As part of Governor Hochul’s recently unveiled 2025 State of the State, Governor Hochul today announced the Department of Financial Services has posted proposed regulations to enhance consumer protections against unfair overdraft fees. These regulations ensure consumers will no longer be burdened with overdraft fees for minor transactions and require banks to provide timely notifications to consumers about overdraft fees to improve transparency.
“With hidden fees and unfair practices, it has become increasingly more difficult for hard-working New Yorkers to keep up,” Governor Hochul said. “It is time that we hold banks accountable and lighten the burden of high overdraft fees for minor transactions to keep New Yorkers’ hard-earned money in their pockets.”
New York State Department of Financial Services Superintendent Adrienne Harris said, “A healthy market grows when consumers have confidence and trust in the products offered and the providers offering them. Today’s proposed regulation ensures that consumers will no longer be taxed with surprising and disproportionate fees for using the overdraft services provided with their bank accounts.”
The proposed regulations eliminate the most exploitative and deceptive banking fees, cap overdraft fees, strengthen customer communications and establish stricter transaction processing requirements. State-chartered banks would be prohibited from:
- Charging overdraft fees on overdrafts of less than $20.
- Charging overdraft fees that exceed the overdrawn amount.
- Charging more than three overdraft or non-sufficient funds (“NSF”) fees per consumer account per day.
- Charging NSF fees for instantaneously declined electronic transactions.
- Charging multiple NSF or overdraft fees for the same transaction, including when a merchant resubmits a declined transaction.
- Charging a “sustained,” “continuous,” or “daily” fee for each day an overdraft balance is not repaid.
- Charging double fees to cover an overdraft, such as one fee for automatically transferring funds from another account and a second fee for the overdraft itself.
- Processing electronic debit transactions in a manner intended to maximize the number of overdraft and NSF fees.
- Charging an overdraft fee for an electronic transaction when the consumer’s account indicates sufficient funds at the time the transaction was initiated.
In 2022, the Department of Financial Services took action to alert institutions about its expectations around unfair overdraft and NSF fee practices, often known as “junk fees,” which disproportionately harm low- and moderate-income New Yorkers.
In 2023, the New York State Legislature passed, and Governor Hochul signed into law, legislation granting DFS additional authority to combat unfair bank fee practices. The Governor’s affordability agenda is focused on easing the financial burden on New Yorkers by addressing unfair practices and ensuring transparency in essential services. From combating exploitative fees to expanding access to affordable housing and child care, she remains committed to creating a more equitable and affordable New York for all residents.
These proposed regulations reflect DFS’s data-driven approach to policy, taking into account the existing regulatory landscape, market trends, the Department’s own overdraft study and robust stakeholder engagement. The Department looks forward to continuing to engage with key stakeholders on this important issue through the public comment period.
Governor Hochul’s Consumer Protections Proposals
As part of her 2025 State of the State, Governor Hochul directed the Department of Financial Services to issue regulations targeting exploitative banking practices while preserving access to high quality banking services. These regulations will prohibit predatory fees, cap the number of daily overdraft charges and improve transparency through timely notifications. These measures will protect consumers and foster accessible and affordable banking services for all New Yorkers.
Governor Hochul proposed legislation to require retail sellers to offer a minimum 30-day return window for various products unless otherwise specified. Additionally, Governor Hochul proposed first-in-the-nation legislation that requires businesses to notify online shoppers when prices are set based on their personal data. To further protect consumers, Governor Hochul proposed additional legislation to ensure cancellation processes are simple, transparent, and fair, ensuring that it is just as easy to cancel a subscription as it was to sign up. Governor Hochul also proposed legislation to establish a licensing and supervision framework for Buy Now Pay Later providers. To address Energy Service Companies (ESCOs) not being required to return unclaimed funds to New York residents, Governor Hochul proposed legislation to ensure ESCOs are subject to the same requirements as utility companies. To combat elder financial exploitation, Governor Hochul is seeking legislation to help protect against fraudulent activity, by providing more authority to banks and other institutions to pause certain suspicious transactions and mandate reporting of suspected exploitation and fraud to law enforcement and Adult Protective Services.