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Bank to allow texts to OK overdrafts

Associated Press / May 10, 2011

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NEW YORK — Willing to pay $35 to overdraw your checking account? Just text your approval.

Under a pilot Bank of America program, customers would be able to instantly reverse a declined transaction.

News of the test program comes just a year after the bank stopped permitting transactions that overdraw a customer’s account. At the time, Bank of America called the decision a consumer-friendly one to prevent customers from unknowingly overdrafting their accounts and incurring penalty fees.

Also, a rule that went into effect last summer prohibits banks from enrolling customers in overdraft programs without their active consent.

Customers will have to sign up for the new program. If they try to make a purchase that’s declined, they would immediately get a text from Bank of America asking if they want the purchase to go through. The text would notify customers of the overdraft fee.

The customer’s approval would be good only for that particular transaction. And if a customer put money in the account by the end of the day, the fee would not be charged.

Bank of America plans to roll out the pilot plan next year.