Federal Register / Vol. 75, No. 107 / Friday, June 4, 2010 / Rules and Regulations 31673 

1The Board published a technical amendment in 

April 2009 correcting a printing error with respect 

to Sample Form B–10. Depository institutions must 

use Sample Form B–10, or a substantially similar 

form, including the box and gridlines, to provide 

totals for overdraft fees and returned item fees for 

the statement cycle and year-to-date. 74 FR 17768 

(April 17, 2009). See § 230.11(a). 

product may not be provided instead with 

the account with more limited features 

because the consumer has declined to opt in. 

* * * * * 

Paragraph 17(c) Timing 

* * * * * 

2. Permitted fees or charges. Fees or 

charges for ATM and one-time debit card 

overdrafts may be assessed only for 

overdrafts paid on or after the date the 

financial institution receives the consumer’s 

affirmative consent to the institution’s 

overdraft service. See also comment 17(b)–7. 

Paragraph 17(d) Content and Format 

* * * * * 

3. Opt-in methods. The opt-in notice must 

include the methods by which the consumer 

may consent to the overdraft service for ATM 

and one-time debit card transactions. 

Institutions may tailor Model Form A–9 to 

the methods offered to consumers for 

affirmatively consenting to the service. For 

example, an institution need not provide the 

tear-off portion of Model Form A–9 if it is 

only permitting consumers to opt-in 

telephonically or electronically. Institutions 

may, but are not required, to provide a 

signature line or check box where the 

consumer can indicate that he or she declines 

to opt in. 

4. Identification of consumer’s account. An 

institution may use any reasonable method to 

identify the account for which the consumer 

submits the opt-in notice. For example, the 

institution may include a line for a printed 

name and an account number, as shown in 

Model Form A–9. Or, the institution may 

print a bar code or use other tracking 

information. See also comment 17(b)–6, 

which describes how an institution obtains a 

consumer’s affirmative consent. 

5. Alternative plans for covering overdrafts. 

If the institution offers both a line of credit 

subject to the Board’s Regulation Z (12 CFR 

part 226) and a service that transfers funds 

from another account of the consumer held 

at the institution to cover overdrafts, the 

institution must state in its opt-in notice that 

both alternative plans are offered. For 

example, the notice might state ‘‘We also offer 

overdraft protection plans, such as a link to 

a savings account or to an overdraft line of 

credit, which may be less expensive than our 

standard overdraft practices.’’ If the 

institution offers one, but not the other, it 

must state in its opt-in notice the alternative 

plan that it offers. If the institution does not 

offer either plan, it should omit the reference 

to the alternative plans. 

By order of the Board of Governors of the 

Federal Reserve System, May 27, 2010. 

Jennifer J. Johnson, 

Secretary of the Board. 

[FR Doc. 2010–13280 Filed 6–3–10; 8:45 am] 

BILLING CODE 6210–01–P 

FEDERAL RESERVE SYSTEM 

12 CFR Part 230 

[Regulation DD; Docket No. R–1315] 

Truth in Savings 

AGENCY: Board of Governors of the 

Federal Reserve System. 

ACTION: Final rule. 

SUMMARY: On January 29, 2009, the 

Board published final rules amending 

Regulation DD, which implements the 

Truth in Savings Act, and the official 

staff commentary to the regulation. The 

final rule addressed depository 

institutions’ disclosure practices related 

to overdraft services, including balances 

disclosed to consumers through 

automated systems. The Board is 

amending Regulation DD and the 

official staff commentary to address the 

application of the rule to retail sweep 

programs and the terminology for 

overdraft fee disclosures, and to make 

amendments that conform to the Board’s 

final Regulation E amendments 

addressing overdraft services, adopted 

in November 2009. 

DATES: The final rule is effective July 6, 

2010, except for § 230.11(a)(1)(i), which 

is effective October 1, 2010. 

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 December 2008, the Board adopted 

a final rule amending Regulation DD, 

which implements the Truth in Savings 

Act, and the official staff commentary to 

the regulation. The final rule addressed 

depository institutions’ disclosure 

practices related to overdraft services, 

including balances disclosed to 

consumers through automated systems. 

The rule was published in the Federal 

Register on January 29, 2009 and 

became effective January 1, 2010. See 74 

FR 5584 (Regulation DD final rule).1

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 two rules, 

institutions and others have requested 

clarification of particular aspects of the 

rule and further guidance regarding 

compliance with the rule. In addition, 

conforming amendments to the 

Regulation DD final rule are necessary 

in light of certain provisions 

subsequently adopted in the Regulation 

E final rule. Accordingly, the Board 

proposed to amend Regulation DD and 

the official staff commentary. 75 FR 

9126 (March 1, 2010). 

