Exam 2
When is the government NOT required to provide a certificate of compliance?
-Records that are not individually identifiable with a particular member. - Records sought by a supervisory agency for its supervisory, regulatory or monetary functions. This also includes examinations and any investigations relating to consumer complaints. - Records sought in accordance with procedures authorized by the Internal Revenue Code • Records that are required to be reported in accordance with any federal statute or rule, such as the Bank Secrecy Act. • Information that is requested by a government authority for a legitimate law enforcement inquiry that is seeking only the name, address, account number and type of account of any member or ascertainable group of members associated with a financial transaction or class of financial transactions or in connection with certain international matters. • A subpoena issued in conjunction with proceedings before a grand jury. • Records sought by the Government Accountability Office for an authorized proceeding or audit directed at a federal agency. • Records of any credit union officer, director, employee or any major borrower who there is reason to believe may be acting in concert with any such officer, director, employee or controlling shareholder, provided by the credit union to the U.S. Attorney, state law enforcement agency, or, in the case of violations of 31 U.S.C. 5311 et seq. to the Secretary of the Treasury, for criminal violation and violations of the BSA and AML statutes.
How are CUs expected to ensure members abide by the 6 transaction limitation in compliance with Reg. D?
1) Prevent withdrawals or transfers of funds from this account that are in excess of the limits established (six per month), or 2) Adopt procedures to monitor those transfers on an ex post basis and contact members who exceed the established limits on more than an occasional basis (more than 3 times in a 12 month period). For members who continue to violation these limits after they have been contacted by the CU, the CU must either close the account and place the funds into another account the member is eligible to maintain and take away the transfer and draft capabilities of the account.
What is the 4-part opt-in process? How long is an opt-in valid for? What is the process for revocation?
1. The credit union provides the member an opt-in notice in writing (or electronically if agreed), which describes the credit union's overdraft program and discloses the potential fees; 2. The credit union provides the member with a reasonable opportunity to provide the opt-in; 3. The member provides affirmative consent (i.e., opt-in); and 4. The credit union provides a written confirmation (or electronic if agreed) of themember's consent, which must include information about the member's ability to revoke their consent in the future. A member's opt-in is effective until it is revoked by the member or the credit union ceases to offer the overdraft service. The credit union must provide the same methods for a member to revoke as it does to allow a member to provide the initial opt-in consent. For joint accounts, any account owner can provide the opt-in to obtain overdraft coverage for ATM and one-time debit card transactions. The flip side of that coin is that the CU must treat a revocation by any account owner as a revocation of the opt-in consent on the account. Thus, one joint owner could opt-in but have the consent revoked the next week by the other joint owner.
6. Which fees must be disclosed? Are some fees outside of the regulation's control?
A CU must disclose the amount of any fee that may be imposed in connection with an account (or an explanation of how the fee will be determined) and the condition under which the fee may be imposed. This includes: - Maintenance fees, such as monthly service fees; - Fees to open or to close an account; - Fees imposed upon dormant and inactive accounts; - Fees related to deposits or withdrawals, such as fees for use of a CU's ATMs; - NSF fees; and - Fees for special services, such as stop-payment fees, fees for balance inquires or verification or share and deposits, fees associated with checks returned unpaid, fees for regularly sending, to members share drafts that otherwise would be held by the CU and overdraft line of credit access fees (if charged against the share account) Yes, there are fees that are not required to be disclosed under the TIS regulation. These include "service fees" for both member and nonmember for travelers' checks, wire transfers, ACH transfers, process of credit card cash advances, or handling U.S. Savings bond redemption. There are also "incidental fees" such as fees associated with the escheat laws, garnishment or attorney fees, to change names on accts, to generate a mid-cycle periodic statement, to wrap loose coins, photocopying fees and statement returned to the CU for wrong address and locator fees.
When is an initial privacy notice required?
A CU must provide not later than when the CU establishes a customer relationship. For instance, a privacy notice must be provided to an individual not later than when that individual signs the membership agreement. Thus, a CU can provide the notice to a new member together with the membership agreement and signature card. A CU may always deliver a privacy notice earlier than required. If an existing member obtains a new financial product or service, then the CU is not required to provide another initial notice to that member if the earlier notice accurately covers the product.
Under which circumstance must a CU provide account disclosures?
A CU must provide the account disclosures to a consumer before an account is opened or service is provided, whichever is earlier. A CU is deemed to have provided a service when a fee required to be disclosed is assessed. If account opened and member not present, a CU must mail or deliver no later than 10 business days after the account is opened or the service is provided, whichever is earlier. If account opened electronically, must provide the disclosure before an account is opened or service is provided.
Other Reg. CC concepts What is a banking day? What is a business day? Reg. CC applies to what types of accounts?
A banking day in which the CU is open for substantially all of its banking functions. A business day is every day except Saturday and Sunday and legal holidays. Consumer, business and organizational transactional accounts (not savings and money market)
What is the difference between customer and consumers? Which group receives notices and an opportunity to opt out under Reg. P
A consumer is an individual who obtains or has obtained a financial product or service from a CU that is to be used primarily for personal, family or household purposes. A consumer may be a member or nonmember of the CU. This may be someone involved in an isolated transaction, such as using an ATM at a credit union where the person does not have a member relationship. A customer is a consumer who has a customer relationship with the CU. A customer relationship means a continuing relationship between a consumer and the CU where the CU provides one or more financial products or services to the consumer that are to be used primarily for personal, family or household purposes. Reg. P requires the annual privacy notice to be sent to "customers" /"members" for clarity. However, it is important to remember that non-members may also be customers entitled to receive the annual privacy notice as well.
How does Reg. D define a time deposit?
