Consumer Overdraft Protection Fair Practices Act.

Existing law provides for the certification and regulation of state organized banks and credit unions by the Commissioner of Financial Institutions. Existing law prohibits a bank from imposing a charge on a savings account, as defined, or on a depositor for the failure of a depositor to deposit, or for the late deposit of, any agreed periodic installment deposit into that account. Existing law authorizes a credit union to assess charges for failure to meet punctuality obligations to the credit union. This bill would enact the Consumer Overdraft Protection Fair Practices Act. The bill would prohibit a financial institution, defined to include state and federally regulated banks and credit unions, from imposing an overdraft protection fee, as defined, when covering the payment on a transaction for which there are insufficient funds in a customer's account unless specified conditions are satisfied, including that the customer has provided specific written consent to an overdraft protection program or service that provides for the imposition of an overdraft protection fee. The bill would prohibit a financial institution that offers an overdraft protection program or service from making certain advertisements and representations. The bill would prohibit a financial institution from imposing more than 3 overdraft protection fees on a customer in one day. The bill would prohibit an overdraft protection fee from exceeding $25, except that for an overdraft of a customer's account in an amount of $10 or less, an overdraft protection fee would be prohibited from exceeding the amount of the overdraft of the customer's account. The bill would require the Department of Financial Institutions to adopt regulations implementing the provisions of the act and would authorize the department, by regulation or order, to restrict additional acts or practices that the department finds to be unfair or deceptive in connection with the offering, operation, and advertising of overdraft protection programs and services.