AUSTIN, Texas – It's not so much having to pay nonsufficient funds fees that irritates consumers, but it's trying to understand financial institutions' procedures for paying or returning NSF items that are presented on their checking accounts that are the root of consumers' gripes about NSF fees. Financials, say consumers, should have a process for handling NSFs "that can be clearly disclosed and be consistent and fair so that customers can make informed decisions about the alternative payment methods that are available" That was one of the main findings of a recently released white paper by Alex Sheshunoff Management Services L.P. on New Overdraft Scoring and Collections Strategy Creates Big Payoffs. "When financial institutions clarify for their customers their procedures for handling NSFs, while notifying customers that overdrawing their checking account is expensive and should be avoided, customers will shift fees to financial institutions from nonbank competitors.," write Alex Sheshunoff Management Services David Furnace, director, Overdraft Practice, and Bob Giltner, director, authors of the white paper. Furnace and Giltner refer to this as the "Informed Customer Effect" because they say "customers who understand NSF/OD policies and procedures are likely to change their behavior and shift their fee payments to financial institutions." According to the authors, consumers will submit nearly one billion NSF items to financial institutions this year. That translates into over three overdrafts for every transaction account in the U.S. In addition, they say, many "high-performing financial institutions" deal with over six NSFs per checking account and earn, on average, $150 to $200 per account in NSF/overdraft fees. While in the past most financials have not had a comprehensive NSF/OD program, the high NSF/OD incidence rate warrants financials to implement a procedure to efficiently and effectively handle NSFs, Furnace and Giltner say. -

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