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

Our special guest is David Pommerehn, SVP, General Counsel, Head of Regulatory Affairs at the Consumer Bankers Association. In January 2024, the CFPB proposed two new rules: one restricting overdraft fees and the other prohibiting NSF fees on certain declined transactions.  The proposals are among the CFPB’s latest moves in furtherance of the Biden Administration’s “junk fees” agenda. … 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 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 group of 12 Republican Senators have sent a letter to CFPB Director Rohit Chopra in which they urge him “to reverse course and stop using inappropriate tactics to harm financial institutions’ reputations and customer relationships in order to advance your liberal policy preferences.”

In their letter, the Senators assert that “rather than operating as a tough, but fair and sensible regulator, the CFPB is again pursing a radical and highly-politicized agenda unbounded by statutory limits.” … Continue Reading

A Delaware federal court has refused to dismiss a class action complaint filed against a credit union that alleges the credit union violated Regulation E and the Delaware Consumer Fraud Act (CFA) even though the credit union’s overdraft opt-in notice tracked the language in the Regulation E model notice.  The decision should serve as a reminder to financial institutions of the need to make sure their opt-in notices accurately and fully describe their overdraft policies. … Continue Reading

Overdraft and NSF fees remain very much on the radar of the CFPB, the federal banking agencies, and certain state banking agencies.  The very fact that the CFPB continues to closely monitor bank call reports with respect to overdraft and NSF fee revenues demonstrates the Bureau’s ongoing focus on this issue. … Continue Reading

Last week, the Senate Banking Committee’s Subcommittee on Financial Institutions and Consumer Protection held a hearing entitled “Examining Overdraft Fees and Their Effects on Working Families.”  A recording of the hearing is available here

After opening statements from Subcommittee Chairman Raphael Warnock (D-GA) and Ranking Member Thom Tillis (R-NC), three witnesses offered testimony and responded to questions from the Subcommittee members. … Continue Reading