I am attaching a msg from an online statement used by a bank to give its clients a heads-up about future opt-in communication (I am keeping the bank's identity undisclosed). There are a couple of things in there that do not make me feel too 'warm and fuzzy' (for instance, if I were a customer w/ no knowledge of opt-in regulatory timeline, I would be confused with the dates in the last paragraph as they pertain to no response of the DM), but this piece could be used by some of this board readers as a stepping stone for their banks' future communication.

“As a result of a new government regulation, banks are required to give personal checking account customers a choice on how they want to handle overdrafts caused by debit card purchases; you can choose if your Debit Card purchases that would overdraw your account should be approved or declined.

BANK X Debit Card overdraft coverage is a convenient feature that may give you a lot of flexibility in how you use your debit card. Many of our customers have enjoyed this service in the past and it is important that we let you know that this service will not be offered in the future.

You may respond with "Yes" if you want your BANK X checking account to keep working the way it does today. BANK X will decide if your Debit Card purchase that overdraws account will be approved; approval will be based on your account history, your relationship and transaction amount. We suggest that our customers continue to take advantage of this service to make sure that funds are available during emergencies. Please note that a $35.00 fee will be assessed each time (up to 3 per day) Debit overdraft coverage is used. Keep in mind that no fee will be assessed if this service is not used. You will have peace of mind of knowing it is there.

You may respond with "No" if you do not want BANK X Debit Card overdraft coverage. If your Debit Card purchase exceeds your available account balance (including overdraft protection, if applicable), your transaction will be declined; you will not be assessed an insufficient fee.

Effective 3/29/2010, if you do not want BANK X Debit Card overdraft coverage your same day purchases that exceed the available account balance will be declined and no fees will be assessed by BANK X for that purchase. If we do not hear from you before 8/15/2010 regarding your decision, we will consider your answer as "No" and we will begin to decline Debit Card transactions that exceed your available account balance (including overdraft protection, if applicable).”

omg... I stopped reading before a third of the way through!

There is something to be said for model notices...

I no not envy the operations people at that bank, not the call center reps come the 2nd.

Yoda,
I wish I thought that was a spoof.

Nevertheless, it made me think ahead as to what regulators will do with banks that use a notice that doesn't meet the requirements. Hmmm, if you can't charge a fee unless you've run a proper opt-in program, they will probably just make the bank look all those fees up & give them back.

Seems fair to me.

Ken,
I want to stress that what I posted is not the bank's opt-in notice (a la Form A-9), but rather a communication piece informing customers about an incoming opt-in notice in their mail box (or e-mail folder).

Nevertheless, the marketing spinning that I am starting to see is pretty remarkable. I also received a paper copy from the same bank entitled "Watch your mailbox so you can say "Yes" to continue Bank X Debit Card overdraft coverage" and it was a 'piece of art' , for lack of better terms.

I would caution mktg departments from being too conniving with all this: sometimes being too cute with consumers backfires a lot

Compliance, core processing vendor, and overdraft program vendor all tell us, "Do not begin communication with your customers until you can FULLY comply with the requirements of the regulation."

Then I sit in on a webinar with a marketing vendor who says things like. "Well, the reg only prohibits a differance in OD fees for an opt-in versus and opt-out. Offer the opt-ins a rewards program but keep the fee structure the same" and "The sooner you begin letting your customers know about the changes, the more opt-ins you can get." and "We can help you communicate and target the customers you want to have opt-in."

In other words, we want to take advantage of your panic to your bottom line and charge you lots of money to help out, and oh, good luck with your next regulatory exam., hope they don't BBQ you too much for using our liberal interpretation of the Reg. After all we did tell you this does not consitute legal advise.

Thanks for the post Yoda.

I don't work on the deposit side, but I was under the impression that you could NOT return a debit transaction. IF this is the case, why would a consumer Opt in?

Are customer's opting in to allow the bank "authorize" OD transactions or are they only opting in to allow the bank to "charge" OD fees?

Depends on the customer, tasha. Some customers do rely on the ability to overdraw their account using the debit card for purchasing groceries, getting cash at the ATM, etc. If a transaction is authorized, and by the time it is presented for payment the funds are gone, no it cannot be returned, and without an opt-in, the bank cannot charge a fee.

Berryrider, without the opt-in, after August 15th, these transactions will be declined.

If I have a customer whom I believe is abusing the debit card, i.e. making several purchases/withdrawals on the card, then running into the bank to withdraw all the cash leaving the bank to pay their card transactions and charge no fees, the next time they get paid to cover the overdraft, they may find the card won't work anymore.

As many have pointed out, the above situation can be avoided by institutions that offer "real time" debit card transactions. If preauthorizations display on your core system, and you have knowledge that a customer has already spent all the money, you won't cash a check. For banks still using a positive balance file, this will present a new challenge.

That makes me feel better. Now, the only failures are those dealing with confusing their customers and blowing off Reg DD's advertising requirements for the promotion of overdraft services.

Sending the model notice in its pristine form is not an advertisement. Sending a cover letter explaining it is.

So if you can't return a debit transaction, why on earth would a consumer opt in.
Sorry but I think this New Opt-in Requirement is a joke. We try to teach our kids to be responsible regarding their checking account and yet we are telling consumers it's ok to be overdrawn and the banks are not going to penalize you for it. So go ahead and keep spending.
Does not make sense to me.

tasha, that is true, but they might opt in if you were to allow them ot OD a POS transaction. I think about the person that has a full basket of food at check out and they would be rejected if funds were not there and they did not have OD/Courtsey Pay.

Because of the whole balance inqury at the ATM rule that was effective 1/1/10, we do not include any OD protection in the available balance anymore. So, currently if a customer tries to intiate a POS transaction and they don't have enough funds in their account, the transaction is going to be denied. They will not overdraw their account and incur an ovedraft fee. So, do we really need to send the opt-in notices to existing customers?

Also, the statement at towards the bottom of the model notice . . ."There is no limit on the total fees we can charge you for overdrawing your account" Does this mean on a daily basis or over the life of the account?

CSB1...according to what I understand the real regulation is charging for ODs that are done with a debit card. If you do not allow this to happen then I think the opt in is moot. The limit for charging fees is not defined as daily, monthly or whatever, unless that is something you impose, but not within the Reg.

On a side note, I would not elect to have a POS transaction denied at the point of purchase unless a customer did not opt in, the customer will be embarressed and you will lose the income. For us, that could cost us nearly a million a year of lost revenue.

We have "real time" debit cards and my first thought was we didn't need to be concerned with the opt-in since if there wasn't enough money then the transaction would not process. Then the question came up concerning those $1 pre-auth. at the gas station and when the real $40 gas purchase comes in there is not enough money. So we've decided that there is a need to get customers to opt-in.