New York FY 2024 budget proposes to end unfair overdraft practices

State Issues New York Overdraft NSF Fees Consumer Finance State Legislation NYDFS Bank Regulatory

On February 1, the New York governor released the state’s FY 2024 budget proposal, which includes measures for ending certain bank overdraft and insufficient fee practices. Specifically, the proposed legislation would amend section 9-y of the banking law to grant authority to the NYDFS superintendent to promulgate regulations related to (i) supervised banking organizations’ transaction processing practices; (ii) the charges (including overdraft and insufficient funds fees) that banks may impose in connection with dishonored transactions; and (iii) associated disclosures provided to consumers regarding how transactions are processed and any associated fees. In an accompanying budget briefing book, the governor said the proposed measures are part of “nation-leading legislation that comprehensively addresses abusive bank fee practices, which tend to disproportionally harm low- and moderate-income New Yorkers.” Proposed actions include “stopping the opportunistic sequencing of transactions in a way designed to maximize fees charged to consumers, ending other unfair overdraft and non-sufficient funds fee practices, and ensuring clear disclosures and alerts of any permissible bank processing charges.”