FDIC Rescinds 2023 Representment NSF Fee Letter
Summary
The FDIC has withdrawn its 2023 informal guidance on representment nonsufficient funds (NSF) fees. The rescission removes a prior supervisory expectation regarding how banks assess representment fees on returned transactions. Banks previously adhering to the 2023 guidance may now have increased flexibility in their fee assessment practices.
What changed
The FDIC has rescinded its 2023 informal guidance addressing representment NSF fee practices. The withdrawal eliminates a prior supervisory expectation that had governed how banks handle fees when transactions are representment after an initial NSF return.\n\nAffected banks may now revert to their prior practices or adopt alternative approaches consistent with applicable regulations. No new compliance obligations are imposed by this rescission, and no enforcement actions or penalties are referenced in connection with the withdrawn guidance.
What to do next
- Monitor for updates on representment fee practices
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Apr 11, 2026GovPing captured this document from the original source. If the source has since changed or been removed, this is the text as it existed at that time.
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FDIC rescinds guidance on representment NSF fees
April 10, 2026 Reading Time: 2 mins read The FDIC today rescinded a 2023 financial institution letter that had stated that banks’ charging representment nonsufficient funds fees may be a deceptive or unfair practice under section 5 of the Federal Trade Commission Act.
When a merchant submits a check or an Automated Clearing House transaction initiated by a customer, and the customer’s account does not have sufficient funds to cover the payment, the bank may return the item to the merchant and charge an NSF fee. The fee covers the cost to process the return and serves as a penalty to encourage responsible deposit account management. A merchant has the right to resubmit the transaction to the bank with the expectation that the customer will have money in his account so that the transaction will be paid. If the account balance remains insufficient to pay the transaction, the bank may return it a second time and charge another NSF fee. A bank has no control over whether, or when, a merchant resubmits a transaction.
In 2021, FDIC examiners began scrutinizing account disclosures to determine whether they adequately – in the judgment of the examiner or agency – informed consumers that they could be charged representment NSF fees. If not, the FDIC began citing banks for a “deceptive” act or practice under section 5 of the FTC Act. In the FIL issued in 2023, the FDIC also stated that charging representment NSF fees also could be an “unfair” act or practice.
The American Bankers Association has long expressed concern with the FDIC’s scrutiny of representment NSF fees and issuance of the FIL. In a 2024 letter to the FDIC, ABA urged the FDIC to rescind the FIL, asserting that the “FDIC has established binding rules for banks without statutory authority, and without undergoing the [Administrative Procedures Act’s] rulemaking process.”
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