Sen. Cory Booker, a Democrat from New Jersey and Sen. Elizabeth Warren, a Democrat from Massachusetts, joined Maloney along with consumer advocates at a press event about the bill.

The bill, dubbed the “Overdraft Protection Act,” would restrict banks from charging customers overdraft fees. It includes requiring banks to limit charges to no more than once per month and six times per year for each customer.

The bill would also require banks to allow customers to opt in to overdraft programs in the first place instead of enrolling them automatically. 

Currently, banks must give customers the choice to opt in for ATM and debit-card transactions, but automatic enrollment still exists for checks and electronic payments. Read more on overdraft program rules here.

For ATM and debit-card transactions, the American Bankers Association says: “Before opting-in, consumers receive a one-page, consumer-tested, government required, opt-in form that explains debit-card overdrafts and less expensive options. Consumers who are currently covered by overdraft protection have the right to opt-out at any time without consequence or cost.”

Banks can charge account holders $30 to $35 per transaction every time they overdraw their accounts. 

Banks “rely heavily” on overdraft fees as a source of revenue, a report by the Consumer Financial Protection Bureau found. Almost 80% of all overdraft revenue came from 9% of consumers, the CFPB found. These account holders were charged over and over, with 10 or more overdrafts a year. Banks took in an estimated $15.47 billion in overdraft and non-sufficient funds (NSF) revenue in 2019, according to the CFPB.

The lawmakers gathered a day before new government data showed annual inflation increased to 9.1% in June. They said taking aim at overdraft fees would be one way to help give consumers some relief from rising prices.

Booker called the bill an important step on a long journey “toward a fair economy and economic justice”. He also called on institutions to stop making “unjust profits” off lower-income Americans. 

“That’s not capitalism, folks. That is piracy. And it must stop,” Booker said. 

Booker said the bill could relieve some of the burdens of ongoing inflation that hurt consumers. 

Facing record-high price increases on everything from gas to groceries, Americans are trimming their budgets. Some consumers are buying cheaper brands and turning to less expensive options for food. Others say they’ve been dipping into their savings to cover living expenses. 

The CFPB promised a crackdown on overdraft fees last December. Researchers have found that overdraft fees disproportionately hurt low-income, Black and Latino consumers. 

Some banks have eliminated insufficient funds fees (NSF) and other related charges, while others have lowered the fees or relaxed the rules around the fees instead of cutting them altogether.

Warren, Booker and Maloney wrote in May to the CEOs of JPMorgan Chase
JPM,
+4.58%,
Wells Fargo
WFC,
+6.17%
and Bank of America
BAC,
+7.04%,
asking them to drop overdraft fees. The CFPB found that those three banks brought in 44% of the $15.47 billion that banks with more than $1 billion in assets made in 2019 from NSF fees and overdraft fees. 

(JPMorgan Chase declined to comment. Bank of America and Wells Fargo did not reply to a request for comment.) 

Chase recently allowed one more day for its customers to avoid overdraft fees. It also eliminated NSF fees, and last August increased its overdraft buffer by $5 to $50. Bank of America reduced its overdraft fees from $35 to $12 in May, and eliminated a $12 “balance connect fee”. In January, Wells Fargo announced several changes to reduce fees, including a 24-hour grace period for overdraft. It also eliminated NSF fees.

“The big banks might as well have held up a giant sign that says, ‘We will squeeze our customers as hard as we can, or as long as we can get away with it,’” Warren said Tuesday. “We are here today to say they can’t get away with it any longer.”