Overdraft Protection: Members affirmative consent and opt-in confirmation

An “overdraft service” as defined by Regulation E is a “service under which a financial institution assesses a fee or charge on a consumer’s account held by the institution for paying a transaction (including a check or other item) when the consumer has insufficient or unavailable funds in the account.” See, 12 CFR §1005.17 (a). For any courtesy pay or overdraft protection offered for ATM and one-time debit card transactions, Regulation E requires disclosures and the member’s affirmative consent (opt-in) to coverage for those transactions and the associated fee. See, 12 CFR §1005.17 (b). But, what constitutes affirmative consent and how is such consent confirmed?  Let’s go over the relevant provisions.

Affirmative Consent

Under Regulation E, when it comes to obtaining a member’s affirmative consent, credit unions are allowed to obtain consumers’ affirmative consent by in person, by mail, through electronic means and by telephone.

Even though the term “affirmative consent” per se is not defined in the regulation, it contains provisions related to consumers reasonable opportunity to provide such affirmative consent. The commentary to section 1007.17(b)-4 explains a credit union provide consumers with a reasonable opportunity to provide affirmative consent when “it provides reasonable methods by which the consumer may affirmatively consent.” Depending on the means the credit union utilizes to obtain affirmative consent, the methods utilized vary. However, regardless of the method, credit unions are required by the Regulation to comply with the disclosure requirements under section 1005.17 (b)(1). A credit union provides such reasonable methods if:


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