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#2225414 - 11/11/19 05:27 PM Regulation E OD Opt-in years after account opening
Inspector Offline
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Joined: Apr 2016
Posts: 254
Curious about what others thoughts are about this process.

Customer's are given the option to opt in/out of OD coverage at account opening after receiving the necessary disclosure. They are also later able to opt in to OD coverage over the phone at any time in the future if they chose not to opt-in at account opening.

The result is that customers may be opting in when they haven't seen the disclosure for several years. I am not seeing anything that says that the customer has to see the disclosure within any time frame of opting in so it seems like the process is "ok." However, I just want to make sure I am not missing anything.

Thanks in advance for any feedback.
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#2225418 - 11/11/19 05:55 PM Re: Regulation E OD Opt-in years after account opening Inspector
BrianC Offline
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BrianC
Joined: Nov 2004
Posts: 6,011
Illinois
I would use the same “close proximity” standard as the commentary state for providing disclosures when a customer contracts for a new EFT service, which means provide a new A-9 at the time of the opt-in. You are not just ensuring compliance with Reg E, but avoidance of potential UDAAP concerns if customer later are unhappy about fees and claim that they did not understand what they were opting into.
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#2225420 - 11/11/19 08:49 PM Re: Regulation E OD Opt-in years after account opening Inspector
Inspector Offline
Gold Star
Joined: Apr 2016
Posts: 254
Interesting. Thank you for the response.

Do you think the process I described is counter to Reg E then? Or just that it would be a better practice to provide the disclosure again?

I can see a few conundrums happening. If the customer is calling to opt-in and they need to see the disclosure first they would either need to come into the branch or call again after they got the disclosure in the mail or through email. That seems like a hassle if someone wants to opt-in.

Not sure how this would work in practice.
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Opinions expressed are my own and do not reflect legal advice or the opinions of my employer.

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#2225422 - 11/11/19 10:36 PM Re: Regulation E OD Opt-in years after account opening Inspector
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 77,215
Galveston, TX
Since you are required to send written confirmation of an opt-in, why not just include the disclosure with that? I agree - giving them a document describing the institution's overdraft service three or four years ago without an additional disclosure at the time of opt-in is asking for trouble.
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#2225437 - 11/12/19 03:06 PM Re: Regulation E OD Opt-in years after account opening Inspector
Inspector Offline
Gold Star
Joined: Apr 2016
Posts: 254
Good point. I was getting hung up on the idea that the customer needs to get the OD practices disclosure before they could be charged. I guess technically the customer can't be charged until the confirmation is sent so it would be the same situation as with the OD practices disclosure.

Thanks for the feedback and suggestions.
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Opinions expressed are my own and do not reflect legal advice or the opinions of my employer.

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