Following Up with Frequent Overdraft Privilege Users

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Financial institutions are expected to monitor excessive consumer Overdraft Privilege usage to inform customers of additional available options for overdraft protection. These options could be an Overdraft Protection Credit Line or an Overdraft Protection Transfer from another account with the financial institution.

FDIC regulated institutions are expected to give customers who overdraw their accounts on more than six occasions where a fee is charged in a rolling twelve-month period a reasonable opportunity to choose a less costly alternative and decide whether to continue with fee-based overdraft coverage. Strunk also recommends that institutions not regulated by the FDIC also communicate available alternatives to ODP on an annual basis to accounts with insufficient funds items.

ODP Manager can assist with sending letters advising your customers of the alternatives to Overdraft Privilege. If the ODP Manager import file includes data from the core system that indicates when an account has qualified for the letter by exceeding the threshold, the hosted software can automatically show when a letter is due to be sent. If the data is unable to be added to the extract file but qualifying accounts can be identified from an existing core report or other method, a letter can be generated, as needed, as an Ad Hoc letter.

Once the letter is generated, the letter is tracked and retained within the ODP Manager application.

Please contact Strunk Support at support@strunkaccess.com with any questions or to find out more about using ODP Manager’s Excessive Use Notification letter.

ODP Manager Account History

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One major benefit of the hosted ODP Manager software is access to the software’s advanced history tracking. Key account events are tracked in the system and are searchable.

When the daily extract file from the core system is imported into ODP Manager, significant account status changes are tracked. Is the account newly overdrawn or now in good standing? Has an overdraft limit been added to or removed from the account? Has the consumer opted their account in to or out of ATM and everyday debit card transaction coverage according to Regulation E? Has the account been closed? These items are all tracked and retained in each individual account’s history.

When a user generates a collection, custom, or ad hoc letter, not only is the letter type, description, and date recorded, but also a PDF of the letter is saved and linked to the account history and the event history. All letters are stored within the application and can be regenerated at any time.

If a user needs to make further contributions to the account record, a comment or reminder can be created. Notes can be saved to the account as a comment. Reminders can be created for follow-up items with a specific due date. Both comments and reminders are accessible to all users and can include attachments.

Searching for events can be done for an individual account or across a range of dates. Individual account information is easily exported to PDF. Events occurring during a specified timeframe can be filtered and exported to Excel.

Please contact Strunk Support at support@strunkaccess.com with any questions or to find out more about ODP Manager’s advanced event history tracking.

Tracking Charge-Off Items and Recoveries

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ODP Manager is updated daily, through the extract file import process, with the current information from the core processor; however, your users may benefit from some of the hosted software’s manual tracking features to monitor other data as well.

If your users need a better tool to manage the charge-off and recovery process after the deposit account has been closed, the Charge-Off Items and Recoveries feature included in ODP Manager may be helpful.

Once an account has charged off, you can create a charge-off item to track the charged off principal and fees. Notes can be added when the item is created or throughout the recovery process. Updates and changes are also logged. When recoveries are made, they should be entered in ODP Manager, reducing the overall balance tracked.

To monitor the overall status of charge-offs and recoveries, a summary screen displays basic charge-off information and status. By default, ODP Manager displays the Charge Off Items for the last year, but a different timeframe can be selected by specifying a start date and an end date. For reporting purposes, the charge-off item summary can be exported as a PDF.

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

Inform Your Customers About Their Regulation E Opt-In Options

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The Consent Form for Overdraft Services (A-9 form) provides your customer with the information they need to know about overdrafts and overdraft fees. In addition to serving as a disclosure of the appropriate information, it also facilitates a customer’s opt-in election by mail. Customers are also able to opt in over the phone, in person, or electronically.

When you include an account’s Reg E Opt-in election in the extract file imported into ODP Manager, ODP Manager can determine whether an account has already opted in or has not yet responded with a Reg E election. This means that your customers will receive the appropriate letter content based on their Regulation E Opt-in choice.

