NSF Fees on Subsequent Presentments
by Ken Golliher and John Burnett, BOL Gurus
QUESTION: After an item has been presented for a third time, the third presentment being ACH, should the customer, legally, have to pay an insufficient funds fee to a bank?
ANSWER by Ken Golliher: BIO AND CONTACT INFO
There are no federal restrictions on the amount of NSF fees or the number of times they can be imposed on presentment of the same item. If any restrictions exist, they are a matter of state law. (The model version of the UCC does not even discuss NSF fees.)
The fee is for the service the bank is compelled to provide to handle an item presented against insufficient funds. It cannot control the number of times it is asked to provide the service.
It is fair to say the service level is no lower the fourth time the item is presented than it was the first. Actually, since the check would have to be presented over the counter or as a collection item, my observation would be that the service level for every presentment after the third is higher than if the item were presented through the clearing system or ACH.
At any time, the customer can avoid the fee by depositing enough money to pay the check.
ANSWER by John Burnett: BIO AND CONTACT INFO
In his post, Ken suggests:
quote:
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At any time, the customer can avoid the fee by depositing enough money to pay the check.
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What a radical idea! Cover your checks? But don't do it with SSA direct deposit in San Francisco!
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