We're trying to get procedures finalized for the upcoming 8-15 deadline where we anticipate having customers calling in to opt-in after being declined at POS.

Example:
Customer is in Walmart on Monday and declined. Calls bank to opt-in. Bank does maintenance to opt-in customer immediately. Walmart purchase and fee is memo-posted Monday night. Maintenance done on monday kicks out a confirmation letter on Tuesday (mailed that day). Walmart purchase and fee is hard-posted Tuesday night.

Technically the confirmation letter is being sent before the fee is hard posted so I think we're OK.

However, the final rule states "an institution complies with the confirmation requirement if it has adopted reasonable procedures designed to ensure that overdraft fees are assessed only in connection with transactions paid after the confirmation has been mailed or delivered..."

In the example I describe, fees are assessed after confirmation letter is sent, BUT the transactions is paid BEFORE the confirmation has been mailed.

How are others doing this? I thought we were OK but after re-reading the final rule I don't think so.

If I'm reading your scenario correctly the transaction is paid on Tuesday night after you mailed the confirmation notice. Memo posting is not paying an item, it is earmarking it for later payment. The hard posting is the actual payment of the item. In that case, the fee could be assessed since the confirmation notice was mailed prior to the payment of the item.

What happens if the call comes from your customer at 1 p.m. on Monday? When does that transaction hard post, if you let it through? If it posts on Monday's date on the customer's statement, and you don't actually mail the confirmation until Tuesday, you can't assess the fee.

Well rcbcomply, I guess they would opt in for a much bigger reason and not being declined at point of purchase if the funds were not available. I would think everybody would opt in unless they have not will power over their live and spending

Bobw, if there's no OD program, there's nothing to opt in to, and all ATM/POS transactions will be declined if funds are not in the account to cover.

Are there rules to prioritizing the settlement? I can't see anything in the Reg. that specifically states that the institution is required to settle transactions in a particular way.

For example, what if we settle all debits by order of value? What if we settle all POS transactions before checks?

Is there a requirement for the order in which a transaction is settled on the account??

Each bank establishes what is called its own order of payment. It is not dictated by law or regulation. Generally, banks pay their "must pay" items first; e.g. ATM, debit cards, checks cashed over the counter, etc.

That order of payment can certainly be manipulated in such a way as to maximize overdraft fees. Although I just said that the order of payment is not dictated by law or regulation, one of the MegaBanks just ended up on the wrong side of a $200 million decision saying indicating that their methods constituted an unfair and deceptive practice.

Don't go out of your way to give your customers the shaft.

Thanks Ken!

Have you found any restrictions that indicate that a financial institution cannot offer incentives to employees for referring customers to "OPT IN" to ODP?

I searched the Reg. and can't find anything specific, but I've heard a rumor suggested that this is the case.

There is certainly nothing to prevent your bank from offering an incentive to employees to solicit a response if the response can be either an opt-in or a "no thank you."

And as you observe, "grows," there's nothing explicitly stated in the regulation, Staff Interpretations or even (if my memory is right) in the Federal Register supplementary information that would prohibit offering the incentive only for opt-ins that employees pull in in their nets (you can't pay the incentive to a customer to opt in because that would violate the "equal treatment" concepts in the regulation).

Paying employees such an incentive, though, could prompt a regulator's suspicion that employees might "go off script" to solicit opt-ins, painting too rosy a picture of the service (omitting the part in the script about the costs, for example) or too dire a picture of the alternative ("You could be caught at Walmart with $180 in groceries and no way to pay for them, Mr. Smith").

August 15 is almost here, and it's time to face it: the horse has left the barn.

Thanks John, this really helps!

We were getting a lousy response rate on marketing efforts, so we started a teller campaign where tellers would recognize customers who have not opted on their account summary screen, and then the tellers would solicit the opt-in. The campaign pays $1 to every teller for every response received, with an emphasis that the type of response (positive - yes, negative - no) doesn't matter to get credit. In addition, all responses enter the teller into a grand prize drawing of $250. We have provided scripts to them with talking points emphasizing the pros and cons, and encouraging the customer to make an informed decision.

Since we have started the campaign our response rate has sky-rocketted.

Are you recording the fact that John Doe has "just said no" to the opt-in, or do your tellers simply see that he hasn't opted in and go after him again?

We have instructed tellers to only address customers who show on their deposit inquiry screen that they have not responded. We have been very particular about making sure responsible personnel respect someone's decision to opt-out rather than in. We won't address customers who have not opted in unless they show up on a report as having overdrafts that paid and not charged (preauthorizations, etc.).

Sounds like a sound approach. I wish you success.