Board of Governors of the Federal Reserve System

Submitted by:

Submitted to: October 12, 2009

Design and Testing of Overdraft Disclosures: Phase Two
Design and Testing of Overdraft Disclosures: Phase Two

Submitted by:

Macro International Inc.

11785 Beltsville Drive

Calverton, MD 20705

www.macrointernational.com

Submitted to:

Board of Governors 

of the Federal Reserve System

20th and C Streets, NW

Washington, DC 20551
TABLE OF CONTENTS

Executive Summary ........................................................................................................ i

Background of Project .................................................................................................................i

Research Methodology ................................................................................................................ii

Key Research Findings................................................................................................................iii

Section I: Introduction .................................................................................................... 1

Section II: Research Methodology................................................................................. 2

Section III: Findings from Consumer Research............................................................ 3

Round 1: Interviews in Tampa, FL (May 11 and 12, 2009) ........................................................3

Disclosure Notices Tested......................................................................................................3

Key Interview Findings..........................................................................................................4

Round 2: Interviews in Denver, CO (June 8 and 9, 2009)...........................................................9

Disclosure Notices Tested......................................................................................................9

Key Interview Findings..........................................................................................................10

Round 3: Interviews in Bethesda, MD (August 17 and 18, 2009)...............................................15

Disclosure Notices Tested......................................................................................................15

Key Interview Findings..........................................................................................................16

Round 4: Interviews in Philadelphia, PA (September 14 and 15, 2009) .....................................21

Disclosure Notices Tested......................................................................................................21

Key Interview Findings..........................................................................................................22

Appendices:

Appendix A: Sample Recruitment Screener

Appendix B: Information about Participants

Appendix C: Disclosure Notices Used in Round 1 of Testing

Appendix D: Disclosure Notices Used in Round 2 of Testing

Appendix E: Disclosure Notices Used in Round 3 of Testing

Appendix F: Disclosure Notice Used in Round 4 of Testing
i

EXECUTIVE SUMMARY

BACKGROUND OF PROJECT

In May 2008, the Board of Governors of the Federal Reserve System (the “Board”) published 

proposed amendments related to overdraft coverage to Regulation DD, which implements the 

Truth in Savings Act. The proposed rules required that disclosures be provided to consumers 

about their overdraft coverage and the right to opt out of that coverage.1 The Board’s proposed 

rules included model notices that institutions could use to satisfy their disclosure obligations. 

Because these model notices would constitute a "safe harbor" for institutions that use them, a key 

objective for the Board was that they be as clear as possible to consumers. For this reason, the 

Board contracted with ICF Macro in March 2008 to assist it in the development and testing of 

model disclosures related to overdraft coverage. ICF Macro began by advising the Board on the 

development of the sample notices that were released with its May 2008 proposal. Following the 

public comment period, ICF Macro worked with Board staff to revise the notices based on 

comments that were received by depository institutions, consumer groups, and other public 

stakeholders. ICF Macro then engaged in two rounds of cognitive interviews with consumers to 

test the effectiveness and clarity of the model notices, and made appropriate revisions to the 

format and language used. ICF Macro summarized findings from these two rounds of interviews 

in a report to the Board in December 2008.2

In January 2009 the Board published a revised proposal under Regulation E, which implements 

the Electronic Fund Transfer Act. This proposal included both a revised model notice regarding 

the consumer’s right to opt out of overdraft coverage for ATM and everyday debit card 

transactions,3and an alternative model notice regarding the consumer’s right to opt into that 

coverage. After receiving public comment on these amendments, the Board again contracted 

with ICF Macro to provide support in the testing and revision of these model notices. Between 

May and September 2009, ICF Macro conducted four additional rounds of cognitive interviews 

with consumers to test the effectiveness of revised overdraft notices. This report describes 

findings from this most recent phase of ICF Macro’s work related to design and testing of 

overdraft notices for the Board. 

 

1

Separate revisions to Regulation AA proposed by the Board would have required banks to provide customers with 

the right to opt out of overdraft coverage. Regulation AA implements section 5(a) of the Federal Trade Commission 

Act to prohibit unfair or deceptive practices. 

2 This report is available online at http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20081218a6.pdf.

3 As described below, “everyday debit card transactions,” which are debit card transactions that are non-recurring, 

such as a purchase at a store, were referred to by a number of labels on different notices. In this executive summary 

we use the term “everyday,” because it was the clearest to consumers and will be used in the model forms published 

by the Board.
ii

The results of the consumer research described in this report will inform the Board’s final 

revisions to Regulation E (to be issued in November 2009), and the notice that was developed 

will be included as a model. By relying heavily on consumer testing in the development of this 

notice, the Board hopes to ensure that its new regulations will lead to disclosures that are easy for 

consumers to read and understand, and as a result will help them make well-informed financial 

decisions.

RESEARCH METHODOLOGY

After the public comment period ended, Board staff and ICF Macro made revisions to the 

proposed overdraft notices that had been published in January 2009. ICF Macro then began 

conducting one-on-one in-depth cognitive interviews with consumers. The goal of these 

interviews was to assess the extent to which these disclosures were effective in communicating 

information to consumers about how their overdrafts would be handled by their bank, what fees 

they could potentially be charged, and what choices they had related to overdrafts. 

Interview participants were recruited by telephone using a structured screening instrument 

developed collaboratively by ICF Macro and Board staff. Participation was limited to people 

who were the primary financial decision-maker in their households, and who had a checking 

account. Respondents who worked for a bank or credit union were excluded from participation. 

Other screening questions ensured the recruitment of participants with a range of ethnicities, 

ages, and education levels. 

Interviews were approximately 60 minutes long, and were based on an interview guide 

developed collaboratively by ICF Macro and Board staff. While the guide was updated for each 

round, the basic structure of the interviews remained consistent. Participants were first asked a 

series of questions about their check and debit card use. They were then shown a notice on 

overdraft practices for a fictional bank called Solar Bank and asked to review it just as they 

would if they were opening a checking account. They were asked to “think aloud” while they 

read the document, and to let the interviewer know if they had any questions or saw anything that 

they found particularly confusing, surprising, or interesting. Once participants completed their 

initial review of the document, they were asked both comprehension questions to test their 

understanding of the disclosure content and attitudinal questions that asked how they felt about 

the information on the notice. 

In Rounds 1 and 2, each participant was shown two types of notices.4 The first notice indicated 

to consumers that the bank would cover overdrafts for all types of transactions, but that if they 

wished they could opt out of coverage for ATM and everyday debit card transactions. The 

second notice indicated that the bank would not cover overdrafts for ATM and everyday debit 

card transactions, but would cover overdrafts for other types of transactions; however, the notice 

provided that customers could opt into coverage for ATM and everyday debit card transactions. 

 

4 This set of interviews was actually the third round conducted by ICF Macro for the Board on the topic of 

overdrafts. However, because this phase of research was distinct from that carried out by ICF Macro in 2008, the 

first set of interviews in 2009 is referred to in this report as “Round 1.” 
iii

These two notices are referred to in this report as the “opt-out” and “opt-in” notices, respectively. 

The goal of showing both notices was to assess consumers’ reaction to the two approaches, and 

to evaluate whether one approach might be easier for consumers to understand. The order in 

which these notices were shown to participants was varied in order to avoid learning effects. 

Participants in Rounds 3 and 4 were shown only an “opt-in” notice.

KEY RESEARCH FINDINGS

Understanding of Overdraft Practices

 In the first two rounds, almost all participants understood that if they had overdraft 

coverage and the bank paid an overdraft, the bank would charge them a fee for doing so. 

In Round 3, however, four of the nine participants mistakenly thought that having 

“overdraft coverage” meant that their overdrafts would be paid and they would not be 

charged a fee. This misconception appeared to be based on the phrase “overdraft 

coverage,” which implied to participants that their overdrafts would be authorized free of 

charge. The notice used in Round 4, which did not include this phrase, appeared to 

address this point of confusion; all but one participant in the final round understood that 

they would be charged a fee if they overdrew their account.

 The notices used in all four rounds of testing indicated that the bank had discretion in 

deciding whether to cover overdrafts, and did not guarantee that all overdrafts would be 

paid regardless of the type of transaction. Most participants understood this after reading 

the notice, although comprehension of this fact was slightly lower in Rounds 3 and 4.

 Notices used in the first three rounds indicated that even if customers did not have 

overdraft coverage for a particular type of transaction, they could still overdraw their 

account under certain circumstances. About two thirds of participants in these rounds 

understood this after reading the notice. This information was removed from the notice 

in Round 4 because of concerns regarding information overload. When asked whether 

they might still overdraw their account using a debit card transaction even if the bank’s 

standard practice was not to pay these overdrafts, three of seven participants in the final 

round indicated that this was possible. 

 In Round 1, two participants confused the “overdraft coverage” described on the notice

with a link to a savings account. This pattern continued in the next two rounds, even 

though the notices used in those rounds specifically stated that overdraft coverage 

differed from alternative plans offered by the bank. As noted above, the notice used in 

the final round did not use the phrase “overdraft coverage,” but instead described the 

bank’s “standard overdraft practices.” This change eliminated much of participants’ 

confusion on this point; in Round 4 only one of 11 participants mistakenly thought that 

these standard practices included a link to another account. 

 The notices used in Round 1 used the phrase “one-time debit card transaction” to refer to 

a non-recurring transaction made by a debit card (e.g., a purchase at a store). However, 
iv

only three of nine participants understood what this phrase meant. In the next two 

rounds, the notices used the terms “individual debit card transaction” and “one-time debit 

card transaction” again, but in both cases most participants still had difficulty interpreting 

this phrase. One participant in Round 3 suggested that “everyday debit card transaction” 

would be more understandable to consumers, so this term was used in Round 4. 

Comprehension of this phrase was much higher; nine of 11 participants in Round 4 could 

explain what it meant.

Understanding of Opt-Out Notice

 Participants in Rounds 1 and 2 were shown an “opt-out” notice, indicating that the bank 

provided overdraft coverage on all transaction types but that customers had the right to 

opt out of coverage for ATM and everyday debit card transactions. In Round 1, about 

half of participants understood that they would be enrolled in overdraft coverage even if 

they did nothing, and about half also understood their right to opt out. In Round 2, all but 

one participant understood that they were enrolled in overdraft coverage, but only two 

understood the right to opt out. In both rounds, those that did not understand their right 

to opt out incorrectly assumed that if they “opted out” they would have no coverage on 

any types of transactions.

 As noted above, participants in Rounds 3 and 4 were not shown an “opt-out” notice.

Understanding of Opt-In Notice

 Participants in all rounds were shown an “opt-in” notice that indicated that unless 

customers specifically asked it to do so, the bank would not cover ATM and everyday

debit card transactions. These notices also stated that regardless of whether customers

opted into coverage on these transactions, overdrafts on all other types of transactions 

(including checks) would be covered. However, less than half of participants in Rounds 

1 and 2—and none of the participants in Round 3—understood after reading the opt-in 

notice that overdrafts by check would be covered even if they did nothing. The notice 

used in Round 4 was significantly more successful in this regard; six of nine participants 

in that round understood that their check transactions would be authorized.

 Most participants in the first three rounds understood after reading the notice that they 

had the right to opt into overdraft coverage.5 However, many incorrectly thought that 

their decision whether or not to opt in would affect all types of transactions, rather than 

just ATM and everyday debit card transactions. Again, the notice used in Round 4 

explained this right more clearly; most participants understood that they had the right to 

ask the bank to cover transactions for ATM and everyday debit card transactions.

