WASHINGTON— The FDIC has rescinded Biden-era supervisory guidance that warned banks they could face scrutiny for charging multiple nonsufficient funds (NSF) fees when the same unpaid transaction is re-presented more than once, rolling back a consumer-compliance policy that had become a flashpoint with the banking industry.
In a Financial Institution Letter issued April 10, the FDIC said it is withdrawing its June 2023 guidance effective immediately.
The agency said the 2023 letter—FIL-32-2023, which itself had replaced a 2022 version—was “overly broad in scope” and created uncertainty about when disclosures tied to multiple re-presentment NSF fees could trigger “unfairness” concerns under Section 5 of the Federal Trade Commission Act. The rescinded guidance had cautioned that charging repeated fees on the same declined item could present heightened risk of unfair or deceptive acts or practices violations, even when the consumer did not control whether a merchant or third party re-submitted the transaction.
The move unwinds a policy that had already drawn a failed court challenge from banks. Industry groups and several Minnesota banks had sued over the guidance, but the 8th U.S. Circuit Court of Appeals last year upheld dismissal of the case, finding the FDIC letter was not final agency action subject to review under the Administrative Procedure Act. Even so, the FDIC’s rollback now effectively gives banks the relief the lawsuit did not. American Banker said the rescission removes what had been a key supervisory warning that multiple NSF fees on a single transaction could lead to enforcement exposure.
The rollback is the latest in a broader FDIC pullback from Biden-era supervisory and consumer-compliance initiatives under the current leadership. While the agency is withdrawing the specific supervisory framework around multiple re-presentment NSF fees, the action does not erase broader unfair or deceptive acts or practices risk if fee practices are poorly disclosed or otherwise harm consumers.