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Compliance Trifecta Overdraft FACTA Reg Z rules all in effect
WASHINGTON (7/6/10)—In what Credit Union National Association (CUNA) Senior Vice President for Compliance Kathy Thompson calls the “compliance trifecta,” major rules went into effect July 1 that impact credit union operations. New standards under the Fair and Accurate Credit Transaction Act (FACTA), overdraft protection plan restrictions, and the Federal Reserve Board’s (Fed)Regulation Z changes for open-end credit became the rule of compliance land last Thursday. Regarding the new FACTA rules, Thompson reminds credit unions that they have to be prepared for handling direct disputes with members. “The new FACTA regulations not only require credit unions to establish and implement reasonable written policies and procedures to ensure the ‘accuracy’ and ‘integrity’ of the information that they furnish to credit bureaus,” noted Thompson, “but also require a credit union to investigate when a member formally complaints to the credit union about the accuracy of information the credit union has provided to a credit bureau.” The new Regulation E overdraft rules for ATM and one-time debit card transactions require credit unions to provide members with the right to opt in, or affirmatively consent, to a credit union’s overdraft service for ATM and one-time debit card transactions. “The requirement that notice of the opt-in right be provided and the member’s affirmative consent obtained before any fees or charges may be assessed is effective July 1 for new accounts,” Thompson reminds credit unions, “with credit unions having until August 15 to implement these requirements for existing accounts.” This regulation does not apply to overdraft fees related to check, ACH, or recurring debit transactions. And for the new Reg Z open-end lending rules, Thompson reminds credit unions that the new rules effective last week were the result of the melding of a January 2009 open-end final rule and modifications contained in the Credit Card Accountability, Responsibility and Disclosure (CARD) Act which Congress passed in May 2009. The Credit CARD Act modified certain requirements of the January 2009 final rule related to periodic statements, change-in-terms, and advertising provisions and changed their effective date to Feb. 22. On Jan. 12, when the Fed issued its Regulation Z final rule for the credit card provisions that were effective Feb. 22 it re-issued the remaining provisions of the January 2009 general open-end lending rule by incorporating those provisions into the new Card Act final rule. The new rules that became effective last week generally deal with formatting provisions, such as the new summary table in the account opening disclosures, the revised summary table for credit card applications and solicitations, a few changes to periodic statements, and some changes to advertising requirements.

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