On June 11, 2013, the Consumer Financial Protection Bureau (CFPB) released a report that raised concerns about the ability of consumers to anticipate and avoid overdraft costs on their checking accounts. The report found, for instance, wide variations across financial institutions regarding the costs and risks of opting in to overdraft coverage. But it also found that consumers who opt in for overdraft coverage on debit card and ATM transactions end up with higher account fees and more involuntary account closures than consumers who don’t opt in.
Yesterday, MPD CEO Karen Webster further explained in her op-ed that for the CFPB, overdraft protection of prepaid cards is really a loan in disguise, and that consumers who overdraw simply don’t understand that they are setting themselves up to pay overdraft fees on their next payday. In fact, currently, only 7 of 325 cards reviewed by the CFPB even offered overdraft protection at all. The thing is, Webster points out, these prepaid cards allow consumers with irregular revenues to have the option of overdrawing for just a few days- in which case the customer should not have to go through the usual credit loan.
So the CFPB has a lot to figure out. In this context, the government agency asked Fiserv, as well as competitor FIS, a worldwide provider of financial services technology, to provide precious anonymous overdraft data for research purposes. According to Credit Union Times, Fiserv released the following memo to its credit union clients:
“[The] CFPB assures Fiserv that the order is intended to acquire data for research purposes only, under the bureau’s authority to monitor and maintain a fact-based understanding of the financial services marketplace. Because of this assurance, and because the data we produce about your settings will not include information elements that identify your specific institution, we do not believe this order poses the risk of compliance activity aimed at any individual credit union.”
Fiserv warned that there may be a possible price increase for costumers because of the extra workload, which includes approximately 60 data elements about each hosted account processing client’s system settings, reports Credit Union Times.
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