Learn More - Click Here!

Page 3 of 3 1 2 3
Thread Options
#1344946 - 02/17/10 09:55 PM Re: New Opt-in requirements for ODs EdOils
EdOils Offline
Platinum Poster
EdOils
Joined: Jan 2004
Posts: 553
Louisiana
My last post of the day. I promise.

I would like to start a thread in the private forum to discuss strategies on successful opt-ins. Kinda what yall are doing, what works, what doesnt, etc. Believe it or not, my management team wants all banks to be successful and is willing to work with other banks to share knowledge.


Would anyone be interested? More importantly, would BOL be ok with this?
_________________________
You gain education by reading the fine print. You gain experience by not.

Return to Top
Operations Compliance
#1344951 - 02/17/10 10:01 PM Re: New Opt-in requirements for ODs EdOils
Doug Hendrickson Offline
Power Poster
Doug Hendrickson
Joined: Oct 2009
Posts: 3,927
I'd be interested, if only to force me to learn more about our OD policy, practices and fees.
_________________________
I hear and I forget. I see and I remember. I do and I understand.--Confucius

Return to Top
#1345158 - 02/18/10 02:39 PM Re: New Opt-in requirements for ODs Doug Hendrickson
Yoda66 Offline
Junior Member
Joined: Jun 2009
Posts: 33
Same here Ed. There are many snake oil salesmen out there right now who are taking advantage of the situation and charging banks obscene fees: your idea could give this board more ammo to do what's right to the customer and to the bank.
Please let us know on this thread when you have established the private forum.
Yoda

Return to Top
#1345190 - 02/18/10 02:59 PM Re: New Opt-in requirements for ODs Aggs
M Cockrell Offline
Diamond Poster
M Cockrell
Joined: Jan 2003
Posts: 1,028
Dallas, TX
Originally Posted By: Agnessa
Who would opt in to be charged OD fees if the alternative is to simply be declined and not charged anything?

Who wouldn't opt-in? In other words, "Who wants to be declined?"

Certainly not your good clients. It won't affect them if they don't overdraw their account. And, if they make a mistake in their check register, in most cases, I'd bet they'd prefer to be approved (& charged) rather than suffering the embarassment of a declination. (Besides, they'll petition you to refund the OD charge after-the-fact anyway.)

Probably not your habitual overdrafters. They've become accustomed to, & live their lives by, having an OD "privilege."

Right now, your average consumer (much like Congress) thinks this is a good idea, but they're not seeing the whole picture. All they see is: "Ha, ha! The big, bad bank CAN'T charge me a fee." However, I'd venture to say those that do not opt-in will have a rude awakening (& a quick change of mind) after the first instance they receive a declination.

It's like buying a gallon of milk at the convenience store & paying $4 vs buying the same gallon of at a grocercy store & only paying $2.50. There are those that are unwilling to pay the "outrageous" $4, but there will be plenty of those who are willing to pay the higher price because it saves them time ("I want it NOW!"), effort [(in my best 4 year-old voice) "I don't want to have to balance my check book."] or embarassment ("What do you mean, 'Your card's been declined?'").

This is a matter of convenience &, in the end, I believe there will be many more who wish to, at least, have the accessibility to the convenience (& pay for it) rather than being told "You may not even shop at the convenience store."
_________________________
"Remember no man is a failure who has friends." - Clarence (the Angel) Oddbody - It's a Wonderful Life

Return to Top
#1345191 - 02/18/10 03:01 PM Re: New Opt-in requirements for ODs EdOils
Mary Beth Guard Offline
Platinum Poster
Mary Beth Guard
Joined: Oct 2000
Posts: 797
Oklahoma City, OK
Originally Posted By: EdOils
My last post of the day. I promise.

I would like to start a thread in the private forum to discuss strategies on successful opt-ins. Kinda what yall are doing, what works, what doesnt, etc. Believe it or not, my management team wants all banks to be successful and is willing to work with other banks to share knowledge.


Would anyone be interested? More importantly, would BOL be ok with this?



As Executive Editor of BankersOnline, I can conform it's okay with us! We're looking forward to hearing what your thoughts are.

