Compliance Alliance

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Compliance Alliance

Membership Development Team
Bankers Alliance
P. O. Box 162407
Austin, TX 78716
Phone:  (888) 353-3933
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An expertly-staffed hotline, federal regulatory tools, policies and procedures, and unlimited reviews for small-to-medium community banks across the U.S. — the only all-inclusive banking compliance advisory. C/A’s nearly 1700 products and tools support 48 separate bank compliance areas –an unlimited-access Bank Compliance Library – conforms to the most recently published federal banking rules and regulations. Whether you are building institutional exam-readiness or a bank compliance program, C/A has all the resources, access, and availability for one membership subscription. Co-owned by the Virginia Bankers Association and 28 other state bankers associations across the country. Contact C/A’s Membership Development Team at (888) 353-3933 or at: info@compliancealliance.com. To learn more about C/A’s new Virtual Compliance Officer service or call (833) 683-0701.

Compliance Alliance Featured Q&A

Question:

Currently, we provide the EFT Disclosure to all customers at the time of account opening whether or not they wish to receive a debit card.  Are we also required to supply the same disclosure when a debit card is sent to the customer?

Answer:

When it comes to the instance where the card is initially being issued, whether or not the bank would need to issue additional disclosures will depend upon the content of each set of the disclosures, namely the “old” and the “new” disclosures. As, under Regulation E, when an access device is issued, if the EFT capabilities differ from those described in the Regulation E disclosures initially issued by the bank, then new disclosures that accompany the access device are required to be issued to the customer, as suggested below:

“© Addition of electronic fund transfer services. If an electronic fund transfer service is added to a consumer’s account and is subject to terms and conditions different from those described in the initial disclosures, disclosures for the new service are required.” https://www.consumerfinance.gov/rules-policy/regulations/1005/7/#c 

Further, the timing requirements provide the following: 
“…Disclosures given by a financial institution earlier than the regulation requires (for example, when the consumer opens a checking account) need not be repeated when the consumer later enters into an agreement with a third party to initiate preauthorized transfers to or from the consumer’s account, unless the terms and conditions differ from those that the institution previously disclosed. …On the other hand, if an agreement for EFT services to be provided by an account-holding institution is directly between the consumer and the account-holding institution, disclosures must be given in close proximity to the event requiring disclosure, for example, when the consumer contracts for a new service.” https://www.consumerfinance.gov/rules-policy/regulations/1005/interp-7/#7-a-Interp-1 

Additionally, even if not required under the Regulation, new disclosures may, nonetheless, be required under the bank’s internal policy, the account agreement, or, if it is a branded card, under the bank’s agreement with the network. As always, to avoid implicating any UDAAP/UDAP and/or fair banking considerations, the bank will want to ensure that it is treating similarly situated consumers consistently, across the board in determining when new disclosures must be issued.

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