Rules Regarding Overdraft Services – Opt In and Opt Out
QUESTIONS AND ANSWERS
- Does the new overdraft rule apply to both business and personal accounts?
The new overdraft service rules apply to personal/consumer accounts only.
- What methods can be used to opt in?
1) By mail. The institution provides a form that the customer can fill out and mail to affirmatively consent to the service.
2) In person. The institution provides a form that the customer can complete and present at a branch or office to affirmatively consent to the service.
- For joint account holders, do both parties have to opt in?
If two or more customers jointly hold an account, the financial institution must treat the affirmative consent of any of the joint customers as affirmative consent for that account. Similarly, the financial institution must treat a revocation of affirmative consent by any of the joint customers as revocation of consent for that account. (§205.17(e))
- Are institutions required to provide an opt-in notice to customers who have a traditional overdraft line of credit associated with their accounts?
No, the final rule does not apply to the payment of overdrafts pursuant to an overdraft line of credit.
- Can a financial institution provide existing customers with opt-in notices before July 1, 2010, but not implement their choices until August 15, 2010?
Yes, a financial institution may provide the notice and obtain the customer's affirmative consent to the financial institution's overdraft service for ATM and one-time debit card transactions before July 1, 2010. However, there is a statement included that reads "After August 15, 2010, we will not authorize and pay overdrafts for the following types of transactions unless you ask us to."
- If I do not opt in by August 15, 2010, what happens?
For existing customers, an institution will no longer be able to assess fees or charges for paying overdrafts of ATM and one-time debit transactions after August 15, 2010, unless you have affirmatively consented.
- Can a customer opt in at the customer level or must he or she opt in individually for each account he or she has with an institution?
Opt-in occurs at the account level, not at the customer level. Moreover, it can only occur for accounts that are already open, not for accounts that may be opened in the future.
- If a customer revokes his or her affirmative consent, does the institution have to waive or reverse any overdraft fees assessed on the customer's account prior to the implementation of the revocation request?
A customer may revoke consent at any time in the manner made available to the customer for providing consent. A financial institution must implement a customer's revocation of consent as soon as reasonably practical. If a customer does so, the financial institution is not required to waive or reverse any overdraft fees assessed on the customer's account prior to the institution's implementation of the customer's revocation request.
- Is there any limit to the number or amount of overdraft fees an institution can impose once the customer has opted in?
The final rule under Regulation E does not limit the number or amount of overdraft fees that an institution can impose once the customer has opted in. However it must disclose the maximum number of overdraft fees or charges that may be assessed per day or, if applicable, or that there is no limit.
- If a financial institution pays a check into overdraft, is it allowed to charge a fee even if the customer has not opted in?
Yes. Checks are not covered by the mandatory opt-in or fee prohibition rules.
- Does the prohibition on fees apply to all fees, such as nonsufficient funds (NSF) fees, daily fees, negative balance fees, or sustained overdraft fees?
Yes, the new rule prohibits the assessment of any fee or charge — regardless of the name ascribed to the fee — on a customer's account for paying an ATM or a one-time debit card transaction as part of the institution's overdraft service if the customer chooses to opt out.
- What is the difference between a recurring debit card transaction and a nonrecurring one?
A recurring transaction would be one in which payments are automatically and periodically set up to pay an outside party, i.e. gym club membership monthly fee. A non-recurring transaction is a one-time charge with a merchant for purchase for example.
- Do the new rules apply to institutions that do not offer a formal overdraft program, but that merely pay overdrafts on an ad hoc basis and charge overdraft fees when that happens?
Yes, the new rules apply even if the institution does not have a formal overdraft program, but occasionally pays overdrafts and charges fees when it does, regardless of what the program is called or its informal nature. However, depending on their specific practices, these institutions may not have to provide opt-in notices to customers or obtain customer opt-ins if they do not charge overdraft fees.
If you have any further questions please feel free to contact a customer service representative.