Topic: Payment Cards
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What language should we use when notifying customer about the new MasterCard zero liability rules for PIN based transactions that are going into effect on October 17, 2014?
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We believe that your institution should provide change in terms notices to any customers who will be affected by the MasterCard rule change. Because the MasterCard rule change could increase a customer’s liability for unauthorized transactions, the change must be disclosed. Regulation E requires a change in terms notice at least 21 days before the…
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We’re switching our debit cards to a new network, which has different customer liability provisions than our existing network; otherwise the card terms and conditions are unchanged. Do we need to provide a change in terms notice, or do we need to take on the expense of mailing entirely new Regulation E notices?
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We are not aware of any requirement to send existing customers a new set of initial disclosures under Regulation E (provided that those customers have already received initial disclosures). Regulation E requires initial disclosures only “at the time a consumer contracts for an electronic fund transfer service or before the first electronic fund transfer is…
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We’re going to offer reloadable debit payroll cards, and we advertise that you can “get paid on your card with a direct deposit.” But the account agreement didn’t have the Regulation E disclosures for payroll cards. Do we need to include those disclosures?
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We believe Regulation E’s payroll card account rules (in 12 CFR 1005.18) would apply to the program you described. These rules apply to any “account that is directly or indirectly established through an employer and to which electronic fund transfers of the consumer’s wages, salary, or other employee compensation (such as commissions), are made on…
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We have debit cards that have never been activated. Can we deactivate them after giving a 30 day notice?
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We do not see any problem with cancelling debit cards that have never been activated by customers with a thirty day notice. Under Regulation E, the cancellation of an access device does not necessitate a change in terms notice. 12 CFR 1005.8(a)
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Can we order debit cards and checks for trust and estate accounts? How should we print the names on the checks and on the debit cards?
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As to your question on debit cards for trust and estate accounts, we are not aware of any laws that would prevent a bank from issuing a debit card for such accounts. For example, if a customer has the authority under a trust agreement to use the trust funds for any purpose, we do not…
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Can we charge cancellation and lost/stolen card fees on our general use, open loop, non-reloadable gift cards? If so, can we waive the fees? And, are we required to refund customers who cancel their gift cards?
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Lost/stolen card and cancellation fees We do not believe that Regulation E or Illinois law would prohibit a bank from charging fees for lost or stolen cards or for card cancellations, provided that such fees are disclosed in the card agreement. As a general rule, Regulation E restricts banks from charging three types of fees:…
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I know that we can open up a checking account for a minor under the Illinois Banking Act. But can we also issue a debit card to a minor?
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The Illinois Banking Act states that banks may accept deposits from minors and that “the rules and regulations of such bank with respect to each such deposit and account shall be as binding upon such minor as if such minor were of full age and legal capacity.” 205 ILCS 5/45.1. While that provision would protect…
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Are there any restrictions on the interest rates we can charge on credit card accounts? We read that the Interest Act imposes a 9% cap.
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We do not believe that the 9% limit on annual interest rates, found in subsection 4(1) of the Illinois Interest Act, would apply to Illinois banks. In fact, there are very few limitations on interest rates (or on charges and fees) under Illinois law. Section 5e of the Banking Act states that “[n]otwithstanding the provisions…
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If we are acquiring the assets of another bank, do we need to provide the debit card customers with any new disclosures?
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In general, new account disclosures may be required when the information being disclosed or the account terms differ from those of the predecessor bank. Regulation CC Disclosure Requirements For example, if any of the items required to be disclosed in your funds availability policy differs from the predecessor bank’s policy, we would recommend making new…
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A customer gave his debit card and PIN to his girlfriend. We had erroneously linked the debit card to the customer’s savings account, but he had asked that it be linked only to his checking account. His girlfriend used the card to steal money from the customer’s savings account. Will we be liable for the loss?
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Although the transaction you describe might be considered an authorized transaction, it is not likely that you can hold the customer liable because he did not request or validate the link to his savings account. Because the transaction involved a transfer from a savings account made with a debit card, Regulation E governs the customer’s…