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PRODUCTS: Implications of the New Overdraft-Fee Rules
Come July 1, new rules will go into effect regarding overdraft fees. Here’s an overview of the new rules, courtesy of the Federal Reserve Bank of Atlanta:
Financial institutions will no longer be able to charge customers overdraft fees on automated teller machine (ATM) and one-time debit card transactions without the customer’s express consent under new rules that are effective on July 1, 2010. Before giving permission to pay overdraft fees, the consumer must be provided a notice that explains the financial institution’s overdraft services, including the fees associated with the service, and the consumer’s choices. The final rules, along with a model opt-in notice, are issued under Regulation E, which implements the Electronic Fund Transfer Act. …
The results of consumer tests conducted by the Federal Reserve Board show that most consumers prefer not to be enrolled in overdraft services for ATM and one-time debit card transactions unless they expressly opt in. At the same time, testing shows that most consumers want overdraft services to cover important bills, such as checks they use to pay rent, utilities, and telephone bills.
Where does this leave the overdraft product? What strikes me is that this forced communication could become a fine marketing opportunity for banks. The call here is to be creative instituting Reg E in a way that turns a potential negative into a positive.
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