The New York Department of Financial Services (NYDFS) recently issued an Industry Letter to its regulated depository institutions (Institutions), informing them that in future Consumer Compliance and Fair Lending examinations, NYDFS will review whether Institutions are engaged in potentially unfair or deceptive practices with respect to overdraft or non-sufficient funds (NSF) fees.
NYDFS specifically discussed a number of fees and practices the NYDFS expects Institutions to discontinue, including:
- Charging overdraft fees to consumers on debit card transactions where the consumer had a sufficient positive balance when the transaction was authorized, even if the consumer did not have sufficient funds to cover the debit card transaction when it later posted to the account;
- Charging fees for overdraft protection transfers where the amount transferred is insufficient to prevent the actual overdraft; and
- Charging multiple NSF fees in connection with retried transactions (that is, transactions that were previously rejected for insufficient funds and are subsequently presented again to the Institution for payment).