Another Day, Another Overdraft Update
By Jerod Moyer
The FDIC-Washington DC and the FDIC-Kansas City Regional Offices had a Valentine’s Day meeting. And no, I don’t believe Al Capone was involved in this meeting. For those of you who are confused, Google “Saint Valentine’s Day Massacre”. Anyway…
We’re being told there will be consistent marching orders with respect to the Regulation E opt-in examination process. First, as we’ve noted in our previous Overdraft blogs, banks that have provided an opt-in and have something to offer (i.e. Bounce Protection, Overdraft Defender, or other type of cushion, etc.) shouldn’t have any issues with the whole force pay transaction issue (see Overdraft Chaos article in the December 2011 Newsletter).
Next, the FDIC will advise management of banks that provided an opt-in but did not or do not have anything to offer (referred to as “no pay” banks by the FDIC) of following:
- The potential civil liability risk involved with the practice.
- The misleading nature/message of the opt-in notice.
- To STOP providing the opt-in and charging overdrafts on force pay ATM and one-time debit transactions immediately.
- Consider restitution for those who opted in and were charged an overdraft(s).
And, last but not least, the best news of all…if the bank agrees to stop the practice either prior to the examination or while the examiners are on site there will be no UDAP citation, enforcement action or restitution requirement!
So what should you do? If you’ve already stopped providing an opt-in and the practice of charging for one-time debit card ATM force pay transaction, great! If you haven’t stopped yet, do it now! Either way, make certain that you document your efforts so you can show examiners exactly what you’ve done and how you did it. Hopefully, this will be the end of the issue!
P.S. - The FDIC indicated they will be publishing some type of formal guidance on this issue. Again, I’m not going to hold my breath.