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#1648809 - 01/10/12 07:40 PM Debit Card NSF Decline Fees
pweiss Offline
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Joined: Mar 2011
Posts: 103
Hello everyone,

I wanted to ask the group regarding a fee. It was a charge for a "Debit Card NSF Decline Fee". In other words, if you get declined for a debit card transaction (NSF) you will get a fee eventhough the transaction never posted, hence declined.

Is this allowed? If you never opted in with your financial institution, can you charge this fee?


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General Discussion
#1648918 - 01/10/12 08:52 PM Re: Debit Card NSF Decline Fees pweiss
BurntSienna Offline
Diamond Poster
Joined: Aug 2006
Posts: 2,407
I have never heard of such a fee. Have you checked with Visa or MasterCard to see if they allow this?

If this is an allowable fee within the Visa/MasterCard rules, you will need to disclose the fee to your customers at least 30 days before you plan to start charging the fee.

On our system, a customer's card will be declined for the reason "NSF" even if their current balance is positive, but their available balance is negative (i.e. float). I'm not sure how easy it will be to explain this to your customers: "Yes, you were charged an NSF decline fee, but no your account was never negative."

I'd tread carefully and review this concept from all possible angles before attempting to implement this.
"Gratitude makes sense of our past, brings peace for today, and creates a vision for tomorrow." - Melody Beattie

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#1649066 - 01/10/12 10:52 PM Re: Debit Card NSF Decline Fees pweiss
rlcarey Online
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Joined: Jul 2001
Posts: 79,238
Galveston, TX
I would say this would immediately be cited as a UDAP by the regulators, regardless of the disclosures that you provided. Any merchant could easily mis-key a preauthorization which would result in a fee to the customer through no fault of their own.
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#1651370 - 01/17/12 01:48 PM Re: Debit Card NSF Decline Fees pweiss
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 39,629
Cape Cod
See the prefatory information accompanying the publication of the final rule adopting 205.17 of the Fed's Reg E (now 1005.17 of the Bureau's regulation), at 74 FR 59041 (11/17/2009). Near the bottom of the middle column, you'll find the following:
A few commenters suggested the possibility that financial institutions may create new fees for declining ATM or one-time debit card transactions. While the final rule does not address declined transaction fees, the Board notes that such fees could raise significant fairness issues under the FTC Act, because the institution bears little, if any, risk or cost to decline authorization of an ATM or one-time debit card transaction.
I suggest that adoption of such a fee would paint a UDA(A)P target on your bank and you'd be both attacked in the social media and sanctioned by your regulator.
Last edited by John Burnett; 01/17/12 01:49 PM.
John S. Burnett
Fighting for Compliance since 1976
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