CUs Tackle Reg. E Compliance with an Old Friend

With a Regulation E Overdraft Rules deadline just around the corner, credit unions are facing another compliance challenge for their overdraft services.




With a Regulation E Overdraft Rules deadline just around the corner, credit unions are facing another compliance challenge for their overdraft services. And while they can't reduce compliance, they can reduce associated costs with a simple, affordable solution designed by credit unions that fill the gaps in their compliance plans. Here's the Reg. E challenge from four perspectives...

E-Central Credit Union chooses broad education strategy
According to Evan Hitchcock, Marketing Manager for E-Central Credit Union in Pasadena, Calif., the $185 million credit union laid out a multi-prong approach to alert members to the new opt-in requirements: print communications, member calls and personal interaction, and online applications. To accomplish its goals, E-Central CU needed an online service solution to communicate the new rules and simplify opting in. E-Central also wanted to remind members of the differences between the credit union and some less-than-honorable financial institutions.

"The heart of the regulation is aimed at stopping malicious bank behavior," Hitchcock said. "Many institutions didn't do anything to help out their customers who tend to overdraft. Even though they might have funds in a savings account, they could go on overdraft because the accounts aren't linked. Our message to members is that their institution behaved properly; we put members on courtesy pay if funds aren't available elsewhere."

Seven Seventeen Credit Union seeks solution to satisfy two regulations
The Warren, Ohio-based Seven Seventeen wanted to get ahead of the regulatory issue for two reasons: Along with opting in for courtesy pay, the credit union also wanted to give members an online method to opt in to the over-the-limit credit card option, which Regulation Z now requires before allowing consumers to exceed their credit limits.

In looking for the most effective and efficient way to implement the overdraft-service opt in and comply with both Reg. E and Z requirements ongoing, Seven Seventeen's initial step was to create a staff task force to design a member information and opt-in process for both needs - one that would ensure two distinct but similar processes that were cost-effective for the credit union, and secure and convenient for members.

"Our internal committee set several "must-have" criteria for our service provider to help us communicate with members and encourage continued participation," said Karen DeSalvo, Senior Vice President of Marketing for the $770 million credit union. "Those criteria required the vendor to create a process that was simple to use, secure, flexible and cost-effective, and was not a one-size-fits-all solution," she said.

"We wanted to make it as easy as possible for members to opt in using any of the online channels we currently provide," DeSalvo said. "For example, we have online links on our Website home page, as well as on pages for opening accounts, e-statements and online banking. We also wanted to ensure that it would be a secure process. The protection of our members' account information is vitally important to us, thus a system that included a secure server was imperative."

Horizons North Credit Union does the right thing
Brad Harvey, President/CEO of the $65 million Horizons North Credit Union, says Reg. E hit the financial industry rather fast. To comply, the Northglen, Colo., credit union needed lots of member communication in a relatively short period of time. According to Harvey, "my biggest fear is that, come August 16, some members don't know about the change and have a debit card payment declined because they didn't opt in. We're hoping to minimize that."

"Everyone's scrambling to meet the new rule," he said. "We have very robust online-service usage, with some 40 percent of members using online banking," Harvey said. "Some of these members never come into a branch, relying instead on electronic communications from us. If their only source of information is through lobby flyers or statement stuffers, they might never know about the opt-in requirement, so the first thing I did was call our management team together and tell them to use all options available to get the word out."

General Mills FCU faced with early deadline
A big hurdle General Mills Federal Credit Union has faced in launching its information and opt-in campaign is an earlier deadline than most. That meant choosing a service provider that was responsive to this concern.

"We're a beta tester for a new release of our core system, which includes fields for the new overdraft privilege opt-in information, so we are able to have our members opt in by July 1," said Marlo Hirl, Vice President, Marketing and Business Development for the $272 million credit union in Minnetonka, Minn. "Our key considerations were the ability to develop a process quickly to meet the earlier deadline, finding a good tracking element, cost, and simplicity of the solution - both for the credit union and for members."

Hirl says General Mills FCU looked at available solutions but found many were very expensive and provided packages with more than they needed. "We didn't have control over customization, so the end product didn't look like us," she said. "Some providers wanted to include pieces we didn't want, such as direct mail, which we can do ourselves."

Credit unions turn to an old friend
In a unique approach, DigitalMailer used its network of clients to design a Reg. E solution created by credit unions for credit unions. Clients offered suggestions and provided lists of needs that helped the company create a product that both encourages opt-ins and meets the compliance standards of new overdraft-protection guidelines. The online service capitalizes on credit unions' previously collected emails, while taking advantage of DigitalMailer's secure web forms - helping keep the skyrocketing costs of compliance in check.

Evan Hitchcock of E-Central reports that DigitalMailer offered a major benefit in its convenient and secure servers. "DigitalMailer provided us a comprehensive online process and the secure forms to go with it," he said. "They created a process for us that complements our existing marketing plan."

Karen DeSalvo of Seven Seventeen says her CU is using DigitalMailer's email-alerts system in a "drip" marketing campaign to inform members and periodically remind them to opt in. By clicking on an embedded link, members are directed to a secure server - a transparent process to members, as it is designed with the credit union's own logo. "In working with DigitalMailer, we feel like we have a solution that will make it easy for members to opt in and will be easy to administer," said DeSalvo. "The opt-in process is completely secure, and it's convenient for us. We can easily see who has or hasn't signed up and follow up accordingly."

Brad Harvey says there was no question in his mind that DigitalMailer would be the best partner to help with Reg. E compliance. Horizons North put a notice on its home page and created an opt-in link that goes to a secure web form. The link can be viewed from any page on the Website. "Each day, we receive a report showing us who has opted in, so we know where we need to follow up, Harvey said. "We launched our information campaign in early April; and seven days later, 5 percent of our checking accountholders had already opted in for the service."

Marlo Hill at General Mills has used DigitalMailer's Automatic Relationship Builder for email marketing campaigns for a couple of years, so she says going with its Reg. E solution was an easy decision. "We liked DigitalMailer's solution because the messages and the opt-in page look familiar to members. I'm impressed with DigitalMailer's service," she said "and with this quicker deadline, they've been very responsive in helping us get our information out and in setting up an easy opt-in process."


DigitalMailer is offering FREE "Brown Bag Session" webinars through the compliance deadline for interested credit unions. The sessions provide examples of the different elements included with the Reg. E Opt-in service, along with its customizable features.

To register, or for more information, visit




April 19, 2010


  • Thanks for sahrnig. Always good to find a real expert.