TISA Flashcards
What is the purpose of TISA?
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.
When is a consumer entitled to receive disclosures under TISA? (5)
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.
What entities does Reg DD apply to? (3)
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.
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.
Yes, the advertising rules apply to the advertisement, whether the account is to be held by the broker or directly by the consumer.
What is an account?
What are the different types of accounts?
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.
What is an advertisement? (2)
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.
What is annual percentage yield?
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
What is the average daily balance method?
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.
What is a bonus?
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.
What is a business day?
A business day is a calendar day other than a Saturday, a Sunday, or any of the legal public holidays.
What is a consumer?
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
What is the daily balance method?
The daily balance method is the application of a daily periodic rate to the full amount of principal in the account each day.
What is a deposit broker?
A deposit broker is a person who is in the business of placing or facilitating the placement of deposits in an institution
What is a fixed rate account?
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.
What is a grace period?
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.
What is interest?
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.
What is an interest rate?
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.”
What is a passbook savings account?
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.
What is a periodic statement?
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.
What is a stepped rate account?
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.
What is a tiered rate account?
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.
What is a time account?
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.
What is a variable rate account?
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.
Disclosures and periodic statements under TISA are required to be what? (7)
• 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.
Can TISA disclosures be provided electronically?
Yes as long as they are in compliance with the E-Sign Act.
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.
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.
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.
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
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.
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.
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.
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.
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.
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
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.
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.
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.
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.”
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.
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.
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.
Is the following an early withdrawal penalty?
Reclamation of bonuses
Yes, this penalty would need to be disclosed at account opening.
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.
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.
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.
