Filed under: accounts, credit unions, Truth in Savings Act | Tags: credit unions, overdraft services, Proposed Rule, Truth in Savings
There have been rumblings for quite some time about more regulation on overdraft services. Consumer advocates have been lobbying for change because they believe that “overdraft transactions are a high cost form of lending that traps low and moderate income consumers.” See Truth in Savings Proposed Rule. Federal Register Vol. 73, No. 97 at 28740. These advocates also worry about “debit card overdrafts where the dollar amount of the fee may far exceed the dollar amount of the overdraft, and multiple fees may be assessed in a single day for a series of small-dollar transactions.” Id.
Arguably, these overdraft services also keep consumers away from check cashing companies and keep them in traditional financial services with overall lower costs. However, examples such as the consumer who buys a pack of chewing gum with a debit card and is hit with a $20.00 fee for the transaction don’t help. Especially when, prior to overdraft services attaching to the account, the same purchase would simply have been denied without a fee.
Overdraft services are popular with credit unions and I would argue that credit unions are not among the primary abusers of extensive fees tied to these programs. Yet, the proposed changes to Truth in Savings are targeted at all financial institutions that offer the programs.
Highlights of the rule include setting requirements for notices to be given to consumers concerning opt-out rights, disclosure of overdraft service costs on statements and separating out balance inquiries to show funds available with and without the overdraft service.
Consumers can opt out of overdraft services now. The proposed rule would require financial institutions to provide the notice of this at various points prior to assessing fees to the consumer. Currently, giving the consumer specific costs of overdraft services in the consumer’s statement is reserved for financial institutions that advertise overdraft protection. This rule would eliminate that exception. The problem for credit unions is that some data processors still can’t comply with these requirements. ATM processors would face similar hurdles on ATM balance printing.
The comment period ends July 18, 2008. We’re slated to discuss this proposed rule (among other things) on CIiCU this month as well.
Rob Rutkowski will be teaming up with the Alabama Credit Union League on May 22, 2008 in Birmingham, AL to present a seminar on “Credit Union Accounts”, “Compliance” and “Identity Theft”. This seminar will cover various types of saving and share draft accounts, a review of non-personal accounts, and operations for account ownership. The seminar will also cover issues surrounding trust accounts, how to properly set up accounts, deposit account regulations including the Truth in Savings Act, handling accounts after the owner’s death and processes for handling abandoned property. Finally, Rob will cover various issues surrounding identity theft and will talk about how credit unions can protect their members’ sensitive information. If you are interested in attending this seminar, please visit this page: http://www.acul.com/portal/page/portal/ACUL/edusvc/calendar/ACUL%20CALENDAR%20CONTENT/Front%20Line%20Teller%20Boot%20Camp.pdf
Filed under: credit unions, disaster recovery, opinion, PCUA, pictures | Tags: convention, PCUA, Randy Gilson, Union Station
I’m back from Pittsburgh where we exhibited at the PCUA convention. Here is a picture of Ben Bibler and Dawn Pagon at the booth.
If you remember walking through the exhibition hall and seeing a guy in a suit juggling periodically, that was me. We exhibited on Thursday and Friday and I stayed through Saturday. On Saturday, I gave two 90-minute Disaster Recovery presentations. These seemed to be well received.
I have to say, that I enjoyed staying at the Westin Convention Center. I had a nice view of Union Station outside my hotel window. Here’s a picture.
My partner at our law firm, Jim Valecko, has a picture of what Union Station looked like when it was still being used primarily as a train station. It is much cleaner now, in fact it is quite beautiful.
I also have to mention that it was a pleasure meeting Randy Gilson. Mr. Gilson is a waiter at one of the restaurants at the Westin. However he is also a one-man urban renewal project. He has created Randyland which is his vision of reusing and recycling and revitalizing part of the city. He impressed me as an energetic and rather extraordinary individual.
It is always great to work with the PCUA and this trip turned out to be no exception.