Topic: Truth in Savings Act (TISA)
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We are changing how we calculate the penalties we charge on CDs, which will result in higher early withdrawal penalties. Should we notify existing CD customers in their prematurity notices?
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Yes, we recommend notifying your existing CD customers of the change in their prematurity notices, and not with change-in-terms notices. Whether you need to highlight or point out the change in the calculation method for early withdrawal penalties depends on the type of CD, as we detail in the bullet points below. Regulation DD requires…
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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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Are there any problems with advertising an account as “better than free”?
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In our view, the proposed advertising slogan would raise significant UDAAP risks. It may not technically violate the Regulation DD requirement prohibiting advertisements that “refer to or describe an account as ‘free’ or ‘no cost’” if certain fees, such as a monthly maintenance fee, are imposed on the account. 12 CFR 1030.8. However, the CFPB has…
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Are there any limits on premiums on what you can offer for new accounts? Right now, we offer gift cards. Can those gift cards be cashed at the bank?
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Other than the Truth in Savings Act/Regulation DD restrictions on bonuses paid on savings accounts, we are not aware of any other restrictions on premiums offered on new accounts. Regulation DD requires that any advertisement of a bonus also include the following information, stated clearly and conspicuously: (1) The “annual percentage yield,” using that term;…
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If we use a lobby banner to advertise account bonuses, would we have to provide additional disclosures on the banner itself?
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Regulation DD states that indoors signs (“inside the premises of a depository institution”) are not subject to the additional disclosures ordinarily required when advertising a bonus. 12 CFR 1030.8(e)(2). Of course, you must ensure that the sign is not “misleading or inaccurate.” 12 CFR 1030.8(a).
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If a predecessor bank offered CDs on terms that we do not offer, how should we notify customers of the change?
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We believe that a change in terms notice would be required to inform customers that they will be losing the deposit option after the next automatic renewal. Specific rules in Regulation DD address change in terms notices for time accounts that renew automatically and that have a term of one year or less (but more…
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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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We are thinking of offering a $100 for customers opening a checking account. I know we can’t pay interest on a checking account, so how can other banks offer this?
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A bank is permitted to offer a $100 to customers opening a new checking account if the $100 premium is not related to the balance in the demand deposit account or the duration of the account balance. As a general rule, a bank is prohibited from paying interest on a demand deposit account under the…
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I read somewhere that we now must separately disclose fees for paying overdrafts and fees for returning items on our periodic statements, and that we must have separate names for each fee. We label our fees as “overdraft paid/return check fee” on our periodic statements. We do not charge a different fee for each event. Do I now need to break this fee out into two line items and assess them separately?
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Under the amendments to the Official Staff Commentary to Regulation DD, which go into effect on July 1, 2006, you may not group together fees for paying overdrafts and fees for returning checks or other unpaid items on the periodic statement. This new interpretation applies irrespective of whether you advertise your overdraft protection program. In…