Topic: Truth in Savings Act (TISA)
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We have a customer who would like to convert his business checking account into an interest-bearing account. Is this possible? Also, are businesses still prohibited from earning interest in a NOW account?
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Yes, we believe that you can convert a business checking account into an interest-bearing demand deposit account. The Dodd-Frank Act eliminated Regulation Q’s prohibition on paying interest on commercial deposit accounts, and we are not aware of any prohibition on converting from one account type to another. However, for-profit businesses generally are prohibited from opening…
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We recently reclassified some of our money market accounts and sent the affected customers notice of the change. We also lowered the required minimum balance for all of these accounts so that the reclassified customers would not have to maintain higher balances after the change than under their previous account type. However, we did not send notice to our existing money market account customers advising them of the lowered minimum balance requirement. Are we correct that Regulation DD requires notice of a change only if it will adversely affect a customer? One customer informed us they would have preferred to know about the change.
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Yes, you are correct that Regulation DD requires advance notice only for a change in a term that will adversely affect the customer. Regulation DD requires banks to disclose any minimum balance required to (1) open an account, (2) avoid the imposition of a fee, or (3) obtain the annual percentage yield disclosed. If there…
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Our bank offers a rewards checking account that provides certain benefits for using the product, including a reduced fee on consumer loans. When we originate a consumer loan, are we required to review the customer’s checking accounts to see if they are eligible for this benefit, or can we include language in our TISA disclosure that puts that burden on the customer to inform us that they are eligible for the benefit when applying for the loan?
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We recommend that your bank institute a process to check whether consumer loan applicants are eligible for this benefit, rather than placing the burden on the customer to alert your bank about the benefit at the time of loan application. We believe that a failure to provide a stated benefit of the rewards checking account…
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When a customer comes in to open a deposit account, we are going to begin using a pad to capture the customer’s signature. If the customer does not want the account opening documents for their records, are we required to print and provide them anyway? If they can “opt out” from receiving printed documents, do we have to physically document that anywhere in the file (in the form of a signed disclosure from them), or can we just make a file note that states the customer wished not to be provided copies?
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Generally, we do not recommend allowing a customer to “opt-out” of receiving the required account opening disclosures, irrespective of whether the customer provides a physical or digital signature. If a customer does not wish to receive printed disclosures, we recommend walking the customer through the E-Sign Act’s disclosure and consent procedures so that your bank…
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What are the retention requirements for deposit and loan rate sheets?
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We recommend retaining deposit and loan rate sheets for at least two years, subject to the exception below. Both Regulation DD and Regulation Z generally require a two-year retention period for required disclosures made in connection with deposit accounts and consumer credit, respectively. However, for a mortgage loan secured by a dwelling that includes prepayment…
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We erroneously overpaid interest on some of our checking accounts. We will be reversing the overpayments of interest. Are there any Illinois laws requiring notification before reversing the overpayments?
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No, we are not aware of any Illinois laws requiring disclosure in this situation. We recommend reviewing your account agreement with respect to any disclosure requirements related to interest calculation and payment errors and waiving any overdraft fees that occur due to the reversal of the interest payments.
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Under what circumstances must we provide Truth in Savings Act (TISA) disclosures? If someone asks about a thirty-month certificate of deposit (CD), can we provide that person with just the rate sheet and annual percentage yield (APY), or are TISA disclosures required? When does a customer’s inquiry trigger TISA disclosures?
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Your bank is not required to provide TISA disclosures when a consumer makes an oral inquiry (by telephone or in person) about the terms of a specific account. However, you are required to provide TISA disclosures when a consumer requests written information about an account — whether by telephone, in person, or by other means.…
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We recently changed our cutoff time for deposits made into our ATMs from 2:00 to 6:00 p.m. Are we required to send disclosures of the change to our impacted customers within thirty days of the change taking effect?
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We believe that notice is required of an extended ATM deposit cutoff time, assuming that the change in the cutoff time will result in expedited availability of deposited funds. Regulation CC requires notification to customers of a change that expedites the availability of funds no later than thirty days after implementation of the change. If…
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On our website we list the different types of accounts our bank offers. Can we put hyperlinks leading to the account disclosures on a different page, or do the disclosures need to be on the same page? We do not display any rates, but we do have disclosures related to mobile banking (carrier fees may apply) and foreign ATMs (fees may be charged by non-bank owned ATMs).
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Yes, we believe it would be acceptable for a webpage describing different account types to include a link to a separate page that provides disclosures regarding mobile banking and ATM fees. We are not aware of any specific requirements for disclosing that a carrier may impose messaging or data rates, although we do view this…
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For our UTMA accounts, we always disclosed that the accounts would convert to ordinary savings accounts when the beneficiary reaches the age of majority, with “applicable charges” applying after the conversion. However, our original account disclosures for the UTMA accounts do not specify what charges will apply after the conversion to a savings account. Should we send new disclosures to the UTMA account beneficiaries after converting their accounts to savings accounts?
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Yes, we recommend treating the conversion to a savings account as a new account opening, requiring new disclosures and a new account agreement. Regulation DD requires savings account disclosures to include “the amount of any fee that may be imposed . . . and the conditions under which the fee may be imposed.” Simply stating…