The Board received twelve comments 

on the proposed rule, including from 

financial institutions and their trade 

associations, as well as from a 

consortium of consumer groups. The 

final rule adopts the proposed rule 

substantially as proposed, with certain 

clarifications. Similarly, elsewhere in 

today’s Federal Register, the Board is 

amending certain aspects of the 

Regulation E final rule. 

II. Statutory Authority 

The Truth in Savings Act, 12 U.S.C. 

4301 et seq., is implemented by the 

Board’s Regulation DD (12 CFR part 

230). The purpose of the act and 

regulation is to assist consumers in 

comparing deposit accounts offered by 

depository institutions, principally 

through the disclosure of fees, the 

annual percentage yield, the interest 

rate, and other account terms. An 

official staff commentary interprets the 

requirements of Regulation DD (12 CFR 

part 230 (Supp. I)). Credit unions are 

governed by a substantially similar 

regulation issued by the National Credit 

Union Administration. In the 

SUPPLEMENTARY INFORMATION to the 

Regulation DD 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 that legal authority and 

analysis. 


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31674 Federal Register / Vol. 75, No. 107 / Friday, June 4, 2010 / Rules and Regulations 

2The official staff commentary to Regulation DD 

provides that institutions should not use the generic 

term ‘‘insufficient funds fee’’ or ‘‘NSF fee’’ to 

describe both fees for paying overdrafts and fees for 

returning items unpaid. See, e.g., comment 6(a)(3)– 

2.iv (institutions may group itemized fees, but may 

not group together fees for paying overdrafts and 

fees for returning checks or other items unpaid). 

III. Section-by-Section Analysis 

A. Section 230.6(a)—Periodic Statement 

Disclosures; General Rule 

Section 230.6(a) describes disclosures 

that are required to be made when 

periodic statements are provided, 

including certain fees or charges. The 

Board proposed two technical 

amendments to § 230.6(a) and the 

related staff commentary. First, the 

Board proposed to add a new 

§ 230.6(a)(5) to explicitly state that the 

aggregate fee disclosures required by 

§ 230.11(a)(1), discussed below, are 

among the disclosures that are required 

to be provided on periodic statements 

for purposes of § 230.6(a). Second, the 

Board proposed to revise comment 

6(a)(3)–2, to eliminate the reference to 

the promotion of the payment of 

overdrafts because the Regulation DD 

final rule extended the aggregate fee 

disclosure to all institutions. The Board 

did not receive comment on the 

proposed amendments, which are 

adopted substantially as proposed. 

Section 230.6(a)(5) has been revised 

from the proposal to indicate that the 

aggregate fee disclosure is required on 

periodic statements ‘‘if applicable,’’ 

because § 230.11(a) does not require 

aggregate fee disclosures when a 

consumer has not incurred any 

overdraft fees for the calendar year-todate. 

B. Section 230.11(a)—Disclosure of 

Total Fees on Periodic Statements 

Section 230.11(a)(1)(i) requires 

institutions to disclose on each periodic 

statement, as applicable, the total dollar 

amount of all fees or charges imposed 

on the account for paying checks or 

other items when there are insufficient 

or unavailable funds and the account 

becomes overdrawn for the month and 

calendar year-to-date. Sample Form B– 

10 displays this total as ‘‘Total Overdraft 

Fees.’’ Section 230.11(a)(1)(ii) requires 

institutions to disclose separately the 

total dollar amount of all fees or charges 

imposed on the account for returning 

items unpaid for the month and 

calendar year-to-date. 12 CFR 

230.11(a)(1)(ii). Comment 230.11(a)(1)–3 

states that institutions may use 

terminology such as ‘‘returned item fee’’ 

or ‘‘NSF fee’’ to describe fees for 

returning items unpaid. These fee totals 

must be disclosed in a tabular format 

substantially similar to Sample Form B– 

10. 12 CFR 230.11(a)(3). 

Some institutions may use terms other 

than ‘‘Overdraft Fee’’ to describe peritem overdraft fees in their account 

agreements. Comment 3(a)–2 to 

Regulation DD provides that institutions 

must use consistent terminology in their 

account-opening disclosures, periodic 

statements, and other disclosures. In 

light of this comment, questions have 

been raised as to whether institutions 

may use terminology other than ‘‘Total 

Overdraft Fees’’ in the periodic 

statement aggregate fee disclosure to 

describe the total amount of all fees or 

charges imposed on the account for 

paying overdrafts. 

