Topic: Payment Cards
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What should we include in our bank disclosures and policies regarding Mastercard debit card limits? Can we lower a debit card’s limits or cancel a debit card if a customer has had repeated overdrafts? If we lower a customer’s debit card limits or cancel their debit card, do we need to send written notice to the customer? Also, are there any parameters for canceling a customer’s debit card if they have been repeatedly scammed and submitted numerous disputes?
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We believe that the Regulation E requirement to disclose limitations on the frequency and dollar amount of debit card transactions would require you to include any limits imposed by Mastercard in your disclosures. However, we do not believe that you are required to disclose when you cancel a debit card. We do recommend caution before…
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When a customer changes their name (most often in the case of marriage), is it a requirement that they sign a new signature card? If we have their new signature on another document, such as their new ID, would that suffice for signature verification, or must the new signature be captured on the signature card?
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We are not aware of any Illinois laws or regulations that would require you to update signature cards after a customer changes their name (for example, after a marriage, divorce, or adoption), nor do FinCEN’s Customer Identification Program (CIP) regulations require specific procedures for memorializing name changes (which of course you should verify as provided…
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Are we permitted to accept loan payments made through debit or credit card? We currently accept loan payments made through Visa, Mastercard, and Discover cards. If yes, can we accept loan payments as point of sale (POS) transactions? Additionally, our system allows us to run payments only as “card present,” but most of our payments are made over the phone (unless the customer has a deposit account with us). What are the risks of running a loan payment as “card present” when it is truly not present?
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We are not aware of any limitations under federal or Illinois law on accepting loan payments made with a credit or debit card, but we recommend checking your agreements with the relevant credit and debit card networks regarding this practice. The publicly available Visa Product and Service Rules prohibit the use of a credit card…
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We issue Mastercard debit cards and want to know if we can set the purchase limit to zero on some cards, effectively making them ATM cards. We have some customers who only have savings accounts, and if we issue debit cards for these accounts, the customers may use them for purchases and exceed the monthly six-transaction limit.
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We recommend reviewing the terms of your agreement with Mastercard to determine if this is allowable. The publicly available Mastercard Transaction Processing Rules indicate that transaction limits must be set at or above Mastercard’s default limits, which may be found in the Stand-In Processing—Accumulative Global Parameters (Form 041f). Consequently, you may be prohibited from decreasing…
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Our Military Lending Act (MLA) policy for 2018 includes the following clause in the definition of consumer credit: “Additionally, until October 3, 2017 consumer credit does not mean credit extended in a credit card account under an open-end (not home secured) consumer credit plan. (This date may be extended by order of the Secretary of Defense to a date not later than October 3, 2018.)” Should we include this language in our 2019 policy?
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No, we do not recommend including this language in your 2019 MLA policy, as the exemptions for credit cards from the definition of “consumer credit” referenced in the language now have expired. The MLA regulations set forth a Military Annual Percentage Rate (MAPR), which caps at 36% the annual rate charged for consumer credit extended…
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We have a customer who wants to make loan payments over the phone using a debit card from another bank. Does Illinois law allow this type of transaction when the card is not present and the customer does not show ID or sign any cash advance slip?
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We are not aware of any limitations in Illinois law on accepting loan payments made with a debit card, but we recommend checking your operating agreements with debit card issuers regarding the acceptance of loan payments made by debit card. For example, the publicly available Visa Product and Service Rules impose some limitations on the…
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A customer passed away who had a deposit account and a credit card account at our bank. Can we access the deposit account funds to pay off the customer’s outstanding credit card balance? We believe that our account agreements include generic setoff provisions. The customer had not set up an automatic credit card bill payment. We have not attached a levy on the funds or obtained a court order with respect to the debt.
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Whether your bank may access the deposit account funds to pay the deceased customer’s credit card debt depends on a careful review of your account disclosures and agreements. Regulation Z generally prohibits banks from exercising setoff rights in deposit account funds with respect to consumer credit card debts. There is an exception for obtaining or…
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We are sending an email advertisement to existing auto loan customers for a credit card that we offer through a third party. Those who apply for the credit card will receive an Amazon gift card. The email also contains a link to the additional disclosures required under Regulation Z. Is the link sufficient, or should we include the disclosures in the body of the email? Also, should we specify that the offer is only for the email recipient or for existing auto loan customers, so that recipients don’t share the offer email? Are there any other issues with such an email advertisement?
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Yes, Regulation Z and its Official Interpretations permit electronic advertisements to provide the additional required disclosures through a link, provided any trigger terms in the email are “accompanied by a link that directly takes the consumer to the additional information.” We also recommend reviewing the email to ensure that it complies with the CAN-SPAM Act,…