Amended  IN  Senate  April 08, 2024

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Senate Bill
No. 1075

Introduced by Senators Bradford and Limón

February 12, 2024

An act to add Section 14053 to the Financial Code, relating to credit unions.


LEGISLATIVE COUNSEL'S DIGEST


SB 1075, as amended, Bradford. Credit unions: overdraft and nonsufficient funds fees.
The California Credit Union Law generally provides for the organization and regulation of credit unions by the Commissioner of Financial Protection and Innovation. Existing law requires a credit union subject to the examination authority of the commissioner to report annually to the commissioner on the amount of revenue earned from overdraft fees and nonsufficient funds fees, as defined and specified.
This bill would require a state-chartered credit union to provide a customer at least 5 business days before requiring payment of an overdraft fee or nonsufficient funds fee to give the customer an opportunity to repay the amount that triggered the fee. The bill would prohibit a state-chartered credit union from charging more than 3 of those fees per month. The bill would require a state-chartered credit union to disclose these requirements to all customers by January 31, 2025, and then annually thereafter.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 14053 is added to the Financial Code, to read:

14053.
 (a) For purposes of this section, the following definitions apply:
(1) “Fee” means a nonsufficient funds fee or an overdraft fee.
(2) “Nonsufficient funds fee” means a fee resulting from the initiation of a transaction that exceeds the customer’s account balance if the customer’s credit union declines to make the payment.
(3) “Overdraft fee” means a fee resulting from the processing of a transaction that exceeds a customer’s account balance.
(b) A state-chartered credit union shall provide a customer at least five business days before requiring payment of a fee to give the customer an opportunity to repay the amount that triggered the fee.
(c) A state-chartered credit union shall not charge more than three fees per month.
(d) A state-chartered credit union shall disclose the requirements of subdivisions (b) and (c) to all customers by January 31, 2025, and then annually thereafter.