TISA Flashcards
1
Q
What is the purpose of TISA?
A
The purpose of Regulation DD is to enable consumers to make informed decisions about their accounts at depository institutions through the use of uniform disclosures. The disclosures aid comparison shopping by informing consumers
about the fees, annual percentage yield, interest rate, and other terms for deposit accounts.
2
Q
When is a consumer entitled to receive disclosures under TISA? (5)
A
A consumer is entitled to receive disclosures:
• When an account is opened;
• Upon request;
• When the terms of the account are changed;
• When a periodic statement is sent; and
• For most time accounts, before the account matures.
3
Q
What entities does Reg DD apply to? (3)
A
All depository institutions, except credit unions, that offer deposit accounts to residents of any state.
Branches of foreign institutions located in the US are subject if they offer deposit accounts to consumers.
Any persons who advertise accounts are subject to the advertising rules.
4
Q
Do the advertising rules apply in the following example:
A deposit broker places an advertisement offering consumers an interest in an account at a depository institution.
A
Yes, the advertising rules apply to the advertisement, whether the account is to be held by the broker or directly by the consumer.
5
Q
What is an account?
What are the different types of accounts?
A
An account is a deposit account at a depository institution that is held by or offered to a consumer.
It includes time, demand, savings, and negotiable order of withdrawal accounts (NOW). Regulation DD covers interest-bearing as well as noninterest bearing accounts.
6
Q
What is an advertisement? (2)
A
An advertisement is a commercial message, appearing in any medium, that promotes directly or indirectly
(a) the availability or terms of, or a deposit in, a new account, and
(b) the terms of, or a deposit in, a new or existing account.
An advertisement includes a commercial message in visual, oral, or print media that invites, offers, or otherwise announces generally to prospective customers the availability or terms of, or a deposit in, a consumer account.
Examples of advertisements include telephone solicitations and messages on automated teller machine screens.
7
Q
What is annual percentage yield?
A
An annual percentage yield is a percentage rate reflecting the total amount of interest paid on an account, based on the interest rate and the frequency of compounding for a 365-day period or 366-day period during leap years and calculated according to the rules in Appendix A of Regulation DD.
Interest or other earnings are not to be included in the annual percentage yield if the circumstances for determining the interest and other earnings may or may not occur in the future
8
Q
What is the average daily balance method?
A
The average daily balance method is the application of a periodic rate to the average daily balance in the account for the period. The average daily balance is determined by adding the full amount of principal in the account for each day of the period and dividing that figure by the number of days in the period.
9
Q
What is a bonus?
A
A bonus is a premium, gift, award, or other consideration worth more than $10 (whether in the form of cash, credit, merchandise, or any equivalent) given or offered to a consumer during a year in exchange for opening, maintaining, renewing, or increasing an account balance.
The term does not include interest, other consideration worth $10 or less given during a year, the waiver or reduction of a fee, or the absorption of expenses.
10
Q
What is a business day?
A
A business day is a calendar day other than a Saturday, a Sunday, or any of the legal public holidays.
11
Q
What is a consumer?
A
A consumer is a natural person who holds an account primarily for personal, family, or household purposes, or to
whom such an account is offered. The term does not include accounts held by a natural person on behalf of another in a professional capacity or accounts held by individuals as sole proprietors
12
Q
What is the daily balance method?
A
The daily balance method is the application of a daily periodic rate to the full amount of principal in the account each day.
13
Q
What is a deposit broker?
A
A deposit broker is a person who is in the business of placing or facilitating the placement of deposits in an institution
14
Q
What is a fixed rate account?
A
A fixed-rate account is an account for which the institution contracts to give at least 30 calendar days’ advance written notice of decreases in the interest rate.
15
Q
What is a grace period?
A
A grace period is a period following the maturity of an automatically renewing time account during which the
consumer may withdraw funds without being assessed a penalty.
16
Q
What is interest?
A
Interest is any payment to a consumer or to an account for the use of funds in an account, calculated by applying a periodic rate to the balance.
Interest does not include the payment of a bonus or other consideration worth $10 or less during a year, the waiver or reduction of a fee, or the absorption of expenses.
17
Q
What is an interest rate?
A
An interest rate is the annual rate of interest paid on an account and does not reflect compounding. For purposes of the account disclosures in section 1030.4(b)(1)(i), the interest rate may, but need not, be referred to as the “annual percentage rate” in addition to being referred to as the “interest rate.”
18
Q
What is a passbook savings account?
A
A passbook savings account is a savings account in which the consumer retains a book or other document in which the institution records transactions on the account.
Passbook savings accounts include accounts accessed by preauthorized electronic fund transfers to the account. As defined in Regulation E, a preauthorized electronic fund transfer is an electronic fund transfer authorized in advance to recur at substantially regular intervals.
Examples include an account that receives direct deposit of Social Security payments. Accounts permitting access by other electronic means are not passbook savings accounts and must comply with the requirements of section 1030.6 if statements are sent four or more times a year.
