NCUA’s latest letter to credit unions outlines the agency’s supervisory approach to overdraft and non-sufficient funds (NSF) fee practices. Despite overdraft and NSF products being heavily regulated and demanded by credit union members, the letter claims overdraft and NSF fees can cause harm to consumers. 

America’s Credit Unions has provided data to Congress, the NCUA, and other regulators showing credit unions offer overdraft programs in a responsible manner. In addition, America’s Credit Unions notes credit union fee income in 2024 is at a 32-year low. 

“NCUA’s latest letter continues the agency’s out-of-touch efforts to push credit unions into abandoning a product that members depend on to make ends meet,” said America’s Credit Unions Chief Advocacy Officer Carrie Hunt. “This letter, following NCUA’s efforts to collect and publish credit union overdraft, is an effort to shame credit unions that are meeting members’ needs, which we find to be very inappropriate coming from a regulator.”

Harper notes in the letter the NCUA “will continue to review overdraft programs to ensure credit unions are effectively managing the heightened risk of certain fee practices and will expect credit unions to properly mitigate such risks, including by ceasing unanticipated fee practices.”

He adds the NCUA will also recognize proactive efforts to self-identify and correct violations, and that “examiners will generally not cite and the NCUA will generally not pursue enforcement action under the Federal Trade Commission (FTC) Act nor the Consumer Financial Protection Act (CFPA) for violations that have been self-identified and fully corrected prior to the start of an examination.”

NCUA encourages credit unions to review their overdraft and NSF program practices to ensure compliance with Section 5 of the FTC Act, Sections 1031 and 1036 of the CFPA, and other applicable laws and regulations. 

Read the full letter here.