ACU Files Lawsuit to Block CFPB Overdraft Rule
America’s Credit Unions (ACU), joined by other financial services trade groups and banks, has filed a lawsuit against the Consumer Financial Protection Bureau’s (CFPB) recent rule on overdraft services. This rule, targeting financial institutions with over $10 billion in assets, imposes a $5 fee cap and new restrictions on how overdraft programs can be offered. While the rule ostensibly applies to large institutions, its downstream effects could significantly impact credit unions of all sizes, potentially limiting flexibility in offering overdraft services to members.
What Credit Unions Need to Know:
- Scope of the Rule: While the CFPB’s rule primarily targets institutions with assets over $10 billion, its provisions set a precedent that could influence broader regulatory approaches and operational practices for credit unions.
- Overdraft Programs Under Threat: The rule challenges the characterization of overdraft services, claiming they are extensions of credit, which could disrupt how credit unions design and deliver these programs to meet members’ needs.
- Legal Action: The lawsuit seeks to invalidate the rule, arguing the CFPB overstepped its authority under the Truth in Lending Act (TILA). A motion for a preliminary injunction is planned to delay the rule’s October 1, 2025, implementation date.
- Advocacy Opportunity: Credit unions concerned about the potential impact of this rule can support the lawsuit by filing an amicus brief or engaging in advocacy efforts to amplify the industry’s voice.
CrossState will monitor developments closely and provide updates on the litigation and its implications for our member credit unions. If you have questions or would like to discuss potential involvement, please contact our Advocacy team.