On Aug. 4, the Consumer Financial Protection Bureau revealed new Know Before You Owe prototypes of overdraft disclosures designed to better explain a financial institution’s overdraft fees and the risks to consumers in opting into coverage (and fees) for ATM and one-time debit card transactions. The CFPB had found that most consumers who frequently overdraft, are financially vulnerable and the CFPB had begun testing four prototypes designed to help consumers better understand the consequences of the opt-in decision. Currently, the Regulation E disclosure form A-9 is used to inform consumers of their financial institution’s overdraft fee policies and consumers’ option to have overdraft coverage and fees extend to transactions at ATMs and one-time debit card transactions.
“This will give institutions a good idea of where the CFPB is looking to go with future overdraft disclosures and rules,” said Jeff Kelly, vice president of governance, risk and compliance at OnCourse Learning. “It’s a great way to provide additional detail to consumers in helping them to best understand the potential costs and benefits to overdraft programs.”
The CFPB is soliciting public comments and if any of the prototypes are adopted, the existing model disclosure document would be replaced. In the meantime, the current form must be used.