Overdraft Rule Review Pursuant to the Regulatory Flexibility Act, 21729-21732 [2019-09812]

Download as PDF 21729 Federal Register / Vol. 84, No. 94 / Wednesday, May 15, 2019 / Proposed Rules II. Rulemaking Procedure Because the NRC considers this action to be non-controversial, the NRC is publishing this proposed rule concurrently with a direct final rule in the Rules and Regulations section of this issue of the Federal Register. The direct final rule will become effective on July 29, 2019. However, if the NRC receives significant adverse comments June 14, 2019, then the NRC will publish a document that withdraws the direct final rule. If the direct final rule is withdrawn, the NRC will address the comments in a subsequent final rule. Absent significant modifications to the proposed revisions requiring republication, the NRC will not initiate a second comment period on this action in the event the direct final rule is withdrawn. A significant adverse comment is a comment where the commenter explains why the rule would be inappropriate, including challenges to the rule’s underlying premise or approach, or would be ineffective or unacceptable without a change. A comment is adverse and significant if: (1) The comment opposes the rule and provides a reason sufficient to require a substantive response in a notice-andcomment process. For example, a substantive response is required when: (a) The comment causes the NRC to reevaluate (or reconsider) its position or conduct additional analysis; (b) The comment raises an issue serious enough to warrant a substantive response to clarify or complete the record; or (c) The comment raises a relevant issue that was not previously addressed or considered by the NRC. (2) The comment proposes a change or an addition to the rule, and it is apparent that the rule would be ineffective or unacceptable without incorporation of the change or addition. (3) The comment causes the NRC to make a change (other than editorial) to the rule. For procedural information and the regulatory analysis, see the direct final rule published in the Rules and Regulations section of this issue of the Federal Register. jbell on DSK3GLQ082PROD with PROPOSALS III. Background Section 218(a) of the Nuclear Waste Policy Act of 1982, as amended, requires that ‘‘[t]he Secretary [of the Department of Energy] shall establish a demonstration program, in cooperation with the private sector, for the dry storage of spent nuclear fuel at civilian nuclear power reactor sites, with the objective of establishing one or more VerDate Sep<11>2014 16:43 May 14, 2019 Jkt 247001 technologies that the [Nuclear Regulatory] Commission may, by rule, approve for use at the sites of civilian nuclear power reactors without, to the maximum extent practicable, the need for additional site-specific approvals by the Commission.’’ Section 133 of the Nuclear Waste Policy Act states, in part, that ‘‘[t]he Commission shall, by rule, establish procedures for the licensing of any technology approved by the Commission under section [218(a)] for use at the site of any civilian nuclear power reactor.’’ To implement this mandate, the Commission approved dry storage of spent nuclear fuel in NRC-approved casks under a general license by publishing a final rule which added a new subpart K in part 72 of title 10 of the Code of Federal Regulations (10 CFR) entitled ‘‘General License for Storage of Spent Fuel at Power Reactor Sites’’ (55 FR 29181; July 18, 1990). This rule also established a new subpart L in 10 CFR part 72 entitled ‘‘Approval of Spent Fuel Storage Casks,’’ which contains procedures and criteria for obtaining NRC approval of spent fuel storage cask designs. The NRC subsequently issued a final rule on October 19, 2000, that approved the NAC–UMS® Universal Storage System design and added it to the list of NRCapproved cask designs in § 72.214 as Certificate of Compliance No. 1015 (65 FR 62581). IV. Plain Writing The Plain Writing Act of 2010 (Pub. L. 111–274) requires Federal agencies to write documents in a clear, concise, well-organized manner. The NRC has written this document to be consistent with the Plain Writing Act as well as the Presidential Memorandum, ‘‘Plain Language in Government Writing,’’ published June 10, 1998 (63 FR 31885). The NRC requests comment on the proposed rule with respect to clarity and effectiveness of the language used. V. Availability of Documents The documents identified in the following table are available to interested persons through one or more of the following methods, as indicated. Document ADAMS accession No. Letter from NAC International dated September 18, 2018, Submitting Request for Amendment to Certificate of Compliance No. 1015. ML18264A014 PO 00000 Frm 00003 Fmt 4702 Sfmt 4702 Document ADAMS accession No. Proposed Certificate of Compliance No. 1015 Amendment No. 7, Certificate of Compliance for Spent Fuel Storage Casks. Proposed Certificate of Compliance No. 1015 Amendment No. 7, Technical Specifications, Appendix A. Proposed Certificate of Compliance No. 1015 Amendment No. 7, Technical Specifications, Appendix B. Certificate of Compliance No. 1015 Amendment No. 7, Preliminary Safety Evaluation Report. ML19057A267 ML19057A265 ML19057A266 ML19057A268 The NRC may post materials related to this document, including public comments, on the Federal Rulemaking website at https://www.regulations.gov under Docket ID NRC–2019–0070. The Federal Rulemaking website allows you to receive alerts when changes or additions occur in a docket folder. To subscribe: (1) Navigate to the docket folder (NRC–2019–0070); (2) click the ‘‘Sign up for Email Alerts’’ link; and (3) enter your email address and select how frequently you would like to receive emails (daily, weekly, or monthly). List of