Most Consumers Will Opt In, Expert Predicts

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LAKE BLUFF, Ill.-A recent poll conducted by the National Foundation for Credit Counseling suggests more than 26% of Americans will opt-in to overdraft protection, but Mike Moebs believes the total will be more than 75% before year's end.

"Initially there will be a slight dip in overdraft revenue; about $5 billion will be lost among all financials in the third quarter," said Moebs, CEO of Moebs $ervices. "But in the fourth quarter we predict a $2-billion gain, which will result in a net loss of overdraft revenue of $3 billion for the year."

Moebs even sees overdraft revenue increasing in 2011, based on what he learned while working with two CUs and one bank that instituted opt-in programs.

The latest study from Javelin Strategy & Research (Credit Union Journal, Aug. 2), shows financials are already responding to Reg E and the resulting loss of overdraft revenue through "gotcha" fees and by positioning themselves as having the consumer's "back" using mobile services.

The gotcha fees — charges levied on consumers without any warning and no way for consumers to respond — are a big mistake, said Moebs, who advocates using mobile services to alert users of fees so that they can take action.

But what he favors most is using fees to incent consumer behaviors that reduce CUs' expenses, such as a fee on checking without direct deposit and e-statements. "Reg E signals a brand new world," concluded Moebs. "And this new world will be based on transparency and consent."

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