California State Senator Steven Bradford introduced SB 1075, a bill that unfairly targets state-chartered credit unions and limits courtesy overdraft protection for their members. SB 1075 imposes stringent requirements on how state-chartered credit unions serve their members that utilize overdraft services by limiting the number of overdraft and non-sufficient fund (NSF) transactions to three per month and mandating a five-day waiting period before an overdraft fee can be assessed.

In addition to limiting consumer choice at only state-chartered credit unions, SB 1075’s timing is premature.  The Consumer Financial Protection Bureau (CFPB) issued a proposed rule in January of 2024 regarding courtesy overdraft for large financial institutions that many see as an industry standard. The final rule will inevitably have downward price pressure on the product and institution. Therefore, the introduction of SB 1075 in California is premature at best. 

At its worst, SB 1075 is punitive in nature. Overdraft protection is a financial tool that continues to be desired among credit union members. Restricting access to overdraft protection could force credit union members into difficult positions and more expensive alternatives, like predatory lenders. SB 1075 limits a consumer’s choice to utilize financial services that best suit their needs. 

It is imperative to contact your state senator today through Connect for the Cause. Share your concerns about the negative impact that SB 1075 will have on credit union members and ask that the bill be tabled until the final rule has been promulgated at the CFPB.