CFPB proposal would prohibit NSF fees on transactions declined in real time

The CFPB proposed a rule Wednesday that would consider non-sufficient funds (NSF) fees for transactions declined in real time to be unlawful under the Consumer Financial Protection Act.  The proposal would prohibit financial institutions from engaging in this practice across all instantaneously declined transactions, regardless of transaction method, including declined debit card purchases, ATM withdrawals, and some declined peer-to-peer payments.

“The CFPB is once again stretching its UDAAP authority beyond Congressional intent and is trying to publicize an uncommon practice under the guise of yet another misleading ‘junk fees’ proposal that will ultimately foster resentment between the consumer and their financial institution,” said America’s Credit Unions President/CEO Jim Nussle. “While the Bureau continues to confuse activity for progress, America’s Credit Unions will always stand beside our members to ensure regulatory overreach is addressed because at the end of the day, they know their community best.” 

Financial institutions “almost never charge fees for transactions that are declined in real time at the swipe, tap, or click,” the CFPB noted, adding that the proposal is a “proactive step to ensure financial institutions do not impose them.”

Comments on the proposal are due March 24.

America’s Credit Unions has a summary of the proposal here and will continue to engage with CFPB to push back against restrictions on regulated products and services consumers opt into. 

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