NEW YORK (NEWSnet/AP) — A squabble over billion of dollars in overdraft fees is intensifying.

Consumer Financial Protection Bureau is expected to propose rules this week that curtail banks’ ability to charge customers a fee when they overdraw a bank account.

Opponents of the fees cite an example of a $3 cup of coffee costing someone $40.

The banking industry is preparing a multimillion-dollar marketing and lobbying campaign. Although financial institutions have diminished use of overdraft fees within the past decade, the largest banks still collect more than $8 billion in overdraft fees each year, according to data from CFPB and bank public records.

The Biden Administration has placed overdraft fees at the center of a campaign against what it calls “junk fees” and has directed government regulators — CFPB and Federal Trade Commission — to curtail the practice.

Banks charge a customer an overdraft fee if a bank account balance falls below zero. What started as a courtesy offered to some customers, the popularity of debit cards beginning in the 1990s led to citizens compiling billions of dollars in overdraft fees.

Most majors banks have added safeguards to accounts to allow customers to bring a balance into positive territory before incurring a fee, which at some banks can be as high as $39.

Bank of America, at one time considered by industry critics to be the worst abuser of overdraft fees, cut its fee from $35 to $10 two years ago, and says now it is less than 10% of what it was previously.

Most banks have curtailed collection of fees for non-sufficient funds. In that case, the bank charges a customer a fee for not having the funds to cover a charge, but denies the transaction. These are commonly known as “bounced check fees.”

According to research conducted by Bankrate in August 2023, overdraft fees still are charged on 91% of accounts surveyed — and they can run as high as $39. The average overdraft fee in 2023 was $26.61.

Banking industry sources and consumer advocates both expect CPFB’s regulations to be focused on when overdrafts can be charged and how much banks can charge relative to the amount of risk a bank is taking on to cover a routine purchase. One criticism of overdraft fee practices is that the cost to cover routine purchases is low and banks have safeguards to stop customers from taking  accounts deep into red.

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