Gov. Hochul Proposes Regulations To Protect Consumers Against Overdraft Fees

Kathy Hochul

Governor Kathy Hochul is proposing regulations that would protect consumers against overdraft fees.

The State Department of Financial Services posted the regulations that would ensure consumers will no longer be burdened with overdraft fees for minor transactions and require banks to provide timely notifications to consumers about overdraft fees to improve transparency.

The proposed regulations eliminate the most exploitative and deceptive banking fees, cap overdraft fees, strengthen customer communications, and establish stricter transaction processing requirements. State-chartered banks would be prohibited from:

Charging overdraft fees on overdrafts of less than $20.
Charging overdraft fees that exceed the overdrawn amount.
Charging more than three overdraft or non-sufficient funds (“NSF”) fees per consumer account per day.
Charging NSF fees for instantaneously declined electronic transactions.
Charging multiple NSF or overdraft fees for the same transaction, including when a merchant resubmits a declined transaction.
Charging a “sustained,” “continuous,” or “daily” fee for each day an overdraft balance is not repaid.
Charging double fees to cover an overdraft, such as one fee for automatically transferring funds from another account and a second fee for the overdraft itself.
Processing electronic debit transactions in a manner intended to maximize the number of overdraft and NSF fees.
Charging an overdraft fee for an electronic transaction when the consumer’s account indicates sufficient funds at the time the transaction was initiated.