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#1622633 - 11/01/11 03:19 PM POS Overdrafts
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We have a number of debit card users(non-opt-in,of course) who appear to be abusing the system. Over the past several months these customers have incurred multiple overdrafts through POS transactions and have not been assessed OD fees.

Can anyone recommend regulatory compliant action we can take against these repeat(3 or more) offenders?
Living is easy with eyes closed, misunderstanding all you see.

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#1622639 - 11/01/11 03:24 PM Re: POS Overdrafts low profile
Elwood P. Dowd Offline
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Next to Harvey
Not what you want to hear, but you can do anything to this bunch that you are doing to your opt-in customers who are overdrawing their accounts in the same fashion. If you are not punishing them, you cannot punish these guys.
In this world you must be oh so smart or oh so pleasant. Well, for years I was smart. I recommend pleasant.

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#1622670 - 11/01/11 03:44 PM Re: POS Overdrafts low profile
A_G Offline
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Are you on a "real-time" posting system for debit card transactions?
With the lights out, it's less dangerous.

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#1623251 - 11/02/11 02:11 PM Re: POS Overdrafts A_G
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Any thoughts over the following that I received yesterday (other than career change)--

Overdraft opt ins — The representative also indicated that the national FDIC office was in discussions with the Federal Reserve and OCC regarding how banks have communicated and implemented the opt ins under Regulation E. According to the FDIC, most banks indicate that the bank "will pay" an ATM or debit card transaction for a customer who opts in, but "will not pay" it for a customer who does not. However, such language does not reflect reality when the bank is required to pay a transaction for a customer who has not opted in due to practical transaction processing issues, such as the requirement to pay authorized transactions under MasterCard and Visa. Further, the FDIC expressed concern that similarly situated customers are not being treated the same when such circumstances arise. For example, if two customers overdrew their accounts with debit card transactions but only one customer was charged a fee because the other customer did not opt in, then the customer who was charged the fee was being treated unfairly. The FDIC representative did not indicate how banks should resolve or mitigate this issue, but he believed that a Financial Institution Letter would be published shortly.

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#1623338 - 11/02/11 03:19 PM Re: POS Overdrafts JobSecurity
rlcarey Online
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Galveston, TX
Unless you have an ODP program, there is no possibility to have an opt-in for one-time POS and ATM transactions. We have discussed this before. You cannot have an opt-in solely to collect fees.
The opinions expressed here should not be construed to be those of my employer:

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#1623507 - 11/02/11 05:05 PM Re: POS Overdrafts rlcarey
John Burnett Offline
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Assuming the opt-in was legitimate and the bank actually has an overdraft payment program that authorizes ATM and POS transactions against a padded balance, I don't see that there's unfair treatment if the pays and charges for one customer's POS OD (opted in) and pays and doesn't charge for another customer's POS OD (no opt-in, but had to be paid).

If a bank solicits opt-ins under false pretenses when it actually doesn't have an automated overdraft payment program for ATM and debit card transactions, I'd call that a UDAAP violation, and Randy has suggested as much in earlier comments on that question. Candidly, I'd welcome an FIL from the FDIC to put that practice to bed in black and white.
John S. Burnett
Fighting for Compliance since 1976
Bankers' Threads User #8

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#1635521 - 12/05/11 08:34 PM Re: POS Overdrafts John Burnett
lbbanker Offline
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Does the Reg E Opt In/Out apply only to your overdraft privledge or overdraft protection programs (whatever their name, non-loan products) or does it also apply to say your overdraft line of credit products, which are "loan products" for overdraft protection.

I wasn't clear on the types of overdraft programs applied to Reg E. Please help a girl out. Thanks.

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#1635763 - 12/06/11 03:54 PM Re: POS Overdrafts lbbanker
StevenD Offline
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See the definition of 'overdraft service' in

205.17(a) Definition. For purposes of this section, the term “overdraft service” means a service under which a financial institution assesses a fee or charge on a consumer’s account held by the institution for paying a transaction (including a check or other item) when the consumer has insufficient or unavailable funds in the account. The term “overdraft service” does not include any payment of overdrafts pursuant to –
(1) A line of credit subject to the Federal Reserve Board’s Regulation Z (12 CFR part 226), including transfers from a credit card account, home equity line of credit, or overdraft line of credit;
(2) A service that transfers funds from another account held individually or jointly by a consumer, such as a savings account; or
(3) A line of credit or other transaction exempt from the Federal Reserve Board’s Regulation Z (12 CFR part 226) pursuant to 12 CFR 226.3(d).
Opinion expressed are my own and not necessarily those of my employer.

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#1635845 - 12/06/11 04:46 PM Re: POS Overdrafts StevenD
lbbanker Offline
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Thank you Steven. Great help.

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#1636017 - 12/06/11 07:46 PM Re: POS Overdrafts lbbanker
Princess Romeo Offline

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Where the heart is
Why can't the Bank simply cancel the debit cards that are being abused? Or just close the abused accounts altogether?
Regulations are a poor substitute for ethics.
Just sayin'

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