If we advertise a checking account as “free” and list “free eStatements” as a feature, but plainly disclose on the advertisement and in the account opening disclosures that we will charge a fee for requesting paper statements, may we charge the fee?

No, we do not believe that you may charge a monthly fee for paper statements while advertising an account as “free,” even if you disclose the fee on your advertisements and in the account opening disclosures.

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 are planning to plainly disclose that requesting 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.

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 paper statement 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.”)

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.”)