SACRAMENTO–A bill has been introduced in the California Senate that targets overdraft and non-sufficient funds (NSF) fees at state-chartered credit unions.
According to the California and Nevada leagues, under Senate Bill 1075, which has been introduced in the California State Senate by Sen. Steven Bradford (D-Gardena), a state-chartered credit union must:
- Provide a member at least five business days before requiring payment of an overdraft fee or NSF fee to give the member an opportunity to repay the amount that triggered the fee.
- Not charge more than three overdraft fees or NSF fees per month.
- Disclose these requirements to members by January 31, 2025, and annually thereafter.
Widely Reported Scrutiny
As CUToday.info reported, OD and NSF fees at state-chartered credit unions in California have been the subject of media reports and criticism since the release of a report by the state that detailed the amount of revenue earned by OD and NSF fees at individual CUs.
Overall, the report shows state-chartered CUs during 2022 took in $252 million in overdraft and non-sufficient funds fees, and that 30 credit unions earned half or more of their net profit from just overdraft and NSF fees.
In response to the new bill, the California Credit Union League said it has met with Bradford’s office with plans to “continue these discussions.”
‘Heavily Engaged’
“As a reminder, the California and Nevada Credit Union Leagues are already heavily engaged on the frontline when it comes to overdraft/NSF proposals and guidance coming out of Washington, D.C., including the Consumer Financial Protection Bureau’s (CFPB) proposed overdraft rule and proposed NSF rule, as well as forthcoming overdraft/NSF call report data collection guidance from the National Credit Union Administration (NCUA),” the league said in its weekly newsletter to credit unions.
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