Overdraft Fee Rules

Consumer Alert

Bill Schuette
Attorney General

The Attorney General provides Consumer Alerts to inform the public of unfair, misleading, or deceptive business practices, and to provide information and guidance on other issues of concern. Consumer Alerts are not legal advice, legal authority, or a binding legal opinion from the Department of Attorney General.

Overdraft Fee Rules

The Federal Reserve Board enacted rules in 2010 prohibiting banks from charging overdraft fees for ATM withdrawals or debit card purchases when a consumer does not have sufficient funds to cover the transaction, unless the consumer has affirmatively consented to the bank's overdraft protection service for those transactions. Overdraft protection service refers to a bank covering or paying an ATM withdrawal or debit card purchase that overdraws the consumer's account. Consumers are generally charged a fee for this service. If consumers choose not to have overdraft protection, transactions cause their accounts to go into a negative balance will be declined.  The rules went into effect in 2010.

Banks Must Provide Notice of Overdraft Protection Services to Consumers  

Before opting in to a bank's overdraft protection service for ATM withdrawals and debit card purchases, consumers must be provided written notice. In addition to explaining the overdraft fees, the notice to consumers must explain their right to affirmatively consent to payment of overdrafts for ATM withdrawals and debit card purchases. Further, if the bank offers, as an alternative for bank payment of overdrafts, a line of credit or a service that transfers funds from another account, that information must also be included in the notice to consumers. If a consumer does not respond to the notice by affirmatively consenting to overdraft protection, overdrafts will not be paid by the bank.

The consumer may opt in to the overdraft protection service at any time in the manner described in the notice. The consumer may also revoke consent at any time. The consumer's affirmative consent to the bank's overdraft protection service remains effective until revoked by the consumer or until the bank terminates the service. 

Banks May Not Discriminate Against Consumers Who Choose Not to Opt in to the Overdraft Protection Service for ATM Withdrawals and Debit Card Purchases

These rules only apply to overdraft fees resulting from ATM withdrawals or debit card purchases. Banks may not require consumers to accept overdraft protection for ATM withdrawals and debit card purchases as a condition for the payment of any overdrafts for checks or other types of transactions. Further, a bank may not decline to pay checks, ACH transactions, or other types of transactions that overdraw the consumer's account because the consumer has not affirmatively consented to the bank's overdraft protection service for ATM and debit card transactions. Additionally, a bank must provide to consumers who do not affirmatively consent to the bank's overdraft protection for these transactions the same account terms, conditions, and features that it provides to consumers who affirmatively consent, except for the overdraft service for ATM withdrawals and debit card purchases. 

For more information, read the Consumer Financial Protection Bureau’s report on the overdraft fee rules and the impact on consumers.

Contact the Attorney General’s Office

For general consumer questions or to file a complaint, you may reach the Attorney General's Consumer Protection Division at:

Consumer Protection Division
P.O. Box 30213
Lansing, MI 48909
517-373-1140
Fax: 517-241-3771
Toll free: 877-765-8388
Online complaint form