Repayment Plan Management from Beginning to End

A Fresh Start Repayment Plan is a tool available to overdrawn customers that will allow them to repay the overdrawn balance in up to four payments and will also allow them to retain the use of their checking account. It also may help financial institutions recover and collect on accounts which may have otherwise charged off.

Included with Strunk’s hosted ODP Manager software, financial institutions have access to Strunk’s library of Fresh Start documentation. The library contains a Fresh Start Profile that addresses recommended features and optional considerations, a recommended Fresh Start Policy and Procedure Guidelines, a suggested Assessment template to determine Account holder’s ability to repay the Fresh Start Repayment Plan, and a recommended Fresh Start Agreement. These documents provide the necessary information to start offering and setting up Fresh Start Repayment Plans.

ODP Manager Formal Demand and Final Demand collection letters advise customers overdrawn for more than $100 to ask if a Fresh Start might be an option to repay the overdrawn balance in 4 payments or less. Once a customer contacts the institution, an assessment should be completed to confirm the customer’s ability to repay the Fresh Start Repayment Plan.

If a customer qualifies and accepts the Repayment Plan, ODP Manager users can enter a repayment schedule for each account. The repayment schedule can be used to generate the Fresh Start Agreement to be signed by the customer. It will also create payment reminders to show when a repayment should be due. The payment should be verified in the core system and then tracked in the repayment schedule once paid. If the account defaults on the repayment plan, the Fresh Start Default Letter can be generated in ODP Manager to inform the customer that the account has been closed, charged off, and reported to the appropriate agencies.

ODP Manager offers two reports related to Repayment Plans. The Fresh Start Tracking Report lists all accounts that have been identified as being in repayment by an ODP Status Code. A Repayment Schedules summary report can also be used to track the status of Fresh Starts, including payments made and outstanding balances. Both report options can be exported to PDF or Excel.

If you have any questions about Fresh Start Repayment Plan options in hosted ODP Manager, please contact Strunk Support at support@strunkaccess.com to find out more.

Automatically Archive ODP Manager Reports

The ODP Manager hosted software includes a suite of standard reports that are updated after each daily import. These reports can be viewed in the browser or exported to PDF or Excel. Reports for the most recent seven As of Dates are accessible.

If an institution would like the option to review, analyze, or retain past reports, users are able to export and save the reports as needed. However, if reports are not exported and saved within the most recent seven As of Dates, then the report data is no longer available. ODP Manager offers an alternative to manually saving and retaining reports. Upon request, Strunk can set up a Report Archive which automatically archives the requested reports after each daily import. This will alleviate the need to remember to manually save report copies.

The archived reports are saved as PDF files within the software. For each import As of Date, a folder containing the archived reports is created and can be downloaded. If an institution would rather download the archived reports to save to a network drive instead of accessing though the ODP Manager software, a Download Reports Archive link can be set up instead.

If you have any questions about the Report Archive option in hosted ODP Manager, please contact Strunk Support at support@strunkaccess.com to find out more.

Use ODP Manager to Inform Customers about Reg E Opt-In

On consumer accounts, ATM and everyday debit card transactions cannot be included in Overdraft Privilege unless the customer has opted in. Customers can opt in for Reg E at account opening but they may also opt in later. The four options to opt in for the ATM and everyday debit card coverage are: in person at a branch, over the phone, by mail, or electronically.

The Consent Form for Overdraft Services (A-9 form) informs customers about what they need to know about overdrafts and overdraft fees. It also reiterates a customer’s options for opting in and provides them the form to submit by mail. ODP Manager allows institutions to provide an account’s Regulation E Opt-in Status in the file that is imported daily. This allows the hosted software to send different letter templates to customers who have opted in or not opted in for the ATM and everyday debit card coverage.

Strunk’s standard letter templates for the Welcome and Reinstatement letters include the A-9 form for customers who have not already opted in. The Reg E Opt-in Followup Letter template is also provided so that customers with OD limits that have not opted in receive information about ATM and everyday debit card coverage opt-in at least once a year. If a customer has already opted in, their letters highlight that they already have the ATM and everyday debit card coverage. By allowing customers the Reg E opt-in information when overdraft limits are assigned, when overdraft limits are reinstated, or annually, ODP Manager may allow customers to have more opportunities to opt in for Reg E.