 

5 The exception was Round 2, where only four of nine participants understood that they had the right to opt into 

overdraft coverage.
v

Participants’ Attitude toward Overdraft Coverage

 Among participants who had previously overdrawn their account and been charged a fee 

for doing so, about half said that they would have preferred that the bank deny the 

transaction. Most of these participants indicated that the transactions that had overdrawn 

their accounts were not important enough to them to warrant paying the fee they were 

charged. The other half of participants said that they were pleased that the bank paid the 

transaction that overdrew their account, and were willing to pay a fee for this service. 

These participants indicated that it was important to them that their transactions be paid, 

or that they were concerned about the effect that having a transaction denied would have 

on their credit score. This pattern was consistent throughout all four rounds of testing.

 Among participants from all rounds, about half indicated after reading the notices that 

they would want overdrafts to be paid for ATM and everyday debit card transactions. 

However, in many cases the reasoning behind this decision was unclear. In some cases, 

participants said that they would want these overdrafts covered, but only through a link to 

another account or line of credit where they might be charged fewer fees. Other 

participants initially said that they did not want these overdrafts to be covered, but later 

said that they would want coverage in case of emergencies. In a few cases, participants’ 

decisions were affected by the fact that they did not fully understand the terms of this 

coverage—for example, in Round 3 there were some participants that thought they would 

not have to pay any fees if their overdrafts were paid.

 Less than a third of participants indicated that they would not want any overdrafts of any

type to be paid by the bank. Most participants said that transactions they make by check 

tend to be larger in size and more important, so they would want overdrafts for checks to 

be paid even if it meant being charged a fee.

 When asked how they would contact their bank if they wanted to opt into or out of 

overdraft coverage, participants across the four rounds were evenly split between those 

who would go online and those who would call the bank. Only two participants indicated 

that they would prefer to use the tear-off form provided on the bottom of the notice. 

Because so few participants indicated that it would be useful, and because of some 

evidence that it led to confusion in some cases, this tear-off form was removed from the 

notice used in Round 4.

Preference for Opt-Out vs. Opt-In

 Over the first three rounds, participants overwhelmingly indicated that they would prefer 

that banks give them the right to opt into overdraft coverage on ATM and everyday debit 

card transactions, rather than enrolling them automatically and giving them the right to 

opt-out. Most participants expressed a general dislike of being signed up for something 

without their consent; one indicated that it would make him feel that the coverage had 

been “forced” on him.
vi

 In Round 4, four of nine participants that were asked indicated that they would prefer to 

be enrolled in overdraft coverage automatically—a significantly higher proportion than in 

earlier rounds. However, at least two of these participants seemed not to fully understand 

the choice they were being offered. For example, one said that he preferred the “opt-out” 

strategy because it offered him more choice over his account, which would not seem to 

actually be the case. 

Information about Alternative Ways of Covering Overdrafts

 The notices used in all four rounds included information about alternative ways that the 

bank could cover overdrafts, such as through a link to another account or an overdraft 

line of credit. Participants were generally able to find and understand this information, 

although a few were unsure what was meant by a “link to another account.” In some 

cases—particularly in the first three rounds—participants mistakenly thought that this 

link between accounts was the same as the “overdraft coverage” being described on the 

notices.

 When asked, all participants indicated that they would contact their bank for more 

information about these alternative ways of covering overdrafts. In many cases, this was 

because of the language on the notice that these alternatives “may be less expensive” than 

the bank’s standard ways of covering overdrafts. 
1

SECTION I: INTRODUCTION

In May 2008, the Board of Governors of the Federal Reserve System (the “Board”) published 

proposed amendments related to overdraft coverage to Regulation DD, which implements the 

Truth in Savings Act. The proposed rules required that disclosures be provided to consumers 

about their overdraft coverage and the right to opt out of that coverage.6 The Board’s proposed 

rules included model notices that institutions could use to satisfy their disclosure obligations. 

Because these model notices would constitute a "safe harbor" for institutions that use them, a key 

objective for the Board was that they be as clear as possible to consumers. For this reason, the 

Board contracted with ICF Macro in March 2008 to assist it in the development and testing of 

model disclosures related to overdraft coverage. ICF Macro began by advising the Board on the 

development of the sample notices that were released with its May 2008 proposal. Following the 

public comment period, ICF Macro worked with Board staff to revise the notices based on 

comments that were received by depository institutions, consumer groups, and other public 

stakeholders. ICF Macro then engaged in two rounds of cognitive interviews with consumers to 

test the effectiveness and clarity of the model notices, and made appropriate revisions to the 

format and language used. ICF Macro summarized findings from these two rounds of interviews 

in a report to the Board in December 2008.7

In January 2009, the Board published a revised proposal under Regulation E, which implements 

the Electronic Fund Transfer Act. This proposal included both a revised model notice regarding 

the consumer’s right to opt out of overdraft coverage for ATM and everyday debit card 

transactions, and a model notice regarding the consumer’s right to opt into that coverage. After 

receiving public comment on these amendments, the Board again contracted with ICF Macro to 

provide support in the testing and revision of these model notices. Between May and September 

2009, ICF Macro conducted four additional rounds of cognitive interviews with consumers to 

test the effectiveness of revised overdraft notices. 

This report describes this most recent phase of ICF Macro’s work with the design and testing of 

overdraft notices for the Board. Subsequent sections of the report describe the testing 

methodology used, as well as findings from each of the four rounds of interviews. The report 

also details the iterative changes that were made to the model notices after each round, 

eventually leading to the development of a notice that both ICF Macro and the Board believe will 

be more effective than that proposed in January 2009.

 

6

Separate revisions to Regulation AA proposed by the Board would have required banks to provide customers with 

the right to opt out of overdraft coverage. Regulation AA implements section 5(a) of the Federal Trade Commission 

Act to prohibit unfair or deceptive practices.

7 This report is available online at http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20081218a6.pdf.
2

SECTION II: RESEARCH METHODOLOGY

After the public comment period ended, Board staff and ICF Macro made revisions to the 

proposed overdraft notices that had been published in January 2009. ICF Macro then began 

conducting one-on-one in-depth cognitive interviews with consumers. The goal of these 

interviews was to assess the extent to which these disclosures were effective in communicating

information to consumers about how their overdrafts would be handled by their bank, what fees 

they could potentially be charged, and what choices they had related to overdrafts. 

Interview participants were recruited by telephone using a structured screening instrument 

developed collaboratively by ICF Macro and Board staff. Participation was limited to people 

who were the primary financial decision-maker in their households, and who had a checking 

account. Respondents who worked for a bank or credit union were excluded from participation. 

Other screening questions ensured the recruitment of participants with a range of ethnicities, 

ages, and education levels. The recruiting screener used for both rounds of interviews is 

provided as Appendix A; Appendix B provides detailed information about the characteristics of 

participants in all four rounds.

Interviews were approximately 60 minutes long, and were based on an interview guide 

developed collaboratively by ICF Macro and Board staff. While the guide was updated for each 

round, the basic structure of the interviews remained consistent. Participants were first asked a 

series of questions about their check and debit card use. They were then shown a notice on 

overdraft services for a fictional bank called Solar Bank and asked to review it just as they would 

if they were opening a checking account. They were asked to “think aloud” while they read the 

document, and to let the interviewer know if they had any questions or saw anything that they 

found particularly confusing, surprising, or interesting. 

Once participants completed their initial review of the document, they were asked two types of 

follow-up questions: 

 Comprehension questions, to test their understanding of the disclosure content (such as, 

“If you opened this account and then tried to make a debit card purchase in a grocery 

store for more money than you had in your account, what would happen?”)

 Attitudinal and preference questions, to collect information about how consumers felt 

about how their overdrafts would be handled and what choices they would make (such as, 

“Given what you have read here, would you opt out of overdraft coverage?”) 

In some rounds, participants were shown a second notice and asked similar questions. When 

more than one notice was used, the order in which participants were shown the documents was 

varied between interviews to control for possible learning effects.
3

SECTION III: FINDINGS FROM CONSUMER RESEARCH

ROUND 1: INTERVIEWS IN TAMPA, FL (MAY 11 AND 12, 2009)

ICF Macro’s first round of cognitive interviews with consumers was conducted on May 11 and 

12 in Tampa, Florida.8 A total of nine interviews were conducted over the two days of testing. 

Disclosure Notices Tested

Each interview participant in this round was shown two different notices that described two 

different overdraft coverage programs. The first notice indicated to consumers that the bank 

would cover overdrafts for all types of transactions, but that if they wished they could opt out of 

coverage for ATM and one-time debit card transactions.9 The second notice indicated that the 

bank would not cover overdrafts for ATM and one-time debit card transactions, but would cover 

overdrafts for other types of transactions; however, it provided that customers could opt into 

coverage for ATM and one-time debit card transactions if they wished. These two notices are 

referred to in this report as the “opt-out” and “opt-in” notices, respectively. The goal of showing 

both was to both assess consumers’ reaction to the two approaches, and to evaluate whether one 

approach might be easier for consumers to understand.

In its January 2009 proposed regulations, the Board had published both “opt-out” and “opt-in” 

model notices. However, the notices used in this round of testing differed from those that were 

published in several ways, including the following:

 The notices that were published in January 2009 stated in the first section that 

“[overdraft] coverage differs from other overdraft services we offer, such as linking your 

account to another account with us or an overdraft line of credit.” In the notices tested in 

Round 1, this information was removed from the first section. The information was 

retained in a section titled “Other Ways We Can Cover Your Overdrafts.”

 A section was added to the notice informing consumers that even if they do not have 

overdraft coverage on ATM and one-time debit card transactions, those transactions

could still lead to overdrafts. This statement was added to address concerns from 

industry commenters that participants might not be aware of this fact and that it might 

impact their decisions regarding coverage.

 

8 As described in the Introduction, this set of interviews was actually the third round conducted by ICF Macro for 

the Board on the topic of overdrafts. However, because this phase of research was distinct from that carried out by 

ICF Macro in 2008, the Tampa interview will be referred to as “Round 1.”

9 The phrase “one-time debit card transactions” was used in the notice to refer to transactions made using a debit 

card that did not automatically recur. Different labels were used for these transactions in subsequent rounds.
4

 On the opt-in notice, a statement was added that “if you do not have enough money in 

your account for an ATM withdrawal or one-time debit card transaction, we will usually 

decline the transaction.” This text was added to clarify for consumers what would 

happen if they did not request overdraft coverage on these transactions.

The notices that participants were shown were revised slightly from the first day to the second 

day.10 Notices from the first day were labeled Versions O1 (opt-out) and I1 (opt-in); notices

from the second day were Versions O2 and I2. These disclosure notices are provided in 

Appendix C.

Key Interview Findings

Previous Overdraft Experience

 Six of the nine participants indicated that they had overdrawn their account in the past 

and had been charged a fee to have the transaction paid.11 Of these six, two said that 

rather than paying the fee they would have preferred to have the transaction denied, 

because having it paid was not worth the fee they were charged. The remaining four said 

that they were glad the transaction had been paid. Of these four, two indicated that they 

would have wanted the transaction paid because it was a large, important purchase (such 

as a child’s tuition). One wanted it paid because she values “her credit standing.” The 

remaining participant said that she would be willing to “bite the bullet” and pay the fee to 

have her overdraft paid.

