August 22, 2022

FDIC Warns Institutions to Correct Deceptive Practices on Fees for Non-Sufficient Funds

The FDIC warned supervised institutions against charging multiple non-sufficient funds ("NSF") fees on the same transaction.

In a Financial Institution Letter, the FDIC cautioned that charging additional NSF fees when a transaction is resubmitted for payment after previous attempts were declined may be in violation of the law. Charging multiple payment failures on the same transaction may violate disclosure laws and may also fall under the definition of "unfair or deceptive acts or practices" under the Federal Trade Commission Act.

The FDIC encouraged institutions to (i) eliminate NSF fees, (ii) stop assessing multiple NSF fees for the same transaction and (iii) conduct a comprehensive review of NSF policy. The FDIC stated that the policy review should cover (i) disclosures regarding NSF fee amounts charged to customers and (ii) the system for alerting customers that a fee has been assessed. The FDIC cautioned institutions that identify NSF fee issues to take immediate corrective action to address the issues, and that the FDIC will take enforcement action against institutions that fail to correct these practices.

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