Reg E Guidance; CIICU; NAFCU Member "Stuff"
Posted by Anthony Demangone
The most recent issue of the Fed's Consumer Compliance Outlook is now available.  While the publication touches on a number of compliance issues, the part that caught my eye deals with the Fed's Regulation E changes that affect overdraft protection programs.   The Fed provides a general overview of the rule, and the article contains 24 questions and answers.  Many of these deal try to clarify "hazy" areas within the rule.  Here are three that caught my eye. (I also give a little commentary in italics.)
Is it possible for consumers to opt in electronically, such as through an online banking portal?
Yes, see question 2. However, the institution must first provide the consumer with an opt-in notice in writing or, if the consumer agrees, electronically. The consumer should also be given the right to revoke the opt-in agreement in the same manner he or she used to opt in.
Yes, see question 2. However, the institution must first provide the consumer with an opt-in notice in writing or, if the consumer agrees, electronically. The consumer should also be given the right to revoke the opt-in agreement in the same manner he or she used to opt in.
Many folks are trying to find ways to allow consumers to opt in at ATMs. Â The Fed says this is OK, but this guidance indicates that the consumer should also be able to revoke their opt-in at the ATM as well.
Can a financial institution provide existing customers with opt-in notices before July 1, 2010, but not implement their choices until August 15, 2010?
Yes, a financial institution may provide the notice required by ç205.17(b)(1)(i) and obtain the consumer's affirmative consent to the financial institution's overdraft service for ATM and one-time debit card transactions before July 1, 2010, provided that the financial institution complies with all of the requirements of ç205.17. (Comment 205.17(c)-1) However, to avoid misleading consumers, the institution should modify its notice to include a statement such as "After August 15, 2010, we will not authorize and pay overdrafts for the following types of transactions unless you ask us to (see below)." (ç205.17(d)(6))
Yes, a financial institution may provide the notice required by ç205.17(b)(1)(i) and obtain the consumer's affirmative consent to the financial institution's overdraft service for ATM and one-time debit card transactions before July 1, 2010, provided that the financial institution complies with all of the requirements of ç205.17. (Comment 205.17(c)-1) However, to avoid misleading consumers, the institution should modify its notice to include a statement such as "After August 15, 2010, we will not authorize and pay overdrafts for the following types of transactions unless you ask us to (see below)." (ç205.17(d)(6))
Many of us thought a delayed implementation was possible under the rule. Â This guidance solidifies that view. (Whew.)
Can a customer opt in at the customer level or must he or she opt in individually for each account he or she has with an institution?
Opt-in occurs at the account level, not at the customer level. Moreover, it can only occur for accounts that are already open, not for accounts that may be opened in the future.
Opt-in occurs at the account level, not at the customer level. Moreover, it can only occur for accounts that are already open, not for accounts that may be opened in the future.
This guidance indicates that opt-ins must be done individually for each account that a member has with your credit union. Â
There are a ton of other questions within the guidance, so I suggest that you take a few minutes and read it.
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The most recent episode of "Current Issues in Credit Unions" is available. Â As usual, Rob and the gang put together a nice show.
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NAFCU Members: We have some "stuff" for you.  Access NAFCU's Regulatory Alerts on NCUA's recent Reg Flex and Fiduciary Duties proposals.  Also, the April issue of NAFCU's Compliance Monitor is now available.