Understanding of Overdraft Coverage

 Regardless of which notice was shown, almost all participants understood that under the 

bank’s overdraft coverage program at least some of their overdrafts would be paid, and 

that as a result the bank would charge them a fee. However, at least two incorrectly 

thought that the overdraft coverage being described by the notice was the same as a link 

to another account.

 All but one of the participants understood that if the bank did not pay an overdraft, their 

transaction would be declined and they would have to provide another form of payment. 

Most read this information on the notice, but others answered correctly based on their 

previous understanding of how overdraft coverage works.

 All but one of the participants understood after reading the first notice they were shown 

that if they had overdraft coverage, the bank would have discretion in deciding whether 

 

10 If specific variations between forms are not mentioned in this report, it is because they had no observable impact 

on participants’ understanding.

11 Whether or not a person had previously overdrawn their account was used as a screening criterion for recruitment

in all four rounds, so no assumption should be made that participants are representative of the general population in 

this regard. 
5

or not to pay overdrafts. Most thought that the bank’s decision whether or not to pay 

overdrafts would depend on the size of the transaction, or the frequency with which a 

consumer overdrew their account.

 Several participants commented that they would want more information about how the 

bank would decide whether or not to cover transactions.

 After reading the first notice they were shown, six of the nine participants understood that 

even if they did not have overdraft coverage, there were some instances in which the 

bank might still pay overdrafts and charge them a fee. However, some of these

participants assumed that these instances would be limited to overdrafts through check 

transactions. It was unclear to what extent they understood that even if they did not have 

overdraft coverage, they might still overdraw their account through an ATM or one-time 

debit card transaction.

 Only three of nine participants understood the term “one-time debit card transaction” to 

mean a non-recurring transaction made with a debit card. Others had a variety of 

misinterpretations of this phrase, such as that the consumer would only be allowed to 

overdraft one time, or that the only transactions to be covered would be those made with 

a debit card that could be used only once. It was unclear whether participants’ lack of 

understanding of this phrase had an impact on their overall comprehension of overdraft 

coverage; most seemed to overlook the word “one-time” and notice it only when 

specifically asked about it.

 Participants who did not understand the phrase “one-time debit card transaction” were 

asked if the term “non-recurring debit card transaction” was clearer to them. All

indicated that it was not. 

Understanding of Opt-Out Notice

 Only two of the five participants on the first day understood after reading the opt-out 

notice that they were automatically enrolled in overdraft coverage. The remaining three

believed that unless they contacted the bank, they would not be enrolled in the coverage. 

In some cases, this misconception appeared to be due to the presence of a tear-off form at 

the bottom of the page; some participants seemed to assume that if they did not fill out 

the form the coverage would not apply to them.

 Because of this misconception on the first day, the opt-out notice used on the second day 

of testing was revised so that the first sentence read, “Unless you tell us otherwise, we 

will provide overdraft coverage for your account.” Participants who saw this version 

were more likely to understand that they were automatically enrolled in overdraft 

coverage, although even then one of the four participants did not realize she would have 

coverage on her account if she did nothing.

 Even among those participants who understood that they were enrolled in coverage and 

had the right to opt out, only about half understood that their right to opt out was limited
6

to ATM and individual debit card transactions. The other half incorrectly believed that if 

they opted out, they would not have coverage on any types of transactions.

 On the first day, only one of five participants understood that recurring debit transactions 

would be covered whether or not the participant opted out of overdraft coverage on ATM 

and one-time debit card transactions. This appeared to be at least in part because the 

forms used on the first day did not refer specifically to recurring debits, but instead 

described them as “other transactions.” The forms used on the second day of testing 

included a specific reference to “recurring debit transactions.” Two of the four 

participants on the second day noticed this reference and understood that overdrafts of 

this type would generally be covered regardless of whether or not there was overdraft 

coverage on the account. However, the other two were still confused on this point.

Timing of Opt-Out Notice

 All but one participant felt that the opt-out notice should be provided to consumers 

multiple times, rather than just once when the account was opened. Three suggested that 

the bank should provide the notice to customers after the first time they overdraw their 

account, to remind them that they had the right to opt out of this coverage. Two thought 

that the notice should be provided to customers every time they overdrew their account, 

while two more thought it should be provided monthly regardless of whether overdrafts 

occurred. One participant suggested that it be provided if an account holder was charged 

“a lot of fees.” 

Understanding of Opt-In Notice

 Only three of nine participants understood after reading the opt-in notice that if they did 

nothing, they would still have overdraft coverage on checks. The other six assumed that 

if they did nothing they would have no overdraft coverage on any transactions. 

 All nine participants understood that they had the option to enroll in overdraft coverage. 

However, as noted above most thought that this option applied equally to all 

transactions—that is, that their choice was either to have overdraft coverage on all types 

of transactions or none. 

 After these misconceptions were observed on the first day, the following text was added 

to the forms used on the second day of testing: “Whether or not you request overdraft 

coverage for ATM withdrawals and one-time debit card transactions, we will still pay 

overdrafts for other types of transactions, including checks and recurring debits.” 

However, the addition of this text did not have a noticeable effect on participants’ 

understanding. 

Participants’ Attitude toward Overdraft Coverage

 Three of the nine participants indicated that they would want to have overdraft coverage 

on ATM and one-time debit card transactions. Of the other six, one said that he would 
7

want the coverage if there were no daily fees for overdrawn accounts. Another indicated 

that he would want the coverage when he was shown the opt-in notice. However, when 

shown the opt-out notice he disliked the fact that the bank had signed him up 

automatically, and as a result he subsequently indicated that he would not want the 

coverage. 

 When asked whether they would want to opt out of overdraft coverage for all types of 

transactions including checks, only two participants indicated that they would. The 

remainder indicated that they would want to keep coverage at least on check transactions; 

several commented that the transactions that they pay by check tend to be larger and 

more important to them. Of the two that indicated that they would want to fully opt out 

of coverage, one said that if there was no daily fee for overdrawn accounts he would opt 

to keep the coverage.

 Five of the nine participants indicated that if they wanted to opt in or out of coverage, 

they would prefer to do so online. Two said that they would complete the tear-off form 

on the bottom of the notice and take it to the bank in person, while one each said that they 

would prefer to mail the form in or use the phone. 

Preference for Opt-Out vs. Opt-In

 All but one participant indicated that they would prefer that the bank give them the 

opportunity to opt into overdraft coverage, rather than enrolling them automatically and 

giving them the opportunity to opt out. One admitted that he would not have paid

attention to the opt-out notice when opening his account, and therefore would have ended 

up with coverage that he did not want.

Understanding of “Other Ways to Cover Overdrafts”

 All but one participant were able to easily find information on the forms about other 

potential ways they could have their overdrafts covered. Almost all understood this 

section of the notice, although two confused the link to another account and the 

“overdraft coverage” described on the notice.

 All but one participant indicated they would ask the bank for more information about 

these alternative methods for covering overdrafts. Several indicated they would be more 

interested in the link to another account than the line of credit. In some cases this was 

because participants did not fully understand what a “line of credit” was; other

participants seemed wary of getting involved in any bank product related to “credit.” 

 Only two participants assumed that everyone would qualify for both of the alternative 

types of overdraft coverage described. Most others said that all consumers would likely 

qualify for a link to another account, while their ability to get a line of credit would 

depend on factors such as their creditworthiness.
8

 When asked whether more information should be provided on the notice about other 

ways to cover overdrafts, two mentioned information about the fees associated with these 

alternatives. One commented that the entire notice should be restructured so that all three 

alternatives (i.e., overdraft coverage, a link to another account, and a line of credit) are 

described equally. Another participant felt that the line of credit should be the “default” 

option, rather than the overdraft coverage described on the notice.
9

ROUND 2: INTERVIEWS IN DENVER, CO (JUNE 8 AND 9, 2009)

ICF Macro conducted a second round of nine cognitive interviews in Denver, CO on June 8 and 

9, 2009. One of the primary goals of this round was to address the biggest misconceptions of 

participants in the earlier rounds—that is, a) their lack of understanding that overdrafts by check 

would be covered regardless of their decision whether or not to have coverage on ATM and onetime debit card transactions; and b) their mistaken belief after reading the opt-out notice that they 

would have to actively sign up for overdraft coverage, when in fact it was provided automatically 

with their account.

Disclosure Notices Tested

Participants in this round were again shown both an “opt-out” and “opt-in” notice. However, the 

notices used in Round 2 were significantly different than earlier versions in that they were 

written in a question-and-answer format, rather than the narrative format used previously. This 

format was used in an effort to make the notice more consumer-friendly, and to make it easier for 

consumers to find and understand information.

In addition to this general change in format, other revisions that were made to the notices 

between Rounds 1 and 2 included the following: 

 The opt-in forms used in Round 2 specifically stated that the bank would “provide 

overdraft coverage on your account for checks, automatic bill payments, and some other 

types of transactions.” This statement was intended to alleviate the misconception held 

by most participants in Round 1 that if they did not actively opt into coverage, the bank 

would not cover any types of overdrafts. 

 The opt-in notices used in Round 1 included a statement indicating that if the customer 

did not have overdraft coverage for a particular transaction type, the transaction would be 

declined and they would have to provide another form of payment. Because several 

participants in that round indicated that this was obvious to them and did not need to be 

stated, this text was removed from the notices used in Round 2.

 Because some participants in Round 1 mistakenly believed that overdraft coverage was 

the same product as overdraft protection plans like a link to a savings account, the revised 

notices included a note in the first section indicating that overdraft coverage differs from 

other overdraft services that the bank might offer.12

 In several cases, participants’ attitudes toward overdraft coverage in Round 1 were 

determined almost exclusively by the presence of a daily fee. The concern was that this 

 

12 This statement was present in the notices that were published for comment in January 2009. They had been 

removed from the versions used in Round 1 in an effort to save space, but because participants were confused, the 

text was added back in for Round 2.
10

fee might have distracted them from other information on the notice. Therefore, the 

reference to the daily overdraft fee was removed from the notices for Round 2.

 The notices used in Round 2 substituted the phrase “automatic bill payments” for 

“recurring debits,” to see whether consumers might be more familiar with this term.

 Because most Round 1 participants did not understand the phrase “one-time debit card 

transactions,” the revised notices instead used the phrase “individual debit card 

transactions.” 

 The titles of the opt-out and opt-in notices in Round 1 were “Explanation of Overdraft 

Coverage” and “Requesting Overdraft Coverage,” respectively. For Round 2, these titles 

were both changed to “Your Choices Regarding Overdraft Coverage” to better reflect the 

fact that the disclosure was intended to make consumers aware of their options related to 

how their overdrafts would be handled by the bank. 

As in Round 1, over the two days of testing participants were shown several versions of the 

notices that were slightly different. The versions used on the first day were labeled O3 (opt-out) 

and I3 (opt-in). On the second day participants were shown Version O4 and two different opt-in 

notices, I4 and I5. These disclosure notices are provided in Appendix D.

Key Interview Findings

Previous Overdraft Experience

 Seven of the nine participants indicated that at some point in the past they had spent more 

money than they had in their account. All indicated that the transaction had been allowed 

by the bank, and that they had subsequently been charged a fee. One participant 

described a recent incident in which he had bought a $2 bag of ice at a convenience store 

that overdrew his account. He said that he had been charged two overdraft fees in this 

case (for a total of about $60), because the cashier had accidentally recorded the purchase

twice. 

