Q: Is a credit union required to provide a notice each time a nonsufficient funds (NSF) item is presented against a member’s account, whether it is paid or returned?
A: No. Although most financial institutions provide overdraft notices as a matter of industry practice, providing the notice is simply a courtesy, not a requirement.
Providing the notice may also be considered as a loss-control measure because it serves as a red flag for errors and unauthorized items. However, there is no federal law or regulation requiring credit unions to provide the notice.
Q: Does Regulation E cover business accounts?
A: No. Reg E (electronic fund transfers) only covers consumer accounts established “primarily for personal, family or household purposes.”
Further, Reg E defines a consumer as a natural person, so trust and estate accounts are excluded from the regulation’s coverage. It is the credit union’s business decision whether to extend Reg E protections to members’ business accounts.