Of 26 banks examined by Compass Point Research & Trading, only four specifically disclosed their overdraft income, part of a probe into checking account overdraft programs has found. However, looking into just those four, overdraft income averaged 47% of total service fee income.
Despite the small amount of banks surveyed, the research firm said the average does portray a healthy estimate of the market.
Due to the heightened concern and research, the Consumer Financial Protection Bureau announced in February that it is launching an inquiry into checking account overdraft programs to determine how these practices are impacting consumers, according to Compass Point.
The CFPB with be zeroing in on four primary areas: transaction re-ordering, missing/confusing information, misleading marketing materials and the impact on low-income and young customers.
Additionally, according to a survey, 54% of individuals who overdrew their account did not know they had opted-in to overdraft protection.
In light of this, Compass Point suggests that the CFPB address a lack of information among consumers regarding the opt-in process.
"While the ultimate impact is difficult to predict, much of the attention has been focused on the process of reordering transactions as well as the significant variability in opt-in rates," Compass Point said.
The firm expanded, saying, "We believe it is logical that changes could be enacted, though we are cognizant that applying logic in the new regulatory paradigm may not always be successful."
The CFPB is expected to release a preliminary report detailing its initial findings in the coming weeks or by the end of the second quarter of 2013.