(a) Definition. For purposes of this section, the term “overdraft
service” means a service under which a financial institution assesses
a fee or charge on a consumer’s account held by the institution for
paying a transaction (including a check or other item) when the consumer
has insufficient or unavailable funds in the account. The term “overdraft
service” does not include any payment of overdrafts pursuant to—
(1) A line of credit subject
to the Federal Reserve Board’s Regulation Z (12 CFR part 226), including
transfers from a credit card account, home equity line of credit,
or overdraft line of credit;
(2) A service that transfers funds from
another account held individually or jointly by a consumer, such as
a savings account; or
(3) A line of credit or other transaction exempt from the Federal
Reserve Board’s Regulation Z (12 CFR part 226) pursuant to 12 CFR
226.3(d).
(b) Opt-in requirement.
(1) General. Except as provided under paragraph (c) of this section, a financial
institution holding a consumer’s account shall not assess a fee or
charge on a consumer’s account for paying an ATM or one-time debit
card transaction pursuant to the institution’s overdraft service,
unless the institution:
(i) Provides the consumer with a notice
in writing, or if the consumer agrees, electronically, segregated
from all other information, describing the institution’s overdraft
service;
(ii) Provides
a reasonable opportunity for the consumer to affirmatively consent,
or opt in, to the service for ATM and one-time debit card transactions;
(iii) Obtains the consumer’s
affirmative consent, or opt-in, to the institution’s payment of ATM
or one-time debit card transactions; and
(iv) Provides the consumer with confirmation
of the consumer’s consent in writing, or if the consumer agrees, electronically,
which includes a statement informing the consumer of the right to
revoke such consent.
(2) Conditioning
payment of other overdrafts on consumer’s affirmative consent. A financial institution shall not:
(i) Condition the payment
of any overdrafts for checks, ACH transactions, and other types of
transactions on the consumer affirmatively consenting to the institution’s
payment of ATM and one-time debit card transactions pursuant to the
institution’s overdraft service; or
(ii) Decline to pay checks, ACH transactions,
and other types of transactions that overdraw the consumer’s account
because the consumer has not affirmatively consented to the institution’s
overdraft service for ATM and one-time debit card transactions.
(3) Same account terms, conditions, and features. A financial institution shall provide to consumers who do not affirmatively
consent to the institution’s overdraft service for ATM and one-time
debit card transactions the same account terms, conditions, and features
that it provides to consumers who affirmatively consent, except for
the overdraft service for ATM and one-time debit card transactions.
(4) Exception to the notice and opt-in requirements. The requirements of section 205.17(b)(1) do not apply to an institution
that has a policy and practice of declining to authorize and pay any
ATM or one-time debit card transactions when the institution has a
reasonable belief at the time of the authorization request that the
consumer does not have sufficient funds available to cover the transaction.
Financial institutions may apply this exception on an account-by-account
basis.
(c) Timing.
(1) Existing
account holders. For accounts opened prior to July 1, 2010, the
financial institution must not assess any fees or charges on a consumer’s
account on or after August 15, 2010, for paying an ATM or one-time
debit card transaction pursuant to the overdraft service, unless the
institution has complied with section 205.17(b)(1) and obtained the
consumer’s affirmative consent.
(2) New account
holders. For accounts opened on or after July 1, 2010, the financial
institution must comply with section 205.17(b)(1) and obtain the consumer’s
affirmative consent before the institution assesses any fee or charge
on the consumer’s account for paying an ATM or one-time debit card
transaction pursuant to the institution’s overdraft service.
(d) Content and format. The notice required by paragraph (b)(1)(i) of this section shall
be substantially similar to Model Form A-9 set forth in Appendix A
of this part, include all applicable items in this paragraph, and
may not contain any information not specified in or otherwise permitted
by this paragraph.
(1) Overdraft
service. A brief description of the financial institution’s overdraft
service and the types of transactions for which a fee or charge for
paying an overdraft may be imposed, including ATM and one-time debit
card transactions.
(2) Fees imposed. The dollar amount
of any fees or charges assessed by the financial institution for paying
an ATM or one-time debit card transaction pursuant to the institution’s
overdraft service, including any daily or other overdraft fees. If
the amount of the fee is determined on the basis of the number of
times the consumer has overdrawn the account, the amount of the overdraft,
or other factors, the institution must disclose the maximum fee that
may be imposed.
(3) Limits on fees charged. The maximum number
of overdraft fees or charges that may be assessed per day, or, if
applicable, that there is no limit.
(4) Disclosure
of opt-in right. An explanation of the consumer’s right to affirmatively consent to
the financial institution’s payment of overdrafts for ATM and one-time
debit card transactions pursuant to the institution’s overdraft service,
including the methods by which the consumer may consent to the service;
and
(5) Alternative plans for covering overdrafts. If the institution offers a line of credit subject to the Board’s
Regulation Z (12 CFR part 226) or a service that transfers funds from
another account of the consumer held at the institution to cover overdrafts,
the institution must state that fact. An institution may, but is not
required to, list additional alternatives for the payment of overdrafts.
(6) Permitted modifications and additional content. If applicable, the institution may modify the content required by
section 205.17(d) to indicate that the consumer has the right to opt
into, or opt out of, the payment of overdrafts under the institution’s
overdraft service for other types of transactions, such as checks,
ACH transactions, or automatic bill payments; to provide a means for
the consumer to exercise this choice; and to disclose the associated
returned item fee and that additional merchant fees may apply. The
institution may also disclose the consumer’s right to revoke consent.
For notices provided to consumers who have opened accounts prior to
July 1, 2010, the financial institution may describe the institution’s
overdraft service with respect to ATM and one-time debit card transactions
with a statement such as “After August 15, 2010, we will not authorize
and pay overdrafts for the following types of transactions unless
you ask us to (see below).”
(e) Joint relationships. If two or more consumers
jointly hold an account, the financial institution shall treat the
affirmative consent of any of the joint consumers as affirmative consent
for that account. Similarly, the financial institution shall treat
a revocation of affirmative consent by any of the joint consumers
as revocation of consent for that account.
(f) Continuing right to opt in or to revoke the
opt-in. A consumer may affirmatively consent to the financial
institution’s overdraft service at any time in the manner described
in the notice required by paragraph (b)(1)(i) of this section. A consumer
may also revoke consent at any time in the manner made available to
the consumer for providing consent. A financial institution must implement
a consumer’s revocation of consent as soon as reasonably practicable.
(g) Duration and revocation
of opt-in. A consumer’s affirmative consent to the institution’s
overdraft service is effective until revoked by the consumer, or unless
the financial institution terminates the service.
