Initiatives by banks to give customers access to the federal government’s economic impact payments have caused confusion for some customers with overdrawn accounts, according to the Consumer Financial Protection Bureau’s latest consumer complaint bulletin.
The CFPB said in the bulletin released last week that complaints relating to economic impact payments generally involved advances financial institutions had made to overdrawn accounts so that customers could use the full amount of the payment. The advance, equal to the overdrawn amount, was later removed from the account by the bank, typically a month later, the CFPB said. Removing the provisional advance caused problems for some customers.
“In many cases, when the financial institution reversed the advance, consumers were hit with an overdraft fee,” the CFPB said.
The agency added that some consumers did not realize that an advance was posted to their account. In some cases, the accounts were more overdrawn after the reversal, with consumers reporting fees charged on multiple items that had posted to the account that was now overdrawn.
The CFPB said in the bulletin that it could not determine from the complaints what notices financial institutions had provided to their overdraft customers when making the advance and then before reversing the advance.
“Financial institutions often reported providing both electronic and written notices at the time of the advance,” the CFPB said. “Consumers, on the other hand, reported not receiving notices and expressed confusion because they did not proactively opt-in to overdraft protection programs.”
In the bulletin, the CFPB cited a notice it had published in January after examiners had found risks at several institutions that it said “failed to clearly communicate to consumers how and when provisional credits would be revoked.”
“This risk was exacerbated if the institutions lacked a clear policy preventing assessment of an overdraft fee when the revocation of provisional credit resulted in a negative account balance,” the CFPB said.
In some circumstances, financial institutions have responded to complaints about the advances by refunding overdraft fees charged to the consumers’ accounts, saying they were doing so as a courtesy.
The CFPB also had complaints from consumers who received their payments on prepaid cards. These customers said funds had been deposited onto old or defunct cards that were used to receive tax refunds in prior years. This caused delays in accessing money, and some consumers who tried to make subsequent disbursements from these cards ended up having their accounts locked, preventing them from accessing additional funds.
