Michigan AG Joins Attempt to Kill Overdraft Fees To Help Poor
Michigan Attorney General Dana Nessel has joined two multistate actions aimed at eliminating unnecessary banking and mortgage fees to consumers.
The first of the two actions Nessel is joining Michigan to is a multistate coalition of attorneys general calling on banking giants JPMorgan Chase, Bank of America, U.S. Bank, and Wells Fargo to eliminate all overdraft fees on consumer bank accounts. The reasoning behind this is "to create a fairer and more inclusive consumer financial system. Overdraft fees have disproportionately affected vulnerable families and communities of color by straddling them deeper into debt."
“Charging overdraft fees that can sometimes be more than five times the amount of the original purchase is abhorrent. By eliminating these fees altogether, banks will show that they care as much for their customers’ financial well-being as they do their own. Overdraft fees have had harmful effects on millions of consumers nationwide. In some instances, consumers can be charged $35 for a purchase of $5 or less. Studies have shown that the vast majority of such fees fall on low-income consumers, who earn less than $50,000 a year, and communities of color.” - Michigan Attorney General Dana Nessel
While some may question the fairness of this for those who don't go into the red, the thinking is all customers may benefit from a reduction in fees. But the question in the back of some people's minds might be, what will the banking giants do to make up for that lost income.
The second action joins Michigan with 22 other states asking the Consumer Financial Protection Bureau to "prohibit mortgage servicers from charging convenience fees, alleging convenience fees charged by mortgage servicers are one of the more exploitative “pay to pay” fees consumers that customers face, given that most customers don't have another option when dealing with mortgage lenders.