[rcooper]

A question we received from a member is below. Please offer your insight or personal experience. I know it would be appreciated. Thanks.

Can the bank charge $150 in overdraft fees ($150 cap per day) PLUS a $25 consecutive overdraft fee for five consecutive business days? For a total of $175.

Our disclosure shows the practice, but I am afraid that the FDIC will not like that practice.

What do you suggest or I was wondering if other members have encountered this situation.

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[rcooper]

There was an enforcement action from the OCC against Woodforest National Bank back in 2010. Among the many issues listed in the consent order was that the bank charged a consecutive overdraft fee. The consent order stated, “[p]rior to approximately May 15, 2010, accounts that were not brought to a positive balance within seven days were charged a “continuous overdraft fee.” This practice was unfair because, once continuous overdraft fees began, many Bank customers were unable to avoid the assessment of continuous overdraft fees.”

If you provide the customer a way to avoid the continuous overdraft, other than paying the negative balance (I say this because some people won’t be able to pay the overdraft and associated fees, which will only result a larger negative balance and a negative balance they’ll never be able to resolve), it might be more tolerated by the examiners.

https://www.occ.gov/news-issuances/news-releases/2010/nr-occ-2010-122.html

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