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#523314 - 03/28/06 08:16 PM
Overdraft Protection Guidelines
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100 Club
Joined: Apr 2004
Posts: 131
Texas
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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.
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#523315 - 03/28/06 08:24 PM
Re: Overdraft Protection Guidelines
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Cape Cod
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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.
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John S. Burnett BankersOnline.com Fighting for Compliance since 1976 Bankers' Threads User #8
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#523316 - 03/28/06 09:39 PM
Re: Overdraft Protection Guidelines
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100 Club
Joined: Apr 2004
Posts: 131
Texas
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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.
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#523317 - 03/29/06 07:51 PM
Re: Overdraft Protection Guidelines
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Cape Cod
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It sounds like you have the following covered: - Changes in section 230.4 regarding initial disclosures concerning fees.
- 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.
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John S. Burnett BankersOnline.com Fighting for Compliance since 1976 Bankers' Threads User #8
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#523318 - 03/30/06 01:28 PM
Re: Overdraft Protection Guidelines
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Junior Member
Joined: Sep 2004
Posts: 36
The Heart of It All
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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.
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#523319 - 03/30/06 03:53 PM
Re: Overdraft Protection Guidelines
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Power Poster
Joined: Nov 2003
Posts: 3,726
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What is required to be changed on the ATM sign? I did the "may" charge a fee thing, but is there something else?
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#523320 - 03/31/06 04:18 PM
Re: Overdraft Protection Guidelines
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Diamond Poster
Joined: Jun 2004
Posts: 1,927
NYC
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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.
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#523321 - 03/31/06 11:40 PM
Re: Overdraft Protection Guidelines
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Power Poster
Joined: Oct 2000
Posts: 5,991
Soaring over Georgia
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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.
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#523322 - 04/03/06 03:53 PM
Re: Overdraft Protection Guidelines
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Joined: Nov 2002
Posts: 20,656
The Swamp
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If you do not show the ODP limit in your "available" balance at the ATM...is there still additional required language?
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#523323 - 04/03/06 04:34 PM
Re: Overdraft Protection Guidelines
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Joined: Oct 2000
Posts: 40,086
Cape Cod
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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.
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John S. Burnett BankersOnline.com Fighting for Compliance since 1976 Bankers' Threads User #8
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#523324 - 04/03/06 07:31 PM
Re: Overdraft Protection Guidelines
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The Swamp
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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.
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#523325 - 04/03/06 08:37 PM
Re: Overdraft Protection Guidelines
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Joined: Oct 2000
Posts: 40,086
Cape Cod
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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.
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John S. Burnett BankersOnline.com Fighting for Compliance since 1976 Bankers' Threads User #8
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#523326 - 04/04/06 12:52 PM
Re: Overdraft Protection Guidelines
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Joined: Jan 2005
Posts: 154
South Carolina
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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?
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#523327 - 04/04/06 01:01 PM
Re: Overdraft Protection Guidelines
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Joined: Oct 2000
Posts: 40,086
Cape Cod
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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?"
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John S. Burnett BankersOnline.com Fighting for Compliance since 1976 Bankers' Threads User #8
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#523328 - 04/04/06 01:27 PM
Re: Overdraft Protection Guidelines
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Joined: Aug 2001
Posts: 21,939
Next to Harvey
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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.
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#523329 - 04/04/06 01:54 PM
Re: Overdraft Protection Guidelines
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The Swamp
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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?
Last edited by joker; 04/04/06 01:56 PM.
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#523330 - 04/04/06 02:26 PM
Re: Overdraft Protection Guidelines
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Posts: 40,086
Cape Cod
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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).
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John S. Burnett BankersOnline.com Fighting for Compliance since 1976 Bankers' Threads User #8
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#523331 - 04/04/06 03:42 PM
Re: Overdraft Protection Guidelines
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10K Club
Joined: Nov 2002
Posts: 20,656
The Swamp
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Quote:
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.
To me, that so goes against any spirit or intent of the rule changes regarding ODP. We disclose it and give choices from most cost effective to least cost effective methods of overdraft protection service...I don't consider it promoting it at all, but it is written. Since it is written and we do apply specific amount to specific account types, it falls under "advertising".
If we spoke the same information verbally...we would be doing the exact same thing, but in addition, would be expecting the customer to remember all this...since they are getting nothing in "writing"...another non-sensical rule regarding a reg. Go figure!
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My opinion only. Not legal advice. Say you'll haunt me - Stone Sour
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#523332 - 04/04/06 03:48 PM
Re: Overdraft Protection Guidelines
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Joined: Aug 2001
Posts: 21,939
Next to Harvey
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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.
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#523333 - 04/04/06 03:56 PM
Re: Overdraft Protection Guidelines
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10K Club
Joined: Nov 2002
Posts: 20,656
The Swamp
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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!
Last edited by joker; 04/04/06 03:59 PM.
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My opinion only. Not legal advice. Say you'll haunt me - Stone Sour
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#523334 - 04/04/06 04:39 PM
Re: Overdraft Protection Guidelines
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100 Club
Joined: May 2005
Posts: 140
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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?
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#523335 - 04/04/06 06:40 PM
Re: Overdraft Protection Guidelines
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Joined: Oct 2000
Posts: 40,086
Cape Cod
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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."
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John S. Burnett BankersOnline.com Fighting for Compliance since 1976 Bankers' Threads User #8
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#523336 - 05/04/06 08:59 PM
Re: Overdraft Protection Guidelines
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Platinum Poster
Joined: Apr 2005
Posts: 684
Jersey Shore
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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?
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#523338 - 05/04/06 10:06 PM
Re: Overdraft Protection Guidelines
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10K Club
Joined: Oct 2000
Posts: 40,086
Cape Cod
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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.
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John S. Burnett BankersOnline.com Fighting for Compliance since 1976 Bankers' Threads User #8
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#523339 - 05/05/06 12:39 PM
Re: Overdraft Protection Guidelines
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Jersey Shore
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#713450 - 04/09/07 05:13 PM
Overdraft Protection
Mindy
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100 Club
Joined: Nov 2005
Posts: 183
USA
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The bank does not promote ODP but does offer it as a convenience. When the customer is overdrawn they receive a notice that states, "if you would prefer we do not pay your overdrafts in the future, contact us at xxxx."
Would this statement trigger the advertising/promoting definition?
Thank you.
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