CFPB proposes new laws to stamp out NSF fees for transactions declined in real time

The US Consumer Financial Protection Bureau (CFPB) proposes a ban on fees for non-sufficient funds (NSF) charged by banks, credit unions, and certain P2P payment companies.
The ban specifically targets NSF fees for transactions declined in real-time, such as those at the point of sale.
NSF fees are typically incurred when a transaction is processed and then declined due to insufficient funds, with an average value of $34 according to CFPB data from 2022.
The CFPB considers NSF fees applied to transactions involving debit cards and ATMs as “unlawful” under the Consumer Financial Protection Act.
The proposed rule aims to end what the CFPB calls “junk fees” created by large banks, emphasizing the need for competition to provide better products at lower costs.
The CFPB had previously signaled its stance against such fees in October and issued guidelines forbidding large banks from charging customers illegal fees for basic services.
Recently, the CFPB proposed legislation against overdraft fees, seeking to bring large financial institutions further under consumer protection laws by mandating the disclosure of the true cost of overdraft interest rates.