|
[Main Tabs]
[Table of Contents - 6500]
[Index]
[Previous Page]
[Next Page]
[Search]
6500 - Consumer Protection
{{12-31-07 p.7429}}
PART 230—TRUTH IN SAVINGS (REGULATION DD)
Sec.
230.1
Authority, purpose, coverage, and effect on state laws.
230.2
Definitions.
230.3
General disclosure requirements.
230.4
Account disclosures.
230.5
Subsequent disclosures.
230.6
Periodic statement disclosures.
230.7
Payment of interest.
230.8
Advertising.
230.9
Enforcement and record retention.
230.10
[Reserved]
230.11
Additional disclosure requirements for institutions advertising the
payment of overdrafts.
Appendix A to Part
230—Annual Percentage Yield Calculation
Appendix B to Part
230—Model Clauses and Sample Forms
Appendix C to Part
230—Effect on State Laws
Appendix D to Part
230—Issuance of Staff Interpretations
Supplement I to Part
230—Official Staff Interpretations
AUTHORITY: 12 U.S.C. 4301
et seq.
SOURCE: The provisions of this Part 230 appear at 57 Fed. Reg.
43376, September 21, 1992, effective September 21, 1992, but compliance
is optional until March 21, 1993.
§ 230.1 Authority, purpose, coverage, and effect on state laws.
(a) Authority. This part, known as Regulation DD, is
issued by the Board of Governors of the Federal Reserve System to
implement the Truth in Savings Act of 1991 (the act), contained in the
Federal Deposit Insurance Corporation Improvement Act of 1991 (12
U.S.C. 4301 et seq., Pub. L. 102--242, 105 Stat. 2236). Information
collection requirements contained in this part have been approved by
the Office of Management and Budget under the provisions of 44 U.S.C.
3501 et seq. and have been assigned OMB No. 7100--0255.
(b) Purpose. The purpose of this part is to enable
consumers to make informed decisions about accounts at depository
institutions. This part requires depository institutions to provide
disclosures so that consumers can make meaningful comparisons among
depository institutions.
(c) Coverage. This part applies to depository
institutions except for credit unions. In addition, the advertising
rules in § 230.8 of this part
apply to any person who advertises an account offered by a depository
institution, including deposit brokers.
(d) Effect on state laws. State law requirements that
are inconsistent with the requirements of the act and this part are
preempted to the extent of the inconsistency. Additional information on
inconsistent state laws and the procedures for requesting a preemption
determination from the Board are set forth in
appendix C of this
part.
[Codified to 12 C.F.R. § 230.1]
§ 230.2 Definitions.
For purposes of this part, the following definitions apply:
(a) Account means 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. For
purposes of the advertising requirements in
§ 230.8 of this part, the
term also includes an account at a depository institution that is held
by or on behalf of a deposit broker, if any interest in the account is
held by or offered to a consumer.
(b) Advertisement means a commercial message, appearing
in any medium, that promotes directly or indirectly;
(1) The availability or terms of, or a deposit in, a new account;
and
(2) For purposes of § 230.8(a), and § 230.11 of this part,
the terms of, or a deposit in, a new or existing account.
{{12-31-07 p.7430}}
(c) Annual percentage yield means 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
and calculated according to the rules in
appendix A of this
part.
(d) Average daily balance method means 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.
(e) Board means the Board of Governors of the Federal
Reserve System.
(f) Bonus means 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.
(g) Business day means a calendar day other than a
Saturday, a Sunday, or any of the legal public holidays specified in 5
U.S.C. 6103(a).
(h) Consumer means 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 a natural person who
holds an account for another in a professional capacity.
(i) Daily balance method means the application of a
daily periodic rate to the full amount of principal in the account each
day.
(j) Depository institution and institution
mean an institution defined in section 19(b)(1)(A)(i)--(vi) of the
Federal Reserve Act (12 U.S.C.
461), except credit unions defined in section 19(b)(1)(A)(iv).
(k) Deposit broker means any person who is a deposit
broker as defined in section 29(g) of the Federal Deposit Insurance Act
(12 U.S.C. 1831f(g)).
(l) Fixed-rate account means an account for which the
institution contracts to give at least 30 calendar days advance written
notice of decreases in the interest rate.
