Pollack Touts Consumer Friendly Overdraft Program
Pentagon Federal Credit Union President/CEO Frank Pollack told a Senate committee today that his credit union's overdraft protection program is completely opt in, operates as a line of credit and cost to consumer is fully disclosed and proportional to the amount of the overdraft.
He also explained that the credit union's program for military members allows them to waive fees for overdrafts twice over a three-month period. He said they are looking to expand that to all members.
Pollack described the program during a Senate Banking Committee hearing on legislation by Committee Chairman Christopher Dodd (D-Conn.) that would require credit unions and banks would have to gain a member's or customer's permission before enrolling them in an overdraft protection program and could only charge fees once a month or six times per year.
Fees would have to be proportional to the processing costs, customers would have to be notified when they overdraw their account and a customer must be warned if a transaction will cause them to overdraw their account. It would also ban credit unions and banks from shifting the order of transactions to increase the frequency of overdrafts.
Pollack did not address Dodd's legislation in his testimony, but CUNA President/CEO Dan Mica and NAFCU President/CEO Fred Becker wrote letters to the panel opposing the bill.
Becker wrote committee members that the bill could "severely impact the ability of any credit unions to continue to operate, and potentially force some of our smaller members to close their doors forever."
Mica wrote if the bill were passed "credit union members would incur more non-sufficient fund fees with none of the benefits of having many transactions honored. They would pay more merchant return check fees and have more bad checks reported to consumer reporting agencies."