19
Q
What is a periodic statement?
A
A periodic statement is a statement setting forth information about an account (other than a time account or passbook
savings account) that is provided to a consumer on a regular basis four or more times a year.
20
Q
What is a stepped rate account?
A
A stepped-rate account is an account that has two or more interest rates that take effect in succeeding periods and are known when the account is opened.
21
Q
What is a tiered rate account?
A
A tiered-rate account is an account that has two or more interest rates that are applicable to specified balance levels. A requirement to maintain a minimum balance to earn interest does not make an account a tiered-rate account.
22
Q
What is a time account?
A
A time account is an account with a maturity of at least seven days in which the consumer generally does not have a right to make withdrawals for six days after the account is opened, unless the deposit is subject to an early withdrawal penalty of at least seven days’ interest on the amount withdrawn.
23
Q
What is a variable rate account?
A
A variable-rate account is an account in which the interest rate may change after the account is opened, unless the institution contracts to give at least 30 calendar days’ advance written
notice of rate decreases.
24
Q
Disclosures and periodic statements under TISA are required to be what? (7)
A
• Clear and conspicuous;
• In writing;
• In a form the consumer may keep;
• Clearly identifiable for different accounts, if disclosures for different accounts are combined;
• Reflective of the terms of the legal obligation of the
account agreement between the consumer and the
depository institution;
• Available in English upon request if the disclosures are
made in languages other than English; and
• Consistent in terminology when describing terms or
features that are required to be disclosed.
25
Can TISA disclosures be provided electronically?
Yes as long as they are in compliance with the E-Sign Act.
26
What disclosure requirements under TISA are related to Regulation E? (4)
• An institution changes a term that triggers a notice under Regulation E, and uses the timing and disclosure rules of Regulation E for sending change-in-term notices.
• Consumers add an ATM access feature to an account, and the institution provides disclosures pursuant to Regulation
E, including disclosure of fees (See 12 C.F.R. § 1005.7).
* An institution, complying with the timing rules of Regulation E, discloses at the same time fees for electronic services (such as for balance inquiry fees at ATMs) required to be disclosed by this regulation but not by Regulation E.
* An institution relies on Regulation E’s rules regarding disclosure of limitations on the frequency and amount of electronic fund transfers, including security-related exceptions. But any limitations on intra-institutional transfers to or from the consumer’s other accounts during a given time period must be disclosed, even though intra-institutional transfers are exempt from Regulation E.
27
If an account is held by more than one consumer, does the bank need to provide disclosures to one or both consumers?
If an account is held by more than one consumer, disclosures may be made to any one of the consumers.
28
Regarding rate disclosures provided orally, what information must be disclosed?
If an institution chooses to provide rate information orally, it must state the annual percentage yield and may state the interest rate. However, the institution may not state any other rate. The advertising rules do not cover an oral response to a
rate inquiry.
29
What are the rounding requirements for rates and yields in disclosures?
The annual percentage yield, the annual percentage yield earned, and the interest rate must be rounded to the nearest one-hundredth of one percentage point (.01%) and expressed to two decimal places. (For account disclosures, the interest rate may be expressed to
more than two decimal places.)
For example, if an annual
percentage yield is calculated at 5.644 percent, it must be rounded down and disclosed as 5.64 percent, or if annual
percentage yield is calculated at 5.645 percent, it must be rounded up and disclosed as 5.65 percent
30
What are the accuracy requirements for rates and yields in disclosures?
The annual percentage yield (and the annual percentage yield earned) will be considered accurate if it is not more than one-twentieth of one percentage point (.05 percent) above or below the annual percentage yield (and the annual percentage yield earned) that are calculated in accordance with Appendix A of Regulation DD.
31
What are the timing requirements for delivering the account opening disclosures?
What if the consumer is not present at account opening and did not receive disclosures?
What if they opened the account electronically?
A depository institution must provide account disclosures to a consumer before an account is opened or a service is provided, whichever is earlier. (An institution is deemed to have provided a service when a fee, required to be disclosed, is assessed.)
An institution must mail or deliver the account opening disclosures no later than ten business days after the
account is opened or the service is provided, whichever is earlier, if the consumer:
• Is not present when the account is opened or the service is provided; and
• Has not received the disclosures.
If a consumer who is not present at the institution uses electronic means (for example, an Internet Web site) to apply to open an account or to request a service, the disclosures must be provided before the account is opened or the service is provided.
32
What are the requirements for providing disclosures upon request? (3)
A depository institution must provide full account disclosures (at the time of request), including complete fee schedules, to a consumer upon request. Institutions must comply with all requests for this information, whether or not the requestor is an existing customer or a prospective customer.
A response to an oral inquiry (by telephone or in person) about rates and yields or fees does not
trigger the duty to provide account disclosures.
However, when consumers ask for written information about an account (whether by telephone, in person, or by other means), the institution must provide disclosures, unless the account is no longer offered to the public.
33
If a consumer requests disclosures but is not present, can the bank provide them via email or electronically? How does this implicate the E-sign act?
