For-profit colleges are under fire because students often graduate with large amounts of debt and few job opportunities, and because for-profit colleges misrepresent the quality of their programs. Recent Woodstock Institute research shows that for-profit college students often struggle with higher amounts of loans compared to their non-profit and public student counterparts with similar demographic and financial characteristics.
A majority of the bank customers (52 percent) who paid a debit card overdraft penalty fee in the last year, did not recall signing up for this service and were not aware that a fee was involved, according to a recent survey by the Pew Charitable Trusts.
Why all the confusion? Is it something the banks are doing?
Only 14.3% of customers at big banks had overdraft coverage in 2011 and 2012, according to the Consumer Financial Protection Bureau.
But for the minority of consumers who do opt in, overdraft fees can be enormously expensive. Around 8% of consumers paid overdraft fees at least 10 times per year, which cost them an average of $380 annually, the CFPB says.
The four organizations conducted 64 mystery shopping visits at 39 bank branches in Chicago, Durham, New York City, and Oakland, including Bank of America, BB&T, BMOHarris, Capital One, Chase, Citi, SunTrust, and Wells Fargo. In Chicago, mystery shoppers visited Bank of America, BMO Harris, Chase, and Citi.
Four organizations—California Reinvestment Coalition of Oakland, CA; New Economy Project of New York, NY; Reinvestment Partners of Durham, NC; and Woodstock Institute of Chicago, IL—conducted 64 mystery shopping visits at 39 bank branches in Chicago, Durham, New York City, and Oakland. The four largest banks by deposit size in each city or state (California) were selected, including Bank of America, BB&T, BMO Harris, Capital One, Citibank, JPMorgan Chase, SunTrust, Union Bank, and Wells Fargo.
This comment letter supports proposed guidance from the OCC and FDIC regarding bank deposit advance products, which are functionally equivalent to payday loans. The letter also recommends that the OCC and FDIC institute an annual percentage rate cap, require APR disclosure, prevent mandatory automatic repayment, and strongly enforce the guidance. Eighteen organizations signed on to the letter.
The regulators released proposed changes to their documents that implement CRA (called Interagency Questions and Answers).
We have until May 17 to comment on these proposed changes and let regulators know that they don’t go far enough, so please act today!
Your comments matter. Regulators will be hearing from legions of bank representatives, and we need to make sure that they hear from advocates as well. Here is a sample comment letter that we encourage you to personalize and send to regulators:
Bank regulators released proposed rules on April 30 that, at long last, would enact strong consumer protections for “deposit advance products”—essentially, payday loans offered by a mainstream bank. To hear it from the banks, making sure that borrowers can pay back loans and preventing an endless cycle of debt would somehow make consumers worse off (“Banking group says new regs could push consumers into risky payday loans,” April 28).
The proposed standards require an assessment of the borrower’s eligibility for the product and financial capacity to repay the loan and meet other financial obligations, limit the number of such loans borrowers can receive in one year, and mandate adequate management and monitoring of the significant safety and soundness risks posed by offering these high-cost, short-term loans. The public has an opportunity to comment on the proposed guidance.