So...they will get consumers to sign a waiver before issuing the card so they can get those charges, no?

By STEPHEN LABATON
Published: November 12, 2009
WASHINGTON — The Federal Reserve announced new rules on Thursday that would prohibit banks and other issuers of debit cards from charging consumers overdraft fees in many instances without the permission of the cardholder.

The rules, which take effect next summer, come as Congress has been considering whether to impose similar restraints, as well as other legislation that would take away the Fed’s authority to regulate credit cards and mortgages and give it to a new consumer financial protection agency.

The rules are the latest in a series issued by the Fed in response to criticism that it did not move quickly and aggressively enough to root out deceptive and abusive consumer lending practices. Last year the Fed issued rules on predatory loans and abusive mortgage practices.

Under the rules announced on Thursday, consumers must be given a notice that explains the card policies, including fees. Without express permission from the consumer, the card issuer cannot charge for overdrafts at retail stores or A.T.M.’s The disclosures are required to be made in simple and easy to understand notices that customers should soon be receiving.

The rules are aimed at reducing fees for more ordinary purchases, such as at bookstores or coffee shops, where the overdraft fee could be significantly larger than the purchase itself.

Fed officials said the new rules would not cover overdraft fees for checks because consumer studies showed that bank customers are more likely to accept such fees since checks are more typically used for more essential purchases. Nor will they cover overdrafts from recurring debit card transactions, such as to pay for utility or telephone bills that are set up in advance.

“The final overdraft rules represent an important step forward in consumer protection,” the Federal Reserve chairman, Ben S. Bernanke, said. “Both new and existing account holders will be able to make informed decisions about whether to sign up for an overdraft service.”

Fed officials said that the banking industry receives $25 billion to $38 billion a year on overdraft fees, including fees for checks and electronic transactions not covered by the new rules.

Last month Senator Christopher J. Dodd, the Connecticut Democrat who heads the Senate Banking Committee, introduced legislation to limit the number of overdraft fees to one a month and to require a bank to seek permission from consumers to cover debit card and check purchases that would push their bank balance below zero. Under the proposal, banks would have to cap the number of overdrafts that they charge at six a year and require fees to be proportional to the cost of processing the overdraft.

On Tuesday, Mr. Dodd proposed a sweeping overhaul of the regulatory system that included consolidating bank regulators and creating a consumer financial protection agency that would take the Federal Reserve out of the business of regulating credit cards and mortgages.

The House Financial Services Committee has already approved similar legislation on the new consumer protection agency. The Obama administration has urged the creation of such an agency, which has been opposed by the bank industry.

“Overdraft fees can be costly,” said the Fed governor, Elizabeth A. Duke, chairwoman of the board’s committee on consumer and community affairs. “Our rule will help consumers better understand the terms and conditions of overdraft services and will give them an opportunity to avoid fees when these services do not meet their needs.”

The rules will take effect for new cards on July 1. For existing accounts, issuers will not be able to charge overdraft fees without the permission of the cardholder after Aug. 15.


http://www.nytimes.com/2009/11/13/bu...e.html?_r=1&hp