Subjects in 10 CFR Part 72 Administrative practice and procedure, Hazardous waste, Indians, Intergovernmental relations, Nuclear energy, Penalties, Radiation protection, Reporting and recordkeeping requirements, Security measures, Spent fuel, Whistleblowing. Dated at Rockville, Maryland, this 2nd day of May, 2019. For the Nuclear Regulatory Commission. Kim S. West, Acting, Executive Director for Operations. [FR Doc. 2019–10018 Filed 5–14–19; 8:45 am] BILLING CODE 7590–01–P BUREAU OF CONSUMER FINANCIAL PROTECTION 12 CFR Part 1005 [Docket No. CFPB–2019–0023] Overdraft Rule Review Pursuant to the Regulatory Flexibility Act Bureau of Consumer Financial Protection. ACTION: Notice of section 610 review and request for comments. AGENCY: The Bureau of Consumer Financial Protection (Bureau) is conducting a review of the Overdraft SUMMARY: E:\FR\FM\15MYP1.SGM 15MYP1 jbell on DSK3GLQ082PROD with PROPOSALS 21730 Federal Register / Vol. 84, No. 94 / Wednesday, May 15, 2019 / Proposed Rules Rule consistent with section 610 of the Regulatory Flexibility Act. As part of this review, the Bureau is seeking comment on the economic impact of the Overdraft Rule on small entities. These comments may assist the Bureau in determining whether the Overdraft Rule should be continued without change, or amended or rescinded to minimize any significant economic impact of the rules upon a substantial number of such small entities, consistent with the stated objectives of applicable statutes. DATES: Comments must be received by July 1, 2019. ADDRESSES: You may submit responsive information and other comments, identified by Docket No. CFPB–2019– 0023, by any of the following methods: • Electronic: Go to https:// www.regulations.gov. Follow the instructions for submitting comments. • Email: 2019-NoticeRFAReviewOverdraft@cfpb.gov. Include Docket No. CFPB–2019–0023 in the subject line of the message. • Mail: Comment Intake, Consumer Financial Protection Bureau, 1700 G Street NW, Washington, DC 20552. • Hand Delivery/Courier: Comment Intake, Consumer Financial Protection Bureau, 1700 G Street NW, Washington, DC 20552. Instructions: The Bureau encourages the early submission of comments. All submissions must include the document title and docket number. Please note the specific rule or topic on which you are commenting at the top of each response (you do not need to address all rules or topics). Because paper mail in the Washington, DC area and at the Bureau is subject to delay, commenters are encouraged to submit comments electronically. In general, all comments received will be posted without change to https://www.regulations.gov. In addition, comments will be available for public inspection and copying at 1700 G Street NW, Washington, DC 20552, on official business days between the hours of 10 a.m. and 5 p.m. eastern time. You can make an appointment to inspect the documents by telephoning 202–435– 7275. All submissions in response to this request for information, including attachments and other supporting materials, will become part of the public record and subject to public disclosure. Proprietary information or sensitive personal information, such as account numbers or Social Security numbers, or names of other individuals, should not be included. Submissions will not be edited to remove any identifying or contact information. VerDate Sep<11>2014 16:43 May 14, 2019 Jkt 247001 FOR FURTHER INFORMATION CONTACT: Joseph Baressi and Gregory Evans, Senior Counsels, Office of Regulations, at 202–435–7700. If you require this document in an alternative electronic format, please contact CFPB_ Accessibility@cfpb.gov. SUPPLEMENTARY INFORMATION: The Regulatory Flexibility Act 1 (RFA) requires each agency to consider the effect on small entities for certain rules it promulgates.2 Specifically, section 610 of the RFA 3 provides that each agency shall publish in the Federal Register a plan for the periodic review of the rules issued by the agency which have or will have a significant economic impact upon a substantial number of small entities. The Bureau is publishing such a plan separately in this issue of the Federal Register. Section 610 provides that the purpose of the review shall be to determine whether such rules should be continued without change, or should be amended or rescinded, consistent with the stated objectives of applicable statutes, to minimize any significant economic impact of the rules upon a substantial number of such small entities.4 As also set forth in section 610, in each review agencies must consider several factors: 1. The continued need for the rule; 2. The nature of public complaints or comments on the rule; 3. The complexity of the rule; 4. The extent to which the rule overlaps, duplicates, or conflicts with Federal, State, or other rules; and 5. The time since the rule was evaluated or the degree to which technology, market conditions, or other factors have changed the relevant market.5 The following section lists and briefly describes the rule that the Bureau plans to review in 2019 under the criteria described by section 610 of the RFA and pursuant to the review plan published separately in this issue of the Federal Register. The Bureau expects to publish a notice in summer 2019 identifying the rules that will be the subject of section 610 reviews in 2020. I. List of Rules for Review This section lists and briefly describes the rule that the Bureau plans to review in 2019 under the criteria described by section 610 of the RFA and pursuant to the Bureau’s review plan. 1 Public Law 96–354, 94 Stat. 1164. term ‘‘small entity’’ is defined in the RFA. See 5 U.S.C. 601(6). 3 5 U.S.C. 610(a). 4 5 U.S.C. 610(a). 5 5 U.S.C. 610(b). 