This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

9120 

Vol. 75, No. 39 

Monday, March 1, 2010 

DEPARTMENT OF ENERGY 

10 CFR Part 431 

[Docket No. EERE–2008–BT–TP–0014] 

RIN 1904–AB85 

Energy Conservation Program: Public 

Meeting and Availability of the Notice 

of Proposed Rulemaking for Walk-In 

Coolers and Walk-In Freezers; Date 

Change 

AGENCY: Office of Energy Efficiency and 

Renewable Energy, Department of 

Energy. 

ACTION: Proposed rulemaking; date 

change. 

SUMMARY: The Department of Energy 

published a proposed rule in the 

Federal Register on January 4, 2010, 

concerning a public meeting and 

availability of the notice of proposed 

rulemaking (NOPR) regarding test 

procedures for walk-in coolers and 

walk-in freezers. This document 

changes the date of the public meeting, 

the date of the deadline for requesting 

to speak at the public meeting, and the 

date of the deadline for submitting 

written comments on the framework 

document because the scheduled public 

meeting of February 11, 2010, was 

cancelled due to inclement weather, 

which forced a Federal Government 

shutdown. The public meeting will now 

be held on Wednesday, March 24, 2010, 

beginning at 9 a.m. The close of the 

comment period has been changed to 

March 31, 2010 in order to 

accommodate comments received at the 

public meeting and comments that may 

be submitted based on issues raised at 

the public meeting. 

FOR FURTHER INFORMATION CONTACT: Mr. 

Charles Llenza, U.S. Department of 

Energy, Building Technologies Program, 

EE–2J, 1000 Independence Avenue, 

SW., Washington, DC 20585–0121, (202) 

586–2192, Charles.Llenza@ee.doe.gov or 

Mr. Michael Kido, Esq., U.S. 

Department of Energy, Office of General 

Counsel, GC–72, 1000 Independence 

Avenue, SW., Washington, DC 20585– 

0121, (202) 586–8145, 

Michael.Kido@hq.doe.gov. 

DATES: DOE will hold a public meeting 

in Washington, DC on Wednesday, 

March 24, 2010, beginning at 9 a.m. 

DOE must receive requests to speak at 

the meeting before 4 p.m., Wednesday, 

March 10, 2010. DOE must receive a 

signed original and an electronic copy 

of statements to be given at the public 

meeting before 4 p.m., Wednesday, 

March 17, 2010. Written comments on 

the NOPR are welcome, especially 

following the public meeting, and 

should be submitted by Wednesday, 

March 31, 2010. 

ADDRESSES: The public meeting will be 

held at the U.S. Department of Energy, 

Forrestal Building, Room 8E–089, 1000 

Independence Avenue, SW., 

Washington, DC 20585–0121. To attend 

the public meeting, please notify Ms. 

Brenda Edwards at (202) 586–2945. 

Please note that foreign nationals 

participating in the public meeting are 

subject to advance security screening 

procedures, requiring a 30-day advance 

notice. If you are a foreign national and 

wish to participate in the public 

meeting, please inform DOE as soon as 

possible by contacting Ms. Brenda 

Edwards at (202) 586–2945 so that the 

necessary procedures can be completed. 

SUPPLEMENTARY INFORMATION: As noted 

above, DOE will hold a public meeting 

on Wednesday, March 24, 2010 in 

Washington, DC. The purpose of the 

meeting is to discuss the NOPR 

regarding test procedures for walk-in 

coolers and walk-in freezers. For 

additional information regarding the 

NOPR and the meeting, including 

detailed instructions for the submission 

of comments and access to the docket to 

read background documents or 

comments received, please refer to the 

January 4, 2010 proposed rule. 75 FR 

186. The Department welcomes all 

interested parties, regardless of whether 

they participate in the public meeting, 

to submit written comments regarding 

matters addressed in the NOPR, as well 

as any other related issues, by March 31, 

2010. 

Issued in Washington, DC, on February 22, 

2010. 

Cathy Zoi, 

Assistant Secretary, Energy Efficiency and 

Renewable Energy. 

[FR Doc. 2010–4124 Filed 2–26–10; 8:45 am] 

BILLING CODE 6450–01–P 

FEDERAL RESERVE SYSTEM 

12 CFR Part 205 

[Regulation E; Docket No. R–1343] 

Electronic Fund Transfers 

AGENCY: Board of Governors of the 

Federal Reserve System. 

ACTION: Proposed rule; request for 

public comment. 

SUMMARY: On November 17, 2009, the 

Board published final rules amending 

Regulation E, which implements the 

Electronic Fund Transfer Act, and the 

official staff commentary to the 

regulation. The final rule limited the 

ability of financial institutions to assess 

overdraft fees for paying automated 

teller machine (ATM) and one-time 

debit card transactions that overdraw a 

consumer’s account, unless the 

consumer affirmatively consents, or opts 

in, to the institution’s payment of 

overdrafts for those transactions. The 

Board proposes to amend Regulation E 

and the official staff commentary to 

clarify certain aspects of the final rule. 

DATES: Comments must be received on 

or before March 31, 2010. 

