On January 14, 2025, the CFPB published in the Federal Register a withdrawal from its proposed rule to prohibit banks and other financial institutions from charging certain nonsufficient funds (NSF) fees, such as those for declined debit card purchases, Automated Teller Machine (ATM) withdrawals, and some person-to-person payments. The CFPB said that it will determine whether a more comprehensive approach to also prohibit NSF fees charged for additional types of transactions will better protect consumers from potentially unlawful fees.
On January 24, 2024, the CFPB proposed the rule to block banks and other financial institutions from charging fees, such as nonsufficient funds fees, when consumers initiate payment transactions that are instantaneously declined. However, some comments noted that NSF fees for transactions not covered by the rule can be unfair, especially for regular ACH transactions, which are more common now than fees for instant payments. Upon further consideration, the CFPB has reason to believe that practices involving the charging of NSF fees on other types of transactions may also be abusive for reasons similar to those discussed in the proposal. As a result, the CFPB has decided to withdraw the rulemaking and to consider whether consumers similarly lack understanding of other NSF fees to determine whether a broader rulemaking would be appropriate.
The Notice can be found here.