Our bank's policy is to decline ATM and one-time debit transactions if there are insufficient funds in the account. We also make the decision to pay or return each transaction as we do not have an automated program for paying overdrafts. On occasion because of the merchant's timing in sending the transaction, the debit may cause the account to be overdrawn. Section 205.17(b)(4) of Reg E provides an exception only to the notice and opt-in requirements. Can someone clarify this? Can we charge an overdraft fee even if the customer does not opt in?

No.

No.

No. The FRB issued clarification on this and it has been discussed in other threads numerous times.

The proposals are intended to address questions that have arisen and to provide further guidance regarding compliance with certain aspects of the final overdraft rules. In particular, the proposals would clarify that the prohibition in Regulation E on assessing overdraft fees without the consumer's affirmative consent applies to all institutions, including those with a policy and practice of declining automated teller machine (ATM) and one-time debit card transactions when an account has insufficient funds. The proposals would also make certain technical corrections and conforming amendments.

I'll make it unanimous. No.

Although it states in the reg that the opt-in notice must be a separate document and not combined with our initial Reg E disclosure...can banks send the opt-in notice and information in with statements to existing customers?

Yes. Separate document need not mean separate mailing.

We are a small community bank, and we have decided not to charge any of our consumer customers for one time debit card and ATM transactions starting July 1st, and thus eliminating the need to send out an opt-in or opt-out mailing. Are we still required to send out a notice to consumers explaining our overdraft practices by July 1st?

The notice is not required unless you will assess a fee or charge for paying an overdraft or one-time debit card transaction. Page 15 of the Philly Fed's 1st Quarter Consumer Compliance Outlook has the following Q&A on this subject:

Q. If a financial institution does not charge a fee when it pays an item into overdraft, does it have any obligations under the new rules?

A. The final rules prohibit a financial institution that holds a consumer’s account from assessing a fee or charge on a consumer’s account for paying overdrafts in connection with ATM or one-time debit card transactions unless it has met the four requirements in §205.17(b)(1)(i)-(iv). If the institution never assesses such fees or charges, the notice and opt-in requirements do not apply.

So are you guys saying if we don't charge the fee on ATM or one time debit transactions we don't have to provide the overdraft practice notice or opt-in notice?

Also, can someone further explain the last sentence under the section, "Exception to the notice and opt-in requirement" "Financial institutions may apply this exception on an account-by account basis" Does it mean if our system has capbability to both authorize or decline at POS and ATMs on account by account basis, we can charge fees if we pay, as long as the customer has opted-in?