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1. Division of Banks Warns of Risks from Representments Causing Multiple NSF Fees
The Massachusetts Division of Banks has issued a supervisory alert letter to warn banks about certain legal risks and risks of regulatory scrutiny that may arise from charging consumer accountholders multiple non-sufficient funds (NSF) fees for representment of unpaid transactions. According to the supervisory alert letter released on September 23, when a merchant payment transaction is declined due to insufficient funds and the merchant attempts to present the same transaction again in an effort to obtain the declined funds, the representment can trigger the assessment of multiple NSF fees. The supervisory alert letter warns that class action lawsuits have been brought recently against banks for charging multiple NSF fees in such cases even though the banks cannot control whether a merchant represents a declined transaction. The supervisory alert letter recommends that banks should clearly disclose the amount of any NSF fees and how NSF fees may be charged in connection with the processing of payment transactions to avoid exposure to claims by consumers or regulatory criticism that a bank’s NSF policies are confusing or deceptive. Click here for a copy of the supervisory alert letter.
Nutter Notes: The supervisory alert letter notes that standard disclosures in deposit account agreements or fee schedules provided to banks by vendors of forms, for exa ..
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