Banks Sue CFPB Over $5 Cap on Overdraft Fees

The lawsuit challenges the Consumer Financial Protection Bureau’s authority to enforce a rule limiting overdraft fees, set to take effect in October 2025.

The Consumer Financial Protection Bureau (CFPB) finalized a rule capping overdraft fees at $5 for banks and credit unions with over $10 billion in assets.
Banking groups, including the Consumer Bankers Association, filed a lawsuit claiming the rule exceeds the CFPB’s regulatory authority and could harm consumers by limiting access to overdraft services.
The CFPB argues the rule will save consumers up to $5 billion annually and reduce financial burdens on low-income households, who are most affected by high overdraft fees.
The rule provides three fee options for banks: a flat $5 fee, a fee covering costs, or a fee disclosed as an annual percentage rate (APR) similar to other loans.
The lawsuit seeks to block the rule's implementation, which is scheduled for October 2025, as political and legal challenges to the CFPB’s authority continue to grow.