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#2197361 - 11/05/18 08:30 PM Overdraft Cash Credit Lines
Anonymous
Unregistered

In taking on a new bank, we have discovered that they were utilizing an Overdraft Cash Credit Line for their consumers. They no longer offer the product, but have some grandfathered in. My question is, there is no annual fee listed on the agreement, what should my concerns be? Finance charge is clearly covered.

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#2197363 - 11/05/18 08:31 PM Re: Overdraft Cash Credit Lines Anonymous
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
Are they charging something that is not disclosed?
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#2197369 - 11/05/18 08:49 PM Re: Overdraft Cash Credit Lines rlcarey
Anonymous
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The only charge that is not disclosed is the annual fee for the overdraft privilege.

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#2197383 - 11/05/18 09:55 PM Re: Overdraft Cash Credit Lines Anonymous
BrianC Online
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BrianC
Joined: Nov 2004
Posts: 6,694
Illinois
So the question to ask is, "Was a change in terms notice provided 45 days prior to implanting an annual fee provided to consumers in accordance with 1026.9(c)? If it was, there are no concerns with the annual fee.

If a change in terms wasn't provided and you are charging an undisclosed fee, then step 1 is to stop charging the fee. Step 2 is to determine how many affected customers you have and how much as been charged inappropriately. (If any of these fees were also capitalized the interest calculations will not be fun). (Don't forget lines of credit that were charged and are now closed) Step 3 is to develop a restitution plan which you can then propose to your primary examiner to ensure they are comfortable with the length of your lookback and your process before cutting any checks.

Depending on the amount of the annual fee, there are also possible MAPR concerns under the Military Lending Act as annual fees must be included in the MAPR calculation.
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