Overdraft Line of Credit Notifications

In the past we have provided notifications to customers when they access their overdraft line account (only can be accessed by overdrawing your checking account with a physical item, you can't access the account via an ATM). This notice was basically--the bank advanced $X funds to your DDA # y on Z date. Monthly we would send a statement which included all the open-end Reg. Z disclosures including a short description of each advance.

Our agreement does not state that we will provide the notice, state law does not require the notice and I can't find any federal regs. that require the notice. Our operations group would like to discontinue printing and mailing the notice. Beside the customer service issues, anything that I'm missing? Thanks in advance.

The fact that the original agreement did not mention the notices may not be the problem. Providing them was your "pattern and practice" and may have amended the agreement. Since these are not HELOCs, you can probably change the terms with a simple change in terms notice, either as a statement stuffer or maybe a statement message. I would give a month's notice just to be safe.

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Al Miller, CRCM
Fremont Bank (CA)
(510) 790-5825
(510) 505-5211 FAX

Opinions expressed are my own and not necessarily shared by my employer.

I agree with Al. Our bank has never provided notifications of draws against overdraft lines except for the monthly statement. I had a complaint letter from a customer regarding this practice, and did a substantial amount of research to determine that it was OK to do it this way.
I also agree that a simple notification to your customers would be sufficient. If your institution offers telephone or online banking, you might want to inform your customers of ways they can check periodically to see if their lines have advanced.
I was curious, however: Al mentioned something about HELOCs. We are getting ready to allow customers to link their HELOC to their checking account(s) for overdraft purposes. Are there different rules that apply to this practice as far as notifications of the advances are concerned?

No, Leslie, only in the ability to change terms (or, more accurately, the lack of ability to change terms).

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Al Miller, CRCM
Fremont Bank (CA)
(510) 790-5825
(510) 505-5211 FAX

Opinions expressed are my own and not necessarily shared by my employer.

Sorry I posted this in the wrong place. I'll try again later. Thank you.

[This message has been edited by Angela (edited 06-15-2001).]