2 The PO 00000 Frm 00004 Fmt 4702 Sfmt 4702 A. Federal Reserve Board Overdraft Rule i. The Rule In November 2009, to address overdraft practices, the Board of Governors of the Federal Reserve System (Board) published a final rule amending Regulation E, which implements the Electronic Fund Transfer Act 6 (EFTA), and the official staff commentary to the regulation, which interprets the requirements of Regulation E.7 Specifically, pursuant to its authority under EFTA sections 904(a), (b), (c), and 905,8 the Board issued a rule (Overdraft Rule or Rule) that limits the ability of financial institutions to assess overdraft fees for paying automated teller machine (ATM) and one-time debit card transactions that overdraw consumers’ accounts.9 The Board stated that the Overdraft Rule is intended to carry out the express purposes of the EFTA by: (a) Establishing notice requirements to help consumers better understand the cost of overdraft services for certain electronic fund transfers; and (b) providing consumers with a choice as to whether they want overdraft services for ATM and one-time debit card transactions in light of the costs associated with those services.10 Under the Rule, financial institutions must not assess a fee or charge on a consumer’s account for paying an ATM or one-time debit card overdraft transaction, unless the institution, among other things, obtains the consumer’s affirmative consent, or opt-in, to the institution’s payment of overdrafts for these transactions.11 Under the Overdraft Rule, before a consumer may affirmatively consent, the financial institution must ‘‘provide[] the consumer with a notice in writing, or if the consumer agrees, electronically, segregated from all other information, describing the institution’s overdraft service.’’ 12 This notice must include specific information, such as the fees imposed for paying such overdrafts, and the notice must also be ‘‘substantially similar’’ to a model form set forth in appendix A of the regulation (Model Form A–9).13 The Bureau recodified Regulation E, including the amendments made by the Overdraft Rule, in 2011 when the Bureau assumed rulemaking responsibility under 6 15 U.S.C. 1693 et seq. FR 59033 (Nov. 17, 2009). See also clarifications that the Board published in June 2010. 75 FR 31665 (June 4, 2010). 8 15 U.S.C. 1693b(a), (b), (c), 1693c. 9 See 74 FR 59033, 59037 (Nov. 17, 2009). 10 Id. 11 See 12 CFR 1005.17(b)(1)(iii). 12 See 12 CFR 1005.17(b)(1)(i). 13 See 12 CFR 1005.17(d). 7 74 E:\FR\FM\15MYP1.SGM 15MYP1 Federal Register / Vol. 84, No. 94 / Wednesday, May 15, 2019 / Proposed Rules EFTA.14 The Overdraft Rule is now set forth within Subpart A of the Bureau’s Regulation E, 12 CFR part 1005.15 jbell on DSK3GLQ082PROD with PROPOSALS ii. The Market Consumers with checking accounts sometimes attempt transactions for amounts that exceed their account balance. Financial institutions that offer checking accounts may decide whether to allow such transactions to go through (an overdraft) and whether to charge fees in connection with the overdraft (subject to some restrictions). These decisions depend on a number of factors, including the type of transaction, the financial institution’s policies, procedures, and technological systems, and regulatory requirements. In the case of a check or an Automated Clearing House (ACH) transaction, the financial institution may either return a transaction attempt that exceeds a consumer’s account balance unpaid for non-sufficient funds (NSF), or process the transaction, in which case an overdraft occurs. If a consumer attempts a one-time debit card transaction or an ATM withdrawal, the financial institution either authorizes or declines the transaction within seconds of the consumer’s request. A declined transaction does not result in a fee. If the transaction is authorized, the financial institution will later settle the transaction, which might occur on the same day, or as long as three business days later. The Bureau believes that the majority of financial institutions offering checking account overdraft services chose to offer consumers the opportunity to opt-in to those services. Some financial institutions, however, chose not to implement an opt-in regime. Of those financial institutions, some may have elected to provide overdraft services for ATM and one-time debit card transactions, but not charge a fee. Other financial institutions that chose not to offer opt-in elected generally to decline ATM and one-time debit card transactions that would overdraw the account, although certain authorized transactions may nonetheless have resulted in an overdraft later at settlement. Bureau research suggests that a transaction authorizing with a sufficient balance, but later settling with a negative balance 14 76 FR 81019 (Dec. 27, 2011). generally 12 CFR 1005.17. These provisions were originally adopted by the Board in 12 CFR part 205 but, upon transfer of authority by the DoddFrank Act to implement EFTA to the Bureau, were renumbered as 12 CFR part 1005. 76 FR 81020 (Dec. 27, 2011). 