Yes, we believe that you may charge off the account right away. The Joint Agency Guidance on Overdraft Protection Programs states that “overdraft balances should generally be charged off when considered uncollectible, but no later than 60 days from the date first overdrawn.” In other words, the longest you can wait to charge off an overdrawn balance is 60 days, but you may charge it off as soon as you determine that it is uncollectible. The Guidance does not clarify when an overdraft balance is “uncollectible.” However, in our view, you may base your determination that it is uncollectible on the fact that the overdraft was the result of suspected fraud.

For resources related to our guidance, please see:

• Joint Agency Guidance on Overdraft Protection Programs: 70 Fed. Reg. 9127, 9129 (February 24, 2005) (“Institutions also are expected to incorporate prudent risk management practices related to account repayment and suspension of overdraft protection services. These include the establishment of specific timeframes for when consumers must pay off their overdraft balances. For example, there should be established procedures for the suspension of overdraft services when the account holder no longer meets the eligibility criteria (such as when the account holder has declared bankruptcy or defaulted on another loan at the bank) as well as for when there is a lack of repayment of an overdraft. In addition, overdraft balances should generally be charged off when considered uncollectible, but no later than 60 days from the date first overdrawn. In some cases, an institution may allow a consumer to cover an overdraft through an extended repayment plan when the consumer is unable to bring the account to a positive balance within the required time frames. The existence of the repayment plan, however, would not extend the charge-off determination period beyond 60 days (or shorter period if applicable) as measured from the date of the overdraft. Any payments received after the account is charged off (up to the amount charged off against allowance) should be reported as a recovery.”)