Have you ever been charged with an overdraft fee out of the blue without knowing that you had used an overdraft? This has been happening to some back customers for a couple of years now. You may not have heard of Authorize Positive, Purportedly Settle Negative, or APSN, and if you haven’t, it’s time to familiarize yourself with these fees.
Overdrafts can be a headache, but if you have a controlled situation, you will only use them in extreme cases. However, APSN can make you hate the overdraft service, so it’s important to have the Federal Deposit Insurance Corporation’s contact information handy.
What is an APPSN Fee?
The Authorize Positive, Purportedly Settle Negative (APPSN) is an overdraft fee that is occurring at some banking institutions. Better known as APSN, it is a financial transaction that occurs when you have a positive balance when you pay with your debit card, but it leaves a negative balance when a previous transaction is settled.
Sounds confusing, doesn’t it? Let’s explain it another way. Imagine you went to buy a toy for your dog and paid with your debit card because you knew you had enough money and the bank authorized it but did not settle it.
You get home, give your pet its toy and check your account. It is in red with the amount of the toy, right? That happens because the transaction was settled sometime after the withdrawal you made, so that payment was charged as an overdraft because you didn’t have a sufficient balance.
Is the APSN a legal transaction?
Because of this type of situation, the Federal Deposit Insurance Corporation (FDIC) has issued several guidelines that seek to promote practices among financial institutions that protect consumers. Earlier this year, the FDIC issued Supervisory Guidance on Charging Overdraft Fees for Authorize Positive, Settle Negative Transactions.
In this publication, it explains that not taking the necessary steps to avoid APSN could be considered a violation of the Dodd-Frank Wall Street Reform (Dodd-Frank UDAAP) and Consumer Protection Act (CPA) of 2010, a document that prohibits banking institutions from engaging in practices that harm consumers through their services and products.
It also mentions another legal instrument that can be violated by banks and third parties with the APSN, such as the Federal Trade Commission (FTC).
Does this happen every time I overdraft?
No, if you decide to make overdraft payments knowing how much you will be charged in feed, an APSN will not occur. APSN occurs specifically when you are charged fees for overdrafts that you did not intend to have.
Let’s go with another example because I know it is a bit complex to understand. Imagine you go shopping and you know you will have to resort to overdraft because you don’t have the necessary amount to cover it.
Then, your account has a positive balance because of a payment you received, but later you have another overdraft fee after other purchases you made with a positive balance. That is when the APSN occurs.
In the FDIC document, the institution explains that:
“The consumer cannot reasonably avoid the injury because the consumer can’t effectively control payment systems and overdraft processing systems practices”
So whether it happens or not will depend on your trusted institution.
Therefore, the FDIC publication is encouraging the review of banks’ overdraft practices and policies. They also advise institutions to review the agreements they have with third parties that provide this service.
Can I ask my bank to reverse overdraft fees?
As you may already know, all banks offer overdraft policies to their customers, and transaction fees are in the range of $30 to $50. They also have several overdraft services that allow you to make use of it in specific cases or your day-to-day business depending on the type you hire.
However, there are a couple of things you can do to get an overdraft fee refund or avoid the overdraft fee. In case of a refund, you should call your financial institution’s customer service as soon as possible.
And when we say “soon” we mean right after the purchase that you saw the fee in your account. If you are not a customer who frequently uses this service, you may be refunded. In the case of APSN fees, you will have to explain your situation to the bank so that they can refund you quickly.
In these cases, it is important to be honest and if you are a loyal customer, they may be able to resolve more in a jiffy.
What do I do if I don’t receive a refund even though it is an APSN case?
Since the FDIC has made several publications with which it seeks to persuade financial institutions to resolve this situation, you can go to this institution to report the bank’s refusal to give you a refund for APSN. The process is simple:
- All you have to do is file a complaint with the FDIC’s Consumer Response Center. In it, you must indicate information such as your name and where you are calling from
- Likewise, you must provide the bank’s information (state and name) and the type of service involved in the problem, in this case, it would be the APSN
- You will have to include a detailed explanation of the situation and chronological order of the facts, as well as dates and evidence, such as images, to support your complaint. Finally, in that email, you should explain the type of resolution you hope to achieve, which would be the APSN fee refund
This can be done in the FDIC Information and Support Center form. You may also contact the CRC by calling toll-free 1-877-275-3342 (1-877-ASK-FDIC) or For the Hearing Impaired – Toll-Free 1-800-877-8339, Monday through Friday from 8:00 a.m. to 6:00 p.m. (EST) and Saturday from 8:00 a.m. to 1:00 p.m. (EST).
“APPSN Fees Definition | Law Insider.” Law Insider, https://www.lawinsider.com/dictionary/appsn-fees
Bonnema, Nick. “New Expectations for APSN Fees and Overdraft Programs | Wipfli.” Wipfli, Wipfli, https://www.wipfli.com/insights/articles/fi-ra-new-expectations-for-apsn-fees-and-overdraft-programs
“FDIC: Consumer Assistance & Information – Submit a Complaint.” FDIC: Federal Deposit Insurance Corporation, https://www.fdic.gov/consumers/assistance/filecomplaint.html
“FDIC: FIL-19-2023: Supervisory Guidance on Charging Overdraft Fees for Authorize Positive, Settle Negative Transactions.” FDIC: Federal Deposit Insurance Corporation, https://www.fdic.gov/news/financial-institution-letters/2023/fil23019.html
“FDIC Information and Support Center.” FDIC Information and Support Center, https://ask.fdic.gov/fdicinformationandsupportcenter/s/?language=en_US
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“Supervisory Guidance on Charging Overdraft Fees for Authorize Positive, Settle Negative Transactions .” FDIC, https://www.fdic.gov/news/financial-institution-letters/2023/fil23019a.pdf