A deposit that imposes early withdrawal penalties if the member withdraws funds within six days after the date of deposit. The CU must also impose an early withdrawal penalty if the member makes a partial withdrawal within six days of a previous partial withdrawal. If these early withdrawal penalties are NOT imposed, the account should be classified as a savings account or a transaction account. Time deposit have set maturities. Reg. DD requires that they have a maturity of at least seven days from the date of deposit. (most commonly the date is 6 months to 5 years.)
If an email falls into the commercial content category; what are the restrictions on the message?
A prohibition against false or misleading header (source, destination and routing) information in spam or any transactional or relationship message; • A prohibition against deceptive subject headings in spam; • Mandatory inclusion in spam of information identifying it as an advertisement or solicitation, notice of the opportunity to decline to receive further spam from the sender, and the sender's physical address; • Mandatory inclusion of a functioning electronic return address or a comparable mechanism in spam; and • A prohibition against transmission of spam after objection (including transferring or releasing an email address after an objection). - A CU should take all reasonable steps necessary to ensure that third parties used do not violate CAN-SPAM's requirements
What is the definition of a remittance transfer?
A remittance transfer is an electronic transfer of funds requested by a sender to a designated recipient that is sent by a remittance transfer provider. The term applies regardless of whether the sender holds an account with the remittance transfer provider, and regardless of whether the transaction is also an electronic fund transfer, as defined in § 1005.3(b). It does not include 1) Small value transactions. Transfer amounts, as described in section 1005.31(b)(1)(i), of $15 or less or 2) Securities and commodities transfers. Any transfer that is excluded.
What types of transactions are covered by the Regulation E opt-in rule for overdrafts? What types of "overdraft" programs are not included?
ATM and one time debit card transactions (pin and signature) Checks, ACH transactions, wire transfers or recurring debit card transactions,
What are the permissible cutoff time for the receipt of deposits?
After a cut-off hour set by the depositary bank for the receipt of deposits of 2:00 p.m. or later, or, for the receipt of deposits at ATMs, contractual branches, or off-premise facilities, of 12:00 noon or later. A CU is not required to stay open until 2 p.m. If it closes before 2 p.m., deposits received after the closing may be considered deposited on the next banking day. Different cut-offs may be established for different types of deposits. For example, a 2 p.m. cut-off for receipt of check deposits and a later time for receipt of wire transfers. Also, ATMs may have a different cut-off hour than over-the-counter deposits.
3. What is an advertisement? What types of advertisements are exempt from some of the advertising rules?
An advertisement is a commercial message, in any medium, that promotes directly or indirectly the availability of, or a deposit in, a share account. The following are NOT advertisements: - Rate sheets published in newspapers, periodically, or trade journals, unless the CU pays a fee to have the information included or otherwise controls the publication. - In-person discussions initiated by a member or potential member. - In-person discussions with a member about the terms for a specific account.
What types of transactions are included in the term "electronic funds transfer" (EFT)?
An electronic funds transfer is any transfer of funds that is initiated through an electronic terminal, telephone, computer, or magnetic tape for the purpose of ordering, instructing, or authorizing a financial institution to debit or credit a consumer's account. Rather than memorizing the list, think of the reasons why certain transactions are covered and why others are not. • Point-of-sale (POS) transfers - including both PIN-based and signature-based; • ACH transfers; • ATM transfers; • Direct deposit or withdrawal of funds; • Transfers initiated by telephone; • Transfers initiated by debit card transactions - regardless of whether conducted through an electronic terminal; • Electronic transfers initiated using information from a paper check; and • Online bill payments. • Text message transfers This does not include paper checks, wire transfers,1 and certain automatic transfers occurring within the same financial institution
What is an affiliate?
Any company that is related by common ownership or common corporate control with another" There is a presumption that a CU has a controlling influence over a CUSO if the CU owns at least 67 percent of it.
How can a CU give notices under the privacy rule?
By mailing a printed copy of the notice to the member's last known address. A CU may also provide the annual notice electronically to members who have provided proper consent under the E-SIGN Act. The notice may also be given via the alternative delivery method which requires the CU to: • At least annually, include a "Notice of Availability" in a clear and conspicuous manner on an account statement, coupon book or other disclosure; • Post the CU's privacy notice continuously and in a clear and conspicuous manner on a page of the credit union's website on which the only content is the privacy notice; and • Mail the CU's privacy notice to members who request it by telephone within ten days of the request.
What is the difference between commercial content and transactional or relationship content?
Commercial content advertises or promotes a commercial product or service, including content on a website operated for a commercial purpose; Transactional or relationship content facilitates an already agreed-upon transaction or updates a customer about an ongoing transaction; and Other content - which is neither commercial nor transactional or relationship. E.g. educational
What is constructive sharing?
Constructive sharing is when a CU's CUSO gives the CU (or vice versa) a certain set of criteria. If the CU's members meet those criteria, the CU would then send out the CUSO's marketing materials. In this way, the marketing materials are sent to the desired members without sharing any private member information. This arrangement is not subject to the affiliate marketing rule, as no consumer information is shared among affiliates.
What are the rules surrounding a member's ability to opt out? Can it expire? Can it be revoked.
Consumers may opt out at any time and the election must be effective for at least 5 years from when the opt out is received and implemented (Reg. V), but it may expire afterwards. However, the opt out must be honored indefinitely if the opt out is included on the credit union's privacy notice Reg. P. Regulation V gives examples that are similar to the reasonable opt out procedures in Regulation P. Examples include self-addressed envelopes with the reply form and opt out notice would comply, as would a toll free number. Conversely, requiring a member to write a letter or call or write to obtain an opt out form are not reasonable. May provide a single opt-out notice to joint account holders. The notice should indicate whether an opt out by one member would be considered an opt out by all joint account holders, or whether each must opt out separately. In the case of an expiring opt out, a CU must send a renewal notice to the affected consumer with specific information. The information would indicate that the member had previously opted out, inform him or her that the opt out has or will expire, and give the member the means to opt out again. CUs may send a combined notice that contains both a permanent privacy opt out and a limited affiliate marketing opt out, the notice must be clear as to the affiliate marketing opt out limitations.
