No, we do not believe that you may charge a monthly fee for paper statements while advertising an account as “free.” There may be potential pitfalls even if you intend to charge the fee only occasionally, including risking an unfair, deceptive, or abusive act or practice (UDAAP) finding.

Regulation DD prohibits an advertisement from referring to or describing an account as free if any “maintenance or activity fee” may be imposed on the account. A monthly paper statement fee likely would fall into the definition of “maintenance and activity fees,” a term that includes “[t]ransaction and service fees that consumers reasonably expect to be imposed on a regular basis [and] . . . a monthly service fee.” That said, you may be able to advertise certain account features as free, provided that your advertisements do not state or imply that the account is free.

We believe that your institution also could incur some UDAAP risk if you advertise a checking account as “free” with “free eStatements” while omitting the fact that you will charge a fee for providing paper statements, even if you intend to charge the fee only occasionally. For consumer accounts, your institution must obtain each customer’s opt-in before sending statements electronically, as required by the federal Electronic Signatures in Global and National Commerce (E-SIGN) Act and the Illinois Financial Institutions Electronic Documents and Digital Signature Act. Without a customer’s opt-in, you would have to send monthly paper statements until you received the customer’s opt-in, meaning that the fee would be charged by default.

Additionally, if certain classes of customers, such as senior citizens or some disabled persons, do not have access to computers — and as a result cannot avoid the fee — this arguably could be viewed as an unfair or abusive practice. Accordingly, we recommend establishing exceptions to the fees in such cases and making those exceptions known to your customers.

For resources related to our guidance, please see:

• Regulation DD, 12 CFR 1030.8(a)(2) (“An advertisement shall not: . . . Refer to or describe an account as ‘free’ or ‘no cost’ (or contain a similar term) if any maintenance or activity fee may be imposed on the account. The word ‘profit’ shall not be used in referring to interest paid on an account.”)

• Regulation DD, Official Interpretations, Paragraph 8(a), Comment 3 (“For purposes of determining whether an account can be advertised as ‘free’ or ‘no cost,’ maintenance and activity fees include: . . . ii. Transaction and service fees that consumers reasonably expect to be imposed on a regular basis. iii. A flat fee, such as a monthly service fee.”)

• E-SIGN Act, 15 USC 7001(c)(1) (“ . . . if a statute, regulation, or other rule of law requires that information . . . be provided or made available to a consumer in writing, the use of an electronic record to provide or make available (whichever is required) such information satisfies the requirement that such information be in writing if [among several other requirements] . . . (A) the consumer has affirmatively consented to such use and has not withdrawn such consent; . . .”)

• Illinois Financial Institutions Electronic Documents and Digital Signature Act, 205 ILCS 705/10(c)(1) (“Consent to electronic records. If a statute, regulation, or other rule of law requires that information relating to a transaction or transactions in or affecting intrastate commerce in this State be provided or made available by a financial institution to a consumer in writing, the use of an electronic record to provide or make available that information satisfies the requirement that the information be in writing if:. . . . (A) the consumer has affirmatively consented to the use of an electronic record to provide or make available that information and has not withdrawn consent;. . .”)

• Consumer Financial Protection Act of 2010, 12 USC 5536(a) (“It shall be unlawful for (1) any covered person or service provider . . . (B) to engage in any unfair, deceptive, or abusive act or practice.”)

• CFPB Supervision and Examination Manual, UDAAP Section  (“The standard for unfairness in the Dodd-Frank Act is that an act or practice is unfair when: (1) It causes or is likely to cause substantial injury to consumers; (2) The injury is not reasonably avoidable by consumers; and (3) The injury is not outweighed by countervailing benefits to consumers or to competition.”)

• CFPB Supervision and Examination Manual, UDAAP Section (“An abusive act or practice: . . .  Materially interferes with the ability of a consumer to understand a term or condition of a consumer financial product or service or . . . [t]akes unreasonable advantage of:

• A lack of understanding on the part of the consumer of the material risks, costs, or conditions of the product or service;

• The inability of the consumer to protect its interests in selecting or using a consumer financial product or service; or

• The reasonable reliance by the consumer on a covered person to act in the interests of the consumer.”)

• CFPB Supervision and Examination Manual, UDAAP Section (“A representation, omission, act, or practice is deceptive when (1) The representation, omission, act, or practice misleads or is likely to mislead the consumer; (2) The consumer’s interpretation of the representation, omission, act, or practice is reasonable under the circumstances; and (3) The misleading representation, omission, act, or practice is material.”)