 The participants that had previously overdrawn their accounts were evenly split as to 

whether they would have wanted these transactions paid or denied. Three said that they 

would have preferred to have the transaction denied, because this inconvenience would 

have been preferable to being charged fees. Three others said that because their 

transaction was important to them, they were willing to pay the overdraft fee to have it go 

through. The seventh participant had overdrawn his account multiple times, and 

indicated that whether he would have wanted the overdraft paid would have depended on 

the specific transaction in question. 

General Understanding of Overdraft Coverage

 Regardless of which notice they were shown, almost all participants understood that 

“overdraft coverage” meant that at least some of their overdrafts would be paid by the 
11

bank, and that as a result they would be charged a fee. However, at least three had 

difficulty distinguishing between the “overdraft coverage” described on the notice and a 

link to another account—despite the fact that the notice specifically indicated that these 

two types of overdraft services were different. In most cases, this seemed to be because 

participants associated the phrase “overdraft coverage” with links between accounts 

based on personal experience. 

 All but one participant understood that if they did not have overdraft coverage their 

transactions could be denied; as one participant described it, she would be “left there in 

the aisle.” The remaining participant said that he did not know what would happen if he 

did not have overdraft coverage, since the notice did not provide this information.

 All but one participant understood that if they had overdraft coverage, their bank would 

have discretion in deciding whether or not to pay overdrafts. Seven of the eight 

participants who understood this fact saw this information in the notices, while the eighth 

simply assumed that the bank would have the discretion to refuse very large overdrafts. 

Most thought that the bank’s decision whether or not to pay overdrafts would depend on 

the size of the transaction, the length of the account-holder’s relationship with the bank, 

or the frequency with which a consumer overdrew their account.

 Six of the nine participants understood that even if they did not have the overdraft 

coverage described in the notice, they might still overdraw their account through an ATM 

or debit card transaction. However, only three of the six saw this information on the 

notice. One assumed that banks would always allow overdrafts to occur so that they 

could collect a fee. Another said that he thought banks would probably allow an 

overdraft “if it was a small amount.” 

 Only three of nine participants understood that the phrase “individual debit card 

transaction” referred to a single non-recurring transaction made with a debit card. Most

incorrectly assumed that this phrase referred to any transaction made with a debit card, 

including recurring debits. One thought that this phrase meant that they could opt in or 

out of overdraft coverage on a transaction-specific basis.

Understanding of Opt-Out Notice

 Eight of the nine participants understood after reading the opt-out notice that they were 

automatically enrolled in overdraft coverage. 

 All participants understood that they had the right to opt out of coverage on ATM and 

individual debit card transactions. However, only two of the nine understood that even if 

they opted out, they would still have coverage on checks and automatic bill payments. 

As in Round 1, most participants mistakenly thought that if they opted out they would 

have no overdraft coverage at all. 
12

 Three participants did not believe that the bank would allow them to withdraw more 

money out of an ATM than they had in their account, even if they had overdraft 

coverage.

 Two participants misunderstood the purpose of the tear-off section at the bottom of the 

opt-out notice. One said he would fill out the form if he wanted to set up a line of credit 

or link to another account. Another thought filling out the form would indicate to the 

bank that she wanted to sign up for overdraft coverage, when in fact the form would 

actually signal that she wanted to opt out of this coverage.

 Whether or not they were able to correctly indicate whether check transactions would be 

covered, participants generally understood that automatic bill payments would be treated 

in the same way as checks. This was equally true whether participants were looking at 

the opt-out or opt-in forms.

Timing of Opt-Out Notice

 When asked whether accountholders should receive information about their right to opt 

out of overdraft coverage more than once, six said that they should. One participant 

stated that it was sufficient for banks to provide this information once at accountopening; two others did not express a clear opinion. 

 Opinions of how often this information should be provided to accountholders varied from 

monthly to annually. One person commented that accountholders should be reminded of 

their right to opt out each time they are charged an overdraft fee. 

Understanding of Opt-In Notice

 Only four of nine participants understood that overdraft coverage was automatically 

provided for checks, automatic bill payments, and some other types of transactions; the 

remainder thought that if they did nothing they would have no coverage on their account. 

 Only four of the nine participants understood that they could add overdraft coverage for 

ATM withdrawals and debit card transactions if they wished. Others did not see this 

information on the notice. 

 In an effort to address these significant points of confusion, two alternative wordings 

(Versions I4 and I5) were tested on the second day. Both versions indicated that 

overdraft coverage would be provided for checks, automatic bill payments and some 

other types of transactions. Version I4 then stated, “In addition, you can also sign up for 

overdraft coverage for ATM withdrawals and individual debit card transactions.” 

Version I5, on the other hand, included the more direct language, “We do not provide 

overdraft coverage on your account for ATM withdrawals and individual debit card 

transactions. However, if you want coverage on these transactions, you can sign up for 

it.” When asked which of these two notices they preferred, four of the five participants 
13

on the second day indicated that they found Version I5 to be clearer and more explicit. 

One preferred Version I4, because she found the other notice was “too wordy.” 

 There was also some empirical evidence that the wording used in Version I5 might be 

more effective. While neither of the two participants that were shown Version I4 

understood that that ATM withdrawals and individual debit card transactions would be 

treated differently than checks, two of the three who were shown Version I5 understood 

this point. 

 Three participants were confused by the statement that they would have coverage for 

“checks, automatic bill payments, and other types of transactions.”13 One commented 

that they could not think of any other types of transactions that were not addressed 

elsewhere on the notice. Two participants who were looking at the opt-in notice

incorrectly assumed that ATM and individual debit card transactions could sometimes 

fall into the category of “other types of transactions.”

Participants’ Attitude toward Overdraft Coverage

 Five of the nine participants indicated that if they were opening a checking account, they 

would want overdraft coverage on ATM and debit card transactions. However, it was not 

clear that these participants specifically wanted the “overdraft coverage” described on the 

notice; most indicated that they would prefer a link to another account if it was less 

expensive. Two participants indicated that they would not want any overdraft coverage 

on ATM and debit card transactions, while the remaining two were unsure. 

 Two of the nine participants indicated that if they could, they would want to opt out of 

overdraft coverage for all transactions, including checks and recurring debits. One of the 

two described his philosophy toward overdrafts as simply, “don’t let me charge if I don’t 

have the money.”

 Five of the nine participants indicated that if they wanted to sign up for or opt out of 

coverage, they would prefer to do so by phone. The remaining four indicated that they 

would do so online. None said that they would use the tear-off form provided at the 

bottom of the page. 

Preference for Opt-Out vs. Opt-In

 Six of the nine participants indicated that they would prefer that the bank give them the 

opportunity to opt into overdraft coverage, rather than enrolling them automatically and 

giving them the opportunity to opt out. One compared the “opt-out” alternative to 

incidents when she had found herself subscribed for magazines because she had not 

realized she had to check a box to refuse them. The remaining three participants 

 

13 In this case, the “other types” of transactions being referenced are other transactions made using a checking 

account number, such as online bill payments.
14

preferred that the bank enroll them automatically, primarily because they knew that they 

would want the coverage. One of the three commented that it was “safer” to be enrolled 

automatically.

Understanding of “Other Overdraft Services”

 All participants saw the information on the notice about other overdraft services. As 

noted above, however, three participants confused the link to another account with the 

“overdraft coverage” described on the notice.

 All participants indicated they would ask the bank for more information about these 

alternative overdraft services. Most said that they would be more interested in the link to 

another account than the line of credit; in fact, at least two already had a link between 

accounts at their own banks.

 Only two participants assumed that everyone would qualify for both of the alternative 

types of overdraft coverage described. The remaining seven said that whether 

accountholders could get a line of credit would depend on their creditworthiness. Three 

also said that accountholders would have to qualify to get a link to another account, while 

others assumed that all accountholders would be eligible for this overdraft service. 

 When asked whether more information should be provided on the notice about alternative 

overdraft services, two said that they would want information about the fees associated 

with these alternatives. Another said that the notice should explain how “overdraft 

coverage” differs from these other services.
15

ROUND 3: INTERVIEWS IN BETHESDA, MD (AUGUST 17 AND 18,

2009)

ICF Macro conducted a third round of nine cognitive interviews in Bethesda, Maryland on 

August 17 and 18, 2009. One of the primary goals of this round was to develop a notice that 

would address a continuing point of confusion for participants—that regardless of whether they 

chose to have overdraft coverage on ATM and one-time debit card transactions, the bank would 

still cover transactions for other types of transactions, including checks.

Beginning in Round 3, the opt-out notice was no longer used in the interviews; participants were

shown only an opt-in notice, reflecting a decision to focus testing efforts solely on the opt-in 

notice.

Disclosure Notices Tested

As in prior rounds, different versions of the notice were used: Version I6 on the first day of 

testing, and Version I7 on the second day (provided in Appendix E). These notices differed from 

those used in Round 2 in a number of ways, including the following:

 Information about fees was moved lower in the notice, while information about how 

different types of transactions would be treated was moved higher. This change was 

made because most participants in earlier rounds of testing had clearly understood the 

fees, while many had misunderstood the treatment of different types of overdrafts. 

 Information about how different types of overdrafts would be treated by the bank was 

provided in a table, rather than in narrative form. The intent of this change was to make 

this information more prominent.

 A section was added to the notice titled, “What happens if I don’t have overdraft 

coverage for a transaction?” The first sentence of this section stated that if the consumer 

did not have overdraft coverage, in most cases their transaction would be declined or 

returned. The next three sentences explained that consumers could still overdraw their 

account if they did not have overdraft coverage. 

 The notices used in Round 2 had distinguished overdraft coverage from “other overdraft 

services” that the bank offered. The versions used in Round 3 referred to these other 

services as “overdraft protection plans.” The intent of the new wording was to further 

distinguish these plans from the overdraft coverage described in the notice.

 On the first day of testing, the first section of the notice included a reference to overdraft 

protection plans, and then provided more information about these plans in a later section. 

On the second day, all information about overdraft protection plans was moved to the 

first section in order to make more efficient use of space. 
16

 Because some participants in Round 2 had been confused by the statement that the bank 

provides coverage on checks, automatic bill payments, and “other types of transactions,” 

the notices used in Round 3 substituted the phrase “transactions using your checking 

account number” for “other types of transactions.”

 The title of the notice was changed from “Your Choices Regarding Overdraft Coverage” 

to “What You Need to Know About Overdrafts and Overdraft Fees,” to assess whether

this heading would improve the likelihood that consumers would read the disclosure.

 The daily overdraft fee was added back into notices for this round, under the label 

“sustained overdraft fee.”

 Because of the increased space needed for the two tables and other information that was 

added, the notices that were tested in Round 3 were printed on legal-sized paper. Notices 

for all other rounds were printed on letter-size paper. 

Key Interview Findings

Previous Overdraft Experience

 All nine participants indicated that at some point in the past they had spent more money 

than they had in their account, and that the transaction had been allowed by their bank. 

Six indicated that they had subsequently been charged a fee. The remaining three 

participants indicated that they were not charged for overdrafts because they had 

overdraft protection on their checking accounts in the form of a link to a savings account 

or a line of credit.

 The six participants that had been charged a fee for overdrawing their account were 

evenly split as to whether they would have wanted these transactions paid or denied. 

Three said that they would have preferred to have the transaction denied so that they 

would not have been charged fees. The other three, however, preferred to pay the fee and 

have the transaction paid. One of these participants indicated that this was because he 

didn’t want “bad credit,” while another said that he didn’t mind being charged fees 

because he trusts his bank. The third noted that the bank had reversed her fee when she 

called to ask about it.