What are the exceptions for sharing information without following the notice and opt-out rule? To take advantage of the service provider and joint marketing exception, does the CU have to do anything regarding 3rd parties?
Exception for Agreements with Service Providers and Joint Marketers (106.13) Processing and Servicing Transactions Exceptions (1016.14) Other General Exceptions (1016.15) - consumer has consented and does not revoke the consent to the specific disclosure, o comply with a properly authorized subpoena or with federal, state or local laws, to protect the confidentiality or security of the credit union's member records; Chapter 4 - BSA, Privacy and Security 509 Privacy of Member Information, a person acting in a fiduciary or representative capacity on behalf of the consumer; the CU's auditors, attorneys and accountants; a consumer reporting agency in accordance with the Fair Credit Reporting Act; or a law enforcement agency in accordance with the Right to Financial Privacy Act. Yes, it must satisfy two conditions: First, the CU must describe the disclosure in its privacy notice. Second, it must have an agreement with the recipient that prohibits it from using the information other than for the purposes for which it received the information and that it will maintain the confidentiality of the information.
What is the timing requirement for sending periodic statements? Is there a difference in timing depending on whether an EFT occurred or not? If so, what is the difference?
For an account to or from which electronic fund transfers can be made, a financial institution shall send a periodic statement for each monthly cycle in which an electronic fund transfer has occurred; and shall send a periodic statement at least quarterly if no transfer has occurred Yes, the timing depends on whether or not an electronic funds transfer has been conducted in the preceding months and not whether the account has the ability to conduct an electronic funds transfer. If no electronic funds transfers have occurred, the credit union is only required to send periodic statements on a quarterly basis. However, if an electronic funds transfer has occurred in the prior month the credit union is required to send a statement for that month. The staff commentary indicates that if the credit union usually sends statements quarterly it must send interim statements corresponding to the month where an electronic funds transfer has occurred. o Thus, if the credit union usually sends periodic statements at the end of March, June, September and December, and the member conducts electronic funds transfers in February and October, the credit union would need to send a periodic statement for those months in addition to its regular quarterly statements.
What are the funds availability disclosure? requirements?
General disclosures must be clear and conspicuous, in writing, and except for disclosures posted where employees accept deposits, at ATMs or on preprinted deposits slips, must be in a form the consumer may keep. If they are contained in a document that sets forth other account terms, they must be highlighted in some way (i.e., under a separate heading). Specific Availability Policy Disclosure - The CU must provide members with a disclosure, before an account is opened, that describes the funds availability policy followed by the CU The disclosure should include: A summary of the availability policy; A description of the categories of deposits or checks used to determine a delay in availability; when funds from those categories will be available; and an explanation of how to determine the category to which a deposit belongs; A description of any exception holds the CU may impose; A description of any case-by-case hold policy; and A description of how a member may differentiate between a proprietary and nonproprietary ATM. Additional Disclosure Requirements Deposit Slips. Preprinted deposits slips must include a notice that deposits may not be available for immediate withdrawal. Locations Where Employees Accept Consumer Deposits. Such locations must have posted in a conspicuous place a notice that provides the funds availability policy for deposits. The staff commentary notes that the disclosure does not need to be at each teller window, but must be placed in a location where consumers are likely to see it before making their deposits (i.e., at the teller line). This notice is not required at drive through windows or night depository boxes. ATMs. The CU must post at its ATMs a notice that funds deposited at the ATM may not be available for immediate withdrawal. If the CU operates an off premises ATM and does not remove deposits from it more than twice a week, it must disclose at or on the ATM the days on which funds will be considered received. Upon Request. The specific availability disclosure required to be provided before account opening must also be provided to anyone upon oral or written request. Changes in Policy. Generally, the CU should provide a change in terms notice to its members 30 days in advance of the effective date of the change. However, if the change expedites funds availability, the CU may provide the change in terms disclosure not later than 30 days after the change. The staff commentary provides that the notice may be provided in any form so long as it is clear and conspicuous; if the CU delivers it in a brand in a brand new set of account disclosures, the change must be highlighted in some manner.
Which law is implemented by Reg. P? What federal agency has rule making authority regarding Reg. P?
Gramm Leach Bliley Act of 1999 and Consumer Financial Protection Bureau (CFPB)
When is the CU required to provide an opt-out notice?
If a CU wishes to disclose nonpublic personal information to affiliates or to nonaffiliated third parties outside of the enumerated exceptions, it must comply with the notice and opt out requirements of section 1016.10. A CU must provide the disclosures in its initial and annual notices, describe the consumer's right to opt out of the disclosure and give a reasonable opportunity for consumers to opt out of those disclosures. Regulation P provides three examples: If CU provides the notice by mail, it provides a reasonable opportunity to opt out by allowing the consumer to opt out by mailing a form or calling a toll free number, or providing other reasonable means within 30 days from when the credit union mailed the notices. 2. If a member opens an account and agrees to receive the notices electronically, the CU provides a reasonable means to opt out by allowing the member to opt out within 30 days after the date the member acknowledges receipt of the notices in conjunction with opening the account. 3. For an isolated transaction, such as the consumer's purchase of a traveler's check, the credit union provides the consumer with a reasonable opportunity to opt out if it provides the notices at the time of the transaction and requests that the consumer decide whether to opt out before completing the transaction.
