Compliance Blog

Posted by Sarah Loats

The Federal Reserve Board is proposing to amend Section 226.10 to implement rules from the Credit CARD Act regarding payments. The general rule, in proposed section 226.10(a) will require the credit union to credit a payment as of the date of receipt, except when a delay in crediting does not result in a finance or other charge. It's a fairly simple rule, and the applicable text is only 4 pages. The corresponding staff commentary helps to determine when a payment is received.

Proposed section 226.10(b)(2) would implement the requirement that the credit union impose a cut-off hour of no earlier than 5 pm on the due date for all types of payments.

For payments made in person at a credit union branch where payments are accepted, the cut-off time cannot be earlier than the close of business of the branch, even if it is later than 5 pm. A proposed staff comment would explain that in-person payments are payments that are made to or with the direct assistance of an employee. For example, a payment made at a teller window would be an in-person payment, but a payment dropped off in a mail slot would not be. Applicable text can be found here.

***

Overdraft services are still under attack. On Monday, Senator Dodd announced the The Fairness and Accountability in Receiving (FAIR) Overdraft Coverage Act, "a bill to protect Americans from excessive checking account overdraft fees." Here is a link to NAFCU's news story on the bill.

According to the press release the bill would:

• Require banks to get a customer’s consent before enrolling them in an overdraft protection program for ATM and debit card transactions;

• Limit the number of overdraft coverage fees banks can charge to one per month and six per year;
• Require fees be proportional to the cost of processing the overdraft;
• Stop institutions from manipulating the order in which they post transactions in order to rack up extra fees,
• Require customers be notified when they overdraw their account and be given the option of being notified by email, text or traditional mail; and
• Require that customers be warned if an ATM or branch teller transaction will overdraw their account, and be given the chance to cancel the transaction.

While the bill does treat overdraft fees as finance charges it excludes them from the usury ceiling calculation for federal credit unions. See NAFCU's news story for more information.