(m) Grace period means a period following the maturity
of an automatically renewing time account during which the consumer may
withdraw funds without being assessed a penalty.
(n) Interest means any payment to a consumer or to an
account for the use of funds in an account, calculated by application
of a periodic rate to the balance. The term does not include the
payment of a bonus or other consideration worth $10 or less given
during a year, the waiver or reduction of a fee, or the absorption of
expenses.
(o) Interest rate means the annual rate of interest paid
on an account which does not reflect compounding. For the purposes of
the account disclosures in § 230.4(b)(1)(i) of this part, 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."
(p) Passbook savings account means a savings account in
which the consumer retains a book or other document in which the
institution records transactions on the account.
(q) Periodic statement means 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.
(r) State means a state, the District of Columbia, the
commonwealth of Puerto Rico, and any territory or possession of the
United States.
(s) Stepped-rate account means an account that has two
or more interest rates that take effect in succeeding periods and are
known when the account is opened.
(t) Tiered-rate account means an account that has two or
more interest rates that are applicable to specified balance levels.
(u) Time account means 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 amounts withdrawn.
{{12-31-07 p.7431}}
(v) Variable-rate account means 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.
[Codified to 12 C.F.R. § 230.2]
[Section 230.2 amended at 59 Fed. Reg. 52658, October 19,
1994, effective September 23, 1994; 70 Fed. Reg. 29593, May 24, 2005,
effective July 1, 2006]
§ 230.3 General disclosure requirements.
(a) Form. Depository institutions shall make the
disclosures required by §§ 230.4 through 230.6 of this part, as
applicable, clearly and conspicuously, in writing, and in a form the
consumer may keep. The disclosures required by this part may be
provided to the consumer in electronic form, subject to compliance with
the consumer consent and other applicable provisions of the Electronic
Signatures in Global and National Commerce Act (E-Sign Act) (15 U.S.C.
7011 et seq.). The disclosures required by §§ 230.4(a)(2)
and 230.8 may be provided to the consumer in electronic form without
regard to the consumer consent or other provisions of the E-Sign Act in
the circumstances set forth in those sections. Disclosures for each
account offered by an institution may be presented separately or
combined with disclosures for the institution's other accounts, as
long as it is clear which disclosures are applicable to the consumer's
account.
(b) General. The disclosures shall reflect the terms of
the legal obligation of the account agreement between the consumer and
the depository institution. Disclosures may be made in languages other
than English, provided the disclosures are available in English upon
request.
(c) Relation to Regulation E
(12 CFR Part 205).
Disclosures required by and provided in accordance with the
Electronic Fund Transfer Act (15 U.S.C.
1601) and its implementing Regulation E (12 CFR Part 205) that
are also required by this part may be substituted for the disclosures
required by this part.
(d) Multiple consumers. If an account is held by more
than one consumer, disclosures may be made to any one of the consumers.
(e) Oral response to inquiries. In an oral response to a
consumer's inquiry about interest rates payable on its accounts, the
depository institution shall state the annual percentage yield. The
interest rate may be stated in addition to the annual percentage yield.
No other rate may be stated.
(f) Rounding and accuracy rules for rates and
yields--(1) Rounding. The annual percentage yield,
the annual percentage yield earned, and the interest rate shall 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.
(2) Accuracy. The annual percentage yield (and the
annual percentage yield earned) will be considered accurate if not more
than one-twentieth of one percentage point (.05%) above or below the
annual percentage yield (and the annual percentage yield earned)
determined in accordance with the rules in appendix A of this part.
[Codified to 12 C.F.R. § 230.3]
[Section 230.3 amended at 66 Fed. Reg. 17802, April 4, 2001,
effective March 30, 2001; 72 Fed. Reg. 63483, November 9, 2007,
effective December 10, 2007, the mandatory compliance date is October
1, 2008]
§ 230.4 Account disclosures.
(a) Delivery of account disclosures--(1) Account
opening.--(i) General. A depository institution shall
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. Except as provided in paragraph (a)(1)(ii) of this
section, if the consumer is not present at the institution when the
account is opened or the service is provided and has not already
received the disclosures, the institution shall mail or deliver the
disclosures no later than 10 business days after the account is opened
or the service is provided, whichever is earlier.
