Regarding the FDIC’s “Supervisory Guidance on Multiple Re-Presentment NSF Fees,” how will the FDIC determine whether our disclosures regarding multiple re-presentment non-sufficient funds (NSF) fees are adequate?

The FDIC’s supervisory guidance regarding disclosures of NSF fees for re-presented transactions focuses on ensuring that they are clear and conspicuous. The guidance suggests that clear and conspicuous disclosures would address the amount of NSF fees and when and how the fees would be imposed, including the following information: “(1) Information on whether multiple fees may be assessed in connection with a single transaction when a merchant submits the same transaction multiple times for payment; (2) The frequency with which such fees can be assessed; and (3) The maximum number of fees that can be assessed in connection with a single transaction.”

We recommend following the FDIC’s suggestion of a “comprehensive review” of your disclosures to ensure that they cover all three of the specific items mentioned above. Your review also should ensure that your disclosures are clear and conspicuous overall (for example, we might suggest reviewing the wording of your disclosures to ensure that NSF fees cannot be confused with other similar fees, such as overdraft fees).

Note that the FDIC’s guidance suggests reviewing your practices as well as your disclosures. Revised disclosures “may address the risk of deception” but “may not fully address the unfairness risks,” which may arise “if multiple NSF fees are assessed for the same transaction in a short period of time without sufficient notice or opportunity for customers to bring their account to a positive balance in order to avoid the assessment of additional NSF fees.”

For resources related to our guidance, please see:

FDIC FIL-40-2022, Supervisory Guidance on Multiple Re-Presentment NSF Fees, pages 2–3 (August 18, 2022) (“Institutions are encouraged to review their practices and disclosures regarding the charging of NSF fees for re-presented transactions. The FDIC has observed various risk-mitigating activities that financial institutions have taken to reduce the potential risk of consumer harm and avoid potential violations of law regarding multiple re-presentment NSF fee practices. These include: . . . Conducting a comprehensive review of policies, practices, and monitoring activities related to re-presentments and making appropriate changes and clarifications, including providing revised disclosures to all existing and new customers. . . . Clearly and conspicuously disclosing the amount of NSF fees to customers and when and how such fees will be imposed, including:

Information on whether multiple fees may be assessed in connection with a single transaction when a merchant submits the same transaction multiple times for payment;

The frequency with which such fees can be assessed; and

The maximum number of fees that can be assessed in connection with a single transaction.”)

FDIC FIL-40-2022, Supervisory Guidance on Multiple Re-Presentment NSF Fees, page 2 (August 18, 2022) (“In particular, a risk of unfairness may be present if multiple NSF fees are assessed for the same transaction in a short period of time without sufficient notice or opportunity for customers to bring their account to a positive balance in order to avoid the assessment of additional NSF fees. While revising disclosures may address the risk of deception, doing so may not fully address the unfairness risks.”)