ADDRESSES: You may submit comments, 

identified by Docket No. R–1343, by any 

of the following methods: 

• Agency Web Site: http:// 

www.federalreserve.gov. Follow the 

instructions for submitting comments at 

http://www.federalreserve.gov/ 

generalinfo/foia/ProposedRegs.cfm. 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• E-mail: 

regs.comments@federalreserve.gov. 

Include the docket number in the 

subject line of the message. 

• Fax: (202) 452–3819 or (202) 452– 

3102. 

• Mail: Jennifer J. Johnson, Secretary, 

Board of Governors of the Federal 

Reserve System, 20th Street and 

Constitution Avenue, NW., Washington, 

DC 20551. 

All public comments are available 

from the Board’s Web site at http:// 

www.federalreserve.gov/generalinfo/ 

foia/ProposedRegs.cfm as submitted, 

unless modified for technical reasons. 

Accordingly, your comments will not be 

edited to remove any identifying or 

contact information. Public comments 

may also be viewed electronically or in 

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Federal Register / Vol. 75, No. 39 / Monday, March 1, 2010 / Proposed Rules 9121 

paper form in Room MP–500 of the 

Board’s Martin Building (20th and C 

Streets, NW.) between 9 a.m. and 5 p.m. 

on weekdays. 

FOR FURTHER INFORMATION CONTACT: 

Dana E. Miller or Vivian W. Wong, 

Senior Attorneys, or Ky Tran-Trong, 

Counsel, Division of Consumer and 

Community Affairs, at (202) 452–3667 

or (202) 452–2412, Board of Governors 

of the Federal Reserve System, 20th and 

C Streets, NW., Washington, DC 20551. 

For users of Telecommunications 

Device for the Deaf (TDD) only, contact 

(202) 263–4869. 

SUPPLEMENTARY INFORMATION: 

I. Background 

In November 2009, the Board adopted 

a final rule under Regulation E, which 

implements the Electronic Fund 

Transfer Act, limiting a financial 

institution’s ability to assess fees for 

paying ATM and one-time debit card 

transactions pursuant to the institution’s 

discretionary overdraft service without 

the consumer’s affirmative consent to 

such payment. The rule was published 

in the Federal Register on November 17, 

2009 and has a mandatory compliance 

date of July 1, 2010. See 74 FR 59033 

(Regulation E final rule). 

Since publication of the Regulation E 

final rule, institutions have requested 

clarification of particular aspects of the 

rule and further guidance regarding 

compliance with the rule. In addition, 

certain technical corrections are 

necessary. Accordingly, the Board is 

proposing to amend certain provisions 

of Regulation E and the official staff 

commentary, as discussed in Section III 

of this SUPPLEMENTARY INFORMATION. 

Separately, the Board is also proposing 

elsewhere in today’s Federal Register to 

amend Regulation DD to make certain 

clarifications and conforming 

amendments in light of particular 

provisions adopted in the Regulation E 

final rule. 

Although comment is requested on 

the proposed amendments, the Board 

emphasizes that the purpose of this 

rulemaking is to clarify and facilitate 

compliance with the final rule, not to 

reconsider the need for—or the extent 

of—the protections that the rule affords 

consumers. Thus, commenters are 

encouraged to limit their submissions 

accordingly. 

In addition, because the Board does 

not intend to extend the mandatory 

compliance date for the Regulation E 

final rule, any amendments must be 

adopted in final form promptly to give 

institutions sufficient time to implement 

the amended rule by July 1, 2010. In 

order to ensure that final clarifications 

can be provided as soon as possible, 

comments on this proposal must be 

submitted within 30 days from 

publication in the Federal Register. 

II. Statutory Authority 

The Electronic Fund Transfer Act, 15 

U.S.C. 1693 et seq., is implemented by 

the Board’s Regulation E (12 CFR part 

205). The purpose of the act and 

regulation is to provide a framework 

establishing the rights, liabilities, and 

responsibilities of participants in 

electronic fund transfer systems. An 

official staff commentary interprets the 

requirements of Regulation E (12 CFR 

part 205 (Supp. I)). In the 

SUPPLEMENTARY INFORMATION to the 

Regulation E final rule, the Board 

described its statutory authority and 

applied that authority to the 

requirements of the rule. For purposes 

of this rulemaking, the Board continues 

to rely on the description of its legal 

authority and analysis in the Regulation 

E final rule. 

III. Section-by-Section Analysis 

A. Section 205.17(a)—Definition 

Section 205.17(a) of the Regulation E 

final rule defines the term ‘‘overdraft 

service’’ for purposes of § 205.17. In 

particular, § 205.17(a)(3) of the final rule 

explains that the term does not include 

payments of overdrafts pursuant to a 

line of credit or other credit exempt 

from Regulation Z pursuant to 12 CFR 

226.3(d)—that is, credit secured by 

margin securities in brokerage accounts 

extended by Securities and Exchange 

Commission or Commodity Futures 

Trading Commission-registered brokerdealers. Comment 17(a)–1 provided 

further guidance on this exception. 

