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Overdraft
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Title XIV of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 111-203 (the Dodd-Frank Act), charges the Bureau of Consumer Financial Protection (the CFPB or the Bureau) with regulating ``the offering and provision of consumer financial products or services under the Federal consumer financial laws.'' \1\ Specifically, the Dodd-Frank Act grants regulatory authority to the Bureau for the Electronic Funds Transfer Act,\2\ except with respect to section 920 of that Act, and the Truth in Savings Act,\3\ which taken together, in part, govern consumer transaction accounts. Accordingly, the Bureau is reviewing existing regulations and supervisory guidance issued by various regulators pertaining to the use of overdraft programs by financial institutions. To support this ...
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Overdraft-protection programs have been under attack by those outside the financial-services industry. Now, thanks to the Federal Reserve's revisions to Regulation E, community bankers have a lot to do to comply with pricing, disclosure and customer opt-in requirements for overdraft-protection fees for ATM and one-time debit-card transactions. The new rules present not just a tricky compliance burden but communication, marketing and pricing challenges as well. Longer-term, new overdraft-product pricing adjustments might be required as well as changes in the structure of free checking accounts. Deciding whom to market overdraft programs to could also become more important. Several banking consultants and overdraft-product/service providers offer advice to help your community bank respond...
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On February 28, 2012, the Bureau of Consumer Financial Protection (the Bureau) published in the Federal Register a notice and request for information regarding the impacts of overdraft programs on consumers (the Overdraft Notice). The Overdraft Notice allowed a 60-day comment period, closing on April 30, 2012. To allow parties more time to consider and craft their responses, the Bureau has determined that an extension of the comment period until June 29, 2012, is appropriate.
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Michael Moebs, chairman of Moebs Services, Lake Bluff, IL, has two central messages for credit unions working to bring their overdraft programs in compliance with the new regulations: This exercise must go well beyond the compliance department, and reducing overdraft fees in line with the competition is essential to increase member opt-in rates. The impact of the Reg E opt-in requirements will vary based on how credit unions have been handling overdraft protection, suggests Heather Kline, product specialist with Velocity Solutions. Even credit unions that have not offered overdraft protection for shortfalls resulting from electronic transactions should assess how the new regulations might affect their response to occasional overdrafts that stem from debit card holds at the gas pump, for...
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preventing overdrafts The National Foundation for Credit Counseling suggests consumers do the following to avoid overdrawing accounts: - Keep your check register current, recording all withdrawals and balancing often. - Link your checking account to your savings account so money can be taken from your savings to cover an overdraft without charging a fee. - Pad your checking account by carrying a balance that you will not likely exceed. If possible, keep an extra $100 in your checking account to cover unplanned expenses. - Reach out to your creditors. If payment due dates do not coincide with paydays, contact your creditor and request a due date change. This could lead to a change in interest. - Utilize technology and sign up for e-mail or text alerts for low account balances. In o...
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As you no doubt have heard, the Federal Reserve Board has issued final rules that prohibit financial institutions from charging consumers fees for paying overdrafts on automated teller machines and one-time debit card transactions, unless a consumer consents, or opts in, to the overdraft service for those types of transactions. Before opting in, the consumer must be provided a notice that explains the financial institutions overdraft services, including the fees associated with the service, and the consumer's choices. The final rules, along with a model opt-in notice, are issued under Regulation E, which implements the Electronic Fund Transfer Act. Many bankers have had questions about the new rules. Here are some answers to the most frequently asked questions: 1. The opt-in provision a...
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Consumers continue to spend billions on overdraft fees, despite a Federal Reserve regulation that requires banks to obtain customers' permission before signing them up for overdraft-protection programs, consumer advocates say. Consumers will spend an estimated $38.5 billion in overdraft penalty fees in 2011, up from $18.6 billion in 2000, according to a study out by the Pew Health Group, the consumer-product safety arm of the Pew Charitable Trusts.
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We're pleased to have John M. Floyd & Associates as a League business partner," said David L. Chatfield, President and CEO of the League, which serves credit unions in California and Nevada. "JMFA has implemented more than 1,000 variations of JMFA Overdraft PrivilegeSM, and is partnered with leading national core processors serving financial institutions. In addition, 20 credit union leagues representing more than 20 states and the District of Columbia have named JMFA either an 'endorsed' or a 'preferred' provider/partner for overdraft privilege, including the California League in September 2003," a spokesperson said. "We also assist the financial institution with technology upgrades to help streamline processes that improve efficiency and reporting," [Swanston] added. "And because...