Return to Top
#1345203 - 02/18/10 03:13 PM Re: New Opt-in requirements for ODs EdOils
Elwood P. Dowd Offline
10K Club
Elwood P. Dowd
Joined: Aug 2001
Posts: 21,939
Next to Harvey
It's gracious of you to share... We need to get away from discussions revolving around "we'll just revoke their card" and "no one will opt-in."

About one third of this is about compliance. The other two thirds involves marketing and operations. The Fed (ghost writing for the consumer groups) bent over backwards to make the reg impregnable. In so doing, they have left the banks no reasonable outs other than salesmanship and fixing their operational weaknesses.

The FRB was was clearly counting on the latter response, but I do not think it dawned on them that banks would be capable of running successful opt-in programs.

So much for the value of consumer testing... Maybe they should have just formed a committee instead. wink

_________________________
In this world you must be oh so smart or oh so pleasant. Well, for years I was smart. I recommend pleasant.

Return to Top
#1345635 - 02/18/10 08:16 PM Re: New Opt-in requirements for ODs Elwood P. Dowd
Dani York, CRCM Offline
Power Poster
Dani York, CRCM
Joined: Apr 2005
Posts: 3,663
TN
Would love to glean some ideas to share with our sales staff!
_________________________
I can't herd the cats anymore, so I just set up the electric fences and let them fry when they stray out of bounds.

Return to Top
#1345703 - 02/18/10 09:14 PM Re: New Opt-in requirements for ODs Dani York, CRCM
ahkcompliance Offline
Diamond Poster
Joined: Sep 2008
Posts: 2,470
Midwest
If we allow a customer to opt-in via phone, how do you really prove they opted-in? We put the date in teh field showing the date of opt-in but how do you prove to a regulator the customer really opted-in?

Return to Top
#1345721 - 02/18/10 09:25 PM Re: New Opt-in requirements for ODs ahkcompliance
YosemiteSamIAm Offline
Power Poster
Joined: Jan 2004
Posts: 2,795
Guess
Please count me in...I have been offering lots of ideas to marketing and operations...can't say for sure they have been listening though...
_________________________
Sorry, did I just use my outside voice?

Return to Top
#1345729 - 02/18/10 09:34 PM Re: New Opt-in requirements for ODs Elwood P. Dowd
EdOils Offline
Platinum Poster
EdOils
Joined: Jan 2004
Posts: 553
Louisiana
Originally Posted By: Ken_Pegasus
It's gracious of you to share... We need to get away from discussions revolving around "we'll just revoke their card" and "no one will opt-in."

About one third of this is about compliance. The other two thirds involves marketing and operations. The Fed (ghost writing for the consumer groups) bent over backwards to make the reg impregnable. In so doing, they have left the banks no reasonable outs other than salesmanship and fixing their operational weaknesses.

The FRB was was clearly counting on the latter response, but I do not think it dawned on them that banks would be capable of running successful opt-in programs.

So much for the value of consumer testing... Maybe they should have just formed a committee instead. wink



I'll get something posted in the next day or so. Today, if I am ambitious...

I think bankers are shell shocked. We see it at conferences and seminars - head down, blank stare - they have given up. Too much bad news, change in regulations, declining asset quality, etc to take in. Some are buying into the hype. I want to see us proud to be bankers again.

As for the Fed, we think they didn't ask the right questions when they conducted the survey. When we have discussions with our customers that say, "I heard you won't be able to charge me a NSF fee anymore." We say, "That also means that we won't pay your OD anymore." They tend to say, "Well, I don't want that!" It's all in how you ask the question, Senior Fed.
_________________________
You gain education by reading the fine print. You gain experience by not.

Return to Top
#1345746 - 02/18/10 09:48 PM Re: New Opt-in requirements for ODs YosemiteSamIAm
jross Offline
100 Club
Joined: Dec 2009
Posts: 184
TX
ahkcompliance, I am with you on that question.

An extreme example ... We could say that all of our customers opted-in by phone. That way we could keep a sample form to show the examiners and only send the notice to customers who never OD.

How will we prove compliance?
_________________________
My employer doesn't agree with anything I say.

Return to Top
#1345750 - 02/18/10 09:53 PM Re: New Opt-in requirements for ODs Aggs
EdOils Offline
Platinum Poster
EdOils
Joined: Jan 2004
Posts: 553
Louisiana
Originally Posted By: Agnessa
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?


