Risk alert warns of multiple NSF fees on the same transactions

Following a recent consent order against Bank of America for questionable activities including assessing multiple NSF fees on the same transactions, TruStage has issued a risk alert for credit unions.

Risk mitigation for credit unions
Credit unions that assess multiple NSF fees on the same transactions (i.e., NSF fees on represented/resubmitted transactions that are returned again) and/or APSN overdraft fees on debit card transactions should review with legal counsel the CFPB’s prior guidance and the consent orders against Bank of America, Regions Bank and Wells Fargo.

Ultimately, credit unions should make a business decision on whether to change their fee structure to mitigate this risk, the alert states.

Bank of America consent orders
On July 11, the CFPB ordered the bank to refund all repeat NSF fees totaling approximately $80.4 million and to pay a $60 million civil monetary penalty, while the Office of the Comptroller of the Currency concurrently issued an order against the bank separately fining it $60 million.

The CFPB specifically referred to “re-presentment NSF fees” for previously returned ACH transactions and checks that are represented/resubmitted by payees and returned unpaid again resulting in an NSF fee being assessed.

In addition, a second CFPB consent order against Bank of America was issued due to:

  • bank employees opening credit card accounts without consumer consent in order to meet sales goals.
  • the bank’s deceptive acts or practices in advertising a sign-up bonus for a rewards credit card on its website by making it appear that it was available to all applicants, but later denying the bonus to consumers who applied over the phone or in person; and
  • offering a sign-up bonus for a rewards credit card to certain consumers but failing to provide the promised bonus due to employee error.

TruStage risk alerts, in addition to additional risk-prevention resources, may be accessed in their Protection Resource Center. Log-in is required.

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