If a consumer who is not present at the institution makes a request for account disclosures, including a request made by telephone, e-mail, or via the institution’s Web site, the institution may send the disclosures in paper form, or if the consumer agrees, may provide the disclosures electronically, such as to an e-mail address that the consumer provides for
that purpose, or on the institution’s Web site, without regard to the consumer consent or other provisions of the E-Sign Act.
The institution is not required to provide, nor is the consumer required to agree to receive, the disclosures required by
section 1030.4(a)(2) in electronic form.
34
How should a bank disclose the interest rate and APY when a consumer requests disclosures? (3)
What about the maturity for Time accounts?
The institution may disclose the rate and yield offered:
* Within the most recent seven calendar days;
* As of an identified date; or
* Currently by providing a telephone number for consumers to call.
Further, when providing disclosures upon the request of a consumer, the institution may state the maturity of a time account as a term rather than a date. Describing the maturity of a time account as “1 year” or “6 months,” for example.
35
What is the required content of account disclosures at opening or upon request? (7)
- Rate information
- Compounding and crediting
- Balance information
- fees
- transaction limitations
- features of time accounts, if applicable
- bonuses, if applicable
36
For account opening disclosures, what must be included regarding rate information (fixed and variable rate accounts)?
Both (2)
Fixed(1)
Variable(4)
Both:
- Annual percentage yield
- interest rate
Fixed:
-period of time interest rate will be in effect
Variable:
- fact that interest rate and APY may change
- how the interest rate is determined
- frequency at which the interest rate may change
- any limitation on the amount the interest rate may change.
37
For account opening disclosures, what must be included regarding compounding and crediting?
An institution must disclose the frequency with which interest is compounded and credited. In cases where consumers will forfeit interest if they close an account before accrued interest is credited, an institution must state that interest will not be paid.
38
For account opening disclosures, what must be included regarding balance information? (4)
- The minimum balance requirements to open an account, avoid fees, or obtain the APY disclosed
- How the balance is determined to avoid fees or obtain the APY
--The balance computational method used to calculate interest on the account. An institution can use different methods to determine the balance for imposing a fee and accruing interest as long as each method and corresponding period is disclosed.
--When interest begins to accrue on noncash deposits.
39
For account opening disclosures, what must be included regarding fees? (3)
- Amount of any fee that may be imposed and conditions under which the fee may be imposed. (or an explanation of how the fee will be determined.
- if the fees are tied to other accounts at the bank. Ex: if an institution ties the fees payable on a NOW account to balances held in the NOW account and a savings account, the NOW account disclosures must state that fact and explain how the fee is determined.
- The categories of transaction for which an overdraft fee may be imposed. ex: “created by check, in-person withdrawal, ATM withdrawal, or other electronic means.” However, it is insufficient to state that a fee applies “for overdraft items.”
40
For account opening disclosures, what must be included regarding transaction limitations?
An institution must disclose any limitations on the number or dollar amount of withdrawals or deposits. Examples of such limitations include:
* Limits on the number of checks that may be written on an account within a given time period;
* Limits on withdrawals or deposits during the term of a time account; and
* Limits under Regulation D (Reserve Requirements on Depository Institutions) on the number of withdrawals permitted from money market deposit accounts by check to third parties each month.
41
For account opening disclosures, what must be included regarding features of time accounts? (4)
For time accounts, an institution must disclose information about the following features:
- Time requirements: maturity date, for "callable" time accounts the date/ circumstances which a bank can redeem the account
- Early withdrawal penalties: if a penalty will/may be imposed for early withdrawal, how it is calculated, and conditions for its assessment.
-Withdrawal of interest prior to maturity:
--statement that APY assumes interest remains on deposit until maturity and that a withdrawal will reduce earning for accounts where compounding occurs and where interest may be withdrawn prior to maturity.
OR
--statement that interest cannot remain on deposit and that payout of interest is mandatory for accounts where maturity is greater than 1yr, interest is not compounded on an annual/ more frequent basis, interest is required to be paid at least annually, and APY is determined in accordance with appendix A.
-Renewal policies: Whether an account will, or will not renew automatically at maturity. If so, whether a grace period will be provided. If so, length of grace period. Accounts that do not renew automatically, must indicate if interest will be paid after maturity if consumer does not renew account.
42
Is the following an early withdrawal penalty?
Adverse changes to terms such as lowering the interest rate, APY, or compounding frequency for funds remaining on deposit.
Yes, this penalty would need to be disclosed at account opening.
43
Is the following an early withdrawal penalty?
Reclamation of bonuses
Yes, this penalty would need to be disclosed at account opening.
44
For account opening disclosures, what must be included regarding bonuses? (3)
For bonuses, an institution must disclose:
• The amount or type of any bonus;
• When the bonus will be provided; and
• Any minimum balance and time requirements to obtain the bonus.
45
When is a bank required to provide a change in terms notice to consumers?
