1005.17 of Regulation E addresses requirements for overdraft services.
It basically says you cannot charge an overdraft fee for paying an ATM or one-time debit card transaction.
But, there are some exceptions;
For example, if the consumer opts in to allow the fee(s). Before you get too far into the weeds, we need to take a step back and figure out who’s covered by this rule. In other words, who’s in and who’s out?
Jerod explains more in the video.
Transcript:
Regulation E opt-in - It's about, can you charge an overdraft fee associated with a debit card transaction or an ATM transaction that would cause the account to become overdrawn? Well, there's a way you can do that. It's by way of this opt-in, and that's what we're going to cover here today.
Who's in and who's out?
Well, if you're looking to charge that overdraft fee associated with a one-time debit transaction, or an ATM transaction that causes the account to become overdrawn, this rule applies to that financial institution that wants to implement that opt-in and be able to charge for those customers who do opt-in. This rule does not apply if you're not looking to charge a customer for an overdraft fee or to charge a customer for a transaction that causes the account to be negative. And therefore you want to be able to charge an overdraft fee.
So if you don't want to charge for one-time debit and ATM transactions, then the opt-in is not something you need to worry about, which is why you'll see there's a large handful of organizations out there that don't do the opt-in. In fact, the opt-in is more about the few today than the many. The majority of financial institutions don't do it. Why don't they do it, is this a bad thing? It's not a bad thing, but what you're going to find today is there's an hour worth of training dedicated to the red tape that's associated with this opt-in. And so if you're going to do it, you got to make sure you dot the i's, cross the t's and you steer clear of what's on the other side of the red tape, the issues that cause the problems along the way.
Published
2022/04/05