Strunk’s Welcome letter, Reinstatement letter, and Reg E Opt-In Followup letter templates make sure that your customers are aware of their options to opt in and that they know whether they already have the ATM and Everyday Debit Card transactions covered by their Overdraft Privilege limit.

The Welcome and Reinstatement letters sent when a limit is assigned or reinstated can include the Consent Form for Overdraft Services and can inform the customer of other options to opt in: by mail, online, in person, or by phone.

The ODP Manager software can identify which customers have not opted in and have an OD limit, in addition to other criteria. This allows you to communicate with these customers on an ongoing basis to send letters that explain the Reg E opt-in benefits and opt-in methods and that provide a consent form.

Strunk can also facilitate your customer’s online opt-in by creating a Reg E opt-in form and Reg E opt-out form that mirrors the content in your ODP Manager letters. You would then add links to these forms to your website.

Let ODP Manager expand your options to allow your customers to choose Overdraft Privilege coverage for ATM and everyday debit card transactions. Please contact Strunk Support at support@strunkaccess.com with any questions or for more details.

Simple and Efficient Management of the Fresh Start Loan Process using ODP Manager

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Fresh Start Loans can help customers resolve their overdrawn account status with up to four payments and can allow them to keep their checking account open. Fresh Start Loans are also a collection tool that can help financial institutions recover and collect on overdrawn accounts that might have otherwise charged off and been closed. Leveraging the tools included in ODP Manager can make managing the Fresh Start Loan process easier and more efficient.

A repayment schedule can be entered for each account with an approved Fresh Start Loan. It will include payment reminders that display when the FSL payment is due to remind your users to check if the payment has been made as agreed. Once verified, FSL payments can also be tracked in ODP Manager.

Instead of needing to create agreements outside of Strunk’s ODP Manager, the Fresh Start Loan Agreement document can be generated directly from the repayment schedule. In addition to generating the agreement from the repayment schedule, users also have an option to generate the agreement as an Ad Hoc letter.

If customers under a repayment schedule do not pay their Fresh Start Loan payments as agreed, the default close letter can be generated and tracked in ODP Manager as well. If any other Fresh Start Loan letters are needed for accounts in a repayment status, an Ad Hoc letter template can be created. By entering the deposit account number, ODP Manager will pre-fill the account information. After the letter is generated, it will be tracked and retained in ODP Manager just like the other Collection and Custom letters.

ODP Manager includes a report that lists all accounts currently under a Fresh Start Loan status. If details are needed about current repayment schedules, a Repayment Schedule summary report can also be exported to PDF or Excel.

Please contact Strunk Support at support@strunkaccess.com with any questions or for more details.

Top 10 Overdraft Program Questions

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Strunk offers overdraft privilege training to our clients to provide consistency on how the employees view the program and how the employees present the program to their consumers.  When providing training we will sometimes get questions on how to handle specific areas of the program. Here are the 10 most frequently asked questions during overdraft privilege training and the response to those questions.

1. Does a consumer have to opt in to have overdraft privilege on their account?

No, a consumer does not have to opt in to have the “standard overdraft practice” on their account.  The “standard overdraft practice” pay overdrafts for Checks, In-person withdrawals, ACH transactions, Pre-authorized automatic transfers, Automatic bill payments, Recurring debit card transactions, Internet banking transfers and telephone banking transactions.  A consumer only has to opt in to have their Everyday debit card transactions and their ATM transactions cover under the overdraft privilege program.

2. When does a financial institution have to take a consumer out of the overdraft privilege program for Excessive Use?

Never, financial institutions should never take a consumer out of the overdraft privilege program because they use it.  The key is not whether the account has had a lot of overdrafts, but rather, whether the account holder has made deposits sufficient to cover the overdrafts in a timely manner.

3. Does a consumer have to sign the Reg. E opt in form to have their debit card point of sale transactions and their ATM transactions covered?

