We charge a $5.00/day consecutive day overdraft charge when an account has been overdrawn for more than 5 days in a row. There is not a daily notice that generates for the customer, like an NSF notice. The charge is reflected on the customers monthly statement and was in account opening disclosure. I'm just questioning now whether a notice at time of occurrance needs to be generated each day or the first day? I appreciate any guidance. thanks

Our consecutive overdraft charge has a notice that is generated each time the charge is assessed. Does this notice just need to be turned on in your core system to print?

I think so I would say we are out of compliance now by not generating it each time?

Curious- what regulation do you feel you are you out of compliance with?

Frankly, there's no requirement that you notify customers of the fact they have gone overdrawn. Such a notice is often considered a good anti-fraud measure, though, since it has the potential for alerting a customer that something is amiss.

The closest that I know of to a requirement is the Best Practice included in the February 2005 Guidance on Overdraft Protection Programs:

"Promptly notify consumers of
overdraft protection program usage each
time used. Promptly notify consumers
when overdraft protection has been
accessed, for example, by sending a
notice to consumers the day the
overdraft protection program has been
accessed. The notification should
identify the date of the transaction, the
type of transaction, the overdraft
amount, the fee associated with the
overdraft, the amount necessary to
return the account to a positive balance,
the amount of time consumers have to
return their accounts to a positive
balance, and the consequences of not
returning the account to a positive
balance within the given timeframe.
Notify consumers if the institution
terminates or suspends the consumer’s
access to the service, for example, if the
consumer is no longer in good standing."

We allow members to access their courtesy limit by cashing a check with a teller. What would be considered "prompt" notification in a case such as this? Would we need to provide the notice while they are in front of us or could we mail it by running a batch job at night? Thanks in advance for your assistance.

Notice to the member could serve one of two purposes, and the timing of the notice would depend on your purpose.

If the purpose is to alert the member that cashing the check will overdraw the account so the member can determine whether to proceed, clearly the notice needs to be given in person prior to cashing the check.

If the purpose is to let the member know that the account has been overdrawn, with the goal being action by the member to bring the balance back to positive territory, the notice could be generated after the day's processing is complete and mailed promptly thereafter (or emailed/texted, if you provide email/text notification service).

You didn't ask, but I'm not a fan of text notification of overdrafts. Texts are too easily exposed to the wrong eyes. Instead, I'd like to receive a text message that there's an important private message waiting for me on the CU's online banking service.