Requires banks to report to the superintendent annually on the amount of revenue earned from overdraft fees; prohibits banks from imposing overdraft fees during a ten day grace period; regulates the imposition of overdraft and NSF fees.
Summary
This bill would regulate overdraft and non-sufficient funds (NSF) fees charged by banks, trust companies, credit unions, and other banking organizations in New York. It requires covered institutions to report annually to the Superintendent of Financial Services the amount of revenue they earn from overdraft and NSF fees, along with that revenue as a share of net income, and directs the superintendent to publish the data publicly on the department’s website.
The bill also creates new consumer protections around fee timing and duplication. It would prohibit a banking organization from charging an overdraft or NSF fee until 10 days after the transaction, giving the customer a grace period to deposit sufficient funds. In addition, it bars certain overdraft fees in situations where a later unrelated transaction causes the account to go negative after the original debit card transaction, limits fees tied to overdraft protection transfers, and prevents multiple NSF fees on the same transaction if a merchant re-presents it for payment.
Impact
The bill would amend the Banking Law by adding new reporting and fee-restriction provisions applicable to banking organizations subject to state oversight, including banks, trust companies, credit unions, and similar institutions. It would require operational changes in fee assessment systems, customer account processing, and third-party software used to detect and charge overdraft or NSF fees. It also expands public disclosure by requiring the Department of Financial Services to publish institution-level fee revenue data, which could increase scrutiny of banks’ reliance on overdraft-related income.
Sentiment
The bill appears generally consumer-protective in tone, with its focus on transparency, grace periods, and limits on repeated or arguably unfair fee practices. Although no committee transcript or recorded vote is provided, the structure of the bill suggests support for customers who are vulnerable to overdraft charges and skepticism toward bank fee practices. The absence of recorded opposition or debate in the provided materials means there is no documented formal sentiment from committee discussion, but the bill itself reflects a reform-oriented approach.
Contention
The main points of contention are likely to be the 10-day fee delay, the restriction on charging fees when a later transaction causes an overdraft, and the ban on multiple NSF fees for re-presented transactions. Banks and credit unions may argue these provisions reduce fee revenue, require costly system and software updates, and complicate account processing. Consumer advocates would likely support the bill’s limits on repeated fees and its public reporting requirements, viewing them as protections against surprise charges and opaque revenue practices.
Same As
Requires banks to report to the superintendent annually on the amount of revenue earned from overdraft fees; prohibits banks from imposing overdraft fees during a ten day grace period; regulates the imposition of overdraft and NSF fees.
Requires banks to report to the superintendent annually on the amount of revenue earned from overdraft fees; prohibits banks from imposing overdraft fees during a ten day grace period; regulates the imposition of overdraft and NSF fees.
Provides that charges imposed by certain state chartered banking institutions in connection with a check or other written order drawn on insufficient funds shall not exceed the greater of five dollars or the pro rata share of such state chartered banking institution's total direct costs and charge-off losses for providing non-covered overdraft credit.
Provides that charges imposed by certain state chartered banking institutions in connection with a check or other written order drawn on insufficient funds shall not exceed the greater of five dollars or the pro rata share of such state chartered banking institution's total direct costs and charge-off losses for providing non-covered overdraft credit.
Financial institutions; Financial Privacy Act; permitting disclosure or release of information for investigations of financial exploitation of protected adults. Effective date.