ODP Manager can also allow customers to submit their Reg E Opt-in election electronically. Strunk would create an online form that mirrors an institution’s A-9 form. This form would then be linked directly from an institution’s website. Email confirmations are generated when forms are submitted. The submissions are tracked in ODP Manager so that users can generate a list of accounts that need an updated Reg E election.

If you have any questions about the Reg E Opt-in form options in hosted ODP Manager, please contact Strunk Support at support@strunkaccess.com to find out more.

Permit Customers to Make Regulation E Elections Online

ODP Manager custom letter templates include the Consent Form for Overdraft Services for customers who have not already opted in for the Reg E ATM and everyday debit card coverage. These letter templates simplify the process for customers who choose to opt in by mail, but ODP Manager can also allow your customers to opt in for Regulation E electronically.

The hosted software can be set up to include a Reg E opt in form and Reg E opt out form that matches the content in your ODP Manager letter templates. The links are then added to the institution website to direct customers to the Reg E opt in and opt out forms. Email confirmations are generated when customers visit the website and complete the form to opt in or opt out of the ATM / everyday debit card coverage. The request is tracked in ODP Manager and can be emailed to a specified email address at your financial institution.

Once a customer request has been made, ODP Manager users perform the following steps: 1.) Review the new responses in ODP Manager, 2.) Export the list of accounts that need an update to the account’s Reg E election, and 3.) Perform the appropriate maintenance in the core system – the user will update the account record in the core to opt in or opt out the account as requested by the customer. The ODP Manager software displays by default any new responses that have not been reviewed and downloaded. Requests that have already been processed are also retained within ODP Manager to allow review of prior responses.

If you would like to implement the electronic consent to opt in for Overdraft Privilege coverage for ATM and everyday debit card transactions in ODP Manager, please contact Strunk Support at support@strunkaccess.com with any questions or to find out more.

Automatically Update ODP Manager Information

The information in Strunk’s hosted ODP Manager software is updated daily when an extract file from the core processor is uploaded. This file can be committed each day by an ODP Manager user prior to generating letters and reviewing reports. Strunk also offers an Automatic Upload option for institutions that meet the criteria below.

If an institution is able to create the updated core extract file automatically to a specified location, the Automatic Upload process may be possible. There is a one-time setup process – the first step is to install the upload client. The second step is updating the configuration details with user and file variables specific to the institution. The final step is to create a scheduled task. The scheduled task will start the import overnight after the extract file update and before users start their workday.

Even if the daily import is usually performed by the Automatic Upload process, your users will still be able to manually import a file if the scheduled import does not complete as expected. Each day when the import process runs, specified individuals or a group email address will receive an email detailing whether the import completed successfully.

Please contact Strunk Support at support@strunkaccess.com with any questions or to find out more details about this import option.

Strunk Overdraft Program Bulletin

On April 23, 2023, the OCC issued guidance on debit card transactions that are authorized positive, settled negative (APSN) and on re-presented NSF items. On the same date, the FDIC also issued guidance on APSN. Previously, on August 18, 2022, the FDIC had issued guidance on re-presented NSF items. The OCC and FDIC indicate that institutions following either of these practices risk violating Section 5 of the Federal Trade Commission Act which prohibits unfair or deceptive acts or practices and Section 1036 of the Dodd Frank Wall Street Reform and Consumer Financial Protection Act of 2010 which prohibits unfair, deceptive, or abusive acts or practices. The purpose of this bulletin is to summarize that guidance.

OCC Guidance

In terms of guidance related to APSN, the OCC has found that misleading disclosures contribute to findings that the APSN practice was unfair for purposes of Section 5. However, even when disclosures describe the circumstances under which consumers may incur overdraft fees, the OCC has found that overdraft fees charged for APSN transactions are unfair for purposes of Section 5 because consumers are still unlikely to be able to reasonably avoid injury.

With respect to re-presentment of NSF items, the OCC has found that disclosures may be deceptive, for purposes of Section 5, if they do not clearly explain that multiple or additional fees may result from multiple presentments of the same transaction. And again, even when disclosures explain that a single check or ACH transaction may result in more than one fee, a bank’s practice of assessing fees on each re-presentment may also be deemed to be unfair, for purposes of Section 5, if consumers cannot reasonably avoid the harm and the other factors for establishing unfairness under Section 5 are met (there is a representation, omission, act, or practice that is likely to mislead, the act would be deceptive from the perspective of a reasonable consumer, and the representation, omission, act, or practice is material). Their finding is that consumers typically have no control over when a returned ACH transaction or check will be presented again and lack knowledge of whether an intervening deposit will be sufficient to cover the transaction and related fees.

