ATMs currently have an on-screen notice that in generated when a WD exceeds the account balance. It states that WD will be approved as courtesy, and if sufficient funds do not exist when transaction is presented for payment, an OD fee will be charged. It then prompts the individuals to select whether they want to continue or not.

If a customer has opted-in for Reg. E ATM and one-time POS transactions, this notice is ok. But if a customer has not opted-in for Reg. E ATM and one-time POS transactions, is generation of this notice a violation? Should it instead just decline the WD if customer has not opted-in? Or is this okay, since it states it will be approved as a courtesy, and customer has to select on-screen whether or not they want to continue with the WD and be assessed the fee?

First, if the consumer has not yet opted into overdraft service under Reg E §1005.17, and the request would overdraw the account, the bank has two options: (1) Deny the request, or (2) Allow it, but not impose a fee for the resulting overdraft.

If the bank denies the transaction, the message you've described should not appear. If it does, it isn't accurate, and may confuse the customer.

If the bank wants to approve the transaction, it can send an alert to the consumer indicating the account appears not to have sufficient funds and ask whether the consumer wishes to proceed. Whether or not that message is provided, no fee can be triggered by an overdraft resulting from the withdrawal.

Ok, thanks for the response. And if the customer has already opted-in, this notice is ok, correct?

yes

We have always had the following disclosure on our ATM screen when a customer attempts to make a withdrawal that will overdrawn their account..."The amount of your request exceeds your current available balance. If sufficient available balance does not exist in your account at the time this transaction is presented for payment, an overdraft fee will be charged. Do you wish to continue? Yes or No"

Our ATM service provider recently upgraded our ATMs and we noticed the disclosure above does not appear when the customer is about to exceed their available balance. When we ask the service provider to add this disclosure back to our ATMs, we were told, "the screen cannot be re-enabled due to compatibility issues. They (the service provider) do not believe this would be a global compliance issue or (service provider) would not have moved forward with the upgrades. Currently there are 100s of FIs with ATM fleets that have been upgraded with no (disclosure) and remain in compliance."

Are we violating any rules by not having this disclosure on our ATM screens, if applicable? Thank you for your help:)

The 2005 Joint Agency Guidance on Overdraft Programs advises that it is a best practice to provide notification to customer if a transaction will result in a fee before it is completed, but note the key words, "where feasible"

Alert consumers before a transaction triggers any fees. When consumers attempt to withdraw or transfer funds made available through an overdraft protection program, provide a specific consumer notice, where feasible, that completing the withdrawal may trigger the overdraft fees (for example, it presently may be feasible at a branch teller window). This notice should be presented in a manner that permits consumers to cancel the attempted withdrawal or transfer after receiving the notice. If this is not feasible, then post notices (e.g., on proprietary ATMs) explaining that transactions may be approved that overdraw the account and fees may be incurred.

Institutions should consider making access to the overdraft protection program unavailable through means other than check transactions, if feasible.

With your previous vendor, providing this verbiage electronically was feasible. With your current vendor it isn't. Remember, "Guidance isn't law" and then make a risk-based decision if you want to post physical notices on your proprietary ATMs.

That said (and I agree with Brian completely), I can't believe the service provider's "upgrading" of the ATMs without prior notice to the owners of the "hundreds of ATMs." Or perhaps notice was given and didn't get routed by his/her bank to our lover of short stout canines.

Thank you both for your help with this matter.