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Our bank offers the Reg E Opt-in at account inception. New customers opt in and receive their confirmation at the time the account is opened. In light of recent overdraft concerns, we are re-visiting our disclosures, documentation, general practices, etc. The bank has a 30-day waiting period before the overdraft service is effective. We disclose our policy up front, explain that the account must be in good standing within the 30-day period, and that the opt-in can be revoked at any time. We are a national bank. The OCC does not appear to be as restrictive with respect to overdraft services as other agencies, and there has been no new information that specifically addresses this topic. I am wondering, however, if we need to ensure that no fees are assessed for one-time ATM/POS transactions during the interim period before the program kicks in? Our system does not have a means to enter an “effective date.” Does Reg E prohibit charging during this waiting period, or is this something that has come to light due to the attention that this topic continues to generate?
I can offer a few references from the Commentary to Reg E that partially address this issue. However, I STRONGLY encourage you to consult with an OCC Compliance Examiner for their insights and concerns. In additional to being compliant with Reg E and the opt-in provisions for overdraft protection programs, there is also the potential for UDAPP citations if the consumer can’t make an informed decision based on the information provided at account opening. There are several sections of 1005.17 that apply to the opt-in process that you’ve outlined. Here is one basic requirement in 1005.17(b)(5):
5. Implementing opt-in at account-opening. A financial institution may provide notice regarding the institution’s overdraft service prior to or at account-opening. A financial institution may require a consumer, as a necessary step to opening an account, to choose whether or not to opt into the payment of ATM or one-time debit card transactions pursuant to the institution’s overdraft service. For example, the institution could require the consumer, at account opening, to sign a signature line or check a box on a form (consistent with comment 17(b)-6) indicating whether or not the consumer affirmatively consents at account opening. If the consumer does not check any box or provide a signature, the institution must assume that the consumer does not opt in. Or, the institution could require the consumer to choose between an account that does not permit the payment of ATM or one-time debit card transactions pursuant to the institution’s overdraft service and an account that permits the payment of such overdrafts, provided that the accounts comply with § 1005.17(b)(2) and § 1005.17(b)(3).
Section 6 of the commentary explains that
6. Affirmative consent required. A consumer’s affirmative consent, or opt-in, to a financial institution’s overdraft service must be obtained separately from other consents or acknowledgements obtained by the institution, including a consent to receive disclosures electronically. An institution may obtain a consumer’s affirmative consent by providing a blank signature line or check box that the consumer could sign or select to affirmatively consent, provided that the signature line or check box is used solely for purposes of evidencing the consumer’s choice whether or not to opt into the overdraft service and not for other purposes. An institution does not obtain a consumer’s affirmative consent by including preprinted language about the overdraft service in an account disclosure provided with a signature card or contract that the consumer must sign to open the account and that acknowledges the consumer’s acceptance of the account terms. Nor does an institution obtain a consumer’s affirmative consent by providing a signature card that contains a pre-selected check box indicating that the consumer is requesting the service.There are MANY examples in 1005.17(b)(9) that outline fees that may be charged or NOT charged. However, I didn’t see an example that addressed the “effective date” or “waiting period” example.
The most conservative approach may be to refrain from charging a fee during the waiting period. However, this is just a personal opinion.
Susan Costonis, CRCM
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