Regulation E Guide - Overdraft Opt-In: To Pay or Not to Pay

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Before institutions can assess an overdraft charge for paying an ATM or one-time debit card transaction, they need to:

1. Provide consumers with a written notice describing the institution’s overdraft service;
2. Provide consumers a reasonable opportunity to consent (aka Opt-In) to any charges;
3. Obtain a consumer’s affirmative consent (Opt-In); and,
4. Provide a consumer with confirmation of that consent in writing, which includes a statement explaining the right to later revoke consent.

So, what items do you have to pay or not pay if they opt-in? What if they don’t opt-in?

Jerod explains more in the video.

Transcript:

Now, I want to take you to page three, Roman numeral four. This is going to be a real brief thing, but assuming you're going to deliver this opt-in and you're going to implement this if someone doesn't opt-in, so if I'm your customer and I choose not to opt-in, I'm going to find out that I get that option, you can't just make me opt-in, but I choose not to opt-in, you can still pay. In fact, you may want to write a note here. If I don't opt-in, you may still have to pay the transaction by way of a contract that you have with a third-party vendor. So you may still be obligated to pay that charge. In fact, if it's preauthorized and it comes through and is now going to post against a negative value, you can't return that. Once it's preauthorized, we're talking about a one-time debit transaction, there's no return there. It's not like an ACH rule, you can send it back. And so contractually you may be obligated to pay some of these whether you like it or not.

If I do opt-in, letter B, you don't necessarily have to pay. And so the opt-in should never be represented as a guarantee. And we'll talk about misrepresentations and things like that a little bit later on. So if I opt-in, you don't have to pay, but you likely will in some cases. If I don't opt-in, you can still pay. It's up to you. Now, again, some of this is going to be based on how systems and processes behind the scenes work, and you probably find you don't have a choice in certain circumstances. Once the money's out the door, it's out the door and there's no reversal of it.

Published
2022/04/25