monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars insured financial institutions fund its operations. – FDIC press releases and other information are available on the Internet at , by subscription electronically (go to ) and may also be obtained through the FDIC's Public Information Center (877-275-3342 or 703-562-2200). PR-257-2010 Supplemental Information Background As highlighted by the FDIC's November 2008 institutions continue to of Bank Overdraft Programs, expand the types of overdraft payment programs provided to consumers. With changes in technology, the range of services and number of transactions potentially causing an overdraft has broadened to include not only paper checks, but also ATM machines, point-of-sale (POS) debit card use, preauthorized debits, telephonic fund transfers, and online banking transactions. Program participation has sometimes been based on automatic enrollment, and customers may not have fully understood the risks and potential costs involved. Overdraft fees can exceed the amount of the overdraft and can occur multiple times in a single banking day, depending on the type and amount of transactions and the transaction-clearing practices of the institution. For example, batch processing checks and clearing them from largest to smallest likely increases the number of items triggering an overdraft. Extremely high in relationship to the overdraft benefit and/or permitting product over-use often result in customer dissatisfaction and complaints. Serious financial harm can result for customers with a low or fixed income. Supervisory Expectations The FDIC expects institutions to implement effective compliance and risk management systems, policies, and procedures to ensure that institutions manage any overdraft payment programs in accordance with the attached 2005 (Joint (FIL-11-2005) and Joint Guidance on Overdraft Protection Programs Guidance) the Federal Reserve Board's (FRB) November 12, 2009 amendments to Regulation E, to avoid harming consumers or creating compliance, operational, financial, reputational or other risks. As changes are made in overdraft payment programs in response to regulatory developments or to implement additional recommendations, institutions are reminded to ensure that customer communications (e.g., agreements, correspondence, marketing materials, etc.) are updated accordingly, present information accurately and are not misleading.
monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars – insured financial institutions fund its operations. FDIC press releases and other information are available on the Internet at , by subscription electronically (go to ) and may also be obtained through the FDIC's Public Information Center (877-275-3342 or 703-562-2200). PR-257-2010 Supplemental Information Background As highlighted by the FDIC's November 2008 of Bank Overdraft Programs, institutions continue to expand the types of overdraft payment programs provided to consumers. With changes in technology, the range of services and number of transactions potentially causing an overdraft has broadened to include not only paper checks, but also ATM machines, point-of-sale (POS) debit card use, preauthorized debits, telephonic fund transfers, and online banking transactions. Program participation has sometimes been based on automatic enrollment, and customers may not have fully understood the risks and potential costs involved. Overdraft fees can exceed the amount of the overdraft and can occur multiple times in a single banking day, depending on the type and amount of transactions and the transaction-clearing practices of the institution. For example, batch processing checks and clearing them from largest to smallest likely increases the number of items triggering an overdraft. Extremely high in relationship to the overdraft benefit and/or permitting product over-use often result in customer dissatisfaction and complaints. Serious financial harm can result for customers with a low or fixed income. Supervisory Expectations The FDIC expects institutions to implement effective compliance and risk management systems, policies, and procedures to ensure that institutions manage any overdraft payment programs in accordance with the attached 2005 Joint Guidance on Overdraft Protection Programs (Joint Guidance) (FIL-11-2005) and the Federal Reserve Board's (FRB) November 12, 2009 amendments to Regulation E, to avoid harming consumers or creating compliance, operational, financial, reputational or other risks. As changes are made in overdraft payment programs in response to regulatory developments or to implement additional recommendations, institutions are reminded to ensure that customer communications (e.g., agreements, correspondence, marketing materials, etc.) are updated accordingly, present information accurately and are not misleading.
OverdraftHO2BK080416.docx