Ahh... You are looking at it the wrong way. You need to look at it as opting in to a service, not a fee. Some people see the value of the service and are willing to pay for the use of it.

As to how? I'll go into more detail later, but it is very simple. Do you want your account to operate the same way that it does today? If yes, then the government says that I need your permission.

I take 0 credit for our success. Our branch and call center staff are fantastic. When we started talking to them, their response was, "This was no big deal. We talk about ODs everyday." Bottom line they a'int skeered to ask...
_________________________
You gain education by reading the fine print. You gain experience by not.

Return to Top
#1345767 - 02/18/10 10:08 PM Re: New Opt-in requirements for ODs ahkcompliance
EdOils Offline
Platinum Poster
EdOils
Joined: Jan 2004
Posts: 553
Louisiana
Originally Posted By: ahkcompliance
If we allow a customer to opt-in via phone, how do you really prove they opted-in? We put the date in teh field showing the date of opt-in but how do you prove to a regulator the customer really opted-in?


Please take this the right way. You and JRoss need to get past this imagined barrier. You prove compliance by documenting your procedures and following them. These procedures include sending a written opt-in notice which states the customer has the option of revoking their opt-in. If the customer didn't want the service, they could call you back. (Just FYI - We are sending Opt-out letters to the peeps that say no. Not requried, but we want them to know that they can change their mind at any time.)

You are not going to get 100% opt-in. You are also not going to get 100% of your opt-ins verbally. (Our results so far is about 1/3rd of collected opt-ins through the call center.)

Is there risk there? Yes. Is it a show stopper? I don't think so.
_________________________
You gain education by reading the fine print. You gain experience by not.

Return to Top
#1345781 - 02/18/10 10:27 PM Re: New Opt-in requirements for ODs EdOils
jross Offline
100 Club
Joined: Dec 2009
Posts: 184
TX
Ed I agree with you that not all will opt-in and that when they do opt-in it will be in various forms. I am trying to find a way to respond questions already asked inside my bank. For example,
the customer calls to opt-in, receives the next months statement and sees $500 in OD fees, calls the bank to complain and states that he never called to opt-in. We do not have a signature on anything and we do not record phone conversations. How can we cover ourselves?
_________________________
My employer doesn't agree with anything I say.

Return to Top
#1345800 - 02/18/10 10:43 PM Re: New Opt-in requirements for ODs jross
EdOils Offline
Platinum Poster
EdOils
Joined: Jan 2004
Posts: 553
Louisiana
Yes. That could happen and you will have folks that will play the system. However, you should not let the exceptions drive your program. You will limit your potential for sucess by trying to mitigate a small risk.

You have a few options and it depends on the customer, your bank's philosophy, etc.

You could say, "I'm sorry. We'll reverse your fee." OR

"We sent you confirmation in the mail. You should have called us sooner. We'll opt you out now, but we're not refunding the fee." The Fed's commentary supports this by saying, "..If a consumer does so, this provision does not require the financial institution to waive or reverse any overdraft fees assessed on the consumers account prior to the institutions implementation of the consumers revocation request."

OR something in between.

Personally, I'd choose door number one or three and move on. If the customer continued to change their mind, I'd invite them to bank elsewhere.
_________________________
You gain education by reading the fine print. You gain experience by not.

Return to Top
#1345886 - 02/19/10 12:22 PM Re: New Opt-in requirements for ODs Aggs
John Burnett Offline
10K Club
John Burnett
Joined: Oct 2000
Posts: 39,551
Cape Cod
Ed -- With regard to your post above #1344923, please take a look at the Federal Register document, page 59047 (it's the 15th page of the PDF document), first column, first full paragraph. In pertinent part, it reads --
Quote:
Of course, if an existing account holder contacts his or her financial institution in response to the opt-in notice before August 15, 2010 to express a desire not to opt in, the Board expects that the institution would honor the consumers choice at that time.


