Position
- ICBA broadly opposes price controls and caps imposed by any regulatory agency and believes that such intervention only distorts market discipline and demand for delivery of products and services.
- Restrictions on deposit account fees have a negative ripple effect on customers and businesses that rely on these services.
- ICBA vehemently reject the notion that legally required disclosed fees associated with bank products and services, are “junk fees.”
- Community banks are prohibited by laws and regulations from assessing, or “surprising” consumers with fees without fully disclosing them.
- Many consumers make strategic decisions when selecting and using fee-based deposit products and services; and most consumers are fully aware of how and when those fees will be assessed.
- 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.
- Restrictive fee-based legislation and regulations would harm many businesses that receive regular payments 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.
- ICBA remains committed to pushing back and utilizing all resources available against harmful rulemaking and rhetoric that mischaracterizes contractually negotiated and disclosed fees as “junk fees” in any form.
Background
Community banks offer many deposit account services to best address consumer needs. These include a variety of 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 ensure sufficient funds in an account, and to avoid overdrafts. Any fee associated with deposit products and services offered in connection with meeting consumer needs, is fully disclosed, and accepted by the customer, thus creating a contractual obligation between the customer and community bank.
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 various payment programs and options they provide to consumers. It is in the consumer’s best interest for their bank to pay items/transactions rather than reject them and trigger various payee fees levied by merchants, utilities, landlords, and other creditors.
Consumer-demanded services are an important aspect of community banks’ relationships with their customers. The increased assault on legally and fully disclosed overdraft service fees, non-sufficient funds fees, represented item fees, and other deposit related conveniences, has affected how community banks offer, monitor, and manage these services, Yet, despite the negative regulatory landscape, most community banks continue to ensure customer transactions are covered whether via fee-based service, or by accommodation.
Attempts to stop fees or impose price controls or caps 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 back-office operations and payment systems. For a consumer, the negative impact and consequences of a rejected transaction is far worse than incurring a convenient previously disclosed fee.
