The proposal seeks to ensure financial institutions do not charge non-sufficient fees in real time, with comments due in late March.
01/24/2024 1:10 P.M.
3 minute read
The Consumer Financial Protection Bureau released its second proposed rule related to fees in the last week—this time focused on non-sufficient fund (NSF) fees charged in real time by financial institutions.
The proposed rule (PDF) would prohibit those NSF fees, according to a news release from the CFPB.
“These types of transactions include declined debit card purchases and ATM withdrawals, as well as some declined peer-to-peer payments,” the CFPB reports.
The rule would cover banks, credit unions and certain peer-to-peer payment companies, and classify NSF fees as unlawful under the Consumer Financial Protection Act.
According to the CFPB, financial institutions currently “charge a fee for insufficient funds transactions that are processed and then declined—i.e., checks or electronic authorizations, like Automated Clearing House transactions,” but they rarely charge the NSF fees for transactions declined in real time.
Therefore, the proposed rule is a proactive step to ensure those fees are not charged, especially as technology evolves and financial institutions may be able to decline more transactions in real time.
Comments on the proposed rule are due on or before March 25, 2024.
Submit comments, identified by Docket No. CFPB-2024-0003 or RIN 3170-AB16 through the following methods:
- Federal eRulemaking Portal: https://www.regulations.gov. Follow the instructions for submitting comments. A brief summary of this document will be available at https://www.regulations.gov/docket/CFPB-2024-0003. Email: [email protected]. Include Docket No. CFPB-2024-0003 or RIN 3170-AB16 in the subject line of the message.
- Mail/Hand Delivery/Courier: Comment Intake—2024 NPRM Fees for Instantaneously Declined Transactions, c/o Legal Division Docket Manager, Consumer Financial Protection Bureau, 1700 G Street NW, Washington, DC 20552.
ACA’s Take
The CFPB’s other recent proposed rule, released last week, focused on overdraft products, which would fundamentally alter the market, ACA International previously reported.
The CFPB is proposing to apply the overdraft fee rule to only what it deems “very large” banks and credit unions with assets equal to or exceeding $10 billion. The agency estimates that roughly 175 financial institutions would be covered under the proposal, and also hinted at potential future additional coverage for smaller financial institutions by stating that it intends to “monitor the market’s response” before deciding whether to expand this scope to smaller entities in future rulemakings.
As part of the proposal, the CFPB is aiming to severely limit fees for overdraft services and is seeking feedback on setting benchmark fees from between $3 and $14.
The CFPB estimates that current fees are around $35, so this would be a significant shift to any programs currently offered by covered financial institutions. There are also some major shifts in how overdraft products are treated under Regulation Z and E.
Comments on the overdraft fee NPRM (PDF) are due on or before April 1.
It’s expected President Joe Biden will address fees in his State of the Union speech on March 7.
ACA continues to advocate with regulators and Congress that the term “junk fee” does not have a legal definition and shouldn’t be used to classify all fees in the debt collection and financial services industries.
ACA is reviewing the comprehensive proposal on overdraft fees and the NSF fees proposal to determine any impact on the debt collection industry.
To follow ACA’s advocacy work on these issues and more, make sure you’re subscribed to ACA Daily and registered for the free, members-only ACA Huddle held Wednesdays at 11 a.m. CST, featuring real-time updates on regulatory, federal/state advocacy, and compliance issues discussed by industry experts.
Remember, subscribe to ACA Daily and Member Alerts under your My ACA profile when logged in to acainternational.org to receive updates on the ACA Huddle.