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#2282646 - 03/24/23 04:40 PM NSF Fee Notification -Ken's 2002 response.
YHWB Offline
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Joined: Apr 2005
Posts: 634
Out there
Has there been any change in this with all of the attention NSF fees are receiving now?

Notice Requirements: Overdrafts and Checks Returned NSF
Answered by: Ken Golliher
Question:
Is there any law or regulation that states a bank must send a customer a notice when a deposit account becomes overdrawn or a check is returned NSF? If the detail of these transactions are printed on the monthly statement is this sufficient notification?

Answer:
From prior post:

I am not aware of any law or regulation requiring the drawee bank to notify the drawer that NSF items have been presented against its account, whether they are paid or returned. However, if enough banks eliminate such notices, it will probably be the genesis of such a requirement.

The notice may be classified either as a courtesy or as a loss control measure. NSF notices are often the first indication to the customer that he or she made an error of some sort. The early notice allows the customer to deposit funds and avoid further fees and returned items. Often, however, it is also the first indication that the bank has paid unauthorized items, whether they are checks or EFT's. The customer's responses to such notices frequently allow the bank to contain its own losses.

Few banks would say that NSF items are not profitable. Sending the notice is part of the sometimes slim justification for the amount of the NSF fee.

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#2282648 - 03/24/23 04:47 PM Re: NSF Fee Notification -Ken's 2002 response. YHWB
rlcarey Offline
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rlcarey
Joined: Jul 2001
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Galveston, TX
No changes of which I am aware, but if you are thinking about eliminating them in this environment, I would think long and hard about it.
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#2282652 - 03/24/23 05:10 PM Re: NSF Fee Notification -Ken's 2002 response. YHWB
BrianC Offline
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BrianC
Joined: Nov 2004
Posts: 6,685
Illinois
Three years after that answer was published, there was the 2005 Joint Agency Guidance on Overdraft programs that had this best practice:

Promptly notify consumers of overdraft protection program usage each time used. Promptly notify consumers when overdraft protection has been accessed, for example, by sending a notice to consumers the day the overdraft protection program
has been accessed...

https://www.federalreserve.gov/boarddocs/srletters/2005/sr0503a1.pdf

I echo Randy's sentiments.
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