Reg E Opt-In and Continuous Overdraft Fee

If an account is overdrawn due to a recurring debit card item and the account is NOT opted-in (so customer has opted-out), we could charge a continuous overdraft fee, correct? We typically charge a continuous OD fee when an account is overdrawn for 10 consecutive business days.

The special opt-in requirement for imposing overdraft fees under §1005.17 of Regulation E doesn't apply to recurring debit card items. Assuming that you accurately disclosed the opt-in for ATM and one-time debit card transactions, you can impose a correctly-disclosed "continuous OD fee."

Thanks John. So recurring transactions are subject to a fee (be it an overdraft fee or continuous overdraft fee, or both) whether or not the account is opted-in under Reg. E...is that correct?

They could be subject to a fee if you disclosed it properly, but aren't subject to Regulation E as Reg E only covers ATM and one-time debit transactions.

Thanks for the response. Where are banks expected to disclose this information about continuous OD fees?

Continuous overdraft fees must be disclosed as part of your Truth in Savings disclosure the same as all other fees charged in connection with the account.

Would you consider the fee disclosed if it did not specifically appear on the initial TIS Disclosure, but does appear on the bank's Fee Schedule, and the verbiage "refer to the separate Fee Schedule provided to you with this disclosure" appears on the initial TIS disclosure to tie them together?

Reg DD does not mandate the format of the disclosures, only the content and that they meet the "clear and conspicuous standard." As an auditor, I would be spot checking staff to ensure that both documents are provided consistently at account opening or in response to requests for account information to ensure compliance.

The format itself is fine, provided that both documents are provided to the consumer at the same time.

To add to what Brian said, the reason it is okay to have your fees on a separate fee disclosure is that 1030.3(a) (and specifically comment 1-ii) permit disclosures to be made "in combination with other disclosures or account terms." As an auditor, I've seen quite a few smaller financial institutions take a similar approach with having fees listed on a separate fee schedule (like a lobby brochure). As long as customers are, in fact, receiving the fee disclosure with the TISA, then you should be fine.