Our Position

Deposit Account Services & Fees

Position

  • ICBA strongly supports a consistent legal and regulatory framework for deposit account services and deposit-alternative accounts (e.g., prepaid cards) that gives community banks flexibility to provide a variety of services to meet consumers’ financial needs and affords non-bank consumers the same transparency and protections bank customers receive.
  • ICBA opposes any requirements that would dictate a community bank’s deposit account screening and/or closing procedures.
  • ICBA strongly urge policymakers to cautiously consider the consequences of any future restrictive deposit account fees’ legislation and regulations, which would have a negative ripple effect on customers who rely on these services.
  • ICBA strongly urge policymakers to cautiously consider the consequences of any future restrictive deposit-account-fees’ legislation and regulations, which would have a negative ripple effect on customers who rely on these services.
  • Restrictive fee-based legislation and regulations would harm many businesses that receive regular payments by check or allow customers to schedule automatic recurring debit payments—such as insurance or car payments. Restrictive rules will create a significant spike in these transactions being declined or rejected which will be extremely costly to merchants and cause customer confusion.
  • Fee-based rules restricting banks will not address or stop fees for missed or late payments levied by merchants, utilities, landlords, and other payment stakeholders.
  • Government regulations should continue to distinguish between ad hoc overdraft payment and automated overdraft payment programs to ensure that banks can continue to meet the varied financial needs of their customers.
  • Fees’ based legislation and regulations should not require community banks to punish their customers by restricting access to services of convenience that meet their account needs.

Background

Community banks offer many deposit account services to best address consumer needs. These include a variety of overdraft payment programs, and alternative services that allow customers to transfer funds from a designated account or line of credit, or to advance funds from a short-term, small-dollar loan to avoid an overdraft.

Over the last several years, a variety of e-commerce transactions capable of causing overdrafts, non-sufficient funds, and other fees now include, not only ATM and POS debit transactions, but also online and mobile POS transactions.

As a result, community banks have continued to expand the features of overdraft payment programs they provide to consumers because when overdrafts occur, it is generally in the consumer’s best interest for their bank to pay items/transactions rather than returning the items unpaid and triggering returned item and various payee fees levied by merchants, utilities, landlords, and other creditors.

Convenient, consumer-demanded services are an important aspect of community banks’ relationships with their customers. Increased scrutiny of overdraft services has affected how community banks offer, monitor, and managing these services, Yet, despite the negative regulatory landscape, most community banks continue to offer the service to fulfill consumer demand for overdraft coverage.

Attempts to impose price controls or caps on the number of overdraft fees a bank may assess would cause banks to reject more transactions which would create a negative balance in an account – doing a disservice to the customer and placing new burdens on check processors and payment systems that would have to handle returned checks. For a consumer, the negative impact and consequences of a rejected transaction is far worse than incurring an overdraft fee.

Staff Contacts

Rhonda Thomas-Whitley

SVP and Senior Regulatory Counsel

ICBA

[email protected]

Brian Laverdure

SVP of Digital Assets and Innovation Policy

ICBA

[email protected]