I have gone on record here in the Threads objecting to the Fed's tucking away important information like this statement in its analysis of a rule in the Federal Register, rather than in the regulation itself or the Official Staff Interpretations or Commentary, as the case may be. The Fed has done it at least twice before in its regulatory issuances dealing with overdraft fees, and we should, I suppose, be looking for this sort of hidden whenever the Fed publishes rules. [One can only imagine how many times nuances like this one are tucked away in the January 12 Regulation Z amendment document.]

Whether or not your examiner latches on to that single sentence in the FR to challenge your implementation process is an unknown. But I don't think that a bank with a large number of affected accounts would want to contemplate reviewing account records to refund fees in the face of an adverse exam report.
Last edited by John Burnett; 02/19/10 03:44 PM.
_________________________
John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8

Return to Top
#1345925 - 02/19/10 02:16 PM Re: New Opt-in requirements for ODs EdOils
Elwood P. Dowd Offline
10K Club
Elwood P. Dowd
Joined: Aug 2001
Posts: 21,939
Next to Harvey
Geeze, I hate potpurri threads!

I believe John's comment relates back to Agnessa's protests in #1344015. The same language has been quoted elsewhere and there is not much to disagree with; a bank that begins "early" compliance must be able to implement an opt-out at the time it is received; i.e. "now."

Regardless, I'm excited to hear from a banker who's doing more than hand wringing.
_________________________
In this world you must be oh so smart or oh so pleasant. Well, for years I was smart. I recommend pleasant.

Return to Top
#1346100 - 02/19/10 04:13 PM Re: New Opt-in requirements for ODs Elwood P. Dowd
EdOils Offline
Platinum Poster
EdOils
Joined: Jan 2004
Posts: 553
Louisiana
John, I hear you and always value your opinion. In the end, it comes down to a risk management decision. What is the risk associated with starting early vs the risk associated with starting late?

We may have to reverse fees. We may not. An examiner may take that opinion. They may not. We may win the argument. We may not. And so on...

We have the ability to turn off the "pad balance" on the debit card. That leaves the under the floor limit transactions that may slip in. Our research shows this is a very small number of NSFs transactions. Also, we have received a very small number of opt-outs, all of which have been peeps that never od their account.

So, when you measure the risk, our non-compliance risk is vastly smaller then our loss of income risk.

Just to add more potpurri to this thread (gotta keep it smelling fresh in here) - We have a big bank in our market that keeps asking about my wallet. They have started outbound calls to their more "profitable" customers asking for the opt-in.
_________________________
You gain education by reading the fine print. You gain experience by not.

Return to Top
#1346129 - 02/19/10 04:35 PM Re: New Opt-in requirements for ODs EdOils
John Burnett Offline
10K Club
John Burnett
Joined: Oct 2000
Posts: 39,551
Cape Cod
LOL, Ed. I don't disagree with that analysis at all. I do think it's a case of "Understand the risks, then make your decision."

I did talk with a little ($6 million assets) credit union that was really anxious about losing OD fees for those under-floor limit and other under-the-radar debit card transactions. If your business is set up to eke out just enough to keep your nose above water, $20K a year in lost income can make you reach for a snorkel.
_________________________
John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8

Return to Top
#1346175 - 02/19/10 05:24 PM Re: New Opt-in requirements for ODs John Burnett
Aggs Offline
Diamond Poster
Aggs
Joined: Nov 2009
Posts: 1,331
Hoosier Country
I don't necessarily disagree either - it's a risk-based choice at this point and I understand that.

However, I also know that August 15th is not the "end all" date for discussions with customers. We're taking the approach that we'll notify and set up all the opt-in (and revocation) channels once all our systems are in place. I think, for us, the majority of "opt in" opportunity will come after August 15th, once people who chose not to opt in start getting declined and actually experience the "inconvenience". Some people might not be bothered by a moment of embarassment in exhange for not being charged a fee. Some people might want the convenience back, once they experience the flip side of their choice. We will likely plan on doing a follow-up after the 08/15 date with customers who have gotten declined. Instead of spending all the $ on early notification and trying to retain as many people "in" as we can, we will notify as soon as we can, comply with all the Reg requirements and then begin further research and follow-up after the switch gets flipped on 08/15.

That is our approach at this time. If we get further clarification from the Fed regarding the "early compliance" part, we are more than ready (marketing is jumping at the bits) to begin early notification.
_________________________
CRCM + CAMS = certified compliance nerd

Opinions expressed in these threads are my own and not my employer's.