No, a consumer only has to consent to have their debit card point of sale tractions and their ATM transactions covered under the overdraft privilege program.  The regulation provides for four methods to obtain an opt-in (consent): 1) by completing the form, 2) in person, 3) over the phone, and 4) electronically.  The financial institution should make the best possible use of all of these methods.

4. How can the financial institution differentiate between a recurring debit card transaction and a nonrecurring one?

Financial Institution must comply with the Reg. E rule if it adapts its system to identify debit card transactions as either onetime or recurring.  If it does so, the financial institution may rely on the transaction’s coding by merchants, other institutions, and other third parties as a one-time or preauthorized or recurring debit card transaction.

5. Do business accounts have to opt into Reg. E?

No, Reg. E is a consumer regulation.  Business accounts do not have to opt in to have their debit card or ATM transactions covered under the overdraft privilege program.

6. Does the Overdraft Privilege Joint guidance address the order in which charges are posted?

No, the Federal Register continues to assess whether additional regulatory action relating to overdraft services is needed, but nothing yet.

7. Do both parties have to opt into Reg. E on joint accounts?

If two or more consumers jointly hold an account, the financial institution must treat the affirmative consent of any of the joint consumers as affirmative consent for the account.  Similarly, the financial institution must treat a revocation of affirmative consent by any of the joint consumers as revocation of consent for that account.

8. Once a consumer pays back their Fresh Start Loan, can that consumer have their overdraft limit back?

Yes, once the consumers Fresh Start Loan is paid back in full and their account is in ‘good standings’, then their overdraft limit should be added back to their account.

 9. Can a consumer have more than 4 payments on their Fresh Start Loan?

No, a consumer can only have 4 monthly payments on their Fresh Start Loan. To qualify as incidental credit under Reg. B (for Reg. Z not to apply) and to avoid limitations under The Military Lending Act, the number of payments must be limited to 4 and no interest or fees are charged on the loan.

 10. Once an account is no longer suspended, when should that consumer get their overdraft limit back on their account?

Once a consumer account is in ‘good standing’ then that consumer should have an overdraft limit on their account.

Replace Manual ODP Letter Processes with Ad Hoc Letters

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ODP Manager uses the information from the daily extract file to create Collection letters to send to overdrawn accounts. The hosted software also generates Custom letters, for example, Welcome or Reinstatement letters, or letters confirming a Reg E Opt-In election.

In addition to Collection letters and Custom letters, ODP Manager also offers Ad Hoc letters. This letter type allows the flexibility to generate letters on an as-needed basis. 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 them set up as Ad Hoc letter templates in the ODP Manager software.

Ad Hoc letters don’t require specific account events as a trigger. When you need to generate the letter, just enter the account number and the letter will prefill with the information from the software. The letters will automatically populate with the customer name and address from the extract file. Other fields from the file can also be included. Letters can be generated one account at a time, or multiple account numbers at once. By replacing your manual ODP Letter processes with Ad Hoc letter templates, you may save time and you will also benefit from the letter tracking and retention in ODP Manager.

Please contact Strunk Support at support@strunkaccess.com with any questions or for more details.

ODP Manager Management Reporting Suite

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The hosted ODP Manager software includes a comprehensive and robust suite of key reports.  Daily users and management can both leverage these reports to ensure strong program performance and compliance.

Daily reports are used to review the addition and removal of overdraft limits on individual accounts. Account level detail is listed on the New Accounts and Overdraft Aging reports.

Monthly reports are focused on performance analysis and adequate reserves.

Use the Summary Report to monitor trends in your NSF and OD Fees and Refunds. Overdraft Detail reporting helps you assess the appropriate reserve for your overdrawn accounts. Utilization Analysis and Opt-In Impact reports allow you to monitor the percent of accounts with an overdraft limit and the percent of accounts opted in for Regulation E. This is very important for maintaining or improving your ODP program’s performance.

