The National Credit Union Administration has issued guidance to federal credit unions regarding the consumer harm stemming from certain overdraft and non-sufficient funds (NSF) fee practices. The NCUA will continue to review credit union overdraft programs and will pay particular attention to overdraft fees for authorize positive and settle negative transactions and NSF fees for represented items, NCUA Chairman Todd Harper recently warned credit unions.… Continue Reading
Non-sufficient funds fees
Michigan federal court shuts down class action against Flagstar Bank for so-called “surprise overdraft” fees and multiple NSF fees on re-presentments
By Kristen E. Larson on
On April 16, 2024, the U.S. District Court Judge Gershwin A. Drain in the Eastern District of Michigan granted summary judgment in favor of Flagstar Bank (the “Bank”) in a case where the plaintiff alleged breach of contract and conversion with respect to the Bank’s overdraft (OD) and non-sufficient funds (NSF) fee practices. … Continue Reading
CFPB report shows nearly 50% decline in overdraft/NSF fee revenues from pre-pandemic levels
The CFPB has issued a data spotlight that shows bank overdraft/non-sufficient funds (NSF) fee revenues have declined significantly from their pre-pandemic levels.
The report states:
Overdraft/NSF revenue for the fourth quarter of 2022 alone was approximately $1.5 billion lower than in the fourth quarter of 2019 – a decrease of 48% compared to before the pandemic, suggesting an annual reduction of over $5.5 billion going forward. … Continue Reading
OCC and FDIC address overdraft and NSF fee practices
By Scott A. Coleman & Kristen E. Larson on
The OCC has issued a new bulletin and the FDIC has issued new supervisory guidance directed to their supervised institutions to address “authorize positive, settle negative” (APSN) overdraft fee practices. The OCC bulletin also addresses non-sufficient funds (NSF) fee practices. Based on the bulletin and guidance, it would appear that the OCC and FDIC share the CFPB’s apparent view that APSN fees are unfair regardless of how clearly and conspicuously they are disclosed to consumers. … Continue Reading
CFPB report of decline in bank revenues from overdraft and NSF fees follows President Biden’s targeting of “junk fees” State of the Union address
By John L. Culhane, Jr. on
In a new report published last week titled “Banks’ overdraft/NSF fee revenue declines significantly compared to pre-pandemic levels,” the CFPB reported that its most recent analysis found that bank overdraft/NSF fee revenue was 43% lower in the third quarter of 2022 than in the third quarter of 2019 before the COVID-19 pandemic onset – suggesting $5.1 billion less in fees on an annualized basis. … Continue Reading
New York Governor’s 2024 fiscal budget proposal targets overdraft and NSF fees
By Kristen E. Larson on
On February 2, 2023, New York Governor Kathy Hochul released her 2024 fiscal budget proposal, which included banking policy to “Protect New Yorkers from Predatory Banking Fee” in the Executive Budget Briefing Book. The Briefing Book states:
“The Executive Budget includes nation-leading legislation that comprehensively addresses abusive bank fee practices, which tend to disproportionally harm low- and moderate-income New Yorkers, including stopping the opportunistic sequencing of transactions in a way designed to maximize fees charged to consumers, ending other unfair overdraft and non-sufficient funds fee practices, and ensuring clear disclosures and alerts of any permissible bank processing charges.”… Continue Reading
This week’s podcast episode: A close look at the FDIC’s supervisory guidance and class action litigation regarding multiple non-sufficient funds fees arising from re-presentment of the same unpaid transaction
By Barbara S. Mishkin on
We discuss each of the three categories of risk identified in the guidance (consumer compliance, third-party, and litigation), plaintiffs’ legal theories in class actions challenging NSF fees, the role of arbitration clauses and contract language in defending class actions, the FDIC’s suggested risk mitigation practices, issues to consider in navigating FDIC expectations for remediation of self-identified NSF fee issues and plaintiffs’ demands in class action settlements, the position of other federal regulators on re-presentment NSF fees, and state focus on NSF fees.… Continue Reading