Answer:
First, I want to define our terms, not to criticize your question, but to
make sure we are talking about the same things. For the purpose of the webinar,
and in agreement with the regulators’ terminology, an overdraft or “OD” fee is
charged when a transaction is paid, and it overdraws the account (or makes an
existing overdraft balance worse – more overdrawn). An Insufficient Funds or
“NSF” fee is charged when an item presented for payment against an account is
not paid because the account is either already overdrawn, or the balance in the
account is insufficient to pay the item. The “NSF” fee is sometimes referred to as
a “fee for the return of a check unpaid.”
Accordingly, because once an ATM or debit card transaction is authorized you
cannot return it unpaid, you would not charge an NSF fee, but you might charge
an OD fee.
If your bank has properly complied with section 1005.17 of Regulation E,
received a consumer’s consent for overdraft service (and fees) for card-related
transactions, and completed all four steps of the consent procedure, you may
charge an OD fee. But if you failed in any respect to complete the authorization
procedures in section 1005.17, or the consumer has not opted in to overdraft
service for ATM and one-time debit card transactions, you are not permitted to
impose the fee, and if you do, you could be cited by your regulator for violating
Regulation E and for a UDA(A)P violation.
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