IBA Compliance Connection

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If a customer is provided with an opt-in disclosure for our bank’s overdraft service at the time of account opening and does not opt in — then decides to opt in several months later — do we need to send a confirmation to the customer?

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Yes, Regulation E requires that a consumer be provided with confirmation of their consent to opt into a bank’s overdraft service, either in writing or, if the consumer agrees, electronically. Regulation E also provides that a consumer may opt into an institutions’ overdraft service “at any time.”

For resources related to our guidance, please see:

  • Regulation E, 12 CFR 1005.17(b)(1) (“Except as provided under paragraph (c) of this section, a financial institution holding a consumer’s account shall not assess a fee or charge on a consumer’s account for paying an ATM or one-time debit card transaction pursuant to the institution’s overdraft service, unless the institution: . . . (iv) Provides the consumer with confirmation of the consumer’s consent in writing, or if the consumer agrees, electronically, which includes a statement informing the consumer of the right to revoke such consent.”)
  • Regulation E, Official Interpretations, Paragraph 17(b), Comment 7 (“Confirmation. A financial institution may comply with the requirement in § 1005.17(b)(1)(iv) to provide confirmation of the consumer’s affirmative consent by mailing or delivering to the consumer a copy of the consumer’s completed opt-in notice, or by mailing or delivering a letter or notice to the consumer acknowledging that the consumer has elected to opt into the institution’s service. The confirmation, which must be provided in writing, or electronically if the consumer agrees, must include a statement informing the consumer of the right to revoke the opt-in at any time. See § 1005.17(d)(6), which permits institutions to include the revocation statement on the initial opt-in notice. An institution complies with the confirmation requirement if it has adopted reasonable procedures designed to ensure that overdraft fees are assessed only in connection with transactions paid after the confirmation has been mailed or delivered to the consumer.”)
  • Regulation E, 12 CFR 1005.17(f) (“A consumer may affirmatively consent to the financial institution’s overdraft service at any time in the manner described in the notice required by paragraph (b)(1)(i) of this section. A consumer may also revoke consent at any time in the manner made available to the consumer for providing consent. A financial institution must implement a consumer’s revocation of consent as soon as reasonably practicable.”)