Regulation E
12 CFR Part 205 Docket No. R-1377
Electronic Fund Transfers
The Board is amending Regulation E, which implements the Electronic Fund Transfer Act, and the official staff commentary to the regulation, which interprets the requirements of Regulation E. The final rule restricts a person’s ability to impose dormancy, inactivity, or service fees for certain prepaid products, primarily gift cards. The final rule also, among other things, generally prohibits the sale or issuance of such products if they have an expiration date of less than five years. The amendments implement statutory requirements set forth in the Credit Card Accountability Responsibility and Disclosure Act of 2009.
Dates: The final rule will become effective on August 22, 2010.
Regulation DD and Regulation Z
Regulation Z; Docket No. R–1370
Federal Reserve Releases Online Publication on New Overdraft Rules for Debit and ATM Cards
The Federal Reserve Board has announced a new online publication, What You Need to Know: New Overdraft Rules for Debit and ATM Cards, that will help consumers better understand rules that provide additional protection when a debit card or automated teller machine (ATM) transaction causes an account to be overdrawn.
The publication provides an explanation of how the rules will affect existing and new account holders. It contains basic information about types and typical costs of overdraft services and defines common terms consumers may encounter in communications from their bank about overdrafts.
On February 22nd, 2010 The Federal Reserve Board released a publication prohibiting financial institutions from charging overdraft fees for ATM and one-time debit card transactions unless a consumer consents, or opts in, to the overdraft service for those types of transactions.
Under the Board's rules, financial institutions must provide consumers a notice that explains the financial institution's overdraft services, including the fees associated with the service, and the consumer's choices.
The rules give debit and ATM card user’s additional options regarding overdrafts. In July/August 2010 banks, credit unions, and other financial institutions must offer consumers the ability to make decisions about overdrafts for transactions made with their debit or ATM cards.
In the past, some banks automatically enrolled consumers in their standard overdraft practices for all types of transactions when they opened an account. Under the new rules, banks must first get consumers permission to apply its standard overdraft practices to everyday debit card and ATM transactions before consumers can be charged overdraft fees. To grant this permission, consumers will need to respond to the notice and opt in (agree).
Rules for Existing accounts
If existing consumers do not opt in (agree), beginning August 15, 2010, the bank's standard overdraft practices won't apply to consumers’ everyday debit card and ATM transactions. These transactions typically would be declined when consumers don't have enough money in their account, but consumers will not be charged overdraft fees.
Rules for New accounts
If consumers open a new account on or after July 1, 2010, the bank cannot charge consumers’ overdraft fees for everyday debit card and ATM transactions unless consumers opt in. If consumers open a new account before July 1, 2010, the bank will treat consumers as an existing account holder: consumers will receive a notice about the bank's standard overdraft practices and will have to decide if they want them for everyday debit card and ATM transactions.
Checks and automatic bill payments
The new rules do not cover checks or automatic bill payments that consumers may have set up for paying bills such as your mortgage, rent, or utilities. The bank may still automatically enroll consumers in their standard overdraft practices for these types of transactions.
Dates: The final rule will become effective on July 1, 2010.