ABA, Associations Urge CFPB to Rescind Circular On Overdraft Opt-in Procedures

The Honorable Rohit Chopra
Director
Consumer Financial Protection Bureau
1700 G Street, NW
Washington, DC 20552

The American Bankers Association and five other industry associations urged the Consumer Financial Protection Bureau to rescind its Sept. 17 circular that imposes new expectations on banks with respect to their practices for recording and retaining their customers’ “opt-in” to the institution’s overdraft program for one-time point-of-sale debit card purchases and ATM transactions.

The circular — intended for regulators with authority to enforce federal consumer protection laws — deviates significantly from the overdraft rules issued by the Federal Reserve in 2009 and 2010, the associations said. Those rules ensured bank customers received a consumer-tested disclosure and written confirmation of the customer’s opt-in decision prior to being charged an overdraft fee. The Fed did not impose specific requirements for the form of record that a customer must use to opt-in to overdraft for these transactions — or for how the institution must memorialize that opt-in in its system.

The circular lists “examples” of how it expects institutions to record the customer’s opt-in, including retaining the recording of the phone call during which the customer opted in or a copy of the form signed by the customer (if the customer opted in in person or by mail).

“The bureau can point to no provision in Regulation E (or elsewhere) to provide support for these new requirements,” the associations said. “The bureau’s new interpretation of Regulation E removes institutions’ flexibility in recording and retaining customer’s opt-ins and replaces that flexibility with the prescriptive requirements described above."

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