FDIC Rescinds 2023 Guidance on Nonsufficient-Fund Fees

Why It Matters

The rescission restores regulatory flexibility for banks to charge multiple NSF fees, while shifting compliance focus to accurate consumer disclosures rather than outright prohibitions.

Key Takeaways

• FDIC rescinds FIL‑32‑2023 guidance on multiple NSF fees
• Guidance previously flagged multiple NSF fees as unfair under FT Act
• Rescission follows Minnesota Bankers Association lawsuit victory
• Banks regain flexibility on NSF fee disclosures
• Regulators stress accurate consumer disclosures per law

Pulse Analysis

Nonsufficient‑funds (NSF) fees have long been a revenue source for banks, charged each time a declined transaction is re‑presented. While similar to overdraft fees, NSF fees arise only when the institution refuses to cover the payment. In 2022 the FDIC issued guidance (FIL‑32‑2023) warning that levying multiple NSF fees on a single transaction could violate the Federal Trade Act’s ban on unfair or deceptive acts. The agency later softened the rule in 2023, stating it would not require a look‑back review absent clear consumer harm.

The guidance sparked legal pushback from the Minnesota Bankers Association, which argued the document functioned as a de‑facto rule and should have undergone notice‑and‑comment rulemaking under the Administrative Procedure Act. A district court dismissed the suit in 2024, and the 8th Circuit affirmed that decision in September 2025. Citing the guidance’s “overly broad” scope and the uncertainty it created for banks, the FDIC announced on Friday that FIL‑32‑2023 is rescinded effective immediately, restoring regulatory certainty for institutions.

For banks, the rescission removes a potential enforcement lever, allowing them to continue charging multiple NSF fees where their policies permit. Regulators, however, reminded institutions to keep consumer disclosures accurate and compliant with existing laws. Consumers may see unchanged or even higher fee exposure if banks choose to re‑introduce aggressive fee structures. The episode underscores the delicate balance between consumer protection and banks’ pricing freedom, and signals that future regulatory actions will likely focus on transparency rather than outright bans.