New Dodd-Frank Rules on Two Opt-In/Out Forms
Answer by John Burnett, BOL Guru Guru Bio
Question: In reviewing the new Dodd-Frank rules regarding Deposit-Related Consumer Credit Products, (more specifically Overdraft Protection Programs) it appears that banks must now have two Opt-In/Out forms for the customer, one for Reg E requirement and one for Checks/ ACH. We have been asking some other banks to see if this is their interpretation and we have been getting a wide range of responses. Can you clarify this for us?
Answer: Let's start by disconnecting this subject from the Dodd-Frank Act, because the OCC's proposed Guidance on this topic has nothing to do with Dodd-Frank.
If you read the OCC's proposal from June, found HERE, you'll see that, if issued in final form with no change, the Guidance would set an expectation that OCC-regulated banks and savings associations with automated overdraft payment programs (the OCC still refers to them as overdraft protection programs) would provide full and clear information on the program (including costs), and not enroll consumers until they have affirmatively consented (read: opted in). In addition, banks and savings associations would be expected to review each consumer's request for the program for suitability (akin to a credit decision).
Finally, of course, the OD program could not cover ATM and one-time debit card transactions unless you first comply with the requirements of § 1005.17 of the Bureau’s Regulation E, which became effective on December 30, 2011.
It’s too soon to know whether the OCC’s guidance will ever be published in final form, or what form it might take if a final rule is published. For now, it’s probably a good idea to review the principles described in the proposed guidance, and see how your bank’s overdraft service measures up against them.
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