What's happening
This bill requires banks to immediately notify customers when overdraft protection or similar fee-based services are used to prevent account penalties.
Why it matters
Empowers consumers to quickly respond to unexpected fees. Immediate notification gives customers a real-time heads-up when overdraft protection or similar fee-based services are triggered, allowing them to act fast—such as transferring funds or adjusting spending—to avoid repeat charges.
Promotes transparency from banks. By requiring clear disclosure of when overdraft services are used and exactly what fees or penalties apply, the bill ensures customers are not caught off guard by hidden or confusing bank practices.
Supports financial planning and awareness. Instant alerts about insufficient funds can help customers better track their account balances, manage cash flow, and avoid accumulating debt from multiple overdraft fees.
Encourages fairer banking practices. Mandating prompt and clear communication about costly account interventions may reduce the likelihood of banks profiting from customers’ lack of awareness, potentially fostering more responsible fee structures in the industry.
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Who cares
Headline styles
Banks Must Notify Overdrafts
Plain English, a few words. Used as the page title.
Sponsors
Senator · Senate District 14
No co-sponsors yet.
History
- Referred to banks
- Referred to banks
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Notify Customers of Overdrafts
In Assembly Committee · Banks · Sponsor David Weprin
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
2807
2019-2020 Regular Sessions
IN SENATE
January 29, 2019
Introduced by Sen. COMRIE -- read twice and ordered printed, and when printed to be committed to the Committee on Banks
AN ACT to amend the banking law, in relation to requiring banks to notify customers of account overdrafts in certain circumstances
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. The banking law is amended by adding a new section 135 to read as follows:
§ 135. Account notifications. 1. Where a banking institution under this article offers its customers or depositors overdraft protection, or any other similar service wherein the banking institution charges a fee to prevent account penalties for insufficient funds, such institution shall notify such customer or depositor whenever such service is employed to prevent account penalties.
2. A banking institution shall immediately notify a customer or depositor of the insufficiency of funds in such individual's account or accounts via electronic mail, or if the individual prefers, through any other method of notification. Such notification shall state that the bank's overdraft service has gone into effect and shall list any fees and penalties associated with such service.
§ 2. The banking law is amended by adding a new section 458 to read as follows:
§ 458. Account notifications. 1. Where a banking institution under this article offers its customers or depositors overdraft protection, or any other similar service wherein the banking institution charges a fee to prevent account penalties for insufficient funds, such institution shall notify such customer or depositor whenever such service is employed to prevent account penalties.
2. A banking institution shall immediately notify a customer or depositor of the insufficiency of funds in such individual's account or 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.
LBD07487-01-9
S. 2807 2
other method of notification. Such notification shall state that the bank's overdraft service has gone into effect and shall list any fees and penalties associated with such service.
§ 3. This act shall take effect immediately.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
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
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 this service. This will enable the customer to take action as soon as possi- ble to avoid fees, penalties, and interest on an overdrawn account.
Summary of 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 over- draft 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 customer's responsibility to moni- tor 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.
Legislative history
S 4602 COMRIE Same as A 5413 Weprin
Fiscal implications
None to the State.
Effective date
This act shall take effect immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.