Dear Ms. Garrett:
You have asked if NCUA’s regulations require federal credit unions (FCUs) to send a notice each
time a member incurs an NSF or overdraft fee. No, FCUs are not required to send a notice each
time but NCUA’s regulations require FCUs to include NSF and overdraft fees in their periodic
statement disclosures of fees charged to an account. Although not required to do so, NCUA
guidance states it is a “best practice” to notify members promptly.
Disclosures of NSF and overdraft fees are generally governed by NCUA’s Truth in Savings
Act (TISA) rule. NCUA’s TISA rule requires periodic statements to include a disclosure of any
fees, including those for NSFs and overdrafts, debited from an account during the statement
period. 12 C.F.R. §707.6(b)(3). An FCU must itemize the fees by type and dollar amount. Id.
Please note that a recent amendment to NCUA’s TISA rule also requires the disclosure of
the total dollar amount of overdraft fees charged to an account in both the statement period
and the calendar year to date. 12 C.F.R. §707.11. The total dollar amount includes per item
fee, interest charges, daily or periodic fees or fees charged for maintaining the account in an
overdraft status. 12 C.F.R. §707.11(a)(1)(4).
NCUA’s Letter to Credit Unions 05-CU-03, Overdraft Protection (Bounce Protection) Programs
(February 2005), included interagency “best practices” guidance, which, among other things,
recommends an FCU notify a member of an overdraft fee promptly. The guidance states it is a
best practice to “promptly notify consumers when overdraft protection has been accessed, for
example, by sending a notice to consumers the day the overdraft protection program has been
accessed.” Id. The best practices are, however, guidance and not regulatory requirements. If
you have any further questions, please contact staff attorney Justin Anderson or me.