What are the safe harbor requirements for the remittance transfer rule?
If a credit union has provided 100 or fewer remittance transfers in the previous calendar year and the current calendar year, a credit union falls under the safe harbor provision, and it would not be considered a remittance transfer provider and would not have to comply with the regulatory requirements for remittance transfers.
When can CU advertise an account as free?
If the account has NO maintenance or activity fee. Maintenance fees include fee imposed when a minimum balance requirement is not met or when the consumer exceed a specified number of transactions, transaction and service fees that a consumer reasonably expect to be imposed on a regular basis, a flat fee such as a monthly service fee, and fees for deposits, withdrawals, transfers of funds (per check or transaction fee).
Does consent have to be provided electronically?
In general, yes. The member must be able to reasonably demonstrate the ability to access information electronically that is the subject of the affirmative consent. Note: Some disclosures can be provided electronically without completing full E-Sign Act consent. One exception Reg. Z periodic statements for mortgages loans in which member provides affirmative consent, but not full E-Sign consent.
Does consent apply to one category of transactions or to all transactions?
It depends on the disclosure. The CU disclosure must inform the consumer of whether the consent applies (I) only to the particular transaction which gave rise to the obligation to provide the record, or (II) to identified categories of records that may be provided or made available during the course of the parties' relationship."
What is the importance of receiving a certification of compliance?
It serves as a safe harbor to the CUs to release member records to a government authority in which the government authority states that it has complied with U.S.C. 3403 (b). If CU releases information without the certificate it may be liable for violating the Right to Financial Privacy Act.
What are the various requirements of the consent process?
Member must opt in affirmatively consent to electronic disclosures and it must be made or confirmed electronically. The member must consents electronically, or confirms his or her consent electronically, in a manner that reasonably demonstrates that the consumer can access information in the electronic form that will be used to provide the information that is the subject of the consent." For example, test drive process in which member retrieves a code after opening disclosures.
Know the funds availability rules. Expect to apply the rules in difference fact pattern situations.
Next day availability - Cash, electronic payments and certain check deposits must be made available for withdrawal the business day after the banking day on which they were received. These checks are: US Postal Service money orders; Federal Reserve Bank and Federal Home Loan Bank checks; state or local government checks deposited at an institution in the same state as the payor; on-us checks; and cashier, teller or certified checks. To qualify for next-day availability these checks must be deposited in person at a staffed teller station to an account held by the payee. In general, if the checks do not meet the criteria for next day availability, they will be treated as local checks $200 Rule. The CU must make available the next business day the lesser of $200 or the aggregate of all check deposits not already subject to next-day availability. If the member deposited $200 by check, the CU would need to make the entire $200 available by the next business day. If the member deposited two $200 checks, the CU would need to make $200 available the next business day. This rule applies to checks that are not already subject to next-day availability, but does not apply to checks deposited at nonproprietary ATMs. Second-Day Availability. Local checks must be made available for withdrawal no later than the second business day following the banking day on which the checks are deposited. This would be the amount in excess of the first $200 discussed above. In addition, checks that do not satisfy the requirements for next-day availability must be made available on the second business day following the day of deposit. $400 Rule. This rule determines when a CU must make check deposits available for cash withdrawals. In essence, the CU eeds to make a local check available for check withdrawals on the second business day after the day of deposit; however, only$400 of the deposited funds need to be available for cash withdrawals no later than 5:00 p.m. on that same day. At the start of the third business day after the day of deposit, the member must be able to withdraw the entire amount in any manner. Let's look at a rule that includes the $200 rule, second-day availability and the $400 rule. John Member deposited a $1,000 check on Monday. On Tuesday, $200 of that must be available for cash and/or check withdrawals. On Wednesday, the remaining $800 must be available for check-writing purposes, and $400 of it needs to be available for cash withdrawal by 5:00 p.m. On Thursday, the member must be able to withdraw the entire amount in any manner. Nonproprietary ATMs. Cash or check deposits at nonproprietary ATMs must be made available no later than the fifth business day after the day of deposit. The provisions requiring a depository bank to make up to $200 of an aggregate daily deposit available for withdrawal on the first business day after the banking day of deposit do not apply to deposits at a nonproprietary ATMs. Reg. CC availability schedule When funds must be made available is measured by the number of business days following the banking day on which the deposit is made. Funds must be made available at the start of the business day. Thus, the day funds are scheduled to be made available, they must be made available by the later of 9:00 a.m. or the time the CU's t ller facilities (including ATMs) are available for account withdrawals. For example, if the CU has 24-hour ATM service and teller facilities that open at 10:00 a.m., funds must be available for ATM withdrawal at 9:00 a.m. and available for withdrawal by 10:00 a.m. at the teller lines. Note that the timing is different in regards to the $400 rule discussed below.
Can credit unions require members to repay a loan electronically in order to be approved for credit? What can the credit union offer to incentivize its members that agree to repay using EFTs?
No Lower rate or fees on loans that have automatic repayment
When is an annual notice not required?
No annual notice is required where the CU does not share information with third parties in a way that triggers the member's opt-out rights and there have been no changes to the information sharing policies and practices which were last disclosed to the member
5. Does TIS require a periodic statement? If no, what regulation might?
No, Truth-in-Savings does not require periodic statements. However, Reg. E may require such statements. Note: TIS defines periodic statement that set for information about an account (other than a term share or passbook account).
Can credit unions offer different account terms to members who do not opt-in to overdraft to opt-in?
No, must treat members who do not opt-in the same as members who do opt-in.
What information is protected by Reg. P?
Non-public personally identifiable financial information (PII). The Act covers lists derived derived from CU records.
