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Compliance When negative balance fees may be charged
WASHINGTON (1/15/10)--Changes to many financial institution business practices, including overdraft fees, have been all the rage in Congress lately, and this month’s Credit Union National Association (CUNA) Compliance Challenge addresses overdraft fees, asking if the newly proposed Regulation E overdraft rule allows credit unions to charge a negative balance fee when the member’s ATM/debit card overdraft leads to a negative balance for a long period of time. The Federal Reserve Board recently changed Reg E to require institutions to inform and to acquire the consent of account holders before they can charge overdraft fees for ATM and one-time debit card transactions. Consumers may revoke this consent at any time, and financial institutions must provide the same types of accounts to all members or customers, whether they choose to opt in or not. According to CUNA, the new Reg E rule does not change, whether you call the fee an “overdraft fee” or a “negative balance fee.” Any fee that results from an ATM/one-time debit card overdraft is covered by the regulation. Thus, credit unions will only be allowed to charge these types of fees for ATM and one-time debit card overdrafts, beginning on July 1st (or on August 15th for existing members) if the credit union member has been notified in writing of the overdraft service and fully opts-in to the service. The notification must disclose all overdraft fees, including per item fees, daily overdraft fees, and sustained overdraft fees, CUNA added. For the full Compliance Challenge, use the resource link.

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