FDIC issues guidance on multiple re-presentment NSF fees (2023)

The FDIC has issued new supervisory guidance (FIL-40-2022) on multiple non-sufficient funds (NSF) fees arising from the re-presentment of the same unpaid transaction. The guidance directly applies only to state-chartered banks and thrifts that are not members of the Federal Reserve System. National banks and federal thrifts are supervised by the Office of the Comptroller of the Currency (OCC) and state-chartered banks that are members of the Federal Reserve System are supervised by the Federal Reserve Board (FRB). The CFPB has supervisory authority for compliance with Federal consumer financial laws (which includes the Dodd-Frank UDAAP prohibition) over all banks and thrifts with $10 billion or more in total assets.

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The guidance follows the FDIC’s identification during consumer compliance examinations of UDAP violations in connection with banks’ re-presentment practices (as discussed in the March 2022 edition of its Consumer Compliance Supervisory Highlights). In the guidance, the FDIC addresses potential risks arising from multiple re-presentment NSF fees, risk mitigation practices, and the FDIC’s supervisory approach.

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Potential risks. The FDIC discusses the following three categories of risk:

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  • Consumer compliance risk.The failure of a financial institution to clearly and conspicuously provide information that adequately advises customers that it assesses multiple NSF fees arising from the same transaction is considered to be deceptive pursuant to Section 5 of the FTC Act. In certain circumstances, a risk of unfairness may also be present if multiple NSF fees are charged for the same transaction in a short period of time without giving customers sufficient notice or opportunity to bring their accounts to a positive balance in order to avoid the assessment of additional NSF fees. The FDIC warns that “while revising disclosures may address the risk of deception, doing so may not fully address the unfairness risks.”
  • Third-party risk. The FDIC highlights the potential risks that can arise from arrangements with third parties, including core processors, that play significant roles in processing payments, identifying and tracking re-presented items, and providing systems that determine when NSF fees are assessed. Institutions (1) are expected to maintain adequate oversight of third-party activities and appropriate quality control over products and services provided through third-party arrangements, and (2) are responsible for identifying and controlling risks arising from third-party relationships to the same extent as if the third-party activity was handled within the institution. The FDIC encourages institutions “to review and understand the risks presented from their core processing systems related to multiple NSF fees, as well as understand the capabilities of their core processing system(s), such as identifying and tracking re-presented items and maintaining data on such transactions.” We understand that many core processors do not have the capability to identify when a presentment is a multiple presentment. While that limitation does not relieve a bank from compliance with the guidance, the FDIC does recognize that software changes require time for implementation and, accordingly, will show some leniency to banks and thrifts that have self-reported a problem and provided a remedial plan to the FDIC before their next compliance examination.
  • Litigation risk. The FDIC notes that financial institutions have faced class action lawsuits alleging breach of contract and other claims, some of which have resulted in substantial settlements, based on the failure to adequately disclose re-presentment NSF fee practices. We have handled and are presently defending several of these types of class actions. Banks and thrifts that are subject to FDIC supervision (and lack a binding arbitration provision with a class action waiver in their deposit account agreements) and are named a defendant in a class action involving re-presentment NSF fee practices need to ensure that any settlement will address both the concerns of the FDIC and the plaintiffs’ attorneys bringing the class action.

Risk mitigation practices. The FDIC lists risk-mitigating activities that financial institutions can take to reduce the risk of consumer harm and avoid potential violations arising from multiple re-presentment NSF fee practices. In addition to eliminating NSF fees or not charging more than one NSF fee for the same transaction, such activities consist of: (1) conducting a comprehensive review of policies, practices, and monitoring activities related to re-presentments and making appropriate changes and clarifications, (2) clearly and conspicuously disclosing the amount of NSF fees and when and how such fees will be imposed, and (3) reviewing customer notification or alert practices related to NSF transactions and the timing of fees to ensure customers have the ability to avoid multiple fees for re-presented items. We are currently assisting several clients in conducting these reviews.

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The FDIC expects institutions that self-identify re-presentment NSF fee issues to: (1) take full corrective action, including providing full restitution consistent with the guidance; (2) promptly correct NSF fee disclosures and account agreements for both existing and new customers, including providing revised disclosures and agreements to all customers, (3) consider whether additional risk mitigation practices are needed to reduce potential unfairness risk, and (4) monitor ongoing activities and customers feedback to endure full and lasting corrective action. These activities should be conducted carefully with consideration given to how they will impact any class actions in which the bank is a defendant.