The Board proposed to revise 

§ 230.11(a)(1)(i) to clarify that the 

periodic statement aggregate fee 

disclosure must state the total dollar 

amount for all fees or charges imposed 

on the account for paying overdrafts, 

using the term ‘‘Total Overdraft Fees.’’ 

Proposed comment 11(a)(1)–2 explained 

that this provision supersedes comment 

3(a)–2. Consumer group commenters 

supported the proposed requirement. In 

particular, these commenters suggested 

that the use of the terms ‘‘NSF Fee’’ and 

‘‘Overdraft Fee’’ interchangeably has led 

to confusion for consumers. Several 

industry commenters objected to the 

proposed terminology requirement, 

stating that customers are used to seeing 

certain terms used to describe overdraft 

fees, such as ‘‘NSF Items Paid.’’ 2 Other 

commenters stated that the Board 

should permit alternative terminology, 

such as ‘‘Total Overdraft Fees for Paid 

Items.’’ The Board is adopting the 

revisions generally as proposed, with 

minor revisions for clarity. 

Section 230.11(a)(1)(i) requires 

institutions to provide a fee total that 

includes all overdraft fees, including 

any additional daily or sustained 

overdraft, negative balance, or similar 

fees or charges imposed by the 

institution. See comment 11(a)(1)–2. 

Thus, the use of terminology other than 

‘‘Total Overdraft Fees’’ may not capture 

the various fees associated with an 

overdraft service. Moreover, the purpose 

of the aggregate fee disclosure is to 

provide consumers who use overdraft 

services with additional information 

about fees to help them better 

understand the costs associated with the 

service. Permitting the use of 

terminology other than ‘‘Total Overdraft 

Fees’’ could be confusing to consumers 

and potentially undermines their ability 

to compare costs, particularly if a 

consumer has accounts at different 

institutions that each use different 

terminology. The Board does not believe 

the alternative terminology suggested by 

commenters furthers consumer 

understanding. 

C. Section 230.11(c)—Disclosure of 

Account Balances 

Comment 11(c)–2—Retail Sweep 

Programs 

Section 230.11(c) of the Regulation 

DD final rule addresses the disclosure of 

account balance information to a 

consumer through an automated system. 

Under § 230.11(c), institutions must 

disclose a balance that does not include 

additional amounts that the institution 

may provide to cover an item when 

there are insufficient or unavailable 

funds in the consumer’s account, 

including under a service to transfer 

funds from another account of the 

consumer. The Board adopted this 

provision to ensure that consumers 

receive accurate information about their 

account balances and to help avoid 

consumer confusion as to whether an 

account has sufficient funds to cover a 

transaction. 

After publication of the Regulation 

DD final rule, questions were raised 

about the application of the rule to retail 

sweep programs. In a retail sweep 

program, an institution establishes two 

legally distinct subaccounts, a 

transaction subaccount and a savings 

subaccount, which together make up the 

consumer’s account. The institution 

allocates and transfers funds between 

the two subaccounts in order to 

maximize the balance in the savings 

subaccount while complying with the 

monthly limitations on transfers out of 

savings accounts under the Board’s 

Regulation D, 12 CFR 204.2(d)(2). 

Certain characteristics distinguish retail 

sweep programs from overdraft services. 

Therefore, the Board proposed to add a 

new comment 11(c)–2 to clarify that, 

when disclosing a transaction account 

balance, § 230.11(c) does not require an 

institution to exclude from the 

consumer’s balance funds that may be 

transferred from another account 

pursuant to a retail sweep program. 

Commenters supported this 

clarification, but stated that the 

comment should also permit 

institutions to include in the disclosed 

balance funds in investment products 

linked to transaction accounts pursuant 

to investment sweep programs. The 

comment is adopted substantially as 

proposed. 

Retail sweep programs are 

distinguishable in several respects from 

overdraft protection plans that transfer 

funds from a consumer’s linked 

accounts. In particular, retail sweep 

programs are generally not established 

for the purpose of covering overdrafts. 


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Federal Register / Vol. 75, No. 107 / Friday, June 4, 2010 / Rules and Regulations 31675 

3 Due to the clarifications finalized by the Board 

today, comment 11(c)–3 of the Regulation DD final 

rule has been redesignated as comment 11(c)–4. 

