Consumer Groups To Defend Bank Overdraft Cap As CFPB Retreats

A pair of consumer groups won their bid to defend the Consumer Financial Protection Bureau’s $5 cap on bank and credit union overdraft fees after the agency indicated it would no longer do so.

MyPath and the Mississippi Center for Justice—financial counseling and economic justice organizations based in California and Mississippi, respectively—are needed to defend the rule given that the CFPB indicated in a court filing it intends to abandon it, Judge Carlton W. Reeves of the US District Court for the Southern District of Mississippi said in a Tuesday ruling.

“The adequacy of the CFPB’s representation is therefore legitimately in question,” Reeves wrote. “It may fall to the movants to defend the Overdraft Rule.”

“This wise decision gives consumer groups the chance to vigorously defend the CFPB’s overdraft fee rule against bankers scrambling to protect their junk fee profit centers,” Carla Sanchez-Adams, a senior attorney at the National Consumer Law Center representing the intervenors, said in a statement.

The American Bankers Association, the Consumer Bankers Association, America’s Credit Unions, the Mississippi Bankers Association, and three small banks sued to block the CFPB’s cap on overdraft fees in December, just hours after the agency finalized the rule.

The CFPB under former Director Rohit Chopra initially defended the regulation, part of the Biden administration’s campaign against “junk fees.”

The banking plaintiffs opposed the consumer groups’ motion to intervene, stating they didn’t have a significant stake in the case and that any intervention would impede negotiations with the CFPB over the rule.

Reeves rejected those arguments.

“Surely, the bankers expected someone to defend the Overdraft Rule when they filed their suit,” he said. “They are well-prepared with talented national lawyers and aligned amici.”

“We are confident in our legal arguments and are committed to winning this case so we can protect consumers from the Chopra CFPB’s harmful rule,” CBA spokesman Weston Loyd said in a statement.

The intervenors may not have much of a chance to defend the overdraft rule, as Congress moves to repeal it using the Congressional Review Act.

The 1996 law gives lawmakers a short time frame to overturn some regulations with simple majorities in both chambers of Congress and the president’s signature.

The House Financial Services Committee took up a disapproval resolution on the CFPB overdraft rule (H. J. Res. 59) from Chairman French Hill (R-Ark.) at a Wednesday markup.

The resolution would head to the House floor once the committee approves it.

The Senate hasn’t scheduled a vote on a matching resolution to overturn the rule (S. J. Res. 18) from Banking Committee Chairman Tim Scott (R-S.C.).

The National Consumer Law Center and Democracy Forward Foundation represent the intervenor plaintiffs.

Williams & Connolly LLP and Butler Snow LLP represent the banks and trade groups challenging the overdraft rule.

The case is Mississippi Bankers Association v. CFPB, S.D. Miss., No. 3:24-cv-00792, Order Granting Motion to Intervene 3/4/25