SOURCE: ACTON Marketing, LLC

ACTON Marketing, LLC

May 18, 2010 12:34 ET

ACTON Marketing Finds Automatically Opted Out Accounts Could Lead to 5% Debit Card, Account Attrition Nationwide

Survey Finds Non-Response to Reg E Opt-In Forms Will Likely Be Largest Cause of Fee Loss, and Will Likely Lead to Overall Debit Card Account Attrition

LINCOLN, NE--(Marketwire - May 18, 2010) -  Findings of a nationwide survey of U.S. Banking customers show there are more than just overdraft fees at risk due to the Regulation E Opt-In process to be completed this summer. The study found that 37% of the nation's debit card users have overdrawn their accounts in the past year. A significant number of these overdraft program users habitually toss information sent to them by their bank or credit union. When asked what they will likely do to their bank's Opt-In form, 30% of the overdraft users in America said they will most likely round-file the form.

Brian Beach, CEO of ACTON Marketing LLC, which conducted the recent study, said, "More overdraft users will be opted out of their over­draft protection programs this summer due to not responding, than overdraft customers who will consciously Opt-Out because of high fees. Our research confirms that if a bank or credit union sends out only the Opt-In Form, without previous info-marketing in place, almost a third of their overdraft customers will likely not respond and will be opted out. Since especially heavy overdraft users are predisposed to Opt-In, getting them to respond is key."

The study brought to light another customer concept not generally considered in the industry's ongoing dialog about Regulation E. The study found that if banks rely on only one Opt-In/Out contact, 30% of their overdraft customers will not respond, will be automatically opted out, and will not be protected by overdraft protection. When these overdraft users are no longer protected, and they start to have purchases denied at retail, they will most likely move their account to a different bank and away from their current institution.

Said Beach, "The psychology of overdraft users is such that they are extremely averse to having their debit card transactions denied at retail. If they begin to be denied, they will not just re-Opt-In with their current bank or credit union. Most likely they will cut and run. And it will not necessarily be the better overdraft program of another bank that attracts them -- it is the stigma and experience of being denied that they want to escape by moving to another bank."

Through overdraft analysis, 30% of the overdraft users will likely be automatically opted out this summer due to non-response to their Opt-In/Out forms -- and they will then be without overdraft protection. That 30%, accounts for 11% of all the debit card user accounts in America being regular overdraft customers who are suddenly without overdraft protection. If those account holders begin to have their purchases denied at retail, nearly half -- equivalent to 5% of all the debit card user accounts in America -- will move their account to another institution.

"This notion of overdraft customers choosing to Opt-Out, and projections of the associated lost income to banks, is much like a tempest in a teapot," says Beach. "Overdraft users are pre-inclined to Opt-In, even if they have to pay high fees. It's overdraft users' non-response that will result in the most fee loss -- as much as a 30% loss of overdraft fees due to non-response. And then the other shoe drops -- when unprotected customers react and banks lose 5% of their debit card accounts."

In March, 2010, ACTON Market Intelligence, a research division of ACTON Marketing, LLC, conducted an in-depth, Internet-based survey of 20,000 adult heads of household -- the survey focused on their reactions to Regulation E. The full study report is available by contacting ACTON at www.actonfs.com. ACTON Market Intelligence is a wholly-owned division of ACTON Marketing LLC, in Lincoln, Nebraska.

ACTON Marketing is a full-service direct-marketing organization that provides complete direct mail programs for financial organizations. ACTON Marketing was the first marketing company to promote free checking. Using decades of proprietary data, knowledge, and experience, ACTON Marketing continues to offer successful strategies, creative, and production services to clients nationwide. Besides its Checking Account Customer Acquisition program and New Movers Markeogram, ACTON offers strategies for CD retention, cross-selling as well as its new Opt-In and NSF marketing programs. To learn more visit www.actonfs.com.

© 2010 ACTON Marketing, LLC - 3401 NW 39th Street, Lincoln, NE 68524

All contents of this e-letter are copyright 2010 by ACTON Marketing, LLC. All Rights Reserved: Reproducing any part of this document is prohibited without the express written consent of ACTON Marketing, LLC.

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