However, comment 17(a)–1 

inadvertently stated that ‘‘§ 205.17(a)(3) 

does not apply’’ to margin credit 

transactions. As drafted, this would 

mean that the § 205.17(a)(3) exception to 

the definition of ‘‘overdraft service’’ does 

not apply to margin credit. The 

proposed rule revises comment 17(a)–1 

to eliminate the incorrect reference. 

B. Section 205.17(b)—Opt-In 

Requirement 

17(b)(1), 17(b)(4)—General Rule and 

Scope of Opt-In; Notice and Opt-In 

Requirements 

Section 205.17(b)(1) of the Regulation 

E final rule sets forth the general rule 

prohibiting an account-holding financial 

institution from assessing a fee or charge 

on a consumer’s account held at the 

institution for paying an ATM or onetime debit card transaction pursuant to 

the institution’s overdraft service, 

unless the institution satisfies several 

requirements, including providing 

consumers notice and obtaining the 

consumer’s affirmative consent to the 

overdraft service. Section 205.17(b)(4) 

includes an exception from the notice 

and opt-in requirements of 

§ 205.17(b)(1) for institutions that have 

a policy and practice of declining ATM 

and one-time debit card transactions for 

which authorization is requested, when 

the institution has a reasonable belief 

that the consumer’s account has 

insufficient funds at the time of the 

authorization request. 

Since the issuance of the final rule, 

questions have been raised whether the 

§ 205.17(b)(4) exception would permit 

institutions with such a policy and 

practice to assess an overdraft fee 

without the consumer’s affirmative 

consent if an authorized transaction 

settles on insufficient funds. To clarify 

the scope of this provision, the Board is 

proposing to amend §§ 205.17(b)(1), 

(b)(4), and the related commentary to 

explain that the fee prohibition of 

§ 205.17(b)(1) applies to all institutions, 

and that § 205.17(b)(4) provides relief 

only from the requirements of 

§§ 205.17(b)(1)(i)–(iv), including the 

notice and opt-in requirements, when 

no overdraft fees are assessed. The 

proposal thus clarifies the Board’s intent 

that institutions cannot assess a fee for 

the payment of ATM and one-time debit 

card overdrafts if the consumer does not 

opt in, even if the institution has a 

policy and practice of declining ATM 

and one-time debit card transactions 

upon a reasonable belief that an account 

has insufficient funds. 

An institution may not be able to 

avoid paying certain ATM or one-time 

debit card transactions that overdraw a 

consumer’s account, even if a consumer 

does not opt in. This can occur in 

limited circumstances. For example, an 

institution may authorize a debit card 

transaction on the reasonable belief that 

there are sufficient funds in the account, 

but intervening transactions, such as 

checks, may reduce the available funds 

in the checking account before the debit 

card transaction is presented for 

settlement, causing an overdraft. Or, a 

merchant may request authorization of 

an amount that is less than the amount 

later submitted for settlement, or not 

request authorization at all. The 

proposal clarifies that in such 

circumstances, an institution may not 

assess an overdraft fee for paying the 

debit card transaction into overdraft. 

In the January 2009 proposed rule, the 

Board proposed two limited exceptions 

to the fee prohibition under proposed 

§ 205.17(b)(5), including one which 

would have permitted an institution to 

assess overdraft fees, even if the 

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1See 74 FR 59045 (noting that the proposed rule 

‘‘created an exception to the notice and opt-in 

requirement for institutions that have a policy and 

practice of declining to pay any ATM withdrawals 

or one-time debit card transactions for which 

authorization is requested, when the institution has 

a reasonable belief that the consumer’s account 

does not have sufficient funds available to cover the 

transaction at the time of the authorization request’’ 

(emphasis added)). 

2The Board is also proposing conforming 

revisions to § 205.17(b)(1). 

3The proposal also revises comment 17(b)(4)–1, 

redesignated as comment 17(b)(4)–2, to address the 

application of the final rule when institutions 

follow different practices for different types of 

accounts. The proposed comment is also revised to 

eliminate text now reflected in proposed new 

comment 17(b)(4)–1. 

4Some institutions have asked whether they may 

provide supplemental materials with the opt-in 

notices that describe their overdraft services. In 

footnote 39 to the Regulation E final rule, the Board 

explained that institutions may provide consumers 

other information about their overdraft services and 

other overdraft protection plans in a separate 

document outside of the opt-in notice. See 74 FR 

at 59047. However, institutions are reminded that, 

to the extent such additional materials promote the 

payment of overdrafts under Regulation DD, those 

materials may be subject to additional disclosure 

requirements under 12 CFR 230.11(b). 

consumer had not opted in, if the 

institution had a reasonable belief that 

there were sufficient funds available in 

the consumer’s account at the time it 

authorized an ATM or one-time debit 

card transaction. This exception did not 

extend to transactions for which the 

merchant did not request authorization. 

The Board declined to adopt the 

proposed exceptions to the fee 

prohibition under § 205.17(b)(5). See 74 

FR 59033, 59046 (Nov. 17, 2009). As 

explained in the SUPPLEMENTARY

INFORMATION to the Regulation E final 

rule, consumers who choose not to opt 

in may reasonably expect that an ATM 

or one-time debit card transaction will 

be declined if there are insufficient 

funds in their account, and that they 

will not be assessed overdraft fees. 

