ABA Banking Journal
No Result
View All Result
  • Topics
    • Ag Banking
    • Commercial Lending
    • Community Banking
    • Compliance and Risk
    • Cybersecurity
    • Economy
    • Human Resources
    • Insurance
    • Legal
    • Mortgage
    • Mutual Funds
    • Payments
    • Policy
    • Retail and Marketing
    • Tax and Accounting
    • Technology
    • Wealth Management
  • Newsbytes
  • Podcasts
  • Magazine
    • Subscribe
    • Advertise
    • Magazine Archive
    • Newsletter Archive
    • Podcast Archive
    • Sponsored Content Archive
SUBSCRIBE
ABA Banking Journal
  • Topics
    • Ag Banking
    • Commercial Lending
    • Community Banking
    • Compliance and Risk
    • Cybersecurity
    • Economy
    • Human Resources
    • Insurance
    • Legal
    • Mortgage
    • Mutual Funds
    • Payments
    • Policy
    • Retail and Marketing
    • Tax and Accounting
    • Technology
    • Wealth Management
  • Newsbytes
  • Podcasts
  • Magazine
    • Subscribe
    • Advertise
    • Magazine Archive
    • Newsletter Archive
    • Podcast Archive
    • Sponsored Content Archive
No Result
View All Result
No Result
View All Result
ADVERTISEMENT
Home Newsbytes

CFPB: Online Payday Loans Can Lead to Unanticipated Overdraft Fees

April 20, 2016
Reading Time: 2 mins read

Repeated attempts by online payday lenders to collect payments via direct debit can lead to unanticipated consequences for consumers’ bank accounts, according to a report issued by the Consumer Financial Protection Bureau today. The bureau said that half of online borrowers face an average of $185 in overdraft fees as a result of a failed payment attempt during the 18-month survey period, and some also face account closures.

Unlike store-front lenders that perform transactions on an in-person basis, online lenders use automated networks to directly deposit funds into consumers’ accounts, and also to collect payment. The report found that in many cases, the accounts of borrowers who are unable to pay receive multiple payment requests, and that online payday lenders sometimes split a single payment into multiple debit requests. Each debit request made to an account that contains insufficient funds may result in an additional overdraft charge to the customer from the bank.

As ABA EVP Wayne Abernathy pointed out, however, the report — which is composed of data from an 18-month period between 2011 and 2012 — also showed that 94 percent of initial payment requests were successful, and of those, only 7 percent were covered with overdraft funds. The bureau’s findings, therefore, focus on the experience of a very small but important number of consumers, Abernathy added.

“It is unfortunate that the CARD Act, the MLA rule, direct deposit advance guidance issued by the OCC and FDIC and anticipated small dollar lending rules have created a situation in which the only available option for these consumers is an online lender,” Abernathy said. “ABA believes there should be a vibrant credit market with many choices for short term and small dollar credit, and we look forward to working with the bureau to expand this market.”

ADVERTISEMENT
Tags: Consumer lendingOnline marketplace lendingPayday lending
ShareTweetPin

Author

Monica C. Meinert

Monica C. Meinert

Monica C. Meinert is a senior editor at the ABA Banking Journal and VP for executive communications at the American Bankers Association.

Related Posts

#PracticeSafeChecks campaign wins two Telly Awards

#PracticeSafeChecks campaign wins two Telly Awards

Compliance and Risk
May 21, 2025

An ABA public education campaign warning consumers about the risks of check fraud has received two awards for video and television excellence.

ABA, associations urge Congress to overturn CFPB credit card late fees rule

Proposed amendment would add credit card rate cap to Senate stablecoin bill

Newsbytes
May 21, 2025

A proposed amendment would add language capping credit card interest rates at 10% to the GENIUS Act, an unrelated bill establishing a regulatory framework for payment stablecoins.

Bank, credit union groups unite against Welch-Gooden bill

ABA, associations urge senators to reject adding credit card routing mandates to stablecoin bill

Newsbytes
May 21, 2025

ABA joined state and national associations in voicing strong opposition to adding credit card routing mandates to an unrelated bill on stablecoins.

ABA urges ‘same risk, same regulation’ for digital assets

Proposed amendment would add Credit Card Competition Act to Senate stablecoin bill

Newsbytes
May 20, 2025

Sen. Roger Marshall (R-Kan.) has filed an amendment to add credit card network routing mandates to an unrelated bill establishing a regulatory framework for payment stablecoins.

FDIC withdraws proposed rules on brokered deposits, corporate governance, executive pay

FDIC rescinds 2024 bank merger policy

Newsbytes
May 20, 2025

The FDIC board unanimously voted to rescind a 2024 statement on bank mergers that expanded the factors taken under consideration when the agency reviews merger applications.

FDIC says banks need to correctly report uninsured deposits

FDIC provides update on Deposit Insurance Fund restoration

Compliance and Risk
May 20, 2025

DIF reserve ratio remains on track to reach the statutory minimum of 1.35% by year's end. Also, FDIC will explore changing how it calculates the DIF's exposure to losses.

NEWSBYTES

#PracticeSafeChecks campaign wins two Telly Awards

May 21, 2025

Proposed amendment would add credit card rate cap to Senate stablecoin bill

May 21, 2025

ABA, associations urge senators to reject adding credit card routing mandates to stablecoin bill

May 21, 2025

SPONSORED CONTENT

Choosing the Right Account Opening Platform: 10 Key Considerations for Long-Term Success

Choosing the Right Account Opening Platform: 10 Key Considerations for Long-Term Success

April 25, 2025
Outsourcing: Getting to Go/No-Go

Outsourcing: Getting to Go/No-Go

April 5, 2025
Six Payments Trends Driving the Future of Transactions

Six Payments Trends Driving the Future of Transactions

March 15, 2025
AI for Banks: A Starter Guide for Community and Regional Institutions

AI for Banks: A Starter Guide for Community and Regional Institutions

March 1, 2025

PODCASTS

Podcast: Accelerating banking for quick-service restaurants

May 8, 2025

How a Georgia community bank supports government-guaranteed lending nationwide

May 1, 2025

Podcast: Quantum computing’s shakeup in payments, cybersecurity

April 24, 2025
ADVERTISEMENT

American Bankers Association
1333 New Hampshire Ave NW
Washington, DC 20036
1-800-BANKERS (800-226-5377)
www.aba.com
About ABA
Privacy Policy
Contact ABA

ABA Banking Journal
About ABA Banking Journal
Media Kit
Advertising
Subscribe

© 2025 American Bankers Association. All rights reserved.

No Result
View All Result
  • Topics
    • Ag Banking
    • Commercial Lending
    • Community Banking
    • Compliance and Risk
    • Cybersecurity
    • Economy
    • Human Resources
    • Insurance
    • Legal
    • Mortgage
    • Mutual Funds
    • Payments
    • Policy
    • Retail and Marketing
    • Tax and Accounting
    • Technology
    • Wealth Management
  • Newsbytes
  • Podcasts
  • Magazine
    • Subscribe
    • Advertise
    • Magazine Archive
    • Newsletter Archive
    • Podcast Archive
    • Sponsored Content Archive

© 2025 American Bankers Association. All rights reserved.