You are supposed to provide revocation capabilities via the same channels you used for opt-in (although that's patently impossible for opt-ins obtained as part of new account paperwork) -- see 205.17(f). So if you allowed the consumer to give you an opt-in orally, you should provide the consumer the ability to revoke it orally.

As for documentation, you should document your procedures and I recommend logging any revocation requests. But there's no requirement that you retain "proof" of individual opt-ins or revocations.

There is no specified place for the notice of right to revoke. The regulators will like it better if it's conspicuous, and it's better, I think, if it's above the signature line on the opt-in form, because it's more likely to be seen there. That's just an opinion.

If we mail the opt-in notices early,include the below statement on the opt-in notice and an existing customer informs us prior to August 15 that they do not want to opt-in, do we need to stop accessing the fee for any ATM and one-time debit card transactions or do we stop charging the fee until after August 14 because we mentioned the effective date on the notice.

The statement reads "After August 14, 2010, we will not authorize and pay overdrafts for the following types of transactions unless you ask us to (see below): ATM transactions and everyday debit card transactions"

thanks,

If we mail the opt-in notices early, include the below statement on the opt-in notice (mentioned on the webinar)and an existing customer informs us prior to August 15 that they do not want to opt-in, do we need to stop accessing the fee at that time or until after August 14 because we mentioned the effective date on the notice.

The statement reads "After August 14, 2010, we will not authorize and pay overdrafts for the following types of transactions unless you ask us to (see below): ATM transactions and everyday debit card transactions"

thanks,

There are two reasons that you should promptly stop assessing OD fees for ATM and one-time debit card transactions in that customer's account.

First, there is the requirement in the regulation that says if you start compliance with the regulation early, you have to comply with all the regulation's provisions, and one of those provisions is to act a promptly as reasonably practicable when a customer revokes an opt in (which is arguably the same as opting out).

Second, there is the statement in the first column of the fifteenth page of the Federal Register document in which the final regulation was published that says that it is the [Federal Reserve] Board's expectation that you'd act promptly.

Whether your regulator will take the same view as the Fed Board is the unknown.

does anyone see an issue with having an employee incentive program to increase the number of opt ins?

My bank has an ODP service. Then, there are those customers who do not qualify/do not want the service. Do we send opt-in notices to that group? Even though they have no OD service/balance/allowance, there are times when they manage to overdraw their account with a card.

Becky,
Incenting employees to sell an opt-in is a workable option. The warning is that it cannot be an element in an overall plan to mislead or abuse the customer. Your bank should provide scripts to its sellers and mandate that they follow them. Expect that your scripts will be subject to third party review.

We are months away from the first on-site examination on this topic. No examination procedures have been published. However, I've heard rumblings about a major thrift that is on the precipice of an enforcement action because of the way they have handled their promotion of overdrafts in the past. A friend operates sort of a voluntary "clipping service" for me where he sends links to lawsuits filed against banks that have aggressively promoted overdraft services.

It's "open season" and you want to avoid being a target. An aggressive promotion will not "violate" this regulation. What you want to assure is that it does not sink to the level of an unfair and deceptive practice in the eyes of your reviewer. (In candor, the biggest variable here is "Who is your reviewer?")

There is a thread in the Private Forum that describes what appears to be an effective promotional program. I see no indicators there that the bank is overreaching its customers.

Only Pollyanna would just mail the A-9 and expect a significant number of customers to mail it back.

Queen BB,

Banks that promote overdrafts need to divorce their Reg E opt-in decision from that fact. Unless your promotions indicate you will honor allow overdrafts via ATM and debit cards, there is no real conflict.

Banks that promote overdrafts do not promise the customer that an NSF item will be paid. Banks that obtain a customer opt-in in response to an A-9 do not promise the customer that an NSF item will be paid. Both the overdraft promotion and the A-9 solicitation are inherently deceptive. However, the second one is sanctioned by the federal government.

The fact that a customer does not "qualify" for a promoted overdraft service has nothing to do with the fact he is overdrawn this morning because of a systemic weakness. The issue is whether or not your bank wants to collect the fee.