{{12-31-07 p.7432}}
(ii) Timing of electronic disclosures. If a consumer
who is not present at the institution uses electronic means (for
example, an Internet Web site) to open an account or request a service,
the disclosures required under paragraph (a)(1) of this section must be
provided before the account is opened or the service is provided.
(2) Requests. (i) A depository institution shall
provide account disclosures to a consumer upon request. If a consumer
who is not present at the institution makes a request, the institution
shall mail or deliver the disclosures within a reasonable time after it
receives the request and may provide the disclosures in paper form, or
electronically if the consumer agrees.
(ii) In providing disclosures upon request, the institution may:
(A) Specify an interest rate and annual percentage yield that
were offered within the most recent seven calendar days; state that the
rate and yield are accurate as of an identified date; and provide a
telephone number consumers may call to obtain current rate information.
(B) State the maturity of a time account as a term rather than a
date.
(b) Content of account disclosures. Account disclosures
shall include the following, as applicable:
(1) Rate information--(i) Annual percentage
yield and interest rate. The "annual percentage yield" and
the "interest rate," using those terms, and for fixed-rate
accounts the period of time the interest rate will be in effect.
(ii) Variable rates. For variable-rate accounts:
(A) The fact that the interest rate and annual percentage yield
may change;
(B) How the interest rate is determined;
(C) The frequency with which the interest rate may change; and
(D) Any limitation on the amount the interest rate may change.
(2) Compounding and crediting--(i) Frequency.
The frequency with which interest is compounded and credited.
(ii) Effect of closing an account. If consumers will
forfeit interest if they close the account before accrued interest is
credited, a statement that interest will not be paid in such cases.
(3) Balance information--(i) Minimum balance
requirements. Any minimum balance required to:
(A) Open the account;
(B) Avoid the imposition of a fee; or
(C) Obtain the annual percentage yield disclosed.
Except for the balance to open the account, the disclosure shall
state how the balance is determined for these purposes.
(ii) Balance computation method. An explanation of the
balance computation method specified in § 230.7 of this part used to
calculate interest on the account.
(iii) When interest begins to accrue. A statement of
when interest begins to accrue on noncash deposits.
(4) Fees. The amount of any fee that may be imposed in
connection with the account (or an explanation of how the fee will be
determined) and the conditions under which the fee may be imposed.
(5) Transaction limitations. Any limitations on the
number or dollar amount of withdrawals or deposits.
(6) Features of time accounts. For time accounts:
(i) Time requirements. The maturity date.
(ii) Early withdrawal penalties. A statement that a
penalty will or may be imposed for early withdrawal, how it is
calculated, and the conditions for its assessment.
(iii) Withdrawal of interest prior to maturity. If
compounding occurs during the term and interest may be withdrawn prior
to maturity, a statement that the annual percentage yield assumes
interest remains on deposit until maturity and that a withdrawal will
reduce earnings. For accounts with a stated maturity greater than one
year that do not compound interest on an annual or more frequent basis,
that require interest payouts at least annually, and that disclose an
APY determined in accordance with section E of Appendix A of this part,
a statement that interest cannot remain on deposit and that payout of
interest is mandatory.
{{12-31-07 p.7433}}
(iv) Renewal policies. A statement of whether or not
the account will renew automatically at maturity. If it will, a
statement of whether or not a grace period will be provided and, if so,
the length of that period must be stated. If the account will not renew
automatically, a statement of whether interest will be paid after
maturity if the consumer does not renew the account must be stated.
(7) 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.
(c) Notice to existing account
holders--(1) Notice of availability of disclosures.
Depository institutions shall provide a notice to consumers who
receive periodic statements and who hold existing accounts of the type
offered by the institution on June 21, 1993. The notice shall be
included on or with the first periodic statement sent on or after June
21, 1993 (or on or with the first periodic statement for a statement
cycle beginning on or after that date). The notice shall state that
consumers may request account disclosures containing terms, fees, and
rate information for their account. In responding to such a request,
institutions shall provide disclosures in accordance with paragraph
(a)(2) of this section.
