Resources to Ensure Your Credit Union is Compliant with Overdraft

The CFPB recently released a new circular regarding improper overdraft opt-in practices. This circular reminded financial institutions of their obligation under Regulation E to retain records that prove the consumer consented to the institution's payment of ATM and one-time debit card transactions.

Credit unions are also required to provide the member with written confirmation of that authorization (after the opt-in) before charging any overdraft fees for those services.

The CFPB found that the institutions under its supervision were unable to show policies and procedures were being followed with respect to these requirements, and records were not maintained to prove consumers affirmatively consented to enroll in covered overdraft services.

With overdraft practices under scrutiny in general, it's a good time to review your credit union's program to make sure your processes are well documented and evidenced. Validate that you are properly maintaining your member's opt-in and can furnish the documentation and the written confirmation you are obligated to provide (yes, this can be electronically submitted). Make sure your policies and procedures are also well- documented and maintained.

There are several resources available to credit unions affiliated with the Association that can help ensure your program is comprehensive:

• InfoSight
  • ACH/Electronic Payments - Electronic Fund Transfers - Regulation E - Overdraft Fees for ATM and One-Time Debit Card Transactions
  • Accounts - Overdraft Payment Programs

• CU PolicyPro
  • Policy 7215 - Overdraft Protection
  • Policy 2615 - ATM or Debit Cards

If you need assistance accessing InfoSight or CU PolicyPro, please contact the Association's VP of Membership Engagement, Jordan Burroughs at [email protected]