15 See VerDate Sep<11>2014 16:43 May 14, 2019 Jkt 247001 is a common occurrence for frequent overdrafters who have not opted in.16 The Bureau has found that the share of consumers who have opted in varies widely by institution, but in general it is considerably less than half.17 This underscores the variation among financial institutions and their customers in their desire to offer or use overdraft on card-based transactions. The Bureau has estimated in 2013 that the rule led to a material decrease in the amount of overdraft fees paid by consumers.18 With regard to the type of transactions taking place, there has been substantial growth in debit card-based transactions both due to more consumers using debit cards and those with debit cards using them more. There have been technological changes making debit card acceptance more ubiquitous, such as the introduction of tablet and smartphonebased point of sale terminals and a growing number of online and mobile marketplaces, retailers, and service providers. There has also been a growing comfort among consumers in making electronic payments. Since the issuance of the Overdraft Rule, the Bureau has observed several changes in overdraft practices at a number of financial institutions. These include: (i) Changes in the order in which different categories of transactions are posted, which has resulted in a diminution in the number of overdraft transactions; (ii) limits on the number of overdraft fees that some financial institutions may charge in a single business day; and (iii) ‘‘cushions’’ which preclude assessing overdraft fees on de minimis amounts. The Bureau does not have reason to believe that these changes are attributable to the Rule. iii. Bureau Resources and Analysis The Bureau has conducted research relevant to the Overdraft Rule. In 2012, the Bureau launched an inquiry into overdraft, paralleling work that the Bureau was undertaking to examine 16 CFPB, Data Point: Frequent Overdrafters (Aug. 2017) at 28, available at https:// www.consumerfinance.gov/documents/5126/ 201708_cfpb_data-point_frequent-overdrafters.pdf. 17 CFPB, CFPB Study of Overdraft Programs: A White Paper of Initial Data Findings (June 2013) at 29, available at https://files.consumerfinance.gov/f/ 201306_cfpb_whitepaper_overdraft-practices.pdf. This report covers a number of larger banks. The Bureau has obtained data with respect to practices at smaller banks and credit unions which is consistent with the Bureau’s finding. The Bureau will consider those data in connection with this review. 18 CFPB, CFPB Study of Overdraft Programs: A White Paper of Initial Data Findings (June 2013) at 39, available at https://files.consumerfinance.gov/f/ 201306_cfpb_whitepaper_overdraft-practices.pdf. PO 00000 Frm 00005 Fmt 4702 Sfmt 4702 21731 other types of short-term credit products. The Bureau obtained aggregate and anonymized account-level data from large banks as part of this inquiry, which Bureau researchers extensively analyzed. The Bureau shared some of its findings through a June 2013 White Paper, July 2014 Data Point, and August 2017 Data Point.19 In 2015, the Bureau obtained deidentified information from core processors on 4,091 financial institutions for a single 12-month period around 2014. The vast majority of these financial institutions were small, as defined by the Small Business Administration as having assets less than $550 million.20 The acquired information related to overdraft practices (whether the financial institution offered overdraft and opt-in, its policies for making overdraft and balance-related decisions, transaction processing methods, and overdraft and NSF fees charged) and consumer outcomes (share of accounts opted-in, overdraft and NSF fee revenue per account, and distribution of fees across accounts). iv. Previous Input to the Bureau In February 2012, the Bureau published a request for information, seeking input from the public on the impact of overdraft programs on consumers, including information on the impact of the Overdraft Rule.21 The Bureau received more than one thousand comments from trade groups, financial institutions, consumer advocates, individual consumers, and others. In August 2017, the Bureau announced that it had conducted consumer testing on potential updates and improvements to the Model Form A–9 promulgated by the Board. The Bureau released four alternative versions of a revised opt-in model form 19 CFPB, CFPB Study of Overdraft Programs: A White Paper of Initial Data Findings (June 2013), available at https://files.consumerfinance.gov/f/ 201306_cfpb_whitepaper_overdraft-practices.pdf; CFPB, Data Point: Checking account overdraft (July 2014), available at https:// files.consumerfinance.gov/f/201407_cfpb_report_ data-point_overdrafts.pdf; CFPB, Data Point: Frequent Overdrafters (Aug. 2017), available at https://www.consumerfinance.gov/documents/ 5126/201708_cfpb_data-point_frequentoverdrafters.pdf. 20 ‘‘A financial institution’s assets are determined by averaging the assets reported on its four quarterly financial statements for the preceding year.’’ 13 CFR 121.201. Assets for the purposes of this size standard means the assets defined according to the Federal Financial Institutions Examination Council 041 call report form for NAICS Codes 522110, 522120, 522190, and 522210 and the National Credit Union Administration 5300 call report form for NAICS code 522130. 21 77 FR 12031 (Feb. 28, 2012). E:\FR\FM\15MYP1.SGM 15MYP1 21732 Federal Register / Vol. 84, No. 94 / Wednesday, May 15, 2019 / Proposed Rules and invited feedback on these alternatives, while noting that the current Model Form A–9 remains effective under Regulation E.22 The Bureau received more than forty comments in response to the release. In response to the Bureau’s 2018 Call for Evidence Initiative, which included requesting input on all inherited regulations and rulemaking authorities, the Bureau received approximately ten comments that included information about checking account overdrafts generally.23 These comments came from trade groups, financial institutions, and consumer advocates. The comments addressed a wide variety of topics including the overall cost of overdraft, the treatment of overdrafts under the Truth in Lending Act, and potential modifications to the current Model Form A–9. Through these and other outreach efforts, the Bureau has heard concerns expressed by some financial institutions and trade groups regarding the requirements that the opt-in notice be substantially similar to Model Form A– 9 and that the notice may not