My Question is related to how other Banks handle their internal collection for negative deposit accounts. I am curious as to what steps you take when an account goes into the negative (if any at all). I understand that most customers are able to repay before any action is taken. But for those who do how do you tackle? Do you just send Letters? Or do you do both letters and phone calls?

There are a few different processes followed, depending on how significant the overdraft is. One of our more common scenarios is improper authorizations leading to OD. I assume most are familiar, but for the sake of clarity... We're talking about things like Hertz getting an auth for $200 (which is approved because the balance is $250), and then the customer crashes the car, so Hertz decides to clear the auth for $2,000, resulting in the account balance going to -$1,750. In that case, we wouldn't even contact the CH. We would just process an authorization chargeback for $1,800.

In instances where the CH authorized the charges the caused the OD, there's minimal collection efforts made until it has been 30 or 60 days (depending on amount).

Last is something like a bust-out, where it appears the customer has done it intentionally (such as a bad deposit to inflate the balance). Those are handled by a separate fraud team, and I'm not familiar with what all their process entails.

Thanks for the Reply: (Edited)

So, what happens if the customer continues to use their checking account and max out the OD and as a result now has NSF fees for each transaction that is not covered bringing them further in the negative? We send letters, but the customer fails to respond to such letters to bring account current. No calls are made to attempt to collect the balance owed. We use CheckSystem to report on these customers.

How would you handle before the final charge off, would you continue to just send the letters up to that point, or would you make call to try to contact the customer in efforts to collect and to put on a payment plan before making the decision to Charge off and close the accounts?