We do not believe that there is a maximum returned check fee that a national bank may charge commercial or consumer deposit account customers in Illinois.

Returned Check Fees for Consumer Deposit Accounts

We are not aware of a limit on returned check fees for consumer deposit accounts under Illinois law. The National Bank Act permits a national bank to “charge its customers non-interest charges and fees, including deposit account service charges” and provides that “[t]he establishment of non-interest charges and fees, their amounts, and the method of calculating them are business decisions to be made by each bank, in its discretion, according to sound banking judgment and safe and sound banking principles.” 

We caution that earlier this year, the CFPB requested comments from consumers on “junk fees.” In the request for comment, the CFPB specifically asked about returned check fees, and we expect that the scrutiny of returned check fees and similar charges will continue.

Returned Check Fees for Commercial Deposit Accounts

The Illinois Uniform Commercial Code (UCC) limits returned check fees that a bank may charge a commercial deposit account holder to $4.50 for each dishonor of a deposited check that is returned for insufficient funds or because the drawer does not have an account with the drawee. As a national bank, you likely have a credible argument that the National Bank Act preempts this fee limit for your bank. However, we are not aware of any court case that has confirmed this preemption argument, and you may wish to voluntarily comply with the $4.50 limit for competitive reasons.

The Illinois UCC also limits charges for “bad checks” that are dishonored to $25, but we believe that this limit applies to amounts charged by the payee for collection of the check amount — covering, for example, a retailer’s or lender’s costs in collecting the bad check. We do not believe this limit would apply to a returned check fee charged in connection with a deposit account.

For resources related to our guidance, please see:

• OCC Regulations, 12 CFR 7.4002(a) (“A national bank may charge its customers non-interest charges and fees, including deposit account service charges.”)

• OCC Regulations, 12 CFR 7.4002(b)(2) (“The establishment of non-interest charges and fees, their amounts, and the method of calculating them are business decisions to be made by each bank, in its discretion, according to sound banking judgment and safe and sound banking principles.”)

• Illinois UCC, 810 ILCS 5/3-806 (“A fee or charge not to exceed $4.50 may be assessed to any person or owner of a commercial checking account or other similar commercial account where a check or other draft that is deposited into the account is dishonored upon presentment because of insufficient funds or because the drawer does not have an account with the drawee; provided, however, that, the limitation on the fee or charge specified in this paragraph does not apply to any fee or charge assessed to any bank or other depository institution or to any non-commercial checking account or other similar non-commercial account.”)

• CFPB, Request for Information Regarding Fees Imposed by Providers of Consumer Financial Products or Services, 87 Fed. Reg. 5801, 5803 (February 2, 2022) (“3. What fees exceed the cost to the entity that the fee purports to cover? For example, is the amount charged for NSF fees necessary to cover the cost of processing a returned check and associated losses to the depository institution?”)

• Illinois UCC, 810 ILCS 5/3-806 (“Any person who issues a check or other draft that is not honored upon presentment because the drawer does not have an account with the drawee, or because the drawer does not have sufficient funds in his account, or because the drawer does not have sufficient credit with the drawee, shall be liable in the amount of $25, or for all costs and expenses, including reasonable attorney’s fees, incurred by any person in connection with the collection of the amount for which the check or other draft was written, whichever is greater.”)