CFPB must initiate SBREFA review before overdraft, NSF proposals

The CFPB must initiate a Small Business Regulatory Enforcement Fairness Act (SBREFA) review of any potential overdraft and non-sufficient funds (NSF) proposed rules, America’s Credit Unions and other financial services trades wrote to CFPB Director Rohit Chopra Wednesday.

The CFPB’s most recent rulemaking agenda indicates it expects to issue proposals to regulate NSF fees under its unfair, deceptive, or abusive practices authority; and to define overdraft fees as credit under the Truth in Lending Act.

In the letter to Chopra, the trades noted the “significant economic impact” of such proposed rules on financial institutions with $850 million in assets or less requires a SBREFA review process to ensure final rules minimize costs and burdens on small businesses while promoting access to credit.

“If the Bureau intends to use its authority to regulate unfair, deceptive or abusive acts and practices to prohibit charging NSF fees under certain circumstances, that prohibition will apply to all banks and credit unions, regardless of asset size,” the trades argued, adding any similar rule subjecting overdraft fees to Regulation Z would also impact all overdraft services at financial institutions.

The CFPB recently released a report on overdraft and NSF fees; America’s Credit Unions will continue to monitor the bureau’s actions on legal, regulated fees and advocate for the credit union industry in any rulemaking efforts.

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