(2) Alternative to notice. As an alternative to the
notice described in paragraph (c)(1) of this section, institutions may
provide account disclosures to consumers. The disclosures may be
provided either with a periodic statement or separately, but must be
sent no later than when the periodic statement described in paragraph
(c)(1) is sent.
[Codified to 12 C.F.R. § 230.4]
[Section 230.4 amended at 58 Fed. Reg. 15081, March 19,
1993; 60 Fed. Reg. 5130, January 26, 1995, effective January 18, 1995;
63 Fed. Reg. 40637, July 30, 1998, effective August 28, 1998; 66 Fed.
Reg. 17802, April 4, 2001, effective March 30, 2001; 72 Fed. Reg.
63483, November 9, 2007, effective December 10, 2007, the mandatory
compliance date is October 1, 2008]
§ 230.5 Subsequent disclosures.
(a) Change in terms--(1) Advance notice required.
A depository institution shall give advance notice to affected
consumers of any change in a term required to be disclosed under
§ 230.4(b) of this part if the change may reduce the annual
percentage yield or adversely affect the consumer. The notice shall
include the effective date of the change. The notice shall be mailed or
delivered at least 30 calendar days before the effective date of the
change.
(2) No notice required. No notice under this section
is required for:
(i) Variable-rate changes. Changes in the interest
rate and corresponding changes in the annual percentage yield in
variable-rate accounts.
(ii) Check printing fees. Changes in fees assessed for
check printing.
(iii) Short-term time accounts. Changes in any term
for time accounts with maturities of one month or less.
(b) Notice before maturity for time accounts longer than one
month that renew automatically. For time accounts with a maturity
longer than one month that renew automatically at maturity,
institutions shall provide the disclosures described below before
maturity. The disclosures shall 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.
(1) Maturities of longer than one year. If the
maturity is longer than one year, the institution shall provide account
disclosures set forth in § 230.4(b) of this part for the new account,
along with the date the existing account matures. If the interest rate
and annual percentage yield that will be paid for the new account are
unknown when disclosures are provided, the institution shall state that
those rates have not yet been determined, the date when they will be
determined, and a telephone number consumers may call to obtain the
interest rate and the annual percentage yield that will be paid for the
new account.
(2) Maturities of one year or less but longer than one
month. If the maturity is one year or less but longer than one
month, the institution shall either:
(i) Provide disclosures as set forth in paragraph (b)(1) of this
section; or
(ii) Disclose to the consumer:
{{12-31-07 p.7434}}
(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 (or that those rates have not yet been
determined, the date when they will be determined, and a telephone
number the consumer may call to obtain the interest rate and the annual
percentage yield that will be paid for the new account); and
(C) Any difference in the terms of the new account as compared to
the terms required to be disclosed under § 230.4(b) of this part for
the existing account.
(c) Notice before maturity for time accounts longer than one
year that do not renew automatically. For time accounts with a
maturity longer than one year that do not renew automatically at
maturity, institutions shall disclose to consumers the maturity date
and whether interest will be paid after maturity. The disclosures shall
be mailed or delivered at least 10 calendar days before maturity of the
existing account.
[Codified to 12 C.F.R. § 230.5]
[Section 230.5 amended at 58 Fed. Reg. 15081, March 19,
1993; 63 Fed. Reg. 52107, September 29, 1998, effective September 24,
1998]
§ 230.6 Periodic statement disclosures.
(a) General rule. If a depository institution mails or
delivers a periodic statement, the statement shall include the
following disclosures:
(1) Annual percentage yield earned. The "annual
percentage yield earned" during the statement period, using that
term, calculated according to the rules in appendix A of this part.
(2) Amount of interest. The dollar amount of interest
earned during the statement period.
(3) Fees imposed. Fees required to be disclosed under
§ 230.4(b)(4) of this part that were debited to the account during
the statement period. The fees shall be itemized by type and dollar
amounts. Except as provided in § 230.11(a)(1) of this part, when fees
of the same type are imposed more than once in a statement period, a
depository institution may itemize each fee separately or group the
fees together and disclose a total dollar amount for all fees of that
type.
(4) Length of period. The total number of days in the
statement period, or the beginning and ending dates of the period.
