Topic: Electronic Signatures in Global and National Commerce Act (ESIGN)
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When our customers open deposit accounts online, our vendor’s software combines the E-SIGN disclosures with the other account disclosures, instead of providing separate E-SIGN disclosures and obtaining consent before presenting the other account disclosures. Is that permissible?
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For any disclosures to which the E-Sign Act applies, we believe that you should obtain a consumer’s consent — following the E-Sign Act procedures and disclosure requirements for obtaining consent — before providing these disclosures. In general, the E-Sign Act requires that the consumer already “has affirmatively consented” to the use of electronic disclosures (and has…
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How should we distribute the CHARM Handbook and the HUD Settlement Cost Booklet to customers who access our loan applications online? Currently, our online system automatically prints the both documents, leading to customer complaints. We don’t accept applications online; customers can submit applications by faxing, mailing, or bringing the application to a branch.
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We do not believe that the Consumer Handbook on Adjustable Rate Mortgages (CHARM Handbook) or the Settlement Cost Booklet (referred to in the rules as the “special information booklet”) need to be automatically printed with loan applications that your customers access online. As explained below, the CHARM Handbook can be provided to an online loan…
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Can we offer a free checking account with the only way to qualify for free checking is if the customer agrees to receive e-statements? If the customer does not agree to receive e-statements, or cannot receive them for any reason, they would not qualify for the free checking account.
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We agree that the bank should consider UDAAP concerns in creating a free checking account on the condition that the customer has agreed to receive e-statements. However, we believe you may be able to offer such an account, provided that the proper disclosures are made. Although we are not aware of any laws or regulations…
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Can we advertise a checking account as “free” if the account would impose a monthly paper statement fee on customers who do not opt-in to e-statements?
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No, we do not believe that you could advertise such an account as “free.” Before using electronic statements, your institution must obtain each customer’s opt-in, as required by the federal Electronic Signatures in Global and National Commerce (E-SIGN) Act, 15 USC 7001(c)(1), and the Illinois Financial Institutions Electronic Documents and Digital Signature Act, 205 ILCS 705/10(a). Without…
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If we send an electronic account statement to a customer, but the email notification bounces as undeliverable, are we required to switch the customer back to paper statements?
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We are not aware of any law or rule that would explicitly require you to switch customers to paper statements in this situation. However, it may be prudent to do so. Assuming that the customer has agreed to receive statements electronically (as required by the federal Electronic Signatures in Global and National Commerce (ESIGN) Act…
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Can we start charging a monthly paper statement fee on our deposit accounts, assuming we provide proper notice before charging the fee? And can we advertise these accounts as free?
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We are not aware of any Illinois or federal laws or regulations that would prohibit charging a paper statement fee on deposit accounts. However, there could be pitfalls if not done carefully. For example, if certain classes of customers, such as senior citizens or some disabled persons, do not have access to computers — and…
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Our forms vendor is updating the terms and conditions for our deposit accounts. Do we have to disclose the changes to our customers? The vendor is requiring us to purchase their disclosures of the new terms and conditions, and the mailing will cost us thousands of dollars.
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It was a pleasure speaking to you earlier today. As we discussed, there are several regulations that might require disclosures of changes in the terms and conditions of your deposit accounts. Each regulation imposes different standards for when a bank must disclose changes, and not every change requires new disclosures, but with all of the…
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Can we allow clients to request stop payments through an online system or do we need to obtain a hard copy of the form?
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Disclaimer: The Electronic Commerce Security Act (ECSA) was repealed and replaced with the Uniform Electronic Transaction Act (UETA), effective June 25, 2021. Please note that this change may affect the continued accuracy of this guidance as it pertains to the ECSA. We do not believe that your organization needs hard copies of stop payment orders…
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Are there some types of documents that cannot be electronically signed under Illinois law?
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Disclaimer: The Electronic Commerce Security Act (ECSA) was repealed and replaced with the Uniform Electronic Transaction Act (UETA), effective June 25, 2021. Please note that this change may affect the continued accuracy of this guidance as it pertains to the ECSA. We believe that it is possible to accept electronic signatures on mortgage security instruments…
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Can we hold a promotion with a cash prize giveaway to encourage customers to sign up for e-statements?
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Although we cannot offer any legal advice, we believe that a promotional drawing can be structured to comply with the federal lottery prohibition and the Illinois Criminal Code’s prohibitions on gambling. As to federal law, the Federal Deposit Insurance Act states that a bank may not (among other things) “announce, advertise, or publicize the existence…