An institution must give advance notice to affected consumers of any change in a term that is required to be disclosed if the change may reduce the annual percentage yield or adversely affect the consumer.
46
What content must be included in change in terms notice? and when must is be provided?
The notice must include the effective date of the change and must be mailed or delivered at least 30 calendar days before the effective date of the change.
47
A bank is not required to provide a change in terms notice for what changes? (5)
* For variable-rate accounts, any change in the interest rate and corresponding changes in the annual percentage yield;
* Any changes in fees assessed for check printing;
* For short-term time accounts, any changes in any term for accounts with maturities of one month or less;
* The imposition of account maintenance or activity fees that previously had been waived for a consumer when the consumer was employed by the depository institution, but who is no longer employed there; and
* The expiration of a one-year period that was part of a promotion, described in the account opening disclosures, for example, to “waive $4.00 monthly service charges for one year.”
48
True or false:
For automatically renewing time accounts with maturity longer than one month, an institution must provide different disclosures depending on whether the maturity is longer than one year or whether the maturity is one year or less.
True.
All disclosures must be provided before maturity.
49
What disclosures must be provided for auto renewing time accounts with maturities longer than one year? (3)
- Date existing account matures
- New account disclosures provided to all accounts
- If the interest rate and APY is unknown:
- -that those rates have not yet been determined
- -date they will be determined, and
- -telephone number for consumers to call to obtain interest rate and APY for new account.
50
What disclosures must be provided for auto renewing time accounts with maturities longer than one month but no more than one year? (3)
* Provide the disclosures required in section 1030.5(b)(1) disclosures for time accounts longer than one year; or
* Disclose to the consumer:
a. The date the existing account matures and the new maturity date if the account is renewed;
b. The interest rate and the annual percentage yield for the new account if they are known. If the rates have not yet been determined, the institution must disclose:
i. The date when they will be determined; and
ii. A telephone number the consumer may call to obtain the interest rate and the annual percentage yield for the new account; and
c. Any difference in the terms of the new account as compared to the terms required to be disclosed for the existing account.
51
What are the timing requirements for delivering subsequent disclosures for time accounts that automatically renew? (2)
All disclosures must be mailed or delivered at least 30 calendar days before maturity of the existing account.
Alternatively, the disclosures may be mailed or delivered at least 20 calendar days before the end of the grace period on the existing account, provided a grace period of at least five calendar days is allowed.
52
What notice is required for time accounts longer than one year that do not automatically renew?
When must the disclosures be provided?
For time accounts with maturity longer than one year that do not renew automatically at maturity, an institution must disclose to consumers:
- the maturity date and
- whether interest will be paid after maturity.
The disclosures must be mailed or delivered at least 10 calendar days before maturity of the existing account.
53
True or False:
Reg DD does not require institutions to provide periodic statements?
True.
However for institutions that do provide periodic statements, there are requirements for what must be included in them.
54
What disclosures must be included on a periodic statement? (6)
- APY earned
- Amount of Interest earned
- Fees imposed
- Length of period
- Combined statements if applicable
- Aggregate fee disclosure
55
For periodic statements, what information must be disclosed regarding APY earned?
An institution must state the annual percentage yield earned during the statement period, using that term, and calculated according to Appendix A of Regulation DD.
56
For periodic statements, what information must be disclosed regarding Amount of interest earned?
An institution must state the dollar amount of interest earned during the statement period, whether or not it was credited. In disclosing interest earned for the period, an institution must use the term “interest” or terminology such as:
* “Interest paid,” to describe interest that has been credited; or
* “Interest accrued” or interest earned,” to indicate that interest is not yet credited.
57
For periodic statements, what information must be disclosed regarding fees imposed? (4)
- report any fees required to be disclosed that were debited during the period, even if assessed for an earlier period.
- Fees must be itemized by type and dollar amounts.
- If fees of the same type are grouped together, description must make clear the dollar figure represents more than a single fee. (ex: “total fees for checks written this period.”)
- Total overdraft and returned item fees, if any. Provide totals for each for the statement period and for calendar year to date.
58
True or false:
On a periodic statement, an institution can combine and disclose overdraft fees and NSF fees.
False,
An institution must separately identify whether a fee was for the payment of an overdraft or for returning the item unpaid.
59
For periodic statements, what information must be disclosed regarding length of period?
Total number of days in the statement period or beginning and end dates of the period (must make clear if beginning and end dates are included in the period)
60
For periodic statements, what information can be disclosed regarding combined statements? (2)
Institutions may provide information about an account (for example, a Money Market Deposit Account) on the periodic
statement for another account (such as a Negotiable Order of Withdrawal account) without triggering the disclosures
required by this section, as long as:
* The information is limited to the account number, the type of account, or balance information; and
* The institution also provides a periodic statement complying with this section for each account.
61
For periodic statements, what information can be disclosed regarding aggregate fees disclosures?