Adopting exceptions to the fee 

prohibition would undermine the 

consumer’s ability to understand the 

institution’s overdraft practices and 

make an informed choice. While the 

Board recognized that both financial 

institutions and consumers can have 

imperfect account balance information, 

the Board stated that financial 

institutions are in a better position to 

mitigate the information gap than 

consumers, such as through 

improvements to payment processing 

systems. 

By contrast, the exception adopted by 

the Board in § 205.17(b)(4) of the 

Regulation E final rule was intended to 

provide relief from the requirements of 

§§ 205.17(b)(1)(i)–(iv), including but not 

limited to the requirement to provide an 

opt-in notice.1 The exception was not 

intended to permit institutions to assess 

fees for paying overdrafts absent 

consumer consent. 

If § 205.17(b)(4) were read to permit 

an exception from the fee prohibition, 

consumers with accounts at institutions 

that do not offer discretionary overdraft 

programs would be treated differently 

and provided fewer protections than 

consumers at institutions that do offer 

such programs, where an institution 

cannot prevent paying overdrafts 

resulting from ATM and one-time debit 

card transactions. Specifically, 

consumers with accounts at institutions 

that do not offer discretionary overdraft 

services could be assessed an overdraft 

fee without consenting to the payment 

of overdrafts. In contrast, consumers 

with accounts at institutions that do 

offer discretionary overdraft services 

and who did not opt in could not be 

assessed such fees. Such a result would 

not promote transparency or benefit 

consumers overall. 

Nonetheless, the Board understands 

that the § 205.17(b)(4) exception could 

be read to permit institutions to assess 

overdraft fees, even if the consumer did 

not opt in. Accordingly, the Board is 

proposing to revise § 205.17(b)(4) and 

the related commentary to clarify that 

the prohibition on assessing overdraft 

fees under § 205.17(b)(1) applies to all 

institutions, including those institutions 

that have a policy and practice of 

declining to authorize and pay any ATM 

or one-time debit card transactions 

when the institution has a reasonable 

belief at the time of the authorization 

request that the consumer does not have 

sufficient funds available to cover the 

transaction.2 The proposal adds new 

comment 17(b)(4)–1 to explain that, 

assuming a consumer has not opted in, 

if an institution with such a policy and 

practice authorizes an ATM or one-time 

debit card transaction on the reasonable 

belief that the consumer has sufficient 

funds in the account to cover the 

transaction, but at settlement the 

consumer has insufficient funds in the 

account (for instance, due to intervening 

transactions that post to the consumer’s 

account), the institution may not assess 

an overdraft fee or charge for paying that 

transaction.3 However, institutions that 

have such a policy and practice are not 

required to comply with the 

requirements of §§ 205.17(b)(1)(i)–(iv), 

including the notice and opt-in 

requirements, if no fees are assessed.4

17(b)(1)(iv)—Written Confirmation 

Section 205.17(b)(1)(iv) states that an 

institution must provide the consumer a 

written confirmation of his or her optin choice before charging overdraft fees. 

The written confirmation helps ensure 

that a consumer intended to opt into an 

institution’s overdraft service by 

providing the consumer with a written 

record of that choice. Written 

confirmation is particularly appropriate 

to evidence the consumer’s choice 

where a consumer opts in by telephone. 

Some institutions have asked whether 

the written confirmation required by 

§ 205.17(b)(1)(iv) must be sent to the 

consumer before the institution may 

assess overdraft fees. 

The requirement to provide the 

confirmation before charging overdraft 

fees balances the interest in ensuring 

that consumers understand their choice, 

with the interest in providing 

consumers access to overdraft services 

expeditiously when requested. The 

requirement ensures that institutions 

send out the written confirmation 

promptly, which minimizes the time 

until consumers receive the 

confirmation, while recognizing that a 

consumer may not opt into an 

institution’s overdraft service until the 

time the service is needed. Permitting 

fees to be assessed once the written 

confirmation has been sent permits 

institutions to pay the transaction with 

minimal delay to the consumer. 

Consumers who did not intend to opt in 

would be able to revoke the opt-in at 

any time. 

To provide additional clarity, the 

Board is proposing to revise comment 

17(b)–7 to clarify that an institution may 

not assess any overdraft fees or charges 

on the consumer’s account until the 

institution has sent the written 

confirmation. To address concerns 

about operational and litigation risks 

related to tracking compliance with the 

requirements for charging overdraft fees, 

the proposed comment also states that 

an institution complies with 

§ 205.17(b)(1)(iv) if it has adopted 

reasonable procedures designed to 

ensure that the written confirmation is 

sent before fees are assessed. 

Comment 17(b)–8—Outstanding 

Negative Balance 

While many institutions charge the 

same per-item overdraft fee amount 

regardless of the amount of the 

consumer’s negative balance, some 

institutions impose tiered fees based on 

the amount of the consumer’s 

outstanding negative balance at the end 

of the day. For example, an institution 

may impose a $10 per-item overdraft fee 

if the consumer’s account is overdrawn 

by less than $20, and a $25 per-item 

overdraft fee if the account is overdrawn 

by $20 or more. Questions have been 

raised as to how overdraft fees may be 

assessed in these circumstances. 

