Institutions often think about overdrafts through a deposit operations lens; however, an overdraft is actually an extension of credit. So, while it’s a no-brainer that institutions assess UDAAP risks with respect to overdraft practices, they also need to take a look at potential fair lending risks. Institutions should ensure overdraft practices are applied consistently and are not based on prohibited factors. Additionally, if employees have discretion in deciding to pay or return a check, to waive overdraft fees, etc., there should be a roadmap to help ensure consistency.
Jerod explains more in the video.
Published 2027/07/17