Are there any exceptions to the error for remittance transfers definition? If so, what are they?
One important exception to the definition of error is where the funds were sent to the wrong account because the sender provided the credit union with the wrong account number or institution identifier (such as a routing number). To take advantage of this exception, the credit union must comply with the conditions listed in section 1005.33(h), which requires that the credit union: Can demonstrate that the sender provided the incorrect account number or institution identifier; Used reasonably available means to verify the institution identifier and institution name information provided by the sender; Provided notice to the sender before payment that the sender could lose the transfer amount if the sender provided incorrect information; and Attempted to recover the funds.
Does the Right to Financial Privacy Act address federal and state requests?
Only federal requests (government and agencies)
What are the two options the credit union has for a timeline and the requirements accompanying each timeline?
Option 1 - CU has 10 business days to complete the investigation. Must correct errors within 1 business day after determination Must notify the member within 3 business days of the outcome Option 2 - Unable to complete within 10 business days. Take up to 45 business days to conduct investigation Provisionally credit members account for amount of alleged error within 10 business days of notice Notify member within 2 business days of the provisional credit in the account Provide member full use of the provisionally credit funds during investigation Corrects any errors within 1 business day from determination Notifies member of results within 3 business days of completion of investigation Notes: 10 business days may be expanded to 20 for alleged errors in accounts opened within prior 30 calendar days. 45 days may be extended to 90 if transaction either 1) not in state (foreign transaction), 2) POS using debit card, or 3) occurred within 30 calendar days of 1st account deposit.
2. CUs can call accounts by certain names. What are the permissible names? What are the prohibited names?
Permissible names are: - Checking Account may be used to describe a share draft account - Money Market Account may be used to describe money market share accounts. - Share Certificate, Certificate Account or Certificate may be used to describe term share accounts. Prohibited names are: - Deposit Account may not be used to describe a share account. Funds paid into a share account establish members as owners of the CU. Conversely, funds paid into a deposit account do not establish an ownership interest in a financial institution. - Interest. Do not describe dividends as interest. Dividend payments are a return on an equity (ownership) investment. Interest payments are a return on a debt investment (deposits). State-chartered CU may offer interest on accounts if permitted by state law. - CD or Certificate of Deposit may not be used to describe a share certificate. Again, we offer share accounts - not deposit accounts. State-chartered CU may offer certificates of deposit if permitted by state law.
9. What terms must be disclosure in account opening disclosures?
Rate Information - The annual percentage yield and the dividend rate as applicable. Compounding and Crediting - The frequency with which dividends are compounded and credited. If a consumer will forfeit dividends if he/she closes the account before accrued dividends are credited, the CU must state that dividends will not be paid. Balance Information - Any minimum balance requirements, and how the balance is determined to avoid fees or to obtain the APY. This section must also include the balance computation method. Fees - The amount of any fee that may be imposed in connection with an account and the conditions under which the fee may be imposed. Maintenance fees, such as monthly service fees; • Fees to open or to close an account; • Fees imposed upon dormant and inactive accounts; • Fees related to deposits or withdrawals, such as fees for use of the institution's ATMs; • NSF fees; and • Fees for special services Transaction Limitations - Any limitations on the number or dollar amount of withdrawals or deposits. For example, Reg. D limits (no more than 6 checks or withdrawals) Features of Terms Share Accounts • Time requirements; • Early withdrawal penalties; • Disclosures related to the withdrawal of dividends prior to maturity; and • Renewal policies, such as whether an account will, or will not, renew automatically at maturity. Bonuses • The amount or type of any bonus; • When the bonus will be provided; and • Any minimum balance and time requirements to obtain the bonus
Which types of transactions must be restricted in order for an account to be classified as a savings account under Reg. D?
Restricted transactions (total of 6 per month) Transfers and withdrawals to another account of the same member at the same CU or to a third party by means of: - Preauthorized or automatic transfers (i.e. linked savings to checking for overdrafts); - Telephone or fax; - Home or internet banking; or - Check, draft, debit card, or similar order payable to third parties.
When are funds considered deposited?
Staffed facility, ATM or contractual branch( or proprietary ATM of contractual branch) deposited when they are received. Drop box in lobby - In general deposited when placed in the box. However, the CU may treat deposits to lobby boxes the same as deposits to night deposit boxes if it provides a notice on the lobby box that states when the deposits will be considered deposited. Mailed funds - deposited on the day they are by CU. The day they are received is the day the mail is delivered to the CU, even if the mail is initially delivered to a mailroom rather than the check processing area. Night depository, lock box or similar facility are considered deposited on the day on which the deposit is removed from such facility and is available for processing by the CU. If funds normally are removed from the ATM not more than 2 times each week, or at an ATM that is not on, or within 50 feet of, the premises of the depositary bank are considered deposited on the day the funds are removed from the ATM Funds are considered deposited on the next banking day, in the case of funds that are deposited: - On a day that is not a banking day for the depositary bank; or - After a cut-off hour set by the depositary bank for the receipt of deposits of 2:00 p.m. or later, or, for the receipt of deposits at ATMs, contractual branches, or off-premise facilities, of 12:00 noon or later.
What types of accounts are covered under NCUA's Truth in Savings Rule?
The Act applies to a "covered account" held by a "member". An account is a share, share draft, checking and term share account (e.g. IRA, accts held for minors under UTMA, and payable upon death accts (PODs). A member is natural persons who hold accounts primarily for personal, family or household purposes). The Act DOES NOT apply to accounts held by non-natural persons (i.e., business associations) or accounts held for commercial purposes (i.e., a purpose other than personal, family or household purposes). A covered accounts DOES NOT include mortgage escrow accounts for collecting taxes and property insurance, accounts opened by an executor in the name of a decedent's estate, and trust accounts opened by a trustee under a formal written trust agreement.