contain any information not specified in or otherwise permitted by the regulation. Some of these financial institutions have expressed a desire to add additional information to the notice that they believe may be relevant to the consumer’s decision, such as an institution’s policies for making overdraft and balance-related calculations. Finally, the Bureau’s experience suggests there is little overlap, duplication, or conflict between the Overdraft Rule and Federal, State, or other rules. The Bureau has not received any requests for a determination that the Overdraft Rule preempts State law. In October 2015, the Department of Education also issued a final rule that generally prohibits overdraft fees on students’ checking accounts if the financial institution offering the account partners with an entity that handles the school’s financial aid disbursement process.24 jbell on DSK3GLQ082PROD with PROPOSALS II. Request for Comment Consistent with the review plan, the Bureau asks the public to comment on the Overdraft Rule, including the following topics: (1) The nature and extent of the economic impacts of the Rule as a whole and of its major components on 22 https://www.consumerfinance.gov/about-us/ blog/know-you-owe-we-are-designing-newoverdraft-disclosure-forms/. 23 83 FR 12881 (March 26, 2018). 24 See 34 CFR 668.164. VerDate Sep<11>2014 16:43 May 14, 2019 Jkt 247001 small entities, including impacts of the reporting, recordkeeping, and other compliance requirements of the Overdraft Rule, as well as benefits of the Rule. (2) Whether and how the Bureau by rule could reduce the costs of the Overdraft Rule on small entities, consistent with the stated objectives of EFTA and the Overdraft Rule. (3) Any other information relevant to the factors that the Bureau considers in completing a Section 610 Review under the Regulatory Flexibility Act, as described above. Where possible, please submit detailed comments, data, and other information to support any submitted positions. Dated: May 6, 2019. Kathleen L. Kraninger, Director, Bureau of Consumer Financial Protection. [FR Doc. 2019–09812 Filed 5–14–19; 8:45 am] BILLING CODE 4810–AM–P BUREAU OF CONSUMER FINANCIAL PROTECTION 12 CFR Chapter X [Docket No. CFPB–2019–0024] Plan for the Review of Bureau Rules for Purposes of the Regulatory Flexibility Act Bureau of Consumer Financial Protection. ACTION: Plan for periodic review of rules and request for comments. AGENCY: The Bureau of Consumer Financial Protection (Bureau) is publishing a plan for the review of rules which have or will have a significant economic impact upon a substantial number of small entities, pursuant to section 610 of the Regulatory Flexibility Act. DATES: Comments must be received by July 15, 2019. ADDRESSES: You may submit responsive information and other comments, identified by Docket No. CFPB–2019– 0024, by any of the following methods: • Electronic: Go to https:// www.regulations.gov. Follow the instructions for submitting comments. • Email: like 2019-NoticeRFAReviewPlan@cfpb.gov. Include Docket No. CFPB–2019–0024 in the subject line of the message. • Mail: Comment Intake, Consumer Financial Protection Bureau, 1700 G Street NW, Washington, DC 20552. • Hand Delivery/Courier: Comment Intake, Consumer Financial Protection SUMMARY: PO 00000 Frm 00006 Fmt 4702 Sfmt 4702 Bureau, 1700 G Street NW, Washington, DC 20552. Instructions: The Bureau encourages the early submission of comments. All submissions must include the document title and docket number. Please note the specific rule or topic on which you are commenting at the top of each response (you do not need to address all rules or topics). Because paper mail in the Washington, DC area and at the Bureau is subject to delay, commenters are encouraged to submit comments electronically. In general, all comments received will be posted without change to https://www.regulations.gov. In addition, comments will be available for public inspection and copying at 1700 G Street NW, Washington, DC 20552, on official business days between the hours of 10 a.m. and 5 p.m. eastern time. You can make an appointment to inspect the documents by telephoning 202–435– 7275. All submissions in response to this request for information, including attachments and other supporting materials, will become part of the public record and subject to public disclosure. Proprietary information or sensitive personal information, such as account numbers or Social Security numbers, or names of other individuals, should not be included. Submissions will not be edited to remove any identifying or contact information. FOR FURTHER INFORMATION CONTACT: Joseph Baressi and Gregory Evans, Senior Counsels, Office of Regulations, at 202–435–7700. If you require this document in an alternative electronic format, please contact CFPB_ Accessibility@cfpb.gov. SUPPLEMENTARY INFORMATION: The Regulatory Flexibility Act 1 (RFA) requires each agency to consider the effect on small entities for certain rules it promulgates.2 Specifically, section 610(a) of the RFA 3 provides that each agency shall publish in the Federal Register a plan for the periodic review of the rules issued by the agency which have a significant economic impact upon a substantial number of small entities. An agency may amend a plan at any time by publishing the revision in the Federal Register. Congress specified that the purpose of the review shall be to determine whether such rules should be continued without change, or should be amended or rescinded, consistent with the stated objectives of applicable statutes, to minimize any significant economic 1 Public Law 96–354, 94 Stat. 1164. terms ‘‘small entity’’ and ‘‘rule’’ are defined in the RFA. See 5 U.S.C. 601. 3 5 U.S.C. 610(a). 2 The E:\FR\FM\15MYP1.SGM 15MYP1

