FDIC eliminates Biden-era NSF representment policy

The FDIC recently rescinded its supervisory guidance finding banks’ charging representment nonsufficient funds fees could be “deceptive or unfair” under the Federal Trade Commission Act. .“Based on a review and assessment … the FDIC concludes the guidance is overly broad in scope and has raised uncertainty regarding when, for instance, disclosures regarding representments may result in ‘unfairness’ concerns under Section 5 of the Federal Trade Commission Act,” according to the April 10 order. The guidance, which passed in 2023 under the Biden administration, came two years after FDIC examiners began reviewing account disclosures to determine whether they informed consumers they could be charged representation fees. If the FDIC determined they had not, the merchant was then cited for the violation. Following the 2023 order, banking trade groups said the issue was a merchant concern, not a bank concern, noting existing rules require banks to honor presented checks for processing and payment. The Minnesota Bankers Association filed a lawsuit to block the guidance shortly after it was issued, but that attempt was later dismissed by a federal appeals court.The FDIC’s action continues its attempts to roll back regulations unveiled under Biden. Last year, the agency rescinded Biden-era guidance surrounding mergers and acquisitions and brokered deposits.