Nonsufficient Funds (NSF) Fees for Instantaneously Declined Transactions
When a consumer’s attempted withdrawal, debit, payment, or transfer transaction amount exceeds the available funds in their account, currently, a financial institution might decline the transaction and charge the consumer a fee, often called a nonsufficient funds (NSF) fee.
The proposed rule would prohibit NSF fees on transactions that are declined instantaneously or near-instantaneously—that is, those declined with no significant perceptible delay after the consumer initiates the transaction. This prohibition would cover transactions involving the use of debit cards, ATMs, or certain person-to-person apps. The proposed rule would declare that charging such fees would constitute an abusive practice under the Consumer Financial Protection Act.
The proposed rule, borrowing the term “covered financial institutions” as defined by Regulation E, would cover financial institutions of any size and depositories as well as non-depositories.