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Arizona Credit Union System Partners with Floyd & Associates to Offer Overdraft Privilege Program.

Business Editors


Program helps members avoid negative consequences

of bounced share drafts (checks)

Arizonans who bounce checks (share drafts) can avoid embarrassment, inconvenience and onerous costs, if their credit union offers a new overdraft privilege program being extended to affiliates of the Arizona Credit Union League (ACUL).

The Arizona Credit Union System, represented by ACUL Services, Inc., has signed an agreement with John M. Floyd & Associates, Inc. (JMFA) of Houston naming the profitability-consulting firm as its "Preferred Business Partner" for the JMFA OVERDRAFT PRIVILEGE(SM) program.

Credit union organizations in another 17 states, as well as CUNA and Affiliates, and IntegraSys(TM), a major core processor for credit unions, also have teamed with JMFA during the past year for its product (

"The public is demanding value-added services like overdraft privilege," CEO John M. Floyd has told both the Consumer Advisory Council to the Federal Reserve System and the Consumer Federation of America.

"This discreet service avoids the embarrassment of members 'making good' on a share draft (check) with a valued retailer or creditor. Neither the accountholder nor the merchant loses time or productivity in straightening out an NSF (insufficient funds) mess," Floyd says. "Members don't wind up on retailers' bad check lists.

"Members can avoid multiple NSF charges from a merchant or late payment penalties on mortgages, car loans or tuition payments. They also can prevent negative entries on their credit record or potential visits from law enforcement for inadvertent - but repeated - bad share drafts or checks," he added.

"With overdraft privilege, Arizona credit unions have the opportunity to enhance member satisfaction while also increasing their non-interest fee income," noted Gary Plank, President and CEO of the League and the service firm.

Overdraft Programs Vary Widely

JMFA, founded in 1973, is a leading provider of noninterest or fee income products to financial institutions. The company has installed profit improvement programs in 1,650-plus financial institutions, adding more than $10 billion in increased pre-tax earnings for its clients. The company also has successfully implemented variations of its overdraft privilege program in more than 550 credit unions, banks and thrifts.

"JMFA's overdraft privilege program ( is nondiscriminatory and guaranteed to be 100% compliant with federal and state regulations, as well as with recently suggested changes," Floyd emphasized. "Our program has a proven track record of producing more income and less charge-offs for financial institutions than typical NSF programs."

He also disclosed:

-- Of 18,000 financial institutions in the United States, more

than 2,000 are estimated to now have defined and communicated

overdraft programs.

-- The typical fee charged on an insufficient funds (NSF) check

is $17 to $35. The average is $22.50.

-- Studies indicate the average accountholder writes about 3.4

NSF items per year.

"A well-managed overdraft program is a win-win-win for the consumer, the merchant and the financial institution," he said. "Additionally, automated programs help identify troubled accountholders for necessary counseling."

The Federal Reserve System, at the urging of consumer advocate groups, including the National Consumer Law Center, has been reviewing compliance issues concerning "bounce protection," "courtesy pay" and similar overdraft programs. Some critics contend the programs need stricter controls under the Truth in Lending Act, however, the Fed decided in March 2003 to make no regulatory changes at that time, but to continue gathering information on the programs.

Floyd has been speaking from coast to coast this past year emphasizing the multiple benefits of overdraft programs, as well as the unfair practices endemic to the implementation, marketing and management of some overdraft programs. Some bounce or overdraft protection programs are discriminatory, over-promote the service, under-educate consumers on its use and base overdraft limits on a "mystery matrix," he has advised consumers, regulators and bankers.

Brian R. Witt, chairman of the Credit Union Committee of the American Bar Association, agreeing with Floyd's premise, stated in the May issue of Credit Union Magazine: "The hidden, unquantifiable costs of not covering overdrafts could be more insidious than the overdraft fees now imposed under current disclosure laws."

JMFA creates strategic programs, including PRIVILEGE MANAGER CRM(TM) software, specific to each credit union, its organization and its market that maximizes all aspects of NSF revenue. It then delivers expert training, marketing and software to assure successful implementation and full regulatory compliance.

About the Arizona Credit Union League:

The Arizona Credit Union League serves 65 federally and state-chartered credit unions with more than 1.3 million members. The association provides member credit unions with consultation, legislative lobbying, regulatory compliance, marketing services, public relations, operational and technical assistance, education and training, and fee-based services. For more information, visit the ACUL Web site at

JMFA OVERDRAFT PRIVILEGE(SM) and PRIVILEGE MANAGER CRM(TM) are service marks of John M. Floyd & Associates, Inc. PRIVILEGE MANAGER CRM(TM) is patent pending.
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Publication:Business Wire
Date:Apr 7, 2004
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