The New York State Department of Financial Services today proposed new restrictions on overdraft and non-sufficient funds fees for state-chartered banks, including banning fees for overdraft amounts of less than $20.
According to a summary of the proposal, changes would include prohibitions on overdraft fees that exceed the overdraft amount, charging more than three overdraft or NSF fees per consumer account per day, charging NSF fees for instantaneously declined electronic transactions, and charging multiple NSF or overdraft fees for the same transaction, including when a merchant resubmits a declined transaction. The regulation would also prohibit charging an overdraft fee for an electronic transaction when the consumer’s account indicates sufficient funds at the time the transaction was initiated.
“With hidden fees and unfair practices, it has become increasingly more difficult for hard-working New Yorkers to keep up,” Gov. Kathy Hochul said. “It is time that we hold banks accountable and lighten the burden of high overdraft fees for minor transactions to keep New Yorkers’ hard-earned money in their pockets.”
Some of the state’s proposals mirror rules proposed by the Consumer Financial Protection Bureau under Director Rohit Chopra, such as a proposed ban on charging NSF fees for instantaneously declined electronic transactions. (The CFPB later dropped the proposal.) In the final days of the Biden administration, the bureau released a report encouraging states to review and strengthen their consumer financial laws and regulations.
