In a major victory for credit unions, proposed legislation requiring written notification of overdraft fees charged to certain account holders has been vetoed by Gov. Kathy Hochul.
The bill would have required that financial institutions send written notification of overdraft fees charged to account holders every 180 days, and would have applied to all state charters. The New York Credit Union Association opposed the bill on the grounds that the mandated disclosures were duplicative with federal disclosure requirements in the Truth and Savings Act and unnecessarily burdensome. After discussing concerns with the governor’s office, Association leadership found the legislation to ultimately be a “redundancy.”
“I applaud Gov. Hochul’s decision to veto this overdraft bill, which would have been another burden on state-regulated credit unions, putting our state charters at a disadvantage,” said William J. Mellin, Association president/CEO. “This is a huge victory for credit unions and I thank those within the credit union movement who took action and reached out to their legislators to express their concerns about the bill.”
In other news related to overdraft fees, in July, 2022, Hochul signed a bill directing the New York state’s Department of Financial Services to conduct a study of the impact of overdraft fees on consumers, and to submit a report on its findings within 12 months. In addition, DFS issued new guidance for New York-regulated banking institutions in an effort “to promote financial inclusion by prohibiting unfair and deceptive overdraft and non-sufficient funds fee practices,” also in July.
Association leadership will continue to monitor any developments regarding overdraft fees that may impact credit unions. The Association is also monitoring a series of bills sent to the governor that must be signed or vetoed before the end of the year.