In proposing some revisions to our overdraft policy I'm referring back to FIL-81-2010. The guidance references "consider eliminating overdraft fees for transactions that overdraw an account by a de minimis amount. And, if a fee is charged such fee should be reasonable and proportional to the amount of the original transaction".

We already automatically pay/waive fee for any item that overdraws an account by $10 or less. But that has nothing to do with what the amount of the 'original transaction' is.

It seems to me the guidance is referencing two different things that aren't necessarily the same: 1) checks that, when paid, only overdraw the account by a few dollars 2) tiny checks that are ODs - which may need a tinier fee?

Could someone help me understand how this de minimis works?

It's sloppily written FDIC guidance, not a regulation crafted by the Fed.

When they talk about not charging a fee for de minimus amount, they are suggesting that banks should not charge any fee for an overdraft of less than $XX. When they are talking about the fee bearing a relationship to the amount of the overdraft they are attempting to reiterate the same point; i.e. a $10 overdraft should not generate a $29 fee.

Thank you, Ken.

I'd like to tack on a follow up question. The guidance also alternates between referring to consumers and referring to customers. My instinct is to apply these considerations to businesses too, would you agree?

Using "customer" and "consumer" as if they were synonyms would have been one of my examples of how sloppily written the guidance is. I've never heard of field examiners attempting to apply the guidance to business customers, but you may have a respondent here that says "They did in our bank." Then, you will know that it's an issue where you might need to have a response ready.

Mine would be that it simply does not mention business customers.

Back in "the day", there were no protections. Then consumers became a squeaky enough wheel to get oiled.

I would not rely too much on the fact that business are not yet protected. It will happen.

Al