---
title: CFPB Proposal on NSF
description: CFPB proposes new regulations to prohibit financial institutions from charging NSF fees on instantaneous or near-instantaneous declined transactions, as part of their crackdown on junk fees. Learn more about this proposal and its potential impact on consumers. Guidance for Bankers.
---

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# [CFPB Proposal on NSF](https://blog.bankerscompliance.com/en/cfpb-proposal-on-nsf)

 Written by [Amy Kudlacek](https://blog.bankerscompliance.com/en/author/amy-kudlacek) | Feb 9, 2024 3:14:46 PM

We alerted you to a [Proposal](https://www.consumerfinance.gov/rules-policy/rules-under-development/overdraft-lending-very-large-financial-institutions-proposed-rule/) that will amend Regulations Z and E regarding overdraft fees for very large financial institutions (over $10 billion in assets). Today, we are alerting you to another [Proposal](https://www.consumerfinance.gov/rules-policy/rules-under-development/nonsufficient-funds-nsf-fees/) that will prohibit financial institutions from charging NSF fees on transactions that are declined *instantaneously or near-instantaneously*. These are all part of the CFPB’s “war” on junk fees and we anticipate there will likely be more to come.

This latest proposal was issued on January 24th and, unlike the previous proposal, would apply to ALL financial institutions (as defined by [Regulation E](https://www.consumerfinance.gov/rules-policy/regulations/1005/)), regardless of asset size. These proposed changes will not amend any existing regulations but will add 12 CFR 1042 – Nonsufficient Funds Fees. This Section will clarify that non-compliance *would constitute an abusive practice under the Consumer Financial Protection Act’s prohibition on unfair, deceptive, or abusive acts or practices* (aka UDAAP).

When a consumer attempts to initiate a withdrawal from their account in which there are insufficient funds, some financial institutions have the ability to decline that transaction right away and may, in some cases, charge an NSF fee. The Proposal seeks to eliminate that practice for certain electronic transactions (some debit card, ATM, P2P, etc.). Transactions such as checks and ACH transactions would not be covered. Again, this would apply to instantaneous or near-instantaneous declines and not those that occur hours or days after the consumer’s attempt.

Comments are due on or before March 25, 2024.

Published  
2024/02/09

[View full post](https://blog.bankerscompliance.com/en/cfpb-proposal-on-nsf)

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