Talking to members about Reg. E doesn’t have to be painful!

Do you know how your front line employees explain Reg E. options to members? If you don’t, I’d encourage you to sit on the other side of the desk and listen to how the options are presented. Your employees should be presenting your members’ options in a way that is clear, consistent, compliant and objective. There should be no bias in this conversation.

However, if your Reg. E opt-in rates are 90% or higher, or 10% or lower, it’s a pretty good sign that employee bias is a factor.

Here are the main issues I see while training front line team members on Reg. E:

• Employees don’t know what to say. I often hear: “I never know what I’m going to say ahead of time.” This generally leads to over-explaining and confusion for the member, along with the compliance risks that come with inconsistency.
• “I customize it for each member.” Shouldn’t everyone hear the same explanation in a polished, clear and compliant way?
• The employee’s tone and word selections show negative bias, as in these examples:
  • Over-stressing the standard overdraft fee: “It’s THIR-TY-FIVE DOL-LARS!!!”
  • “If you opt out, you can come in and see what is WRONG with your account and we can fix it before you get a bunch of BIG FEES.”

If you open accounts online, look at how much higher your opt-in rates likely are in that channel where there is no negative employee bias staring a new member in the face.

• Employees want to protect members from fees, so a common approach is, “You don’t want this, do you?”
• Body language and confidence of employees change when the subject comes up, which sends the message that they are uncomfortable with what is coming next.
• Presentations aren’t compliant. For example, for consumers that choose to opt-in, sometimes employees will tell them, “Now all of your transactions will be approved!” This is incorrect and potentially misleading.
• Employees use long, complicated examples or “parades of horribles” to explain options, which often confuses members or sways their decision. For example, “What if you’ve run out of gas on the side of the road when it’s freezing outside and you need to use your debit card to pay for gas to get home to feed your baby?!?”

When I ask front line employees what percentage of checking account holders overdraw their account at least once a year, most employees answer 80-90%! Why do they respond with such a high number? Because they primarily work with members in the branch who overdraw, so they assume the majority of all members overdraw!

When I tell front-line staff that, on average, 75% of accounts don’t overdraw a single time during a 12-month period, and that 60% of accounts never overdraw even over multiple years, they are shocked! It’s not surprising, then, that the front line employees are misinformed about their credit union’s true overdraft picture. Often, this tends to negatively bias the employees towards Reg. E, since they may equate it with unhappy or confused members. This misinformation is a primary reason why Regulation E training and education is so critical!

Having a member-focused Reg. E script that employees have practiced and memorized ensures that the approach is compliant, concise and easy to understand. Using the approach of empowering the member to select how the credit union should strive to handle a transaction that would overdraw the account ahead of time ensures satisfaction and loyalty.   Your script should include the following:

• Explain both options of opting-in and opting-out, and what could happen in each scenario. Also be sure to explain the possibility of fees, and make sure your delivery is neutral and factual.
• Explain that overdraft coverage is an optional service to the account holder, not a penalty! It’s up to them to weigh the pros and cons of opting in.
• Never promise to approve or authorize transactions if they opt in.   Opting in is simply authorizing the credit union to strive to pay the transaction consistent with the Joint Guidance on Overdraft Protection Programs (“Institutions should not represent that the payment of overdrafts is guaranteed or assured…”). If they have no available overdraft limit remaining, the transaction may not be approved even if they opted in.
• Build trust with members by asking members how the credit union could best serve them if this situation should arise.
• Let members know that they can change their selection at any time, since a decision to opt in today doesn’t mean the member couldn’t have a change of heart tomorrow.

Training your employees with a compliant, clear and neutral script ensures that your members will be empowered with accurate, comprehensive information to make the best decision for their needs. In the process, you will build your employees’ confidence, which in turn will improve their performance, productivity and the level of service they provide to your members.