The Federal Deposit Insurance Corporation (“FDIC”) on August 18, 2022 issued updated Supervisory Guidance on banks assessing multiple re-presentment fees against customers’ accounts. This follows the March 2022 FDIC Consumer Compliance Supervisory Highlights, which also raised similar concerns. The guidance focuses upon banks that charge a fee each time an item is presented and then returned. If insufficient funds (“NSF”) fees are being assessed by the bank, this is generally the default setting for most core processor systems (and often cannot be changed). The guidance raises two significant issues, both under the prohibition on unfair and deceptive acts and practices (“UDAP”) in Federal Trade Commission Act (“FTC Act”). In addition, both of these claims presumably would serve as a basis for a claim under the prohibition on unfair, deceptive, and abusive acts and practices (“UDAAP”) under the Dodd-Frank Act.
First, the FDIC notes that many banks are not adequately disclosing how they assess their NSF fees. In particular, these banks are not clearly describing that an NSF fee will be assessed for each presentment, as opposed to being assessed for each item. The FDIC concludes that a lack of clarity could serve as a basis for a claim that the bank is engaging in deceptive practices—a basis for a claim under UDAP (and presumably UDAAP).
