Yes, we believe you should remove “free” from the name of the deposit account product and cease advertising the account as “free” if you will be charging a monthly fee for paper statements. Additionally, while you are not required to notify customers when you change the name of a deposit account product, we recommend sending notice as a courtesy, to prevent any future confusion.

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.” Although you disclose that paper statements will incur a fee, we believe you would still be violating Regulation DD if you refer to or describe the account as “free” while charging a fee for paper statements on a monthly basis.

Advertising a checking account as “free” without disclosing on the advertisement that you will charge a fee for paper statements if customers do not access their e-statements for a certain amount of time could raise the risk of a finding of an unfair, deceptive, or abusive act or practice (UDAAP). In 2014, the CFPB brought an enforcement action against a bank for engaging in deceptive practices when it advertised checking accounts as “free” without disclosing a minimum activity requirement necessary to maintain free checking and prevent the checking accounts from automatically converting to a different account type (which imposed monthly maintenance fees) after ninety days of inactivity. The CFPB found that this practice also violated Regulation DD’s prohibition on misleading or inaccurate advertisements. Consequently, we believe you should disclose in your advertisements that you will charge a fee for paper statements if customers do not log in and access their e-statements for a certain amount of time.

Also, Regulation DD requires your account opening disclosures to include the amount of any fee that may be imposed in connection with a deposit account and the conditions under which the fee may be imposed. We recommend checking that your initial account disclosures included the fact that you will charge a paper statement fee if customers do not log in and access their e-statements for a certain amount of time.

Further, 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 — charging a paper statement fee, even if fully disclosed, arguably could be viewed as an unfair or abusive practice. Accordingly, we recommend establishing exceptions to paper statement fees in such cases and making those exceptions known to your customers.

As to providing notice of the change in the account name, we do not believe that Regulation DD imposes a notice requirement when changing an account name without making any changes to the account terms. Regulation DD requires a change-in-terms notice at least thirty calendar days before a change that “may reduce the annual percentage yield or adversely affect the consumer,” and we do not believe that changing the name of a deposit account product alone would trigger this notice requirement. However, we recommend sending notice of the account name change to current account holders as a courtesy and to prevent any future confusion.

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.”)

• 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, page 1 (“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, page 9 (“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, page 5 (“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.”)

• Manufacturers and Traders Trust Company Consent Order, page 6 (October 9, 2014) (“Section 1036(a)(1)(B) of the CFPA prohibits ‘unfair, deceptive, or abusive’ acts or practices. 12 U.S.C. § 5536(a)(1)(B). . . . In connection with the advertising, marketing, and promoting of Free Checking, in numerous instances, Respondent represented, expressly or impliedly, that consumers with Free Checking would not pay a monthly maintenance fee. Respondent’s advertising and marketing failed to disclose the minimum activity requirement necessary to maintain Free Checking and the automatic conversion to an M&T First Account after 90 days of inactivity. Respondent’s failure to disclose these facts in its advertising and marketing, in light of the representations made, was a deceptive act or practice. . . . Therefore, Respondent engaged in deceptive acts or practices in violation of sections 1031(a) and 1036(a)(1)(B) of the CFPA, 12 U.S.C. §§ 5531(a), 5536(a)(1)(B).”)

• Manufacturers and Traders Trust Company Consent Order, page 7 (October 9, 2014) (“Regulation DD, 12 C.F.R. § 1030.8(a)(1) prohibits an advertisement from being ‘misleading or inaccurate,’ or from ‘misrepresent[ing] a depository institution’s deposit contract.’ . . . Respondent’s advertisements for Free Checking were misleading and inaccurate because they advertised the product as ‘free,’ but failed to disclose the minimum activity requirement necessary to maintain Free Checking and the automatic conversion to an M&T Account if there was no account activity for 90 days. . . . Therefore, Respondent’s advertisements violated Regulation DD, 12 C.F.R. § 1030.8(a)(1).”)

• Manufacturers and Traders Trust Company Consent Order, page 7 (October 9, 2014) (“Regulation DD prohibits advertising an account as ‘“free” or “no cost” . . . if any maintenance or activity fee may be imposed on the account.’ 12 C.F.R. § 1030.8(a)(2). . . . Respondent advertised Free Checking as ‘free,’ but automatically converted consumers with Free Checking accounts, which did not impose monthly maintenance fees, to M&T First accounts, which did impose monthly maintenance fees, if there was no account activity for 90 consecutive days. Respondent’s advertisements referred to Free Checking as ‘free,’ but the terms and conditions of Free Checking imposed minimum activity requirements that, if not met, meant that M&T would automatically convert the Free Checking account to an M&T First account with a monthly maintenance fee. . . . Therefore, Respondent’s advertisements violated Regulation DD, 12 C.F.R. § 1030.8(a)(2).”)

• Regulation DD, 12 CFR 1030.4(b) (“Account disclosures shall include the following, as applicable: . . . (4) Fees. 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, 12 CFR 1030.5(a)(1) (“A depository institution shall give advance notice to affected consumers of any change in a term required to be disclosed under § 1030.4(b) of this part if the change may reduce the annual percentage yield or adversely affect the consumer. The notice shall include the effective date of the change. The notice shall be mailed or delivered at least 30 calendar days before the effective date of the change.”)