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#1387448 - 05/07/10 12:38 PM Reg E Overdrafts - Logistics
CalifDreamin Offline
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CalifDreamin
Joined: Mar 2002
Posts: 2,240
Far from Calif
Some questions have come up here, and I'm curious as to what others of you are doing....

1) Are you retaining the written opt-ins you get back? (i.e. imaging)

2) When you receive one by phone, are you writing it on the paper opt-in and retaining?

3) We use Jack Henry, and the system is going to be set up so that at the end of the day if the account has been maintenanced to show opt-in, the confirmation letter will be generated for us to send out. So, let's say you have a customer who was just denied at Walmart to get groceries and needs opt in immediately - if that customer calls us and wants that effective immediately can we make that immediately effective and charge for the OD, or will we not be able to charge if we allow the transaction to process?

4) Are you maintaining records of opt-in changes, and if you are, how? For example, husband opts in this morning, wife comes in this afternoon and opts out...husband gets denied tomorrow on an ATM transaction...comes in Monday furious because he gave the opt in...

5) Are you centralizing this function? (i.e. one dept. handling coding the system for opt ins)

Thank you!
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#1387612 - 05/07/10 02:53 PM Re: Reg E Overdrafts - Logistics CalifDreamin
John Burnett Offline
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3) You cannot charge a fee unless you have sent the confirmation. That's as far as the rule goes. Assuming you are able to activate overdraft service for your cardholder at 5 p.m. on Friday while you're talking with your customer, when will the confirmation be sent? When will the transaction post, if the customer is able to access overdraft funds at 5:15 when you've "flipped the switch"? When would the fee be assessed?

You need to figure out the answers to those questions. If the confirmation has been sent before the fee is assessed, and you can document that process, you're OK. But if the fee will be posted on Friday's business and the confirmation won't be sent until Monday, you'll be in violation.

Situations like this are good excuses for innovation. Would your system, or the bank representative who flipped overdraft service on for the customer be able to send the confirmation via email that could be generated "at the moment" if the consumer provides (or has provided) an address and agreed to get the confirmation electronically? I know that if I were that customer, waiting at Walmart with my two tired cranky kids, I'd be more than happy to give you my email address if it meant I could pay for my groceries and get the kids home and fed.
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#1387619 - 05/07/10 02:56 PM Re: Reg E Overdrafts - Logistics John Burnett
BrianC Offline
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Question 4: He can be furious all he wants. The wife has the right to opt-out and you have an obligation to honor her request. If the two parties cannot agree, and husband wants to opt in, advise him to open an individual account and opt-in so the wife cannot change his choice.
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#1387620 - 05/07/10 02:56 PM Re: Reg E Overdrafts - Logistics John Burnett
John Burnett Offline
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4) If you aren't maintaining those records, or at least a log of who flipped the opt-in on or off and when, you'll start recording the information as soon as you get one of those situations.

5) I cannot imagine a situation in which the control of this function could successfully be decentralized.
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#1387631 - 05/07/10 03:05 PM Re: Reg E Overdrafts - Logistics BrianC
CalifDreamin Offline
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Far from Calif
Quote:
Question 4: He can be furious all he wants. The wife has the right to opt-out and you have an obligation to honor her request. If the two parties cannot agree, and husband wants to opt in, advise him to open an individual account and opt-in so the wife cannot change his choice.


Quote:
4) If you aren't maintaining those records, or at least a log of who flipped the opt-in on or off and when, you'll start recording the information as soon as you get one of those situations.


Exactly why we are trying to come up with how to deal with this now before the new rules hit. We can see Mr. talking to his officer making the change...then Mrs. making the change some other way...then Mr. coming in to talk to (yell) at his officer when the transaction doesn't go through...Officer saying, "Well, I know I changed that for you..." So, how to track who makes changes when without bogging staff down with more paper, etc. but also easily be able to explain to the customer exactly what happened and who made changes. Although we hope this doesn't happen often, we can really see this happening, especially quite a bit at the beginning.
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#1387633 - 05/07/10 03:08 PM Re: Reg E Overdrafts - Logistics John Burnett
CalifDreamin Offline
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Far from Calif
Quote:
5) I cannot imagine a situation in which the control of this function could successfully be decentralized.


