Gov. Cuomo signs law to require banks to take action to prevent overdraft fees

Regional

NEW YORK – JUNE 30: People use ATMs at a Bank of America branch is seen June 30, 2005 in New York City. Bank of America Corp., the second- largest U.S. bank, agreed to buy MBNA Corp. for around $35 billion. (Photo by Mario Tama/Getty Images)

ALBANY, N.Y. (WROC) — Gov. Andrew Cuomo signed legislation Thursday that requires banks in New York to take action to prevent overdraft fees for customers.

The legislation, S.1465/A.1073, requires banking institutions that maintain checking accounts to pay checks in the order they are received. If a bank receives a check for a greater amount of money than the balance in the account, it may decline to pay the check. However, the banking institution must honor any smaller checks that can be paid with the existing account balance, according to officials.

“The COVID pandemic had a devastating effect on our economy and as a result, many New Yorkers still struggle to pay their bills, and the arbitrary overdraft fees that banks have continued to issue only add insult to injury,” Cuomo said. “This legislation will require banks to take several actions that reduce the opportunities for charging overdraft fees and keep more money in New Yorkers’ pockets. We continue to face the economic impacts of the COVID-19 pandemic and this commonsense bill will help many of the state’s residents who need it most.”

Under current law, if a banking institution receives a check for a larger amount of money than the funds in the account, it will not only dishonor that check, but all subsequent checks, even if there are sufficient funds in the account to pay them. Officials from the governor’s office say this legislation requires banks to honor subsequent checks if they can be paid using funds in the account.

Copyright 2021 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

If you have a news tip or a correction to the story you can email it to us through this link. If you would like to send a comment to the author of the story, you can find their email on our Meet the Team page.

Trending Now