FDIC Rescinds Biden-Era Guidance on Insufficient Funds Fees

The FDIC has officially rescinded its Biden‑era supervisory guidance on multiple re‑presentment NSF (insufficient funds) fees, effective immediately.

Here are the key points:

1. What exactly was rescinded

• The FDIC withdrew Financial Institution Letter FIL‑32‑2023, “FDIC Clarifying Supervisory Approach Regarding Supervisory Guidance on Multiple Re‑Presentment NSF Fees.”

• FIL‑32‑2023 itself had replaced the original 2022 guidance (FIL‑40‑2022) on multiple re‑presentment NSF fees, which had warned that repeated NSF fees on the same item could be unfair or deceptive under Section 5 of the FTC Act.

1. FDIC’s stated reasons

• After reviewing FIL‑32‑2023, the FDIC concluded the guidance was “overly broad in scope” and had created uncertainty about when disclosures and practices around re‑presentments might constitute “unfairness” under Section 5.

• The agency therefore rescinded FIL‑32‑2023 “effective immediately.”

1. What remains of the FDIC’s position

• The FDIC emphasizes that institutions must still ensure consumer disclosures accurately reflect their actual practices and comply with applicable laws and regulations, including UDAP/UDAPF standards.

• The rescission removes the specific FDIC supervisory framework around multiple re‑presentment NSF fees, but it does not grant blanket immunity for NSF/overdraft fee practices that could otherwise be unfair, deceptive, or abusive.

1. Context and litigation background

• The rolled‑back guidance was a Biden‑era initiative that cautioned banks about stacking multiple NSF fees when the same payment item is re‑submitted and again returned for insufficient funds.

• A challenge brought by Minnesota bankers was dismissed in 2025 on ripeness grounds—the appellate court held the guidance was not final agency action because the FDIC had not determined specific fee practices to be unlawful.

1. Practical implications for banks and compliance

• FDIC‑supervised institutions are no longer subject to FIL‑32‑2023 as an articulated supervisory expectation regarding multiple re‑presentment NSF fees.

• However, banks should still:

  • Confirm account agreements and fee disclosures clearly explain representment and fee practices.

  • Evaluate NSF/overdraft practices for UDAP/UDAAP risk under existing law and broader regulatory expectations, including other agencies’ guidance and state‑level rules (e.g., NY DFS overdraft/NSF initiatives).

• Industry groups such as the ABA had criticized the prior guidance as de facto rulemaking without APA procedures, and had urged its rescission; the FDIC’s move aligns with that criticism and with broader Trump‑era efforts to roll back Biden‑era supervisory guidance.