League Comments on CFPB's Move to Ban NSF Fees on Real-Time Payments

The Consumer Finance Protection Bureau yesterdayday proposed what it characterized as a “proactive step” to prevent financial institutions from charging fees for transactions that are instantaneously declined. The proposed rule would prevent financial institutions from charging nonsufficient funds fees or other fees for ATM withdrawals, debit card purchases, peer-to-peer payments or other transactions that are declined “instantaneously or near-instantaneously.” The agency claimed that charging the fees represents an abusive practice under the Consumer Financial Protection Act’s prohibition on unfair, deceptive, or abusive acts or practices.

"CFPB continues to target legitimate fees that enable not-for-profit credit unions to cover the costs of doing business as they serve their members under the guise of consumer protection. We will vigorously oppose measures like this NSF fee ban, as well as the Bureau’s recent proposal on overdraft programs because both threaten our ability to operate in a free market system," said League President/CEO Carrie Hunt. "The League strongly supports consumer protection, and we remain a trusted, consumer-friendly banking alternative, but CFPB is undermining our ability to remain competitive and relevant in a marketplace dominated by for-profit banks. These proposals inject a dangerous level of risk into the equation for credit unions, leaving us no good options to offset fraud losses, charge-offs, and business-related costs."

"We continue to sound the alarm because the stakes are so high in these various fights on both the legislative and regulatory fronts," said Hunt. "While your League remains active and engaged on these issues, it’s critically important that credit unions are, as well. With pending action by the Federal Reserve Board on debit card interchange fees, an ongoing legislative battle on credit card interchange fees, and CFPB’s recent proposals, every credit union needs to understand that their engagement on the advocacy front has never been more important."

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