Managment had now decided to increase our NSF fees. I already have our Opt in notice prepared with our old fee. We are planning on mailing our opt in requirements on May 1 and the new fee takes effect June 1. We will do our change in terms 30 day prior. My question is is it okay if the notice states the old fee?

My bank does not promote ODs, but there are times when a card purchase (gas at the pump, for example) is authorized, then another item clears the system first - leaving the card purchase ODing the account. No choice but to pay the card, as it was authorized with sufficient balance and no way to return/decline it after the fact. So, my question is whether or not to send the OD notice to those folks who are not in the formal ODP. They are just plain ole folk who used their card, was authorized, but at time of clearing the account does not have the funds. It looks to me like having the notice sent to them would at least allow us to charge them for the OD in their account caused by this card transaction.

QueenBB,

We are in the same boat, so to speak. I don't know how you could word the opt-in notice in order to get someone to opt-in to a charge in this circumstance. We don't actually offer a service to opt-in to. Who would opt-in if they are told that the transaction would have to be paid regardless of whether we can charge them?

Does anyone have an opinion about opting-in over the phone?

We are going to allow it as long as we can verify the customer's identity.

We are going to allow it all...mail, phone, online, email, in person. We want it to be convenient for the customer.

While we want it to be convenient for our customer too, I have to wonder about the security of the issue. I mean with identiy theft. I know we are going to verify as much as we can over the phone, but you really never know who you are talking too. It just makes me nervous.

We will permit telephone opt-ins as well and will follow our normal customer identification procedures for any telephone transaction.
The written confirmation mailed to the address of record for the account should negate any issues with identity theft.

Don't you give account information over the phone to your customers? In my own opinion that seems more risky than this. What ever you do to identify your customers when they call for account information you could use the same measures with the opt-in wouldn't you agree.

That is what I plan on doing. I have created a checklist with the 5 privacy questions to assist in the determination of the customer's identity. We are planning on following the same procedures for CIP, I was just wanting some opinion.

The notice has a segregation requirement. Would it be acceptable to mail this with information regading the bank's Overdraft Defender program? I just thought the segregation requirement prohibited institutions from included the opt-in with other consents. Is that correct?

The segregation requirement just requires that you not include other information on the opt-in disclosure. There is a footnote in the Federal Register document that specifically says it's OK to include other material in the mailing (if you do a mailing), but it must be on a separate document. Make very sure, though, that your Overdraft Defender program material complies with Reg DD section 230.11(b) requirements.

I don't think so. That schedule says you will be sending out conflicting fee information within one or two days. The right hand and left hand at your bank need to get together and coordinate things better. Sending out the opt-in notice with stale fee information without knowing abut the fee increase is one thing (and regulators might not like it in spite of the excuse), but knowingly sending it out with stale fee information will be looked upon as a problem, and your opt-in process could be declared invalid.

Save your regulator the trouble of writing your bank up for the violation and have the disclosures re-done with the new fees, even if it means you'll need to postpone the "roll-out" from May 1 to May 15 or so.

Thanks John!

We have a difference of opinion at my FI regarding what constitutes a "separate document"
Could a cover letter accompanying the A-9 notice be on the reverse side or should it be a completely separate piece of paper?

How have other FIs interpreted this?

I'm trying to figure out what law or regulation dictates the minimum payment we can charge on our overdraft courtesy coverage plan. I'm thinking state law? (NC in my case). Is that correct?
Thank you.

Ken you mentioned in a recent Compliance Update School that sending a letter along with the opt-in form to the customers may be an advertisement promoting the payment of overdrafts and if so must include those 4 specific items spelled out in the reg. We were thinking of using a similar letter to one that one of our upper mgmt received from their "other" bank. I would like to have you look at it and advise if it is what you are talking about but I do not know if I can attach it to this post and I see that you do not take PM's. Any suggestions?

Maybe this has been discussed already, but I can't find it.

For accounts with repeat debit/ATM card initiated overdrafts that have not opted in after 7/1 (because the bank is not live or gas station $1 approval scenario), is there anything wrong with revoking card privileges?