What is required for a credit union to do sharing covered under the Rule?
The CU must 1) disclosure the information sharing practice to the member/consumer; 2) the member/consumer has a reasonable opportunity to opt out; and 3) the member/consumer does not opt out.
How must overdraft protection fees be disclosed on periodic statement? Are any fees exempt from this requirement? If yes, which fees?
The CU must disclose the total dollar amount of all fees imposed on the account for paying checks or other items when there are insufficient funds and the account becomes overdrawn using the term "Total Overdraft Fees" for both the statement period and for calendar year-to-date. Yes, there are fees exempt from this requirement which are fees for transferring funds from another account to avoid an overdraft or fees charged when the CU has previously agreed in writing to pay items that overdraw the account and the service is subject to Reg. Z.
Understand the general relationship between Reg. CC and state law funds availability policies
The EFA Act indicates that any state law that provides for availability in a shorter period of time than required by federal law is applicable to all federally insured institutions in that state, including federally chartered institutions. If a state law provides shorter availability only for deposits in accounts in certain categories of banks, such as commercial banks, the superseding state law continues to apply only to those categories of banks, rather than to all federally insured banks in the state. Provisions of state law that are inconsistent with the EFA Act and Regulation CC are preempted.
What are the member notice requirements for the error resolution process?
The error resolution procedure begins when a member informs the credit union of an error within sixty days after the periodic statement showing the error is sent. The notice needs to identify the member's name and account number or other unique identifier and provide known information about the type, date and amount of the alleged error. May be provided orally or in writing CU may require oral in writing within 10 business days
CU can retain records in electronic form if what conditions are met?
The records must accurately reflect the information in the original document, must be accessible and must be capable of being accurately reproduced. Record retention requirements can be satisfied with either an electronic image of an original hard copy or an electronic record of the information itself (such as information originated etronically).
Review the Special Situations and the reasons for the outcomes in the member's liability for the transaction.
The regulation states the definition does not include a situation where the member acts with fraudulent intent or a transaction conducted in concert with the member. Thus, if a member gives his brother his ATM card and PIN with the understanding the brother will withdraw money and the member will claim an unauthorized transfer - this transaction might not fall under the definition of an "unauthorized electronic funds transfer." If the member provides another person with authorization to make transfers from the account, the member can be held fully liable if the other person exceeds their authority or continues to make transfers after the authority has been removed - provided the member has not notified the credit union of the revocation of authority. This makes sense as the member has provided the authorization to the other person that prevents the transfers from being unauthorized. If the member revokes the authority in June and notifies the credit union of the revocation, further transfers by the other person in July and August could be considered unauthorized funds transfers. If the member's account is accessed as a result of a robbery or fraud, such as phishing or card skimming, the transactions are unauthorized. Similarly, if a member is forced to conduct a transaction (i.e., forced to input their card and PIN at an ATM under threat of violence), the transactions are unauthorized even though the member was the one who conducted the transaction. In situations where the member has been negligent with their debit card or account information, the credit union cannot push higher liability onto the member. The credit union is still required to follow the liability thresholds laid out in section 1005.6. Here is the language from the staff commentary: "Negligence by the consumer cannot be used as the basis for imposing greater liability than is permissible under Regulation E. Thus, consumer behavior that may constitute negligence under state law, such as writing the PIN on a debit card or on a piece of paper kept with the card, does not affect the consumer's liability for unauthorized transfers." Similarly, the staff commentary indicates the credit union cannot have members agree to accept greater potential liability for unauthorized transactions under Regulation E. Think of the liability thresholds as maximums - if the member provides the required notice within the required timeframe the credit union cannot hold the member liable for more than the amount in Regulation E.
What are the various exception holds?
The rule provides six exceptions to the general availability schedules. . - New Accounts. An account is considered "new" for the first 30 days it is open. This exception is intended for members that do not currently have a transaction account at the CU. Thus, if a member already has one, an additional accounts would not be a "new" account for purposes of this exception. Under this exception, next-day availability applies to cash, electronic deposits and the first $5,000 of most other next-day items; the remaining funds of the next day items must be made available on the ninth business day. The CU may choose your availability schedule for on-us checks and local checks. - Large Deposits. The CU may extend the hold periods when funds, other than cash or electronic deposits, over $5,000 are deposited by a member in any one banking day. The extended hold may be placed on funds in excess of $5,000 and you may aggregate deposits made by that member to any of his or her accounts, even joint accounts. Redeposited Checks. The CU can place an extended hold on a check that had previously been deposited and returned unpaid. This exception does not apply to checks that were returned because they were post-dated and are no longer post-dated, or to checks that were returned due to a missing indorsement and the eindorsement is no longer missing. - Repeated Overdrafts. If the member's account(s) has been repeatedly overdrawn the availability rules for checks do not apply for 6 months after the last overdraft. There is a specific definition in the rule for what constitutes a repeatedly overdrawn account. The CU may consider an account to be repeatedly overdrawn if: • On six or more banking days within the preceding six months, the account balance is negative, or the account balance would have become negative if checks or other charges to the account had been paid; or • On two or more banking days within the preceding six months, the account balance is negative, or the account balance would have become negative, in the amount of $5,000 or more, if checks or other charges to the account had been paid. - Reasonable Cause to Doubt Collectability. This exception can apply when the CU has reasonable cause to believe the check is uncollectible. This belief must be based on a set of facts particular to the check and not on the fact that the check is of a particular class or is deposited by a particular class of persons. For example, this exception could not be applied to a check simply because it is a cashier's check, absent other facts particular to that check. - Emergencies. It permits it to place an extended hold on deposits in cases of emergencies beyond the CU's control. Note: Exception Hold Times. Except for new accounts and emergency holds, the regulation provides a safe harbor for what is considered a reasonable extended hold. It defines a "reasonable period of time" as one additional business day for on-us checks, 5 additional business days for local checks, and 6 additional business days for deposits at nonproprietary ATMs. CUs may impose longer holds but have the burden of proving the period is reasonable.