General Understanding of Overdraft Coverage

 Most participants understood that if they had overdraft coverage for a particular 

transaction and tried to spend more money than they had in their account, the bank would 

pay the amount. As in previous rounds, however, a few participants (in this case, two of 

the nine) had difficulty distinguishing between the “overdraft coverage” described on the 

notice and “overdraft protection plans” offered by the bank. This confusion existed 

despite the fact that the notices being tested specifically stated that these two sets of 

practices were different. 
17

 Four of the nine participants initially had the misconception that if they had overdraft 

coverage they would not be charged a fee for overdrafts. In three cases this seemed to be 

because of the use of the phrase “overdraft coverage”—one participant commented that if 

their transactions were “covered,” they would assume that they would not be charged a 

fee. In two of these cases this misconception was so strong that even after the 

interviewer explained otherwise, both still assumed that they would not be charged any 

fees.

 Six of the nine participants understood that if they did not have overdraft coverage, their 

transactions would be denied. The remaining three incorrectly thought that their 

transactions would be paid, but because they did not have coverage they would be 

charged a fee. This misconception was related to the incorrect belief that “overdraft 

coverage” meant that they would not be charged fees for overdrawing their account. 

 Six participants were asked whether they thought the bank’s overdraft coverage program 

meant that it would pay all overdrafts. Three correctly stated that overdraft coverage was 

discretionary, although one of the three did not see this information in the notice and 

based her answer only on prior experience. Two incorrectly thought that the bank would 

pay all overdrafts, while the remaining participant did not know. As in previous rounds, 

those participants that understood that the bank had discretion thought that the bank’s

decision whether or not to pay overdrafts would depend on the size of the transaction or 

the customer’s history with the bank.

 Six of eight participants14 understood that even if they did not have the overdraft 

coverage described on the notice, it was still possible that they would overdraw their 

account through an ATM or debit card transaction. Five of the six saw this information 

on the notice, while the sixth just assumed this was the case. The remaining two 

participants incorrectly thought that if they did not have overdraft coverage for ATM or 

individual debit card transactions, there was no way they could overdraw their account. 

 Only five of eight participants who were asked understood the meaning of the phrase 

“one-time debit card transactions.” The remaining three participants misinterpreted this 

phrase; two thought it referred to debit cards that could only be used once, while the third 

thought it meant that the customer was only allowed to overdraw his or her account once 

with each debit card. One of the participants that did understand the phrase suggested 

that “everyday debit card transactions” would be a clearer way to describe these 

transactions. Two subsequent participants that were asked whether they preferred the 

term “one-time” or “everyday” indicated that they felt the latter term was clearer. 

 Six participants were asked what would happen if they did not have overdraft coverage 

on checks and wrote a check to their gas company for more money than was in their 

 

14 One of the nine participants in this round of testing had very low comprehension of overdraft coverage in general, 

even after reading this notice several times. As a result, this participant was not asked a number of the follow-up 

questions.
18

account. Five correctly answered that they would likely be charged a fee by both their 

bank (for bouncing their check) and the gas company. The remaining participant 

indicated thought he would be charged a fee by the gas company, but not by his bank.

Understanding of Right to Opt In

 All nine participants at least initially had the misconception that if they did not actively 

sign up for overdraft coverage, the bank would not cover any types of transactions. This 

confusion seemed to be for a variety of reasons. First, at least two participants were

distracted by the presence of the tear-off form at the bottom of the page, and seemed to 

think that if the form was not returned there would be no overdraft coverage on the 

account. Some participants simply overlooked the table showing which transactions were 

covered. For example, one participant stated that there was no place on the notice that 

mentioned how different transaction types would be handled, even though this was the 

stated purpose of the table. Other participants saw and understood the table, but 

incorrectly thought that the table showed what types of transactions would be covered if

they requested overdraft coverage. While about half understood after re-reading the 

notice more carefully that coverage on certain transactions would be provided

automatically, others remained confused on this point.

 A few participants were distracted by a paragraph on the notice describing instances in 

which a customer could still overdraw their account even if they did not have overdraft 

coverage. When asked to explain how the bank would handle overdrafts, they referred 

exclusively to this section of the notice—even though the intent of this paragraph was to 

describe less-common instances when an overdraft could occur.

 All but two of the participants understood that they had the option of signing up for 

overdraft coverage on ATM and debit card transactions. As noted above, however, all 

participants also incorrectly thought that they also had to sign up for coverage on other 

transactions as well.

 After the fact that the bank automatically provides overdraft coverage on some 

transactions was explained to them, several participants suggested that the notice state 

that this coverage “comes standard” on their account. This terminology, they felt, would 

be best understood by consumers.

 All nine participants assumed that if they signed up for overdraft coverage on ATM and 

debit card transactions, the bank would later allow them to remove the coverage from 

their account if they wished. As one put it, “I assume that if I sign up, I could get out of 

it.”

Participants’ Attitude toward Overdraft Coverage

 Of eight participants that were asked, four initially indicated that they would want 

overdraft coverage on ATM and debit card transactions, while the other four said that 
19

they would not want coverage on these transactions. Of the latter four, two later 

indicated that they might opt into the coverage, just in case of emergencies. 

 Only one participant indicated that she would want to opt out of overdraft coverage for 

all transaction types if given the chance. However, this participant also indicated that she 

would opt into coverage on ATM and debit card transactions, so her responses were 

contradictory. All other participants indicated that they would want coverage at least on 

checks and automatic bill payments. 

 When asked how they would contact their bank to sign up for overdraft coverage on 

ATM and debit card transactions, participants were split evenly. Four indicated that they 

would call the phone number shown on the notice, four indicated that they would go to 

the website provided, and one was unsure which of the two methods she would use. 

None said that they would use the tear-off form provided at the bottom of the notice.

Preference for Opt-Out vs. Opt-In

 Of the eight participants that were asked, seven said they would prefer that the bank give 

them the opportunity to opt into overdraft coverage, rather than enrolling them 

automatically and giving them the opportunity to opt out. One commented that the latter 

scenario would make him feel like the coverage had been “forced” on him, while another 

said that he generally did not like to be automatically enrolled in anything. Another 

participant said that she would find it “easier to agree to getting something, rather than to 

asking to remove it.”

 The one participant who preferred that he be automatically enrolled in coverage rather 

than given the opportunity to opt in did not understand what “overdraft coverage” was; he 

incorrectly believed that if he had this coverage he would not be charged any fees for 

overdrawing his account. 

Overdraft Protection Plans as an Alternative to Overdraft Coverage

 Six participants generally understood the information provided on the notice about 

“overdraft protection plans.” The other three indicated that they did not understand the 

notice’s reference to plans that “link your account with a savings account, a credit card 

account, or a line of credit.” 

 All participants indicated they would ask the bank for more information about overdraft 

protection plans. When asked why, all but two mentioned the language in the notice 

indicating that these plans “may be less expensive” than overdraft coverage.

 Of seven participants that were asked, two thought that all customers would qualify for 

the overdraft protection plans described in the notice. The remaining five indicated that 

only some people would qualify based on their credit history. 
20

 When asked whether more information about overdraft protection plans should be 

provided on the notice, two participants commented that they would have liked to see 

more description of the plans and how they differed from overdraft coverage. Other 

participants said that no additional information was needed on this notice.
21

ROUND 4: INTERVIEWS IN PHILADELPHIA, PA (SEPTEMBER 14 AND 

15, 2009)

ICF Macro conducted a final round of 11 cognitive interviews in Philadelphia, Pennsylvania on 

September 14 and 15. In revising the notices for this round, ICF Macro attempted to address two 

important misconceptions that were apparent from Round 3: a) that “overdraft coverage” meant 

that consumers would not be charged fees if they overdrew their account; and b) that if 

consumers did not opt into coverage, overdrafts by check or automatic bill payment would not be 

authorized.

Disclosure Notices Tested

As in Round 3, participants in Round 4 were shown only an opt-in notice. This notice differed 

from that used in the previous round in two significant ways. First, the phrase “overdraft 

coverage” was removed entirely. Both Board staff and ICF Macro were concerned that the use 

of this phrase seemed to imply to some participants in Round 3 that they would not be charged a 

fee for overdrawing their accounts. Therefore, rather than indicating that the bank provided 

“overdraft coverage” to customers and then describing the meaning of that term, the revised 

notices described how overdrafts would be handled and referred to these as the bank’s “standard 

overdraft practices.” As in the previous round, the notice then distinguished these “standard 

overdraft practices” from “overdraft protection plans” like a link to a savings account.

In addition to the elimination of the phrase “overdraft coverage,” the notice was shortened 

considerably. Board staff was concerned that the length of the notices used in Round 3 made it 

less likely that consumers would read them, and asked ICF Macro to find ways to make more 

efficient use of the space. For this reason, several elements were removed from the notice:

 The two tables that had been added to the notice in Round 3 were removed. Fees were 

disclosed in a narrative format (as they had been in Rounds 1 and 2), and information 

about whether different types of transactions would be paid by the bank was provided in 

bulleted form. 

 The tear-off form at the bottom of the notice was removed, because very few participants 

in the first three rounds indicated that they would be likely to use this form to 

communicate with their bank. 

 The statement that overdrafts could still occur even if the bank did not authorize them 

(for example, because of delays in charges posting to the account) was removed from the 

notice because it appeared in Round 3 to distract participants from the general opt-in 

concept. Instead, the notice used in Round 4 stated simply, “if we do not authorize and 

pay an overdraft, your transaction will be declined.”

Unlike in previous rounds, the same notice (Version I8) was used on both days of testing. This 

notice is provided in Appendix F.
22

Key Interview Findings

Previous Overdraft Experience

 Eight of the 11 participants indicated that at some point in the past they had spent more 

money than they had in their account, and that the transaction had been allowed by their 

bank. All eight indicated that they had subsequently been charged a fee. 

 As in previous rounds, participants that had been charged a fee for overdrawing their 

account were evenly split as to whether they would have wanted these transactions paid if 

they had been given the choice. Four said that they would have preferred that the 

transactions be declined so that they would not have been charged fees. The other four 

were glad that the bank had paid the transactions, even if they were subsequently charged 

a fee. One noted that if the bank had allowed his check to be returned unpaid he would 

have had to pay two fees, one to the bank (for a returned check) and another to the 

company he was trying to pay. Another said that he would want overdrafts paid because 

he wouldn’t want to be “kicked out of the bank” for bouncing a check.

Understanding of Standard Overdraft Practices

 In this round of testing, immediately after reviewing the notice participants were asked to 

explain what the word “overdraft” meant. All were able to do so easily—and while the 

notice provided a definition of the word in its first sentence, it appeared that almost all 

participants were already familiar with the term before reading the notice. 

 After reading the notice, six participants immediately understood that the bank would pay 

overdrafts for checks and other transactions using their checking account number, and for 

automatic bill payments. Two other participants realized this after re-reading the notice. 

The remaining three participants did not understand that overdrafts for these transactions 

would be paid until this fact was explained to them by the interviewer. This represented 

a substantial improvement from previous rounds—in the previous round, for example, 

none of the nine participants realized that check overdrafts would be paid.

 In at least three cases, the reason that participants initially had difficulty understanding 

that check overdrafts would be paid was because they focused exclusively on the 

statement explaining what types of transactions would not be paid, while overlooking the 

list of types that would be paid. One of the three commented that this was because the 

word “not” was underlined, which made that sentence more prominent. 

