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If you have not done so already, please register to attend a virtual CEO Roundtable regarding the NCUA’s new NSF/ODP reporting requirements on Wednesday, April 24, at 9:30 a.m. PT/10:30 a.m. MT. The GoWest team will provide updates on advocacy efforts, guidance for credit unions in reporting this data, and discussion about communications resources. Click here to register. This issue has the potential to impact all credit unions and their members.

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Situation

Effective March 31, 2024, credit unions with assets of $1 billion or greater are required to report Overdraft (OD) and Non-Sufficient Funds (NSF) fees as separate line items on call reports. While this change was announced on December 7, 2023, there was poor communication from the NCUA to credit unions regarding this update and very little lead time to adjust to the changes.

Despite extensive advocacy efforts and a meeting with NCUA as recently as April 23, they will not delay the implementation of the rule, or make it voluntary.

The outcome presents possible reputational risk for all credit unions. This means as a Movement, we must be united and prepared.


What’s Happened So Far

In California, a recently passed law requires CUs and banks subject to the authority of the California Department of Financial Protection and Innovation (DPFI) to report this same data now being required by the NCUA. The state’s first report of this data contained unfavorable results for credit unions, resulting in more widespread scrutiny, extremely negative press, and new legislation currently under consideration in California to severely limit credit unions’ overdraft practices.

GoWest credit unions have an opportunity to learn from what we saw in California and proactively prepare to tell their story, providing the crucial context for what the data shows.


Recommendations/Best Practices 

  • Prepare your public relations/communications team to respond to inquiries. 
  • Share your talking points with all staff, including front-line staff. 
  • Be empathetic. Acknowledge that consumers impacted by the fees are struggling financially. 
  • Be transparent. Policymakers, well-trained financial media, or consumer advocacy groups will appreciate a straightforward response; don’t “pivot” to unrelated topics. 
  • Know your credit union’s policy regarding these fees.  
  • In addition to your policy, know the rationale behind it.   
  • Has the credit union conducted a review of fees recently?  
  • Have fees been reduced or changed, or is there a plan to do so?   
  • How are fees communicated to your members? What feedback have you gotten?   

A special note to CDFI credit unions: 
    • Policymakers may be concerned you are receiving grant money while charging what they consider high or excessive fees.   
    • Our CDFI designation means we are serving an area where people may not have access to other financial services and may have been taken advantage of.  
    • Share examples of the services you provide as a CDFI.  

 If you’ve reduced or eliminated fees, or plan to, share that information.  

If you are asked why your credit union has higher NSF/ODP fees than banks in general, share that credit unions serve primarily consumers while many banks serve more commercial clients.  

Remind reporters that comparing credit unions vs banks on one fee vs looking at fees wholistically is not telling the true story.

Another resource for your consideration can be found at overdraftfacts.com.


Talking Points 

  • Overdraft Protection is an opt-in service members can choose to use, so they can pay expenses on time and bridge the gap between paychecks. 
  • Our fees are posted online.   
  • Overdraft programs provide an alternative to predatory services offered by check cashing companies or payday lenders. 
  • We know that members using services such as the overdraft protection program or who are charged an NSF fee are struggling financially. 
  • As a not-for-profit, cooperative financial institution, we do not want our members to be in a position where they cannot meet their financial obligations. 
  • Our credit union’s fees cover the cost associated with providing the service. 
  • We provide financial education and financial counseling services to support members using these services and provide recommendations to avoid overdraft and NSF fees in the future.

Add Your Credit Union’s Context 

  • Tell how you are addressing concerns about OD and NSF such as: 
    • Reducing/eliminating fees 
    • Increasing education 
    • Outreach to impacted members and services you are offering them. 


General Talking Points

  • Not-for-Profit Structure: Credit unions are focused on delivering value to their members rather than generating profits. The fees collected are ultimately reinvested in the members. 
  • Lower Account Maintenance Costs: As a result of the not-for-profit structure, credit unions frequently provide accounts with no monthly fees, making them a cost-effective option for members, especially those who maintain lower balances.  
  • Competitive Interest Rates: Credit unions typically offer competitive interest rates on savings and checking accounts, which can help members earn more on their deposits compared to many banks.  
  • Member-Centric Approach: Credit unions work with members based on their individual needs, providing services such as options to skip loan payments, low-limit credit cards to help members build credit, refunds on overdraft or NSF fees in certain circumstances.  
  • Community-focused: Credit unions have a strong community focus, which may lead to unique programs and policies aimed at supporting local members, like special checking accounts with more lenient overdraft policies.  


Provided Resources

 

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