Quarterly/As Needed reports are used for less frequent reviews. Review accounts that did not qualify in prior reviews but now may meet your qualifying criteria using the Status Tracking and Heavy OD User reports. Additional reports allow you to review all your accounts with Fresh Start Loans or review the overall volume of letters that are generated in ODP Manager.

Your institution’s reports can be viewed and filtered on screen or exported and saved as Excel or PDF files. In addition to data from your most recent extract file, you are also able to access reports from your most recent seven As of Dates. If you reference past reports for additional analysis, Strunk can set up your reports to be automatically archived after each import.

Please contact Strunk Support at support@strunkaccess.com with any questions or for more details.

Customize Your ODP Manager Letter Templates

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Templates for all your necessary Collection and Custom letters are included with Strunk’s hosted ODP Manager software. We’ve provided the letter content for you but there are customizable letter template options to allow your letter appearance to be consistent with other letters sent by your institution.

Do you have a standard letterhead that is used for your customer communications? ODP Manager can save your header and footer information so you can print your letters on plain paper instead of letterhead.

Do you typically sign your letters? ODP Manager allows the flexibility to store signatures for each of your ODP Manager users. No more signing letters – the signature can print with your letter! A signature can be used for all letters, or the signature can change based on the user generating the letters.

Do your customers contact a central location to discuss the ODP Program information or do they contact their local branch? With the hosted software, letters can include a single contact number, or the included phone number can change based on the account’s branch. ODP Manager can even change contact names based on the account’s branch.

Take advantage of hosted ODP Manager’s flexibility to create letter templates specific to your institution. Please contact Strunk Support at support@strunkaccess.com with any questions or for more details.

The Prospect of Eliminating Overdraft Fees

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Ally Bank has recently made headlines announcing that it would no longer charge its customers overdraft fees. Ally is a popular online bank that offers one type of checking account and overdraft fees only accounted for less than .07% of Ally’s revenue in 2020.  Ally Bank typically excludes consumers that use overdraft protection to begin with; of their 2.5 million banking clients, only about 1% have been subject to overdraft charges in the past.

When a financial institution decides to eliminate overdraft protection to their account holders, how does that really affect the consumer? First, if the account holder writes a check for more than they have in their checking account then that check gets declined (the check bounces) and sent back to the payee who tried to cash the check.  Once the check is returned, the account holder is charged an NSF fee and most likely charged a return fee from the payee or the merchant.  After a check is returned, the payee or merchant might try to re-deposit/re-present the check to see if the customer has the funds available.  If the account holder does not have the funds available then they are charged another fee.  Without overdraft protection these types of transactions can be very expensive because the consumer will have to pay an NSF fee, return fee and most likely re-presentment fee as well.  Also, the account holder will be inconvenienced because the check did not clear, meaning the payee has still not been paid.  Ultimately, the consumer will have to deal with the embarrassment of having their item returned.  Secondly, if an account holder doesn’t have overdraft protection on their account then that account holder is not allowed to have their debit card covered under an overdraft program.  Most consumers enjoy the convenience of having their debit card approved for a transaction that may overdraw their account rather than having those transactions declined.

After reviewing banks that are offering no overdraft fees accounts, Strunk has found that most of these banks are just setting up automatic transfer from another account or a line of credit to cover the overdraft items.  Also, if a bank is offering no overdraft fees there are some restrictions you may need to consider on the account.  Some of the restrictions to the account could be that the account doesn’t offer checks.  The bank may impose higher minimum balances or direct deposit requirements to reduce the occurrence of a transaction being declined, and if the account holder does not have the required daily balance or required monthly deposit amount then there is usually a monthly maintenance fee on the account. Strunk recommends that your organization consider all of these situations when evaluating an account type without overdraft protection.

An independent certified public accountant has examined Strunk’s operations and found them to be in compliance with the AICPA’s Trust Service Principles. It was determined that Strunk meets the Security, Availability, Processing Integrity, Confidentiality, and Privacy criteria for SOC 2 established by the AICPA.