You also ask the question, “Couldn't an entry level checking account lack the ability to go negative? Then you go on to say “debit and ACH approval are automated and instant.” This is only half right. Debit card transactions are instant but in many occurrences the merchant where the card is being swiped will send through an approval authorization for an amount less than the final full amount of the transaction. This happens when you leave a tip on your debit card slip at a restaurant. Let's say a member has a $20 available balance in his/her checking account and decides to go out for supper at a restaurant. The bill comes and it's $18. The member gives the waiter his/her debit card and the waiter swipes it (authorizing a hold of $18 from the member's checking account). Then he brings the member the slip to sign and the member leaves him a $3 tip.

Since the transaction was already authorized for $18, the credit union has to honor that authorization. Then when the restaurant pushes through the transaction it hits the member's account for $21 and overdraws the account. This also happens often at gas stations that will authorize only $1 when a member fills his or her tank. A debit card transaction like this cannot be returned, it has to be paid. The only thing the member needed to do to avoid the overdraft was to open the app on his or her smartphone and look at the available balance. This can be done in a matter of seconds and is free to the member. The member would've been able to make the responsible decision to either order a less expensive menu item or leave a $2 tip instead of $3. The credit union offers a way free of charge for the member to be responsible and avoid the overdraft fee; if they choose not to use that free product then I really can't see excusing them from paying the fee. The CFPB is only focusing on the problem from the financial institution perspective. Many overdrafts are caused by situations as described above. If we're not going to hold the member responsible then shouldn't the responsibility fall somewhat on the merchant?

When you say that debit and ACH approval is automated and instant, this is a misstatement. Debit card approval is subject to certain limitations like the instance described above and ACH approval is not. This is a common misunderstanding. ACH transactions are, at the earliest, next-day and can be longer depending on the merchant originating the ACH. Also, ACH transactions do not send through authorization holds like debit card transactions. Therefore, ACH transactions do not adjust the available balance of the checking account when the member authorizes the ACH. So when a member writes a check at Walmart and Walmart runs the check through the machine, it is not debiting the member's account in real time nor is it checking the member's available balance and holding available funds for the transaction like a debit card. It is simply converting the MICR data on the check to an ACH which will then clear the member's account the following day.

So to answer your question from above, what if my access to financial services did depend on my ability to write masterfully without making any grammar or spelling errors? I would hope the credit union reviewing my writing would offer a free app or website or even a free 800 number where I could check my spelling and grammar before I requested access, and if so, I would hope that I was responsible enough to utilize the free products offered to me, and if I chose not to utilize all these available tools, then I would hope that I wouldn't complain when the credit union charged me because I didn't use the free spelling and grammar check.

Justin Maddison

CFO

Western Cooperative Credit Union

Williston, N.D.