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FDIC’s supervisory approach. The FDIC advises that it “will recognize an institution’s proactive efforts to self-identify and correct violations.” More specifically, its examiners will generally not cite UDAP violations that have been identified and fully corrected before the start of a consumer compliance examination. In determining the scope of restitution, the FDIC will consider an institution’s record-keeping practices and any challenges it may have in retrieving, reviewing, and analyzing re-presentment data, on a case-by-case basis, when evaluating the time period used for customer remediation. The FDIC notes that it has accepted a two-year lookback period for restitution in cases where an institution was unable to reasonably access accurate ACH data for re-presented transactions beyond two years. It advises that if an institution with challenges in readily accessing accurate ACH data self-corrects this issue and provides restitution to harmed customers for transactions occurring two years before the date of the guidance (August 18, 2022), the institution will generally be considered to have made full corrective action. The FDIC warns, however, that (1) it will not consider full corrective action to have been taken if an institution fails to provide restitution for harmed customers when data on re-presentment is reasonably available, and (2) if examiners identify violations arising from re-presentment NSF fee practices that have not been self-identified and fully corrected prior to an examination, the FDIC will evaluate appropriate supervisory or enforcement actions, including civil money penalties and restitution.

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Neither the OCC, the FRB, nor the CFPB have taken a formal public position on the issue of re-presentment NSF fees. However, the federal prudential regulators and the CFPB generally take consistent positions with respect to consumer compliance issues (and Acting Comptroller Hsu and CFPB Director Chopra are current members of the FDIC Board of Directors), and the OCC, FRB, and CFPB have already made overdraft practices a focus of concern. Accordingly, we expect these agencies will soon take a similar position on re-presentment NSF fees in guidance or otherwise.

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Overdraft and NSF fees also continue to be a focus of state regulators. In July 2022, the New York State Department of Financial Services issued an Industry Letter providing guidance on overdraft and NSF fees to depository institutions that it supervises. In March 2021, the Division of Banks of the Massachusetts Office of Consumer Affairs and Business Regulation issued a supervisory alert to warn financial institutions of the potential legal and regulatory risks arising from NSF fees charged on the re-presentment of unpaid transactions.

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How many times can an NSF check be presented? ›

Generally, a bank may attempt to deposit the check two or three times when there are insufficient funds in your account. However, there are no laws that determine how many times a check may be resubmitted, and there is no guarantee that the check will be resubmitted at all.

Can a bank charge multiple NSF fees? ›

Some financial institutions charge additional NSF fees for the same transaction when a merchant re-presents a check or ACH transaction on more than one occasion after the initial unpaid transaction was declined.

How many times can a bank charge NSF fees? ›

Every bank and credit union has its own limit on the number of overdraft fees it will charge in one day. You can commonly expect banks to charge a maximum of 4 to 6 overdraft fees per day per account, though a few outliers do allow as many as 12 in one day.

What is the maximum NSF fee by state? ›

State Allowed NSF Fees
21 more rows

Can a bounced check be resubmitted? ›

When you cash or deposit a check and there's not enough funds to cover it in the account it's drawn on, this is also considered non-sufficient funds (NSF). When a check is returned for NSF in this manner, the check is generally returned back to you. This allows you to redeposit the check at a later time, if available.

Can you submit multiple proposals to NSF? ›

Only one submission should be provided to NSF even if review by multiple programs is envisioned. Proposers may indicate on the Cover Sheet which NSF organizational unit(s) they believe would be most appropriate for proposal review. However, NSF will determine which program will evaluate each proposal.

How do banks justify NSF fees? ›

You may be charged an NSF fee if you don't have enough funds available to cover a transaction. A common example is if you have a monthly pre-authorized bill and forget to deposit money into your account to cover the charge. Or you write a cheque and the recipient doesn't cash your cheque immediately.

How do I fight NSF fees? ›

Six Ways to Avoid NSF Fees
  1. Track Your Expenses. One of the best ways to avoid NSF fees is to stay on top of your expenses. ...
  2. Monitor Your Checking Account Regularly. ...
  3. Link Your Checking Account to a Savings Account. ...
  4. Keep Extra Funds in Your Account. ...
  5. Set Up Bank Account Alerts. ...
  6. Switch Banks.
Jun 22, 2021

How many fees will you be charged for an NSF check? ›

How much do NSF fees cost? The average NSF fee is $26.58, which is the lowest since 2004 when the average was $25.81, according to Bankrate's 2022 checking account and ATM fee study. While NSF fees are generally on the decline, it's worth noting that they're still commonly charged.

What is a retry NSF fee? ›

Retry NSF Fee(s means NSF Fees that were charged and not refunded for Automated Clearing House (ACH) and check transactions that were re-submitted by a merchant after being returned by Defendant for insufficient funds.

How many times can Chase charge overdraft fees? ›

What it costs. We charge a $34 Insufficient Funds Fee per transaction during our nightly processing beginning with the first transaction that overdraws your account balance by more than $50 (maximum of 3 fees per business day, up to $102).

