I am posting this question in the Kentucky forum because it is my understanding my question relates to what Kentucky FDIC examiners may be citing. With our AOD program, we comply with the FDIC Guidance relating to minimum amount overdrawn (ex $10) before we charge the AOD fee...and the daily limit on the number of AOD fees we will charge in a day. I wanted to see if any Banks were following this AOD Guidance for accounts that do not have AOD when the account simply has an NSF (s) post? We really do not want to give up any fee income, but we hear that the Lexington Office is trigger happy with UUDAP.

If the customer is enrolled in the automated overdraft program you have a daily limit on overdraft fees as well as a de minimis amount before an overdraft fee is imposed. However, if the customer is not enrolled, a fee is charged regardless of the amount of the overdraft and there is no limit to the number of overdraft fees that can be charged in a single day?

Yes...If the customer is not enrolled, we currently charge an NSF fee even if the overdraft is only $1 for example. And if the customer had 10 NSF checks clear, that customer would get 10 NSF charges. I was just wondering if any other banks are having problems with the FDIC by not following the AOD guidance for accounts that are not part of the AOD system but rather the NSF system? I know that guidance is directed toward AOD systems, but that wouldn't stop an over zealous examiner from calling the NSF system a UUDAP for not falling the AOD guidance.

You have built a rather unusual feature into your AOD program - it actually has some benefits to the consumer! Make certain your written description of your AOD program reflects these features. I've never seen a bank do this before so I'm wondering if you will hear from a banker with firsthand information.

While FDIC field examiners are prone to apply the label "unfair and deceptive" to virtually anything that doesn't crawl away at right angles, the phrase actually has a legal meaning. Your practice does not fit that definition. You simply have one class of customers choosing to receive these pricing breaks and another class of customers that chose not to. Regardless, your examiner may choose to see it differently.

Without commenting on any specific field office, it's accurate to say I've seen the FDIC threaten UDAP when I don't think they thought there really was a UDAP issue; they use it as a bullying tactic, but it does not make the written report. That works in most banks. Be certain of your convictions.