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#1578096 - 07/14/11 05:29 PM Re: Overdraft Guidance Ann
#Just Jay Offline
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Not Ken, but if they are requesting that you not bug them further, I think asking them to sign a special request may just push them over the edge... IMO, documenting their request on one of your 'doc screens' is a fine solution.
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#1578198 - 07/14/11 07:08 PM Re: Overdraft Guidance John Burnett
goalie Offline
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I've been following this thread and have a clarification question. We are an ad-hoc bank and currently do not have a de minimis level before we charge an overdraft fee. This appears to be ok in accordance with the Guidance. But the FAQ's seem to open the door to say that banks should implement a de minimis (section III, #2). Any thoughts on which way to go with the de minimis?

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#1578206 - 07/14/11 07:13 PM Re: Overdraft Guidance #Just Jay
dcl1963 Offline
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We're including a section at the bottom of our letter for the customer to complete & send to us if they don't want any further notices; may push them over the edge, and I'm right behind them...
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#1578360 - 07/14/11 09:30 PM Re: Overdraft Guidance goalie
John Burnett Offline
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Goalie--

The FAQ says that the FDIC wants your ad-hoc paying bank to avoid using a non-neutral posting order that increases fees to be paid by the consumer for overdrafts. But it doesn't say in the section you cite that ad-hoc paying banks need to implement a de minimis overdraft amount. In fact, it only says that automated payment banks should consider implementing such a practice.
Last edited by John Burnett; 07/14/11 09:31 PM.
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#1578592 - 07/15/11 02:55 PM Re: Overdraft Guidance John Burnett
goalie Offline
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thanks john

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#1578636 - 07/15/11 03:33 PM Re: Overdraft Guidance dcl1963
Ann Offline
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Thanks, DCL and JJ....I am also going over the edge....how many times do we have to tell a consumer that they are not managing their account well or what their credit score is?

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#1580005 - 07/19/11 07:29 PM Re: Overdraft Guidance Ann
Tryin-2-Comply Offline
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Thanks, HappyAuditor -

Next question - we hvae both ad hoc and and an automated system - our automated system is set to specific amounts and follows the guidance.

However, i am concered about our customers who are not in the OD program - should we consider implementing daily limits and monitoirng on ad hoc programs as well - i understand the guidance the FDIC issued was meant for automated systems - but if we don't limit our ad hoc program are we not setting up ourselves for UDAP issues against those who are charged more becuase they are not in an OD Program with a cap.

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#1580264 - 07/20/11 02:38 PM Re: Overdraft Guidance Tryin-2-Comply
Dani York, CRCM Offline
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Do you tell customers that they are not in the automated program? If they know they are not in an automated program, I don't see a UDAP issue as long as they understand that the caps, etc apply to the automated program only. I do see a customer issue though as they may feel the bank is feeing them to death....which could lead to another round of consumer advocacy groups crying foul and more guidance for ad hoc programs.....
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#1580848 - 07/21/11 01:50 PM Re: Overdraft Guidance Dani York, CRCM
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no, our customers do not know they are in or out of the overdraft program. We don't advertise either.

thanks for the input.

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#1581491 - 07/22/11 05:02 AM Re: Overdraft Guidance Tryin-2-Comply
Bat21 Offline
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Does this Overdraft Guidance 6 in 12 rule in any way apply to the Reg E opt in rule with gas station transactions?
Last edited by Bat21; 07/22/11 06:54 AM.
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#1581806 - 07/22/11 04:13 PM Re: Overdraft Guidance Bat21
John Burnett Offline
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If you have a customer who has opted in under Reg E §205.17 and a debit card transaction overdraws his account, resulting in an overdraft fee, that would be an "occasion" to be counted as one of the "6 in 12" under the FDIC's Guidance.

If another customer has not opted in under §205.17, but overdraws his account because he's use his debit card at a gas pump that authorizes $1 but pumps and charges $50, you can't charge an overdraft fee. That overdraft would not be an "occasion" under the FDIC's Guidance because no fee is assessed.
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#1598839 - 08/31/11 07:39 PM Re: Overdraft Guidance John Burnett
lucyc Offline
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We are a ad-hoc and we are contemplating implementing a daily limit which when exceeded the customer would be not be charged.

We are also contemplating a diminimus amount.

Should we notify our customers regarding these changes even though the guidance does not apply to us? If the answer is yes, then am I correct in assuming this is advantageous to our customers and therefore we can notify them 30 days after the change?

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#1599214 - 09/01/11 04:57 PM Re: Overdraft Guidance lucyc
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Bump

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#1599232 - 09/01/11 05:26 PM Re: Overdraft Guidance lucyc
RR Joker Offline
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We did that lvc...and changed the addendum to the TIS to acknowledge the deminimis...we are not disclosing the daily max.
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#1599240 - 09/01/11 05:38 PM Re: Overdraft Guidance RR Joker
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RR Joker, is the notification required? I'm asking because we are trying to keep our expenses low.

