Regulation of Overdraft Protection

Question 1

First State Bank has implemented an overdraft protection program that it calls Bounce Protection. This feature will be applied to all consumer checking accounts. Which of the following practices is considered a best practice?
A. In it’s advertisements for the checking account the bank states “Free Bounce Protection” we pay all of your bounced checks.
B. In its product description given to new customers the bank states that the bounce protection is required on all free checking accounts
C. The bank trains its new accounts personnel to accurately explain the product and provides disclosures which clearly state the conditions and terms of the program
D. The available account balance shown on the internet and ATMs includes the amount of unused OD protection

Answer 1

C. The bank trains its new accounts personnel to accurately explain the product and provides disclosures which clearly state the conditions and terms of the program

Question 2

ACME Bank offers an overdraft protection privilege to all of its checking account customers. All customers are given a $300 OD limit at the beginning. The bank will increase the limit upon request and after a review of the customer’s account history. Customers are advised of their individual limits. To which of the following requirements is the bank subject?

A. Reporting the total of all unused OD limits as unfunded commitments on the call report.
B. Giving an example to each customer of how the bank treats multiple items presented against the account
C Providing TILA periodic disclosures to the customers each month when an OD occurred
D. Placing a cap on the total amount of fees any customer can incur in any one day

Answer 2

A. Reporting the total of all unused OD limits as unfunded commitments on the call report.

Question 3

Which of the following is NOT true of the FDIC guidance document OD Payment Programs and Consumer Protection?
A. Institutions are expected to offer consumers alternatives to automated OD protection programs at the time they join the program
B. Ad hoc OD programs are not covered by the guidance
C. Institutions are expected to institute daily limits on the amount of fees that can be charged under the automated program
D. Institutions must review check clearing procedures for fairness

Answer 3

A. Institutions are expected to offer consumers alternatives to automated OD protection programs at the time they join the program

Question 4

Which of the following is true of the requirements for OD services as regulated in 12 CFR 1005.17?
A. Institutions can cancel an individual consumers OD service at any time
B. The consumer can provide affirmative consent via telephone
C. There are no rules on how much an institution can charge for OD services.
D. A prescribed notice must be sent to the consumer to opt in to OD services

Answer 4

D. A prescribed notice must be sent to the consumer to opt in to OD services