Topic: Online Banking
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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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May a customer use online banking to transfer from a HELOC or line of credit to the customer’s checking account?
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Yes, your bank may choose to permit customers to transfer line of credit or home equity line of credit (HELOC) disbursements into their checking or other deposit accounts using online banking. We are not aware of any Illinois or federal law that would prohibit or restrict this practice. However, we note that this practice can…
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The latest FDIC quarterly newsletter for the Chicago Region includes an article on bill payment services offered by banks through third parties. The article states that banks “are permitted to characterize payments as ‘prohibited’ or as an ‘exception’” in their Terms and Conditions Agreements, but that when they decline to process those payments, “the failure to notify consumers that a payment has been declined” will “result in harm to the consumer.” What types of payments can we categorize as “prohibited” or an “exception”? Also, what notification if any is required if we decline a permitted payment for insufficient funds? Is particular wording required?
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We discussed this issue with a representative from the FDIC Chicago region, who told us that there is no law or regulation expressly governing the rejection of payments that are authorized through an online bill payment service. You may rely on your bill payment service agreement with your customer to define what types of payments…
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Our auditors told us that a “Doing Business As” (“d/b/a”) checking account was subject to Regulation E because it is held under the sole proprietor’s social security number, not a business tax ID. Is that true? Also, if we offer our consumer Internet banking product to business customers, would that make those business accounts subject to Regulation E?
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No, Regulation E does not apply to a business customer. Regulation E applies only to accounts “established primarily for personal, family, or household purposes.” It would not apply to an account established for a business, regardless of the tax identification number used for the account. Also, a business operating under a fictitious d/b/a name is…
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Do we need to provide a “click through” disclaimer for links on our website that leave our website and lead to our online mortgage application platform, which is run by a third-party service provider?
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No, we do not recommend using a click through disclaimer when linking to a third-party service provider’s website that is providing a service on behalf of the bank. The interagency guidance on web linking recommends using a disclaimer when linking to third-party websites that are “not under direct control of the financial institution.” However, the…
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Does Illinois law require an ink signature on loan documents? We would like to use digital signatures for our consumer auto loan documentation.
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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, Illinois law does not require an inked signature on loan documents, although heightened requirements…
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When a customer comes into a branch and uses a personal banker’s computer to add online banking access to an existing account, is it acceptable to ask the customer to read the disclosures on the computer screen, or should it be done at a home computer?
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If your customers are signing up for online banking only, without adding e-statements at the same time, we do not see a problem with using a personal banker’s computer. We are not aware of any disclosures that would need to be provided in writing for enrolling an existing customer in online banking, and therefore we…
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We would like to make online banking available for certain commercial credit customers. What kind of disclosures do we need to provide? Is it an issue if we do not make online banking available to all other customers?
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We are not aware of any laws or rules that would require you to provide additional disclosures related to online banking beyond the disclosures that you ordinarily provide for your commercial customers. For example, Regulation E disclosure requirements may apply when online banking is added to a consumer account, but that regulation does not apply…
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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…