Just want to be sure I'm clear on the new guidelines effective July 1st. If we advertise, we do not need to send any disclosures to our existing customers. Am I correct.

Your question needs to be more specific, Mindy. Advertise what? What disclosures? Depending on detailed specifics, it's possible your bank might have to send updated disclosure information to current depositors. And if you're advertising your bank's ODP, and it's an ODP covered by the regulation (Reg. DD), you'll certainly have some added statement disclosures to make.

Sorry, we have had OD Privilege for about 10 years. Our policy explains that you can access your OD by ATM, electronic transfers, check cards, checks etc. We have had that in our disclosures for the past several years. Before July 1st we will also post notice at our ATM's about the OD fees. And I almost forgot about the change on the statements, we use Silverlake and we are all set with them for that. Whew! I think that is everything.

It sounds like you have the following covered:

1. Changes in section 230.4 regarding initial disclosures concerning fees.
   
2. Section 230.11(a) changes regarding statement disclosures

You say you are upgrading the notice at your ATMs. Don't forget that any ATM "ad" must include the information required by §230.11(b)(1)(i) and (iii).

You'll also want to make sure your descriptions of fees for paying overdraft items and fees for returning overdraft items are in compliance with the OSC to section 230.6. If you make a change to one or both of those descriptions, you'll want to alert customers of that fact, but it's not a 30-day notice item, in my opinion (not adverse to the customer).

I don't think you have any other section 230.5 disclosure requirements here.

May I ask a follow up question.. I want to be sure about the disclosure on the periodic statements. The concept of providing disclosure for "all accounts" to which our advertisement applies. Does that mean "all accounts" in the context of our account types such as " regular checking, 55 Plus, NOW checking" or whether the customer actually has a product like "Bounce" tied to their account where teh paying of overdrafts has been advertised? Some people have the option of not waiving Bounce and not having it included.

What is required to be changed on the ATM sign? I did the "may" charge a fee thing, but is there something else?

I have a related question. Our product is a line of credit for a fixed limit that the deposit account holder applies for and is approved. My understanding is that this is not considered an ODP and is not covered by the changes to Reg DD that will go into effect on July 1; am I correct? If I am correct, my issues relate to Reg Z, right? What else do I need to know? Thanks for your help.

You are correct. These would be subject to Reg Z, not Reg DD.

You also need to know that certain factors of the Interagency Guidance on Overdraft Protection Programs issued in February, 2005 had aspects that apply to all overdrafts, not just those under ODP programs. So those aspects could come into play for you with both accounts that don't have your line of credit, but have an overdraft that is paid, or for those that do have a line, but the account is paid into overdraft because the limit on the line has been met.

Also, the new provisions of Reg DD have some additional advertising requirements that apply to a bank that advertises "free" accounts and in the same ad advertise any service related to the account that carries a fee, not just overdraft protection.

If you do not show the ODP limit in your "available" balance at the ATM...is there still additional required language?

Including the ODP limit in the balance shown at the ATM is only one of scores of ways in which an institution can trip the disclosure requirement. One cannot give an answer to Joker's question without a complete check of everything the institution does or says with regard to ODP.

Here's basically what we do...maybe there is still no clear cut answer...John?

At account opening, we give a disclosure listing 3 overdraft services. 1) Bounce protection which is tied to another account and very cost effective. 2) Ready Reserve - a Reg Z governed revolving plan and 3) Overdraft protection which under the proper circumstances will automatically be added to the account that is in good standing 90 days after opening...they are given the change to OPT OUT of the service. They are also made aware of the types of transactions that can trigger overdraft. We do have specific amounts coded to particular account types and the customer is privy to the amount...

anything else needed to answer the question.

The fact that you tell the customer in writing that you have an ODP (option 3 in your list) puts you squarely in the group of banks that must comply with the provisions of section 230.11.

