Posted by Anthony Demangone
Many credit unions are in the midst of planning how to comply with Regulation E's upcoming requirements for overdraft protection programs. Part of the planning concerns how to prepare the opt-in form itself. There is a general misunderstanding about the opt-in form. Many credit unions believe that you may not tinker with the model form at all. That really is not entirely true. Here's how the Fed explains it:
Under the final rule, the opt-in notice required by § 205.17(b)(1)(i) may not contain any information that is not specified or otherwise permitted by § 205.17(d) and must be in a form substantially similar to Model Form A-9. P. 39 of the final rule. (Emphasis added.)
So, the form must be substantially similar to the model form. True. True. But you are allowed to include any information that is permitted under 205.17(d). And that does give you some flexibility. For example, 205.17(d)(6) outlines permissible modifications.
(6) Permitted modifications and additional content. If applicable, the institution may modify the content required by §205.17(d) to indicate that the consumer has the right to opt into, or opt out of, the payment of overdrafts under the institution's overdraft service for other types of transactions, such as checks, ACH transactions, or automatic bill payments; to provide a means for the consumer to exercise this choice; and to disclose the associated returned item fee and that additional merchant fees may apply. The institution may also disclose the consumer's right to revoke consent. For notices provided to consumers who have opened accounts prior to July 1, 2010, the financial institution may describe the institution's overdraft service with respect to ATM and one-time debit card transactions with a statement such as “After August 15, 2010, we will not authorize and pay overdrafts for the following types of transactions unless you ask us to (see below).”
Also, the Federal Reserve in no way prevents you from sending a cover letter in addition to the opt-in form that is chock full of marketing material. So while you are limited in what you can put on the opt-in form, the sky is the limit on any marketing materials that accompany it. Well, not quite. Remember that any marketing materials would be advertisements, subject to NCUA's Truth in Savings regulation.
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NAFCU Compliance is coming to the great state of Texas! And I am writing to invite you to attend a regulatory compliance overview that I’ll be hosting during NAFCU’s upcoming Volunteers Conference in San Antonio, Texas. The session will run from 2:00 p.m. to 4:00 p.m. on Thursday, May 20, 2010 at the Marriott San Antonio Rivercenter.
I plan to cover a wide range of compliance topics (ramble) during these two hours. I'm sure I'll hit on overdraft protection, Reg Z, the SAFE Act and more. I'll probably mention Penn State football and force you to see a few pictures of my kids as well. Attendees of this session will also obtain 1.75 credit hours for their NCCO designation.
After our compliance session, you are also invited to attend the opening cocktail party at the Volunteers Conference. The cocktail party is from 4:00 p.m. to 5:00 p.m. at the Marriott San Antonio Rivercenter and serves as a meet and greet opportunity for folks attending the conference.
There is no registration fee or cost for you to attend this compliance roundup, and it is open to NAFCU members and non-members. That's just how we roll here at NAFCU. In fact, if there is more than one professional on your staff that you feel could benefit by attending, we invite them to attend as well.
We do need you to RSVP so we can make arrangements for meeting space at the hotel. So please contact NAFCU staffer Olivia Gonzaga, at [email protected] or 703-842-2205, to let us know how many from your credit union will be attending this special compliance roundup.
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