FDIC Guidance

The FDIC guidance is essentially the same as the OCC guidance, they just issued their guidance on re-presented items separately last August. In the April 23rd guidance on APSN the FDIC indicated that failure to take steps to avoid assessing overdraft related fees when transactions are authorized on positive balances but settle on negative balances results in ‘heightened risks” of violations of Section 1036 of the Dodd Frank Wall Street Reform and Consumer Protection Act of 2010. An act or practice is unfair when it (1) causes or is likely to cause substantial injury to consumers, (2) cannot be reasonably avoided by consumers, and (3) is not outweighed by countervailing benefits to consumers or to competition.

In their August 18, 2022, guidance they said violations of law occur when financial institutions charge multiple NSF fees for the re-presentment of unpaid transactions if disclosures do not fully or clearly describe the financial institution’s re-presentment practice, including not explaining that the same unpaid transaction might result in multiple NSF fees if an item was presented more than once. Practices involving the charging of multiple NSF fees arising from the same unpaid transaction results in heightened risks of violations of Section 5 of the Federal Trade Commission Act which prohibits unfair or deceptive acts or practices (UDAP). Therefore, if a financial institution assesses multiple NSF fees arising from the same transaction, but disclosures do not adequately advise customers of this practice, the misrepresentation and omission of this information from the institution’s disclosures is material and therefore deceptive. Also, a risk of unfairness may be present if multiple NSF fees are assessed for the same transaction in a short period of time without sufficient notice or opportunity for customers to bring their account to a positive balance to avoid the assessment of additional NSF fees. As a result, while revising disclosures may address the risk of deception, doing so may not fully address the unfairness risk.

In addition to the regulatory compliance risk, the FDIC also found that multiple NSF fee practices may result in heightened litigation risk. Numerous financial institutions, including some FDIC supervised institutions, have faced class action lawsuits alleging breach of contract and other claims because of the failure to adequately disclose re-presentment NSF fee practices.

If you would like more information on Strunk’s program, please contact us at info@strunkaccess.com or call 800-728-3116.

Charge Off and Recovery Tracking and Reporting

After an overdrawn account has been charged off, financial institutions may still need to track and report on the charge-off balances and recoveries related to the overdrawn accounts. ODP Manager includes a manual tracking process that may allow your users to manage the charge-off and recovery process after the deposit account had been closed.

Once the account has charged off, users can create a Charge-off Item with the date, charge-off principal, charge-off fees, charge-off reason, and item status. Users can also include notes at the time the item is created and throughout the recovery process. Updates and changes are logged as well. As recoveries are made, they should be entered in ODP Manager and they will reduce the overall charge-off balance tracked.

All Charge-off Items for the last year are displayed on the C/O Items and Recoveries summary page. If a longer or shorter reporting timeframe is desired, a different default timeframe can be requested by the financial institution. Also, users can change the start and end dates at any time to change the charge offs displayed. The summary displays basic account and charge-off information. When the summary information is exported as a PDF it will overall totals and adds additional totals by branch.

Please contact Strunk Support at support@strunkaccess.com with any questions or to find out more details about using the Charge-off Items and Recoveries feature.

Strunk Response to Recent Overdraft Headlines

It is no secret that overdrafts and overdraft fees are making the news quite frequently these days. This increased attention often puts pressure on community financial institutions specifically, as the articles and reports are often unclear. Questions like, ‘is there something our FI is required to do?’ or more simply, ‘should we be doing something?’ arise.

Most recently, the Consumer Financial Protection Bureau (CFPB) has released a report stating that banks’ overdraft/NSF fee revenue has declined significantly compared to pre-pandemic levels. The CFPB stated that “Bank overdraft/NSF fee revenue was lower in 2020 and early 2021 than before the pandemic, which was likely largely due to pandemic-related stimulus checks pushing up average checking account balances. In the second half of 2021, as the pandemic stimulus wound down, overdraft/NSF fee revenue rebounded somewhat, but began decreasing again through the third quarter of 2022 – likely due to changes in bank policies.”

