Topic: Truth in Savings Act (TISA)
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Our core provider includes an Illinois Terms and Conditions disclosure in our new deposit account forms, in addition to a Truth in Savings Act (TISA) disclosure. The disclosure includes our account agreement, with provisions on account ownership, stop payments, the duty to report unauthorized transactions, setoff, and more. Is there a law or regulation that requires that this form be provided for every new account opened, including for new accounts opened by existing customers? We have reviewed the Illinois Consumer Deposit Account Act, which states that we comply with the law if we are in compliance with the TISA.
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We recommend providing your institution’s terms and conditions for every new account opened, including those opened by existing customers. While there is no law or regulation that specifically requires you to provide customers with an “Illinois Terms and Conditions” disclosure, it is important to provide the governing rules for accounts held at your institution to…
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For a monthly fee, we offer an optional add-on checking account product that includes ID protection, cell phone coverage, credit monitoring, travel and leisure discounts, insurance products, and more. When advertising this product, we would like to refer to the cost as a monthly “subscription” fee rather than a monthly “service” fee. Is this allowable?
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We are not aware of any law or regulation that would prohibit your bank from marketing the cost of an add-on checking account product as a “subscription” fee rather than a “service” fee — provided the fees are clearly disclosed and explained and customers are not charged for any services they do not receive. The…
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We would like to stop sending certificate of deposit (CD) interest notices for interest that is credited to a deposit account or back to the CD. Is this allowed?
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Yes, we believe you may stop sending CD interest notices when interest is credited to a deposit account or back to the CD. Although some banks provide interest notices as a courtesy, they are not required under Regulation DD. Under Regulation DD, customers are entitled to receive disclosures when an account is opened, on request,…
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We are an Illinois savings bank considering offering minor savings accounts. We would like to provide a gift at account opening, with the exact gift (cash or swag, for example) determined by spinning a wheel that lands on a certain prize. Can minors open savings accounts in their name if they are old enough to sign the signature card? Also, is there a dollar limit on account opening gifts, and would we need to describe the gift in our account disclosures and report it to the IRS for tax purposes?
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Yes, minors are permitted to open savings accounts. While we are not aware of a dollar limit on account opening gifts, Regulation DD’s disclosure requirements apply if the gift is worth more than $10, and IRS reporting requirements apply to gifts valued at $10 or more and $600 or more. Both the Illinois Savings Bank…
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Can we set a flat fee as a penalty on a certificate of deposit (CD)? For example, for a CD that matures in fewer than twelve months, can we set a penalty as a certain number of months’ interest or a flat fee, whichever is higher?
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We believe that you may set a flat fee as an early withdrawal penalty on a CD, provided that the fee is properly disclosed under Regulation DD. Regulation DD’s Official Interpretations state that “Monetary penalties, such as ‘$10.00’ or ‘seven days’ interest plus accrued but uncredited interest’” are examples of early withdrawal penalties that must…
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Our bank’s legal name (but not our ownership) will change in 2022, and our current name will become a division of the new bank name. We will be notifying our customers of the change well in advance. Will we need to send revised account disclosures and privacy notices to our customers, and if so, what are the timing requirements? Can you recommend any guidance or resources that address compliance considerations with respect to name changes? Also, what type of notification is required if we decide to change the bank’s main office or corporate headquarters?
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We do not believe you are required to send customers revised account disclosures and privacy notices when only your bank’s name is changing. However, if your bank’s main office is changing, you must seek federal and state approval and publish notice of the change. For consumer savings accounts, Regulation DD requires you to provide advance…
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Are there any legal issues associated with increasing a certificate of deposit (CD)’s early withdrawal penalty rate at the time of renewal and on any new CDs? Could this be an unfair, deceptive, or abusive act or practice?
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As a general matter, we do not believe that there are specific legal problems with increasing the early withdrawal penalty rate for new CD agreements (including renewals of existing CDs and new CDs), provided that the increased early withdrawal penalty is properly disclosed under Regulation DD. To properly disclose an increased penalty, it must be…
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Although no longer required, we continue to enforce a six-per-month transaction limit for our savings and money market deposit accounts, and our account agreement provides that we reserve the right to require at least seven days written notice before a customer can make a withdrawal from a savings or money market deposit account. Our Truth in Savings Act (TISA) disclosure used to include this reservation of rights language, but we recently discovered that our core provider updated our TISA disclosure to remove the reservation of rights language. Are we required to include the reservation of rights language in our TISA disclosure for savings and money market deposit accounts if we still impose transaction limitations? Do we need to notify existing customers who received the disclosure with the reservation of rights language that we no longer include this language in our new TISA disclosure?
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We do not believe you are required to include the reservation of rights language in your TISA disclosure for savings and money market accounts, and we do not believe you need to notify existing customers that your new TISA disclosure no longer includes this language. Additionally, since your account agreement includes the reservation of rights…
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If we temporarily suspend the six-per-month limitation on transfers and withdrawals from savings accounts at our bank (as authorized under recent amendments to Regulation D), must these accounts be reported as “transaction accounts” for Call Report purposes? We have not changed our terms and conditions or account disclosures to reflect the temporary suspension of the six-per-month limitation. May we still refer to these accounts as savings accounts even if we must report them as transaction accounts on our Call Reports?
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Your bank may continue to report such accounts as nontransaction savings deposits for Call Report purposes; however, your bank has the option of reporting such accounts as transaction accounts if certain criteria are met. The December 2020 COVID-19 Related Supplemental Instructions for Call Reports state that when a reporting institution has suspended the enforcement of…
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We offer two savings accounts that function in the same way; one is an Illinois Uniform Transfers to Minors Act (UTMA) account and the other is a minor savings account. If we mistakenly opened an Illinois UTMA account as a minor account, or vice versa, should we provide new disclosures before correcting the account names in our system? Also, would the escheatment rules for savings accounts apply, or the escheatment rules for UTMA accounts, when the title of the account doesn’t accurately describe the account — for example, if the title on an account reads “as Custodian Under ILUTMA,” but the ownership was incorrectly listed as “joint”?
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We recommend providing new account disclosures when changing an account name to add or remove a reference to the Illinois UTMA. A reference to the Illinois UTMA in an account name implies that the account is a custodial account subject to the Illinois UTMA’s requirements for custodians, rather than a savings account that is owned…