What sharing is governed by the affiliate marketing rule?
The sharing of "eligibility information" between a CU and its affiliate (or vice versa) is restricted and cannot be used to make solicitations for marketing purposes unless the sharing arrangement is provided in the disclosure, member has reasonable opportunity to opt out and does not opt out. Reg. V defined eligibility information as "any information which would be in a consumer report if the exclusions from the definition of consumer report under FCRA did not apply.
How does Regulation E define an EFT error?
The term "error" means: • An unauthorized electronic fund transfer; • An incorrect electronic fund transfer to or from the consumer's account; • The omission of an electronic fund transfer from a periodic statement; • A computational or bookkeeping error made by the financial institution relating to an electronic fund transfer; • The consumer's receipt of an incorrect amount of money from an electronic terminal; • An electronic fund transfer not identified in accordance with §1005.9 or §1005.10(a); or • The consumer's request for documentation required by §1005.9 or §1005.10(a) or for additional information or clarification concerning an electronic fund transfer, including a request the consumer makes to determine whether an error exists under paragraphs (a)(1)(i) through (vi) of this section. The term "error" does not include: • A routine inquiry about the consumer's account balance; • A request for information for tax or other recordkeeping purposes; or • A request for duplicate copies of documentation.
What is the definition of an error for remittance transfers?
This provision defines "error" to include: An incorrect amount paid by a sender in connection with a remittance transfer unless the disclosure stated an estimate and the difference results from the application of actual exchange rates, fees and taxes; A computational or bookkeeping error made by the remittance transfer provider; The failure to make available to a designated recipient the amount of currencydisclosed to the sender; Failure to make funds available to a designated recipient by the date of availability stated in the disclosure provided to the sender; and The sender's request for documentation required by Section 1005.31 or additional information or clarification concerning the remittance transfer.
What is the different timeframes for member notification of an unauthorized transaction? What is the member's liability for each timeframe?
Timely notice of loss or theft given within 2 business days of learning of the loss or theft Timely notice of loss or theft NOT given within 2 business days of learning of the loss or theft Timely notice NOT given after periodic statement delivered. Time notice given - the lesser of the loss or $50 Timely notice Not Given - the lesser of the loss or $500 The member can be held fully liable for unauthorized transactions that occur more than sixty days after the delivery of a periodic statement and prior to notice to the credit union. - 1st two tiers - 3rd works in conjunction with two tiers Note: The first two tiers of liability do not apply to unauthorized transfers from a member's account made without an access device
What does the Right to Financial Privacy Act require the government to have? What does it do to required financial records?
To obtain a member's financial records, a government must have one of the following: - An authorization, signed and dated by the member, that identifies the records being sought, the reasons for the request and the customer's rights under the RFPA; • An administrative subpoena or summons that meets the requirements of 12 U.S.C. § 3405, which, among other things, requires a copy of the subpoena or summons to be served on the member; • A search warrant that meets the requirements of 12 U.S.C. § 3406, which, among other things, requires a copy of the search warrant to be mailed to the member; • A judicial subpoena that meets the requirements of 12 U.S.C. § 3407, which, among other things, requires a copy of the subpoena or summons to be served on the member; or • A formal written request by a government agency that meets the requirements of 12 U.S.C. § 3408, which, among other things, requires a copy of the subpoena or summons to be served on the member and which limits the use of such a formal written request to situations where no administrative summons or subpoena authority is available. Allows there release to the federal agency and limits duties of CUs
Which transactions are not considered unauthorized transfers?
Transactions in which the member gives another party authorization to make transfers. Transactions in which the member acts with fraudulent intent or a transaction conducted in concert with the member. Thus, if a member gives his brother his ATM card and PIN with the understanding the brother will withdraw money and the member will claim an unauthorized transfer - this transaction might not fall under the definition of an "unauthorized electronic funds transfer." Note: An unauthorized electronic funds transfer is an "electronic funds transfer from a consumer's account initiated by a person other than the consumer without actual authority to initiate the transfer and from which the consumer receives no benefit. For example, robbery, fraud (such as phishing or card skimming, or a member is forced to input his or her card and PIN an ATM under threat of violence.
What types of transfers are covered by the remittance transfer rule?
Transfers where the sender provides cash or another method of payment to a money transmitter or financial institution and requests that funds be sent to a specified location or account in a foreign country; Consumer wire transfers, where a financial institution executes a payment order upon a sender's request to wire money from the sender's account to a designated recipient; An addition of funds to a prepaid card by a participant in a prepaid card program, such as a prepaid card issuer or its agent, that is directly engaged with the sender to add these funds, where the prepaid card is sent or was previously sent by a participant in the prepaid card program to a person in a foreign country, even if a person located in a state (including a sender) retains the ability to withdraw such funds; International ACH transactions sent by the sender's financial institution at the sender's request; and Online bill payments and other electronic transfers that a sender schedules in advance, including preauthorized remittance transfers, made by the sender's financial institution at the sender's request to a designated recipient. What is NOT covered are A consumer's provision of a debit, credit or prepaid card, directly to a foreign merchant as payment for goods or services because the issuer is not directly engaged with the sender to send an electronic transfer of funds to the foreign merchant when the issuer provides payment to the merchant; • A consumer's deposit of funds to a checking or savings account located in a state, because there has not been a transfer of funds to a designated recipient; and Online bill payments and other electronic transfers that senders can schedule in advance, including preauthorized transfers, made through the website of a merchant located in a foreign country and via direct provision of a checking account, credit card, debit card or prepaid card number to the merchant, because the financial institution is not directly engaged with the sender to send an electronic transfer of funds to the foreign merchant when the institution provides payment to the merchant.
