CFPB proposal on non-sufficient-funds fees would distort market: ICBA

A new Consumer Financial Protection Bureau proposed rule to restrict the use of non-sufficient-funds fees is another example of the bureau imposing arbitrary price controls that would distort market discipline, ICBA said.

CFPB Proposal: The bureau’s proposed rule would bar banks from charging NSF fees for transactions that are declined in real time, deeming them unlawful under the Consumer Financial Protection Act. This would include declined debit card purchases, ATM withdrawals, and some peer-to-peer payments.

ICBA Response: In a national news release, ICBA said the proposal would have a negative ripple effect on customers and businesses, undermining the CFPB’s mission. ICBA also reiterated its call for the bureau to conduct a Small Business Regulatory Enforcement Fairness Act review before proceeding with the rulemaking, as it and other groups requested earlier this month.

Overdraft Proposal: The NSF proposed rule follows last week’s CFPB proposal to establish new standards on overdraft services. Following that release, ICBA said policymakers should cautiously consider the impact of restrictions on deposit account fees and advocated tiered regulation for community banks over $10 billion in assets given the proposal’s exemption for banks under that asset threshold.

Ongoing Advocacy: The new proposals are the latest in the Biden administration’s campaign against “junk fees,” which ICBA again rejected as a mischaracterization. ICBA has repeatedly pushed back against the campaign, noting the “junk fee” narrative mischaracterizes overdraft services and credit card late fees.

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