Overdraft & NSF Fees Data Shouldn’t Be Publicly Released, America’s Credit Unions Argues

As of March 31, credit unions with assets of more than $1 billion must include overdraft and non-sufficient funds (NSF) fees in Call Reports filed with the NCUA. Officials with America’s Credit Unions have pushed back on this reporting revision since it was published late in December. On Friday, Chief Advocacy Officer Carrie Hunt, with the lobbying group, wrote to the NCUA’s three board members asking the agency to not publicly disclose the new fee data stating the new reporting requirement could expose legal and reputational risks to those credit unions.

“Data on these fees should not be released publicly. Instead, the NCUA Board should further evaluate the legal and reputational risks that credit unions may face and delay the release of such information,” wrote Hunt.

According to Hunt’s letter, the argument concerning a legal risk revolves around the fee data from credit unions, falls under the Freedom of Information Act (FOIA) exemption and should be considered confidential.

“It is our position that the agency should refrain from disclosing publicly the Fee Income reported under revised Call Report account code 131, as this information is confidential business information protected under the FOIA exemptions. We maintain that this information on overdraft and NSF fees is exempt from a FOIA request under FOIA Exemption 4 and therefore should not be made public by the NCUA. If the NCUA is releasing Call Report data under separate authority, we would appreciate that clarification,” Hunt wrote.

As far as the reputational risk, Hunt used a report out of California last year as an example, which found credit unions were making a lot of money from overdraft and NSF fees. Specifically, at the time, CUNA and NAFCU pushed back on a detailed editorial published in Politico and called the story “misleading” and “inflammatory.”

Hunt wrote, “As we have already seen following the release of certain information on overdraft and NSF fees charged by California state-chartered credit unions and banks, this information is likely to be spun in a misleading and potentially inaccurate way, resulting in irreparable harm to the positive reputation credit unions have worked so hard to achieve.”

In a March 4 editorial published in CU Times, NCUA Chairman Todd Harper advocated for credit union officials to reduce their overreliance on overdraft and NSF fees. He also argued that credit unions should be transparent about their fee income.

“Credit union member-owners and the public have a right to know how much income a credit union generates from overdraft and NSF fees,” Harper wrote. He also noted that the new fee reporting requirement “will allow credit unions to better benchmark their overdraft programs against other financial institutions.”

In her letter to the NCUA, Hunt added, “Given that the changes have already been made to the Call Report, we stress the significant ramifications that may result. Thus, if the Board is unwilling to prevent disclosure of this fee data indefinitely, we urge, at a minimum, the agency to delay such disclosure until after it has sufficiently assessed the legal and policy concerns with releasing such information.”