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#1790256 - 02/28/13 07:06 PM Removal of Overdraft Program
tjtk1995 Offline
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Is it required to notify a customer that you are removing their overdraft privilege amount or more so customer courtesy? If so, does anyone have an example of a letter that they would share?

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#1790265 - 02/28/13 07:23 PM Re: Removal of Overdraft Program tjtk1995
John Burnett Offline
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Notification of suspension or revocation of overdraft coverage is among the "best practices" listed in the 2005 Joint Guidance on overdraft payment programs.
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#1790308 - 02/28/13 08:26 PM Re: Removal of Overdraft Program tjtk1995
manimal Offline
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I would think if you didn't tell them and they continued to use their account as if they had overdraft privileges... you could fall under some UDAAP scrutiny.
Last edited by manimal; 02/28/13 08:26 PM. Reason: fixed wording
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#1790344 - 02/28/13 09:13 PM Re: Removal of Overdraft Program tjtk1995
tjtk1995 Offline
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What about business accounts? I know Reg. E applies only to consumer account, but I can not find anywhere that we can charge them for atm/one-time debit card transactions?

Do you know if we can?

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#1790347 - 02/28/13 09:15 PM Re: Removal of Overdraft Program tjtk1995
rlcarey Offline
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Business purpose accounts are not subject to Regulation E, so it is a matter of contract.
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#1790383 - 02/28/13 10:12 PM Re: Removal of Overdraft Program tjtk1995
John Burnett Offline
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Back to the original question -- Of course, you told the consumer that you reserved the right to pay or not pay any individual transaction even if they did have overdraft privilege. And of course they are likely to get the message that you're pulling the plug when you start bouncing their overdraft items. But banks that don't want to invite exam criticism increase, rather than decrease, their communication with OD privilege customers, and follow the best practices list to the extent possible.
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#1906071 - 03/17/14 07:28 PM Re: Removal of Overdraft Program tjtk1995
Sci_Comply Offline
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I just ran into tjtk1995 's problem myself. Apparently with staff changes in the last year, the letters seem to have gone by the wayside. Thanks for pointing me in the right direction on the Joint Guidance doc!

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#1937895 - 07/03/14 07:34 PM Re: Removal of Overdraft Program John Burnett
Frank Ernest Offline
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The 2005 guidance does say to notify the customer if we terminate or suspend access but what about if we reduce the amount of coverage? Do you think the guidance includes notifying them of a reduction? I feel that it is the right thing to do as far as customer service but I don't know that it is also recommended by the guidance.

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#1939002 - 07/09/14 05:49 PM Re: Removal of Overdraft Program tjtk1995
John Burnett Offline
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I'd assume that it anticipates a notice when the coverage amount is reduced. It's the right thing to do for the customer and protects the bank from any accusation that your previous "course of dealing" had led the customer to rely upon the higher coverage amount, even though you have previously disclosed that you're under no obligation to pay any item into overdraft.
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