To: All Member Banks and Others Concerned in the Third Federal Reserve District

Attention: Chief Executive Officer and Chief Compliance Officer



The Board of Governors of the Federal Reserve System has published proposed amendments to Regulation DD, which implements the Truth in Savings Act, and the regulation’s official staff commentary to address concerns about the uniformity and adequacy of information provided to consumers when they overdraw their accounts. The proposed amendments, in part, address a specific service offered by depository institutions, commonly referred to as “bounced-check protection” or “courtesy overdraft protection.”

Depository institutions sometimes offer courtesy overdraft protection to deposit account customers as an alternative to a traditional overdraft line of credit. To address concerns about the marketing of this service, a proposed revision to the regulation would expand the prohibition against misleading advertisements to cover communications with current customers about existing accounts. The staff commentary would provide examples. Other proposed revisions to Regulation DD would require additional fee and other disclosures about courtesy overdraft services, including in advertisements.

The Board is also proposing amendments of general applicability that would require institutions to provide more uniform disclosures about overdraft and returned-item fees. In addition, the member agencies of the Federal Financial Institutions Examination Council are publishing today proposed guidance to assist insured depository institutions in the responsible disclosure and administration of overdraft protection services.

The Board’s Federal Register notice containing the proposed amendments to Regulation DD, published June 7, 2004, is available here (308 KB, 20 pages).

Date: Comments must be received within 60 days of publication in the Federal Register.

For Further Information: Elizabeth A. Eurgubian, Attorney, or Ky Tran-Trong or Krista P. DeLargy, Senior Attorneys, Division of Consumer and Community Affairs, Board of Governors of the Federal Reserve System, at (202) 452-3667 or 452-2412. For users of Telecommunications Device for the Deaf (“TDD”) only, contact (202) 263-4869.