By: R. Matthew Waters, Financial Institution Specialist
On March 31, 2022, the FDIC issued its Consumer Compliance Supervisory Highlights which covered the five most frequently cited Level 2 and Level 3 violations, examination observations, regulatory developments, and consumer complaint trends. A notable concern in the supervisory highlights was the re-presentment of unpaid transactions.
Financial institutions are increasingly being scrutinized for charging multiple non-sufficient funds (NSF) fees on the same item without clearly disclosing the effects of multiple presentments. Further, some institutions provide on initial disclosures that one NSF fee will be charged “per item” or “per transaction” but do not clearly define those terms. The FDIC states that “there is risk of unfairness if multiple fees are assessed for the same transaction in a short period of time without sufficient notice or opportunity for consumers to bring their account to a positive balance.”
The FDIC also issued a number of risk-mitigating activities that financial institutions have employed including eliminating NSF fees altogether, charging only one NSF fee for the same transaction, and disclosing all conditions in which an NSF fee may be assessed. It is recommended that institutions review their account agreements and consider changes to enhance the explanations of how overdraft and NSF fees are assessed.
Your account agreement vendor may already have an enhanced account agreement that provides the additional information needed. Vendors generally offer several account agreement updates during the year as a result of litigation within the financial institution industry. Any updates to account agreements must be sent to current account holders to inform them of the changes. Simply providing the updated account agreement to new account holders going forward is insufficient.
To see the full article, click the following link: Consumer Compliance Supervisory Highlights (fdic.gov)
On March 31, 2022, the FDIC issued its Consumer Compliance Supervisory Highlights which covered the five most frequently cited Level 2 and Level 3 violations, examination observations, regulatory developments, and consumer complaint trends. A notable concern in the supervisory highlights was the re-presentment of unpaid transactions.
Financial institutions are increasingly being scrutinized for charging multiple non-sufficient funds (NSF) fees on the same item without clearly disclosing the effects of multiple presentments. Further, some institutions provide on initial disclosures that one NSF fee will be charged “per item” or “per transaction” but do not clearly define those terms. The FDIC states that “there is risk of unfairness if multiple fees are assessed for the same transaction in a short period of time without sufficient notice or opportunity for consumers to bring their account to a positive balance.”
The FDIC also issued a number of risk-mitigating activities that financial institutions have employed including eliminating NSF fees altogether, charging only one NSF fee for the same transaction, and disclosing all conditions in which an NSF fee may be assessed. It is recommended that institutions review their account agreements and consider changes to enhance the explanations of how overdraft and NSF fees are assessed.
Your account agreement vendor may already have an enhanced account agreement that provides the additional information needed. Vendors generally offer several account agreement updates during the year as a result of litigation within the financial institution industry. Any updates to account agreements must be sent to current account holders to inform them of the changes. Simply providing the updated account agreement to new account holders going forward is insufficient.
To see the full article, click the following link: Consumer Compliance Supervisory Highlights (fdic.gov)
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