Agencies

[Federal Register Volume 84, Number 94 (Wednesday, May 15, 2019)]
[Proposed Rules]
[Pages 21729-21732]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-09812]


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BUREAU OF CONSUMER FINANCIAL PROTECTION

12 CFR Part 1005

[Docket No. CFPB-2019-0023]


Overdraft Rule Review Pursuant to the Regulatory Flexibility Act

AGENCY: Bureau of Consumer Financial Protection.

ACTION: Notice of section 610 review and request for comments.

-----------------------------------------------------------------------

SUMMARY: The Bureau of Consumer Financial Protection (Bureau) is 
conducting a review of the Overdraft

[[Page 21730]]

Rule consistent with section 610 of the Regulatory Flexibility Act. As 
part of this review, the Bureau is seeking comment on the economic 
impact of the Overdraft Rule on small entities. These comments may 
assist the Bureau in determining whether the Overdraft Rule should be 
continued without change, or amended or rescinded to minimize any 
significant economic impact of the rules upon a substantial number of 
such small entities, consistent with the stated objectives of 
applicable statutes.

DATES: Comments must be received by July 1, 2019.

ADDRESSES: You may submit responsive information and other comments, 
identified by Docket No. CFPB-2019-0023, by any of the following 
methods:
     Electronic: Go to https://www.regulations.gov. Follow the 
instructions for submitting comments.
     Email: [email protected]. Include 
Docket No. CFPB-2019-0023 in the subject line of the message.
     Mail: Comment Intake, Consumer Financial Protection 
Bureau, 1700 G Street NW, Washington, DC 20552.
     Hand Delivery/Courier: Comment Intake, Consumer Financial 
Protection Bureau, 1700 G Street NW, Washington, DC 20552.
    Instructions: The Bureau encourages the early submission of 
comments. All submissions must include the document title and docket 
number. Please note the specific rule or topic on which you are 
commenting at the top of each response (you do not need to address all 
rules or topics). Because paper mail in the Washington, DC area and at 
the Bureau is subject to delay, commenters are encouraged to submit 
comments electronically. In general, all comments received will be 
posted without change to https://www.regulations.gov. In addition, 
comments will be available for public inspection and copying at 1700 G 
Street NW, Washington, DC 20552, on official business days between the 
hours of 10 a.m. and 5 p.m. eastern time. You can make an appointment 
to inspect the documents by telephoning 202-435-7275.
    All submissions in response to this request for information, 
including attachments and other supporting materials, will become part 
of the public record and subject to public disclosure. Proprietary 
information or sensitive personal information, such as account numbers 
or Social Security numbers, or names of other individuals, should not 
be included. Submissions will not be edited to remove any identifying 
or contact information.

FOR FURTHER INFORMATION CONTACT: Joseph Baressi and Gregory Evans, 
Senior Counsels, Office of Regulations, at 202-435-7700. If you require 
this document in an alternative electronic format, please contact 
[email protected].

SUPPLEMENTARY INFORMATION:  The Regulatory Flexibility Act \1\ (RFA) 
requires each agency to consider the effect on small entities for 
certain rules it promulgates.\2\ Specifically, section 610 of the RFA 
\3\ provides that each agency shall publish in the Federal Register a 
plan for the periodic review of the rules issued by the agency which 
have or will have a significant economic impact upon a substantial 
number of small entities.
---------------------------------------------------------------------------

    \1\ Public Law 96-354, 94 Stat. 1164.
    \2\ The term ``small entity'' is defined in the RFA. See 5 
U.S.C. 601(6).
    \3\ 5 U.S.C. 610(a).
---------------------------------------------------------------------------

    The Bureau is publishing such a plan separately in this issue of 
the Federal Register. Section 610 provides that the purpose of the 
review shall be to determine whether such rules should be continued 
without change, or should be amended or rescinded, consistent with the 
stated objectives of applicable statutes, to minimize any significant 
economic impact of the rules upon a substantial number of such small 
entities.\4\ As also set forth in section 610, in each review agencies 
must consider several factors:
---------------------------------------------------------------------------

    \4\ 5 U.S.C. 610(a).
---------------------------------------------------------------------------

    1. The continued need for the rule;
    2. The nature of public complaints or comments on the rule;
    3. The complexity of the rule;
    4. The extent to which the rule overlaps, duplicates, or conflicts 
with Federal, State, or other rules; and
    5. The time since the rule was evaluated or the degree to which 
technology, market conditions, or other factors have changed the 
relevant market.\5\
---------------------------------------------------------------------------

    \5\ 5 U.S.C. 610(b).
---------------------------------------------------------------------------

    The following section lists and briefly describes the rule that the 
Bureau plans to review in 2019 under the criteria described by section 
610 of the RFA and pursuant to the review plan published separately in 
this issue of the Federal Register. The Bureau expects to publish a 
notice in summer 2019 identifying the rules that will be the subject of 
section 610 reviews in 2020.

I. List of Rules for Review

    This section lists and briefly describes the rule that the Bureau 
plans to review in 2019 under the criteria described by section 610 of 
the RFA and pursuant to the Bureau's review plan.

A. Federal Reserve Board Overdraft Rule

i. The Rule
    In November 2009, to address overdraft practices, the Board of 
Governors of the Federal Reserve System (Board) published a final rule 
amending Regulation E, which implements the Electronic Fund Transfer 
Act \6\ (EFTA), and the official staff commentary to the regulation, 
which interprets the requirements of Regulation E.\7\ Specifically, 
pursuant to its authority under EFTA sections 904(a), (b), (c), and 
905,\8\ the Board issued a rule (Overdraft Rule or Rule) that limits 
the ability of financial institutions to assess overdraft fees for 
paying automated teller machine (ATM) and one-time debit card 
transactions that overdraw consumers' accounts.\9\ The Board stated 
that the Overdraft Rule is intended to carry out the express purposes 
of the EFTA by: (a) Establishing notice requirements to help consumers 
better understand the cost of overdraft services for certain electronic 
fund transfers; and (b) providing consumers with a choice as to whether 
they want overdraft services for ATM and one-time debit card 
transactions in light of the costs associated with those services.\10\ 
Under the Rule, financial institutions must not assess a fee or charge 
on a consumer's account for paying an ATM or one-time debit card 
overdraft transaction, unless the institution, among other things, 
obtains the consumer's affirmative consent, or opt-in, to the 
institution's payment of overdrafts for these transactions.\11\ Under 
the Overdraft Rule, before a consumer may affirmatively consent, the 
financial institution must ``provide[] the consumer with a notice in 
writing, or if the consumer agrees, electronically, segregated from all 
other information, describing the institution's overdraft service.'' 
\12\ This notice must include specific information, such as the fees 
imposed for paying such overdrafts, and the notice must also be 
``substantially similar'' to a model form set forth in appendix A of 
the regulation (Model Form A-9).\13\ The Bureau recodified Regulation 
E, including the amendments made by the Overdraft Rule, in 2011 when 
the Bureau assumed rulemaking responsibility under