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#1600838 - 09/08/11 01:06 PM Re: Overdraft Guidance lucyc
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Bump

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#1600841 - 09/08/11 01:12 PM Re: Overdraft Guidance lucyc
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Reg DD does not require a notice when the change is positive to the customer, so I would say no.
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#1600881 - 09/08/11 01:54 PM Re: Overdraft Guidance lucyc
Elwood P. Dowd Offline
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Quote:
Should we notify our customers regarding these changes even though the guidance does not apply to us?


Answered above at #1571534, but I've got a rant that feels like a hair ball and I have to get rid of it...

Assuming the changes relate to establishing a de minimus amount that would generate an overdraft fee or establishing a daily cap on overdraft fees, you would go through a two step analysis driven by the requirements of Regulation DD. You also need to give a nod to Regulation E along the way.

Changes to the Regulation DD commentary a few years ago required banks to better disclose the circumstances under which a fee may be imposed. It focused on a then new requirement to list the types of transactions that could generate an overdraft fee; e.g. "...check, in person withdrawal, ATM widdrawal..." etc. If there is an implied requirement that caps and de minimus amounts must be disclosed that's where it would be found. Personally, I don't think it implies that at all; i.e. I don't think regulation DD requires you to disclose de minimus amounts or caps. (Forms vendors may disagree because it allows them to sell new forms.)

Regulation DD does not require redisclosure unless a change is made to an item that was required to be disclosed and the impact of the change is negative to the customer. As neither trigger is pulled by establishing deminimus amounts or caps, I don't think you are required to disclose changes to these two features under Regulation DD.

If a bank operaes an opt-in program under Regulation E, Model form A-9 requires a disclosure of a cap if it exists. If your insitution has a cap and sends an opt-in notice the cap must be reflected there. The opt-in notice must be accurate at the time the customer receives it. It is not necessary to tell the customer that information provided on an earlier form has changed.

That's an awful lot of foreplay for suggestions from me that 1) banks should set caps and de minimus amounts, 2) when they do, they should notify customers of the change using the least expensive method available; e.g. statement messages, and 3) disclose them voluntarily on the inital disclosure.

Banks have made a lot of money while fighting a rearguard action against increasingly ridiculous regulatory (FDIC) pronouncements. At some point, it's going to be time for everyone to get in front of this issue. It's not about informing consumers. They do not care. It's about getting your regulator off your --- and keeping them off.
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#1601138 - 09/08/11 05:51 PM Re: Overdraft Guidance Elwood P. Dowd
lucyc Offline
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Thanks for the input RR and Ken

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#1608424 - 09/26/11 01:51 PM Re: Overdraft Guidance lucyc
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The annual review of an overdraft program's key features.....since the guidance was effective July 1, 2011, I'm assuming that as long as a bank has an annual review completed by July 1, 2012 that the FDIC will not criticize. Or should the annual review be completed by 12/31/11?

Thanks!

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#1617040 - 10/18/11 06:45 PM Re: Overdraft Guidance Valley Girl
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We're planning on presenting the formal annual review in December, but don't see why it couldn't be done by July '12. Safety & Soundness Examiners are coming next week so I'll post if told otherwise.
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#1617115 - 10/18/11 07:47 PM Re: Overdraft Guidance Valley Girl
Elwood P. Dowd Offline
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Remember, banks had a long lead time on this...as fumble worded as it was overall, I thought it pretty clear that they were expecting compliance by 7/01/11:

Quote:
5. When are institutions expected to have reviewed and responded to the Guidance?

As stated in the Guidance, the FDIC expects that institutions will have approved, responsive compliance and risk management action plans, policies and procedures by July 1, 2011.


My suggestion was and would remain that the first annual review should have been done before the effective date and the second within 12 months of the first. It's anyone's guess what one exam team will say in comparison to another, but the groundwork is laid for saying it should have been done months ago.
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#1617461 - 10/19/11 03:07 PM Re: Overdraft Guidance Elwood P. Dowd
markp Offline
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What is the difference between a linked transferred account and an automated overdraft payment program? I just started reading this thread and until now I thought we were OK but now I’m 2nd questioning it. We only offer a linked transfer account for overdraft protection. Must we comply with fil-81-2010?

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#1618304 - 10/20/11 06:42 PM Re: Overdraft Guidance markp
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What happens when a customer doesn't have an account linked or the $ in the linked account runs out?
If an officer looks at the account and determines whether or not to pay the item, you are ad hoc, and the guidance does not apply to you. If you have a software that automatically pays the item, you have an automated OD program, and the guidance does apply to you.
At least that's my understanding.

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#1618360 - 10/20/11 08:30 PM Re: Overdraft Guidance markp
Elwood P. Dowd Offline
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Quote:
We only offer a linked transfer account for overdraft protection.


You are one of the good guys; yours is an overdraft protection plan within the current meaning of the term. If that's the only way you would pay an NSF item, the Gospel, according to the FDIC, does not apply to you.

If you would pay an NSF item when the linked account was zeroed out, then the issue is whether the decision is automatic or judgmental.

Monster threads like this one are pretty much worthless as a learning tool.
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