The lawsuit claims the guidance is outside of the FDIC’s statutory authority.
07/25/2023 10:30 A.M.
1 minute read
The Minnesota Bankers Association (MBA) has sued the Federal Deposit Insurance Corporation (FDIC) for guidance that it says exceeds the agency’s statutory authority.
The guidance is the Financial Institutions Letter 40-2022: Supervisory Guidance on Multiple Re-Presentment NSF Fees the FDIC issued in August 2022.
It “encourages banks to refrain from charging multiple ‘non-sufficient funds’ fees for the same unpaid transaction,” according to an article in Bloomberg Law.
The MBA seeks declaratory and injunctive relief under judicial review provisions of the Administrative Procedure Act, according to the complaint filed in the U.S. District Court for the District of Minnesota.
Despite being classified as “supervisory guidance,” the MBA asserts it is a legislative rule promulgated without adherence to essential administrative procedures and states it is an “arbitrary and capricious” action that goes beyond the FDIC’s statutory authority.
The guidance was issued to more than 5,000 financial institutions under direct supervision of the FDIC, requiring them to retroactively evaluate practices for “risks” related to the non-sufficient funds fees on the same unpaid transaction, according to the MBA’s complaint.
It further argues MBA members that charged the fees could be subject to increased compliance costs and possible enforcement actions.
According to ACA International member company Barron & Newburger, the MBA’s case is important for the accounts receivable management industry to watch. “The plaintiffs’ arguments would apply equally to multiple documents issued by the CFPB under its current director,” it reports.