The CFPB states in their report that they ‘have not observed correlating increases in other listed checking account fees, which suggests that banks are not replacing overdraft/NSF fee revenue with other fees on checking accounts.’  The report identifies the largest banks in the United States, and while those banks can afford these changes, the report fails to review how this will affect community financial institutions.

It is important to understand that the comments in the report are a function of two primary things:

  1. Consumers have changed their behavior regarding overdrafts because of the pandemic.
  2. Mega banks chose on their own to drastically cut NSF and OD fees. Those banks have many revenue sources and can afford to be magnanimous, while community financial institutions do not have that opportunity.

Quite possibly the most critical message here is, there is no new regulation and nothing for the community FI to do, for now. Strunk will alert clients if any new rule making is introduced by the CFPB, and thus changes become necessary. Strunk’s overdraft program remains complaint by offering clear and appropriate disclosures, easily accessible reports and ongoing employee training.

Community FIs might still feel the strain of lost revenue and should explore new fee income strategies and profit improvement opportunities with Strunk to get out in front of this challenge. It has never been more important to shift focus and to diversify the ways fee income is produced for the community FI.

Overdraft Privilege Provides a Much Needed Service

Before the early 1990’s, banks typically returned all items that would cause an overdraft on a consumer checking account. When overdraft privilege programs started consumers were thrilled that their overdrawn items wouldn’t automatically be returned to the merchant. Thirty years later, Strunk, the pioneer of overdraft programs, is still helping banks provide efficient, compliant overdraft services to community banks across the country.

Overdraft programs have come under scrutiny since 2005 when the FFIEC published best practices for paying items into overdraft status. All of the guidance set forth by the regulators were meant to disclose the bank’s policies and to ensure those policies were followed…just like any product or service a bank offers.

In 2010 banks couldn’t automatically pay and charge for a debit card caused overdraft without consumer consent. Another great regulation! Then in 2011, the FDIC asked banks to provide notice to excessive users of overdrafts by notifying consumers each time that had six overdrafts in a twelve month period. Perfect solution to reminding customers of their bad habits!

More recently the FDIC has been concerned about disclosing second presentment fees on the same check. This occurs when an insufficient item comes through, the bank returns it to the merchant, and the merchant sends it back so they can get paid for the purchase the consumer made. Notifying consumers that a fee may be levied against the second presentment is a tremendous idea. There is also a concern that debit card transactions may be approved with a positive balance and when the item actually hits the account it is negative and an overdraft fee is charged.

Lastly, the CFPB is concerned about “junk fees” where someone makes a deposit then the check they deposited comes back insufficient. Some banks levy a charge for the insufficient deposited item even though the depositor wouldn’t have known that the check would be returned.

Contact Strunk at info@strunkaccess.com to learn more about how to run an Overdraft Privilege program in a compliant and profitable way that benefits consumers.

ODP Manager Letters as Needed

The hosted ODP Manager software uses information from a daily extract file to determine when Collection letters should be sent to overdrawn accounts and which Custom letters should be sent to accounts when overdraft limits are assigned, or accounts opt in for Reg E. In addition to the Collection and Custom Letter functionality, the software also allows users the flexibility to send Ad Hoc letters as needed. These letters don’t rely on an account event to be triggered so users are not limited to criteria included in the daily extract file.

If you close and charge off an account before the standard number of days overdrawn, you will need to be able to generate an Account Closed letter. Or you may have ODP related letters that you send in specific situations other than those covered by the standard letter templates. You can even use Ad Hoc letters to generate your Fresh Start Loan agreements. Rather than creating letters manually, you can have Strunk set them up as Ad Hoc letter templates in the ODP Manager software.

If a user has a list of accounts that need to receive the specific letter, an Ad Hoc letter can be generated using the template, and sent to the customer. When you need to generate the letter, just enter the account number and the letter will pre-fill with the information from the software – name, address, and any other relevant fields. Letters can be generated one account at a time, or multiple account numbers at once. Once the letter has been generated, ODP Manager tracks and retains the letter just like your Collection and Custom letters.

Please contact Strunk Support at support@strunkaccess.com with any questions or to find out more details about using ODP Manager’s Ad Hoc letters.