On January 22, New York Governor Kathy Hochul announced the NYDFS proposed its amendments to 3 NYCRR Parts 32 and 6 related to deposit account transactions and associated charges. The regulations will redefine terms such as “banking institution,” “consumer account,” “credit,” “debit,” and various types of charges, including insufficient funds (NSF) and overdraft charges. The amendments will prohibit banking institutions from settling electronic debits in a manner that maximizes insufficient funds charges and require the application of credits before debits. They will also ban multiple NSF charges on a single transaction and overdraft charges on transactions where the account balance appeared sufficient at the time of authorization. Furthermore, the regulations will limit the amounts of NSF and overdraft charges, ensuring they do not exceed the transaction amount or apply to transactions below $20. A cap of three insufficient funds charges per day will be established, along with continuous overdraft fees for each day an overdraft balance is not repaid. The amendments will also restrict return deposit item charges unless specific conditions are met, such as repeated dishonor from the same originator. Specifically, charging a “sustained,” “continuous,” or “daily” fee for each day an overdraft balance is not repaid will be prohibited. Additionally, the regulations will mandate timely notices to consumers about potential overdraft charges and the first imposition of an insufficient funds charge or return deposit item charge within a calendar year.
