I'm interested in everyone's thoughts on timing of the "opt-in" campaign for existing customers. If we get customers that opt-out well before the July 1 or Aug 15 date - do we have to start to honor their request as soon as we get it? Maybe I've got this backwards - because the customers won't be opting out, they just won't be opting in. Anyway - I still am wondering about what others are planning for when they will start to ask existing customers to opt-in.

Interesting question. If you start notifying new customers of the opt-in right before the mandatory 7/1/2010 compliance date, you must be in compliance with the restrictions and requirements of §205.17, and cannot impose OD fees on those new customers without receiving an opt in. [Comment 17(c)-1]

There's nothing specific in the rule or comments concerning early notification of existing customers. But assume you start notifying new customers starting 4/1/2010. Let's also assume you start notifying customers on your books as of 3/31/2010 beginning 4/15/2010. You would not need to "turn off" your OD fee assessment for any of those existing accounts until 8/15, and you can tell those customers you'll stop authorizing card-initiated ODs as of that date. But what if one of those existing customers decides she doesn't want OD service for card transactions and tells the bank so? Unless she says "I don't want overdraft service for card transactions on or after 8/15/2010," I think you should be prepared to shut it off as soon as practicable after you get the request, which is effectively an opt-out. I'd emphatically suggest that you be prepared to turn it off right away if you get something like "I never wanted OD service for card transactions. Please turn it off right away," or something less polite .

We've been discussing an effective date that it would be turned off and putting that in the disclosure for existing customers - reason being - we don't know at what point our core processor will be ready to handle the new reg and at this point we can't handle multiple scenarios for balances so we would not be able to turn one customer off but leave others on.

We are planning on disclosing the opt-in at account opening later this month but with the disclosure that if they don't want the OD service for card transactions, that will be turned off in July.

With our system (ITI) it's currently all or nothing. If the customer doesn't want any OD service at all, we can handle that. If they want the OD service on checks only, they will have to wait until July to have the card transactions turn off.

If we are clear about the starting dates, are we allowed to charge OD fees on those new accounts that use card transactions and overdraw their account?

John - we listened to the webinar yesterday and as always it was very helpful. I'm still hung up on the "early compliance" issues specifically your comments on 'existing customers' vs. 'new customers'.

Here where you refer to 'start notifying new customers' - are you refering to customers that open new accounts prior to 7/1/2010 - but after the implementation date we choose.


This is where I get lost - are you saying that the reg states that we can't impose OD fees on those "pre July 1" customers before 8/15/10? I agree it might not be such a hot idea, and that we ought to be prepared to not charge, unless we get the opt-in. But does the reg say that?

In my read of the reg, you have only two categories of customers - accounts opened prior to July 1 and accounts opened on or after July 1. Are you considering a third category of customers such as customers opening new accounts after we start notifying existing customers?

What I was thinking is for accounts opened prior to July 1 we have until 8/15 to ban fees unless we have the opt-in; for accounts opened July 1 or later - we don't have the 45 day window (we have to ban fees right away unless we have the opt-in).

Two categories of customers with the bright line at 7/1/2010.

If you decide to start notifying new customers of opt-in right and solicit opt-ins before 7/1, you can't charge them for ODs for the period from account opening until 7/1 if they don't opt in.

Put another way. You decide to start giving the notice and collecting opt-ins on 4/1/10. You can't delay the prohibition against OD fees without opt-ins until 7/1 for these customers.

So....what if we do things the old fashioned way? We don't have an o.d. program and we make the pay/return decisions the following morning.
What part of this new regulation will apply to banks that still operate this way besides listing mtd and ytd o.d. fees on monthly statements?

The monthly statement rule is old business, from Reg DD, effective 1/1/2010.

The new rule, which you will have to comply with by 7/1/2010, is in Regulation E, and it only affects card transactions (including those made with the card number only by telephone or Internet). Whether you have an O.D. program or not, if you occasionally pay an item that overdraws an account and impose a fee for the overdraft, that's an overdraft service. Yes, even the "old fashioned" ad hoc overdraft decisioning falls into that definition if a fee is imposed.

The regulation will affect you if you currently impose a fee if an ATM or one-time debit card transaction overdraws a consumer's account. Unless you give the consumer the disclosures required by §205.17(b)(1) and §205.17(d) and obtain an the consumer's affirmative consent for continued coverage by the overdraft service, you won't be able to impose an overdraft fee for ATM or one-time debit card transactions that overdraw the account.