Topic: Payment Cards
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Are we required to notify our debit card customers about their ability to opt out of the Visa Account Updater (VAU) program that Visa requires us to implement in October 2017? This program requires us to notify Visa when a cardholder’s account information changes, so that merchants who have an existing relationship with the cardholder can continue to process recurring payments without an interruption in service. We are required to participate in the program, but customers may opt-out. There are no customer fees or other changes associated with this new program. Also, because this is an information sharing issue, we want to make sure we will not violate any privacy laws if we do not notify our existing cardholders about new service and opt-out option.
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We are not aware of any federal or Illinois law that would require you to provide notice about the VAU program and opt-out option to your debit card customers, although we believe it may be prudent to do so. Regulation E requires debit card issuers to notify customers about changes to certain terms and conditions,…
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Does the Visa Account Updater (VAU) program apply to credit cards? We recently started issuing Visa credit cards and were not aware of this program.
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Yes, the VAU program applies to credit cards. We spoke with a Visa representative who provides customer support for the VAU program. He clarified that the program applies to all Visa credit and debit cards. As a Visa card issuer, your bank must participate in this program. For additional information about the program requirements, your…
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Can we email teller receipts to our customers? What information should we include in the receipts?
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Yes, we believe that your bank may provide electronic receipts for teller transactions, without needing to meet the disclosure and consent requirements in the federal E-Sign Act. We are not aware of any federal or Illinois law that requires financial institutions to issue receipts for basic teller transactions, such as deposits and withdrawals (in fact,…
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We are planning to distribute new, chip-enabled debit cards to all of our customers. We would like to send a mass email to customers who have provided their email addresses notifying them that they need to verify their mailing addresses to avoid delay. Would sending this email violate any regulations?
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We do not believe that an email requesting verification of customers' mailing addresses would violate any laws or regulations, provided that the email does not require customers to verify their mailing addresses as a precondition for receiving a new debit card. The E-SIGN Act requires you to make certain disclosures along with obtaining the recipient's…
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We are planning to charge a convenience fee to customers who make loan payments with a credit card. We found that this type of surcharge is prohibited in Oklahoma. Does Illinois prohibit these charges?
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We are not aware of any Illinois law that prohibits so-called convenience fees that are charged for using a credit card to pay for a transaction, including the use of a credit card to make a loan payment. The Illinois Interest Act generally authorizes banks to charge reasonable loan-related fees, provided they are agreed to…
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Can we change our rules to require all customers to enter a PIN when using a debit card as a credit card? If so, do we need to disclose the change? Would this create any fair lending concerns?
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No, we do not believe that a blanket policy of requiring all customers to use debit card PINs would raise any concerns under the fair lending laws, since it would apply equally to all of your debit card customers. If your bank does proceed with this contemplated change, we recommend providing at least 21 days…
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Certain geographic areas have more instances of debit card fraud than others. Can we change our rules to require customers living in those areas to use a PIN when using a debit card as a credit card? If so, do we need to disclose the change?
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Requiring the use of debit cards PINs only for customers residing in particular geographic areas (here, areas with higher crime rates) could raise concerns under the fair lending laws. Although residents located in specific geographic areas are not per se protected classes based on their locations, a practice singling out particular geographic areas could result…
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What steps should we take when a customer is adjudicated disabled and appointed a plenary guardian over his estate and person? Do we need to reissue debit cards, get new signature cards, set up new online accounts, etc.? Also, if we establish new accounts in the name of the guardian, can we issue the disabled customer his own debit card to allow him to access the guardian’s new accounts?
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When a customer is appointed a guardian, we recommend closing the customer’s existing bank accounts and depositing the funds in a new account, titled as “[guardian’s name], guardian of the estate of [customer’s name].” In opening the new accounts, you should obtain new signature cards with the guardian’s signature, issue new debit cards to the…
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A customer just notified us of unauthorized transactions on the customer’s personal account made through prearranged PPD ACH transactions. Some are from last month, and others are from over four months ago. Which, if any, do we have to reimburse him for?
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Regulation E requires you to reimburse the customer for the unauthorized ACH transactions that occurred within the first sixty days after your bank provided a periodic statement showing the unauthorized transactions. For unauthorized transactions on consumer accounts that do not involve a debit card or other access device, Regulation E requires banks to reimburse only…
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Under the Illinois Electronic Fund Transfer Act, are we prohibited from advertising our products on our ATM screens if the ATM can be accessed by non-customers?
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No, the Illinois Electronic Fund Transfer Act (EFTA) does not prohibit you from advertising your products and services on the screens of ATMs that may be accessed by non-customers, provided that the advertisement appears only to your customers after they insert a card issued by your bank. The Illinois EFTA generally prohibits a bank from…