On April 26, 2023, the Federal Deposit Insurance Corporation (the “FDIC”) and the Office of the Comptroller of the Currency (the “OCC”) simultaneously issued new guidance to banks concerning Authorize Positive, Settle Negative (“APSN”) transactions and related overdraft and other fees. Many banks historically have assessed APSN overdraft fees when a transaction was authorized against a positive balance but later settled against a negative balance due to intervening transactions. In their respective notices, both agencies said that charging APSN fees may present a heightened risk of violating prohibitions on unfair or deceptive acts or practices under the Federal Trade Commission Act (the “FTC Act”) and Consumer Financial Protection Act of 2010 (the “CFPA” or the “Dodd-Frank Act”). Both agencies further indicated that, because of the complexity of account balance calculation methods and payment processing, customers are unlikely to be able to reasonably avoid APSN overdraft fees, even if banks disclose that they charge such fees. The OCC also raised similar concerns about representment fees and other overdraft practices. The new guidance echoes recent regulatory focus on overdraft-related practices and efforts by the White House to minimize “surprise” fees to consumers.
Read more
