Checking Accounts: Long on Words, Short on Protections (Spring 2011 Trust Magazine Briefly Noted)

Author: Nicolle Grayson

08/05/2011 - You can read Romeo and Juliet in half the time it takes to read the typical disclosures that consumers are expected to understand before opening a checking account.

The median length of those disclosures is an alarming 111 pages, according to a new report from the Pew Health Group’s Safe Checking in the Electronic Age Project. In October 2010, Pew examined more than 250 types of checking accounts offered online by the 10 largest banks in the United States, which hold nearly 60 percent of all deposit volume nationwide.

In Hidden Risks: The Case for Safe and Transparent Checking Accounts, Pew recommends that policy makers require banks to provide a one-page, easy-to-read disclosure form similar to what is known as the Schumer Box for credit cards. Within three days of the report’s release, Sen. Charles Schumer (D-NY) touted the study in a press conference and joined Pew in calling for a one-page disclosure document.

“It is exceedingly difficult for the average consumer to find the basic information needed to either select a checking account or to responsibly manage the one they currently have,” said Shelley A. Hearne, managing director of the Pew Health Group. “A standard one-page document will make it easier for a consumer to shop around and find the best product for them, much in the way that nutrition labels on food products enable consumers to compare and contrast.”

The report points out other risks hidden from consumers. They include excessive overdraft fees, the reordering of deposits and withdrawals to maximize overdraft fees, binding mandatory arbitration agreements and provisions that require the accountholder to pay the bank’s “loss, costs, and expenses” in a legal dispute, regardless of the outcome to the case.

Hidden Risks offers a number of policy solutions to protect consumers, promote a competitive marketplace and foster a level playing field among financial institutions. For more information on the Safe Checking in the Electronic Age Project and the issues it covers, please visit

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