Answer:
There are a few changes that all financial institutions, even those that don't offer ODP or Courtesy Overdraft Protection, need to make in order to comply with the revisions to the Truth in Savings regulations (12 CFR Parts 230 and 707), compliance with which is mandatory as of 7/1/2006 (most depository institutions) or 10/1/2006 (credit unions). Providing separate labels for fees imposed when items are paid into overdraft and for fees for returning checks is one of those changes. References that follow are to Part 230; substitute "707" if you're at a credit union.
The regulation itself doesn't make this plain. In section 230.6(a)(3) we see a general statement about fees reflected on periodic statements:
"The fees shall be itemized by type and dollar amounts. Except as provided in Section 230.11(a)(1) of this part, when fees of the same type are imposed more than once in a statement period, a depository institution may itemize each fee separately or group the fees together and disclose a total dollar amount for all fees of that type."
The regulation, however, doesn't tell the full story. Next, look at the Interpretations of the regulation (often referred to as the Commentary) in Supplement I, and we find, under section 230.6(a)(3): "2. Itemizing fees by type. In itemizing fees imposed more than once in the period, institutions may group fees if they are the same type. (See Section 230.11(a)(1) of this part regarding certain fees that are required to be grouped when an institution promotes the payment of overdrafts.) When fees of the same type are grouped together, the description must make clear that the dollar figure represents more than a single fee, for example, “total fees for checks written this period.” Examples of fees that may not be grouped together are:
i. monthly maintenance and excess-activity fees
ii. “transfer” fees, if different dollar amounts are imposed— such as $.50 for deposits and $1.00 for withdrawals
iii. fees for electronic fund transfers and fees for other services, such as balance-inquiry or maintenance fees
iv. fees for paying overdrafts and fees for returning checks or other items unpaid."
According to the Interpretation of the section, fees for paying overdrafts and fees for returning checks or other items unpaid cannot be combined, and the inference is that they are not considered to be fees of the same type. For those who aren't willing to make that inference, we then look at the information that accompanied the publication of the amendments to Regulation DD (12 CFR Part 230) in the Federal Register on May 24, 2005. In that text, which reflects the view of the Fed staff of the amendments, we find, on page 29589 of the Federal Register --
"Institutions that do not promote the payment of overdrafts and have merely automated their traditional practice of paying overdrafts on an ad hoc basis are not covered by Section 230.11(a)(1). These institutions may continue to itemize fees on periodic statements but whether they itemize fees or group them together by type, institutions must distinguish between fees for paying overdrafts and fees for returning unpaid items." [Emphasis added]
Show your vendor the Federal Register document with the quote above highlighted. Document the fact that you've done that in an effort to comply with the amended regulation. When your vendor gets its changes to comply completed, have your decisions made about how you'll describe the two separate fees, and quickly get the changes implemented. While I can't guarantee that examiners won't cite your institution for failure to get this change made on time, I believe that they are aware of some of the challenges that institutions are facing in making this change.
First published on BankersOnline.com 7/31/06
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