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To the extent institutions impose 

tiered fees based on the amount of the 

consumer’s outstanding negative 

balance, proposed new comment 17(b)– 

8 clarifies that the fee or charge must be 

based on the amount of the negative 

balance attributable solely to check, 

ACH, or other transactions not subject to 

the fee prohibition. For instance, if a 

consumer’s negative balance of $30 is 

attributable in part to a debit card 

transaction that initially overdrew the 

account, and in part to a $10 check that 

the bank subsequently paid, the 

institution should base any overdraft 

fees solely on an outstanding negative 

balance of $10. 

Comment 17(b)–9—Daily or Sustained 

Overdraft, Negative Balance, or Similar 

Fees or Charges 

Some institutions assess daily or 

sustained overdraft, negative balance, or 

similar fees or charges when a consumer 

has overdrawn an account and has not 

repaid the amount overdrawn within a 

specified period of time. For example, 

today, if a consumer overdraws his or 

her account by $30, the institution may 

assess an overdraft fee of $20. If the 

resulting negative $50 balance is not 

paid back on the fifth day, the 

institution may assess an additional $20 

sustained overdraft fee. 

In certain circumstances, an ATM or 

one-time debit card transaction may 

overdraw a consumer’s account, even if 

the consumer has not opted in, as 

discussed above. The Board has been 

asked whether the prohibition in 

§ 205.17(b)(1) against assessing overdraft 

fees on ATM and one-time debit card 

transactions where the consumer has 

not opted in also extends to daily or 

sustained overdraft, negative balance, or 

similar fees or charges. 

In addition, a consumer who has not 

opted in may sometimes overdraw his 

or her account as a consequence of the 

payment both of ATM or one-time debit 

card transactions and of check, ACH, or 

other transactions not subject to the fee 

prohibition in § 205.17(b)(1). The Board 

has also been asked to clarify whether 

a daily or sustained overdraft, negative 

balance, or similar fee or charge may be 

assessed if an account is overdrawn 

based in part on an ATM or one-time 

debit card transaction and in part to a 

check, ACH or other type of transaction 

not subject to the final rule. The 

proposed clarifications would address 

both questions. 

Under the final rule, consumers who 

do not opt in may not be assessed any 

overdraft fees for paying ATM or onetime debit card transactions, including 

daily or sustained overdraft, negative 

balance, or similar fees or charges. As 

noted above, consumers who do not opt 

in may reasonably expect not to incur 

per-item overdraft fees for ATM and 

one-time debit card transactions, even if 

such transactions overdraw their 

account. Similarly, such consumers 

would reasonably expect not to incur 

daily or sustained overdraft, negative 

balance, or similar fees or charges due 

to these transactions. For clarity, 

proposed comment 17(b)–9.i explains 

that if a consumer has not opted in, the 

prohibition on assessing overdraft fees 

and charges in § 205.17(b)(1) applies to 

all overdraft fees or charges, including 

but not limited to daily or sustained 

overdraft, negative balance, or similar 

fees or charges, assessed for paying an 

ATM or one-time debit card transaction. 

Thus, where a consumer’s negative 

balance is attributable solely to an ATM 

or one-time debit card transaction, the 

rule prohibits the assessment of such 

sustained overdraft fees if the consumer 

has not opted in. For example, if a 

consumer who has not opted in has a 

$50 account balance, and the institution 

nonetheless pays a $60 debit card 

transaction (and no other transactions 

occur), the institution may not charge 

any overdraft fees, including a daily or 

sustained overdraft, negative balance, or 

similar fee or charge, for paying that 

debit card transaction. 

The Regulation E final rule applies 

solely to ATM and one-time debit card 

transactions. That is, the final rule does 

not apply to overdraft fees imposed in 

connection with other types of 

transactions, including check, ACH or 

recurring debit card transactions. As a 

result, institutions may impose daily or 

sustained overdraft, negative balance, or 

similar fees or charges associated with 

paying overdrafts for such transactions. 

For example, where a consumer has a 

$50 account balance, and the institution 

pays a $60 check, the institution may 

charge a per-item overdraft fee, as well 

as a daily or sustained, negative balance, 

or similar fee or charge if a negative 

balance remains outstanding. 

Similarly, proposed comment 17(b)– 

9.i clarifies that where the consumer’s 

negative balance is attributable in part 

to a check, ACH or other transaction not 

subject to the fee prohibition of 

§ 205.17(b)(1), an institution is not 

prohibited from assessing a daily or 

sustained overdraft, negative balance, or 

sustained fee, even if the negative 

balance is also attributable in part to an 

ATM or one-time debit card transaction. 

The Board believes this result is 

consistent with the general scope of the 

Regulation E final rule, which prohibits 

fees only with respect to ATM and onetime debit card transactions. For 

example, if a consumer has a $50 

account balance, and the institution 

posts a one-time debit card transaction 

of $60 and a check transaction of $40 

that same day, the institution may 

charge a per-item fee for the check 

overdraft (but cannot assess any 

overdraft fees for the debit card 

transaction because the consumer has 

not opted in). Likewise, assuming no 

other transactions occur or deposits are 

made to the account, because the 

consumer’s negative balance is 

attributable in part to the $40 check, the 

institution may charge a sustained 

overdraft fee when permitted by the 

account agreement. 

