Fees on the Decline

If there’s one theme to tie together what we’ve been hearing and seeing coming out of D.C. relating to banks, it’s consumer protection. Whether it’s the increased emphasis on Fair Lending, proposed rules in this area or the ongoing campaign against fees.

As to this latest item, the CFPB is at it again, this time calling attention to non-sufficient fund (NSF) fees. In a recent publication the bureau praised large banks which either do not charge or have publicly announced the elimination of NSF fees on checking accounts. It has been estimated that these actions taken by these large banks will save consumers around $1 billion.

The CFPB’s major complaint about NSF fees appears to be that, at least in their view, consumers receive no service at all in exchange for this fee. They further state that NSF fees increase financial distress for consumers, who may also be hit by merchants’ fees for this non-sufficient fund payment attempt. According to the CFPB, NSF fees nationwide average around $34 each, despite the costs to return payments being significantly lower. All told, banks with assets exceeding $1 billion, reported an aggregate of $8.8 billion charged in overdraft/NSF fees. This recent publication further indicated that the CFPB is closely investigating to determine whether charging these fees may be unlawful, and in which situations.

This posting from the CFPB notes that their work on overdraft/NSF fees is part of the larger initiative to save consumers billions of dollars by promoting competition and reducing what the CFPB refers to as, “junk fees.”  Be sure to check out the featured article in our March Access Magazine for a more detailed discussion of junk fees and what the CFPB is proposing to do about them.

Now may be the time to evaluate which fees the bank is charging and in which circumstances they’re being charged, to be proactive and get ahead of potential regulatory changes. Industry-wide there seems to be a movement to reduce these types of fees where they’re not being eliminated altogether, such as decreasing from $35 to $25, $15, or even $5 (as we’ve heard anecdotally).

Although increases in fees for deposit accounts require advance notice before the changes are effective: 21 days under Regulation E and 30 days under Regulation DD, you’re not required to give notice to your customers when fees decrease. You may give notice to your customers in the instance of fees being reduced, as there is no prohibition in giving a notice when not required in this situation. If you choose to give notice, you may do so however you’d like: a statement message, a separate letter mailed in the same envelope with statement, a separate letter mailed by itself, a notice in online banking, or any other method of communication already authorized by your customer.