Consumers have opted in to overdraft programs in numbers not forecast by most issuers. The aha moment was when issuers realized that educating consumers on the value of these programs really did work. It’s the tone of that education that’s come into question.
“In a study conducted by The Center for Responsible Lending found that many consumers were confused about how their accounts worked and why they might need to opt-in to overdraft protection. 60% of consumers who opted in said that an important reason they did so was to avoid a fee if their debit card was declined, when in fact, a declined debit card costs consumers nothing. 64% said that an important reason they did so was to avoid bouncing paper checks, when opt-in rules cover only debit and ATM transactions.”
This article offers examples of scare tactics designed to motivate consumers to opt in, but there are also examples of many issuers that tried to get it just right when they explained the benefits of overdraft protection. The bigger question is that by building complexity in to a process, do regulators ultimately help or hurt consumers?