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Reversing provisional credit to overdraw an account

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Question: 
I need to reverse provisional credit but the customer does not have the funds in the amount I need to reverse, can I proceed with the reversal of the provisional credit, which will put the account in a negative balance ? I understand we cannot charge any OD fees and will notify the customer we will honor checks, drafts, or similar instruments payable to third parties and preauthorized transfers from the consumer's account (without charge to the consumer as a result of an overdraft) for five business days after the notification. We must honor items as specified in the notice, but need honor only items that it would have paid if the provisionally credited funds had not been debited.
Answer: 

Yes, you can reverse the provisional credit, but make sure you include the appropriate language with the notice of the reversal (about covering overdrafts, etc., for 5 days), and make sure the notice of reversal gets out promptly.

First published on 08/25/2024

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