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#2177751 - 05/11/18 04:01 AM Regulation E and overdraft protection accounts
New Day Offline
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Joined: Dec 2011
Posts: 139
The customer has a savings account attached to their checking for overdraft protection. An unauthorized debit causes funds to be transferred to the checking and a $5 fee is charged, I think the transfer and the fee should be reversed to put the account balances right and to make the customer whole. Others think only the fee needs to be reversed as the customer knows the funds were deposited into the checking and we don't want to risk them overdrawing because we reversed the entire transaction.

I say this is no different than the line of credit transferring funds to cover an overdraft and the customer claims the debit was unauthorized. We reverse this transfer and correct any interest that would accrue because of it.

What's your opinion?

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#2177753 - 05/11/18 11:21 AM Re: Regulation E and overdraft protection accounts New Day
rlcarey Online
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rlcarey
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Galveston, TX
Agreed - you set everything back as if the transaction never happened.
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#2177791 - 05/11/18 01:59 PM Re: Regulation E and overdraft protection accounts rlcarey
burkemi Offline
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Joined: Nov 2013
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Originally Posted By rlcarey
Agreed - you set everything back as if the transaction never happened.


Including any lost interest accrual due to the transfer.
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#2177903 - 05/11/18 07:25 PM Re: Regulation E and overdraft protection accounts New Day
John Burnett Offline
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John Burnett
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Cape Cod
When you do that, you, of course, communicate with the customer, and that's when you will certainly tell him the transfer from savings will be reversed and the fee refunded.

And, don't forget to reduce the auto transfer from savings count by one (or make sure you subtract it when doing your Reg D monitoring on savings account transfers).
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#2177916 - 05/11/18 08:25 PM Re: Regulation E and overdraft protection accounts New Day
New Day Offline
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Joined: Dec 2011
Posts: 139
Thank you for your input. What part or the Regulation would you quote to help them understand?

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#2178408 - 05/16/18 08:01 PM Re: Regulation E and overdraft protection accounts New Day
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
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Central City, NE
Staff Interpretations to §1005.11(c)#6:
If the financial institution determines an error occurred, within either the 10-day or 45-day period, it must correct the error (subject to the liability provisions of §§1005.6 (a) and (b)) including, where applicable, the crediting of interest and the refunding of any fees imposed by the institution. In a combined credit/EFT transaction, for example, the institution must refund any finance charges incurred as a result of the error. The institution need not refund fees that would have been imposed whether or not the error occurred.
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