• CFPB Unveils Prototype Overdraft Opt-In Forms
  • October 4, 2017 | Authors: Edward J. Levin; Lawrence D. Coppel; Marjorie A. Corwin; Christopher R. Rahl
  • Law Firm: Gordon Feinblatt LLC - Baltimore Office
  • Under the Consumer Financial Protection Bureau (CFPB) Electronic Fund Transfers Regulation E (Reg. E), consumers must specifically opt-in to have financial institutions pay ATM and one-time debit card transactions that would otherwise overdraw a consumer’s account (in order for the financial institution to assess an overdraft fee for the transaction). Reg. E provides a model disclosure and opt-in form that has been in use since 2010. The CFPB recently released the results of its study concerning consumers that frequently overdraw their deposit accounts. The CFPB concluded that consumers who frequently overdraw their deposit accounts are vulnerable and that those who opt-in to the payment of ATM and one-time debit card transactions pay about $450 more each year in overdraft fees than similar consumers who do not opt-in. The CFPB’s study questions whether the existing Reg. E opt-in form provides enough clarity concerning a consumer’s decision to opt-in for the payment of ATM and one-time debit card transactions. The CFPB published four prototype overdraft opt-in forms for public comment. The prototype forms use a tabular format, listing overdraft fees for various transaction types. The forms are designed to be easier for financial institutions to use and for consumers to understand the ramifications of deciding whether to opt-in to the payment of ATM and one-time debit card transactions. The CFPB is seeking public comment concerning the forms while certain financial institutions test them.