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Fed Publishes Supervisory Observations on ‘Representment Fees’

The Federal Reserve’s recent Compliance Spotlight (by the Fed’s Consumer Compliance Outlook) published a research note on supervisory observations regarding “representment fees” this week.

Through supervisory examinations, the Fed recently analyzed the practice of imposing fees on represented transactions at several supervised institutions for compliance with applicable federal consumer financial laws.

As background, a representment occurs when, after a credit union or bank declines to pay a debit transaction from a consumer’s checking account because of insufficient funds, the merchant presents that same transaction again to the bank for payment.

Examiners identified more than one institution that charged a non-sufficient funds (NSF) fee when a transaction was first presented and declined and also charged additional NSF fees each time the same transaction was represented and declined.

At more than one supervised institution, examiners cited the assessment of NSF fees on represented transactions as an unfair practice in violation of Section 5 of the Federal Trade Commission (FTC) Act, which prohibits unfair or deceptive acts or practices (UDAP), based on the following findings.

Access the ‘Compliance Hotline’
Your League-member benefits include the Compliance Hotline — providing exclusive access to dedicated compliance experts:

Using the above phone number and email address, you can gain access to a knowledgeable team that’s ready to address all your credit union’s compliance inquiries — promptly and efficiently. With the Compliance Hotline, you can proactively respond to impromptu questions and issues by getting clarity and insight on technical topics that normally slow you down. We want to help you unlock the full potential of your League membership by leveraging the resources and support you need to navigate the complex world of compliance effortlessly. We’re ALWAYS just a phone call or email away!

Additionally, other League-member compliance resources include: 

  • ViClarity
  • CU PolicyPro
  • ComplySight
  • InfoSight
  • CU Store
  • Record Retention Guide
  • GRC Technology Solutions 

For more information, email Lisa Quaranta.

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