36. How should an Applicant demonstrate that its nonsufficient funds (NSF) fees are consistent with a community development mission?

Question PM27 asks Applicants to describe certain features related to any NSF fees their customers may be charged. If an Applicant charges NSF fees that can exceed the amount of the item returned unpaid (see PM27.2a), or charges NSF fees more than once for the same transaction, regardless of whether the item is re-presented (see PM27.4a), it must explain how such practices should be considered consistent with an acceptable community development mission.

As part of any response, an Applicant should describe how it mitigates the risks to account holders associated with NSF fees and any meaningful and effective action it takes to limit the incurrence of such fees by customers. Examples of such actions include, but are not limited to:

• Monitoring accounts for excessive or chronic customer incurrence of NSF fees and contacting such customers (e.g., in person or via telephone) to discuss less costly alternatives such as a linked savings account, a more reasonably priced line of credit consistent with safe and sound banking practices, or a safe and affordable small-dollar loan, and giving the customer a reasonable opportunity to decide whether to choose another available alternative.
• Offering consumers with excessive or chronic incurrence of NSF fees access to free or low-cost financial education workshops or individualized counseling to learn how to manage personal finances more effectively.
• Reviewing customer notification or alert practices related to NSF transactions and the timing of fees to ensure customers are provided with an ability to effectively avoid multiple fees for re-presented items, including restoring their account balance to a sufficient amount before subsequent NSF fees are assessed.
• Taking full corrective action when re-presentment NSF fee issues are identified, including providing restitution to harmed customers, consistent with the restitution approach described in the FDIC’s 2022 “Supervisory Guidance on Multiple Re-Presentment NSF Fees” (FIL-40-2022).
• Additional consumer protection features such as those listed in PM27.6.