 Seven of the 11 participants clearly understood from the notice that overdrafts through an 

ATM or debit card transaction would not be paid by the bank unless specifically 

requested. An additional three participants correctly indicated that these overdrafts 

would not be paid, but appeared to base their answers on prior assumptions rather than a 

close reading of the notice. Again, this was a substantial improvement in comprehension 

from previous rounds.
23

 All but one participant understood that if the bank paid an overdraft, it would charge a fee 

of up to $30. The remaining participant incorrectly thought that the phrase “we will 

authorize and pay overdrafts” meant that the bank would pay these overdrafts without 

charging a fee. 

 Five of the 11 participants understood that the bank’s coverage of overdrafts was 

discretionary, and did not guarantee that any overdrafts would be authorized or paid. Of 

these five, two based their response to this question on the relevant text in the notice, 

while the remaining three simply assumed that the bank had the right to decline 

overdrafts if it wished. Of the remaining six participants, four incorrectly thought that the 

bank would pay all overdrafts, while the other two were unsure. 

 As in previous rounds participants were asked whether they could overdraw their account 

through an everyday debit card transaction, even though the bank generally does not pay 

overdrafts for these transactions. However, because this information was removed from 

the notice prior to this round, participants’ answers were based only on their prior 

experience and assumptions. Of seven participants that were asked this question, three 

correctly stated that it would be possible to overdraft through an everyday debit card 

transaction even if they did not contact the bank to request that these transactions were 

paid. The remaining four participants incorrectly thought that this would not be possible. 

 Nine of the 11 participants were able to correctly explain what the phrase “everyday debit 

card transaction” meant in the context of the notice. This was a substantially higher 

percentage than in previous rounds, when the phrases “one-time debit card transaction” 

or “individual debit card transaction” were used. 

 Nine participants were asked what would happen if they wrote a check to their gas 

company for more money than was in their account and the bank did not pay the 

overdraft. All correctly indicated that they probably would be charged a fee by their gas 

company. Only six, however, understood that they probably would also be charged a 

returned check fee by their bank. The remaining three indicated that they did not think 

such a fee would be charged because it was not mentioned in the notice. 

 All nine participants who were asked knew that they had the option to tell the bank to pay 

overdrafts for ATM and everyday debit card transactions, and understood how they could 

do so. As in the previous round, all participants assumed that if they asked the bank to 

authorize and pay transactions on ATM and everyday debit card transactions, they could 

later contact the bank to reverse their decision. 

Participants’ Attitude toward Overdraft Coverage

 Of nine participants that were asked, only one initially indicated after reviewing the 

notice that he would want the bank to pay overdrafts on ATM and debit card 

transactions—and this participant said he had not overdrawn his account for years and 

would be unlikely to ever to do again. Two other participants said at first that they would 

not want the bank to pay these transactions, but later indicated that they might want it to
24

in case of emergencies. The remaining six participants indicated that they would not 

want the bank to pay overdrafts for ATM and debit card transactions because of the fees 

that they would be charged. 

 Three of nine participants indicated that if they could, they would instruct the bank to 

never pay any overdrafts for any types of transactions. The remaining six participants 

indicated that they would want the bank to pay overdrafts at least on checks and 

automatic bill payments. 

 Seven participants indicated that if they wanted to instruct the bank to pay overdrafts on 

ATM and everyday debit card transactions they would call the bank. The remaining two 

said that they would go online to let their bank know they wanted these overdrafts to be 

paid. 

Preference for Opt-Out vs. Opt-In

 Of the nine participants that were asked, five said they would prefer that the bank give 

them the opportunity to request that it pay overdrafts on ATM and everyday debit card 

transactions, rather than providing this coverage automatically and giving them the 

opportunity to opt out. As in previous rounds, several participants indicated that they did 

not like to be automatically signed up for programs or services without their prior 

consent. 

 The remaining four participants indicated that they would prefer that the bank pay 

overdrafts on ATM and everyday debit card transactions as a standard practice. This was 

a deviation from previous rounds, when a higher percentage of participants preferred the 

“opt-in” strategy. However, at least two of the four participants this round that preferred 

the “opt-out” strategy seemed not to fully understand the distinction between these two 

choices. For example, one said that he preferred the “opt-out” strategy because it offered 

him more choice over his account, when in fact both strategies provide an equal degree of 

choice for customers. 

Overdraft Protection Plans as an Alternative to Standard Overdraft Practices

 Unlike in previous rounds, participants generally did not confuse the “overdraft 

protection plans” offered by the bank with its “standard overdraft practices.” Only one 

participant did not understand that these are two distinct options for how their overdrafts 

could be handled.

 The notice used in Round 4 used “a link to a savings account” as an example of an 

overdraft protection plan offered by the bank. Of ten participants that were specifically 

asked to comment on this section of the notice, seven understood what a “link to a 

savings account” meant. The other three indicated that they did not know what this 

meant, but that they would ask their bank.
25

 All participants indicated they would ask the bank for more information about overdraft 

protection plans. When asked why, about half mentioned the text that indicated that these 

plans “may be less expensive” than the bank’s standard overdraft practices.

 When asked whether more information about overdraft protection plans should be 

provided on the notice, two participants commented that the bank should include 

information about the cost of these plans rather than simply indicating they “may be less 

expensive.” One participant said that the bank should provide a brief description of the 

plans, while another thought the notice should more clearly explain the difference 

between these plans and the bank’s standard overdraft practices. On the other hand, one 

participant specifically said that no more information should be provided because it 

would make the notice “too wordy.” 
26

CHAPTER III: SUMMARY

This report summarizes the second phase of work conducted by ICF Macro in support of the 

Board’s efforts to amend Regulation E rules related to overdraft coverage. The goal of this work 

was to revise the overdraft notices proposed by the Board in January 2009 to ensure that they 

communicate information to consumers effectively and clearly. 

ICF Macro conducted four rounds of consumer interviews between May and October 2009 in 

order to test the effectiveness of these disclosure notices. In early rounds of testing, participants 

had a number of serious misconceptions about how overdrafts would be handled, including that 

a) if they did nothing they would have no coverage for overdrafts by check; b) overdrafts of all 

types would be treated the same by the bank; and c) if they had “overdraft coverage” they would 

not have to pay any overdraft fees. Over the course of the four rounds, ICF Macro and Board 

staff attempted to combat these misconceptions in a number of ways, with mixed success. 

However, the disclosure notice shown to participants in the last round of testing was 

substantially more effective than earlier versions. While this notice did not eliminate all 

misconceptions, participants who read this version had a much greater understanding of how 

their overdrafts would be handled and what their options were. 

The results of the consumer research described in this report will inform the Board’s final 

revisions to Regulation E (to be issued in November 2009), and the notice that was developed 

will be included as a model. By relying heavily on consumer testing in the development of this 

notice, the Board hopes to ensure that its new regulations will lead to disclosures that are easy for 

consumers to read and understand, and as a result will help them make well-informed financial 

decisions.
Appendix A:

Sample Recruitment Screener

Note: The recruitment screeners used in different rounds varied slightly in 

terms of the quotas that were established for different criteria, but the 

questions remained the same in all rounds. The screener provided here was 

used in Round 1 of testing.
Screener for FRB Cognitive Interviews

Participant Screener for Federal Reserve Board Interviews

Tampa, FL

May 12th and 13th, 2009

General Information and Recruiting Specifications

 Recruit 9 participants for 60-minute interviews

 Recruit two floaters per day, one to cover AM and the other to cover PM

 Participant stipend is $75

 INTERVIEWERS: Ask all participants to bring their reading glasses if necessary, because they 

will be asked to read over several credit card documents as part of the interview.

Screening Questions

Q1. Do you currently have a checking account with a bank?

 No  Thank respondent politely and end call.

 Yes  Continue

Q2: Are you the person in your household who is responsible for making financial decisions?

 No  Thank respondent politely and end call.

 Yes  Continue

 Yes, in cooperation with my [spouse, partner, etc.]  Continue

Q3: Do you currently work for a bank or credit union?

 No  Continue

 Yes  Thank respondent politely and end call.

Screening Question Screening Criteria:

Q4: Have you ever had an overdraft on

your checking account—that is, spent 

more money than was available in 

your account?

a) Yes

b) No

c) Don’t know

 At least 7 recruits must respond “a” to Q4

Q5: How much money do you have 

currently in your checking account?

a) Under $500

b) $500 or over

 At least 5 recruits must respond “a” 
Screener for FRB Cognitive Interviews 2

Q6: What is your age?

a) 18 to 25

b) 26 to 35

c) 36 to 45

d) 45 to 60

e) 61+

 At least 4 recruits should respond “a” or “b”

 At least 4 recruits should respond “c”, “d”, or 

“e”

Q7: What is your ethnicity?

a) White

b) African-American

c) Latino

d) Asian

e) Other

 At least 3 recruits should respond “b”, “c”, 

“d”, or “e” to Q7

Q8: What is the highest level that you 

reached in school?

a) Attended some high school

b) Graduated from high school

c) Attended some college

d) Graduated from college

At least 4 recruits should respond “a” or “b”

Q9: Gender  At least 3 recruits of each gender
Appendix B:

Information about Participants
*Totals may not add up to 100%, because of rounding.

**One participant in Tampa identified him/herself as both White and African-American.

Round 1:

Tampa

(n=9)

Round 2:

Denver

(n=9)

Round 3:

Bethesda

(n=9)

Round 4: 

Philadelphia

(n=11)

Total

 (n=38)*

Gender

Male 4 7 4 6 21 (55%)

Female 5 2 5 5 17 (45%)

Age

18-25 2 1 3 2 8 (21%)

26-35 1 3 1 3 8 (21%)

36-45 2 3 1 4 10 (26%)

46-60 3 1 2 1 7 (18%)

61+ 1 1 2 1 5 (13%)

Race/Ethnicity**

Caucasian 5 3 6 8 22 (58%)

African-American 2 2 3 2 9 (24%)

Hispanic 2 3 0 0 5 (13%)

Asian 0 0 0 1 1 (3%)

Other 1 1 0 0 2 (5%)

Education Level

Some high school 0 0 1 0 1 (3%)

High school graduate 4 1 2 4 11 (29%)

Some college 2 3 3 3 11 (29%)

College graduate 3 5 3 4 15 (39%)

Current Checking Account Balance

Under $500 1 3 5 6 15 (39%)

$500 or more 8 6 4 5 23 (61%)
Appendix C:

Disclosure Notices 

Used in Round 1 of Testing 

 Notices Used on First Day of Testing:

o Version O1

o Version I1

 Notices Used on Second Day of Testing:

o Version O2

o Version I2
Version O1

EXPLANATION OF OVERDRAFT COVERAGE

Description of Your Coverage

We provide overdraft coverage for your account. This means that if you do not have enough money in

your account for an ATM withdrawal or a one-time debit card transaction, we may still authorize the

transaction and pay the overdraft. Having overdraft coverage does not guarantee that we will authorize

your overdrafts in all cases. If we decide to pay an overdraft, we will charge you a fee. See below for

more information, including how to opt out if you do not want us to authorize any ATM or one-time debit

card overdrafts.

Overdraft Fees

 We will charge you up to $30 each time we pay an overdraft.

 We will also charge you $5 for each day your account remains overdrawn.

 There is no limit on the total amount of fees we can charge you for overdrawing your account.

