Topic: Truth in Savings Act (TISA)
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Under the Truth in Savings Act, does our bank have to notify an account holder when an account becomes classified as “dormant”? We disclose dormancy fees in our account opening disclosures, and we send out a pre-dormancy notice thirty days before the account is classified as “dormant.”
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No, we do not believe that your bank must provide notice to a customer when their account becomes classified as “dormant,” provided that your account agreement and disclosures do not impose this requirement. However, under the Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA), your bank must communicate with customers about accounts that are presumed…
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We are planning an advertisement for closed-end residential mortgage loans that will include the phrase “low downpayment.” Does that phrase trigger additional disclosures under Regulation Z?
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No, we do not believe that the phrase “low downpayment” in an advertisement for mortgage loans would trigger the additional advertising disclosures required under Regulation Z. Regulation Z requires additional disclosures to be provided with advertisements that include trigger terms such as “the amount or percentage of any downpayment.” However, the definition of “downpayment” is…
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Is there an Illinois law that limits holds on items deposited to a savings account? Do you have any guidance on the hold form that should be used?
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No, we are not aware of any Illinois law or rule that would limit holds placed on items deposited into savings accounts. Additionally, because Regulation CC does not apply to savings accounts, we are not aware of any federal requirements for placing holds on items deposited into savings accounts. Any notice obligations would depend on…
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If we fail to send out a final periodic statement for a closed demand deposit account held by a consumer, does that violate Regulation DD?
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No, we do not believe that it violates Regulation DD to fail to send out a final periodic statement for a closed account. However, you may be required to send a periodic statement under Regulation E or the terms of your account agreement. Regulation DD does not require banks to provide periodic statements; it only…
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Do we need to obtain certified beneficial ownership information under the new customer due diligence (CDD) rule every time a business customer renews a certificate of deposit? If so, how do we handle situations when a business customer with an automatically renewing CD refuses to provide this information at the time of renewal? Should we send new disclosures converting automatically renewing CDs to term CDs unless we receive the beneficial ownership information?
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No, your bank does not need to obtain certified beneficial ownership information each time a CD automatically renews. In a recently issued guidance, FinCEN stated that if a customer: (1) certifies their beneficial ownership information once after the new CDD rule takes effect, and (2) agrees to notify your bank of any changes when it…
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We would like to offer a promotional money market account with an introductory interest rate period that would expire on the same date for all customers. As a hypothetical example, if a customer opens an account today, the introductory rate would expire in two months, but if another customer opens an account a month later, the introductory rate would expire in just one month. In other words, the APY will change daily as we count down to the introductory rate’s expiration date. How should we advertise the annual percentage yield (APY)?
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We believe that your bank could advertise the APY “as of a specified date,” provided that the APY is updated appropriately (possibly daily, depending on the medium in which your advertisement appears). Because the introductory APY for these accounts will expire, they are treated as “stepped-rate” accounts under Regulation DD. Assuming that your advertisements will…
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If a bank employee sends an email to an acquaintance offering a bank deposit product, with a statement of the product’s annual percentage yield (APY), does that trigger our Truth in Savings Act (TISA) disclosures or CAN-SPAM requirements?
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Yes, an email that mentions a deposit product’s APY will trigger the TISA’s additional advertising disclosures. Regulation DD’s advertising requirements expressly apply to one-on-one communications such as telephone solicitations, and we would read it as also applying to emails. While Regulation DD does exempt “in-person discussions with consumers about the terms for a specific account,”…
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Can we convert a NOW account to an interest bearing demand deposit account?
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Yes, we believe that you can convert a NOW account to an interest bearing demand deposit account. We are not aware of any prohibition on converting from one account type to another (including business accounts in the wake of Dodd-Frank’s elimination of Regulation Q’s prohibition on paying interest on commercial deposit accounts). However, you are…
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Are we required to include the FDIC logo and advertising statement on a certificate of deposit (CD) prematurity notice?
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No, we do not believe that you must include the FDIC logo on CD maturity notices, but we recommend reviewing the prematurity notices to ensure that they could not be viewed as advertisements for your bank. The FDIC’s Advertisement of Membership rule requires banks to include the “Member FDIC” or “Member of FDIC” statement in…
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We currently offer ad hoc overdraft protection, but we want to establish a formal overdraft protection program for checking accounts, ACH transactions, and debit transactions. We have not yet established the exact parameters of our program, but we are planning to charge a fee for the service. What notice do we have to provide before rolling out the program? Can the notice be included in a periodic statement? Can we establish criteria that customers must meet in order to qualify for the program, such as that the customer does not have any delinquent loans? Or do we have to offer the program to all customers?
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Yes, your bank should provide advance notice and an opportunity to opt in to a new overdraft program. Regulation E requires financial institutions to complete a four-step process before charging a fee for paying an overdraft on an ATM or on a one-time debit card transaction. This process includes providing written notice of the overdraft…