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From the Editors of CU Weekly

updated 08/29/14 11:44 AM
Full Disclosure is Key
The topic of overdraft fees persists as the Consumer Financial Protection Bureau (CFPB) continues to discuss whether rules governing overdraft and related services are warranted—changing the date for further pre-rule activities on overdraft programs to February 2015.

In the meantime, many consumers are still confused about overdraft as demonstrated by a Pew Charitable Trusts survey. It shows that 52 percent of consumers didn’t know how much they paid in total fees the last time their checking account had a negative balance.

John M. Floyd, chairman and CEO of John M. Floyd & Associates (JMFA), suggests now is the time to implement and maintain best practices to provide your members full-disclosure of how their overdraft protection plan works. This includes overdraft coverage opt-ins, overdraft coverage limits, transaction posting order, overdraft and insufficient funds fee structure, and involuntary account closures. Not only will it help protect members from fee burdens, but it will also ensure your credit union’s compliance.

As a preferred provider of 100 percent compliant overdraft or courtesy pay solutions for more than 25 years, JMFA offers fully-disclosed programs that implement the following program safeguards:

  • Reasonable, communicated fees
  • Clearly established overdraft limits
  • Transaction clearing policies that avoid maximizing account holder overdrafts and related fees created by the clearing order
  • The ability to easily monitor excessive usage
  • Communications materials that outline alternative financial products that more appropriately fit the needs of excessive overdraft users

According to Floyd “As the CFPB continues to consider its final ruling, many consumers will continue to need a solution for making ends meet from time to time; and they shouldn’t be left in the dark regarding how it works or how much it costs.”

For more information on JMFA, please contact Joyce King, manager of Credit Union Solutions and Membership, at 909-212-6023 or joycek@ccul.org.