Thread Starter: Anonymous
Title: Re: Overdraft Fees on Automatic Loan Payments
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Like many banks, we have many customers set up on automatic loan payments from their deposit account. When the deposit account and loan are both held by our bank the payment is really an intra-bank transfer, not an ACH. So when the deposit account does not have sufficient funds the loan payments are usually returned (without an NSF fee). On some occasions though, the payment will be force-posted and is assessed an overdraft fee. I feel like this is a poor practice.
Some in management want to know why. We can charge an overdraft fee if an ACH from our deposit account is sent to another bank. Or if the loan payment is coming from another bank to pay our loan, that customer will be subject to that bank's OD rules. So why can't we charge our fee in this situation? Besides UDAAP risk (this is basically the issue - why is it UDAAP) is there any guidance anyone can offer. There seems to be a fair amount of subjectivity here, and I know there aren't any Regs which specifically speak to this practice - so where do I go?
Any help?????
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