Your Right to Opt Out of Overdraft Coverage

You may opt out of overdraft coverage for ATM withdrawals and one-time debit card transactions

by telling us not to authorize these transactions when you do not have enough money in your

account. Opting out may allow you to limit the overdraft fees you are charged. However, some

overdrafts could still occur even if you opt out. For example, you may have enough money in your

account when we authorize a transaction, but other transactions may reduce the amount in your account

before that transaction clears. If this causes an overdraft, you will be charged a fee.

Opting out will not affect whether we pay overdrafts for other types of transactions, including checks. If

we decide to pay these overdrafts, we will charge you a fee.

Other Ways to Cover Your Overdrafts

We offer other ways of covering your overdrafts that may be less expensive, such as a link to another

account you have with us or an overdraft line of credit. Ask us about these options.

How to Opt Out or Get More Information

To opt out of overdraft coverage or request information about other ways to cover your overdrafts:

 Call us at 1-800-555-1234;

 Visit www.solarbank.com/overdrafts; or

 Complete the form below and mail it to Solar Bank, P.O. Box 1234, Pittsburgh, PA 19714.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

___ I do not want overdraft coverage for my ATM withdrawals and one-time debit card transactions.

___ I want information about other ways to cover my overdrafts.

Printed Name: _________________________

Date: _________________________

Account Number: ________________________
Version I1

REQUESTING OVERDRAFT COVERAGE

Your Right to Request Overdraft Coverage

If you do not have enough money in your account for an ATM withdrawal or one-time debit card

transaction, we will usually decline the transaction. In these cases, you may be unable to complete the

transaction unless you have another form of payment. If you want us to authorize and pay these

overdrafts, you can request overdraft coverage. Having overdraft coverage does not guarantee that we

will authorize your overdrafts in all cases. If we decide to authorize and pay an overdraft, we will charge

you a fee.

Even if you do not request overdraft coverage for ATM withdrawals and one-time debit card transactions,

overdrafts could still occur in some cases. For example, you may have enough money in your account

when we authorize a transaction, but other transactions may reduce the funds in your account before that

transaction clears. This may cause you to overdraw your account and you will be charged a fee.

Your choice will not affect whether we pay overdrafts for other types of transactions, including checks. If

we decide to pay these overdrafts, we will charge you a fee.

Overdraft Fees

 We will charge you up to $30 each time we pay an overdraft.

 We will also charge you $5 for each day your account remains overdrawn.

 There is no limit on the total amount of fees we can charge you for overdrawing your account.

Other Ways to Cover Your Overdrafts

We offer other ways of covering your overdrafts that may be less expensive, such as a link to another

account you have with us or an overdraft line of credit. Ask us about these options.

How to Request Overdraft Coverage or Get More Information

To request overdraft coverage or information about other ways to cover your overdrafts:

 Call us at 1-800-555-1234;

 Visit www.solarbank.com/overdrafts; or

 Complete the form below and mail it to Solar Bank, P.O. Box 1234, Pittsburgh, PA 19714.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

___ I want overdraft coverage for my ATM withdrawals and one-time debit card transactions.

___ I want information about other ways to cover my overdrafts.

Printed Name: _________________________

Date: _________________________

Account Number: _________________________
EXPLANATION OF OVERDRAFT COVERAGE

Description of Your Coverage

Unless you tell us otherwise, we provide overdraft coverage for your account. This means that if you do

not have enough money in your account for an ATM withdrawal or a one-time debit card transaction, we

may still authorize the transaction and pay the overdraft. Having overdraft coverage does not guarantee

that we will authorize your overdrafts in all cases. If we decide to pay an overdraft, we will charge you a

fee. See below for more information, including how to opt out if you do not want us to authorize any

ATM or one-time debit card overdrafts.

Overdraft Fees

 We will charge you up to $30 each time we pay an overdraft.

 We will also charge you $5 for each day your account remains overdrawn.

 There is no limit on the total amount of fees we can charge you for overdrawing your account.

Your Right to Opt Out of Overdraft Coverage

You may opt out of overdraft coverage for ATM withdrawals and one-time debit card transactions

by telling us not to authorize these transactions when you do not have enough money in your

account. Opting out may allow you to limit the overdraft fees you are charged. However, some

overdrafts could still occur even if you opt out. For example, you may have enough money in your

account when we authorize a transaction, but other transactions may reduce the amount in your account

before that transaction clears. If this causes an overdraft, you will be charged a fee.

Even if you opt out of coverage for ATM withdrawals and one-time debit card transactions, we may still

pay overdrafts for other types of transactions, including checks and recurring debits. If we do pay these

overdrafts, we will charge you a fee.

Other Ways to Cover Your Overdrafts

We offer other ways of covering your overdrafts that may be less expensive, such as a link to another

account you have with us or an overdraft line of credit. Ask us about these options.

How to Opt Out or Get More Information

To opt out of overdraft coverage or request information about other ways to cover your overdrafts:

 Call us at 1-800-555-1234;

 Visit www.solarbank.com/overdrafts; or

 Complete the form below and mail it to Solar Bank, P.O. Box 1234, Pittsburgh, PA 19714.

You do not need to do anything if you want overdraft coverage for your account.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

___ I do not want overdraft coverage for my ATM withdrawals and one-time debit card transactions.

___ I want information about other ways to cover my overdrafts.

Printed Name: _________________________

Date: _________________________

Account Number: _______________________

Version O2
Version I2

REQUESTING OVERDRAFT COVERAGE

Your Right to Request Overdraft Coverage

If you do not have enough money in your account for an ATM withdrawal or one-time debit card

transaction, we will usually decline the transaction. In these cases, you may be unable to complete the

transaction unless you have another form of payment. If you want us to authorize and pay these

overdrafts, you can request overdraft coverage. Having overdraft coverage does not guarantee that we

will authorize your overdrafts in all cases. If we decide to authorize and pay an overdraft, we will charge

you a fee.

Even if you do not request overdraft coverage for ATM withdrawals and one-time debit card transactions,

overdrafts could still occur in some cases. For example, you may have enough money in your account

when we authorize a transaction, but other transactions may reduce the funds in your account before that

transaction clears. This may cause you to overdraw your account and you will be charged a fee.

Whether or not you request overdraft coverage for ATM withdrawals and one-time debit card

transactions, we may still pay overdrafts for other types of transactions, including checks and recurring

debits. If we do pay these overdrafts, we will charge you a fee.

Overdraft Fees

 We will charge you up to $30 each time we pay an overdraft.

 We will also charge you $5 for each day your account remains overdrawn.

 There is no limit on the total amount of fees we can charge you for overdrawing your account.

Other Ways to Cover Your Overdrafts

We offer other ways of covering your overdrafts that may be less expensive, such as a link to another

account you have with us or an overdraft line of credit. Ask us about these options.

How to Request Overdraft Coverage or Get More Information

To request overdraft coverage or information about other ways to cover your overdrafts:

 Call us at 1-800-555-1234;

 Visit www.solarbank.com/overdrafts; or

 Complete the form below and mail it to Solar Bank, P.O. Box 1234, Pittsburgh, PA 19714.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

___ I want overdraft coverage for my ATM withdrawals and one-time debit card transactions.

___ I want information about other ways to cover my overdrafts.

Printed Name: _________________________

Date: _________________________

Account Number: _________________________
\

Appendix D:

Disclosure Notices 

Used in Round 2 of Testing 

 Notices Used on First Day of Testing:

o Version O3

o Version I3

 Notices Used on Second Day of Testing:

o Version O4

o Version I4

o Version I5
Version O3

YOUR CHOICES REGARDING OVERDRAFT COVERAGE

What is overdraft coverage?

Unless you tell us otherwise, we will automatically provide overdraft coverage for your account. This

means that if you make a transaction for more money than you have in your account, we may

authorize and pay the transaction anyway. However, having overdraft coverage does not guarantee

that we will always authorize your overdrafts. Note that this coverage differs from other overdraft

services we offer, such as a link to another account you have with us or an overdraft line of credit.

Will I be charged any fees for overdrawing my account?

Yes. We will charge you up to $30 each time we pay an overdraft. There is no limit on the total

amount of fees we can charge you for overdrawing your account.

What if I don’t want overdraft coverage?

You can opt out of overdraft coverage for ATM withdrawals and individual debit card transactions

(see below). However, even if you do opt out, we will still continue to provide overdraft coverage for

checks, automatic bill payments, and other types of transactions. If we do pay these overdrafts, we

will charge you fees.

Could I overdraw my account even if I opt out of overdraft coverage for ATM withdrawals and

debit card transactions?

Yes, in some cases. For example, you may have enough money in your account when we authorize a

debit card transaction, but other transactions may reduce the funds in your account before that

transaction clears. This may cause you to overdraw your account, and you will be charged fees.

What other options do I have for covering overdrafts?

We offer other ways of covering your overdrafts that may be less expensive, such as a link to another

account you have with us or an overdraft line of credit. Ask us about these options.

How do I opt out of overdraft coverage?

To opt out of overdraft coverage on ATM withdrawals and individual debit card transactions, or for

information about other ways to cover your overdrafts:

 Call us at 1-800-555-1234;

 Visit www.solarbank.com/overdrafts; or

 Complete the form below and mail it to Solar Bank, P.O. Box 1234, Pittsburgh, PA 19714.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

___ I do not want overdraft coverage for ATM withdrawals and individual debit card transactions.

Printed Name: _________________________

Date: _________________________

Account Number: _________________________
Version I3

YOUR CHOICES REGARDING OVERDRAFT COVERAGE

What is overdraft coverage?

If you have overdraft coverage and make a transaction for more money than you have in your account,

we may authorize and pay the transaction anyway. However, having overdraft coverage does not

guarantee that we will always authorize your overdrafts. Note that this coverage differs from other

overdraft services we offer, such as a link to another account you have with us or an overdraft line of

credit.

Will I be charged any fees for overdrawing my account?

Yes. We will charge you up to $30 each time we pay an overdraft. There is no limit on the total

amount of fees we can charge you for overdrawing your account.

What are my choices regarding overdraft coverage?

We provide overdraft coverage on your account for checks, automatic bill payments, and some other

types of transactions.

In addition, you have the option to sign up for overdraft coverage for ATM withdrawals and

individual debit card transactions (see below).

Could I overdraw my account even if I don’t sign up for overdraft coverage for ATM withdrawals

and debit card transactions?

Yes, in some cases. For example, you may have enough money in your account when we authorize a

debit card transaction, but other transactions may reduce the funds in your account before that

transaction clears. This may cause you to overdraw your account, and you will be charged fees.

What other options do I have for covering overdrafts?

We offer other ways of covering your overdrafts that may be less expensive, such as a link to another

account you have with us or an overdraft line of credit. Ask us about these options.

How do I sign up for overdraft coverage on ATM withdrawals and debit card transactions?

To sign up for overdraft coverage on ATM withdrawals and individual debit card transactions, or for

information about other ways to cover your overdrafts:

 Call us at 1-800-555-1234;

 Visit www.solarbank.com/overdrafts; or

 Complete the form below and mail it to Solar Bank, P.O. Box 1234, Pittsburgh, PA 19714.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

___ I want overdraft coverage for ATM withdrawals and individual debit card transactions.

Printed Name: _________________________

Date: _________________________

Account Number: _________________________
Version O4

YOUR CHOICES REGARDING OVERDRAFT COVERAGE

What is overdraft coverage?

Unless you tell us otherwise, we will automatically provide overdraft coverage for your account. This

means that if you make a transaction for more money than you have in your account, we may

authorize and pay the transaction anyway. However, having overdraft coverage does not guarantee

that we will always authorize your overdrafts. Note that this coverage differs from other overdraft

services we offer, such as a link to another account you have with us or an overdraft line of credit.

