Questions and Answers

Disclosure requirements from two regulations could possibly apply:  Regulation Z (Truth-in-Lending) and Regulation DD (Truth-in-Savings).

Regulation Z generally applies to consumer open-end credit. But charges that you impose for paying items that overdraw an account are not considered "finance charges" under Regulation Z unless the payment of the items and the imposition of the charges were previously agreed to in writing. (See 12 CFR 226.4(c)(3).) If there's no finance charge because there's no previous written agreement, then the credit you are extending would not be within the definition of "open-end credit" and Regulation Z would not require any disclosures. Of course, if there is such a written agreement, Regulation Z would require the initial disclosures listed in Section 6 (12 CFR 226.6) and the disclosures on periodic statements listed in Section 7 (12 CFR 226.7).

Regulation DD was amended effective July 1, 2006, to require institutions that promote informal overdraft protection services to include certain disclosures in periodic statements and advertisements. (See 12 CFR 230.11.) These disclosures are mainly concerned with the fees and charges imposed when an overdraft occurs.