RSK.IQ Question of the Week 1/9/17

Does an NSF Transaction Count Under Regulation D?

Issue/Inquiry

On a statement savings account, a customer, who had already reached the six permissible transactions allowed under Regulation D, conducted a seventh transaction, but it was returned because there were insufficient funds in the account. Can the Bank count this seventh transaction as a violation of Regulation D requirements and charge a fee?

Response Summary

Since the seventh transaction did not result in a transfer or withdrawal, the number of transfers or withdrawals permitted by Regulation D has not been exceeded and no penalty may be imposed.

Response Detail

Under Regulation D, a “savings deposit” is a deposit or account commonly known as a passbook savings account, statement savings account, or money market account, from which the depositor is permitted to make no more than six transfers and withdrawals, or a combination of both, per calendar month or statement cycle of at least four weeks, to another account of the depositor at the same institution or to a third party by means of a pre-authorized automatic transfer,  telephonic agreement, order or instruction, or by check, draft, debit card, or similar order made by the depositor and payable to third parties. 12 CFR §204.2(d)(2).

In this case, the customer had already made six transfers or withdrawals from a statement savings account, or a combination of both, and attempted a seventh, which was returned unpaid for nonsufficient funds.

As only transfers or withdrawals are counted against the number of permitted transactions, the seventh transaction would not be counted, since it did not result in a transfer or withdrawal. Given that the number of permissible transactions has not been exceeded, the Bank may not treat the seventh transaction as an excess transaction and impose a penalty upon it.

This entry was posted on Monday, January 9th, 2017 at 1:34 pm.

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