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BofA to try letting customers OK overdrafts via text message

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It’s an uncomfortable moment: You try to use your debit card but the cashier shrugs and says, ‘Sorry, it’s been declined,’ because you don’t have enough in the account.

Then your mobile phone buzzes with a text message from Bank of America: it can make the payment after all -- so long as you agree to a $35 overdraft fee. You can avoid the fee if you replenish your account by the end of the banking day, 8 p.m. at Bank of America ATMs.

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That scenario will be played out next year in a pilot program allowing some BofA customers to opt in to overdraft fees one at a time, spokeswoman Anne Pace said Monday.

The option tweaks a policy that Bank of America put in place last summer, when it stopped permitting debit transactions that overdraw a customer’s account at the register.

The policy drew praise from consumer advocates who had long criticized banks for gouging consumers with the fees, although my colleague David Lazarus, who writes about consumer affairs, commented: ‘It seems pretty pathetic to sing a company’s praises just because it’s decided to stop mistreating customers.’

Pace said allowing customers to choose to pay overdrafts on an individual basis at points of sale would provide them an option already available at Bank of America ATMs. Customers can overdraw their accounts at ATMs but are given a warning first about the $35 fee that is reversible if they replenish the account by the end of the day.

The overdraft approval via text message would apply only to the specific transaction.

Pace said it was too early to say exactly where or when the pilot program would begin. Participating customers would have to provide written authorization before the bank would start texting them with the overdraft fee offer.

Since last August, the Federal Reserve has barred banks from automatically charging overdraft fees to account holders on ATM and debit card transactions, so having to opt in to the BofA program merely complies with existing regulations.

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-- E. Scott Reckard

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