Bank overdraft fee refunds: what one wrong core setting costs

Bank overdraft fee refunds have run to nearly $250 million since 2022 for two practices alone, according to the CFPB: about $184 million for fees on card transactions the customer's balance covered when they paid, and about $66 million for repeat NSF fees when a merchant re-presented the same item. Part of the cause, the CFPB found, was a setting in core banking platforms that kept charging those fees by default unless the institution switched it off. What one wrong setting costs is the sum of three things: every fee charged since the setting went wrong, the program that finds the customers and pays them, and, if a regulator finds it first, a penalty and an order that dictates how the refund is run. Botminds' Overdraft Compliance is built to size the first two before the third arrives. This page sets out what banks have refunded and paid, how refunds are calculated and paid out, and what it costs to find the problem yourself.

How much have banks refunded for overdraft fees?

The CFPB's running total is the best single figure: "Since the CFPB heightened its supervisory attention on overdraft and NSF fees in 2022, financial institutions have agreed to refund nearly $250 million to consumers", about $184 million for unanticipated overdraft fees and about $66 million for NSF fees on items already returned once (Supervisory Highlights 37). That figure covers supervisory findings at institutions the CFPB examines. Public enforcement orders sit on top of it.

The orders show the range. Regions Bank was ordered to refund at least $141 million of authorized-positive overdraft fees; Bank of America about $80.4 million of repeat NSF fees; TD Bank an estimated $97 million over opt-in failures; Atlantic Union Bank at least $5 million, also over opt-in. The Congressional Research Service totals the CFPB's overdraft actions against Wells Fargo, Navy Federal Credit Union and Regions at "roughly $491 million for overdraft-related issues" (CRS Insight IN12513).

Why do banks refund overdraft fees?

Because a fee charged in breach of a rule is consumer harm, and every supervisor's remedy for harm starts with getting the money back. In the first APSN examinations, institutions "were directed to cease charging APSN overdraft fees and to conduct lookbacks and issue remediation to consumers who were assessed these fees" (Supervisory Highlights 29). The OCC says its overdraft violation findings "have typically led to corrective action, including remediation to harmed consumers" (OCC Bulletin 2023-12).

The CFPB's 2025 priorities lean further the same way: the Bureau "will focus on redressing tangible harm by getting money back directly to consumers, rather than imposing penalties on companies" (CFPB Supervision and Enforcement Priorities, April 2025). Its 2020 bulletin on responsible business conduct, which was not among the 67 guidance documents withdrawn in May 2025, sets the questions every remediation is judged by: whether the institution worked out how many consumers were affected and how badly, and whether it made them whole (CFPB Bulletin 2020-01; the bulletin's full list, and how a program answers it, is in what customer remediation in banking is).

What one wrong core setting costs, term by term

Most of the published refunds trace back to a fee decision a core platform makes on every item. The CFPB found that core processors had set their platforms to keep charging the fees by default until each client institution acted to stop them (NSF representment fees and the core's default setting quotes the finding). A setting that is wrong charges every eligible customer every day until someone changes it, so its cost grows with time, not with any single error. The four terms below price it.

Take the fictional sample credit union the solution runs on. Its core decided card and ATM courtesy pay fees at settlement, the vendor default since a 2024 conversion, and a second setting charged a returned-item fee on re-presented items. Replaying 12 months found 4,920 authorized-positive fees and 2,218 repeat fees, $142,680.00 and $64,322.00 at $29.00 a fee. Changing the first setting would remove, by the solution's estimate, about 410 fees a month, $11,890.00 of monthly fee income. A 24-month lookback across all four findings is estimated at $280,836.00 against $222,256.00 for 12 months.

How are overdraft refunds calculated?

Fee by fee, with exclusions written down before the first payment. The Regions order is the clearest public template. It required redress of "all unreimbursed Authorized-Positive Overdraft Fees" over the relevant period, except four classes: fees included in balances charged off when the account closed, provided the bank did not collect them; fees on transactions without enough funds "at authorization for the amount of the final purchase"; overdraft protection transfer fees that would have been charged anyway; and fees "that displaced other overdraft or non-sufficient funds fees that would have occurred but for Respondent's daily cap on such fees" (CFPB Consent Order 2022-CFPB-0008).

That last exclusion shows why refund arithmetic needs the replay, not a query. If a daily cap of four stopped a fifth fee, and the APSN fee is refunded, the fifth fee would have been charged in its place; refunding both overpays. The same logic removes fees already refunded at a branch and counts a customer in two findings once. In the sample, 436 members were in more than one finding and were counted once. The order also required a written redress plan that would "Describe the methodology Respondent proposes to use to identify Affected Consumers and the amount of redress to be provided to each", submitted within 90 days for the CFPB's non-objection.

Overdraft Compliance sizes the refund plan, and a second person checks it

Can a bank refund overdraft fees to closed accounts?