Rather, institutions typically establish 

retail sweep programs by agreement 

with the consumer, in order for the 

institution to minimize its transaction 

account reserve requirements and, in 

some cases, to provide a higher interest 

rate than the consumer would earn on 

a transaction account alone. 

Furthermore, most retail sweep 

programs are structured so that the 

consumer (or person acting on behalf of 

the consumer) cannot independently 

access the funds in the savings 

subaccount; all transfers out of, and 

deposits or transfers into, the savings 

subaccount component of a retail sweep 

program are effected through the 

transaction subaccount. 

Notwithstanding the establishment of 

two legally distinct subaccounts under a 

retail sweep program, the periodic 

statements that consumers receive show 

a single consumer account balance, and 

a single account on which all 

transactions into and out of the account 

are reflected. 

By contrast, linked accounts can be 

used and funded independently of one 

another. For example, a consumer can 

directly make deposits into, and 

withdrawals from, a savings account 

whether or not it is linked to a checking 

account. The link between accounts 

under an overdraft protection program 

is primarily established for purposes of 

providing funds from the savings 

account in the event that the consumer 

has insufficient funds in the checking 

account. Additionally, while retail 

sweep programs typically do not impose 

fees on transfers between the savings 

subaccount and the transaction 

subaccount, institutions typically charge 

fees for transfers from linked accounts 

to cover an overdraft. 

Based on the foregoing, the Board 

believes that consumers under a retail 

sweep program may reasonably expect 

to see a single balance combining the 

funds in the transaction subaccount and 

the savings subaccount when they 

request an account balance. Consumers 

could be confused if a balance that only 

includes funds in the transaction 

subaccount were provided because, in 

some cases, the balance in the 

transaction subaccount could be zero (to 

the extent funds had been transferred to 

the savings subaccount at the time of the 

balance inquiry). Thus, the final 

comment clarifies that § 230.11(c) does 

not require an institution to exclude 

from the consumer’s balance funds that 

may be transferred from another account 

pursuant to a retail sweep program. 

Some industry commenters stated that 

the Board should also permit 

institutions to include in the disclosed 

balance funds in investment products 

linked to transaction accounts pursuant 

to investment sweep programs. In an 

investment sweep program, a consumer 

links a transaction account at a 

depository institution with an 

investment product at a broker-dealer, 

investment institution, or the depository 

institution. The transaction account and 

the linked investment product are 

generally established 

contemporaneously. Investment sweep 

programs are normally not established 

for the purpose of covering overdrafts. 

Rather, deposits and other credits to the 

transaction account are swept on a 

regular basis to the investment product 

to provide the consumer a potentially 

higher rate of return, while providing 

consumers access to the funds through 

the transaction account. Fees are 

typically not charged for the transfers. 

For these reasons, the Board believes 

that investment sweep programs with 

these characteristics are also 

distinguishable from overdraft 

protection plans that transfer funds from 

a consumer’s linked accounts, and the 

balances in the linked investment 

product could be included in the 

balance disclosed under § 230.11(c). 

Comment 11(c)–3—Additional Balance 

Section 230.11(c) of the Regulation 

DD final rule permitted institutions to 

disclose an additional balance including 

overdraft funds, so long as the 

institution prominently states that the 

balance contains additional overdraft 

funds. Comment 11(c)–2 of the final rule 

provided guidance on how institutions 

could appropriately identify the 

additional funds. However, the 

comment only addressed opt-outs. The 

Board subsequently adopted the 

November 2009 Regulation E final rule, 

which requires institutions to obtain a 

consumer’s affirmative consent, or optin, to the institution’s overdraft service, 

before charging any fees for paying ATM 

and one-time debit card transactions. In 

light of the final Regulation E opt-in 

requirement, the Board proposed to 

amend comment 11(c)–2, redesignated 

as comment 11(c)–3, to include 

references to the opt-in requirement. 

References to opt-outs were retained in 

some instances because some 

institutions may provide an opt-out 

choice with respect to checks, ACH, and 

other types of transactions not subject to 

the Regulation E final rule restrictions. 

The Board also proposed to extend 

the requirement to indicate, when 

applicable, that funds in the additional 

balance may not be available for all 

transactions. For example, if a consumer 

has an overdraft line of credit, but under 

the terms of the agreement with the 

institution, the consumer cannot access 

the line of credit when using a debit 

card at a point-of-sale transaction, the 

proposed comment should state that any 

additional balance displayed through an 

automated system should indicate that 

the overdraft funds are not available for 

all transactions. 

