New York Financial Dept. Announces Guidance on Fees

New York guidanceThe New York guidance informs all regulated depository institutions of the need to avoid certain practices related to fees.

07/15/2022 1:00 P.M.

1.5 minute read

New York State Department of Financial Services (DFS) Superintendent Adrienne A. Harris recently announced new DFS Guidance for New York-regulated banking institutions. The guidance aims to promote financial inclusion by prohibiting unfair and deceptive overdraft and non-sufficient funds (NSF) fee practices, according to a news release.

The guidance continues the department’s commitment to making affordable banking products and services available to underserved communities, including low- and moderate-income individuals, immigrants and people of color.

Specifically, the guidance informs all regulated depository institutions of the need to avoid the following practices, according to the news release.

  • Authorize Positive, Settle Negative Transactions: Charging consumers an overdraft fee even though the consumer had a positive account balance sufficient to cover the transaction when it was authorized by the institution.
  • Double Fees Arising from Futile Overdraft Protection Transfers: Charging a fee to consumers for an “overdraft protection” transfer from a consumer’s other account that is of an insufficient amount to avoid an overdraft, resulting in the consumer being charged both an overdraft fee as well as a fee for the “overdraft protection” transfer.
  • Representment Fees: Charging a consumer more than one NSF fee for the same declined transaction, without adequate disclosures, where the merchant re-presents the same transaction to the banking institution in a second or third attempt to collect funds.

In accordance with the department’s approach to data-driven policymaking, the guidance was developed after extensive evaluation and analysis of supervisory examination findings across regulated institutions and engagement with key stakeholders, according to the news release.

It also follows April’s guidance encouraging state-regulated banks to offer “Bank On” certified accounts to fulfill the state’s affordable banking requirements.

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