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Decision Decision establishing certain maximum dishonored check fees at Massachusetts state-chartered institutions

Date: 05/01/2015
Organization: Division of Banks

This decision establishes the maximum allowable fee Massachusetts state-chartered banks and credit unions may assess certain consumer deposit accounts for processing dishonored checks, otherwise referred to as deposit return items (DRI), under Massachusetts General Laws chapter 167D, section 6 and Massachusetts General Laws chapter 171, section 41A.1  The maximum fee set by this decision shall remain in effect from June 1, 2015 to June 1, 2016, or until such time as the Division of Banks issues its 2016 DRI fee decision.

Table of Contents

2015 DRI Determination

The 2015 dishonored check or DRI fee is based upon deposit return item cost data independently obtained from a sample of state-chartered banks and credit unions.  The Division of Banks (Division) collected this data during the course of its regularly scheduled financial safety and soundness examinations under G. L. c. 167, s.2.  The sample of institutions reasonably reflects industry differences in asset size, charter type, geographical location, and DRI processing procedures.  The Division used three years of DRI cost data to determine the maximum allowable fee under Massachusetts General Laws chapter 167D, section 6 and Massachusetts General Laws chapter 171, section 41A.  The data collected from the Division's examination sampling process is summarized below.

A total of 74 institutions were surveyed.  This sample included 39 banks and 35 credit unions.2  The cost of processing deposit returned items ranged from $1.21 to $22.65 per item.  The average cost to process a deposit return item was $7.91 for banks and credit unions combined.  Banks had an average cost of $6.97 and credit unions had an average cost of $8.95.  The time for processing a DRI ranged from 2 to 65 minutes and the median cost of all institutions was $6.84 per item.

Conclusion

The maximum allowable fee Massachusetts state-chartered banks and credit unions may assess certain consumer deposit accounts for processing dishonored checks or DRI items under Massachusetts General Laws 167D, section 6 and Massachusetts General Laws chapter 171, section 41A, respectively, shall be $6.84.  This fee determination shall be in effect from June 1, 2015 to June 1, 2016, or until such time as the Division issues its 2016 DRI fee decision.

State-chartered institutions are advised that the above DRI fee is the maximum fee permitted by law.  Institutions, however, may elect to impose a lower DRI fee or to waive the fee for their customers.

 

David J. Cotney, Commissioner of Banks

May 1, 2015

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