Member Login

THE MEMO

DAKOTA CREDIT UNION ASSOCIATION
  • Advocacy
    • Government Affairs
    • Grassroots Action Center >
      • Advancing Communities
      • Bill Tracking
    • Political Fundraising
    • Regulatory Advocacy
    • Preserving Financial Choice for North Dakotans
  • Compliance
    • Compliance Resources
    • Compliance Solutions >
      • AffirmX
      • CECL
      • ComplySight
      • CU CMS
      • CU PolicyPro
      • InfoSight
      • PayLynxs
      • RecoveryPro
      • Training
    • The Memo: Compliance
  • Member Resources
    • Awards >
      • DakCU Awards
      • CUNA Awards
    • CU Awareness (SWAP)
    • DakCU Foundation >
      • Donor Wall
      • Memorials
    • DakCU Health Benefits Trust
    • Financial Well-Being for All
    • Professional Development >
      • Chapters
      • Emerging Leader Program
      • Sales CU Training
      • Training
    • Strategic Partners >
      • CAP Program Directory
      • Compliance Solutions
      • Pee Wee and Friends®
  • News & Events
    • The Memo
    • Events Calendar
    • Annual Summit >
      • Sponsors
    • CUNA GAC
    • MonDak
    • New Ideas
    • Sales CU Training
  • About Us
    • Board of Directors
    • Contact Us
    • Our Team

Is Your Overdraft Program Free from Bias?

4/25/2022

 
Picture
Potential misuse of algorithms can create concern over fairness in lending decisions. A consumer-focused overdraft strategy provides an unbiased solution. 
By Cheryl Lawson, JMFA EVP-Compliance Review

Incorporating consumer data and innovative technologies—such as artificial intelligence (AI) or machine learning—into service delivery strategies has become more commonplace amid the pandemic, changing consumer service expectations and increased fintech competition.

It is true more advanced technology that analyzes previous account activity can be useful in detecting fraud and predicting what services might be most ideal for consumers. However, relying on analytics or algorithms to determine who gets a specific service like overdraft protection and who doesn’t, goes against regulatory expectations of fairness and can erode consumer trust when they are unaware of how decisions that impact their financial well-being are made.

According to a study by the Brookings Institute, issues around algorithmic bias have been the subject of vigorous debate in tech-policy circles. And the stakes become even higher when data does not represent certain consumer groups who have been left out of mainstream settings by new, cutting-edge technology.

Recent comments by CFPB Director Rohit Chopra stressed concerns over the potential misuse of algorithms that offer little transparency in lending decisions. Furthermore, in a December speech, Eric Halperin, the CFPB’s new enforcement chief suggested that some uses of AI may constitute “unfair, deceptive and abusive acts and practices (UDAAP) violations” and indicated this is an issue of high priority for the Bureau. And while the current focus is on lending products, Chopra has commented that “when consumers and regulators do not know how decisions are made by the algorithms, consumers are unable to participate in a fair and competitive market, free from bias.”

Consumer-focused overdraft strategy provides an unbiased solution
With the increased attention on fair and inclusive consumer services, maintaining a totally unbiased overdraft solution that keeps your account holders well-informed about their options and account status is essential.
Unlike complicated algorithms or matrix-based programs that utilize data points to determine program limits that are unknown to the consumer, a fully transparent overdraft solution is built around processes and procedures that are inclusive of all eligible account holders and continually communicated. With full knowledge of their limit, program fees and the alternative services available, they can maintain their finances without worry when an unexpected expense or emergency knocks them off track.

Based on financial well-being and financial literacy, a completely disclosed overdraft strategy is a win-win for both consumers, as well as the financial institutions that serve their financial needs. Plus, with the support of experienced consultants and compliance experts, you can uncover many aspects of your program that need improving to achieve the best results, including:
  • an appropriate fee structure and guidance on making suitable adjustments;
  • established limits and clearly defined rules that help consumers make responsible and informed decisions about service usage;
  • recommendations on overdraft threshold (de minimis), daily caps, grace periods and fee refunds;
  • expert reviews of current disclosures and advice regarding effective explanation of important account information;
  • comprehensive staff training on how to educate account holders about your program;
  • compliant policies, procedures and communications materials;
  • ongoing, proactive performance and compliance recommendations;
  • a 100 percent compliance guarantee.

Nothing to hide and plenty to gain

Regulators have made it clear that protecting consumers from biased or undisclosed financial service practices is on their radar. Providing a fair and inclusive overdraft option with clear disclosures, reasonable fees and advice on how to maintain financial stability is a reliable way to avoid increased scrutiny while maintaining a sustainable source of income. It is also a proactive strategy for building long-term trust and loyalty by helping account holders manage their short-term liquidity needs with certainty.

JMFA is one of the most trusted names in the industry. Whether it’s recovering lost revenue, delivering a 100% compliant overdraft service, uncovering new savings with vendor contract negotiations, creating more value, or serving account holders better—JMFA can help you deliver measurable results with proven solutions. That is why they are a CUNA Strategic Services (CSS) partner. If you are interested in learning more about JMFA, please contact Jenny Jackson, CUNA Strategic Services alliance manager or Derrik Mather, Regional Director for JMFA. For information or questions about any of our Dakota Service Corps products or services please contact George McDonald, DakCU’s Chief Officer of Strategic Services.
Picture

Comments are closed.

    The Memo

    The Memo is DakCU's newsletter that keeps
    ​credit union professionals updated on current news and information. ​

    Memo Home

    Want the Memo delivered straight to your inbox?
    Sign Up Now


    Archives

    February 2023
    January 2023
    December 2022
    November 2022
    October 2022
    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021


    Categories

    All
    Action Alert
    Advocacy
    Awards
    Awareness Campaign
    Compliance
    CUPAC/CULAC
    Dakota CUs Give Back
    Events
    Facebook Creeping
    Financial Well Being
    Foundation
    Fraud Alert
    Grants
    In The Spotlight
    Marketing Tips
    Member Solutions
    Miscellaneous
    ND Legislative Update
    News And Notes
    President's Perspective
    Press Releases
    SD Legislative Update
    Webinars

Copyright Dakota Credit Union Association.  All Rights Reserved.
2005 N Kavaney Dr - Suite 201 | Bismarck, North Dakota 58501
Phone: 
800-279-6328 | info@dakcu.org | sitemap | privacy policy
Picture
Picture
Picture
  • Advocacy
    • Government Affairs
    • Grassroots Action Center >
      • Advancing Communities
      • Bill Tracking
    • Political Fundraising
    • Regulatory Advocacy
    • Preserving Financial Choice for North Dakotans
  • Compliance
    • Compliance Resources
    • Compliance Solutions >
      • AffirmX
      • CECL
      • ComplySight
      • CU CMS
      • CU PolicyPro
      • InfoSight
      • PayLynxs
      • RecoveryPro
      • Training
    • The Memo: Compliance
  • Member Resources
    • Awards >
      • DakCU Awards
      • CUNA Awards
    • CU Awareness (SWAP)
    • DakCU Foundation >
      • Donor Wall
      • Memorials
    • DakCU Health Benefits Trust
    • Financial Well-Being for All
    • Professional Development >
      • Chapters
      • Emerging Leader Program
      • Sales CU Training
      • Training
    • Strategic Partners >
      • CAP Program Directory
      • Compliance Solutions
      • Pee Wee and Friends®
  • News & Events
    • The Memo
    • Events Calendar
    • Annual Summit >
      • Sponsors
    • CUNA GAC
    • MonDak
    • New Ideas
    • Sales CU Training
  • About Us
    • Board of Directors
    • Contact Us
    • Our Team