Bank fees scrutinized
LANSING — Retailers have entered the busiest period of the year. But how are consumers gearing up to protect their pocketbooks?
Sen. Gretchen Whitmer, D-East Lansing, is working on legislation to protect consumers from excessive and hidden fees tacked on by banks.
“As the holiday shopping season kicks off in full, shoppers deserve to be protected from unfair fees and should know about any hidden costs in their purchases,” said Whitmer.
“My plan would help consumers put more of their hard-earned money towards gifts for their family instead of gifts to bailed-out banks.”
Whitmer’s “Buyer Beware” plan would reduce overdraft fees, prevent banks from charging multiple fees in a 24-hour period, and require banks to disclose and post online how they calculate the overdraft fees.
The Center for Responsible Lending, which has offices in North Carolina, California and Washington, D.C., found that overdraft fees have more than doubled since 2004, costing consumers $23.7 billion in 2008 alone.
That number is expected to rise to $26.6 billion for 2009, the center said. Michigan’s share of overdraft fees is estimated at more than $576 million.
Gail Madziar, vice president of membership and communications for the Michigan Bankers Association, said potential federal legislation early in 2010 would probably address the issue.
The American Bankers Association recently surveyed 1,000 banking customers and found that 82 percent didn’t pay an overdraft fee. Madziar said only 5 percent of them said they paid 10 or more overdraft fees.
“If you have that many overdraft fees, then there is probably another problem going on there,” she said.
Madziar said she has not seen Whitmer’s legislation, but her initial reaction is that the association won’t support the proposal.
Don Mann, regulatory liaison for the Michigan Association of Community Bankers, said the legislative efforts may be well-intentioned but the complexity of banking, from local banks to worldwide banks, is overwhelming.
Banking laws and regulations are better supervised at the federal level because federal agencies can apply rules to all insured banks and credit unions, he said.
“At the state level, it gets a little tricky because it may not apply to all banks. Why would you subject your local banks to more stringent rules?” said Mann.
As for the holiday shopping period, “We believe this will be a better season for many retailers, despite the challenges out there,” said Michigan Retailers Association President James Hallan.
According to the National Retail Federation, shoppers are expected to spend an average of $508 on food, decorations and gifts this year, down from $534 last year.
Foreclosures, economic uncertainty and unemployment are among the reasons consumers are scaling back.
“While high unemployment levels remain a big obstacle, we have seen gains since April and expect that momentum to continue through the end of the year,” Hallan said. “Our national and state economies are more stable than at this time last year, and our members have greater confidence in their businesses and consumers.”