In our view, it would be prudent to notify customers of their right to opt out of the new VAU program, although notification may not be expressly required.

Neither Regulation E nor Regulation Z, nor any other law or rule we are aware of, expressly requires you to notify customers of the addition of the VAU program feature or of the right to opt out. However, Regulation Z requires card issuers to notify cardholders of “significant changes” in account terms and their right to reject the new terms. Examples of significant changes include changes to available credit, fees, charges, rates, grace periods, an increase in a minimum required payment, and the acquisition of a security interest.

Regulation Z also requires that if you add a “credit feature” that does not affect the finance charge terms, you must notify the customer that the new feature is available under previously disclosed terms (unless the change occurs within the first 30 days after the card was issued).

Adding an account updater program is not specifically identified as a “significant change” or “credit feature,” but in our view, it could conceivably be classified as a “significant change” relating to the sharing of your customers’ private information, triggering disclosure requirements under Regulation Z. We found several examples of other banks’ account agreements that include a description of the VAU program and the customer’s right to opt out. One example is included in our resources below.

Consequently, we recommend that you notify your existing customers about the program and their right to opt out of it, and also that you include the opt-out right in your new account agreements going forward.

For resources related to our guidance, please see:

• Regulation Z, 12 CFR 1026.9(c)(2) (“For plans other than home-equity plans subject to the requirements of § 1026.40. . . when a significant change in account terms as described in paragraph (c)(2)(ii) of this section is made, a creditor must provide a written notice of the change at least 45 days prior to the effective date of the change to each consumer who may be affected…”)

• Regulation Z, 12 CFR 1026.9(c)(2)(ii) (“For purposes of this section, a ‘significant change in account terms’ means a change to a term required to be disclosed under § 1026.6(b)(1) and (b)(2), an increase in the required minimum periodic payment, a change to a term required to be disclosed under § 1026.6(b)(4), or the acquisition of a security interest.”)

• Regulation Z, 12 CFR 1026.9(c)(2)(iv)(B) (“In addition to the disclosures in paragraph (c)(2)(iv)(A) of this section, if a card issuer makes a significant change in account terms on a credit card account under an open-end (not home-secured) consumer credit plan, the creditor must generally provide the following information on the notice provided pursuant to paragraph (c)(2)(i) of this section. . . . A statement that the consumer has the right to reject the change or changes prior to the effective date of the changes, unless the consumer fails to make a required minimum periodic payment within 60 days after the due date for that payment…”)

• Regulation Z, 12 CFR 1026.9(b)(1) (“If a creditor, within 30 days after mailing or delivering the account-opening disclosures . . . adds a credit feature to the consumer's account . . . for which the finance charge terms are the same as those previously disclosed, no additional disclosures are necessary.”)

• Regulation Z, 12 CFR 1026.9(b)(1) (“Except as provided in paragraph (b)(3) of this section, after 30 days, if the creditor adds a credit feature or furnishes a credit access device (other than as a renewal, resupply, or the original issuance of a credit card) on the same finance charge terms, the creditor shall disclose, before the consumer uses the feature or device for the first time, that it is for use in obtaining credit under the terms previously disclosed.”)

• Regulation E, 12 CFR 1005.8(a) (“A financial institution shall mail or deliver a written notice to the consumer, at least 21 days before the effective date, of any change in a term or condition required to be disclosed under § 1005.7(b) of this part if the change would result in: Increased fees for the consumer; Increased liability for the consumer; Fewer types of available electronic fund transfers; or Stricter limitations on the frequency or dollar amount of transfers.”)

• TD Ameritrade Debit Card Agreement (Notifies customers about the VAU program and of their right to opt out)