Topic: Mobile Banking
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If we obtain cell phone numbers from our customers, can our core processor send them fraud alerts via text message? Do we need any disclosures referencing text messages and fees the customer’s provider may charge to receive texts from our core processor?
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We do not recommend sending text messages to your customers without their prior written permission, which generally is required by the Telephone Consumer Protection Act (TCPA). The TCPA requires “prior express written consent” before texting a consumer’s cellular phone, with limited exceptions. The Federal Communications Commission (FCC) has carved out a narrow exception for texts…
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We want to promote some closed-end loan products in an advertisement designed for mobile devices. The advertisement would include terms that trigger certain additional disclosures under Regulation Z. Can we include a link in the advertisement to another webpage that will have the required disclosures?
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Yes, when an electronic advertisement includes terms that trigger additional disclosures, Regulation Z and its Official Interpretations permit the advertisement to include a link that takes consumers directly to the additional required information. For resources related to our guidance, please see: Regulation Z, 12 CFR 1026.24(e)(1) (“If a catalog or other multiple-page advertisement, or an…
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At a recent seminar, we were told that electronic deposits are subject to next-day availability, as with cash deposits and wire transfers. Our bank’s person-to-person (transfers between customers and recipients at other banks) and bank-to-bank transfers (transfers to an account held by the same customer at another bank) are processed as ACH debit transfers, and we place a one-day hold on such transfers before making the funds available to our customers. Are these electronic payments that would be subject to next-day availability?
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ACH Debit Transfers No, ACH debit transfers are not “electronic payments” for purposes of Regulation CC’s next-day availability requirements. In Regulation CC, an “electronic payment” includes ACH credit transfers, but not debit transfers. As explained in the Official Interpretations to Regulation CC, because an ACH debit transfer is more like a check than an ACH…
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Our commercial customer issued a paycheck to an employee. The employee deposited the item via remote deposit and then took the item to a check cashing business. We returned that deposit attempt as a duplicate item. The check casher is sending collection letters to our customer asserting that our customer is responsible for paying the item, citing 810 ILCS 5/3-302 and 720 ILCS 5/17-1A. Isn’t the employee responsible for the check casher’s loss?
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Based on the facts as described, we believe the check casher is the holder in due course of the original check and is correct in demanding payment from your customer. In addition, the check casher also has the right to demand payment from your customer’s employee. Under the rules of the UCC, both would be…
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If a business customer wants to use our bank to pay its employees through ACH transactions, could we be liable for the customer’s payroll taxes if they overdraw their account with us when initiating payroll payments? We are not providing any payroll processing services. The customer would calculate the wages and tax withholdings on its own and use our online system to make payroll payments via ACH.
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Yes, we believe that your bank might face potential liability for honoring a customer’s overdraft in order to permit the customer to cover wages, provided that your bank is deemed to have knowledge that the employer lacked the intent or ability pay its payroll taxes. However, this issue has not been settled in Illinois; we…
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If a business or consumer customer has signed up for online and/or mobile banking, and we are sending a communication regarding the online or mobile banking platform, would that communication require us to obtain affirmative consent in order to send it electronically under the E-SIGN Act?
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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. No, we do not believe that the E-SIGN Act requires you to obtain affirmative consent…
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We have added a “device bar” at our main branch with Android and Apple devices that customers can use to access internet banking and sign up for mobile banking. Our wifi network is password-only, which we do not give out to our customers. Through the devices, customers have access to our wifi network, but they can access only our website and a few other specific sites, such as a mortgage calculator website. Do we need to provide any disclosures regarding our wifi network?
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No, you are not required to provide specific disclosures, although certain disclosures and policies may be prudent. For example, your bank may wish to require guests to agree to a “wifi acceptable use” policy; we have provided two examples of such policies below. In addition, we note that providing your customers access to a limited…
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Our bank has contracted with a third party vendor to provide a personal payment service (facilitating person-to-person payments). Customers may access the service through their mobile devices and our online banking website. The transfers are executed by ACH transfer. The disclosures that we provide to our customers state that “we must hear from you no later than sixty (60) days after the transaction in which the problem or error appears is first posted in the transaction history.” Does Regulation E apply to this service, and if so, are we violating its disclosure requirements?
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Yes, we believe that Regulation E would apply because the person-to-person payments are executed by ACH transfer. As a result, your disclosures should comply with Regulation E’s disclosure and error resolution provisions. From what you have told us, your error resolution notice does not appear to comply with Regulation E (and it may confuse customers…
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Does Regulation CC apply to checks deposited via mobile banking?
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No, the current language in Regulation CC does not encompass mobile check deposits. Mobile deposits occur when a customer takes a picture of a check and transmits the image electronically to their bank. This process is referred to as remote deposit capture (RDC). We spoke with an attorney at the Federal Reserve Board who confirmed…
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We are putting together a statement insert advertisement announcing our new mobile banking app. Other than the Member FDIC and Equal Housing Opportunity notices, are we required to include anything else with the ad?
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We are not aware of any rules or guidelines that directly address your question. Having said that, if the app is characterized as a free service offered by the bank (or even is characterized as a free app on the website from which it is downloaded), we would advise disclosing that mobile carrier fees may…