AG Nessel Seeks to Protect Consumers from High Overdraft Fees

LANSING – Michigan Attorney General Dana Nessel has joined a coalition of 22 attorneys general in sending a letter (PDF) to the leadership of the U.S. House of Representatives and the House Financial Services Committee urging the House to vote against House Joint Resolution 59, which would overturn a final rule issued by the Consumer Financial Protection Bureau. The rule, set to take effect on October 1, 2025, is designed to limit the ability of large financial institutions to impose excessive overdraft fees. Attorney General Nessel and the coalition argue the CFPB’s rule is a much-needed check on abusive and deceptive practices that allow major banks to profit from consumers’ financial hardships. 

On December 12, 2024, the CFPB issued the final rule amending Regulations Z (Truth in Lending Act) and E (Electronic Funds Transfer Act). The rule requires large financial institutions with more than $10 billion in assets to cap overdraft fees at $5 or the amount that would cover the bank’s actual costs from providing overdraft protection.  

Overdraft fees are a major profit center for banks, accounting for about $5.8 billion in revenue in 2023. In the letter, the coalition argues repealing the rule would allow large financial institutions to continue charging average overdraft fees of $35, even though the majority of consumers’ overdrafts are for less than $26 and are repaid within three days—translating to pricing in annual percentage rate (APR) terms of over 16,000%. The coalition also highlights how some banks manipulate the timing of deposits and withdrawals to maximize fees, charging customers even when they have enough money for an approved transaction. Attorney General Nessel argues that practice creates hurdles for consumers to maintain a positive account balance, while also contributing to involuntary account closures, driving consumers out of the banking system altogether, and damaging their credit. 

“Excessive overdraft fees are predatory, causing unnecessary burdens for consumers,” Nessel said. “This critical CFPB rule ensures that these fees are proportionate and transparent. Rejecting such a rule is just another attempt to undermine the vital work of the CFPB, which has always been in the corner of Michiganders, protecting them from deceptive fees, predatory loans, and shady financial schemes and putting money back in the pockets of hard-working families.” 

Attorney General Nessel recently joined other attorneys general in filing two amicus briefs to defend the CFPB after the Trump administration told employees to stop working on cases investigating deceptive and abusive conduct by companies. Since its creation, the CFPB has helped millions of Americans by assisting homeowners facing foreclosure stay in their homes, stopping banks from charging junk fees, and returning more than $20 billion to the pockets of consumers. To raise awareness about the agency’s impact, Attorney General Nessel released a video about the threats facing the CFPB and joined former CFPB Director Rohit Chopra to discuss the impact of the Bureau’s ongoing shutdown on Michiganders. 

Joining Attorney General Nessel in sending this letter are the attorneys general of Arizona, California, Colorado, Connecticut, Delaware, Hawai’i, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont, Washington, Wisconsin, and the District of Columbia. The Hawai’i Office of Consumer Protection also joined the coalition.