In case you missed it, the CFPB issued a Proposal back in January that will prohibit financial institutions from charging NSF fees on transactions that are declined instantaneously or near-instantaneously. While the comment period has ended, you will need to be on the lookout for when a Final Rule is issued.
This Proposal was part of the CFPBs ongoing “war” on junk fees and would apply to ALL financial institutions (as defined by Regulation E), regardless of asset size. The proposed changes would not amend any existing regulations but would add a 12 CFR 1042 – Nonsufficient Funds Fees. This Section would 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 wanted to eliminate this 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.
Published
2024/05/13