Republicans Are Moving To Scrap Rules That Limit Overdraft Fees

The big winner will be a prepaid debit card company that has spent generously in Washington in recent years.

posted on Feb. 8, 2017, at 4:15 p.m.

Matthew Zeitlin
BuzzFeed News Reporter

A financial company that has spent generously on lobbying Washington may soon see its bets pay off, as the Congressional Republicans who were among its many beneficiaries work to scrap rules that prevent it from charging customers tens of millions in overdraft fees.

Last week, Georgia Republican Sen. David Perdue introduced a resolution in Congress, alongside other Republicans including his fellow Georgian Johnny Isakson, to throw out a new package of rules for the prepaid debit card industry.

The rules, finalized by the Consumer Financial Protection Bureau in October, include limitations on overdraft fees, which have become a significant source of consumer complaints about the financial industry — and an important revenue stream for Georgia-based financial firm Total System Services, whose NetSpend unit is the country’s largest manager of prepaid cards, according to a 2015 financial filing.

The vast majority of prepaid debit cards don’t come with overdraft fees, but NetSpend’s do, and the fees accounted for 10-12% of its overall revenue in 2016, or $80-85 million, the company told investors in October. Its parent has spent big on lobbying and political donations in a bid to kill the rules: in the last three months of 2016 alone, it spent some $270,000 lobbying Congress.

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