The proposal also provides guidance 

on the date on which such a fee may be 

assessed. Specifically, proposed 

comment 17(b)–9.i states that the date is 

determined by the date on which the 

check, ACH, or other transaction is paid 

into overdraft. Because the rule does not 

cover checks, ACH, or other 

transactions, the Board believes 

institutions may charge per-item 

overdraft fees, or sustained or other 

similar fees. Nonetheless, the Board 

believes it is appropriate to base the 

date on which fees may be charged on 

the date that the transaction not subject 

to the rule is paid. 

Proposed comment 17(b)–9.ii 

includes three examples illustrating 

how fees may be applied when a 

negative balance is attributable in part 

to a check, ACH, or other transaction 

not subject to § 205.17(b)(1). The first 

example demonstrates the general 

application of the rule. The second 

example addresses the result when a 

consumer with an outstanding negative 

balance makes a deposit that diminishes 

the negative balance, but does not bring 

the account current. The third example 

demonstrates how to determine the date 

when fees may apply when the check, 

ACH or other transaction is paid on a 

different date than the ATM or one-time 

debit card transaction that overdraws 

the account. 

The examples are based on certain 

assumptions. Among them are that the 

institution posts ATM and debit card 

transactions before it posts other 

transactions, and that it allocates 

deposits to debits in the same order in 

which it posts debits. Thus, the 

examples assume that deposits made to 

the account are allocated first to debit 

card transactions, then to checks. The 

proposed rule does not, however, 

require transactions to be posted or 

deposits to be allocated in the manner 

set forth in the example. Institutions 

may post transactions or allocate 

deposits as permitted by applicable law. 

The Board recognizes that 

programming systems to conform to the 

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proposed rule may raise operational and 

cost concerns, and could be challenging 

to implement by July 1, 2010. 

Institutions that do not make the 

necessary systems changes could not 

assess daily or sustained, negative 

balance or similar overdraft fees or 

charges, even on checks and other 

transactions not subject to the opt-in 

requirement, after the final rule’s 

mandatory compliance date of July 1, 

2010. 

17(b)(3)—Same Account Terms, 

Conditions, and Features 

Comment 17(b)(3)–2 provides 

guidance on limited-feature deposit 

account products in light of the 

requirement under § 205.17(b)(3) to offer 

consumers the same account terms, 

conditions, and features regardless of 

their opt-in choice. This comment 

inadvertently included an incorrect 

cross-reference. The proposal revises the 

comment to omit the cross-reference. 

IV. Regulatory Analysis 

Sections VII and VIII of the 

SUPPLEMENTARY INFORMATION to the 

Regulation E final rule set forth the 

Board’s analyses under the Regulatory 

Flexibility Act (5 U.S.C. 601 et seq.) and 

the Paperwork Reduction Act of 1995 

(44 U.S.C. 3506; 5 CFR part 1320 

Appendix A.1). See 74 FR 59050–59052. 

Because the proposed amendments are 

clarifications and would not, if adopted, 

alter the substance of the analyses and 

determinations accompanying the 

Regulation E final rule, the Board 

continues to rely on those analyses and 

determinations for purposes of this 

rulemaking. 

Text of Proposed Revisions 

Certain conventions have been used 

to highlight the proposed revisions. 

New language is shown inside flboldtype arrowsfi while language that 

would be deleted is set off with øboldtype brackets¿. 

List of Subjects in 12 CFR Part 205 

Consumer protection, Electronic fund 

transfers, Federal Reserve System, 

Reporting and recordkeeping 

requirements. 

Authority and Issuance 

For the reasons discussed in the 

preamble, the Board proposes to amend 

12 CFR part 205 and the Official Staff 

Commentary, as follows: 

PART 205—ELECTRONIC FUND 

TRANSFERS (REGULATION E) 

1. The authority citation for part 205 

continues to read as follows: 

Authority: 15 U.S.C. 1693b. 

2. Section 205.17 is amended by 

revising paragraphs (b)(1) introductory 

text and (b)(4) to read as follows: 

* * * * * 

(b) Opt-in requirement. (1) General. 

Except as provided under paragraphøs 

(b)(4) and¿ (c) of this section, a financial 

institution holding a consumer’s 

account shall not assess a fee or charge 

on a consumer’s account for paying an 

ATM or one-time debit card transaction 

pursuant to the institution’s overdraft 

service, unless the institution: 

* * * * * 

(4) øException to¿flApplication to 

certain financial institutions;fi notice 

and opt-in requirements. øThe 

requirements of § 205.17(b)(1) do not 

apply to an institution that has¿flThe 

prohibition on assessing overdraft fees 

under § 205.17(b)(1) applies to all 

institutions, including an institution 

that hasfi a policy and practice of 

declining to authorize and pay any ATM 

or one-time debit card transactions 

when the institution has a reasonable 

belief at the time of the authorization 

request that the consumer does not have 

sufficient funds available to cover the 

transaction.fl However, such an 

institution is not required to comply 

with the requirements of 

§§ 205.17(b)(1)(i)–(iv), including the 

notice and opt-in requirements, if it 

does not assess overdraft fees.fi 

Financial institutions may fl rely 

onfiøapply¿ this 

flprovisionfiøexception¿ on an 

accountfl typefi-by-accountfl typefi 

basis. 

