Reg E and Overdraft Fees

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Question:

An article about Reg E and Overdraft fees in our local newspaper mentioned a change effective August 22, regarding a ban on charging inactivity fees. The article made it sound like this will affect savings and checking accounts. I have not read or heard anything else about this. Can you clear this up for me?

Answer:

It sounds like there were some crossed circuits in reporting. The change to Regulation E, effective August 22, addresses the sale or issuing of gift cards, under Regulation E's new Section 205.20. That new rule does, indeed, include significant restrictions (not outright bans) on the charging of dormancy, inactivity and service fees on gift card accounts. The previous amendments to Regulation E, which required compliance beginning on July 1, are in Section 205.17, and address overdraft fees for ATM and one-time debit card transactions.

Incidentally, a new law recently signed by the president delays the effective date of some of the provisions of the rule addressing some gift cards, gift certificates and general prepaid cards until January 31, 2011. For details, review the applicable rule in BOL's ABC Soup.

First published on BankersOnline.com 7/26/10