The Federal Deposit Insurance Corporation (FDIC) has rescinded its Biden-era supervisory guidance that cautioned banks against charging multiple non-sufficient funds (NSF) fees on a declined transaction.
In announcing the rescission, the FDIC stated that its prior guidance, called Supervisory Guidance on Multiple Re-Presentment NSF Fees, was “overly broad in scope” and “raised uncertainty” about when disclosures concerning multiple attempts to initiate a payment after a failed transaction (re-presentments) may violate the prohibition on unfair or deceptive acts or practices (UDAP) under the Federal Trade Commission Act (FTC Act). The rescission is effective immediately.
The guidance
Background
A financial institution may charge an NSF fee when a customer initiates payment from an account with insufficient funds to cover the transaction. If a transaction is declined because of insufficient funds, banks may attempt to run the transaction again, which can result in customers being charged multiple NSF fees for the same transaction.
The FDIC’s NSF guidance was initially issued in 2022 amid the Biden administration’s push to curb so-called junk fees. It warned of potential compliance and litigation risks tied to the practice of charging an NSF fee upon each re-presentment of the same unpaid transaction. The FDIC suggested that charging multiple NSF fees on re-presented transactions could be unfair or deceptive should a financial institution fail to provide proper disclosures regarding re-presentment practices and fees, and encouraged institutions to review their practices and disclosures to reduce the risk of consumer harm and violations of law.
In 2023, the FDIC – and the Office of the Comptroller of the Currency (OCC), in a separate bulletin – revised the guidance, clarifying its supervisory approach for corrective action when a violation of law is identified. The updated guidance stated that the FDIC would “not request an institution to conduct a lookback review” of past practices unless there was a “likelihood of substantial consumer harm.”
Industry reaction
In July 2023, the Minnesota Bankers Association (MBA) sued the FDIC and OCC, arguing that the guidance violated the Administrative Procedure Act (APA) because it failed to conduct a proper notice-and-comment rulemaking process. A judge dismissed the suit in April 2024, finding that the guidance was not a rule subject to APA requirements. The MBA appealed that decision to the Eighth Circuit, which affirmed the lower court ruling in September 2025. Recent reporting suggests that while the MBA chose not to appeal the Eighth Circuit’s ruling, it communicated with the FDIC over the past several months about rescinding the guidance.
Rescission
Following a recent review, the FDIC rescinded the guidance, noting it was too broad and raised questions around how disclosures may violate the prohibition on UDAP.
The FDIC stated that supervised institutions should still review their disclosures to confirm they accurately reflect their NSF and re-presentment practices and comply with applicable laws.
Looking ahead
The rescission represents a meaningful shift in the FDIC’s supervisory posture on NSF fees and is part of a broader pattern of the current administration unwinding Biden-era regulatory measures targeting bank fees.
In the near term, practitioners are encouraged to review their existing NSF fee practices and disclosures to confirm that they are properly grounded in applicable law independent of the now-withdrawn guidance. Note that the FDIC still expects compliance with applicable law, and the rescission does not alter underlying statutory or regulatory obligations under the FTC Act or other consumer protection frameworks. Institutions that modified their NSF fee practices or disclosure language in response to the guidance may reassess whether those changes remain appropriate considering current supervisory expectations.
It is also important to note that while the FDIC has rescinded its guidance, state banking agencies may have independent standards governing NSF fee practices, and institutions should ensure they have a clear view of applicable state-level requirements. Further, institutions supervised by the OCC should monitor whether the agency issues its own corresponding rescission or otherwise signals a change in its supervisory approach to multiple NSF fees on re-presented transactions.