Q: How does an “automated” overdraft payment program differ from “ad hoc” overdraft payment practices?
A: Automated overdraft payment programs typically rely on computerized decision-making, and use pre-established criteria to pay or return specific items. There is little to no case-by-case review and decision-making with respect to an individual customer or item.
By contrast, ad hoc practices typically involve the exercise of bank employee judgment in making a specific decision about whether to pay or return an item. This is done as an accommodation and based on the employee’s knowledge of a particular customer.
This can be found in FAQ I-1 of the FDIC’s Overdraft Payment Program Supervisory Guidance FAQs. The FAQs can be found at: http://www.fdic.gov/news/conferences/overdraft/FAQ.html