FDIC Issues Guidance on Bank Overdraft Fees

The FDIC issued supervisory guidance on the practice of charging overdraft fees on transactions authorized against a positive balance but settled against a negative balance ("APSN").

In the Financial Institution Letter the FDIC highlighted:

• concerns with both the available and ledger balance methods used by institutions when assessing overdraft fees;
• the importance of reviewing bank practices regarding the charging of overdraft fees on APSN transactions to ensure customers are not charged overdraft fees for transactions consumers may not anticipate or avoid - fees that can cause substantial injury
• concerns around an act or practice which may be considered unfair (i.e. when it (i) causes or is likely to cause substantial injury to consumers, (ii) cannot be reasonably avoided by consumers and (iii) is not outweighed by countervailing benefits to consumers or to competition.
• overdraft programs provided by third parties that may not be compliant with all applicable laws and regulations.