Exactly! It's all in how you present it...

My point, Ed, is that a bank that doesn't authorize ATM and debit card transactions that would, at the time of the authorization request, overdraw the account would have a hard time convincing its customer to go ahead and opt into an overdraft service. The message to the customer: You can opt in and get charged if one of these transactions sneaks in under the radar and we are forced to pay it. I just don't know how a bank will be able to describe its overdraft service for card transactions if, in fact, it intends to deny any authorization request that would take the account overdrawn.

I finally read the final rule. We are looking at it so closely as we rely on the existance of our Overdraft lines of credit. We do not charge a fee on top of the interest that will be charged if we draw on the line to cover an overdraft caused when someone uses their card to make a purchase and the event causes an overdraft. Interest is charged; not a fee. I scoured that regulation for a clarification of fee and other charges. the other charges is not defined, however the document does point out that it does not apply to ODLs. We are therefore concluding that we will not have to comply with the notice and opt in process.....unless, of course, you say we are missing something...and, if so, please let me know what it is. We only charge an OD fee when we have a check or ACH come in and we cover the subsequent overdraft caused but still proceed with making the trans. good.

So you're saying you never pay an overdraft caused by a one-time debit card or ATM transaction <unless they have the LOC>? What if something slips-through-the-cracks. Example: A debit card transaction of $25 is approved - the customer has $30 in the account. However, immediately afterwards the customer comes into the bank and cashes a $25 check. Could that happen?

"Then, how dumb would I feel for having said "No?" "

I think you will feel that way until it happens, then you will feel dumb for having said yes.
But why would it happen anyway, I though you though it would never happen. So why opt in
Seems that the reason to opt in may be the same reason not to.

I am dizzy. It's five. Tomorrow everyone.

I don't have to theorize about me making mistakes or someone else making a mistake. Once I deposited my entire paycheck in one account and wrote all my checks on the other. Now, my checking account is backed up by a HELOC. When I had it rewritten a couple years ago, the bank "forgot" to link it to my account. I did not know that until they sent me an OD notice for an amount I would not have approved.

I've also had the experience of standing in an airport two connecting flights from home and needing cash with only my ATM card as a potential source. If this event and one of the two above converged, I would not give a rip about paying a $28 fee.

Duchess: following your line of thinking, the check will cause the acct to go into OD. If cust. has LOC, we'll use that. If cust. has $ i another acct, etc etc we'll cover and charge an OD fee...for the check. So, again, why would we need to send the notice?

Don't forget about under floor limit transactions. Auto fuel dispenser authorizes for $1. Customer gets $50 in gas and causes an OD. Would you want to charge a fee for this? If so, you need the notice.

Personally, with the way “overdraft service” is defined, I don’t know of any bank or credit union that would not be affected.

Ahhhh, but John, you are smarter than the average bear. You know how items process. I'm also willing to bet that you will not opt-in.

My point is that we offer a service, regardless of accidental or intentional. We pay for a transaction when the customer doesn’t have the money. The model notice provided by the Gub’mint describes our “overdraft service”. We should not be afraid or embarrassed to ask to be compensated for processing these transactions.

That being said, I think there are two types of overdraft customers – accidental and lifestyle. The accidental peeps overdraft on occasion, maybe once or twice a year. They may forget record a check or make a deposit. Most of us feel for those people and we may even waive their fee every now and then. They will opt-in for the insurance.

The lifestyle peeps you know by name because they are always on your OD list. These people have money, they just don’t manage it. Most of us have no sympathy for them, but they carry the weight of the OD program. They will opt-in to keep up their lifestyle.

An early success story – we have been gathering opt-ins since 2/1. Of the nearly 2,000 people we have talked to, we have a 97% opt-in rate. It’s still very early and we have a long way to go, but it proves that you can be successful if you are willing to ask.

Actually, that's kind of amazing. Are you targeting your frequent fliers or just your customer base at large?

We cut our deck into 5 groups based on their NSF activity on plastic for 1/1/09-12/31/09. Basically, heavy hitters, high mid-range, low mid, rarely, and never. We started mailing to the nevers because we wanted to refine our process. If we stubbed our toe, no harm no foul.

We also started with our new accounts desks. If they open an account for an existing customer, they ask for the opt-in on existing accounts as well. Again, if you don’t ask, you will not receive.

In order to not kill the mail room, call center, and branches, we are sending a set number of notices per day. We have yet to touch the ones that have had any NSF activity.

We have only heard from about 4% of the total, even though we have mailed out to nearly 50% of our customers. I’m very curious to see if we can continue the trend. Also, we think we will get a better response rate once we start working up the ladder.

We have been working on our plan since November. For those of you who haven’t started, you need to get in the game. Sure, you have until August 15th, but do you really want to wait until then?

And that was my 500th post. Wa-hoo!!!!

Ed, you stated:
"We have only heard from about 4% of the total, even though we have mailed out to nearly 50% of our customers."

Not to be too picky, but that does not sound as the 97% opt-in rate that you previously described. Was the 97% the opt-in rate with new customers only? I am trying to find out to determine adjustments to current sales incentive plan that will now include opt-in sign-up.

Am I correct in assuming that your systems are fully functional and can accommodate the customer's choice as of right now? Meaning that the people who call you and say "I do NOT want to opt in" are immediately taken out of our OD program and their ATM and one-time debit card transactions are declined.

