Update on Recent Litigation Trends in Overdraft and NSF Fee Practices

Time 7 Minute Read
October 2, 2025
Legal Update

Notwithstanding a decrease in regulatory focus on overdraft and non-sufficient (“NSF”) fee issues under the Trump administration, we have seen an uptick in litigation on these issues through increased account record requests, demand letters and lawsuits. It is important that financial institutions remain vigilant in fully disclosing their fee practices and monitoring for potential risk areas.

Monitor for Financial Record Requests

Institutions are increasingly receiving “financial record authorization” requests from attorneys representing bank customers as a first step before a formal demand letter or lawsuit. These attorneys are commonly using social media to search for potential new clients, promising to do all the work for them to identify potential claims. To do this, clients execute “financial records authorizations,” wherein the clients authorize attorneys to obtain copies of all of their bank records on their behalf. Armed with these authorizations, the attorneys then send form records request letters to institutions, demanding copies of all of their clients’ records since account opening. These records requests not only create burdensome response obligations, but also the materials produced are then mined by counsel for potential claims. It is critical that institutions are on the lookout for such requests and are prepared to handle them carefully to help mitigate against potential claims.

Proactively Assess for Common Theories

When reviewing the produced records, plaintiffs’ attorneys are still commonly investigating for claims based on: (1) assessing overdraft fees on “authorize positive, settle negative” (“APSN”) transactions without adequate disclosures and (2) assessing multiple NSF and overdraft fees on the same item, if the item is presented for payment more than one time (“retry” or “representment” fees), without adequate disclosures. We are also seeing two new theories of increasing focus: (1) challenging the “content” of information contained in the institution’s model A9 Opt-In form for capturing consent to assess overdraft fees on ATM and one-time debit card transactions, and (2) challenging the assessment of fees on de minimis debit items (micro-transactions).

Challenges to the A9 Opt-In Form

In order to assess overdraft fees on ATM and one-time debit card transactions, Regulation E, 12 C.F.R. § 1005.17(b), requires “affirmative consent” or “opt-in” by the consumer to overdraft coverage on such transactions. Regulation E contains a model consent form in Appendix A, commonly referred to as the “A9 Opt-In Form” entitled “What You Need to Know about Overdrafts and Overdraft Fees”. In order to take advantage of the “safe harbor” contained in Regulation E for using a consent form that is “substantially similar” to the model A9 Opt-In Form, most institutions had historically adopted their own consent forms to largely track the model form. In response, in a new line of cases, plaintiffs’ attorneys are alleging that merely using a verbatim version of the model A9 Opt-In Form alone, without additional disclosures specific to the institution’s practices within that document, is a violation of Regulation E. 

Specifically, in these lawsuits, plaintiffs’ attorneys are alleging that the model form does not contain language sufficiently describing the institution’s balance method for determining if a customer does not have enough money to cover a transaction (i.e., whether the institution calculates overdrafts based on the actual/ledger balance or the available balance). In addition, they allege that the model form does not include language disclosing whether the institution determines that balance and assesses fees at the time of authorization (i.e., debit card swipe) or at the time of settlement (generally several days later). Because Regulation E requires the opt-in notice to be “segregated” from all other information, plaintiffs’ attorneys argue that this additional information must be contained in the separate A9 Opt-In form itself and cannot be supplemented by the account agreement or other disclosures. 

Challenges to Fees on De Minimis Debit Items

We have also seen an uptick in plaintiffs’ attorneys challenging the assessment of fees on de minimis debits. Increasingly, applications are using a verification process whereby micro credits are followed by micro debits to verify linked bank accounts. For example, applications may submit a micro credit of $0.21 to the linked account followed by a micro debit of $0.21 for verification purposes. Depending on the institution’s de minimis settings for the linked account, a customer could potentially be charged an overdraft fee for the micro debit even though plaintiffs’ attorneys argue that the micro credit was intended to cover the subsequent micro debit. Plaintiffs’ attorneys are now reviewing account records for this theory and challenging assessment of overdraft fees on those account verification micro debits as a potential breach of contract or unconscionable practice under state law.

Recommended Proactive Steps

Given this heightened litigation environment, we recommend that institutions proactively identify and mitigate against these potential risk areas. This includes:

  • Reviewing and updating the institution’s overdraft and NSF related disclosures, including the account agreement, A9 Opt-In Form, fee schedule and overdraft program disclosures to mitigate against these common theories.
    • If the institution does not have a comprehensive overdraft and NSF fee practices disclosure in place that covers these common theories, we recommend that the institution work on developing disclosures that work in conjunction with updates to the fee schedule and A9 Opt-In Form.
    • As part of any updates, it is critical to confirm the institution’s core settings on retry fees, APSN fees and de minimis limits to provide that the core settings match the intended practices and updated disclosures.
    • Institutions may also consider implementing updated de minimis fee limitations at the transaction and balance level to help mitigate against potential claims.
    • Finally, institutions may also work with counsel to assess whether it may be appropriate to add an arbitration provision with a class waiver as part of these account agreement updates to help mitigate against potential claims.
  • Monitoring for financial records requests and carefully handling such inquiries with assistance of counsel.
    • It is critical that institutions take these records requests seriously, as plaintiffs’ attorneys will be mining the documents produced to form the basis for a settlement demand or filing of a lawsuit.
    • We recommend that institutions consider retaining counsel to assist with responding to such records requests, as there may be opportunities to advocate and educate plaintiffs’ attorneys on the institution’s practices without the need for formal litigation and deter future records requests.

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Abigail Lyle is a member of the Financial Institutions Corporate and Regulatory practice group at Hunton Andrews Kurth LLP. This article presents the views of Ms. Lyle and does not necessarily reflect those of Hunton Andrews Kurth or its clients. The information presented is for general information and education purposes. No legal advice is intended to be conveyed; readers should consult with legal counsel with respect to any legal advice they require related to the subject matter of the article. Ms. Lyle regularly advises institutions on topics related to overdraft programs and defends institutions in class action litigation and enforcement actions related to overdraft and insufficient fund fee practices. Abigail Lyle may be reached at (214) 979-8219 or alyle@hunton.com.

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