Overdrafts

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As we await the CFPB’s proposed overdraft and nonsufficient funds (NSF) fee rule, the CFPB issued another report, Overdraft and Nonsufficient Fund Fees: Insights from the Making Ends Meet Survey and Consumer Credit Panel. It appears this report was issued to bolster those imminent rulemaking efforts, similar to the consent order with Atlantic Union Bank earlier this month.… Continue Reading

On December 7, 2023, Atlantic Union Bank (the “Bank”) entered into a consent order with the Consumer Financial Protections Bureau (CFPB) related to its in-person and telephone overdraft opt-in sales practices during 2017-2020. The settlement requires the Bank to refund affected consumers $5 million in overdraft fees and pay a $1.2 million civil money penalty to the CFPB.… Continue Reading

During his remarks in a meeting with private sector companies on June 15, 2023, President Biden described junk fees as “these hidden charges that companies sneak into your bill to make you pay more and without you really knowing it initially.”  President Biden was joined by representatives from Live Nation, SeatGeek, xBk, Airbnb, the Pablo Center at the Confluence, TickPick, DICE, and the Newport Festivals Foundation — companies that currently provide or have committed to providing all-in pricing in response to the President’s call to action on “junk fees” in his State of the Union.… Continue Reading

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

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

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

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

On October 25, the U.S. Court of Appeals for the Seventh Circuit affirmed a district court’s order dismissing a class action alleging that an Illinois internet-based credit union breached its account agreement when it charged non-sufficient funds (NSF) fees to its customers. Plaintiff alleged the account agreement required the credit union to use the ledger-balance to assess NSF fees and only assess one NSF fee per transaction.… Continue Reading

On October 26, 2022, President Biden appeared at the White House with Rohit Chopra, CFPB Director, and Lina Khan, FTC Chair, to announce that his Administration is taking action to eliminate all “junk fees,” such as fees for deposited checks that are returned unpaid, surprise banking overdraft fees, hidden hotel booking fees and termination charges to stop people from changing cable plans. … Continue Reading

A New York federal district court has issued an order allowing a putative class action to proceed against Trustco Bank, finding that the plaintiff had stated a claim for breach of contract based on the bank’s assessment of non-sufficient funds (NSF) fees.  The complaint in Jenkins v. Trustco Bank alleges that Trustco’s assessment of multiple NSF fees on the same transaction constituted 1) a breach of the covenant of good faith and fair dealing, 2) unjust enrichment, 3) a deceptive act or practice under New York General Business Law § 349, and 4) a breach of contract. … Continue Reading