On January 14, the CFPB withdrew its proposed rule prohibiting financial institutions from charging nonsufficient funds (NSF) fees on transactions that are “instantaneously or near-instantaneously” declined. NSF fees are charged when consumers attempt transactions that exceed their available account funds.
As previously covered by InfoBytes, the CFPB’s original proposed rule would have prohibited financial institutions from charging certain NSF fees by identifying them as an “abusive” act or practice. Nearly 8,000 comments, from both supporters and detractors, influenced the decision to withdraw the rule, with many highlighting that other NSF fees, such as those for recurring ACH transactions, could also be abusive. The CFPB acknowledged that practices involving NSF fees on other transactions might also be deemed “abusive” but noted these fees were outside the original proposal’s scope. Accordingly, the CFPB withdrew the rulemaking to “determine whether a broader rulemaking would be appropriate.”
