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Final
Rule on Reg E Requires Opt In (cont'd)
Definition
Overdraft
service – means a service under which a financial intuition
assesses a fee or charge on a consumer’s account held by the
institution for paying a transaction (including a check or other
item) when the consumer has insufficient or unavailable funds in the
account.
Does
Not Mean – payment of any overdrafts resulting from
transactions, including:
·
LOC subject to Reg Z, including transfers from a credit card
account, HELOC, or overdraft LOC;
·
A service that transfers from another account held
individually or jointly by a consumer, such as a savings account;
·
Transactions in a securities or commodities account;
·
Recurring debit card transactions;
·
Check transactions;
·
ACH transactions; or
·
Decoupled debit card transactions (see Commentary comment
17(b)-1).
Opt-in
The opt-in applies to ATM and one-time debit card
transactions made with a debit card issued by or on behalf of the
account-holding institution.
I.
I. Consumers must be given a “reasonable” opportunity
to opt-in, and the opt-in obtained, before being
charged an overdraft fee for “covered
transactions.”
II.
II. Can require consumer to sign or check a box on an
opt-in form
at account opening. If the line is not signed
or the box checked,
the institution must assume the
consumer did not opt-in.
III.
III. If the institution offers an LOC subject to Reg Z or a
service that transfers funds from another account of the
consumer to
cover overdrafts, the institution must state
that fact. The
institution may, but is not required to, list
additional
alternatives for the payment of overdrafts.
IV.
IV. An opt-in
by one account owner is an opt-in for the
account. The opt-in
remains in effect until revoked by
the consumer or terminated by the
financial institution.
V. V.
A revocation
of an opt-in by one account owner is a
revocation for the account.
VI. VI.
The consumer may revoke the opt-in at any time. I
Institution
must implement the revocation as soon as
reasonably practical.
Notice
Requirement
I. Financial institution must provide a notice
in writing
(or, if the consumer agrees, electronically)
·
Must be segregated from any other documents provided to the consumer,
including account opening disclosures.
·
Must describe the institution’s overdraft service,
including types of transactions for which a fee or charge may be
imposed if an overdraft is paid. (FRB warns against implementing a
fee for declining a transaction.)
·
Must state the dollar amount of any fees or charges that can
be assessed and any maximum amount (can use the phrase “up to a
maximum of $xxxx”).
·
Must disclose the opt-in right and explain how to exercise
it.
·
Commentary provides for additional information that may be
included in the Notice.
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