According to 12 CFR 1005.11(d)(2), upon debiting a provisional credit a financial institution shall :
* Notify the consumer of the date and amount of the debiting;

*Notify the consumer that the institution will honor checks, drafts, or similar instruments payable to third parties and preauthorized transfers from the consumer's account (without charge to the consumer as a result of an overdraft) for five business days after the notification. The institution shall honor items as specified in the notice, but need honor only items that it would have paid if the provisionally credited funds had not been debited.

Does the notification of the reversal need to state that checks, drafts, or similar instruments etc. will be honored? Or can the notice just state that the consumer's account will be debited five business days from the transmittal of the notification and include the date of the debiting, as stated in the Interpretation to 1005.11(d)(2)?

Thanks in advance.

The wording of the regulation and of the official interpretation represent two alternatives for handling the requirement. You can use either, since either furthers the goal of the requirement that the consumer get a five-day warning of the drop in his balance to give him time to move in funds to prevent checks from bounding and fees from accumulating.

Some banks stick with the wording of the regulation and monitoring activity for five days to scrutinize items that need to be paid and fees that need to be voided or refunded, which is clearly more complicated than using the alternative in the interpretation, because they are concerned about customers who, given the advance warning, might pull funds out of their accounts to avoid having to pay the bank back.

Some banks that have tried the alternative "we will reverse the provisional credit on [date]" approach have found that it has worked well for them; others have said they've experienced problems.

If you do use the alternative in the Official Interpretations, you do not have to include the sentence saying you will honor items for five days, etc.

Thanks, that is what I had hoped, as we use the wording in the official interpretation.