Overdraft stamp and calculator

Governor Hochul Signs Legislation to Continue Commitment to Affordable Banking in New York State

Governor Hochul Signs Legislation to Continue Commitment to Affordable Banking in New York State

Governor Kathy Hochul today signed legislation (S.9348/A.8292) directing the Superintendent of the Department of Financial Services to conduct a study on bank overdraft fees in New York State. The report will inform the State's ongoing efforts to address excessive finance fees and help low-income New Yorkers access affordable banking options that protect and grow hard-earned savings.

"As New Yorkers recover from the economic pains of the pandemic, it is critical that we do everything possible to increase access to affordable banking services," Governor Hochul said. "This legislation will help ensure that every New Yorker has access to low-cost banking services to manage and secure their needs, regardless of where they live."

Superintendent of Financial Services Adrienne A Harris said, "I commend Governor Hochul and the Legislature for enacting this legislation and continuing New York's commitment to making affordable banking products and services available to underserved communities, including low- and moderate-income individuals, immigrants, and people of color. DFS will continue to take all possible action to build an equitable and transparent financial system for all New Yorkers."

This law directs DFS to conduct a study on overdraft fees in New York State and examine:

  • The total amount of overdraft fees paid in New York.
  • Geographical distribution of such fees.
  • Whether any communities have high rates of overdraft fees and the possible reason for such high rates.
  • The percentage of overdraft fees reduced through direct or indirect negotiation.
  • How institutions disclose consumer rights relating to fee negotiation.

State Senator James Sanders Jr. said, "Overdraft fees cost New Yorkers millions of dollars per year. Low-income residents are already struggling to make ends meet. This legislation will help us understand the true impact of overdraft fees so we can find ways to address the problem."

Assemblymember Patricia Fahy said, "Far too many New Yorkers, especially those with lower incomes and those from disadvantaged communities, grapple with predatory overdraft fees that are obstacles to personal financial stability. Americans paid a whopping $15.5 billion total in overdraft fees and costs alone in the year 2019. By directing the Department of Financial Services to study overdraft fees and their impacts on New Yorkers, we'll have a clearer idea of how best to alleviate this growing financial burden on New Yorkers and their finances. Thank you to Governor Kathy Hochul for signing this important bill into law and to the Department of Financial Services for the steps they've already taken on this issue."

This law and the resulting study and report of findings will complement Governor Hochul's ongoing commitment to addressing onerous, opaque, and predatory fee practices. Earlier this week, the Governor directed DFS to issue Guidance to New York-regulated bank, credit unions and other depository institutions, alerting them to avoid the following practices:

  • Authorize Positive, Settle Negative Transactions: Charging consumers an overdraft fee even though the consumer had a positive account balance sufficient to cover the transaction when it was authorized by the institution.
  • Double Fees Arising from Futile Overdraft Protection Transfers: Charging a fee to consumers for an "overdraft protection" transfer from a consumer's other account that is of an insufficient amount to avoid an overdraft, resulting in the consumer being charged both an overdraft fee as well as a fee for the "overdraft protection" transfer.
  • Re-presentment Fees: Charging a consumer more than one NSF fee for the same declined transaction, without adequate disclosures, where the merchant re-presents the same transaction to the banking institution in a second or third attempt to collect funds.

Today's bill signing also follows April's Guidance encouraging State-regulated banks to offer "Bank On" certified accounts to fulfill the State's affordable banking requirements. Bank On accounts eliminate overdraft fees and are critical to attracting individuals from underserved communities into the banking system.


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