This story is free to read because readers choose to support LAist. If you find value in independent local reporting, make a donation to power our newsroom today.
California limits junk fees: New law blocks fines for declined ATM withdrawals
Customers use an ATM at a Bank of America office on July 18, 2023.
(
Justin Sullivan
/
Getty Images
)
Californians who try to withdraw money but don’t have enough in their bank accounts won’t fall deeper into a financial hole from having to pay a fine, thanks to a new state law.
The law covers instances in which banks charge customers when their withdrawals are declined instantaneously, such as at ATMs, because of insufficient funds. It takes effect Jan. 1.
Assembly Bill 2017 applies to banks and credit unions that are regulated by the state; Gov. Gavin Newsom signed it in September. The bill was backed by several consumer advocacy groups, including the California Low-Income Consumer Coalition and East Bay Community Law Center, which called penalties for insufficient funds “junk fees” and said getting rid of them will protect financially vulnerable consumers.
Tim Grayson, the bill’s author, said when he introduced it in May that it would “help prevent fee creep in the banking industry.” Grayson, a Democrat from Concord, is an incoming senator who was in the Assembly through the end of the 2024 legislative session.
-
The rule being considered comes as immigration arrests rise at state courts, discouraging victims, witnesses and others from showing up, according to lawyers and advocates. -
California is famous for its slow ballot counting. That’s because of the state’s security fixtures and efforts to ensure every vote is counted. Experts don’t agree on a fix. -
Steyer has spent $132 million of his own money on his California campaign, but he remains in a tight race with less-funded Democrats and Republicans.
The Consumer Federation of America, a sponsor of the bill, said common charges for insufficient funds are $30 or more.
The California Credit Union League, which at first opposed the bill and said credit unions “do not charge these types of fees,” eventually took a neutral position. But the state Department of Financial Protection & Innovation has found that many credit unions do have income from insufficient-fund charges; a 2022 state law tasked the agency with collecting data from banks and credit unions about their fees.
Sponsored message
The law by Grayson is similar to a rule by the Consumer Protection Financial Bureau — the federal watchdog agency that’s in President-elect Donald Trump’s crosshairs — that applies to federally chartered banks.
In line with the growing nationwide push to eliminate junk fees, Newsom also signed another bill addressing overdraft fees: Senate Bill 1075 will limit credit-union fees for insufficient funds to $14 unless a lower federal limit is set. That becomes law in 2026. And he signed Assembly Bill 2863, which will make it easier for consumers to cancel subscriptions and requires companies to get consent from their customers before charging them to renew or when a free trial ends. It goes into effect July 1.
Trending on LAist
-
California has cleared an initiative aiming to cancel Measure ULA and similar taxes across the state. But it might not be November’s only “mansion tax” measure. -
Eleven newcomers, every style imaginable and unlimited tastings — all under one roof at L.A. LIVE. -
The issues surround poor bookkeeping and accounting of taxpayer money at the agency — which spent over $800 million in public funds last fiscal year. -
Interim CEO says the public agency is “restructuring” after withdrawal of county funds. -
Eligible California residents have till the end of the month to claim cash made available by the Middle Class Tax Refund. -
Accelerated land movement has closed off what was once a bustling nature preserve that will never be what it once was.
Best of LAist