The Board did not receive comment 

on the proposed comment, which is 

adopted substantially as proposed with 

non-substantive revisions.3

D. Effective Date 

Because some depository institutions 

may be using terminology other than 

‘‘Total Overdraft Fees’’ in their aggregate 

fee disclosure under § 230.11(a)(1), the 

Board proposed to make the proposed 

revisions to § 230.11(a)(1)(i) effective 

approximately 90 days after publication 

of the final rule in the Federal Register. 

The Board solicited comment on 

whether this would be an appropriate 

time period for implementation. 

Consumer group commenters stated that 

this time frame would be reasonable, 

but that the Board should not extend the 

effective date further. Two industry 

trade associates urged the Board to 

provide an implementation time of six 

to nine months because institutions’’ 

resources are currently devoted to 

coming into compliance with the 

Regulation E final rule. 

Section 302 of the Riegle Community 

Improvement Development and 

Regulatory Improvement Act of 1994, 12 

U.S.C. 4802, requires regulations that 

impose additional disclosure 

requirements to take effect on the first 

day of a calendar quarter beginning on 

or after the date on which the 

regulations are published in final form, 

unless the agency determines, for good 

cause published with the regulation, 

that the regulation should become 

effective before such time. The Board 

believes that an approximately 90-day 

effective date is appropriate because 

final § 230.11(a)(1)(i) will require some 

institutions to modify the disclosures 

provided to consumers. An effective 

date of July 1, 2010, which is the first 

calendar quarter following publication 

of this final rule, would not provide 

sufficient time for compliance. Thus, 

§ 230.11(a)(1)(i) is effective October 1, 

2010, which is the first day of the 

subsequent calendar quarter. The 

remaining provisions of the final rule 

are effective July 6, 2010. 

IV. Regulatory Analysis 

Sections VI and VII of the 

SUPPLEMENTARY INFORMATION to the 


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31676 Federal Register / Vol. 75, No. 107 / Friday, June 4, 2010 / Rules and Regulations 

Regulation DD 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 5591–5593. 

Because the final amendments are 

clarifications and do not alter the 

substance of the analyses and 

determinations accompanying the 

Regulation DD final rule, the Board 

continues to rely on those analyses and 

determinations for purposes of this 

rulemaking. 

List of Subjects in 12 CFR Part 230 

Advertising, Banks, Banking, 

Consumer protection, Reporting and 

recordkeeping requirements, Truth in 

savings. 

Authority and Issuance 

■ For the reasons set forth above, the 

Board amends 12 CFR part 230 and the 

Official Staff Commentary, as set forth 

below: 

PART 230—TRUTH IN SAVINGS 

(REGULATION DD) 

■ 1. The authority citation for part 230 

continues to read as follows: 

Authority: 12 U.S.C. 4301 et seq. 

■ 2. Section 230.6 is amended by adding 

paragraph (a)(5) to read as follows: 

§ 230.6 Periodic statement disclosures. 

(a) * * * 

(5) Aggregate fee disclosure. If 

applicable, the total overdraft and 

returned item fees required to be 

disclosed by § 230.11(a). 

* * * * * 

■ 3. Section 230.11 is amended by 

revising paragraph (a)(1)(i) to read as 

follows: 

§ 230.11 Additional disclosure 

requirements for overdraft services. 

(a) * * * (1) * * * 

(i) The total dollar amount for all fees 

or charges imposed on the account for 

paying checks or other items when there 

are insufficient or unavailable funds and 

the account becomes overdrawn, using 

the term ‘‘Total Overdraft Fees’’; and 

* * * * * 

■ 4. In Supplement I to part 230, 

■ a. In Section 230.6(a)(3), the first two 

sentences of paragraph 2. are revised. 

■ b. In Section 230.11(a)(1), paragraph 

2. is revised. 

■ c. In Section 230.11(c), paragraphs 2. 

and 3. are redesignated as paragraphs 3. 

and 4. respectively. 

■ d. In Section 230.11(c), new paragraph 

2. is added. 

■ e. In Section 230.11(c), newly 

designated paragraph 3. is revised. 

