Bank customers who were charged fees on transactions they had enough money to cover are getting refunds. The Consumer Financial Protection Bureau’s supervisory exams forced financial institutions to return $140 million to consumers hit by illegal junk fees, with $120 million of that total tied directly to surprise overdraft charges and so-called double-dipping nonsufficient funds (NSF) fees. The refunds, combined with a separate $60 million penalty against Bank of America from the Office of the Comptroller of the Currency, signal that federal regulators are squeezing a revenue stream banks have relied on for decades.
How coordinated federal action drove $140 million in refunds
The $140 million in refunds did not come from a single lawsuit or a blanket rule change. Instead, the CFPB used its routine supervisory exams to identify banks that were charging overdraft fees even when a customer’s account showed a sufficient balance at the time a transaction was authorized. The agency classified these charges as unfair, deceptive, or abusive acts under its UDAAP enforcement authority, then required the institutions to return money to affected customers. Of that amount, $120 million went to customers who had been hit by surprise overdraft fees or NSF fees charged multiple times on the same transaction.
The CFPB’s September 2022 enforcement action against Regions Bank, filed as Administrative Proceeding 2022-CFPB-0008, became a defining example. Examiners found that the bank charged overdraft fees on certain debit card and ATM transactions even when consumers appeared to have enough money at the time the transactions were authorized. The order required Regions to reimburse impacted customers, pay a civil penalty, and overhaul its overdraft practices. The case signaled that regulators viewed surprise overdraft fees as a systemic problem rather than a one-off error.
Building on that case, the CFPB issued formal guidance to the broader industry, warning that charging fees on transactions authorized against a positive balance or repeatedly charging NSF fees on the same item could be considered unfair under federal law. The bulletin, released as part of the agency’s effort to curb so-called “junk fees,” clarified that banks must design systems to avoid penalizing customers when the bank’s own processing order or timing quirks cause an account to dip negative. By publishing this compliance guidance, the CFPB effectively put every institution on notice that practices similar to those uncovered at Regions could trigger enforcement.
The OCC moved in parallel. The agency assessed a $60 million civil penalty against Bank of America for similar overdraft fee practices, specifically targeting what regulators call “representment,” where a bank resubmits a declined transaction and charges a new fee each time it bounces. In these cases, a single merchant payment that fails multiple times can generate several NSF fees, even though the consumer never attempts a new purchase. By treating each representment as a fresh opportunity to charge a fee, banks magnified costs for customers living paycheck to paycheck. Two separate federal agencies targeting the same category of fees at different banks created pressure that no single consent order could have achieved alone.
Overdraft revenue fell by half, saving consumers billions
The individual enforcement actions tell only part of the story. CFPB research found that overdraft and NSF revenue in 2023 dropped more than 50% compared with pre-pandemic levels, saving consumers more than $6 billion annually. That decline reflects more than just refunds from specific enforcement cases. After watching regulators pursue Regions Bank, Bank of America, and others, many large and midsize banks began voluntarily reducing or eliminating overdraft fees, capping the number of charges per day, or introducing grace periods and small negative-balance buffers.
Industry executives have acknowledged that overdraft and NSF fees were historically a significant profit center, especially for accounts with low balances. But the new regulatory environment made that revenue less predictable and more legally risky. Rather than wait for an exam finding or enforcement order, institutions increasingly chose to rework their fee schedules, market “low- or no-overdraft” accounts, and lean more heavily on other sources of income such as interchange fees and interest spreads.
The shift has been especially meaningful for consumers who routinely hover near zero. Under older fee models, a single timing mismatch-such as a paycheck posting after a bill payment-could trigger a cascade of overdraft charges. With fewer surprise fees and limits on representment, those same consumers now have a better chance of recovering from a shortfall without losing a full day’s wages to penalties. The CFPB’s data suggest that the savings are widespread, not confined to customers at the banks directly named in enforcement actions.
Regulators are not finished. The CFPB has signaled that it will continue to scrutinize overdraft programs through routine exams, with a focus on whether disclosures are clear and whether systems still generate fees in situations consumers cannot reasonably anticipate. The OCC, meanwhile, has used its Bank of America order to underscore that national banks must monitor third-party payment processors and internal posting practices to avoid repeat NSF fees on the same transaction.
Together, these efforts have begun to unwind a longstanding banking practice that many consumers viewed as both confusing and punitive. While overdraft services are unlikely to disappear entirely, the era in which banks could quietly reap billions from opaque fee structures appears to be ending. For households that live close to the financial edge, fewer junk fees mean more money available for rent, groceries, and savings-and a banking system that functions a bit more like the safety net it is often advertised to be.