(b) Special rule for average daily balance method. In
making the disclosures described in paragraph (a) of this section,
institutions that use the average daily balance method and that
calculate interest for a period other than the statement period shall
calculate and disclose the annual percentage yield earned and amount of
interest earned based on that period rather than the statement period.
The information in paragraph (a)(4) of this section shall be stated for
that period as well as for the statement period.
[Codified to 12 C.F.R. § 230.6]
[Section 230.6 amended at 64 Fed. Reg. September 14, 1999
effective September 1, 1999; 66 Fed. Reg. 17802, April 4, 2001,
effective March 30, 2001; 70 Fed. Reg. 29593, May 24, 2005, effective
July 1, 2006]
§ 230.7 Payment of interest.
(a) Permissible methods--(1) Balance on which
interest is calculated. Institutions shall calculate interest on
the full amount of principal in an account for each day by use of
either the daily balance method or the average daily balance
method. 1
(2) Determination of minimum balance to earn interest.
An institution shall use the same method to determine any minimum
balance required to earn interest as it uses to determine the balance
on which interest is calculated. An institution may use an additional
method that is unequivocally beneficial to the consumer.
(b) Compounding and crediting policies. This section
does not require institutions to compound or credit interest at any
particular frequency.
{{12-31-07 p.7435}}
(c) Date interest begins to accrue. 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 (12 U.S.C.
4005 et seq.) and implementing Regulation CC
(12 CFR Part 229).
Interest shall accrue until the day funds are withdrawn.
[Codified to 12 C.F.R. § 230.7]
§ 230.8 Advertising.
(a) Misleading or inaccurate advertisements. An
advertisement shall not:
(1) Be misleading or inaccurate or misrepresent a depository
institution's deposit contract; or
(2) Refer to or describe an account as "free" or "no
cost" (or contain a similar term) if any maintenance or activity fee
may be imposed on the account. The word "profit" shall not be
used in referring to interest paid on an account.
(b) Permissible rates. If an advertisement states a rate
of return, it shall state the rate as an "annual percentage
yield" using that term. (The abbreviation "APY" may be used
provided the term "annual percentage yield" is stated at least
once in the advertisement.) The advertisement shall not state any other
rate, except that the "interest rate," using that term, may be
stated in conjunction with, but not more conspicuously than, the annual
percentage yield to which it relates.
(c) When additional disclosures are required. Except as
provided in paragraph (e) of this section, if the annual percentage
yield is stated in an advertisement, the advertisement shall state the
following information, to the extent applicable, clearly and
conspicuously:
(1) Variable rates. For variable-rate accounts, a
statement that the rate may change after the account is opened.
(2) Time annual percentage yield is offered. The
period of time the annual percentage yield will be offered, or a
statement that the annual percentage yield is accurate as of a
specified date.
(3) Minimum balance. The minimum balance required to
obtain the advertised annual percentage yield. For tiered-rate
accounts, the minimum balance required for each tier shall be stated in
close proximity and with equal prominence to the applicable annual
percentage yield.
(4) Minimum opening deposit. The minimum deposit
required to open the account, if it is greater than the minimum balance
necessary to obtain the advertised annual percentage yield.
(5) Effect of fees. A statement that fees could reduce
the earnings on the account.
(6) Features of time accounts. For time accounts:
(i) Time requirements. The term of the account.
(ii) Early withdrawal penalties. A statement that a
penalty will or may be imposed for early withdrawal.
(iii) Required interest payouts. For noncompounding
time accounts with a stated maturity greater than one year that do not
compound interest on an annual or more frequent basis, that require
interest payouts at least annually, and that disclose an APY determined
in accordance with section E of Appendix A of this part, a statement
that interest cannot remain on deposit and that payout of interest is
mandatory.
(d) Bonuses. Except as provided in paragraph (e) of this
section, if a bonus is stated in an advertisement, the advertisement
shall state the following information, to the extent applicable,
clearly and conspicuously:
(1) The "annual percentage yield," using that term;
(2) The time requirement to obtain the bonus;
(3) The minimum balance required to obtain the bonus;
(4) The minimum balance required to open the account, if it is
greater than the minimum balance necessary to obtain the bonus; and
(5) When the bonus will be provided.
