CUNA Survey

CFPB Seeks Input on Overdraft Protection and Overdraft Privilege Programs

In order to assist members with protecting themselves against overdrafts, many credit unions offer a combination of Overdraft Protection and Overdraft Privilege programs for their checking accounts.

Questions #1 through #3, below, deal with “Overdraft Protection/Transfer” programs. For the purposes of this survey, please view this service as one in which an amount of money is transferred to the member’s checking account from the member’s own savings, money market, or other type of account.

Questions #4 through #10 deal with “Overdraft Privilege” programs – also sometimes referred to as “Courtesy Pay” or “Bounce Protection” programs. Please view this service as one in which the credit union’s own funds are used to cover the overdraft, and which often times carries a fee that is fairly consistent with those charged for NSF (non-sufficient funds) checks.

Overdraft Protection/Transfer Programs (see above for definition)

1. Which types of Overdraft Protection/Transfer programs, if any, does your credit union currently offer to its members? (Check all that apply.)

Link to savings account
Link to credit card
Link to money market account
Link to line of credit
Other (specify):
Do not offer this type of program (If not offered, please skip to Question 4a.)

2. What proportion of your credit union's checking users have established this type of program with you?
3. How are your members made aware of/informed of your Overdraft Protection/Transfer program(s)? (Check all that apply.)

Included with information/disclosures provided at account opening
Included on website
Staff informs members at account opening
Staff informs members when credit union is contacted regarding an overdraft that has occurred
Other (specify):
Members are not made aware of/informed of this program(s)

Overdraft Privilege Programs (see above for definition)
(If you do not offer Overdraft Privilege, please skip to Question 11.)

4a. Through which of the following options does your credit union give members the opportunity to be alerted to and avoid a transaction that would cause an overdraft fee? (Check all that apply.)
4b. How are your members made aware of/informed of the availability of this “alert” feature(s)? (Check all that apply.)

4c. What proportion of your credit union's checking users are using your “alert” feature(s)?
4d. In your view, what impact do such alert programs have on members' overdraft practices, particularly among those who are likely to incur overdraft fees?

5. When a member inquires about their account balance (whether over the phone or via the ATM), does the quoted account balance include "Overdraft Privilege" amounts, or does it simply represent the actual remaining dollar amount in the account?

The quoted balance includes Overdraft Privilege amounts
The quoted balance represents the actual remaining dollar amount in the account
Don't know

6. If your credit union offers electronic statements for checking (i.e., e-statements), please estimate what proportion of your e-statement users actually view their monthly checking statement every (or almost every) month.
7a. In what ways are your members informed of the rules and practices that determine which transactions will cause overdraft fees to be incurred? (Check all that apply.)

7b. Are you aware of any available research (conducted by your credit union or any outside entity) that documents members' perceptions regarding how transactions are processed, when overdrafts are incurred, and when related fees are charged?

Yes (If yes, please describe):
No

7c. In your opinion, what changes in your checking users' understanding of overdrafts have resulted from the changes that took effect with the Deposit Account Disclosure Regulation (Reg DD; i.e., transfer limits) in 2010?
7d. In your opinion, what changes in your checking users' overdraft frequency have resulted from the changes that took effect with the above regulation?

A much higher frequency of overdrafts
A somewhat higher frequency of overdrafts
Unchanged frequency of overdrafts
A somewhat lower frequency of overdrafts
A much lower frequency of overdrafts
Don't know

8a. Regulation E amendments which took effect on July 1, 2010 ("Reg E opt-in rule") mandated opt-in requirements for Overdraft Privilege with respect to one-time debit and ATM transactions. We recognize that your credit union may or may not offer this option for your members. However, for ACH and check transactions, does your credit union automatically enroll eligible members in Overdraft Privilege for these transactions?

Yes, we automatically enroll eligible members in Overdraft Privilege for ACH and check transactions
No, we do not automatically enroll eligible members, and do not allow members to opt-in to Overdraft Privilege for ACH or check transactions
No, we do not automatically enroll eligible members, but allow members to opt-in to Overdraft Privilege for ACH and check transactions
Other (specify):
Don't know

For Questions 8b through 8h, please answer only with respect to one-time debit transactions and ATM transactions covered by the Reg E opt-in rule. (If your credit union does not offer Overdraft Privilege for these types of transactions, please skip to Question 9a.)

8b. What proportion of your credit union's checking users that had opened their checking accounts before the July 1, 2010 implementation date of Regulation E ("Reg E opt-in rule") chose to opt-in to your Overdraft Privilege program?
8c. Compared to the opt-in rates among those members with checking accounts before implementation of the Reg E opt-in rule, what are your checking user opt-in rates among those who opened their accounts after implementation of the Reg E opt-in rule?

The opt-in rate is higher among those opening their accounts after implementation of the rule
The opt-in rate is about the same among those opening their accounts after implementation of the rule
The opt-in rate is lower among those opening their accounts after implementation of the rule

8d. What differences in your credit union's marketing and disclosures practices may be responsible for differences in opt-in rates in checking accounts opened before and those opened after implementation of the Reg E opt-in rule?

8e. Please estimate the opt-in rate since the July 1, 2010 implementation of the Reg E opt-in rule among your checking users in each of the following groups:

	All or almost all	Most	About half	Some	Very few or none	Don't know
Opt-in rate for checking users who rarely or never overdraft
Opt-in rate for checking users who occasionally overdraft
Opt-in rate for checking users who frequently overdraft

8f. How did the opt-in rates after implementation of the Reg E opt-in rule differ based upon average account balance or demographic characteristics, such as income, age, or education level?

8g. How do the frequencies of overdrafts among members who opted-in differ from those who did not opt-in?

Those who opted-in have overdrafts much more frequently than those who did not
Those who opted-in have overdrafts somewhat more frequently than those who did not
Those who opted-in have overdrafts about as frequently as those who did not
Those who opted-in have overdrafts somewhat less frequently than those who did not
Those who opted-in have overdrafts much less frequently than those who did not

8h. One of the reasons users opt-in to Overdraft Privilege programs is for the comfort of knowing an item will be covered if they inadvertently overdraw their account. Please estimate what proportion of your Overdraft Privilege users have opted-in for this or a similar reason.
9a. The CFPB is interested in learning how credit unions are conducting outreach to members who incur overdrafts repeatedly, what policies have been implemented to manage both the risks and needs such members may present, etc. What are some practices that your credit union has implemented to serve these types of members while still protecting your institutional safety?

9b. If your credit union has policies/procedures in place to address/work with members that over-utilize or abuse Overdraft Privilege, please tell us how you monitor for "excessive" usage, and how you define "excessive."

10a. Does your credit union's processing system separate different types of debit transactions (e.g., ATM and point-of-sale debit, ACH, check) and apply different rules to order transactions in discrete buckets?

Yes (If yes, please explain):
No (If no, please continue with Question 10b.)

10b. If not, what is the one, primary way your credit union currently groups and orders different types of transactions?
10c. How does your credit union disclose the ways in which it currently groups and orders transactions? (Check all that apply.)

11. What is your credit union's asset size?
Thank you for your efforts in responding.