On July 6, 2010, the Federal Reserve's Regulation E
prohibition of overdraft fees will take effect. From then on,
financial institutions will no longer be able to charge a fee when
a consumer overdraws a checking account by making a debit card
purchase or requesting an ATM withdrawal for an amount that exceeds
the consumer's available funds, unless the overdraft
service is expressly authorized by the account holder. The new
"opt-in" rules are aimed at giving consumers a meaningful
choice when it comes to the unwieldy fees associated with these
services, which are assessed at around $35 per transaction by the
big banks.
As a result of this rule change, retailers should be prepared
for an upswing in declined debit card purchases (and consequently,
an upswing in frustrated customers!). Retailers may want to prepare
their sales personnel for advising a consumer whose purchase is
declined that the consumer's bank will be sending the consumer
a letter explaining the rule
