Bill Text: CA SB1075 | 2023-2024 | Regular Session | Amended

California Senate Bill 1075

Bill Title: Credit unions: overdraft and nonsufficient funds fees.

Spectrum: Partisan Bill (Democrat 2-0)

Status: (Engrossed) 2024-07-02 - From committee: Do pass and re-refer to Com. on APPR. (Ayes 9. Noes 0.) (July 1). Re-referred to Com. on APPR. [SB1075 Detail]

Download: California-2023-SB1075-Amended.html

Amended IN Assembly June 24, 2024

Amended IN Senate May 20, 2024

Amended IN Senate May 09, 2024

Amended IN Senate April 09, 2024

Amended IN Senate April 08, 2024

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Senate Bill

No. 1075

Introduced by Senators Bradford and Limón

February 12, 2024

An act to ~~add, repeal, and~~ add Section 14053 of to the Financial Code, relating to credit unions.

LEGISLATIVE COUNSEL'S DIGEST

SB 1075, as amended, Bradford. Credit unions: overdraft and nonsufficient funds fees.

The California Credit Union Law generally provides for the organization and regulation of credit unions by the Commissioner of Financial Protection and Innovation. Existing law requires a credit union subject to the examination authority of the commissioner to report annually to the commissioner on the amount of revenue earned from overdraft fees and nonsufficient funds fees, as defined and specified.

This bill would require a credit union to provide a ~~customer at least 3 business days before requiring payment of an overdraft fee to give the customer an opportunity to repay the amount that triggered the fee. The~~ member a notice each time the credit union assesses an overdraft fee or nonsufficient funds fee, as specified. Beginning January 1, 2026, the bill would prohibit a credit union from charging an overdraft fee or a nonsufficient funds fee exceeding $14 or the amount set by the federal Consumer Financial Protection Bureau for the fee, whichever is lower. The bill would require a credit union to disclose these requirements to all customers by January 31, 2025, and then annually thereafter. The bill would apply these provisions to credit unions with assets exceeding $1,000,000,000 on January 1, 2025, and to all credit unions on January 1, 2026, except as specified.

Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO

The people of the State of California do enact as follows:

SECTION 1.

Section 14053 is added to the Financial Code, to read:

14053.

(a) For purposes of this section, the following definitions apply:

(1) “Fee” means a nonsufficient funds fee or an overdraft fee.

(2) “Nonsufficient funds fee” means a fee resulting from the initiation of a transaction that exceeds the ~~customer’s~~ member’s available account balance if the ~~customer’s~~ member’s credit union declines to make the payment.

(3) “Overdraft fee” means a fee resulting from the processing of a transaction that exceeds a ~~customer’s~~ member’s available account balance.

(b)A credit union with assets exceeding one billion dollars ($1,000,000,000) shall provide a customer at least three business days before requiring payment of an overdraft fee to give the customer an opportunity to repay the amount that triggered the overdraft fee.
(b) (1) A credit union shall provide a notice to a member each time the credit union assesses a fee that meets all of the following requirements:
(A) The notice shall be provided to the member using a communication method designated by the member for receiving this type of notice.
(B) The notice shall be provided on the same business day the transaction that resulted in the fee occurred, unless it is not feasible to provide the notice that day, in which case the notice shall be provided on the next business day.
(C) The notice shall contain all of the following:
(i) The date of the transaction.
(ii) The type of transaction.
(iii) Whether the transaction was declined or processed.
(iv) If applicable, the amount of the overdraft that results from the transaction.
(v) If applicable, the amount necessary to return the account to a positive balance.
(vi) If applicable, the consequences of not returning the account to a positive balance within a certain timeframe.
(vii) If applicable, the amount of time the member has to return the account to a positive balance to avoid the consequences described in clause (vi).
(2) If the account has more than one accountholder, provision of the notice described in paragraph (1) to any accountholder shall be sufficient.

(c) A Beginning January 1, 2026, a credit union ~~with assets exceeding one billion dollars ($1,000,000,000)~~ shall not charge a fee exceeding fourteen dollars ($14) or the amount set by the federal Consumer Financial Protection Bureau for the fee, whichever is lower.

~~(d)A credit union with assets exceeding one billion dollars ($1,000,000,000) shall disclose the requirements of subdivisions (b) and (c) to all customers by January 31, 2025.~~
~~(e)This section shall remain in effect only until January 1, 2026, and as of that date is repealed.~~

SEC. 2.Section 14053 is added to the Financial Code, to read:
14053.
~~(a)For purposes of this section, the following definitions apply:~~
~~(1)“Fee” means a nonsufficient funds fee or an overdraft fee.~~
~~(2)“Nonsufficient funds fee” means a fee resulting from the initiation of a transaction that exceeds the customer’s account balance if the customer’s credit union declines to make the payment.~~
~~(3)“Overdraft fee” means a fee resulting from the processing of a transaction that exceeds a customer’s account balance.~~
(b)A credit union shall provide a customer at least three business days before requiring payment of an overdraft fee to give the customer an opportunity to repay the amount that triggered the overdraft fee.
~~(c)A credit union shall not charge a fee exceeding fourteen dollars ($14) or the amount set by the federal Consumer Financial Protection Bureau for the fee, whichever is lower.~~
~~(d)A credit union shall disclose the requirements of subdivisions (b) and (c) to all customers by January 31, 2026, and then annually thereafter.~~
~~(e)This section shall become operative January 1, 2026.~~