I currently have been reviewing our overdraft practices during a UDAAP compliance review, and one of our practices caught my attention in respect to Reg DD.
We have customers who have an Overdraft Line of Credit, used in a typical fashion to cover overdrafts versus using our courtesy service.

My concern is that I noticed that our core system parameters are set to include the customer’s available credit amount into their available balance. So, if the customer logs into online banking or uses phone banking, their current balance will be whatever it is, but their available balance will be padded with the additional available credit amount. For example, the customer may have a $2,000 current balance and $1,000 available on their ODLOC. They would see current balance of $2,000, and $3,000 available. This is only the case with our ODLOC product and is not the case with our courtesy or sweep products.

I am referencing 12 CFR 1030.11(c), which states:
Disclosure of account balances. If an institution discloses balance information to a consumer through an automated system, the balance may not include additional amounts that the institution may provide to cover an item when there are insufficient or unavailable funds in the consumer’s account, whether under a service provided in its discretion, a service subject to the Board’s Regulation Z (12 CFR part 226), or a service to transfer funds from another account of the consumer. The institution may, at its option, disclose additional account balances that include such additional amounts, if the institution prominently states that any such balance includes such additional amounts and, if applicable, that additional amounts are not available for all transactions.

I suppose my real concern is with displaying this amount at the ATM terminal and on receipts. I am almost certain we do not indicate that the available balance includes the available credit from the customer’s ODLOC. My thoughts are that this should be turned off – still give the customer access to the line to cover the overdrafts, but don’t display it as part of the available balance.

I concur with you.

In harmony with that. And include your web banking portal as an automated system through which balances may be obtained, too. And while you're at it, check any telephone banking service.

As always, thank you to you both.

Furthering this discussion: Am I correct that providing a padded balance which includes available credit from an overdraft line of credit are not subject to the advertising requirements (1030.11(b)) but are subject to the balance requirements of 1030.11(c))?

In other words, if we only padded balances for customers with overdraft lines of credit, we would only need to disclose based on 1030.11(c) and not 1030.11(b). We would; however, need to disclose for both if the padded balance included amounts from a courtesy OD program?