Reg. E Overdraft Opt-in for ATM and one-time POS

Posted By: TeamComply

Reg. E Overdraft Opt-in for ATM and one-time POS - 07/02/20 04:10 PM

Couple of Reg. E Opt-In Questions:

1) So we currently have an Overdraft Privilege program (ODP) that we offer to customers, however the customer/account must be eligible for this program, it isn't just automatic at account opening. The account has to be open for 45 business days, have deposits totaling at least $400 or more within a 30-day period and have consistent deposit activity. So, the customer's account must have ODP before Reg. E opt-in can be accepted. We utilize the opt-in consent and confirmation model notices for the Reg. E opt-in of ATM and one-time POS. So customers can elect to opt-in to Reg. E at the time their account is opened, with the understanding that they won't actually be eligible for this until at least 45 business days later. The confirmation notice is then sent at that time (once the account is eligible). Curious if this is how other banks handle ODP and Reg. E Opt-In?

2) In a scenario in which a customer has an account which is opted-in overdrafts for Reg. E, this particular account is closed for one reason or another (e.g. checks were lost/stolen, etc.), so bank closes the account and opens a new account for the customers and notates that "Reg. E Opt-In was transferred from prior account" - in this type of situation, should we still get an election form and send the confirmation notice?
Posted By: rlcarey

Re: Reg. E Overdraft Opt-in for ATM and one-time POS - 07/02/20 05:22 PM

1. How does one opt-in to a service that they may or may not ever qualify for in the future?

2. I would.
Posted By: TeamComply

Re: Reg. E Overdraft Opt-in for ATM and one-time POS - 07/02/20 05:37 PM

1. So how do other banks handle this? If a customer isn't eligible for ODP/opt-in services at the time the account is open?
Posted By: TeamComply

Re: Reg. E Overdraft Opt-in for ATM and one-time POS - 07/14/20 06:22 PM

Anyone willing to share their thoughts on this?
Posted By: BrianC

Re: Reg. E Overdraft Opt-in for ATM and one-time POS - 07/14/20 06:24 PM

To minimize compliance risk and financial risk, I've seen institutions that will grant an immediate $100 limit at the time of account opening/opt-in to avoid the concerns of the waiting period that Randy mentions and then at the 30 day period if the other criteria are met increase the limit to the standard amount.
Posted By: TeamComply

Re: Reg. E Overdraft Opt-in for ATM and one-time POS - 07/14/20 07:16 PM

Thanks for sharing this information. So this would require our ODP disclosure/information to be updated...but we wouldn't have to update the Reg. E Opt-In Election or Confirmation (we're using the model forms)...is that correct? Would we need to provide this updated information to existing customers or only for new accounts going forward?

Have you seen institutions handle this any other way? Just wondering, what, if any, other options we may have.
Posted By: GrannieTwo

Re: Reg. E Overdraft Opt-in for ATM and one-time POS - 07/24/20 04:39 PM

Our bank defaulted all our customers to No for Opt-in. We do not offer a true ODP product. We had a customer just asks us about our daily fee. Our daily fee is $5.00 but is the item is an ATM or one time POS, they are charge a percentage. Can anyone point me to the section in Reg E that discusses the percentage on an ATM or one time POS? Thank you.
Posted By: rlcarey

Re: Reg. E Overdraft Opt-in for ATM and one-time POS - 07/24/20 05:00 PM

If you have no ODP program, you cannot charge a fee or a percentage for ATM or one time POS transactions.
Posted By: BrianC

Re: Reg. E Overdraft Opt-in for ATM and one-time POS - 07/24/20 05:34 PM

You'll find a pretty detailed discussion on daily overdraft fees as they relate to one-time ATM/Debit card transactions in comment 9 of the staff interpretations to 1005.17(b).

https://www.bankersonline.com/regulations/12-1005-017
Posted By: GrannieTwo

Re: Reg. E Overdraft Opt-in for ATM and one-time POS - 07/24/20 08:02 PM

Thank you for your help.
Posted By: Ann

Re: Reg. E Overdraft Opt-in for ATM and one-time POS - 07/27/20 06:59 PM

In a similar scenario, we allow Reg E opt-in at account opening and ODP can be eligible in 30 days. If persons do not wish to opt in to the ODP program, can they still opt-in to one time ATM and POS overdrafts? We have an audit finding where some are opted in to Reg E but no overdraft limit has been established. We've been instructed to change these customers to "opt-out".
Posted By: rlcarey

Re: Reg. E Overdraft Opt-in for ATM and one-time POS - 07/27/20 07:23 PM

If persons do not wish to opt in to the ODP program, can they still opt-in to one time ATM and POS overdrafts?

No, because the only thing they are opting in to at that point of time is getting charged a fee.