December 2, 2009
Darren Craig On November 12, 2009, the Federal Reserve Board announced final rules prohibiting financial institutions from charging consumers overdraft fees on automated teller machine (“ATM”) and one-time debit card transactions, unless a consumer affirmatively consents to participate in the overdraft services provided for those types of transactions. The Board adopted those rules under the authority delegated to it by Electronic Fund Transfer Act, 15 U.S.C. §§ 1693–1693r. The rules amend 12 C.F.R. 205.12 and 205.17.

The final rules prohibit a financial institution from assessing any overdraft fee for providing an overdraft service for ATM and one-time debit card transactions unless the consumer opts in, or affirmatively consents, to the institution’s overdraft service for those types of transactions. The rules apply to all consumers, including existing account holders, and provide consumers with an ongoing right to revoke their consent.

Financial institutions may not tie the payment of overdrafts for checks and other transactions, such as automated clearing house (“ACH”) payments, to a consumer’s opting into overdraft service for ATM and one-time debit card transactions. Financial institutions must provide consumers who do not opt in with the same account terms, conditions, and features, including price, that it provides to consumers who do opt in.

The mandatory compliance date is July 1, 2010. The text of the new regulations, along with commentary and model forms, may be found on the Federal Reserve’s website at http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20091112a1.pdf