The New York Department of Consumer Affairs Commissioner asked the Federal Reserve to prohibit financial institutions from using text messages to obtain consent from their customers before enrolling them into overdraft services, and warned firms not to "undermine new federal regulations with aggressive solicitations to enroll New Yorkers into overdraft protection services." A copy of the press release is attached.
The NY DCA took the action after learning that a marketing firm is promoting a "text message solution" to financial institutions that will need to obtain consent from their customers beginning July 1, 2010 before enrolling them into overdraft services. The Commissioner cautioned against these aggressive marketing strategies saying they would eliminate the consumer's opportunity to make informed choices about overdraft protection services, which he claims would "defy new federal regulations of overdraft protection and threaten the financial security of consumers."
In a letter to Federal Reserve Chairman Ben Bernanke, the New York Commissioner also asked that the Federal Reserve to prohibit financial institutions from using text messages to obtain consent from their customers before enrolling them into overdraft services.
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Ralph T. Wutscher
Kahrl Wutscher LLP
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