The intended impact of HB 5309 involves modifying the existing general statutes, specifically Section 36a-303, to enhance consumer rights by prohibiting additional fees following an initial overdraft caused by external errors. If a bank or credit union fails to freeze an account upon an overdraft, they will not be able to charge further fees for subsequent overdrafts, thereby safeguarding account holders from escalating charges during financially vulnerable times.
Summary
House Bill 5309, also known as the Act Concerning Automatic Overdraft Protection, seeks to amend current banking regulations in Connecticut regarding overdraft fees. This bill aims to prevent banks and credit unions from charging fees related to overdrafts caused by errors in direct deposit information provided by the Social Security Administration. The legislation emphasizes consumer protection, ensuring that financial institutions do not impose penalties on clients for overdrafts that occur due to these administrative errors.
Contention
Notably, there could be contention around how this legislation will affect banking operations and their revenue models. Financial institutions may argue that restricting the ability to charge fees could lead to increased financial risks for them. Proponents of the bill, however, assert that this legislation promotes fairness and accountability in banking practices, safeguarding consumers from undue financial strain as they navigate errors that are out of their control. Discussions surrounding implementation strategies may also arise, emphasizing the need for clear communication between banks and their customers regarding account management and overdraft policies.
An Act Concerning Consumer Credit, Certain Bank Real Estate Improvements, The Connecticut Uniform Securities Act, Shared Appreciation Agreements, Innovation Banks, The Community Bank And Community Credit Union Program And Technical Revisions To The Banking Statutes.
An Act Concerning Motor Vehicle Assessments For Property Taxation, Innovation Banks, The Interest On Certain Tax Underpayments, The Assessment On Insurers, School Building Projects, The South Central Connecticut Regional Water Authority Charter And Certain State Historic Preservation Officer Procedures.
Provides that charges imposed by certain state chartered banking institutions in connection with a check or other written order drawn on insufficient funds shall not exceed the greater of five dollars or the pro rata share of such state chartered banking institution's total direct costs and charge-off losses for providing non-covered overdraft credit.