We couldn't either, and we've set up a central location. The concern is that initially, you have so many opt-ins to have to handle that it's going to be too much for two people. Trying to decide if we should allow branch staff to take care of any they get in the office - we figure at the very least new accounts should be able to handle them, but we also know they are going to scream that they are too busy. So, we just wanted to get an idea of how others are doing this, at least initially.

We also give customers the option to do online and phone which will hopefully cut down on some of the paper/manual entry.
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#1388143 - 05/07/10 10:38 PM Re: Reg E Overdrafts - Logistics John Burnett
Southern gal Offline
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Posts: 504
TN
Yikes, just when I thought we had all this figured out, I read this post. We process debit cards on real time now, customer will be declined at POS unless they have a positive balance. We are sending out the opt-in/opt out notices just in case we have some situations where a transaction that was approved at POS kicks out on our potential report and we know we'll have to pay that item because it has already been previously authorized, but will be able to charge if customer has opt-in and we have mailed back a confirmation. Now from reading this it almost sounds like if we get opt-ins back that means we'll have to authorize payment at POS even if customer has negative balance. What am I not seeing?
Last edited by Southern gal; 05/07/10 10:38 PM.
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#1388272 - 05/10/10 02:11 PM Re: Reg E Overdrafts - Logistics Southern gal
morirse de risa Offline
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In regards to question #3: The rule states we cannot charge a fee unless we have sent a confirmation. John suggests sending the confirmation letter to an email address.

Would we be able to snail mail the confirmation letter that same day? Granted, the customer will not receive it that day.

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#1388335 - 05/10/10 03:12 PM Re: Reg E Overdrafts - Logistics morirse de risa
Georgia Plum
Unregistered

Southern Gal, if you decline at POS, then you have nothing to opt in to. Why would you go through the opt-in process unless you have an overdraft program (which you obviously don't). We also don't have an overdraft program and will just have to take the loss on the occasional items that are one time/POS items that we won't be able to collect a fee on.

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#1388436 - 05/10/10 04:47 PM Re: Reg E Overdrafts - Logistics CalifDreamin
Aggs Offline
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Hoosier Country
Originally Posted By: FlamingoGal

Exactly why we are trying to come up with how to deal with this now before the new rules hit. We can see Mr. talking to his officer making the change...then Mrs. making the change some other way...then Mr. coming in to talk to (yell) at his officer when the transaction doesn't go through...Officer saying, "Well, I know I changed that for you..."


The point you really want to drive home with your customers is that opting-in does NOT guarantee payment of overdrafts. In such a case (as you provide above), the best explanation would be that there were not enough funds in the account and the transaction was declined by the bank - as you have the right to do.

We're keeping track of only the "last" choice made and the date/time/channel it was made. So for customer #1, the screen might show "not opted in - default" which would indicate a customer who was defaulted into being not opted in because they never made a choice. Customer #2 might say "Opt in - 08/21/10 4:23pm online banking" and Customer #3 might say "Opt in - 07/12/10 3:21pm, Branch #101". For customers who revoke the opt in, it will say something like "Revoked opt in - 09/10/10 9:25am, Customer Service Center".

There is really not much we plan on doing beyond that. We will also keep a record of each confirmation letter mailed, so it can be accessed that way. If someone questions it, we can say "According to our records, you opted in on July 14th through your online banking account. We sent you the confirmation letter on July 15th - here is a copy of it".
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#1388530 - 05/10/10 06:37 PM Re: Reg E Overdrafts - Logistics
blvsinangels Offline
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Originally Posted By: Georgia Plum
Southern Gal, if you decline at POS, then you have nothing to opt in to. Why would you go through the opt-in process unless you have an overdraft program (which you obviously don't). We also don't have an overdraft program and will just have to take the loss on the occasional items that are one time/POS items that we won't be able to collect a fee on.



