Bank Customers Must Take Action To Continue Overdraft Protection

Texas community bankers are alerting customers of an important federal rule change that will prevent authorization of courtesy overdraft protection for ATM and everyday debit transactions unless positive action is taken by the accountholder.Members of the Independent Bankers Association of Texas (IBAT) are conducting an informational campaign alerting customers that they must take affirmative action to continue to receive the coverage before the federal rule becomes effective Aug. 14.AUSTIN — Texas community bankers are alerting customers of an important federal rule change that will prevent authorization of courtesy overdraft protection for ATM and everyday debit transactions unless positive action is taken by the accountholder.Members of the Independent Bankers Association of Texas (IBAT) are conducting an informational campaign alerting customers that they must take affirmative action to continue to receive the coverage before the federal rule becomes effective Aug. 14.

Members of the Independent Bankers Association of Texas (IBAT) are conducting an informational campaign alerting customers that they must take affirmative action to continue to receive the coverage before the federal rule becomes effective Aug. 14.

Accountholders at banks with courtesy overdraft protection will receive a notice disclosing the fees and terms associated with their bank’s courtesy overdraft program. Customers who fail to opt in will not receive courtesy overdraft protection for ATM and debit card transactions, but will otherwise receive the same account terms, conditions and features provided to consumers who do opt in. Customers can change their mind at any time and revoke their opt-in or choose to opt in later.

“The rule is very specific, mandating that a customer must opt in by phone, email, in person or by mail,” IBAT President/CEO Christopher Williston said. “It will inhibit a bank from authorizing, paying or charging on most courtesy overdrafts unless the customer has consented to pay the fee and written confirmation has been sent by the bank by mail or electronically.”

The only things not affected by the new rules will be courtesy overdraft protection for automatic bill payments, checks and other transactions using a customer’s checking account number, and overdraft lines of credit or a checking account linked to a savings account.

“We hope that this informational campaign by our members across 700 Texas communities will result in a positive response from consumers and avoid any unexpected embarrassment for a debit card user being refused service because they forgot to opt in,” Williston said.

Why you need to opt in to overdraft protection:

If the accountholders in either of these scenarios had opted in, the transactions probably would have been authorized. However, soon these—and similar scenarios—will repeat themselves over and over again across the country.

    • Your son is driving home from college for the weekend and stops for gas. When he swipes his debit card at a gas pump, it is denied because his account is overdrawn. He can try the service station’s ATM machine, but it will be denied also. When he calls home, pretty much all you can do is tell him that you will be there as soon as you can, and to call 9-1-1 if he feels threatened.    

    • A young mother just endured two hours of shopping for clothes and groceries with her three small children at the Supercenter. Her cart is overflowing and her nerves are shot. She unloads the cart and the associate rings up the total—$437.89. While herding kids, she searches her purse, finds her debit card, and swipes it. It is denied three times because her paycheck isn’t deposited until tomorrow. She pulls out her checkbook, but the store will not take her check because they suspect she doesn’t have money in her account. Frustrated, she rounds up the kids and heads for the door, knowing that she’ll have to do this all over again tomorrow.