We were told we cannot start handing out the opt-in forms to customers because if the customer opts-out we must start when we give the customer a confirmation. However, if we hold all the confirmations until July can we at that point start the process of stopping the atm and overdraft charges, if the customer opts-out. Hopefully this is clear.

If you collect the opt-in/out now, you have to be very clear that it takes effect August 15, 2010 (for existing customers)

Instead of starting a new Opt in notice thread, I thought I would tag this question onto this one.

We are trying to decide if we need to send out a notice to each account or just each account holder? Meaning, if we have a customer who has 3 qualifying accounts, could we send one notice then ask them to indicate which accounts they want to opt out or in to?


For example could we put (And I am paraphrasing).

Please check which applies to your decision:
__ I elect to opt in for all my accounts

__ I only elect to opt in for these accounts:
(Please List)________________

__ I elect to opt out of all my accounts

__ I only elect to opt out of these account:
(Please List)________________


ABA in their guidance states:

From the ABA FAQ
23. If a customer has more than one account for which overdraft services are available, is it necessary to provide a separate opt-in notice for each account?

The rule requires a bank to provide a customer with the opportunity to affirmatively consent to overdraft services and to document his or her consent to opt-in with respect to each account. However, a bank can use one notice and consent form to accomplish this, assuming that the notice makes it clear that the opt-in decision must be made for each account and the model consent form is modified to provide a check box clearly indicating the customer’s choice for each account. In addition, the written confirmation will need to include a confirmation for each account. Modifying the model form in this manner is permissible under the rule without losing the safe harbor.

You only need to send one opt-in notice, and you only need to get a single opt-in form, provided it gives the consumer the ability to opt-in (or not) for each account. There is no requirement that the form include an opt-out selection, although there is one on the Sample A-9 form.

So John, you think sending one form to an account holder who has multiple qualifying accounts is permittable? I know ABA has said it is, but I can't find where it is in the reg. Unless Since the reg doesn't say one per account, sending a notice can be interpreted as 1 is enough.

So for existing customers (accounts that are opened prior to July 1st) when should the notice be sent out to them giving them an opportunity to opt in starting August 15th? Can these letters be sent out on June 30th? And then for new accounts opened on July 1st if they opt out then overdraft charges cannot be charged, however if they opt in then overdraft charges can be charged starting the day they opened the account (on or after July 1st) or would it be August 15th? I guess my concern is that if we send out the letters prior to July 1st (say May 1st), there are 2 months of new accounts that would fall under the existing account rule (opened prior to July 1st). What are other banks doing and when are they mailing the notices out?

If you stick to the dates in the regulation, you can start sending your notices to accounts open before 7/1 anytime from 7/1 on. For new accounts opening 7/1 and later, you start with no OD fee for card transactions, and can start imposing an OD fee if and when the consumer opts in. So if I open my account with you on July 1 and give you my opt-in on July 6, you can start assessing OD fees on card transactions on July 6 or any later date.

So for all existing customers (opened prior to 7/1) we can send the notice starting on 7/1 (there is no need to send prior to that)? And if we do not hear back or receive the letter back for these customers by 8/15, then we will opt them out of the program. For all new customers from 7/1 on will fill out the opt in notice at account opening. Is this correct?

Bump

My FI does not 'authorize' overdrafts arising from ATM or debit vard transactions, so we're not sending out an 'opt in' form to existing accounts(and therefore can't charge the fee)- our normal procedure is to 'hot card' the account to prevent additional exposure. Would it be acceptable to require that the customer 'opt in' as a condition of having the card re-activated?

Also, in the middle of all this, we're changing ATM processors and will have to re-issue cards - can an 'opt in' form be sent with the new card?

Yes.

Thanks

Sorry, dickr, but my "yes" was in response to an earlier post, not to yours.

I don't think you can get away with conditioning the reactivation of a card upon an opt-in any more than you can condition the initial issuance of a card upon an opt-in. You deactivated the card because of account mishandling. You can certainly tell the customer that subsequent mishandling will result in revocation of card privileges. I also think you have to be careful about hot-carding, deactivating or revoking card privileges in the first place. If your customer overdraws the account once in a while but promptly covers the overdraft, I'm not so sure you have mishandling issues, and the risk to the bank is probably not sufficient to warrant action. But if overdrafts aren't quickly covered (and I mean within a day or two), you could have added risk.

As for sending an opt-in disclosure and invitation along with re-issued cards, I see no problem. You can theoretically send them repeatedly to consumers who haven't yet opted in.

