James Battles Banks Over $5.8B Overdraft Rip-Off

NEW YORK – New York Attorney General Letitia James is leading a charge against the nation’s biggest banks, fighting to protect consumers from what she calls a predatory practice: excessive overdraft fees. James, alongside 22 other state Attorneys General, has sent a scathing letter to the U.S. House of Representatives, urging them to reject a resolution that would gut a Consumer Financial Protection Bureau (CFPB) rule designed to rein in these charges.

The battle centers around House Joint Resolution 59, a measure that threatens to overturn the 2024 CFPB rule targeting banks with over $10 billion in assets. These institutions currently rake in an estimated $5.8 billion annually from overdraft fees – a practice James argues disproportionately harms working families. The Senate narrowly passed its version of the resolution 52-48 last month, with even a Republican, Senator Josh Hawley, breaking ranks to oppose it.

“Overturning this rule will only do one thing: help big banks profit at your expense,” James stated bluntly. “Accidentally overdrawing your checking account by a few dollars shouldn’t result in an outrageous fee.” The current system, she points out, often saddles customers with a $35 fee for overdrafts that average just $26 – effectively an astronomical 16,000 percent annual interest rate if the debt is repaid within the typical three-day window. This isn’t an accident; it’s a business model built on exploiting financial hardship.

The CFPB rule, if allowed to stand, would force banks to treat overdraft fees as interest on a loan, subjecting them to standard lending regulations. James and her fellow AGs argue this is a fair assessment of the practice, and a necessary step to protect vulnerable consumers from spiraling debt and potential account closures. Several banks, including Citigroup, Capital One, and Ally Bank, have already eliminated overdraft fees, proving it’s a viable option without crippling the financial system.

This isn’t James’s first rodeo when it comes to consumer protection. In January 2025, she secured over $1 million from Netspend corporation, a provider of reloadable debit cards, for a range of illegal fees. Prior to that, in August 2024, she filed suit against predatory lender Acima for deceptive financing practices and usurious “rental” fees. And in April 2024, James led a coalition against another financial predator. The Attorney General’s office is clearly dedicated to holding these companies accountable.

Joining James in this fight are the Attorneys General of Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, North Carolina, Oregon, Rhode Island, Vermont, Washington, Wisconsin, and the District of Columbia, along with the Hawaii Office of Consumer Protection. The outcome of this battle in the House will determine whether big banks continue to profit from a system critics call legalized robbery, or if consumers finally get a break.

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