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CUNA warns of opt-out rule burdens
WASHINGTON (7/22/08)—The Credit Union National Association (CUNA) endorsed the idea behind a Federal Reserve Board plan that would allow consumers to “opt out” of overdraft protection plans, but strongly opposed forcing financial institutions to give notice of opt-out rights to consumers in any periodic statement period in which the service is used. The repeated opt-out notices would be too burdensome for credit unions, with very little benefit for consumers, CUNA said in a comment letter sent to the Fed late last week. CUNA also believes that the proposed opt-out notice requirements should not apply at all to credit unions or other financial institutions that currently use an “opt-in” approach in which consumers affirmatively choose to enroll in these plans. “Under this approach, consumers have clearly expressed their intentions, and it is simply unnecessary to provide them with additional notices of their right to opt-out of a service in which they voluntarily elected to participate,” wrote CUNA Senior Assistant General Counsel Jeffrey Bloch. The Fed’s proposed rule to amend Regulation DD, the Truth in Savings Act, if adopted, would not apply directly to credit unions. However, the National Credit Union Administration is required to adopt substantially similar rules for federal credit unions. Also, the Fed, NCUA and Office of Thrift Supervision worked jointly on related proposed rules for unfair and deceptive practices. CUNA also will be submitting a comprehensive comment letter on this to the NCUA. “Because this (RegDD) proposal is intended to complement and be consistent with the proposal recently published by NCUA, the Board, and the OTS that addresses unfair and deceptive practices as they pertain to credit cards and overdraft protection plans, we strongly believe that the effective date of these proposals should be the same,” the CUNA letter recommended. “Furthermore,” it added, “mandatory compliance should not be required until at least two years after these rules are finalized since they are intertwined with several comprehensive proposals that will amend the Regulation Z open-end credit rules.” To read more on CUNA’s comments, use the resource link below.


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