How many times do you get charged an overdraft fee Wells Fargo? ›

6. Our overdraft fee for Consumer checking accounts is $35 per item (whether the overdraft is by check, ATM withdrawal, debit card transaction, or other electronic means), and we charge no more than three overdraft fees per business day.

What is the maximum you can charge for a returned check? ›

Many states allow merchants to charge customers up to $40 for the work of handling a bad check; $30 is most common. Add that to the typical nonsufficient funds fee, and you're looking at $65 for one transaction. Utility companies and landlords may charge a similar bounced check fee.

What is the maximum fee for a returned check? ›

The cost of a returned check

On average, a returned check fee (or NSF fee) can range anywhere from $10 to $50, although several big banks like Wells Fargo, Bank of America, Citibank and Capital One have made changes to their returned item policies, some fully eliminating this fee altogether.

What banks have eliminated NSF fees? ›

More recently, various big banks, online banks and credit unions have announced plans to lower overdraft fees or cut them entirely.
  • Alliant Credit Union. Alliant Credit Union stopped charging overdraft and NSF fees in 2021. ...
  • Ally Bank. ...
  • Bank of America. ...
  • BMO Harris. ...
  • Capital One. ...
  • Citibank. ...
  • Citizens Bank. ...
  • KeyBank.
Aug 11, 2022

Can you reprocess a returned check? ›

If you now have the correct amount of money in your account, you can ask the recipient to redeposit the check. A returned check can be deposited again, but generally only once. Pay your fees: After making good on the payment, you'll want to pay the fees coming from your bank or credit union.

How long do you have to redeposit a bounced check? ›

There's no hard and fast rule about how many times a returned check can be redeposited, but, generally, banks might try redepositing the check twice after a failed attempt. Again, however, you might have to wait a day or two for the funds to become available, and there is a chance that the check will bounce again.

Can a check still bounce after it clears? ›

How can a check clear and then bounce? If a bank doesn't see any red flags that a check might bounce, they may go ahead and transfer funds into the payee's account. However, it may turn out during their processing that funds weren't available from the payer, so then the check bounces.

Can I resubmit an NSF proposal? ›

Resubmission. A declined proposal may be resubmitted, but only after it has undergone substantial revision.

How many NSF Grants can you have? ›

There is the standard limit by NSF, which is one PI and up to four co-PIs that is a function of how many can be listed on the proposal cover page. There is no limit on the number of Other Senior Personnel per proposal.

Can you reapply to NSF? ›

If you decline the Fellowship by the May 1 deadline, you may reapply for the Fellowship in subsequent competitions, providing you continue to meet the eligibility criteria detailed in the Program Solicitation. If you do not respond by the deadline, you are ineligible to re-apply to future GRFP Competitions.

Will there be any not sufficient funds NSF charges? ›

Yes. Banks and credit unions may charge a fee if there are insufficient funds to cover a transaction.

Why is my NSF fee so high? ›

NSF Fees: Overview

As banking becomes more automated and digital transactions continue to increase, it may become more likely that a customer mistimes a deposit, is hit with an unexpected bill or runs their debit card one too many times, leading to a pricey “NSF fee” on their overdrawn account.

How do I get multiple overdraft fees waived? ›

Some banks may refund an overdraft fee after you contact customer service and explain your situation, especially if you've been a loyal customer and rarely overdraw your account. Other banks might have a formal program that either waives or helps you avoid overdraft fees.

Can you get back NSF fees reversed? ›

Fortunately, you can get an overdraft fee refund - and NSF, late payment, and bank fees are often refundable, too. All you need to do is ask the bank and hope you get a service agent who can help.

How do I ask for a fee to be waived? ›

When negotiating a fee waiver, it's important to be specific and straightforward. Call the bank, mention the fee you incurred and say you would like to have it waived by the bank. If the bank isn't immediately open to helping you, try to show you're a valuable customer.

What happens when a check bounces due to insufficient funds? ›

If you wrote a check that bounced, your bank may charge you a nonsufficient funds fee or overdraft fee. In addition, the company you were trying to pay may charge you a late fee if the bounced check means your payment is now overdue. Failure to pay outstanding fees can result in your account being sent to collections.

Do you add or subtract NSF checks? ›

NSF (not sufficient funds) checks.

When this happens, the bank returns the check to the depositor and deducts the check amount from the depositor's account Therefore, NSF checks must be subtracted from the company's book balance on the bank reconciliation.

What happens if I deposit a check twice by mistake? ›

If you accidentally deposit a check twice, the bank will remove the duplicate transaction.

Can I appeal an NSF charge? ›

In some cases, banks can indeed reverse NSF charges. The most important thing in this process is acting quickly—as soon as you've found out about the charge. First, fix your account's deficit as soon as you notice it. Then, call the bank and request that the NSF charge is waived.

