the same failed transaction. The FDIC’s earlier guidance had warned that this practice presented heightened risk under Section 5, including not only deception concerns tied to disclosures, but also potential unfairness concerns, even where disclosures existed. The agency has now stepped back from that position — not because repeated fee stacking has been shown to be harmless, but because the FDIC has decided the guidance itself went “too far.” Starting to see the problem? A major issue with multiple re-presentment NSF fees was never just that banks might describe them poorly. It was that consumers often have very little practical control over whether the same item gets run again and, with it, whether another fee gets triggered. The Federal Reserve’s Consumer Compliance Outlook laid that logic out plainly in 2023: Once a bank declines the transaction, the merchant controls the number and timing of re-presentment, but the bank still decides whether to pay or decline the represented transaction, and whether to assess another NSF fee on it. Merchant control doesn’t make the problem go away; in fact, you could argue that it helps explain why consumers often cannot reasonably avoid the harm, while the bank still retains control over whether to convert that re-presentment into yet another charge. What’s worse is that the problem doesn’t disappear merely because an agency decides the old guidance was too broad. That might be what makes the rescission feel so conspicuously one-directional. Here, the FDIC isn’t withdrawing a stale procedural memo or cleaning up some obscure, obsolete footnote. It is backing away from guidance aimed at a fee practice that had drawn sustained criticism precisely because of the way it can stack charges onto the same failed transaction. And it is doing so without replacing that guidance with anything remotely comparable; instead, what remains is little more than a generic, broad reminder. State regulators, meanwhile, are hardly all moving in the same direction. In January 2025, New York’s governor and the Department of Financial Services announced proposed regulations aimed at what they described as exploitative overdraft and NSF practices. Among the proposed restrictions was a prohibition on charging multiple NSF or overdraft fees for the same transaction, including when a merchant resubmits a declined item. Now, this author isn’t naïve enough to think that New York speaks for every state, but New York’s premise here was fairly universal, and that premise wasn’t that the problem could be solved by polishing disclosures. It was that repeat-fee structures like these can themselves be abusive and harmful, particularly to vulnerable consumers, and that banks were expected to respond not just with clearer words, but with actual limits on fee practices and more timely notice to consumers. So, yes — right now, the FDIC is framing this as a course correction against supervisory overbreadth and uncertainty. You could argue that this is also something else: a conscious decision to stop pressing on a fee practice that has been widely criticized as problematic precisely because disclosure alone may not cure the harm. After all, when the same failed transaction can generate fee after fee after fee, the question is not merely whether the account agreement was artfully drafted. It is whether the system is designed to keep charging for the same miss until the miss becomes profitable. Many will treat this as a “pro-bank move,” and a deregulatory sigh of relief. But I’ll caution again — like so many similar federal actions of late, those same folks may want to be careful not to mistake the removal of guidance for the removal of risk. Multiple re-presentment NSF fees still squarely fall within UDAAP territory because the core criticisms of the practice have not changed: the harm can be substantial, the consumer often cannot reasonably avoid it, and disclosure alone may not solve either problem. What has changed is that the FDIC has chosen to step back without putting anything meaningful in its place, leaving institutions with more discretion, less certainty and a cloudier supervisory line to navigate on their own. And when the regulatory pendulum swings back — as it always does — “flexibility” might look a lot like “ambiguity deferred.” LINCOLN BRUNING endacotttimmer.com 402-817-1000 Legal advice. Community banking experience. 19 NEBRASKA BANKER
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