Insiders and Overdrafts

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Question:

An executive officer has a debit card transaction that has caused an overdraft. As to Reg O, we would pay and charge the fee. But as to Reg E he has opted out which means we would pay the item and not charge the fee. I don't know which Reg takes precedence. The account is overdrawn less than $100.

Answer:

Your insider is a consumer and is entitled to all the rights that a consumer has under federal and state law and regulations.
So, since he has opted out of (or never opted in to) overdraft coverage for ATM and one-time debit card transactions, you cannot charge him an overdraft fee. Regulation O doesn't counteract that fact. It only prohibits a benefit that your customers and employees don't get.

If the debit card transaction is one of a series (recurring) and you are able to determine that it is (merchants are able to "flag" recurring debit card transactions, but don't always do so), the Reg E prohibition on charging an OD fee for the transaction does not apply, and you would have to impose the charge or violate Reg O.