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Dreher Tomkies LLP
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Columbus, Ohio 43215
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BOARD ISSUES FINAL OVERDRAFT PROTECTION OPT IN RULES

The Federal Reserve Board today published a final rule under Regulation E, the implementing regulation for the Electronic Fund Transfer Act, and the official staff commentary that will prohibit financial institutions from charging consumers fees for paying overdrafts on automated teller machine (ATM) and one-time debit card transactions, unless a consumer affirmatively consents, or opts in, to the overdraft service for those types of transactions.

Before opting in, a consumer opening a new account 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. For existing accounts, institutions may provide an opt-in notice on or with the first periodic statement sent after the effective date of the final rule, or following the first assessment of an overdraft fee to the account after the effective date of the final rule. If the consumer does not affirmatively consent within 60 days after the opt-in notice is sent, the institution must cease assessing fees for such overdrafts. The final rules include a model opt-in notice.

The final rules also prohibit a financial institution from discriminating against consumers who do not affirmatively consent. Thus, an institution (i) must provide consumers who do not affirmatively consent with the same account terms, conditions and features that it provides to consumers who do affirmatively consent, except for the overdraft service for ATM and one-time debit card transactions, and (ii) may not charge overdraft fees for any overdrafts it pays on ATM or one-time debit card transactions made by consumers who do not affirmatively consent.

The final rules are effective 60 days after publication in the Federal Register, with a mandatory compliance date of July 1, 2010. For accounts opened prior to July 1, 2010, institutions must not assess fees on or after August 15, 2010 for paying an ATM or one-time debit card transaction pursuant to the overdraft service without the consumer’s affirmative consent.

  • Judy Scheiderer