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Opt In/Out-Overdraft Fee for Card Transaction

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Regarding the following question I read today, would it be okay for a bank to charge the overdraft fee if the customer HAD opted in - even though the account had a positive balance when the transaction was approved? Or, does this fall in line with the UDAP statement from the agencies? Question: Can we charge an overdraft fee for a one-time debit card transaction that overdraws an account of a customer who has not opted-in if there were sufficient funds at the time of authorization but not at the time the transaction posts? Answer: No. The rule does not include any exceptions for card transactions that overdraw an account. The rule at its simplest is, "No opt-in, no overdraft fee."

Yes, it would be acceptable if the consumer had opted in to overdraft service for ATM and one-time debit card transactions, but your description of your overdraft program should make it clear that, because debit-card transactions are often posted to the account one to a few days after they occur, a transaction authorized against a sufficient ledger balance may result in a negative ledger balance (overdraft) when it finally posts if intervening transactions have reduced the balance.

I can't offer the same assurance if the bank authorizes against the available balance and determines positive or overdraft status based on available balance. The regulators expressed discomfort with that.

First published on 03/31/2019

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