BIRMINGHAM, Ala.–Alarmed at what it said are unsavory practices involving overdraft protection, the Alabama Credit Union League said this week it has adopted a formal policy position criticizing unnamed financial institutions for "harmful" misuse of the product.
Such misuse of the so-called courtesy pay programs, said the league, injures consumers and should be "prohibited."
"There are some regional banks in our state that take advantage of consumers in their courtesy pay offerings," said Stephen Swofford, chairman of the league and president/CEO of Alabama CU of Tuscaloosa.
Among practices deemed unjust and poorly "structured and operated" are the manipulation of check payment to maximize income potential and including overdraft coverage amounts as part of balance available.
Recommended For You
The policy statement, adopted Nov. 27, does stress that courtesy pay programs "are an account feature, and payments are not a loan to the member and should not be treated as such. Therefore the Alabama Credit Union League opposes any attempt by a legislative or regulatory authority to consider it as such and to impose the resulting regulatory structure."
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more inforrmation visit Asset & Logo Licensing.