[[Page 21731]]

EFTA.\14\ The Overdraft Rule is now set forth within Subpart A of the 
Bureau's Regulation E, 12 CFR part 1005.\15\
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    \6\ 15 U.S.C. 1693 et seq.
    \7\ 74 FR 59033 (Nov. 17, 2009). See also clarifications that 
the Board published in June 2010. 75 FR 31665 (June 4, 2010).
    \8\ 15 U.S.C. 1693b(a), (b), (c), 1693c.
    \9\ See 74 FR 59033, 59037 (Nov. 17, 2009).
    \10\ Id.
    \11\ See 12 CFR 1005.17(b)(1)(iii).
    \12\ See 12 CFR 1005.17(b)(1)(i).
    \13\ See 12 CFR 1005.17(d).
    \14\ 76 FR 81019 (Dec. 27, 2011).
    \15\ See generally 12 CFR 1005.17. These provisions were 
originally adopted by the Board in 12 CFR part 205 but, upon 
transfer of authority by the Dodd-Frank Act to implement EFTA to the 
Bureau, were renumbered as 12 CFR part 1005. 76 FR 81020 (Dec. 27, 
2011).
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ii. The Market
    Consumers with checking accounts sometimes attempt transactions for 
amounts that exceed their account balance. Financial institutions that 
offer checking accounts may decide whether to allow such transactions 
to go through (an overdraft) and whether to charge fees in connection 
with the overdraft (subject to some restrictions). These decisions 
depend on a number of factors, including the type of transaction, the 
financial institution's policies, procedures, and technological 
systems, and regulatory requirements. In the case of a check or an 
Automated Clearing House (ACH) transaction, the financial institution 
may either return a transaction attempt that exceeds a consumer's 
account balance unpaid for non-sufficient funds (NSF), or process the 
transaction, in which case an overdraft occurs. If a consumer attempts 
a one-time debit card transaction or an ATM withdrawal, the financial 
institution either authorizes or declines the transaction within 
seconds of the consumer's request. A declined transaction does not 
result in a fee. If the transaction is authorized, the financial 
institution will later settle the transaction, which might occur on the 
same day, or as long as three business days later.
    The Bureau believes that the majority of financial institutions 
offering checking account overdraft services chose to offer consumers 
the opportunity to opt-in to those services. Some financial 
institutions, however, chose not to implement an opt-in regime. Of 
those financial institutions, some may have elected to provide 
overdraft services for ATM and one-time debit card transactions, but 
not charge a fee. Other financial institutions that chose not to offer 
opt-in elected generally to decline ATM and one-time debit card 
transactions that would overdraw the account, although certain 
authorized transactions may nonetheless have resulted in an overdraft 
later at settlement. Bureau research suggests that a transaction 
authorizing with a sufficient balance, but later settling with a 
negative balance is a common occurrence for frequent overdrafters who 
have not opted in.\16\
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    \16\ CFPB, Data Point: Frequent Overdrafters (Aug. 2017) at 28, 
available at https://www.consumerfinance.gov/documents/5126/201708_cfpb_data-point_frequent-overdrafters.pdf.
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    The Bureau has found that the share of consumers who have opted in 
varies widely by institution, but in general it is considerably less 
than half.\17\ This underscores the variation among financial 
institutions and their customers in their desire to offer or use 
overdraft on card-based transactions. The Bureau has estimated in 2013 
that the rule led to a material decrease in the amount of overdraft 
fees paid by consumers.\18\
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    \17\ CFPB, CFPB Study of Overdraft Programs: A White Paper of 
Initial Data Findings (June 2013) at 29, available at https://files.consumerfinance.gov/f/201306_cfpb_whitepaper_overdraft-practices.pdf. This report covers a number of larger banks. The 
Bureau has obtained data with respect to practices at smaller banks 
and credit unions which is consistent with the Bureau's finding. The 
Bureau will consider those data in connection with this review.
    \18\ CFPB, CFPB Study of Overdraft Programs: A White Paper of 
Initial Data Findings (June 2013) at 39, available at https://files.consumerfinance.gov/f/201306_cfpb_whitepaper_overdraft-practices.pdf.
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    With regard to the type of transactions taking place, there has 
been substantial growth in debit card-based transactions both due to 
more consumers using debit cards and those with debit cards using them 
more. There have been technological changes making debit card 
acceptance more ubiquitous, such as the introduction of tablet and 
smartphone-based point of sale terminals and a growing number of online 
and mobile marketplaces, retailers, and service providers. There has 
also been a growing comfort among consumers in making electronic 
payments.
    Since the issuance of the Overdraft Rule, the Bureau has observed 
several changes in overdraft practices at a number of financial 
institutions. These include: (i) Changes in the order in which 
different categories of transactions are posted, which has resulted in 
a diminution in the number of overdraft transactions; (ii) limits on 
the number of overdraft fees that some financial institutions may 
charge in a single business day; and (iii) ``cushions'' which preclude 
assessing overdraft fees on de minimis amounts. The Bureau does not 
have reason to believe that these changes are attributable to the Rule.
iii. Bureau Resources and Analysis
    The Bureau has conducted research relevant to the Overdraft Rule. 
In 2012, the Bureau launched an inquiry into overdraft, paralleling 
work that the Bureau was undertaking to examine other types of short-
term credit products. The Bureau obtained aggregate and anonymized 
account-level data from large banks as part of this inquiry, which 
Bureau researchers extensively analyzed. The Bureau shared some of its 
findings through a June 2013 White Paper, July 2014 Data Point, and 
August 2017 Data Point.\19\
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    \19\ CFPB, CFPB Study of Overdraft Programs: A White Paper of 
Initial Data Findings (June 2013), available at https://files.consumerfinance.gov/f/201306_cfpb_whitepaper_overdraft-practices.pdf; CFPB, Data Point: Checking account overdraft (July 
2014), available at https://files.consumerfinance.gov/f/201407_cfpb_report_data-point_overdrafts.pdf; CFPB, Data Point: 
Frequent Overdrafters (Aug. 2017), available at https://www.consumerfinance.gov/documents/5126/201708_cfpb_data-point_frequent-overdrafters.pdf.
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    In 2015, the Bureau obtained de-identified information from core 
processors on 4,091 financial institutions for a single 12-month period 
around 2014. The vast majority of these financial institutions were 
small, as defined by the Small Business Administration as having assets 
less than $550 million.\20\ The acquired information related to 
overdraft practices (whether the financial institution offered 
overdraft and opt-in, its policies for making overdraft and balance-
related decisions, transaction processing methods, and overdraft and 
NSF fees charged) and consumer outcomes (share of accounts opted-in, 
overdraft and NSF fee revenue per account, and distribution of fees 
across accounts).
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    \20\ ``A financial institution's assets are determined by 
averaging the assets reported on its four quarterly financial 
statements for the preceding year.'' 13 CFR 121.201. Assets for the 
purposes of this size standard means the assets defined according to 
the Federal Financial Institutions Examination Council 041 call 
report form for NAICS Codes 522110, 522120, 522190, and 522210 and 
the National Credit Union Administration 5300 call report form for 
NAICS code 522130.
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iv. Previous Input to the Bureau
    In February 2012, the Bureau published a request for information, 
seeking input from the public on the impact of overdraft programs on 
consumers, including information on the impact of the Overdraft 
Rule.\21\ The Bureau received more than one thousand comments from 
trade groups, financial institutions, consumer advocates, individual 
consumers, and others.
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    \21\ 77 FR 12031 (Feb. 28, 2012).
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    In August 2017, the Bureau announced that it had conducted consumer 
testing on potential updates and improvements to the Model Form A-9 
promulgated by the Board. The Bureau released four alternative versions 
of a revised opt-in model form