If an institution charges a consumer overdraft and returned item fees, it must disclose them on the consumer’s periodic statement
62
What are the special periodic statement requirements for an institution that uses the average daily balance method and calculating interest for a period other than the statement period? (2)
-an institution must calculate and disclose the annual percentage yield earned and amount of interest earned based on the time period used rather than the statement period.
-In addition, when disclosing the length of period requirement on the periodic statement, an institution
must state this information for the statement period as well as the interest-calculation period.
63
What permissible methods can be used to determine the balance to calculate interest? (2)
An institution must calculate interest on the full amount of principal in an account for each day by using one of the two following methods:
* Daily balance method, where the daily periodic rate is applied to the full amount of principal in the account each day; or
* Average daily balance method, where a periodic rate is applied to the average daily balance in the account for the period. The average daily balance is determined by adding the full amount of principal in the account for each day of the period and dividing that figure by the number of days in the period.
64
What are the three prohibited methods for determining the balance to calculate interest?
The following are prohibited calculation methods:
• Ending-balance method, where interest is paid on the balance in the account at the end of the period;
• Low-balance method, where interest is paid based on the lowest balance in the account for any day in that period; and
• Investable-balance method, where interest is paid on a percentage of the balance, excluding the amount set aside for reserve requirements.
65
Can an institution use 360 day calculation method for calculating the daily periodic rate?
What about using a 366 day or 365 day method for a leap year?
Institutions may apply a daily periodic rate greater than 1/365 of the interest rate—such as 1/360 of the interest rate—as long as it is applied 365 days a year.
Institutions may apply a daily rate of 1/366 or 1/365 of the interest rate for 366 days in a leap year, if the account will earn interest for February 29.
66
Can an institution pay interest on a dormant account?
Institutions must pay interest on funds in an account, even if inactivity or the infrequency of transactions would permit the institution to consider the account to be “inactive” or “dormant” (or similar status) as defined by state, other laws, or the account contract.
67
What are the permissible methods to determine the minimum balance to earn interest and when should they be used?
They should be used if an institution requires a minimum balance to earn interest. The bank must use the same method to determined the required minimum balance as it used to determined the balance on which interest is calculated.
Permitted methods include the daily balance method or the average daily balance method.
68
Which method must be used to calculate interest in the following example?
Institution requires a $300 minimum balance and uses the average daily balance method to calculate this minimum balance.
The bank must calculate the interest based on the average daily balance method.
The same method must be used to determine balance as is used to calculate interest.
69
How can an institution pay interest earned for balances below the minimum?
What if the balance is above the minimum?
An institution that requires a minimum balance may choose not to pay interest for days or periods when the balance drops below the required minimum, whether they use the daily balance
method or the average-daily-balance method to
calculate interest.
Institutions must pay interest on the full balance in the account that meets the required minimum balance.
70
For the following example, what balance must an institution use to calculate interest earned?
Bank requires $300 minimum daily balance to earn interest, consumer deposits $500.
The institution must pay the stated interest rate on the full $500 and not just on $200.
Institutions must pay interest on the full balance in the account that meets the required minimum balance.
71
Are there limitations on the calculation methods used to determine minimum balance on requirements that do not involve the payment of interest?
No, banks can use the daily balance method, average daily balance method or any other method to calculate minimum balance requirements that do not involve the payment of interest. (Ex: to compute minimum balances for assessing fees)
72
Does TISA require institutions to compound or credit interest at any particular frequency?
No, institutions choosing to compound interest may compound or credit
interest annually, semi-annually, quarterly, monthly, daily, continuously, or on any other basis.
73
True or false:
An institution must pay accrued interest if a consumer closes their account prior to the date accrued interest is credited.
False,
An institution may choose not to pay accrued interest if
consumers close an account prior to the date accrued interest is credited, as long as the institution has disclosed this practice in
the initial account disclosures.
74
What is the required date interest begins to accrue on an account?
When does interest stop accruing?
Interest shall begin to accrue not later than the business day specified for interest-bearing accounts in section 606 of the Expedited Funds Availability Act, which states:
… interest shall accrue on funds deposited in an
interest-bearing account at a depository institution
beginning not later than the business day on which the
depository institution receives provisional credit for such funds.
Interest shall accrue until the day funds are withdrawn.
75
What are the requirements regarding misleading or inaccurate advertising? (3)
(prohibitions mostly)
An institution may not advertise in a way that is misleading or inaccurate or misrepresents its deposit contract.
In addition, an advertisement may not use the word “profit” in referring to interest paid on an account.
An institution’s advertisement may not refer to or describe an account as “free” or “no cost” (or contain a similar term such
as “fees waived”) if a maintenance or activity fee may be imposed on the account.
76
What are some examples of maintenance or activity fees that if assessed, would prevent an institution from refering to an account as free or no cost? (4)
• Any fee imposed when a minimum-balance requirement is not met, or when consumers exceed a specified number of
transactions;
* Transaction and service fees that consumers reasonably expect to be imposed on a regular basis;
* A flat fee, such as a monthly service fee; and
• Fees imposed to deposit, withdraw, or transfer funds,
including per-check or per-transaction charges (for
example, 25 cents for each withdrawal, whether by check or in person).