Under the new rules, I understand that if the customer opts in to the overdraft program, we (the Bank) must send a confirmation letter to the customer aknowledging their request. However, I have not seen anything on if the customer originally opts in to the program and then either calls, sends a letter, or stops into the branch stating they want to opt out does a confirmation letter need to be sent to the customer aknowledging that he has opted out? What about to all the customers that respond via mail, call, or in the branch stating they opt out (or do not respond that are automatically opted out); does a confirmation letter need to go to these customers?

Thanks for your help.

I'm advocating that our Standard Overdraft Practices be that we DO authorize and pay overdrafts for checks and automatic bill payments and that we DO NO authorize and pay overdrafts for ATM and debit card transactions.

1. I'm presuming we DO NOT need to send out the opt-in/out disclosure as there will not be anything to opt-in/out of, correct?

2. If an ATM or debit card transaction does somehow cause an overdraft, we have to pay the overdraft and not charge the customer, correct?

3. Are we required to disclose our Standard Overdraft Practices to existing customers in some way? To new customers?

Doug,

1. Correct.
2. Correct, and you need to prevent any tiered OD fee from including the card transaction when calculating the fee, and to block any "continuing OD fee" from using a card transaction posting date in determining how long an account has been overdrawn.
3. The closest you come to making that disclosure will be under Regulation DD §230.4 where you have to provide a general description of the types of transactions that will result in an OD fee. Of course, you can provide a description of your Standard Overdraft Practices if you wish. Be very careful, however, to ensure it states that you retain discretion for paying/not paying checks, ACH items and automatic bill payments.

A quick question....as I noticed Ken indicated ina PS that you could limit your opt-in mechanism to in-person and via the mail....I have someone telling me that you need to provide all four methods in order for it to be considered a reasonable opportunity......the information I've read indicates that the four methods are examples of what the regulators will consider reasonable...no where do I see that you have to provide all four methods. My bank would like to provide 3 of the four....in the branch, online, and via the telephone. We do not want to implement the mail option...for those folks who do not have a computer to opt-in on-line, most everyone could make it to the branch or call......can anyone please confirm that I am interpreting this correctly....I saw the words examples and I also saw the word "could" when talking about the options....it did not say "must". Thanks

No, you don't have to provide "all four" methods. If someone came up with a fifth or sixth method, the same people would say you had to use all of them. Banks have different levels of technology available to them.

Those are examples. Candidly, the requirement for reasonable opportunity to opt in doesn't even make sense in the regulation. So what if the bank doesn't provide an opportunity? It only hurts the bank by making it shut off OD access for card transactions for more customers.

It's clearly in the bank's interest to make it as easy as possible, but it should only be available in ways the bank is equipped to manage, IMO.

I want to tag onto this topic also with the following:
a) we force pay ATM and one time debit card transactions and do not charge a fee
b) we charge an "overdraft fee" for all other types of transctions excluded form Reg E
c) we have decided we do not need to send out the opt-in notice

However here is my question: On our Deposit Fee Schedule available for the customer, we have "Overdraft Fee - Item Was Paid $30". Do we need to clarify this to say it's only certain type of accounts and does not apply to Reg E (ATM and one time debits)or some similar language?

No.

Are there any concerns with a follow up phone call or email to some customers after the initial notice goes out to ask if they would like to opt in? Or are there any Reg DD advertising concerns?

Going back to the original question. IBAT (and for you Yankees Independent Bankers of Texas) published a legal ease which stated:

Originally, the Federal Reserve said the following in the preamble of the adoption of the Reg E overdraft rules pertaining to ATM and one-time debit card transactions (See the bottom of page 55 and the top of page 56.):

"If an existing account holder contacts his or her financial institution in response to the opt-in notice before August 15, 2010 to express a desire not to opt in, the Board expects that the institution would honor the consumer’s choice at that time."

However, the good folks at the Fed have since changed their minds.

If an opt-out decision occurs on or after July 1, then the bank needs to make it effective without delay. If the bank has an early opt in/opt out program AND it is very clear about the effective date of the decision to opt out, it can delay an opt out decision to the effective date. Be sure that the effective date is restated next to the selection box!"

But I haven not been able to find any other references to support this statement. Has anyone found or heard of any comments on this?

We will now send out Opt in out in the mail and if anyone opts out we will not honor this until 8-15 based upon IBAT's statement

Anyone know the retention requirements for Opt-ins and revocations received? I'm assuming we follow the Reg E "no less than 2 years" rule.

Does any one see a problem with spelling out the $ amount of the overdraft fee? The amount is listed in the middle of the page on A-9 model form. Instead of $25.00 show it as Twenty Five dollars???