John: We are doing the same thing that joker outlined above. We think that 230.11(a)(2)- Communications NOT triggering disclosure of total fee, (iii) - "engaging in an in person discussion with a customer" would permit a discussion of an overdraft protection program and still not be considered advertising/promoting. Thoughts?

From a practical perspective, the "in person discussion" exception reflects the reality that you can't regulate conversations. But there is a distinct difference between having an oral discussion and making disclosures, which I take to mean written information about the service. The written disclosures would trigger 230.11. You need to ask yourself, "are we putting anything on paper or on computer screens, or on our voice response systems, or in ads, or disclosures that tells a customer that we're inflating his balance for the purpose of paying items drawn on his account?"

I agree with John, the "in person" exception excludes verbal, not written, communications. You may say anything you wish to the customer about your ODP and, even if an examiner or auditor is standing next to you, it does not constitute "promoting" the service.

John, I fully understand we are advertising an ODP plan falling under 230.11. My question specifically relates to disclosures AT the ATM...we do not include the balance in the available balance showing on balance inquiries...therefore I see no "advertisement" there. I'm referring to your post #537619 in reply to Mindy...

Quote:

---

You say you are upgrading the notice at your ATMs. Don't forget that any ATM "ad" must include the information required by §230.11(b)(1)(i) and (iii).

---

Could you elaborate on this?

That's what I get for bringing in a related issue that wasn't directly responsive to the question at hand.

I was referring to an actual ad for ODP that a bank might run on its ATM screen, either between uses or in lieu of a "Please wait while we weigh your request" message. In that case (an ODP ad), you would need to include those two items of information to comply with 230.11(b).

I concede the point that the customer would be better served with a written than a verbal explanation. Also, I can't wait to hear the verbal advocate's response to the customer's: "Could you give me something in writing that describes that?"

Nevertheless, that's the way they set it up. It's very likely that they made the decision for the reason John mentioned, the impossibility of regulating verbal communications.

Too funny Ken...I can just picture the "deer in the headlight" expression on the poor CSR's face when they are asked that nearly inevitable question! haha.

Actually tho, if you think about it, conversations are somewhat regulated...just think of the regulator's shopping for verbal "annual percentage yields/rates" in verbal rate quotes! Those verbal requirements are pretty darn specific!

Isnt that an exclusion from promoting?
If a customer requests information regarding your accounts or OD program, that is excluded from the disclosure requirements in the periodic statements, but would be included in the advertising rules?

The exclusion for responses to consumer's inquiries about deposit accounts or the payment of overdrafts is worded slightly differently, but found in both subsections (a) and (b) of 12 CFR 230.11.

Ditto the exclusion for "in person discussions."

Getting back to the ATM issue - We have an ODP program but don't promote it in any way. If we feel you are a "good" customer we will pay up to $500. in overdrafts. We have automated the system for these "good" customers to automatically pay and charge. We include this $500 in their available balance at ATM's and through POS. It does not show in the available balance at the AMT but the ATM will allow you to take your balance negative. The receipt will show a negative balance after the w/draw. Our Reg DD disclosure indicated that you incur a overdraft fee for check, electronic, POS activity blah, blah, blah. Are we covered?

Quote:

---

We include this $500 in their available balance at ATM's and through POS. It does not show in the available balance at the AMT but the ATM will allow you to take your balance negative.

---

If this is all you do, I don't think you are promoting your overdraft services; you do not trigger DD's advertising requirements or its fee aggregation requirements on periodic statements.

Evaluate the best practices portion of the guidance as to whether you could provide advance notice of the overdraft in this circumstance. Off the top of my head: "Please check your balance before you make a withdrawal. If you withdraw an amount greater than your balance you will incur an overdraft item fee of $XX."

("Evaluate" is the operative word.)

Note that, if, after evaluating that portion of the guidance, you decide to post a notice at the ATM to that effect, that notice will not be considered an advertisement triggering any of the provisions of section 230.11.