[[Page 21732]]

and invited feedback on these alternatives, while noting that the 
current Model Form A-9 remains effective under Regulation E.\22\ The 
Bureau received more than forty comments in response to the release.
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    \22\ https://www.consumerfinance.gov/about-us/blog/know-you-owe-we-are-designing-new-overdraft-disclosure-forms/.
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    In response to the Bureau's 2018 Call for Evidence Initiative, 
which included requesting input on all inherited regulations and 
rulemaking authorities, the Bureau received approximately ten comments 
that included information about checking account overdrafts 
generally.\23\ These comments came from trade groups, financial 
institutions, and consumer advocates. The comments addressed a wide 
variety of topics including the overall cost of overdraft, the 
treatment of overdrafts under the Truth in Lending Act, and potential 
modifications to the current Model Form A-9.
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    \23\ 83 FR 12881 (March 26, 2018).
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    Through these and other outreach efforts, the Bureau has heard 
concerns expressed by some financial institutions and trade groups 
regarding the requirements that the opt-in notice be substantially 
similar to Model Form A-9 and that the notice may not contain any 
information not specified in or otherwise permitted by the regulation. 
Some of these financial institutions have expressed a desire to add 
additional information to the notice that they believe may be relevant 
to the consumer's decision, such as an institution's policies for 
making overdraft and balance-related calculations.
    Finally, the Bureau's experience suggests there is little overlap, 
duplication, or conflict between the Overdraft Rule and Federal, State, 
or other rules. The Bureau has not received any requests for a 
determination that the Overdraft Rule preempts State law. In October 
2015, the Department of Education also issued a final rule that 
generally prohibits overdraft fees on students' checking accounts if 
the financial institution offering the account partners with an entity 
that handles the school's financial aid disbursement process.\24\
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    \24\ See 34 CFR 668.164.
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II. Request for Comment

    Consistent with the review plan, the Bureau asks the public to 
comment on the Overdraft Rule, including the following topics:
    (1) The nature and extent of the economic impacts of the Rule as a 
whole and of its major components on small entities, including impacts 
of the reporting, recordkeeping, and other compliance requirements of 
the Overdraft Rule, as well as benefits of the Rule.
    (2) Whether and how the Bureau by rule could reduce the costs of 
the Overdraft Rule on small entities, consistent with the stated 
objectives of EFTA and the Overdraft Rule.
    (3) Any other information relevant to the factors that the Bureau 
considers in completing a Section 610 Review under the Regulatory 
Flexibility Act, as described above.
    Where possible, please submit detailed comments, data, and other 
information to support any submitted positions.

    Dated: May 6, 2019.
Kathleen L. Kraninger,
Director, Bureau of Consumer Financial Protection.
[FR Doc. 2019-09812 Filed 5-14-19; 8:45 am]
 BILLING CODE 4810-AM-P
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