Will I be charged any fees for overdrawing my account?

Yes. We will charge you up to $30 each time we pay an overdraft. There is no limit on the total

amount of fees we can charge you for overdrawing your account.

What if I don’t want overdraft coverage?

You can opt out of overdraft coverage for ATM withdrawals and individual debit card transactions

(see below). However, even if you do opt out, we will still continue to provide overdraft coverage for

checks, automatic bill payments, and other types of transactions. If we do pay these overdrafts, we

will charge you fees.

Could I overdraw my account even if I opt out of overdraft coverage for ATM withdrawals and

debit card transactions?

Yes, in some cases. For example, you may have enough money in your account when we authorize a

debit card transaction, but other transactions may reduce the funds in your account before that

transaction clears. This may cause you to overdraw your account, and you will be charged fees.

What other options do I have regarding overdraft services?

We offer other overdraft services that may be less expensive, such as a link to another account you

have with us or an overdraft line of credit. Ask us about these options.

How do I opt out of overdraft coverage on ATM withdrawals and debit card transactions?

To opt out of overdraft coverage on ATM withdrawals and individual debit card transactions, or for

information about other overdraft services:

 Call us at 1-800-555-1234;

 Visit www.solarbank.com/overdrafts; or

 Complete the form below and mail it to Solar Bank, P.O. Box 1234, Pittsburgh, PA 19714.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

___ I do not want overdraft coverage for ATM withdrawals and individual debit card transactions.

Printed Name: _________________________

Date: _________________________

Account Number: _________________________
Version I4

YOUR CHOICES REGARDING OVERDRAFT COVERAGE

What is overdraft coverage?

If you have overdraft coverage and make a transaction for more money than you have in your account,

we may authorize and pay the transaction anyway. However, having overdraft coverage does not

guarantee that we will always authorize your overdrafts. Note that this coverage differs from other

overdraft services we offer, such as a link to another account you have with us or an overdraft line of

credit.

Will I be charged any fees for overdrawing my account?

Yes. We will charge you up to $30 each time we pay an overdraft. There is no limit on the total

amount of fees we can charge you for overdrawing your account.

Do I have overdraft coverage on my account?

We provide overdraft coverage on your account for checks, automatic bill payments, and some other

types of transactions.

In addition, you can also sign up for overdraft coverage for ATM withdrawals and individual debit

card transactions (see below).

Could I overdraw my account even if I don’t sign up for overdraft coverage for ATM withdrawals

and debit card transactions?

Yes, in some cases. For example, you may have enough money in your account when we authorize a

debit card transaction, but other transactions may reduce the funds in your account before that

transaction clears. This may cause you to overdraw your account, and you will be charged fees.

What other options do I have regarding overdraft services?

We offer other overdraft services that may be less expensive, such as a link to another account you

have with us or an overdraft line of credit. Ask us about these options.

How do I sign up for overdraft coverage on ATM withdrawals and debit card transactions?

To sign up for overdraft coverage on ATM withdrawals and individual debit card transactions, or for

information about other overdraft services:

 Call us at 1-800-555-1234;

 Visit www.solarbank.com/overdrafts; or

 Complete the form below and mail it to Solar Bank, P.O. Box 1234, Pittsburgh, PA 19714.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

___ I want overdraft coverage for ATM withdrawals and individual debit card transactions.

Printed Name: _________________________

Date: _________________________

Account Number: _________________________
Version I5

YOUR CHOICES REGARDING OVERDRAFT COVERAGE

What is overdraft coverage?

If you have overdraft coverage and make a transaction for more money than you have in your account,

we may authorize and pay the transaction anyway. However, having overdraft coverage does not

guarantee that we will always authorize your overdrafts. Note that this coverage differs from other

overdraft services we offer, such as a link to another account you have with us or an overdraft line of

credit.

Will I be charged any fees for overdrawing my account?

Yes. We will charge you up to $30 each time we pay an overdraft. There is no limit on the total

amount of fees we can charge you for overdrawing your account.

Do I have overdraft coverage on my account?

We provide overdraft coverage on your account for checks, automatic bill payments, and some other

types of transactions.

We do not provide overdraft coverage on your account for ATM withdrawals and individual debit

card transactions. However, if you want coverage on these transactions, you can sign up for it (see

below).

Could I overdraw my account even if I don’t sign up for overdraft coverage for ATM withdrawals

and debit card transactions?

Yes, in some cases. For example, you may have enough money in your account when we authorize a

debit card transaction, but other transactions may reduce the funds in your account before that

transaction clears. This may cause you to overdraw your account, and you will be charged fees.

What other options do I have regarding overdraft services?

We offer other overdraft services that may be less expensive, such as a link to another account you

have with us or an overdraft line of credit. Ask us about these options.

How do I request overdraft coverage on ATM withdrawals and debit card transactions?

To request overdraft coverage on ATM withdrawals and individual debit card transactions, or for

information about other overdraft services:

 Call us at 1-800-555-1234;

 Visit www.solarbank.com/overdrafts; or

 Complete the form below and mail it to Solar Bank, P.O. Box 1234, Pittsburgh, PA 19714.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

___ I want overdraft coverage for ATM withdrawals and individual debit card transactions.

Printed Name: _________________________

Date: _________________________

Account Number: _________________________
Appendix E:

Disclosure Notices 

Used in Round 3 of Testing 

 Notice Used on First Day of Testing:

o Version I6

 Notice Used on Second Day of Testing:

o Version I7

Note: Unlike the notices used in other rounds, Versions I6 and I7 were 

designed to be printed on legal-sized paper.
Version I6

What You Need to Know about Overdrafts and Overdraft Fees

 What is “overdraft coverage”?

If you have overdraft coverage and do not have enough money in your account to cover a transaction, we

may authorize and pay it anyway. We will charge you fees each time we pay an overdraft (see below).

Overdraft coverage is not the same as overdraft protection plans that we offer, which link your account with

a savings account, a credit card account or a line of credit.

 Do I have overdraft coverage on my account?

It depends on the kind of transaction you are making, as shown in the table below.

Type of transaction Do I have overdraft coverage?*

 Checks Yes

 Automatic bill payments Yes

 Transactions using your checking

account number Yes

 ATM transactions No, unless you sign up for it (see below)

 One-time debit card transactions No, unless you sign up for it (see below)

*Overdraft coverage is discretionary, and does not guarantee that we will pay all overdrafts.

 What happens if I don’t have overdraft coverage for a transaction?

If you do not have overdraft coverage, in most cases your transactions will be declined or returned.

However, there may be instances when you can still overdraw your account. For example, you may have

enough money in your account when we authorize a debit card transaction, but other transactions may

reduce the funds in your account before that transaction clears. This may cause you to overdraw your

account, and you will be charged fees.

 What are the fees for overdraft coverage?

Type of fee Fee**

 Overdraft fee Up to $30 for each overdraft item.

 Sustained overdraft fee $5 per day, if your account is overdrawn for 5 or

more consecutive business days.

**There is no limit on the total fees we can charge you for overdrawing your account.

 What alternatives do I have to overdraft coverage?

We offer overdraft protection plans that may be less expensive than overdraft coverage. These plans link

your account to another account with us, such as a savings account, credit card account or line of credit.

Ask us about these plans.

 How can I sign up for overdraft coverage for ATM and one-time debit card transactions?

To sign up for overdraft coverage for ATM and one-time debit card transactions, or for information about

overdraft protection plans:

 Call us at 1-800-555-1234;

 Visit www.solarbank.com/overdrafts; or

 Complete the form below and mail it to Solar Bank, P.O. Box 1234, Pittsburgh, PA 19714.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

___ I want to sign up for overdraft coverage for ATM and one-time debit card transactions.

Printed Name: _________________________

Date: _________________________

Account Number: _________________________
Version I7

What You Need to Know about Overdrafts and Overdraft Fees

 How does Solar Bank treat overdrafts on my account?

Even if you do not have enough money in your account to cover a transaction, we may authorize and pay it

anyway depending on the type of transaction you make. If we do, we will charge you fees (see below).

This service, which comes with your account, is called “overdraft coverage.”

As an alternative to overdraft coverage, we also offer overdraft protection plans that may be less expensive.

Ask us about these plans. Our overdraft protection plans include:

 A link to a savings account you have with us;

 A link to a credit card you have with us; or

 An overdraft line of credit.

 How does overdraft coverage apply to my account?

Overdraft coverage applies as shown in the table below.

Type of transaction Do I have overdraft coverage?*

Checks Yes

Automatic bill payments Yes

Transactions using your checking

account number Yes

ATM transactions No, unless you sign up for it (see below)

One-time debit card transactions No, unless you sign up for it (see below)

*Overdraft coverage is discretionary, and does not guarantee that we will pay all overdrafts.

 What happens if I don’t have overdraft coverage for a transaction?

If you do not have overdraft coverage, in most cases your transactions will be declined or returned.

However, there may be instances when you can still overdraw your account. For example, you may have

enough money in your account when we authorize a debit card transaction, but other transactions may

reduce the funds in your account before that transaction clears. This may cause you to overdraw your

account, and you will be charged fees.

 What are the fees for overdraft coverage?

Type of fee Fee**

Overdraft fee Up to $30 for each overdraft item.

Sustained overdraft fee $5 per day, if your account is overdrawn for 5 or

more consecutive business days.

**There is no limit on the total fees we can charge you for overdrawing your account.

 How can I sign up for overdraft coverage for ATM and one-time debit card transactions?

To sign up for overdraft coverage for ATM and one-time debit card transactions, or for information about

overdraft protection plans:

 Call us at 1-800-555-1234;

 Visit www.solarbank.com/overdrafts; or

 Complete the form below and mail it to Solar Bank, P.O. Box 1234, Pittsburgh, PA 19714.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

___ I want to sign up for overdraft coverage for ATM and one-time debit card transactions.

Printed Name: _________________________

Date: _________________________

Account Number: _________________________
Appendix F:

Disclosure Notice 

Used in Round 4 of Testing 

 Notice Used on Both Days of Testing:

o Version I8
Version I8

What You Need to Know about Overdrafts and Overdraft Fees

An overdraft occurs when you do not have enough money in your account to cover a transaction, but we pay it

anyway. We can cover your overdrafts in two different ways:

1. We have standard overdraft practices that come with your account.

2. We also offer overdraft protection plans, such as a link to a savings account, which may be less

expensive than our standard overdraft practices. To learn more, ask us about these plans.

This notice explains our standard overdraft practices.

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

We 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

We pay overdrafts at our discretion, which means we do not guarantee that we will always authorize and

pay any type of transaction.

If we do not authorize and pay an overdraft, your transaction will be declined.

 What fees will I be charged if Solar Bank pays my overdraft?

Under our standard overdraft practices:

 We will charge you a fee of up to $30 each time we pay an overdraft.

 Also, if your account is overdrawn for 5 or more consecutive business days, we will charge an

additional $5 per day.

 There is no limit on the total fees we can charge you for overdrawing your account.

 What if I also want Solar Bank to authorize and pay overdrafts on my ATM and everyday

debit card transactions?

If you also want us to authorize and pay overdrafts on ATM and everyday debit card transactions, call 1-

800-555-1234 or visit www.solarbank.com/overdrafts.
Macro International Inc.

11785 Beltsville Drive

Calverton, MD 20705

www.macrointernational.com