Delaying annual reviews of overdraft programs until the next rule modification or updated guidance can lead to serious and expensive issues. Preventing a problem is almost always simpler and less expensive than trying to fix it. Despite the fact that the most current guidance was issued in 2010, a lot has changed in the overdraft industry since then. The media and lawmakers have been focusing more on overdraft fees, which has brought increased attention to this financial service. Just recently Regions Bank has been fined $191 million by financial authorities for charging ‘surprise’ overdraft fees on debit card transactions and ATM withdrawals. The CFPB announced that Regions Bank “committed unfair and abusive acts and practices when it charged overdraft fees on transactions that had a sufficient balance at the time the Bank authorized the transaction but then later settled with an insufficient balance”. In August, the FDIC issued new supervisory guidance on multiple non-sufficient funds (NSF) fees arising from the re-presentment of the same unpaid transaction, charging a consumer more than one NSF fee for the same declined transaction, without providing proper disclosures.
Financial Institutions should be evaluating these areas on a regular basis. Strunk can help your financial institution reduce risk while offering this important service by using consumer-friendly policies, compliant disclosures with simple, understandable language, and constant, continuing account holder communication. We will provide a thorough analysis of your overdraft program and its disclosures and make recommendations on how to update it to meet current regulatory requirements. Your financial institution will gain greater understanding of program usage as well as practical best practices. Strunk will also provide staff training, consistent communication around the program, correct disclosures and compliance with all regulatory rules. In order to assure the success of your overdraft program, it may be time to rely on an outside expert if limited resources and other projects now demand all of your team’s focus and attention. Don’t put program assessments off and run the risk of being let down.