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#2231161 - 02/18/20 04:14 PM Imposing Multiple NSF Fees
Newbie06 Offline
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Can anyone tell me when banks were allowed to begin charging customers for more than one NSF fee per transaction?

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#2231163 - 02/18/20 04:31 PM Re: Imposing Multiple NSF Fees Newbie06
John Burnett Offline
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Not sure there has ever been something addressing your question. Can you describe what you mean by "more than one NSF fee per transaction"? It could refer to the practice of imposing a "continuing OD fee" if an account has been OD for more than X days, or to multiple presentations of the same item resulting in multiple OD fees. What are you asking about?
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#2231164 - 02/18/20 04:38 PM Re: Imposing Multiple NSF Fees Newbie06
Newbie06 Offline
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John, yes that is what I am referring to.

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#2231166 - 02/18/20 04:41 PM Re: Imposing Multiple NSF Fees Newbie06
John Burnett Offline
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I asked you whether you were referring to A or B and you answered "Yes."

So, are you asking about:

(A) the practice of imposing a "continuing OD fee" if an account has been OD for more than X days
or
(B) multiple presentations of the same item resulting in multiple OD fees
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#2231167 - 02/18/20 04:42 PM Re: Imposing Multiple NSF Fees Newbie06
John Burnett Offline
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...or both?
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#2231177 - 02/18/20 05:20 PM Re: Imposing Multiple NSF Fees Newbie06
Newbie06 Offline
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Sorry John, I can't even use the excuse that it's Monday. My situation is referring to letter "B"

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#2231204 - 02/18/20 07:36 PM Re: Imposing Multiple NSF Fees Newbie06
John Burnett Offline
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Thanks, and I might have guessed that's where you were going with this. To my knowledge, there are no rules on this. But it's begun to be an issue with mobile deposits and duplicate presentments and, more recently, there have been some actual court cases (I'm not aware of decisions on these) where a customer is claiming that, when his check overdraws his account when it's first presented and an OD fee is imposed, that should be it, and the bank should not be able to charge another OD fee if the check is returned, redeposited and represented only to overdraw the account a second time (or a third time, if it's converted to a re-presented check entry (RCK) and represented via the ACH).

I don't know whether any of the cases are based on a claim that an FI doesn't have a right to impose the fee more than once. I suspect most of the cases are based on a claim that the bank's disclosures did not explain that an item, if presented more than once, may trigger an OD charge with each presentment.

There may be a state here and there that prohibits the practice, but, as I said earlier, I don't know of any.
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#2231207 - 02/18/20 07:42 PM Re: Imposing Multiple NSF Fees Newbie06
John Burnett Offline
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One additional thought -- in the case of multiple presentments resulting from one or more mobile deposits and a deposit of the paper check there's a strong argument that there's authority to pay the check only once. And if that's the case, any overdraft fee triggered by multiple presentments of the same item would be hard to justify under any deposit contract and disclosures.
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#2231225 - 02/18/20 08:46 PM Re: Imposing Multiple NSF Fees Newbie06
Newbie06 Offline
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John, you hit the nail on the head. We were looking at this because our current disclosures don't tell our customers that they will be charged multiple NSF fees for each presentment. We are getting a new account software which does indeed incorporate language about this. So, we were thinking about re-disclosing this information to current customers and were wondering when this "rule" came into play.

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#2231415 - 02/20/20 07:53 PM Re: Imposing Multiple NSF Fees Newbie06
John Burnett Offline
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Rather than a "rule," I suspect it's a trending concern, and the cynic in me might believe it's one created by a creative attorney (is that gentle enough prose?) based on an argument that if not disclosed properly, the practice could arguable be unfair, deceptive and/or abusive. Of the three prongs on the UDAAP pitchfork, I'd say it's more likely deceptive than unfair or abusive, but UDAAP is in the eye of the beholder.

I think your move is wise.
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#2232415 - 03/05/20 04:28 PM Re: Imposing Multiple NSF Fees Newbie06
scb2011 Offline
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Would you say that this issue is limited to mobile deposits, or include something like a check written on one's account to a business that is returned/not paid, and then sent through again later?

Do you think the statement "Created by check, in person withdrawal, ATM withdrawal or other electronic means." standard wording on a fee schedule regarding the description of types of overdrafts lowers this risk?

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#2232542 - 03/06/20 04:17 PM Re: Imposing Multiple NSF Fees Newbie06
John Burnett Offline
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First, the canned language from Regulation DD gets you compliance with that regulation, but it doesn't cover you from a UDAAP perspective, and that's where your risk is found.

And yes, a consumer (or more likely an attorney in search of the next "rainmaker" class-action suit) could go after banks imposing multiple OD fees (without disclosing them or the circumstances that may trigger them) when a check is returned and redeposited (don't forget that, with the RCK check conversion, three presentments are possible, and the "only twice as a cash item" rule is a construct of the Fed, not the UCC).
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#2232661 - 03/09/20 06:37 PM Re: Imposing Multiple NSF Fees John Burnett
Marmaduchess Offline
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ABA just published a staff analysis on this topic. It looks like a few law firms are sending demand letters to banks and CUs claiming UDAAP.

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#2232675 - 03/09/20 09:17 PM Re: Imposing Multiple NSF Fees Newbie06
John Burnett Offline
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Veteran readers of these discussion forums may recall similar tactics involving missing ATM notices (although those involved apparent Reg E violations before the regulation was updated to prevent those opportunistic legal threats).

UDAP/UDAAP are potentially bigger threats.
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