It has to, and orders spell out how. The Regions order required redress "by direct deposit whenever feasible", otherwise by paper check, and a plan describing how the bank would find current mailing addresses, with "reasonable efforts to identify current addresses prior to mailing redress checks and once any redress checks are returned as undeliverable". Money that could not be delivered did not stay with the bank: if redress paid fell short of the plan, the shortfall went to the Bureau.

In the sample, 288 members had closed their accounts since the fee and are paid by official check to the address on the core, checked against returned mail; 14 are deceased members whose refunds go through the credit union's deceased account procedure. Checks that are never cashed still need an answer, which is why the refund program needs an end date and a reconciliation, not just a payment run.

Who pays for an overdraft lookback, and what does it cost?

The institution pays, and the cost is mostly people. The Federal Reserve Bank of St. Louis found that staff costs were above 60 percent of compliance spending in every size group of community banks it studied (Regional Economist, July 2016). A lookback done by hand is weeks of that time: requesting posting history, matching card authorizations to settlements, linking returned items, sizing the refund and drafting letters.

The solution's own estimate, for one quarterly test at a credit union the size of the sample, puts the manual work at about 25 business days on a sample of accounts, eight of them on sizing the refund, entries and letters, against about four and a half with the agents on every fee. It is an estimate, kept deliberately modest, not a measured result. The bigger saving is the one a sample cannot deliver at any price: the population, counted, before the refund has to be rebuilt for an examiner. How that full-year test works is in overdraft protection compliance, tested on last year's postings.

Finding it yourself or being told: why the order matters

The same refund costs less when the institution finds it. The FFIEC's consumer compliance rating system, used by the FFIEC's member agencies, was revised to "establish incentives for institutions to promote consumer protection by preventing, self-identifying, and addressing compliance issues in a proactive manner" (81 FR 79473). The Regions order documents the opposite path: the bank's executives decided by July 2019 to stop the fees but waited for a posting order change, while compliance staff warned that regulators "will likely expect" refunds of the fees charged in the meantime.

FDIC data put the voluntary side in proportion. In 2025 the FDIC ordered about $1.2 billion in restitution across all consumer laws, while supervised institutions "provided voluntary restitution payments totaling $4.7 million to 47,902 consumers" (FDIC, March 2026); in 2023, voluntary restitution was $10.6 million to more than 130,000 consumers (FDIC, March 2024). The money is small next to the orders; the difference is who decided how to pay it.

Sizing a refund before the exam

Botminds' Overdraft Compliance does the refund arithmetic as soon as a finding is approved. Its refund agent adds the finding's fees to the plan, removes overlaps and fees already refunded, splits credits, checks and estates, and drafts the general ledger entries. The Compliance Officer prepares the plan and the Deposit Operations Manager checks it; the agent never posts a refund. A notice agent drafts a plain-language notice for every member in the language on file, which only the Member Services Director approves, and nothing is sent before the plan is checked.

The setting change is priced the same way before it is made. In the sample, the replay of 12 months under the proposed setting shows the fees and income it removes, so the decision to change it is taken with the number in front of the person who signs it. Why so many of these settings were vendor defaults, and what to ask the vendor, is in overdraft protection program vendors and your core: what agents add.

Overdraft Compliance prices the setting change behind the refund

Questions people ask

What does an overdraft remediation cost?

The refund itself, which is every affected fee in the lookback window; the people and data work to find and pay it; and any penalty if a regulator finds it first. The refunds in public orders ranged from at least $5 million at Atlantic Union to at least $141 million at Regions, and the penalties from $1.2 million to $120 million across two agencies at Bank of America.

Do banks have to notify customers about overdraft refunds?

Orders usually require it. The Regions order required a notification explaining that the payment was made under the consent order, with an exemplar submitted for review. Outside an order, a short notice saying what was charged, what is being refunded and what changed is what lets a customer recognise the credit.

How far back do overdraft fee refunds go?

To the start of the practice or as far as the regulator sets. Remediation plans reported to the CFPB for APSN fees covered periods starting in 2018 or 2019; Regions' covered about three years, and Bank of America's repeat NSF refunds went back to September 2018. Data retention, at least two years under Regulations E and DD, often sets the practical limit.

Are refunded overdraft fees reported anywhere?

Supervisors report totals, not individual refunds: the CFPB's Supervisory Highlights gives the running figure for APSN and repeat NSF refunds, and the FDIC's annual highlights report restitution ordered and paid voluntarily. Inside the institution, the refund reverses fee income, which is why the plan drafts the general ledger entries against the fee income accounts.

Which overdraft fees are excluded from a refund?

Whatever the methodology says, and it should say. The Regions order excluded fees in charged-off balances the bank did not collect, fees on transactions without enough funds for the final amount at authorization, transfer fees that would have been charged anyway, and fees that displaced others under the bank's daily cap.