FRB: Regulation DD

ABA Contact: Nessa Feddis
Released: May 18, 2004 Federal Reserve
Published: June 7, 2004 Federal Register
Comments Due: August 6, 2004
Disposition: Filed August 11, 2004


The proposal amends Regulation DD (Truth in Savings Act) to address concerns about the marketing of automated bounce protection programs and consumers' understanding of them. It expands the prohibition against misleading advertisements to cover communications with current consumers about existing accounts and provides examples of misleading advertisements. The proposed revisions also require additional fee and other disclosures about automated overdraft services, including a requirement that periodic statements aggregate overdraft and returned item fees (separately) for the statement period as well as cumulatively for the calendar year.

Summary of ABA comments

ABA generally agrees with the Board that any concerns about the fee and terms associated with overdrafts on deposit accounts should be addressed in Regulation DD rather than Regulation Z (Truth in Lending Act.) Overdraft fees are related to deposit accounts and are not viewed as credit charges either by banks or their customers. We generally support most of the proposed additions and changes to Regulation DD and believe that they will help to ensure that consumers are aware of the means, cost, and consequences of overdrawing an account.  We offer a few recommendations, including deletion of the proposed requirement to aggregate NSF and overdraft fees.

Update, May 19, 2005

The Board released final amendments to Regulation DD on May 19, which follow closely the proposal. In addition to requiring clear disclosures about the fees and features of bounce protection programs, the final regulation requires that institutions that "promote" overdraft services must separately disclose, for the statement period and for the calendar year to date the total dollar amount of fees for paying overdrafts and the total dollar amount for fees for items returned unpaid.

Final Rule, May 24, 2005.

2004 Regulations Chart
Federal Register
Comment Letter

Questions? Please contact Nessa Feddis for more information.