See full Library here – https://store.bankerscompliance.com/
Want FREE Deposit Operations Tools? Check them out here – https://store.bankerscompliance.com/link/DOTools
What are the overdraft related regulations? Hi there, this is Jared Moyer with Bankers Compliance Consulting. Simple question, right? Not so simple of an answer. So let’s get the easy ones out of the way first. Reg DD Truth and Savings requires you to disclose how much your overdraft fee is, your NSF, how and when the overdraft can occur. Reg E, if you’re going to charge overdraft fees related to ATM and one time debit card transactions that cause the account to be overdrawn, you’ve got to make sure that you understand the opt in rules. Then let’s move on to the lending side of things you might say, “Well, why the lending side?” Well, first off let’s do Regulation B, the Equal Credit Opportunity Act.
Regulators will agree that when you allow an overdraft debt to occur, it becomes incidental credit which then invites fair lending risks to the table so you need to make sure that in your consideration of whether to pay or to not pay an overdraft, you’re not using criteria that would be attributed to prohibited characteristics like race, sex, religion, age, marital status, those sorts of things. Then we’re going to move on to Reg Z. If you allow your customers to convert their overdraft debts into installment loans, there are certain times where Reg Z will be triggered and you have to follow the Reg Z disclosure requirements. So be aware of that.
The next one is going to be the biggest one of all and that’s going to be the unfair, deceptive, or abusive acts or practices. You see, because there’s so little in Reg DD, the Truth and Savings Act, Reg E, Reg B, Reg Z, as it relates to overdraft specific requirements, there’s a lot of gray space and where the regulation stopped saying to do this and to do that, or to not do this, to not do that, we end up having to make some judgment calls and that’s eye of the beholder stuff that is subjective and that’s where you’re going to have your risk when it comes to overdrafts. It’s also where we have the legal risks that comes into the court proceeding side of things with class action lawsuits and just plain being sued as relates to things related to overdrafts.
And history has taught us a lot of lessons on overdraft related issues and it continues to do that. If you go out and Google overdrafts, you’ll see there’s lots of class action lawsuits currently in the pipeline as it relates to something related to overdrafts. So those are just a few of the major players as it relates to the regulatory requirements and overdrafts. We’ve got training on this out on our website. If you’re not familiar with our library, Bankerscompliance.com is where to go and you can seek out overdraft related training as well as any other regulatory requirements that you may be looking for a compliance training on. If you’re not sure, or you want to have a discussion about what’s best for you and your team, I invite you to pick up the phone and we’d love to talk to you about how we can partner with one another so that you can meet those compliance challenges head on. Let’s have that discussion.