FDIC Flags Overdraft Issues in Consumer Compliance Supervisory Highlights

The FDIC today released its first edition of Consumer Compliance Supervisory Highlights, a new publication intended to provide institutions with information and observations related to the agency’s consumer compliance supervision activities. This issue highlights findings from the approximately 1,200 consumer compliance examinations conducted by the FDIC in 2018.

Among the key issues flagged by the FDIC was improper disclosure of overdraft programs, which can lead to potential unfair or deceptive practices violations. The FDIC noted that these issues can arise particularly with processing systems that use an “available balance” method to assess overdraft fees. To help mitigate overdraft-related risks, institutions can provide clear disclosures detailing how overdraft fees are assessed, FDIC noted. Additionally, they can ensure that when using an available balance method, any transaction authorized against a positive available balance does not incur an overdraft fee, even if the transaction later settles against a negative available balance.

The FDIC also flagged recurrent issues related to RESPA Section 8; Regulation E; loan programs that allow customers to skip a payment; and the calculation of finance charges and disclosures related to lines of credit.