NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A1721
SPONSOR: Weprin TITLE OF BILL:
An act to amend the banking law, in relation to requiring banks to noti-
fy customers of account overdrafts in certain circumstances
PURPOSE OR GENERAL IDEA OF BILL:
This bill will require banks, to notify their customers with accounts
featuring overdraft protection when such protection is exercised. This
notification will also list any fees and penalties associated with t
this service. This will enable the customer to take action as soon as
possible to avoid fees, penalties, and interest on an overdrawn account,
SUMMARY OF SPECIFIC PROVISIONS:
Section 1:
The banking law is amended by adding a new section 135. Paragraph one
states that banks which offer overdraft protection or similar service
that the banks must notify customers when their overdraft protection has
been employed. Paragraph two establishes that this contact shall be made
via email or the customers preferred method of notification, and shall
include a list of penalties or fees associated with this service.
Section 2:
The banking law is amended by adding a new section 458: This section is
identical to section one.
Section 3:
This act shall take effect immediately
JUSTIFICATION:
This bill will simply ensure that banking customers are alerted when
their accounts are overdrawn if they have signed up for overdraft
protection or a similar service. This would allow them to act to fix the
situation. Simply put, while it is a customers responsibility to monitor
their.account, if for some reason the account does become overdrawn for
some reason, the bank may charge days of fees and penalties before the
customer happens to check their balance, and even then, they would not
readily know what the amount of the fees and penalties being levied will
amount to. By requiring customers be notified when their overdraft
protection has been activated, it creates a situation where customers
are better able to manage their finances.
PRIOR LEGISLATIVE HISTORY:
02/08/17 referred to banks
01/03/18 referred to banks
FISCAL IMPLICATIONS:
None
EFFECTIVE DATE:
Immediately
STATE OF NEW YORK
________________________________________________________________________
1721
2025-2026 Regular Sessions
IN ASSEMBLY
January 14, 2025
___________
Introduced by M. of A. WEPRIN -- read once and referred to the Committee
on Banks
AN ACT to amend the banking law, in relation to requiring banks to noti-
fy customers of account overdrafts in certain circumstances
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. The banking law is amended by adding a new section 135 to
2 read as follows:
3 § 135. Account notifications. 1. Where a banking institution under
4 this article offers its customers or depositors overdraft protection, or
5 any other similar service wherein the banking institution charges a fee
6 to prevent account penalties for insufficient funds, such institution
7 shall notify such customer or depositor whenever such service is
8 employed to prevent account penalties.
9 2. A banking institution shall immediately notify a customer or depos-
10 itor of the insufficiency of funds in such individual's account or
11 accounts via electronic mail, or if the individual prefers, through any
12 other method of notification. Such notification shall state that the
13 bank's overdraft service has gone into effect and shall list any fees
14 and penalties associated with such service.
15 § 2. The banking law is amended by adding a new section 458 to read as
16 follows:
17 § 458. Account notifications. 1. Where a banking institution under
18 this article offers its customers or depositors overdraft protection, or
19 any other similar service wherein the banking institution charges a fee
20 to prevent account penalties for insufficient funds, such institution
21 shall notify such customer or depositor whenever such service is
22 employed to prevent account penalties.
23 2. A banking institution shall immediately notify a customer or depos-
24 itor of the insufficiency of funds in such individual's account or
25 accounts via electronic mail, or if the individual prefers, through any
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD03585-01-5
A. 1721 2
1 other method of notification. Such notification shall state that the
2 bank's overdraft service has gone into effect and shall list any fees
3 and penalties associated with such service.
4 § 3. This act shall take effect immediately.
