We are having a terrible disagreement with our manager. She says that our system will only allow opt-in as "all or nothing". In other words, the cust will have to opt in to both ATM/debit card AND checks and other trans types. The customer can't just opt into the pmt of checks.

We think that is conditioning - which is prohibited. Who is right?

You are.

By telling the person who doesn't want to opt in "too bad, your checks and ACH transactions will bounce now, too" - you are conditioning the opt-in. You are subjecting the person who didn't opt in to additional hardship (or at least that's how it would be looked at) - bouncing a check will mean that they get assessed fees by you PLUS fees from the payee.

Basically, one group of people will have coverage for checks and ACH, the other group will not. It's definitely in violation of the reg.

We were also told our systems couldn't accomodate that. Guess what - after several months of work, they can. Shocking... And we're ready to go early next month.

You have to push to get the ability to separate your overdraft service into two parts or eliminate altogether your overdraft service that covers ATM and one-time debit card transactions. Otherwise, you'll be in violation, as Yikes! has pointed out.

Time is running out on this decision, too. You've got about 3 months before you'll have to drop OD service on card transactions for customers who haven't opted in by 8/15. If you haven't convinced management to get off the dime on the question, it will mean none of your customers can have OD coverage for ATM and one-time debit card transactions on or after that date. If they have that coverage now, some of them will be less than pleased.

Wait I'm confused! Our policy is that we do not authorize debit or ATM withdrawals if the funds are not there. Therefore I believe we do not have to do opt-in or opt -out. But reading the above if these accounts have overdraft(credit approved NOT courtesy pay) attached does that change everything and now we do have to opt-out and all that?

You only have to do opt-in in you want to pay ATM & one-time debit card trans and be able to charge a fee. As for other transaction types, you do not have to have opt-in. Some banks have opt-in for these other trans types as suggested in the ODP best practices issued in 2005. Best Practices encouraged banks to provide election or opt-out of service if dep accts were automatically enrolled in ODP. The new OTS proposed guidance now goes even further and encourages the bank to provide consumer choice.