Deposit change in terms: Do I need to let the customer know?

When financial institutions make a change to deposit account terms or conditions, a lot goes into communicating them to customers.

Every notification needs to meet regulatory requirements so you will want to review the rules to determine type, content and timing of the notification.

Documentation is essential in case auditors, examiners or customers have questions.

Your records should include the change, the date the change took effect, how you determined who should receive the notice, a copy of the notice that was mailed or delivered, and the date the notice was mailed or delivered.

When reviewing requirements, don’t assume all deposit-related changes require compliance with just one regulation.

For instance, stricter limitations on electronic fund transfers for certain consumer accounts may require that Regulation E and Regulation DD change in terms requirements be met.

Here is an overview of notification requirements for Regulation E, Regulation CC and Regulation DD.

Regulation E – Electronic Fund Transfer (EFT) Act

Requirements: The written notice must be mailed or delivered at least 21 calendar days before the effective date for any change in term or condition required to be disclosed under §1005.7(b) (Content of Initial Disclosures) if the change would result in the following:

• Increased fees for the consumer
• Increased liability for the consumer
• Fewer types of available electronic fund transfers
• Stricter limitations on the frequency or dollar amount of the transfers

When an institution changes the telephone number or address used for reporting possible unauthorized transfers, a notice is required if the institution will impose liability on the consumer for unauthorized transfers under §1005.6.

Prior notice is not required if an immediate change in terms or conditions is necessary to maintain or restore the security of an account or EFT system. If the change is made permanent and notifying the consumer would not jeopardize the security of account or system, the consumer must be notified in writing on or with the next regularly scheduled periodic statement or within 30 days of making the change permanent.

Cancellation of an access device or closing of some of the institution’s ATMs does not require a change notice.

Required form or wording: None

Provide to consumer: Either on a periodic statement or by sending a copy of a revised disclosure statement. Attention must be directed to the change, such as a cover letter referencing the changed term.

Regulation CC – Expedited Funds Availability Act

Requirements: The written notice must be mailed or delivered at least 30 calendar days before implementing any change in the availability policy. Prior notice is not required when the change results in faster availability of deposits. A notice must then be sent no later than 30 calendar days after the change is implemented. The notice requirement is applicable to consumer accounts only; however, the institution may opt to send the notice to all customers affected by the change.

If the institution makes funds from deposits at nonproprietary ATMs available for withdrawal later than funds form deposits at proprietary ATMs, the institution must provide its customers with an updated list of proprietary ATMs once a year if there are changes in the list of ATMs previously disclosed to customers.

Required form or wording: None

Provide to consumer: May be given to the consumer in any form as long as it is clear and conspicuous. If the notice is provided through revised account disclosures, the customer must be directed to the changed terms by using a letter or insert or highlighting the changed terms. 

Regulation DD – Truth in Savings Act

Requirements: The written notice must be mailed or delivered at least 30 calendar days before the effective date if the change may:

• Reduce the annual percentage yield (APY)
• Adversely affect the consumer

No notice is required for changes in:

• Interest rate and corresponding changes in the APY in variable-rate accounts
• Fees for printing checks, deposit slips or withdrawal slips
• Any term for time accounts with maturities of one month or less

Prior notice is not required when terms will automatically change when an event occurs, if the institution fully described the conditions of the change in the account opening disclosures and provides a change in terms notice to customers when the event occurs, regardless of whether the consumer is affected.

Required form or wording: Must include the effective date of the change.

Provide to consumer: Either on or with the periodic statement or in another mailing. If the notice is provided through revised account disclosures, the changed term must be highlighted in some manner, such as notating that a particular fee has been changed and specifying the new amount or using an accompanying letter that refers to the changed term. 

How Wipfli can help

Our financial institutions team brings real-world experience to deliver the compliance answers and solutions you need. Learn more on our regulatory compliance services web page.