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 centers have drawn criticism for their potential health and environmental effects on surrounding communities and for the amount of energy they use. -
Trump's endorsement of Steve Hilton for governor over Chad Bianco has upended the California GOP's strategy, forcing the party to refocus on other races. -
Riverside County Sheriff and California governor candidate Chad Bianco focused on claims from an activist group when he kicked off a voter fraud inquiry.
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
-
A new exhibition in downtown L.A., Jean-Michel Basquiat: King Pleasure, takes an inside look at the man and his work. That’s aided by access to the artist’s personal life — made possible because it’s presented by Basquiat’s estate, run by his sisters Jeanine Heriveaux and Lisane Basquiat. -
It’s going to be warm this weekend, so take advantage of both the higher temps and the recent rain. -
A possible new rule could require movies to open in more cities to be eligible for an Academy Award. Meant to boost moviegoing, it appears to target streamers — but it could instead cause headaches for small distributors who couldn't afford the change. -
There was a time when there were toilets a-plenty in our streets. Trouble was — you had to pay to use them. -
If you've never heard of Tulare Lake, it may be because it hasn't been a permanent presence in Central California since the early 1900s. Now, with water accumulating, locals are worried about what's next. -
The union that represents school support staff in Los Angeles Unified School District has reached a tentative agreement with district leadership to increase wages by 30% and provide health care to more members.
Best of LAist