(e) Exemption for certain
advertisements.--(1) Certain media. If an
advertisement is made through one of the following media, it need not
contain the information in paragraphs (c)(1), (c)(2), (c)(4), (c)(5),
(c)(6)(ii), (d)(4), and (d)(5) of this section:
{{12-31-07 p.7436}}
(i) Broadcast or electronic media, such as television or radio;
(ii) Outdoor media, such as billboards; or
(iii) Telephone response machines.
(2) Indoor signs. (i) Signs inside the premises of a
depository institution (or the premises of a deposit broker) are not
subject to paragraphs (b), (c), (d), or (e)(1) of this section.
(ii) If a sign exempt by paragraph (e)(2) of this section states
a rate of return, it shall:
(A) State the rate as an "annual percentage yield," using
the term or the term "APY." The sign shall not state any other
rate, except that the interest rate may be stated in conjunction with
the annual percentage yield to which it relates.
(B) Contain a statement advising consumers to contact an employee
for further information about applicable fees and terms.
(f) Additional disclosures in connection with the payment of
overdrafts. Institutions that promote the payment of overdrafts in
an advertisement shall include in the advertisement the disclosures
required by § 230.11(b) of this part.
[Codified to 12 C.F.R. § 230.8]
[Section 230.8 amended at 58 Fed. Reg. 15081, March 19,
1993; 60 Fed. Reg. 5130, January 26, 1995, effective January 18, 1995;
63 Fed. Reg. 40638, July 30, 1998, effective August 28, 1998; 63 Fed.
Reg. 52107, September 29, 1998, effective September 24, 1998; 70 Fed.
Reg. 29593, May 24, 2005, effective July 1, 2006]
§ 230.9 Enforcement and record retention.
(a) Administrative enforcement.
Section 270 of the act
contains the provisions relating to administrative sanctions for
failure to comply with the requirements of the act and this part.
Compliance is enforced by the agencies listed in that section.
(b) Civil liability. Section 271 of the Act contains the
provisions relating to civil liability for failure to comply with the
requirements of the act and this part; Section 271 is repealed
effective September 30, 2001.
(c) Record retention. A depository institution shall
retain evidence of compliance with this part for a minimum of two years
after the date disclosures are required to be made or action is
required to be taken. The administrative agencies responsible for
enforcing this part may require depository institutions under their
jurisdiction to retain records for a longer period if necessary to
carry out their enforcement responsibilities under section 270 of the
act.
[Codified to 12 C.F.R. § 230.9]
[Section 230.9 amended at 63 Fed. Reg. 52107, September 29, 1998,
effective September 24, 1998]
§ 230.10 [Reserved]
§230.11 Additional disclosure requirements for institutions
advertising the payment of overdrafts.
(a) Periodic statement disclosures.
(1) Disclosure of Total Fees. (i) Except as provided
in paragraph (a)(2) of this section, if a depository institution
promotes the payment of overdrafts in an advertisement, the institution
must separately disclose on each periodic statement:
(A) The total dollar amount for all fees or charges imposed on
the account for paying checks or other items when there are
insufficient funds and the account becomes overdrawn; and
(B) The total dollar amount for all fees imposed on the account
for returning items unpaid.
(ii) The disclosures required by this paragraph must be provided
for the statement period and for the calendar year to date, for any
account to which the advertisement applies.
(2) Communications not triggering disclosure of total fees.
The following communications by a depository institution do not
trigger the disclosures required by paragraph (a)(1) of this
section:
{{12-31-07 p.7436.01}}
(i) Promoting in an advertisement a service for paying overdrafts
where the institution's payment of overdrafts will be agreed upon in
writing and subject to the Board's Regulation Z (12 CFR part 226);
(ii) Communicating (whether by telephone, electronically, or
otherwise) about the payment of overdrafts in response to a
consumer-initiated inquiry about deposit accounts or overdrafts.
