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Is there any guidance or regulatory issuances regarding the potential the OD/NSF fees are processed on a day that banking centers are not open?
For example, if a location is closed for a holiday when the FRB is open – so the Bank has to make pay/return decisions and will post incoming electronic transactions, but the customer would not be able to make an in-person deposit to avoid the fee caused by items presented in the prior days overnight.
For the sake of consideration, consider inclearing checks and ACH debits come to Bank after business on Thursday but account does not have funds, and Bank is closed on Friday for local holiday when Fed is open.The CFPB has raised recent concerns about ODP programs. This is a link to a press release in January: https://www.consumerfinance.gov/about-us/newsroom/consumer-financial-protection-bureau-launches-initiative-to-save-americans-billions-in-junk-fees/
The OCC also spoke about ODP concerns and POSSIBLE reforms at this link: https://www.occ.treas.gov/news-issuances/news-releases/2021/nr-occ-2021-129.html
This is a link to the basic ODP requirements: https://www.consumerfinance.gov/rules-policy/regulations/1005/17/#c-1
My best suggestion is to check directly with YOUR primary regulator regarding this question. The FDIC has additional requirements, for example.
Generally speaking, regulators have cited enforcement actions for ODP that focused on UDAAP, unfair, deceptive, and abusive acts and practices. These actions are issued when the deposit agreement and ODP agreement aren’t sufficiently clear for a consumer to anticipate how fees are assessed.
As this regulatory shift plays out, industry watchers say that it is probable that at least five limitations are likely:
(1) restrictions on the total dollar amount of fees per day regardless of the number of overdrafts or the amount of account shortage;
(2) allowance of only one fee per overdraft even if the payee re-submits the transaction;
(3) a ban of return check fees (NSFs) when a separate overdraft fee is charged;
(4) prohibition of interest charges on overdraft fees that remain unpaid; and
(5) disallowance of an institution closing an account based solely on repeated overdraft experiences.
In addition to the above, other possible modifications include such things as:
•restrictions on marketing of ODPs and the changes to the prior practices — such as a Pew Trust industry-style-explanatory warning box on monthly account statements;
•regulatory examination of overdrafts as extensions of credit and requiring TILA, ECOA compliance;
•formalized regulatory examination of ODP practices which may include required reporting of fee waivers and refunds in the Call Reports of banks larger than $1 billion in assets (not a current requirement);
•special protections for customers/communities of color which bear the most impact from such fees. Indeed, a recent Financial Health Network study has estimated that Hispanic households paid $3.1 billion in fees in 2020 and Black households paid $1.4 billion;4 and
•discontinuance of immediate recapture in full of ODP fees upon the first deposit made to the accounts and possible repayment periods of 3 months for these fees.
The Bureau’s comment period for new rules closes March 31, 2022. The identified timetable for action is considered to be mid-2022, and many of the larger financial institutions have decided to get ahead on this issue and to voluntarily make changes.
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