• Source: FDIC.gov


Formalizing guidance that has been provided via the examination process, the Federal Deposit Insurance Corporation (FDIC) has issued a Financial Institution Letter (FIL-40-2022) to address consumer compliance risks related to NSF fees on ACH and check re-presentments. Treliant knows deposit operations and consumer protection. If you need assistance assessing your institution’s risk of UDAAPs/UDAPs or litigation risk associated with re-presentment NSF fees or other NSF fees, we can help.


On August 18, 2022, the FDIC issued FIL-40-2022, Supervisory Guidance on Multiple Re-Presentment NSF Fees (Re-Presentment Guidance). When a merchant presents a check or Automated Clearinghouse (ACH) transaction for payment and the paying account has insufficient funds, many banks charge an NSF fee. Re-presentment fees occur when a merchant resubmits a previously declined check or ACH item which is again returned as NSF and the customer’s transaction account is assessed an additional fee.

In FIL-40-2022, the FDIC stated it has identified violations of law, including violations of Section 5 of the Federal Trade Commission Act’s (Section 5’s) prohibition on unfair or deceptive acts or practices, when institutions charge additional fees for re-presentment of a previously unpaid item if the bank’s disclosures do not clearly, accurately, and fully describe the institution’s re-presentment practices and associated fees. Specifically, the FDIC has found that assessing multiple NSF fees arising from the same transaction item is a deceptive practice if the institution’s terms and conditions do not clearly and conspicuously disclose such fee practices. Revising disclosures to ensure consumers are adequately informed of fee practices may address the risk of deception.

The FDIC found that a bank’s failure to adequately disclose re-presentment fee practices may, under certain circumstances, be an unfair practice. Charging multiple re-presentment fees in a short time period may result in substantial injuries to consumers, which the consumers may have insufficient notice or opportunity to reasonably avoid by increasing the account balance to avoid additional returned, re-presented items. The FDIC notes that enhancing disclosures may not fully address the risk that re-presentment NSF fee practices are unfair.

In addition, FIL-40-2022 notes that re-presentment fee risk may be an indicator of elevated third-party risks associated with core processor selection and management. This is particularly true if the core does not have sufficient capabilities to identify and track re-presented items or to maintain data on re-presented transactions and associated fees.

Beyond the risk of violations of Section 5, charging re-presentment fees increases the risk of litigation. Numerous institutions have been defendants in lawsuits related to re-presentment NSF fee practices.

To mitigate the risks, the FDIC recommends institutions consider the following:

  • Review re-presentment NSF fee practices;
  • Review account terms, conditions, and consumer disclosures associated with re-presentment NSF fees and provide enhanced disclosures if current disclosures do not clearly and conspicuously disclose whether multiple fees can be charged on the same item, the frequency with which fees can be assessed, and the maximum number of fees that may be charged on a single transaction item;
  • Eliminate NSF fees;
  • Charging a single NSF fee per transaction, regardless of the number of times the item is re-presented;
  • Ensure customer notification practices related to NSF transactions to ensure customers have an opportunity to effectively avoid multiple fees for re-presented items, including an opportunity to restore the account to a sufficient balance before re-presentment NSF fees are assessed;
  • If issues associated with re-presentment fees are self-identified, take appropriate and timely corrective actions, including restitution to harmed customers, correction of disclosures and account agreements, implementation of ongoing monitoring, and additional risk mitigation if needed.