We are not aware of any law or regulation that would prohibit your bank from marketing the cost of an add-on checking account product as a “subscription” fee rather than a “service” fee — provided the fees are clearly disclosed and explained and customers are not charged for any services they do not receive. 

The Illinois Banking Act generally provides that “[t]he establishment of account service charges and the amounts of the charges not otherwise limited or prescribed by law is a business decision to be made by a bank according to prudent business judgment and safe and sound operating standards.” Regulation DD requires you to disclose any account maintenance or service fees, but it does not require you to refer to fees as “service” fees (provided that you use consistent terminology when referring to the fees). As such, we believe you may offer an add-on checking account product and charge account holders who purchase the product a “subscription fee.”

However, we caution that services sold as “add-on products” for credit cards and checking accounts have been the subject of enforcement actions in cases where banks failed to provide the promised services. For example, the CFPB has cited a bank that charged its customers for identity protection add-on products that involved credit monitoring services, which required customers’ written authorization. In many cases, customers who opted in to the add-on product but did not provide their written authorization were charged for credit monitoring services they did not receive. We recommend reviewing any services encompassed by the subscription fee and ensuring that your bank has received all necessary authorizations from your customers before charging a subscription fee for such services. 

For resources related to our guidance, please see:

• Illinois Banking Act, 205 ILCS 5/5e(b) (“The establishment of account service charges and the amounts of the charges not otherwise limited or prescribed by law is a business decision to be made by a bank according to prudent business judgment and safe and sound operating standards. In establishing account service charges, the bank may consider, but is not limited to considering, the costs incurred by the bank, plus a profit margin, for providing the service, the deterrence of misuse of the bank’s services, the establishment of the competitive position of the bank in accordance with the bank’s marketing strategy, and the maintenance of the safety and soundness of the bank.”)

• Regulation DD, 12 CFR 1030.4(b)(4) (“Account disclosures shall include the following, as applicable: . . . The amount of any fee that may be imposed in connection with the account (or an explanation of how the fee will be determined) and the conditions under which the fee may be imposed.”)

• Regulation DD, Official Interpretations, Paragraph 4(b)(4), comment 1 (“The following are types of fees that must be disclosed: (i) Maintenance fees, such as monthly service fees. . . .”)

• CFPB Orders U.S. Bank to Pay $48 Million Refund to Consumers Illegally Billed for Services Note Received (September 25, 2014) (“U.S. Bank consumers were unfairly charged for certain identity protection and credit monitoring services that they did not receive. These services were sold as ‘add-on products’ for credit cards and other bank products such as mortgage loans and checking accounts. . . . According to the CFPB order, U.S. Bank’s service provider enrolled bank customers in identity protection add-on products that promised to monitor consumers’ credit and alert them to potentially fraudulent activity. . . . In order for a company to provide credit monitoring services, it generally must obtain the customer’s written authorization. U.S. Bank customers, however, were charged for these products as soon as they enrolled without the necessary authorization to perform the services.”)