Dear Sir or Madam:
Thank you for the opportunity to comment on your proposed changes to
Regulation DD as it affects courtesy overdraft protection plans. This
service has proven to be very much appreciated by those customers who
occasionally overdraw their accounts. Most prefer that we pay as opposed
to return their checks. The fee is the same. One area of concern is the
best practice of charging the accounts off when overdrawn for 30 days.
This practice does not give the accountholder sufficient time to remedy
the overdraft situation. While it seems prudent and warranted to stop
paying additional items and increasing the amount overdrawn, we feel
that waiting until 60 to 65 days to charge the account off does not
submit the bank to significant additional risk and allows the
accountholder time to "cover" the overdraft. Our program has been
successful and in place since March, 2001. For your information, the
step - by - step process is as follows. 1. An NSF/Overdraft notice is
mailed to the customer on day 1, at the time the NSF check is presented
for payment. This notice provides the customer with the check number(s),
the amount(s) of the check(s), and balance information as of the time of
presentment. 2. When the account has been overdrawn for 15 days, a
reminder letter is mailed by us. It reminds AOP customers that they must
bring their account to a positive daily balance. 3. At 30 days another
letter is mailed by us. This letter informs AOP customers that their
privilege is revoked. 4. On the 40th day we send another, slightly
stronger letter. AOP customers are notified that their account will be
referred to a collection agency if the overdraft is not cleared before
the 45th day. 5. On day 45 we send a listing of the designated accounts
to Transworld Systems, Inc.. They immediately send a letter notifying
the customer that their account has been referred to them for collection
and encouraging them to pay the bank. 6. Transworld Systems sends
another, stronger notice on the 55th day. 7. When the account hits 60
days overdrawn we send a letter stating that, unless the account is
brought to a positive balance, it will be charged off on day 65 and will
be reported to the credit reporting agencies. 8. On the 65th day, we
automatically close the account, place it in status 8 (do not reopen),
put an account memo on the system with the amount due, and report it to
ChexSystems and Equifax. 9. Also on the 65th day, Transworld Systems
sends another, stronger notice. 10. An even stronger notice goes out
from Transworld Systems on day 75. 11. When the account reaches the 85th
day, Transworld Systems mails its final letter. This strong letter
informs the customer that we may pursue stronger and legal measures to
collect the outstanding balance. Again, I appreciate the opportunity to
offer my comments on your proposed changes. If there are questions, feel
free to contact me.
R. M. (Maxie) Burns, III
Executive Vice President
The Palmetto Bank
310 Hillcrest Drive
Laurens, SC 29360
(864) 984-8350
rmburns@palmettobank.com