Supplement I to Part 230—Official Staff 

Interpretations 

* * * * * 

Section 230.6 Periodic Statement Disclosures 

(a) General Rule 

(a)(3) Fees Imposed 

* * * * * 

2. Itemizing fees by type. In itemizing fees 

imposed more than once in the period, 

institutions may group fees if they are the 

same type. (See § 230.11(a)(1) of this part 

regarding certain fees that are required to be 

grouped.) * * * 

* * * * * 

Section 230.11 Additional Disclosures 

Regarding the Payment of Overdrafts 

(a) Disclosure of total fees on periodic 

statements 

(a)(1) General 

* * * * * 

2. Fees for paying overdrafts. Institutions 

must disclose on periodic statements a total 

dollar amount for all fees or charges imposed 

on the account for paying overdrafts. The 

institution must disclose separate totals for 

the statement period and for the calendar 

year-to-date. The total dollar amount for each 

of these periods includes per-item fees as 

well as interest charges, daily or other 

periodic fees, or fees charged for maintaining 

an account in overdraft status, whether the 

overdraft is by check, debit card transaction, 

or by any other transaction type. It also 

includes fees charged when there are 

insufficient funds because previously 

deposited funds are subject to a hold or are 

uncollected. It does not include fees for 

transferring funds from another account of 

the consumer to avoid an overdraft, or fees 

charged under a service subject to the Board’s 

Regulation Z (12 CFR part 226). See also 

comment 11(c)–2. Under § 230.11(a)(1)(i), the 

disclosure must describe the total dollar 

amount for all fees or charges imposed on the 

account for the statement period and 

calendar year-to-date for paying overdrafts 

using the term ‘‘Total Overdraft Fees.’’ This 

requirement applies notwithstanding 

comment 3(a)–2. 

* * * * * 

(c) Disclosure of account balances 

* * * * * 

2. Retail sweep programs. In a retail sweep 

program, an institution establishes two 

legally distinct subaccounts, a transaction 

subaccount and a savings subaccount, which 

together make up the consumer’s account. 

The institution allocates and transfers funds 

between the two subaccounts in order to 

maximize the balance in the savings account 

while complying with the monthly 

limitations on transfers out of savings 

accounts under the Board’s Regulation D, 12 

CFR 204.2(d)(2). Retail sweep programs are 

generally not established for the purpose of 

covering overdrafts. Rather, institutions 

typically establish retail sweep programs by 

agreement with the consumer, in order for 

the institution to minimize its transaction 

account reserve requirements and, in some 

cases, to provide a higher interest rate than 

the consumer would earn on a transaction 

account alone. Section 230.11(c) does not 

require an institution to exclude from the 

consumer’s balance funds that may be 

transferred from another account pursuant to 

a retail sweep program that is established for 

such purposes and that has the following 

characteristics: 

i. The account involved complies with the 

Board’s Regulation D, 12 CFR 204.2(d)(2), 

ii. The consumer does not have direct 

access to the non-transaction subaccount that 

is part of the retail sweep program, and 

iii. The consumer’s periodic statements 

show the account balance as the combined 

balance in the subaccounts. 

3. Additional balance. The institution may 

disclose additional balances supplemented 

by funds that may be provided by the 

institution to cover an overdraft, whether 

pursuant to a discretionary overdraft service, 

a service subject to the Board’s Regulation Z 

(12 CFR part 226), or a service that transfers 

funds from another account held 

individually or jointly by the consumer, so 

long as the institution prominently states that 

any additional balance includes these 

additional overdraft amounts. The institution 

may not simply state, for instance, that the 

second balance is the consumer’s ‘‘available 

balance,’’ or contains ‘‘available funds.’’ 

Rather, the institution should provide 

enough information to convey that the 

second balance includes these amounts. For 

example, the institution may state that the 

balance includes ‘‘overdraft funds.’’ Where a 

consumer has not opted into, or as 

applicable, has opted out of the institution’s 

discretionary overdraft service, any 

additional balance disclosed should not 

include funds that otherwise might be 

available under that service. Where a 

consumer has not opted into, or as 

applicable, has opted out of, the institution’s 

discretionary overdraft service for some, but 

not all transactions (e.g., the consumer has 

not opted into overdraft services for ATM 

and one-time debit card transactions), an 

institution that includes these additional 

overdraft funds in the second balance should 

convey that the overdraft funds are not 

available for all transactions. For example, 

the institution could state that overdraft 

funds are not available for ATM and one-time 

(or everyday) debit card transactions. 

Similarly, if funds are not available for all 

transactions pursuant to a service subject to 

the Board’s Regulation Z (12 CFR part 226) 

or a service that transfers funds from another 

account, a second balance that includes such 

funds should also indicate this fact. 

* * * * * 

By order of the Board of Governors of the 

Federal Reserve System, May 27, 2010. 

Jennifer J. Johnson, 

Secretary of the Board. 

[FR Doc. 2010–13281 Filed 6–3–10; 8:45 am] 

BILLING CODE 6210–01–P 


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