CFPB update on OD/NSF fee revenue

The CFPB has issued a data spotlight report that shows that many banks changed their OD/NSF fee policies in 2022, and reported annual overdraft/NSF revenue has dropped by $6.1 billion since before the pandemic – a reduction of more than half – saving the average household who overdrafts $185 per year. This reflects a nearly $2 billion annual reduction in NSF fees, and a roughly $4 billion annual reduction in overdraft fees.

In 2023, overdraft/NSF fees were approximately $1.8 billion lower than in 2022, a 24% decrease. However, banks appear to have stopped significantly reducing overdraft fees, as their major policy changes have taken effect and further policy changes have slowed. Following five straight quarterly declines in overdraft/NSF revenue, such revenue remained flat across all quarters of 2023. Even with the substantial reductions in fees versus prior years, consumers paid over $5.8 billion in 2023 in reported overdraft/NSF fees. The report indicates that evidence continues to suggest that financial institutions are generally not increasing other checking account fees to compensate for reduced overdraft/NSF revenue. Across all reporting banks, combined account maintenance and ATM fees remained flat from 2019 to 2023.

The Bureau reports that, since the CFPB heightened its supervisory attention on overdraft and NSF fees in 2022, financial institutions have agreed to refund over $240 million to consumers—approximately $177 million in "unfair unanticipated overdraft fees" charged on transactions that were authorized when the consumer had sufficient funds, and approximately $64 million in NSF fees charged on the same transaction that already incurred an NSF fee when it was previously declined. This $240 million reflects $120 million that the CFPB previously announced in October 2023, and an additional more than $120 million that financial institutions have agreed to refund since the period covered by that announcement.