Regulatory Alerts2003-02-14
Risks of Overdraft Protection Programs
The Office of Financial Institutions, citing an OCC advisory opinion, outlines federal and state compliance requirements for financial institutions offering overdraft protection programs. Institutions must secure written agreements, provide clear ATM balance disclosures, apply consistent eligibility standards, and proactively notify customers to avoid violations of Regulation Z, the Truth in Savings Act, and state consumer credit laws. Examiners will evaluate program administration, complaint handling, and risk management policies to ensure fair practices and mitigate reputational, credit, and liquidity exposures.
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