Q. Heather, What does Reg E say regarding recurring debit card transactions? We have a member that opted out of overdraft coverage, but our system is still charging his monthly cell phone and newspaper subscription and charging him courtesy pay fees when these transaction overdraw his account. We found this link (https://www.consumerfinance.gov/rules-policy/regulations/1005/interp-17/#17-b-Interp-1-ii) where section iv talks about one-time debit card transactions, but I can’t find anything definitive on recurring transactions.

Any help you could give us would be appreciated.

A. Great Question! The overdraft opt-in requirement in Regulation E only applies when the financial institution wants to assess a fee or charge for paying in to the overdraft an ATM or one-time debit card transaction. 

The regulation does not specify which transactions are not subject to the opt-in, just the transactions that are.  Therefore other transactions that are not ATM or one-time debit transactions (checks, ACH, recurring debit card transactions) are not subject subject to the opt-in.  

Probably the closest you get to a definitive statement that recurring transactions are not subject to the opt-in, is the Model Consent Form for Overdraft services, which is a required disclosure for account holders that want to opt-in to coverage.

This is part of the language:

What are the standard overdraft practices that come with my account?

We do authorize and pay overdrafts for the following types of transactions:

• • Checks and other transactions made using your checking account number.
  • Automatic bill payments

We do not authorize and pay overdrafts for the following types of transactions unless you ask us to (see below):

• • ATM Transactions
  • Everyday debit card transactions