Should Banks Disclose the Fees They Don't Charge?

A recent report by Pew Charitable Trusts on banks' overdraft penalty disclosures underscored the old adage, "you know what happens when you assume…" 

Suffice to say that unintended consequences result.

The Pew study compared the fee disclosures of the 12 largest banks. Five of those banks – Wells Fargo (WFC), Citigroup (C), HSBC Finance (HTB), Regions Finance (RF) and Capital One (COF) – provided no information about extended overdraft fees, either in writing or on their websites. So Pew put them in the hall-of-shame "least available" category for that type of fee. (Extended overdraft penalty fees are incurred when an account is overdrawn for a certain period of time, such as five days.)

Logical, right? Except that the reason those five banks "failed" to disclose extended overdraft fees is they didn't charge them in the first place. I know because I called them all to check. Pew hadn't.

Susan K. Weinstock, the director of Pew's Safe Checking in the Electronic Age project, told me that if consumers cannot find fee information easily, banks are not making the proper disclosures.

"We are like the uber-consumer who is looking for the best deal on a checking account. If I go online and read the terms and fees, it's very hard to do because there are gaps in the information," says Weinstock. "If you couldn't find out that there is no fee charged, then there's really no way to know."

Weinstock has urged banks to adopt a uniform disclosure box similar to a nutrition label that would allow for easy comparison of checking account offerings and fees.

So far seven banks and credit unions including JPMorgan Chase (JPM), TD Bank Group (TD) and Inland Bank and Trust (IRC) have adopted Pew's model disclosure form for checking accounts.

Bank of America (BAC) and Citigroup (NYSE:C) have committed to adopting the disclosure form in the next few months, Weinstock says.

Given the industry's rising compliance burden, it may seem like an inopportune time to ask banks to start detailing what they are not doing.

But if the savvy researchers at a think tank can succumb to a fallacy that makes a bank look more devious than it really is, so might the average customer.

Kate Berry is a reporter covering consumer finance for American Banker. The views expressed are her own.