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WASHINGTON - The credit union lobby, which is fighting legislative proposals to require opt-in on overdraft protection programs, criticized rules adopted by the Federal Reserve yesterday that will require opt-in for debit card and ATM transactions.
CUNA, which had urged that opt-in apply only to new members, said the new rules will cause compliance problems at credit unions. "It is disappointing more consideration was not given to the compliance costs associated with this mandate," said CUNA President Dan Mica in a prepared statement.
"Most aspects of the change," said NAFCU President Fred Becker, "while well-intentioned, fail to consider credit unions' unique, not-for-profit status and challenges the ability of credit unions to continue to provide members with the competitive rates, low fees and great service they have come to expect."
Under the new rules, consumers must be given a notice that explains debit card policies, including fees. Without express permission from the consumer, the card issuer cannot charge for overdrafts at retail stores or ATMs The disclosures are required to be made in simple and easy to understand notices that customers should soon be receiving. The opt-in, however, will not apply to checking because consumer studies showed that bank customers are more likely to accept such fees since checks are more typically used for more essential purchases. Nor will they cover overdrafts from recurring debit card transactions, such as to pay for utility or telephone bills that are set up in advance.
Adoption of the new rules comes as Congress is debating legislation that would require opt-in for all overdraft programs and set limits on the number and amount of fees that could be charged.
"The final overdraft rules represent an important step forward in consumer protection," the Federal Reserve chairman, Ben Bernanke, said. "Both new and existing account holders will be able to make informed decisions about whether to sign up for an overdraft service."
The new rules will take effect for new cards on July 1. For existing accounts, issuers will not be able to charge overdraft fees without the permission of the cardholder after Aug. 15.
