Can we prevent our bank employees from Opting-In to cover overdrafts on ATM and one time debit card transactions? Our operations manager is adamant on not allowing employees to Opt-In to prevent overdrafts. My thought is if they are opted-out we would not be able to charge them an overdraft fee. Any feedback as to how others handle this is greatly appreciated.

Do these employees have an overdraft protection product?

Some do and some don't.

You can't 'opt-in' if you don't have an overdraft protection product tied to the account. If not, you're only opting in to the fee and the regulators stated this was a big no-no.

We may be talking semantics; We have an Overdraft Privilege Program which allow a maximum $500 to overdraw an account (we do not allow our employees to participate in our Overdraft Privilege Program).

We also have an Overdraft Protection in which a customer may tie another savings account in the event they overdraw their checking account. In the instance we have a new employee, when they open their account we currently do not offer them the Overdraft Services Disclosure and Consent Form in order to Opt-In and thus they are Opted-Out. In the event they use their debit card for a one time transaction and the merchant allows the transaction to go through we will not be able to charge the overdraft fee and still have to cover the transaction.

You can choose not to offer a courtesy overdraft program to employees. However, as Skittles states, you cannot obtain an opt-in to a service that you are not providing. The FDIC has opined multiple times that obtaining an opt-in without providing the service is unfair since the consumer is only opting into a fee.

You do not have to obtain an opt-in (and shouldn't be) to charge a transfer fee when covering overdrafts from a savings account, but in the event the savings account is empty and a one-time ATM/debit card transaction slips through, you may not charge an overdraft fee.

So if I understand, since our employees are not eligible to overdraw their account they would be automatically opted-out of ATM and everyday debit card transactions. Correct?

Correct

Thank you both so much for your quick responses!

In discussing with another banker, they pointed out that once an employee goes to open a new account they are no longer considered an employee and are now considered a consumer according to CFPB. Thus if I go by that logic, we then would have to offer them the Opt-In/Out notice as we would with any other consumer opening an account. Do you all agree with this?

There is no requirement that you offer an Overdraft Protection Plan (ODP) to any employee. Without them having an ODP - there is nothing to opt-in too. So the question remains, are your employees eligible for and have an ODP? You previously indicated that they are not eligible to participate.

If you have regular customers that do not have an ODP and you have them opted-in for one-time ATM and debt card transactions, you have serious problems.

Please don't go by that logic. A person can be both an employee and a consumer. They do not cease to be employees when they open accounts.

Your bank has made a determination to offer courtesy overdraft to your customers, with the exception that a certain subset of customers (those that collect paychecks from your bank) are not eligible.

So when an employee opens a new account, you don't offer the opt-in because they are not eligible.

The point of the comment by the CFPB is that employees don't lose their consumer rights by becoming employees. So, for example, an employee who submits an error claim under §1005.11 of Regulation E gets all the protections that Regulation E provides to a non-employee consumer. But there is no consumer "right" to overdraft service. You have every right to disqualify employees for such a service, even if you offer it to non-employees.