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#204763 - 06/25/04 09:08 PM
Re: FACT and notice to deposit acct holders?
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Gold Star
Joined: Jan 2004
Posts: 318
USA
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That's my understanding as well, that it only applies to credit accounts.
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CRCM, CAFP, DAD
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#204764 - 06/25/04 09:10 PM
Re: FACT and notice to deposit acct holders?
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Gold Star
Joined: Oct 2003
Posts: 473
the Bat Cave
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I'm right there with you. I too am confused as to why this would apply to deposit accounts. Credit generally means the extension of debt to be repaid at a later time, in either one or more installments. Since overdrafts are created by the payment of a check as directed by the Uniform Commercial Code and are not considered credit, how would they be under the umbrella of FACTA? I need a little guidence from the expert BOLers. Thanks!
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#204767 - 06/29/04 06:14 PM
Re: FACT and notice to deposit acct holders?
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Diamond Poster
Joined: Nov 2000
Posts: 1,830
District of Columbia
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I believe that we should provide the Notice when turning accounts to Chex - I think this meets the spirit and intent of the regulation. Most people know that they will be turined to a credit bureau if they don't pay their loan as agreed, but few people are aware that such a thing as Chex even exists. I would think that it is even more important on the deposit side to ensure that consumers understand that failing to pay an overdraft could have negative results. I view it as a customer service issue and plan to implement it at my bank. BC
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#204768 - 06/29/04 10:21 PM
Re: FACT and notice to deposit acct holders?
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Platinum Poster
Joined: Apr 2002
Posts: 662
Far North
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I agree 100% with Bear Collector's logic and will be providing notice to deposit as well as loan customers.
Just wish I knew how that notice would best be delivered!
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#204769 - 06/30/04 01:04 PM
Re: FACT and notice to deposit acct holders?
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Anonymous
Unregistered
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I know the model language can be included on other forms. However, has anyone seen any guidance as to whether the model language should be separate from other language (for example, a separate paragraph within a letter to the customer) or can the model language be "blended" into an existing letter?
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#204770 - 06/30/04 01:11 PM
Re: FACT and notice to deposit acct holders?
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10K Club
Joined: Oct 2000
Posts: 27,754
On the Net
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Because Reg. B defines credit to include the purchasing of services, I could see overdrafts and fees you have charged for the account, and owed to you, as credit. The FCRA uses this definition and that would make them reportable/disclosable.
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AndyZ CRCM My opinions are not necessarily my employers. R+R-R=R+R Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell
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#204771 - 06/30/04 05:01 PM
Re: FACT and notice to deposit acct holders?
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Diamond Poster
Joined: Apr 2001
Posts: 2,245
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Quote:
I know the model language can be included on other forms. However, has anyone seen any guidance as to whether the model language should be separate from other language (for example, a separate paragraph within a letter to the customer) or can the model language be "blended" into an existing letter?
The statute (section 217) says that the notice must be "clear and conspicuous".
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#204776 - 08/06/04 05:04 PM
Re: FACT and notice to deposit acct holders?
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Gold Star
Joined: Jan 2004
Posts: 318
USA
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Quote:
Because Reg. B defines credit to include the purchasing of services, I could see overdrafts and fees you have charged for the account, and owed to you, as credit.
Andy, I respectfully disagree. "Credit" in Reg B is defined as "the right granted by a creditor to an applicant to defer payment of a debt, incur debt and defer its payment, or purchase property or services and defer payment therefor."
First of all, someone who overdraws their account (absent an OD line of credit) is not an applicant. Plus, I don't see how someone who overdraws their account is "purchasing property or services." And finally, when someone overdraws their account, we don't grant them the right to defer payment, we want our money now.
So I don't see how reporting an overdraft to Chexsystems would require the Fact Act notice. Not to say that it's not a good idea to provide the notice anyway as an added incentive to pay the overdraft, but I don't agree that it's required.
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#204777 - 08/06/04 07:29 PM
Re: FACT and notice to deposit acct holders?
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10K Club
Joined: Oct 2000
Posts: 27,754
On the Net
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An overdraft balance is a credit, a debt owed to you. When someone is overdrawn, most banks do not demand payment at that time. They provide some prescribed time to pay it back, 2 weeks to 30 days or possibly more.
The recent OD proposal states, "Overdraft protection programs that are not covered by the TILA would generally qualify as incidental credit under Regulation B." This is not a binding part of Reg. B or the FCRA, but it cannot be ignored.
I don't believe this was the initial intent when the FCRA was being revised, but I do believe it is a result of the way it was done. But this is just an opinion. Hopefully final rules will be very clear.
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AndyZ CRCM My opinions are not necessarily my employers. R+R-R=R+R Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell
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#204780 - 08/18/04 02:46 PM
Re: FACT and notice to deposit acct holders?
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Anonymous
Unregistered
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The FACT Act does not require the negative information notice when deposit accounts are reported to ChexSystems. While an overdraft is an extension of credit, ChexSystems is not a "Consumer reporting agency that compiles and maintains files on consumers on a nationwide basis" as defined in Section 603(p) of the FCRA. Kirchman has an excellent article on this subject under Hot Issues in the compliance section of their website.
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