Bank of America charged the second-largest amount of overdraft fees in the first three months of this year among the nation’s largest banks, new disclosures required by regulators show.
The Charlotte-based bank, the second-largest U.S. lender by assets, charged consumers $371 million in overdraft fees. Regulators began requiring banks with more than $1 billion in assets to start breaking out the figures this year.
New York-based JPMorgan Chase & Co., the largest U.S. bank by assets, charged the most in overdraft fees, $415 million, according to an analysis of the data by SNL Financial.
San Francisco-based Wells Fargo, the fourth-largest U.S. bank, ranked third with $355 million in fees.
The disclosures come as regulators continue to keep a close watch on overdraft fees five years after federal rules took effect banning lenders from charging the fees without getting customers’ approval.
Just last month, the U.S. Consumer Financial Protection Bureau announced $7.5 million in fines against Regions Financial Corp. to settle the regulator’s claims that the Alabama lender charged overdraft fees to consumers who had not “opted in” to the fees.
Banks could face additional overdraft rules. The CFPB is in the process of reviewing whether additional regulations affecting overdraft practices are necessary.
Bank of America is among lenders that have dealt with lawsuits over overdraft fees in recent years.
Four years ago a federal judge approved a $410 million settlement in a class-action case involving millions of Bank of America customers. The lawsuit claimed the bank processed debit card transactions from highest to lowest dollar amounts to maximize overdraft fees customers paid.
The bank has taken a variety of steps in recent years to help customers avoid the fees. Last year, for example, it unveiled a checking account that eliminates the fees if a customer agrees to a $4.95 monthly payment.
In addition, in 2010, the bank began banning customers from overdrawing their accounts when making debit card purchases, a move some other banks have not taken.
Eliminating overdraft charges on debit card purchases alone has “greatly reduced the number of overdraft events for our customers,” Bank of America spokeswoman Anne Pace said.
She declined to disclose how much revenue the company has lost from changing its overdraft policies.
Bank of America’s overdraft penalty of $35 is the median among the 45 largest U.S. banks, according to a report this month by The Pew Charitable Trusts.
Michael Calhoun, president of the Durham-based Center for Responsible Lending, said Bank of America has been a leader in making overdraft policy changes that benefit consumers.
But more changes are needed industrywide to better protect consumers against “one of the cash cows of the banking industry,” he said.
“We are calling for strong additional reforms in this market,” he said.
Calhoun said some lenders are charging overdraft fees that are “wildly out of proportion” with the amounts by which accounts are being overdrawn.
He said he has other concerns about banks’ practices, such as asking customers to opt in for overdraft authorization when signing up for new accounts.
“It's too easy for the sign-up to happen there,” he said. “They just slip it in.”