Bank Reporting for Exceeding Overdraft Limits

The federal agencies have said that it would be an unfair or deceptive act or practice to report a depositor for mishandling an account (including creating overdrafts) if the customer's account activity conformed to the parameters of the bank's overdraft service (such as an "overdraft privilege" program). Presumably one of the requirements of any such program would be that the customer cure overdrafts within a stated period. If the customer failed to cure an overdraft as required, it would be appropriate to report that infraction. It would also be appropriate, I believe, to refer for collection an overdraft account past the time limit for returning to a positive balance. It would not, however, be appropriate to report the frequency of the customer's use of the service if it was within the parameters of the program.

First published on BankersOnline.com 10/25/10