77
What are some examples of maintenance or activity fees that even if assessed would permit an institution to refer to an account as free or no cost? (6)
Examples of fees that are not maintenance or activity fees include:
* Fees not required to be disclosed under section 1030.4(b)(4),
* Check-printing fees;
* Balance-inquiry fees;
* Stop-payment fees and fees associated with checks returned unpaid;
* Fees assessed against a dormant account; and
* Fees for ATM or electronic transfer services (such as preauthorized transfers or home banking services) not required to obtain an account.
78
True or false:
If an account or service is free only for a limited period of time, the account or service can be advertised as free if the time period is also stated.
True
79
True or false:
Electronic advertising disclosures cannot be provided to the consumer in electronic form without regard to consumer consent or other provisions of the E-sign act.
False
Advertising disclosures provided electronically do not require consent or other provisions under the E-sign act.
80
If an electronic advertisement displays a trigger term (bonus or APY) what must the advertisement include regarding additional disclosures associated with the trigger terms?
If an electronic advertisement (such as an advertisement appearing on an Internet Web site) displays a triggering term
(such as a bonus or annual percentage yield), described
elsewhere in section 1030.8, the advertisement must clearly refer the consumer to the location where the additional required information begins.
For example, an advertisement that includes a bonus or annual percentage yield may be
accompanied by a link that directly takes the consumer to the additional information.
81
Is the following advertising example misleading, inaccurate or misrepresent the deposit contract?
Bank advertises the overdraft service as a "line of credit"
Yes, this would be inaccurate unless the service is subject to Reg Z requirements.
82
Is the following example misleading, inaccurate or misrepresent the deposit contract?
Bank advertises that they will honor all checks or authorize payment of all transactions that overdraw an account, with or without a specified dollar limit, when the institution retains discretion at any time to not honor checks or authorize transactions.
Yes
83
Is the following example misleading, inaccurate or misrepresent the deposit contract?
Bank advertises that consumers with an overdrawn account are allowed to maintain a negative balance when the terms of the account overdraft service require consumers promptly to return the deposit account to a positive balance.
Yes.
84
Is the following example misleading, inaccurate or misrepresent the deposit contract?
Advertisement describes a bank's overdraft service solely as protection against bounced checks when the bank also permits overdrafts for a fee for overdrawing accounts by other means, such as ATM withdrawals, debit card transactions, or EFTs.
Yes.
85
Is the following example misleading, inaccurate or misrepresent the deposit contract?
Advertising an account-related service for which the
institution charges a fee in an advertisement that also uses the word “free” or “no cost” (or a similar term) to describe the account
Yes.
Unless the advertisement clearly and conspicuously indicates that there is a cost associated with the service. If the fee is a maintenance or activity fee under section 1030.8(a)(2), however, an advertisement may not describe the account as “free” or “no cost” (or contain a similar term) even if the fee is disclosed in the
advertisement.
86
If an institution states a rate of return in an advertisement, what disclosure requirements must be followed? (5)
What additional disclosures are required for tiered rate account, stepped rate account advertisements that list a rate?
* It must state the rate as an “annual percentage yield,” using that term.
* If the advertisement uses the abbreviation “APY,” the term “annual percentage yield” must be stated at least once in the advertisement.
* If the advertisement uses the term “interest rate,” it must use the term in conjunction with, but not more conspicuously than, the related annual percentage yield.
* It may not state any other rate except “annual percentage yield” or “interest rate.”
* It must round the annual percentage yield, the annual percentage yield earned, and the interest rate to the nearest one-hundredth of one percentage point (.01%) and express them to two decimal places.
Tiered Rate: An advertisement for a tiered-rate account that states an annual percentage yield must also state the annual percentage yield for each tier, along with corresponding minimum-balance requirements.
Stepped Rate: An advertisement for a stepped-rate account that states an interest rate must state all the interest rates and the time period that each rate is in effect.
87
What are the special account feature advertising requirements for time accounts where APY is offered?
The advertisement must include the period of time during which the annual percentage yield will be offered.
Alternatively, the advertisement may state that the annual percentage yield is accurate as of a specified date. The date must be recent in relation to the publication or media broadcast used for the advertisement, taking into account the particular circumstances or production deadlines involved.
An advertisement may refer to the annual percentage yield as being accurate as of the date of publication, if the date is on the publication itself.
88
What are the requirements for advertising special account features on a variable rate account?
Variable rate: For variable-rate accounts, the advertisement must state that the rate may change after the account is opened.
89
What are the special account feature requirements for advertising accounts with a minimum balance?
For accounts that have a required minimum balance, the advertisement must state the minimum balance required to obtain the advertised annual percentage yield.
For tiered-rate accounts, the advertisement must state the minimum balance
required for each tier in close proximity and with equal prominence to the applicable annual percentage yield.
90
What are the special account feature requirements for advertising accounts with a minimum opening deposit?