Providing information about the payment of overdrafts in response to a
balance inquiry made through an automated system, such as a telephone
response machine, an automated teller machine (ATM), or an
institution's Internet site, is not a response to a consumer-initiated
inquiry for purposes of this paragraph;
(iii) Engaging in an in-person discussion with a consumer;
(iv) Making disclosures that are required by Federal or other
applicable law;
(v) Providing a notice or including information on a periodic
statement informing a consumer about a specific overdrawn item, or the
amount the account is overdrawn;
(vi) Including in a deposit account agreement a discussion of the
institution's right to pay overdrafts;
(vii) Providing a notice to a consumer, such as at an ATM, that
completing a requested transaction may trigger a fee for overdrawing an
account, or providing a general notice that items overdrawing an
account may trigger a fee; or
(viii) Providing informational or educational materials
concerning the payment of overdrafts if the materials do not
specifically describe the institution's overdraft service.
(3) Time period covered by disclosures. An institution
must make the disclosures required by paragraph (a)(1) of this section
for the first statement period that begins after an institution
advertises the payment of overdrafts. An institution may disclose total
fees imposed for the calendar year by aggregating fees imposed since
the beginning of the calendar year, or since the beginning of the first
statement period that year for which such disclosures are required.
(4) Termination of promotions. Paragraphs (a)(1) of
this section shall cease to apply with respect to a deposit account two
years after the date of an institution's last advertisement promoting
the payment of overdrafts applicable to that account.
(5) Acquired accounts. An institution that acquires an
account must thereafter provide the disclosures required by paragraph
(a)(1) of this section for the first statement period that begins after
the institution promotes the payment of overdrafts in an advertisement
that applies to the acquired account. If disclosures under paragraph
(a)(1) of this section are required for the acquired account, the
institution may, but is not required to, include fees imposed prior to
acquisition of the account.
(b) Advertising disclosures for overdraft services.
(1) Disclosures. Except as provided in paragraphs
(b)(2), (b)(3), and (b)(4) of this section, any advertisement promoting
the payment of overdrafts shall disclose in a clear and conspicuous
manner.
(i) The fee or fees for the payment of each overdraft;
(ii) The categories of transactions for which a fee for paying an
overdraft may be imposed;
(iii) The time period by which the consumer must repay or cover
any overdraft; and
(iv) The circumstances under which the institution will not pay
an overdraft.
(2) Communications about the payment of overdrafts not
subject to additional advertising disclosures. Paragraph (b)(1) of
this section does not apply to:
(i) An advertisement promoting a service where the institution's
payment of overdrafts will be agreed upon in writing and subject to the
Board's Regulation Z (12 CFR part 226);
(ii) A communication by an institution about the payment of
overdrafts in response to a consumer-initiated inquiry about deposit
accounts or overdrafts. 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 for
purposes of this paragraph;
(iii) An advertisement made through broadcast or electronic
media, such as television or radio;
(iv) An advertisement made on outdoor media, such as billboards;
(v) An ATM receipt;
{{12-31-07 p.7436.02}}
(vi) An in-person discussion with a consumer;
(vii) Disclosures required by federal or other applicable law;
(viii) Information included on a periodic statement or a notice
informing a consumer about a specific overdrawn item or the amount the
account is overdrawn;
(ix) A term in a deposit account agreement discussing the
institution's right to pay overdrafts;
(x) 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; or
(xi) Informational or educational materials concerning the
payment of overdrafts if the materials do not specifically describe the
institution's overdraft service.
(3) Exception for ATM screens and telephone response
machines. The disclosures described in paragraphs (b)(1)(ii) and
(b)(1)(iv) of this section are not required in connection with any
advertisement made on an ATM screen or using a telephone response
machine.
(4) Exception for indoor signs. Paragraph (b)(1) of
this section does not apply to advertisements for the payment of
overdrafts on indoor signs as described by § 230.8(e)(2) of this
part, provided that the sign contains a clear and conspicuous statement
that fees may apply and that consumers should contact an employee for
further information about applicable fees and terms. For purposes of
this paragraph (b)(4), an indoor sign does not include an ATM
screen.
{{6-30-05 p.7436.03}}
[Codified to 12 C.F.R. § 230.11]
[Section 230.11 added at 70 Fed. Reg. 29593, May 24, 2005,
effective July 1,
2006]
1Institutions shall calculate interest by use of a daily rate
of at least 1/365 of the interest rate. In a leap year a daily
rate of 1/366 of the interest rate may be used. Go Back to Text
[Main Tabs]
[Table of Contents - 6500]
[Index]
[Previous Page]
[Next Page]
[Search]
|