Return to Top
#1346177 - 02/19/10 05:27 PM Re: New Opt-in requirements for ODs EdOils
Elwood P. Dowd Offline
10K Club
Elwood P. Dowd
Joined: Aug 2001
Posts: 21,939
Next to Harvey
The fact that the language is buried in the supplementary information is certainly in your favor. Also, it focuses a temporary circumstance and it may never make it into the exam procedures.

In the very best exit conference of my career, the bank's CEO told the EIC going over a suggestion for the third time, "We acknowledge the risk and we accept it. Move on." I've parrotted that phrase on a number of subsequent occasions, but would not do it in this specific instance. I simply do not think it is necessary to assume the risk.

If your bank is doing such an incredible job that 97% of your customers are opting in, then I'm guessing that it's markedly less than 3% of your customers that are actually opting out. And, of those that do opt out, I have no doubt about your statement that they were non users anyway.

Regardless, I would find a way to flag those opt-outs now and monitor their relevant activity. First, because the language as clear. Second, because you will eventually need such a mechanism anyway. Finally, because your regulators are going to be less than thrilled with the fact that your bank turned this situation around so completely. Accordingly, they are going to look at everything about your program, trying to find a flaw. (Yes, I think they are vindictive.)

I realize that I am explaining things that you probably already understood. However, I am comfortable doing that because I don't think everyone who reads this will understand it at the same level.
_________________________
In this world you must be oh so smart or oh so pleasant. Well, for years I was smart. I recommend pleasant.

Return to Top
#1346280 - 02/19/10 06:41 PM Re: New Opt-in requirements for ODs Elwood P. Dowd
waldensouth Offline
Power Poster
waldensouth
Joined: Nov 2001
Posts: 7,979
FINALLY ABOVE the gnat line
On a call with our core processor yesterday - the compliance officer of the core processor called the attorney at the fed, who's name is listed on the regulation as a source of information, to ask this very question about sending customer's early notices.

She stated that as long as the notices clearly stated that the choice would not be effective until 8-15-10, then early disclosure was fine.
_________________________
"Once you learn to read, you will be forever free."

- Frederick Douglass




My Opinion Only.

Return to Top
#1346367 - 02/19/10 07:23 PM Re: New Opt-in requirements for ODs waldensouth
Elwood P. Dowd Offline
10K Club
Elwood P. Dowd
Joined: Aug 2001
Posts: 21,939
Next to Harvey
There are some other threads where similar oral statements are attributed to Fed personnel. However, the written clarifications they issued today do not address the issue.

I don't find where EdOils indicated that his notice indicated a delayed effective date, but even if it did it would be necessary to track opt-outs from the date of distribution so the bank could implement their response on the effective date.
_________________________
In this world you must be oh so smart or oh so pleasant. Well, for years I was smart. I recommend pleasant.

Return to Top
#1346489 - 02/19/10 08:55 PM Re: New Opt-in requirements for ODs Aggs
John Burnett Offline
10K Club
John Burnett
Joined: Oct 2000
Posts: 39,551
Cape Cod
Originally Posted By: Agnessa

That is our approach at this time. If we get further clarification from the Fed regarding the "early compliance" part, we are more than ready (marketing is jumping at the bits) to begin early notification.


As it happens, Agnessa, our friends at the Fed announced today they are publishing proposed clarifications (and some technical corrections) to the final rules both in Reg E and in Reg DD.
_________________________
John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8

Return to Top
#1347194 - 02/22/10 08:58 PM Re: New Opt-in requirements for ODs John Burnett
EdOils Offline
Platinum Poster
EdOils
Joined: Jan 2004
Posts: 553
Louisiana
I posted our strategy in the private FI forum. There's so much, I'm sure I missed something.

Ken - We did put on our notices that the change was effective 8/15. We used the "Permitted modifications and additional content" guidance that stated we could modify the form to include a statement such as, "After August 15, 2010, we will not authorize and pay overdrafts..."
_________________________
You gain education by reading the fine print. You gain experience by not.

Return to Top
Page 3 of 3 1 2 3

Moderator:  Andy_Z, John Burnett