For an account that requires a minimum deposit to open the account, the advertisement must state the minimum deposit required to open the account, if it is greater than the minimum balance necessary to obtain the advertised annual percentage yield.
91
What are the special account feature requirements for advertising accounts with maintenance or activity fees?
An advertisement must state that fees could reduce the earnings on the account. This requirement only applies to maintenance or activity fees.
92
What are the disclosure requirements for advertising time account features?
For time accounts, the advertisement must include:
• Term of the account;
• Early withdrawal penalties — a statement that a penalty
will or may be imposed for early withdrawal; and
• Required interest payouts — a statement that interest
cannot remain on deposit and that payout of interest is
mandatory for non compounding time accounts with the following features:
a. The stated maturity is greater than one year;
b. Interest is not compounded on an annual or more frequent basis;
c. Interest is required to be paid out at least annually;
and
d. The annual percentage yield is determined in
accordance with section E of Appendix A of Regulation DD.
93
If an institution states a bonus in an advertisement, it must include what information? (5)
If applicable to the advertised product:
* “Annual percentage yield,” using that term;
* Time requirement to obtain the bonus;
* Minimum balance required to obtain the bonus;
* Minimum balance required to open the account, if it is greater than the minimum balance necessary to obtain the bonus; and
* Time when the bonus will be provided.
94
Do the following terms trigger bonus disclosures in advertising?
Bonus checking or Get a bonus when you open a checking account
No.
95
What types of media are exempt from including the following:(3)
a. Information required for special account features involving variable rates, time an annual percentage yield is offered, minimum opening deposit, effect of fees, and early withdrawal penalties for time accounts.
b. When bonuses are advertised, information required related to a minimum balance to open an account (if it is greater than the minimum balance necessary to obtain the bonus) and related to when a time the bonus will be provided.
a. Broadcast or electronic media, such as television or radio. However, the exemption does not extend to Internet and email advertisements.
b. Outdoor media, such as billboards.
c. Telephone response machines. However, solicitations for a tiered-rate account made through telephone response machines must provide the annual percentage yields and the balance requirements applicable to each tier.
96
If a bank posts account information on signs inside its premises or the premises of a deposit broker, the postings are exempt from what advertising requirements?
* Permissible rates;
* When additional disclosures are required;
* Bonuses; and
* Certain media exemption.
97
If an indoor sign at a bank advertises a rate of return, it is exempt from certain advertising requirements, but must still include what?
* State the rate as an “annual percentage yield,” using that term or the term “APY.” The sign must not state any other rate, although the related interest rate may be stated.
* Contain a statement advising consumers to contact an employee for further information about applicable fees and terms.
98
How long must an institution retain advertising records?
An institution must retain records that evidence compliance for a minimum of two years after the date that disclosures are required to be made or an action is required to be taken. If
required by its supervising agency, an institution may need to retain records for a longer time period.
99
Regarding overdraft fees, a bank must disclose on its periodic statements, if provided, separate totals for the statement period and calendar year to date for what? (2)
* The total dollar amount for all fees or charges imposed on the account for paying checks or other items when there are insufficient or unavailable funds and the account becomes overdrawn, using the term “Total Overdraft Fees” and
* The total dollar amount for all fees or charges imposed on the account for returning items unpaid.
This is typically presented in a table with a row for each bullet above and a column for the total during the period and the total year to date for each fee type.
100
Regarding overdraft fee disclosures on the periodic statements, what types of charges must be included in the dollar amount for total overdraft fees? (5)
Disclosed in aggregate table
- Per item fees
- interest charges
- Daily or other periodic fees
- overdraft maintenance fees
- Fees for insufficient funds because previous funds are subject to hold or are uncollected.
Does not include fees for transferring funds from another account to avoid an overdraft, or Reg Z fees.
101
Regarding returned item fee disclosures (NSF fee) on periodic statements, what must be included in the total dollar amount for all fees for Total returned item fees?
Disclosed in aggregate table
-all fees charged for dishonoring or returning checks or other items on the account.
Fees imposed when deposited items are returned are not included.
102
For the periodic statement, what can a bank disclose regarding waived overdraft or NSF fees? (2)
- Can provide a statement for current period reflecting that fees imposed during previous period were waived and credited to the account.
- may, but are not required, to reflect the adjustment in the total for the calendar YTD and in the applicable statement period.
103
How can the institution reflect the following fee waiver in the overdraft table on the periodic statement?
Bank assesses an ODP fee in January and refunds the fee in February
the institution could disclose a year-to-date total reflecting the amount credited, but it should not affect the total disclosed for the February statement period, because the fee was not assessed in the February statement period.
104
How can the institution reflect the following fee waiver in the overdraft table on the periodic statement?
Bank assesses then waives and credits a fee within the same statement cycle.
The institution may, at its option, reflect the adjustment in the total disclosed for fees imposed during the current statement period and for the total for the calendar year-to-date.
Thus, if the institution assesses and waives the fee in the February statement period, the February fee total could reflect a total net of the waived fee.