What happens if the customer has a postive balance at the time of the POS transaction, but by the time it posts they are overdrawn? Can we or can we not charge a fee? We don't have an 'overdraft' program in place. For example gas, the company will process a dollar to make sure the account is good, then the charge comes in the next day for $75 and the customer is overdrawn. We have to pay the POS transaction, but cannot charge for it correct?

If I am running our numbers correctly we stand to loose about $2500 per month....

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#1388563 - 05/10/10 07:08 PM Re: Reg E Overdrafts - Logistics blvsinangels
Aggs Offline
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Aggs
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Hoosier Country
Originally Posted By: blvsinangels
Originally Posted By: Georgia Plum
Southern Gal, if you decline at POS, then you have nothing to opt in to. Why would you go through the opt-in process unless you have an overdraft program (which you obviously don't). We also don't have an overdraft program and will just have to take the loss on the occasional items that are one time/POS items that we won't be able to collect a fee on.



What happens if the customer has a postive balance at the time of the POS transaction, but by the time it posts they are overdrawn? Can we or can we not charge a fee? We don't have an 'overdraft' program in place. For example gas, the company will process a dollar to make sure the account is good, then the charge comes in the next day for $75 and the customer is overdrawn. We have to pay the POS transaction, but cannot charge for it correct?

If I am running our numbers correctly we stand to loose about $2500 per month....


Correct - you CANNOT charge a fee unless you have gotten your customer's affirmative consent (opt-in) to charge them such fees. The specifics behind the transaction being authorized do not matter in this case - no opt-in means no fee, period. You will have to come to terms with losing that fee income.
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#1388756 - 05/10/10 09:21 PM Re: Reg E Overdrafts - Logistics Aggs
morirse de risa Offline
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Midwest
Bump

In regards to question #3: The rule states we cannot charge a fee unless we have sent a confirmation. John suggests sending the confirmation letter to an email address.

Would we be able to snail mail the confirmation letter that same day? Granted, the customer will not receive it that day.

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#1389812 - 05/12/10 06:09 PM Re: Reg E Overdrafts - Logistics morirse de risa
sjlee Offline
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Oklahoma
Are we getting the opt-in on our employees? We charge our employees in the event they are overdrawn so I would think we would need opt in's for them too.
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#1389837 - 05/12/10 06:32 PM Re: Reg E Overdrafts - Logistics sjlee
starfish Offline
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Seattle
You will not be able to charge your employees an overdraft fee for these type of transactions unless they elect to opt in.

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#1389858 - 05/12/10 06:56 PM Re: Reg E Overdrafts - Logistics starfish
sjlee Offline
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Oklahoma
That is what I thought. But we also don't allow our employees to participate in our "Overdraft Priveledge" program, therefore the only time this will come into play is when there is that occasional "oops" transaction that slips in. We are in debate on whether you should be asking them to sign an Opt-in, when they know the bank has to pay the transaction.

What is everyone else doing in this situation, even with your customer's that have debit cards but do not have access to "overdraft priveledge" that would allow the authorization of the covered transactions to begin with?

I think I am making myself more confused.
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#1391738 - 05/17/10 03:21 AM Re: Reg E Overdrafts - Logistics John Burnett
Tristan's Mom Offline
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Tristan's Mom
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Corn 'n Bean Land
We know that a fee cannot be assessed until we have "sent" the confirmation. I'm wondering how everyone interprets "sent" and is it defined anywhere?

Could sent mean generated, postmarked, delivered to the mailbox, emailed???