How many overdraft fees can be charged in a month? ›

. Also, banks cannot charge overdraft fees that are excessive or expensive; the fees must be “reasonable” and are limited in the number of times they can be charged. This means no more than one overdraft coverage fee per month and six per year, per account, by the terms of the proposed bank overdraft fees law.

How many times can Chase waive overdraft fees? ›

Times You Don't Have to Worry About Overdraft Fees

This means Chase will not cover you more than three times per day in overdraft fees. Asides from checks and recurring payments, Chase will not start the service when you're low on money.

Why won t Chase let me overdraft anymore? ›

To help prevent overdrafts, turn off Debit Card Coverage and we won't approve these types of transactions if you don't have enough money in your account. If Debit Card Coverage is turned on, we may pay the overdraft transaction and charge you the $34 Insufficient Funds Fee.

Can Wells Fargo charge multiple overdraft fees? ›

We charge no more than three overdraft fees per business day for Consumer accounts and four overdraft fees per business day for Business accounts. Overdraft fees are not applicable to Clear Access BankingSM accounts.

Is Wells Fargo going to stop overdraft fees? ›

Wells Fargo will also eliminate its overdraft protection fees and give customers a 24-hour grace period to cover an overdraft before they incur a fee.

Do you get an overdraft fee for every transaction? ›

Overdraft fees occur when you don't have enough money in your account to cover your transactions. The cost for overdraft fees varies by bank, but they may cost around $35 per transaction. These fees can add up quickly and can have ripple effects that are costly.

What happens if you submit a check twice? ›

If you accidentally double deposit a check, once the bank finds out, the money from your second deposit will be deducted from your account. If you don't have enough to cover the deduction, and it appears you are knowingly committing fraud, that's when legal or other problems could start.

Can you run a check twice? ›

Depositing the same check twice is called “double presentment.” If done intentionally, double presentment is considered a form of check fraud that could lead to state or federal penalties. Penalties depend on whether check fraud is considered a misdemeanor or a felony in your state.

Will a check go through with insufficient funds? ›

When payment cannot be completed it is often considered as “bounced." If a bank receives a check written on an account with insufficient funds, the bank can refuse payment and charge the account holder an NSF fee. Additionally, a penalty or fee may be charged by the merchant for the returned check.

Who is liable for a check cashed twice? ›

Under the Check 21 Act, the bank that creates the “substitute check” — the bank that allowed its customer access to the mobile check cashing app — is the bank that bears responsibility for any loss from the twice-cashed check.

What does duplicate presentment mean on a check? ›

As remote deposit capture grows in popularity among consumers, not just businesses, the most common form of RDC fraud is "duplicate presentment," where the check is deposited via mobile device, then the paper check is deposited in a different bank as well. [

What happens if a check bounces 3 times? ›

The offender may be slapped with a huge bounced-cheque fee or even a prison term. The bank may stop the cheque book facility or even close your account. Although the Reserve Bank of India states that such action can be taken only if cheques, valued Rs 1 crore or above, have bounced more than four times.

What should you do if a check you received is returned for insufficient funds? ›

If your bank credited your account for a check that was later returned unpaid for insufficient funds, the bank can reverse the funds and may charge a fee. As the payee, you must pursue the maker of the check if you wish to seek reimbursement.

What happens if you write a check and don't have enough money in your checking account to cover it? ›

If the Payee Cashes the Check

You'll need to have 100% of the money required available in your account for the check to be cashed. If you're short on funds, the request to cash the check will be denied, and you'll owe fees to your bank. Plus, the payee may have the right to charge you additional fees.

How can the same check be cashed twice? ›

A duplicate deposit occurs when a someone deposits the same check twice, or deposits it and then also attempts to cash it. This is typically done by first depositing an image of the the check electronically, then attempting to deposit or cash the original paper check separately.

How long does a bank have to return a duplicate check? ›

How long must a bank keep canceled checks / check records / copies of checks? Generally, if a bank does not return canceled checks to its customers, it must either retain the canceled checks, or a copy or reproduction of the checks, for five years.

How many checks can I cash in a day? ›

There is no limit on how many checks you can bring in in one day. Q: Can my employees cash their payroll checks written off of my business account?

How do I know if a check has sufficient funds? ›

To verify a check, you need to contact the bank that the money is coming from.
  1. Find the bank name on the front of the check.
  2. Search for the bank online and visit the bank's official site to get a phone number for customer service. ...
  3. Tell the customer service representative that you'd like to verify a check you received.
Feb 20, 2022

What happens with non sufficient funds? ›

Non-sufficient funds, or insufficient funds, is a banking term used to indicate that the checking account does not have sufficient balance to cover a transaction or payment. Having a non-sufficient funds situation can lead to penalties, a bad impact on one's credit score, and a criminal liability.


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