* * * * * 

3. In Supplement I to part 205, 

a. In Section 205.17(a), paragraph 1. is 

revised. 

b. In Section 205.17(b), paragraph 7. 

is revised. 

c. In Section 205.17(b), new 

paragraphs 8. and 9. are added. 

d. In Section 205.17(b), paragraph 

17(b)(3)–2. is revised. 

e. In Section 205.17(b), paragraph 

17(b)(4)–1. is redesignated as 17(b)(4)–2. 

and revised, and new paragraph 

17(b)(4)–1. is added. 

Supplement I to Part 205—Official Staff 

Interpretations 

* * * * * 

Section 205.17(a)—Requirements for 

Overdraft Services 

17(a) Definition 

1. Exempt securities- and 

commodities-related lines of credit. 

øSection 205.17(a)(3)¿flThe definition 

of ‘‘overdraft service’’fi does not øapply 

to¿flinclude the payment offi 

transactions in a securities or 

commodities account pursuant to which 

credit is extended by a broker-dealer 

registered with the Securities and 

Exchange Commission or the 

Commodity Futures Trading 

Commission. 

17(b) Opt-In Requirement 

* * * * * 

7. Written confirmation. A financial 

institution may comply with the 

requirement in § 205.17(b)(1)(iv) by 

providing to the consumer a copy of the 

consumer’s completed opt-in form or by 

sending a letter or notice to the 

consumer acknowledging that the 

consumer has elected to opt into the 

institution’s service. The written 

confirmation notice must include a 

statement informing the consumer of his 

or her right to revoke the opt-in at any 

time. To the extent the institution 

complies with the written confirmation 

requirement by providing a copy of the 

completed opt-in form, the institution 

may include the statement about 

revocation on the initial opt-in notice.fl 

An institution may not assess any 

overdraft fees or charges on the 

consumer’s account until the institution 

has sent the written confirmation. An 

institution complies with this 

requirement if it has adopted reasonable 

procedures designed to ensure that the 

written confirmation is sent before fees 

are charged. 

8. Outstanding Negative Balance. For 

a consumer who has not opted in, to the 

extent that a fee or charge is based on 

the amount of the outstanding negative 

balance, the fee or charge must be based 

on the amount of the negative balance 

attributable solely to check, ACH, or 

other transactions not subject to the fee 

prohibition. For instance, if a 

consumer’s negative balance of $30 is 

attributable in part to a debit card 

transaction that overdrew the account, 

and in part to a $10 check subsequently 

paid by the institution, the institution 

should base any overdraft fees solely on 

an outstanding negative balance of $10. 

9. Daily or Sustained Overdraft, 

Negative Balance, or Similar Fee or 

Charge 

i. Daily or sustained overdraft, 

negative balance, or similar fees or 

charges. If a consumer has not opted 

into the institution’s overdraft service, 

the prohibition on assessing overdraft 

fees or charges in § 205.17(b)(1) applies 

to all overdraft fees or charges, 

including but not limited to daily or 

sustained overdraft, negative balance, or 

similar fees or charges. Thus, where a 

consumer’s negative balance is solely 

attributable to an ATM or one-time debit 

card transaction, the rule prohibits the 

assessment of such fees unless the 

consumer has opted in. However, the 

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Federal Register / Vol. 75, No. 39 / Monday, March 1, 2010 / Proposed Rules 9125 

rule does not prohibit an institution 

from assessing daily or sustained 

overdraft, negative balance, or similar 

fees or charges if a negative balance is 

attributable in whole or in part to a 

check, ACH, or other transaction not 

subject to the fee prohibition of 

§ 205.17(b)(1). In such case, the date on 

which such a fee may be assessed is 

determined by the date on which the 

check, ACH, or other transaction is paid 

into overdraft. 

ii. Examples. The following examples 

illustrate the application of the rule. For 

each example, assume the following: (a) 

The debit card transactions are paid into 

overdraft, even though the consumer 

has not opted in, because the amount of 

the transaction at settlement exceeded 

the amount authorized or the amount 

was not submitted for authorization; (b) 

under the terms of the account 

agreement, the institution may charge a 

one-time sustained overdraft fee of $20 

on the fifth consecutive day the 

consumer’s account remains overdrawn; 

(c) the institution posts ATM and debit 

card transactions before other 

transactions; and (d) the allocates 

deposits to account debits in the same 

order in which it posts debits. 

a. Assume that a consumer has a $50 

account balance on March 1. That day, 

the institution posts a one-time debit 

card transaction of $60 and a check 

transaction of $40. The institution 

charges an overdraft fee of $20 for the 

check overdraft but cannot assess any 

overdraft fees for the debit card 

transaction because the consumer has 

not opted in. At the end of the day, the 

consumer has an account balance of 

negative $70. The consumer does not 

make any deposits to the account, and 

no other transactions occur between 

March 2 and March 6. Because the 

consumer’s negative balance is 

attributable in part to the $40 check 

(and associated overdraft fee), the 

institution may charge a sustained 

overdraft fee on March 6. 