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#1391749 - 05/17/10 12:32 PM Re: Reg E Overdrafts - Logistics Tristan's Mom
John Burnett Offline
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The proposed "clarifying" amendments to Reg E would, if finalized, state that you'd need to have a procedure for sending the conformation documented, and would not have to prove that any individual confirmation actually went out the door. You define "sent" in that procedure, but I think it has to mean you placed it in the outgoing mail for delivery before the last mail pickup for the day (or last trip to the post office if your bank takes its outgoing mail to the post office or postal drop box), or you pressed the "send" link/button.

There is no requirement that you determine when or whether the customer receives or reads the confirmation.
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#1392310 - 05/17/10 09:21 PM Re: Reg E Overdrafts - Logistics John Burnett
ahkcompliance Offline
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On each opt-in/out form we get we document on that form the date received and the date confirmation sent. We back the confirmation date up by having procedures in place saying confirmations will be sent same day as received.

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#1393709 - 05/19/10 09:33 PM Re: Reg E Overdrafts - Logistics sjlee
In the middle of it Offline
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We're taking a second look at our cardholding customers that are not part of our standard overdraft protection program. Originally we were not notifying them, but now there have been some comments made about other banks getting opt-ins so the fees can be charged... I cannot imagine that the notice language is going to be workable unless we're authorizing overdrafts, not just paying them when there is an "oops."

So I second the question - what is everyone doing for card holders not covered by your overdraft protection program? Thanks!

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#1397230 - 05/27/10 05:34 PM Re: Reg E Overdrafts - Logistics In the middle of it
Snowgirl Offline
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I was wondering what everyone is doing for the card holders not covered by the ODP as well?

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#1397320 - 05/27/10 06:34 PM Re: Reg E Overdrafts - Logistics Snowgirl
kelligirl, CRCM Offline
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Posts: 53
In over my head
Is anyone revising their initial EFT disclosure to include information regarding their debit card overdraft program. I realize that the disclosure required by 205.17 has to be provided seperately.

However, we are just introducing our "debit OD protection program" effective July 1. 205.7(c) states:

Addition of electronic fund transfer services. If an electronic fund transfer service is added to a consumer's account and is subject to terms and conditions different from those described in the initial disclosures, disclosures for the new service are required.

I'm not sure if this applies to the OD program since the customer has to opt-in to it.

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#1397501 - 05/27/10 09:35 PM Re: Reg E Overdrafts - Logistics kelligirl, CRCM
Local banker Offline
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205.17(b)(4) Exception to the notice and opt-in requirements states that the requirements of 205.17(b)(1) do not apply to an institution that has a policy and practice of declining to authorize and pay any ATM or one-time debit card transactions.....

If you sent the opt in notice and the customer opts in, then are you required to make additional disclosures? Do you define standard overdraft practices on the notice? If so, how when it's subjective? At least with an overdraft service there are defined terms that the customer opts in to under Reg DD.

As for now, our bank is taking a wait and see approach on existing customers, but we are going to get all customers to opt in or out beginning July 1st. At least that's we are planning to do this week smile

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#1397947 - 05/28/10 09:00 PM Re: Reg E Overdrafts - Logistics Local banker
gonetobeach Offline
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Joined: May 2004
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near Dallas
We are notifying all of our debit card holders regardless of whether they are in our ODP program about the regulation changes and asking for their decision.

For example: If by chnace the customer exceeds the availability of any alternate overdraft program they may have (cash reserve, sweep, LOC) after they had a transaction authorized at a POS terminal, tha transaction would appear on our NSF report. We would have to pay the item, but if that customer had not provided us with their opt in, we would not be able to charge a fee.

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#1397950 - 05/28/10 09:07 PM Re: Reg E Overdrafts - Logistics gonetobeach
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Why would any customer opt-in to the fee if their transactions are generally declined anyway? It seems like you'll be paying to contact these customers with a very, very minimal opt in percentage. As a customer, I would need a "carrot" - such as being able to access an overdraft limit - in order to opt in. I wouldn't volunteer to pay a fee on a transaction that was "accidentally" processed when I didn't have enough funds in the account.

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