105
What disclosures are required for advertising overdraft services? (4)
* The fee(s) for the payment of each overdraft;
* The categories of transactions for which a fee may be imposed for paying an overdraft;
* The time period by which the consumer must repay or cover any overdraft; and
* The circumstances under which the institution will not pay an overdraft. It is sufficient to state, as applicable, “Whether your overdrafts will be paid is discretionary and we reserve the right not to pay. For example, we typically do not pay overdrafts if your account is not in good standing, or you are not making regular deposits, or you have too many overdrafts.”
106
The advertising disclosure rules for overdraft services do not apply in what circumstances? (12)
* An advertisement promoting a service where the institution’s payment of overdrafts would be agreed upon in writing and subject to Regulation Z (12 C.F.R. § 1026);
* A communication by an institution about the payment of overdrafts in response to a consumer-initiated inquiry about deposit accounts or overdrafts. However, providing information about the payment of overdrafts in response to a balance inquiry made through an automated system, such as a telephone response machine, ATM, or an institution’s Internet site, is not a response to a consumer initiated inquiry that is exempt from the advertising disclosures;
* An advertisement made through broadcast or electronic media, such as television or radio. However, this exception does not apply to advertisements posted on an institution’s Internet site, on an ATM screen, provided on telephone-response machines, or sent by electronic mail;
* An advertisement made on outdoor media, such as billboards;
* An ATM receipt;
* An in-person discussion with a consumer;
* Disclosures required by federal or other applicable law;
* Information included on a periodic statement or on a notice informing a consumer about a specific overdrawn item or the amount the account is overdrawn;
* A term in a deposit account agreement discussing the institution’s right to pay overdrafts;
* A notice provided to a consumer, such as at an ATM, that completing a requested transaction may trigger a fee for overdrawing an account, or a general notice that items overdrawing an account may trigger a fee;
* Informational or educational materials concerning the payment of overdrafts if the materials do not specifically describe the institution’s overdraft service; or
• An opt-out or opt-in notice regarding the institution’s payment of overdrafts or provision of discretionary
overdraft services.
107
An ODP advertisement on an ATM screen or telephone response machine is not required to include what? (2)
* The categories of transactions for which a fee may be imposed for paying an overdraft; or
* The circumstances under which the institution will not pay an overdraft.
108
The advertising requirements for ODP to disclose fees for the payment of each overdraft does not apply to indoor signs as long as it contains what? (2)
A clear and conspicuous statement that:
• Fees may apply; and
• Consumers should contact an employee for further information about applicable fees and terms.
109
If a bank discloses balance information to a consumer through an Automated system, the disclosed balance cannot include what?
Any exceptions?
Additional amounts that the bank may provide to cover an item when there are insufficient or unavailable funds or ODLC.
However, the institution may, at its option, disclose an additional, second account balance that would include funds provided by the institution, if the institution prominently states that any such second balance
includes funds that the institution may provide to cover insufficient or unavailable funds in the consumer’s account and, if applicable, that additional funds are not available for all
transactions.
110
What additional amounts can be included in the balance disclosed through an automated system? (2)
- Funds deposited (ex: check) that are not yet available for withdrawal due to funds availability under Reg CC.
- Funds that are held by the bank to satisfy a prior obligation (ex: cover a hold for an ATM or debit card transaction that has been authorized but not yet settled)
111
True or false:
When disclosing a transaction account balance, a bank is required to include funds from the consumer's balance that may be transferred from another account pursuant to a retail sweep account.
False, a bank is not required to do this, but is also not required to exclude this information. At the bank's option they can include this information.
112
What sub accounts are established as part of a retail sweep program.
Bank establishes two legally distinct sub accounts, a transaction sub account, and a savings sub account. These two together make up the consumer's account.
113
Retail sweep accounts typically include what elements? (3)
• Comply with Regulation D;
• Prevent direct access by the consumer to the non transaction subaccount that is part of the retail sweep
program; and
• Document on the consumer’s periodic statements the account balance as the combined balance in the subaccounts.
114
What are the requirements if a bank chooses to disclose additional balances at an automated system, which include funds that may be provided to cover an overdraft (overdraft limit)? (5)
- Prominently state that the additional balances include additional overdraft funds.
- Cannot simply state the second balance is the consumer's "available balance" or "available funds"
- Bank should provide enough info to convey the second balance includes funds that the bank may provide to cover insufficient or unavailable funds.
- If a consumer has not opted in, these funds should not be listed.
- If a consumer has opted in to only ATM and one time debit, it should disclose that the overdraft funds are not available for all transactions.
115
What is considered an automated system regarding balance disclosures?
A telephone response system, the institution’s Internet site, or an ATM.
The requirement applies
whether the institution discloses a balance through an ATM owned or operated by the institution or through an ATM not owned or operated by the institution (including an ATM operated by a non-depository institution).
If the balance is obtained at an ATM, the requirement also applies whether the balance is disclosed on the ATM screen or on a paper receipt.