b. Same facts as in a., except that on 

March 3, the consumer deposits $40 in 

the account. The institution allocates 

the $40 to the debit card transaction 

first, consistent with its posting order 

policy. At the end of the day on March 

3, the consumer has an account balance 

of negative $30, which is attributable to 

the check transaction (and associated 

overdraft fee). The consumer does not 

make any further deposits to the 

account, and no other transactions occur 

between March 4 and March 6. Because 

the remaining negative balance is 

attributable to the March 1 check 

transaction, the institution may charge a 

sustained overdraft fee on March 6. 

c. Assume that a consumer has a $50 

account balance on March 1. That day, 

the institution posts a one-time debit 

card transaction of $60. At the end of 

the day on March 1, the consumer has 

an account balance of negative $10. 

Because the consumer did not opt in, 

the institution may not assess an 

overdraft fee for the debit card 

transaction. On March 3, the institution 

pays a check transaction of $100 and 

charges an overdraft fee of $20. At the 

end of the day on March 3, the 

consumer has an account balance of 

negative $130. The consumer does not 

make any further deposits to the 

account, and no other transactions occur 

between March 4 and March 8. Because 

the consumer’s negative balance is 

attributable in part to the check, the 

institution may assess a $20 sustained 

overdraft fee. However, because the 

check was paid on March 3, the 

institution must use March 3 as the start 

date for determining the date on which 

the sustained overdraft fee may be 

assessed under the terms of the account 

agreement. Thus, the institution may 

charge a $20 sustained overdraft fee on 

March 8.fi 

* * * * * 

Paragraph 17(b)(3)—Same Account 

Terms, Conditions, and Features 

* * * * * 

2. Limited-feature bank accounts. 

Section 205.17(b)(3) does not prohibit 

institutions from offering deposit 

account products with limited features, 

provided that a consumer is not 

required to open such an account 

because the consumer did not opt in 

ø(see comment 17(b)(3)–2)¿. For 

example, § 205.17(b)(3) does not 

prohibit an institution from offering a 

checking account designed to comply 

with state basic banking laws, or 

designed for consumers who are not 

eligible for a checking account because 

of their credit or checking account 

history, which may include features 

limiting the payment of overdrafts. 

However, a consumer who applies, and 

is otherwise eligible, for a full-service or 

other particular deposit account product 

may not be provided instead with the 

account with more limited features 

because the consumer has declined to 

opt in. 

* * * * * 

Paragraph 17(b)(4)—øException 

to¿flApplication to certain financial 

institutions;fi notice and opt-in 

requirements. 

fl1. Application of fee prohibition. 

Although the fee prohibition in 

§ 205.17(b)(1) applies to all institutions, 

an institution that has a policy and 

practice of declining to authorize and 

pay ATM or one-time debit card 

transactions when it has a reasonable 

belief that the consumer does not have 

sufficient funds to cover the transaction 

is not required to provide an opt-in 

notice or comply with the other 

requirements of §§ 205.17(b)(1)(i)–(iv). 

Nonetheless, the prohibition against 

assessing overdraft fees or charges in 

§ 205.17(b)(1) still applies. For example, 

if an institution with such a policy and 

practice authorizes an ATM or one-time 

debit card transaction on the reasonable 

belief that the consumer has sufficient 

funds in the account to cover the 

transaction, but at settlement, the 

consumer has insufficient funds in the 

account (for example, due to intervening 

transactions that post to the consumer’s 

account), the institution may not assess 

an overdraft fee or charge for paying that 

transaction, and it is not required to 

provide an opt-in notice. 

2fiø1¿. Accountfltypefi-by-account 

fltype applicationfiøexception¿. øIf a 

financial institution has a policy and 

practice of declining to authorize and 

pay any ATM or one-time debit card 

transactions with respect to one type of 

deposit account offered by the 

institution, when the institution has a 

reasonable belief at the time of the 

authorization request that the consumer 

does not have sufficient funds available 

to cover the transaction, that account is 

not subject to § 205.17(b)(1), even if 

other accounts that the institution offers 

are subject to the rule. For example, if 

the institution¿ flIf a financial 

institution fioffers three types of 

checking accounts, and the institution 

has øsuch¿ a policy and practice flof 

declining to authorize and pay any ATM 

or one-time debit card transactions 

when it has a reasonable belief that the 

consumer does not have sufficient funds 

to cover the transaction fiwith respect 

to only one of the three types of 

accounts, that øone¿ type of account is 

not subject to the notice fland opt-in 

firequirementfls, assuming no fees are 

chargedfi. However, the other two 

types of accounts offered by the 

institution remain subject to the notice 

fland opt-in firequirementflsfi. 

* * * * * 

By order of the Board of Governors of the 

Federal Reserve System, February 18, 2010. 

Jennifer J. Johnson, 

Secretary of the Board. 

[FR Doc. 2010–3720 Filed 2–26–10; 8:45 am] 

BILLING CODE 6210–01–P 

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