Disclosures are key in overdraft protection litigation

Good morning folks.  With everyone seemingly so happy that Tiger Woods won his first tournament in five years yesterday, I could ponder what it is about this country that makes us love seeing people strive to succeed; take perverse pleasure in seeing people fall once they succeed; and ultimately take pride in watching them succeed yet again.  But, alas, this is not why you read my blog.

Instead, you read my blog to help get a heads up on some of the issues that are either confronting your credit union or might be in the near future.  Overdraft opt-in litigation certainly falls into this category, but I am not sure exactly why.  Here’s why I am confused:

First, no one disputes that members have to affirmatively opt in to receive overdraft protections on their debit card transactions.  Second, no one disputes that for purposes of calculating a person’s balance there are two common approaches a financial institution can use.  First, they can calculate based on all the funds in a person’s account when a debit transaction is made.  This is called a ledger balance.  Or, they can calculate using an available funds method, which subtracts from a member’s account funds, which include payments that have not yet been drawn but are committed, such as account holds placed by hotels for incidental uses.


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