4. What terms in an advertisement would trigger additional disclosures? What are the additional disclosures that must be included in the advertisement?
Trigger terms, such as "annual percentage yield" or "bonus" would trigger additional disclosures. If an ad states, "APY" certain disclosure may be triggered which include: - Variable Rates - Variable rate accounts must state the rate may change after the account is opened. - Time Annual Percentage Yield (APY) Offered - Must state the period time the APY will be offered. Alternatively may state APY is accurate as of a specific date. - Minimum Balance - For accts that have a required minimal balance, the ad must state the minimum balance required to obtain the advertised APY. - Minimum Opening Deposit - For accts that require a minimum deposit to open the account, the ad must state the minimum deposit required to open the account, if it is greater than the minimum balance necessary to obtain the advertised APY. - Effect of Fees - An ad must state that fees could reduce earnings on the account. This requirement only applies to maintenance or activity fees. - Features of Share Certificate Accounts - The ad must include: o Term of the account; o Early withdrawal penalties - A statement that a penalty will or may be imposed on early withdrawals; and o Required dividend payouts - A statement that dividends cannot remain on deposit and that payout of dividends is mandatory for non-compounding time accounts with the certain features outlined in the regulation. If an ad states a "bonus", it must include the following: - "Annual percentage yield" using that term; - Time requirement to obtain the bonus; - Minimum balance required to obtain the bonus; - Minimum balances 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. Note: General statements such as "bonus checking" or "receive a bonus" when you open a checking account do not trigger the bonus disclosure.
What are some potential consequences of improper E-Sign consent?
Ultimately, a court could determine the disclosures were never properly delivered to the member. For example, Regulation E's error resolution procedures rely on the timing of a periodic statement. If that statement was sent electronically, without proper E-SIGN Act consent, the "clock" for the member's claims of unauthorized transactions might not E-SIGN Act begin as the periodic statement was not properly delivered. Alternatively, a member could attempt to challenge the credit union's "change-in-terms" for his or her credit card account if the credit union sent the notice electronically and the member had not electronically consented — arguing the change is null and void for that member. Section 101(c)(3) of the E-SIGN Act does indicate the failure to obtain proper consent would not prevent a contract from being valid and enforceable. In conclusion the account may be valid but the lack of proper disclosures could be in violation of the relevant regulation (Regulation E, Regulation Z, Truth in Savings, etc.).
Which transactions are unrestricted on a savings account for Reg. D?
Unrestricted Transactions - Transfers into the account; - Transfers to repay the member's loan and associated expenses at the CU; and - Transfers to another account of the same member at the same CU or withdrawals directly to the member when made: **By mail or messenger; **At an ATM; **In person, or ** By telephone, when the transaction results in a check mailed to the depositor.
What is SPAM?
Unsolicited commercial email messages
When is a revised notice required?
When a CU changes its policies and practices regarding disclosures to nonaffiliated third parties so that its most recent notices are inaccurate, then the credit union may not disclose the information unless it provides revised privacy and opt out notices. Example include • The CU disclosing a new category of nonpublic personal information to any nonaffiliated third party; • The CU disclosing nonpublic personal information to a new category of nonaffiliated third party; or • The CU disclosing nonpublic personal information about a former member to a nonaffiliated third party, if that former member has not had an opportunity to exercise an opt out regarding that disclosure. For example, if a CU 's prior notices stated that it does not share information with nonaffiliated third parties, other than through the exceptions, the CU would need to provide a revised notice before it could change this practice and begin sharing with nonaffiliated third parties in ways that are not covered by the exceptions. Note: A notice may remain accurate if the CU intends to disclose the same categories of information to a new company that fits within one of the categories of nonaffiliated third parties that it described in the previous notices.
What triggers a change in terms notification? If you must send one, what is the timing requirement? What are some of ways a CU may provide this notice?
When there is change in a term that is required to be disclosed at account opening that either reduces the annual percentage yield or adversely affect the consumer. The notice must be mailed or delivered at least 30 calendar days before the change takes effect and include the effective date of the change. The notice may be provided on or with the regular periodic statement or in another mailing such as a highlighted portion of a newsletter or statement stuffer.
Are overdraft programs subject to enhanced advertising requirements? If yes, what are the requirements?
Yes, overdraft programs are subject to ad requirements unless an exception applies. The enhanced requirements are to disclose all of the following: - The fees 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 member must repay or cover an overdraft; - The circumstance under which the CU will not pay an overdraft
Do electronic documents and disclosures carry the same legal weight as paper documents in most situations?
Yes, the are valid and enforceable under the E-Sign Act provided certain criteria is met. E-sign allows CUs to open online memberships and loans.
Is the credit union required to provide notification to the member after it completes its Reg. E investigation?
Yes, within 3 days after completion of the investigation.
What types of accounts are covered under Reg. E
• An "Account" means a demand deposit (checking), savings, or other consumer asset account (other than an occasional or incidental credit balance in a credit plan) held directly or indirectly by a financial institution and established primarily for personal, family, or household purposes. • The term includes a "payroll card account" which is an account that is directly or indirectly established through an employer and to which electronic fund transfers of the consumer's wages, salary, or other employee compensation (such as commissions), are made on a recurring basis, whether the account is operated or managed by the employer, a third-party payroll processor, a depository institution or any other person. • The term does not include an account held by a financial institution under a bona fide trust agreement