My bank's marketing team wants to start sending out notifications now but we (compliance) have put that on hold right now until we can verify that we will not be out of compliance. I don't think we can do the early notification if we cannot accomodate customer choice now. I can't see telling customers who don't want to opt in "Ok, we got it. You will not be opted after August 15th. Until then, you're still in"

I realize wanting to get ahead of the change and get as many opt-ins as we can, but it doesn't sit right with me at this point. My stance is we will not be doing any mailings until our systems are ready. Then, we will be doing "early compliance" ahead of the July 1 date - but at least ALL the parts will be ready.

Can we limit the way our customers reply to our opt in notice? Can we require them to mail it back?

From a compliance standpoint you can, jross, but with only one response channel you will get a lower opt-in rate.

How do you plan to handle phone requests to opt-in? How will we prove that the customer opted-in?

Telephone opt-ins are valid only if the bank has first sent the opt-in rights notification. Also, remember that afterwards you have to send in written confirmation to customer.

From another thread, here is John Burnett interpretation: "Telephone opt-in would only be valid if the bank had first delivered the opt-in rights notification. If the consumer found out about opt-ins in an early July newspaper article and your institution had not yet delivered its notices to customers on your books as of 7/1/2010, you'd have to ensure the customer is delivered the notice before accepting the opt-in. If the customer was calling to inform you he or she wished not to opt in, you should be able to implement that choice then, and not wait until August 15"

Yoda,
I'm guessing that Ed was being literal when he said "the people we have talked to;" i.e. the customers with whom they have spoken in person. Mailing the notice is simply required foreplay; no one is going to understand that notice or respond to it intelligently.

It's the phone call or CSR conversation that is the sales pitch; I think they have 2,000 live conversations so far and that's what the batting average is based on.

So, as long as we mail the notice, they customer may call in to opt in or out?

Right-o Ken. It also proves that you have to talk to the peeps to get a response. Our mail in, drop off at a branch, or fax in your request channels are almost non-existent.

Interestingly, 1/3rd of the responses are to the call center. "I got this letter. WTH, does it mean?" After our rep talks to them, we get 97% opt-in. More interestingly, is 97% is the magic number if we get a chance to talk to them, regardless of channel.

Call, fax, drop off at a branch, go online, etc. If you give them a "reasonable" method to opt-in, you gotta give them the same way to change their mind.

Our core will not be ready until June. However, we have built an Access database to record the customer's choice. We can upload the database when our core is ready.

Now, don't get confused. This is for "plastic" transactions only - no checks, no ACH. We do have the ability in our core to turn off our "pad balance" on the plastic, causing a declined authorization if there isn't enough funds available. We may get an under the floor limit or offline transaction to slip in. However, we can still charge a fee until 8/15 for these transactions, even if they opt out.



That is unfortunate that y'all have taken this stance as I think you are missing an opportunity to be successful. The Fed's Official Staff Commentary regarding permitted modifications and additional content to the form states "...For Notices provided to consumers who have opened accounts prior to July 1, 2010, the financial institution may describe the institution's overdraft service with respect to ATM and one-time debit card transactions with a statement such as After August 15, 2010, we will not authorize and pay overdraft for the following types of transactions unless you ask us to." That, to me, sounds like the Fed knows it will take us a while to gather these opt-ins and have given us a way to do so.

Also, I think you need to talk to your OPS people. Since 2005 (I think) we have had to give our customer a choice to "opt out" of the "pad balance" for "plastic" transactions. Someone smarter than me can give you the Reg/FIL/whatever. You should have this ability now. The under floor limit and offline transactions will still come through. The only difference after 8/15 is you will not be able to charge the customer a fee for these exceptions.

I agree with the great green one on this one. You will be less successful if this is the only channel you give your customer.

We discussed this. Some peeps didn't want to make it easy for the customer to change their mind or "revoke" their opt-in, as you have to give them the same easy way to revoke as you do to opt-in. In the end, we decided that by creating a barrier to revoke would create a larger barrier to opt-in, thus limiting our success for something we perceive to be a very small risk. I think you want to give them as many channels as possible to opt-in.

I still disagree with you. I have done a lot of research on this for over a week, spoken to examiners and other people in the industry, and the consensus was that right now, if you send the early notification you are actually "complying early" and therefore it's assumed all your ducks are in a row. Meaning that if a customer gets this notice, calls and says "I don't like this and I don't want to wait until 08/15" - you should be able to flip the switch and make it happen. Most places only have two options right now - either you're completely IN the OD system or you're completely OUT - meaning that everything gets declined, rejected, returned, etc. (including checks, ACH).

I was told that if someone calls and wants to only opt out of the card side (per the new reg) and the only solution we give them is either to opt out of OD protection completely (or waiting until 08/15) - that this in fact is not in compliance with the reg. Because we would be treating the customer who doesn't want to opt in differently from someone who opts in. By turning off their OD courtesy pay for checks and ACH (and not turning it off if they elected to opt in) we're treating them differently.

Either way, right now our system cannot just turn off OD courtesy pay for cards only. It's all or nothing. Until our system can do that, we are not doing the customer notification.

And I'm actually wondering how you're getting customers to opt in to this program. That honestly surprises me. Who would opt in to be charged OD fees if the alternative is to simply be declined and not charged anything?