Understanding Regulation DD: Key requirements and risks

Regulation DD and the Truth in Savings Act (TISA) play a critical role in bringing transparency to your customers.

While the regulation itself isn’t overly complex, compliance issues often emerge not from misunderstanding the rules but from overlooked inconsistencies across disclosures, systems and customer-facing materials. And even small discrepancies can quickly become systemic, affecting large groups of customers and creating significant regulatory and financial risk.

To avoid these pitfalls, financial institutions must actively monitor for inconsistencies and ensure that every disclosure, from account opening to advertising, aligns with actual product functionality.

Here’s an overview of Regulation DD and how a proactive approach can help you maintain compliance:

What is Regulation DD?

Regulation DD is a federal regulation issued by the Consumer Financial Protection Bureau (CFPB) to implement the Truth in Savings law.

At its core, Regulation DD in banking focuses on transparency. Financial institutions must accurately disclose information such as interest rates, annual percentage yields (APYs), fees, balance requirements and interest calculation methods at account opening, on periodic statements, in advertisements and upon account renewal when applicable.

The regulation is designed to prevent misleading or incomplete information that could cause consumers to misunderstand how their accounts work or what they truly cost.

What is the purpose of Regulation DD?

Regulation DD’s purpose is to help consumers make informed decisions about deposit accounts by requiring financial institutions to clearly and consistently disclose key account terms, conditions and costs.

These disclosures allow consumers to understand and compare deposit products — such as checking accounts, savings accounts, money market accounts and certificates of deposit (CDs) — across financial institutions.

What are Regulation DD overdraft requirements?

Regulation DD includes specific disclosure requirements related to overdraft services and overdraft fees to ensure consumers clearly understand when these fees may be assessed and how they are calculated.

While Regulation DD does not govern a consumer’s choice to opt in or out of overdraft services for ATM and one‑time debit card transactions, it does govern how overdraft features and fees are disclosed under the Truth in Savings Act.

Under Regulation DD, financial institutions must accurately disclose all overdraft fees and the circumstances under which those fees may be imposed. These disclosures must be clear, consistent across all delivery channels and reflective of actual system functionality.

Inaccurate or inconsistent disclosures are among the most common Regulation DD violations and frequently result in reimbursement obligations.

When must an institution provide Regulation DD notice and disclosures?

Under Regulation DD, banks are required to provide TISA notices and disclosures at specific points in the customer relationship. Key timing requirements include:

• At account opening: Required disclosures must be provided before or at the time a deposit account is opened, including rates, APYs, fees, balance requirements and interest calculation methods.
• Upon request: Disclosures must be provided to any consumer who requests information about a deposit product, even if no account is opened.
• On periodic statements: Periodic statements must include the total overdraft fees and returned item fees charged during the statement period and year‑to‑date.
• Advance notice of adverse changes: At least 30 days’ advance notice is required for any change that adversely affects the consumer, such as increasing or adding fees or changing balance requirements.
• At certificate of deposit (CD) renewal: Renewal notices must be provided prior to maturity. For CDs with terms greater than 12 months, all account‑opening disclosures required under Regulation DD must be included or attached.
• In advertisements: Advertisements for deposit products must include required disclosures when triggering terms — such as APYs, bonuses or promotional rates — are used.
• Electronic and online delivery: Disclosures provided electronically must be accessible, clear and consistent with paper disclosures, and online product information must comply with Regulation DD advertising rules.

Regulation DD compliance tips

When it comes to Regulation DD, the primary responsibility is to clearly and accurately disclose product features to customers. Below are some important dos and don’ts when it comes to your financial institution’s compliance with the act.

The dos:

• Verify all your disclosures and statements are consistent: The account opening disclosure required by the Truth in Savings Act, TISA disclosure, branch brochure, periodic statement and information posted online should all document the same terminology and information related to a specific product, annual percentage yields (APYs), minimum balances and fees.   
• Use consistent terminology: Verify consistent terminology between the various disclosures and periodic statements.  If you label the fee to pay an item on insufficient funds an “overdraft fee” within your TISA disclosure but call it a “nonsufficient funds fee” on your periodic statement or if you label your monthly fee a “service charge” within your TISA disclosure but label it a “monthly fee” within your periodic statement, you could be required to reimburse those charges.
• Ensure product terms are accurate: Compare the product terms disclosed to the parameters included in your deposit system to ensure they are accurate. Most Truth in Savings Act violations relate to disclosing one fee, APY, interest accrual method or balance computation method to a customer but actually providing another.
• Validate that rate tiers are disclosed appropriately: If the tier pays from $1,000.00 to $1,499.99, verify your disclosures include the rate tiers and system parameters are accurate. Ensure all balances are covered. For example, tiers of $1000 to $1,499 and $1,500 to $4,999, and exclude the 99 cents between tiers, which should not occur.
• Include disclosures in renewal notices: Include all required disclosures with certificate of deposit (CD) renewal notices for terms greater than 12 months. Renewal notices for CDs with terms greater than 12 months must contain all disclosures required under Regulation DD at account opening. Not all renewal notices have the required fields, so an additional attachment may be necessary.
• Review advertisements: Review all new advertisements of deposit products for required disclosures. If the annual percentage yield is disclosed or a bonus is offered, additional disclosures are triggered.
• Review rewards and bonuses: Ensure any bonus or rewards checking features are functioning as anticipated and disclosed. Verify the qualifying cycle is clearly defined, and rewards or bonuses are functioning as disclosed. 
• Verify overdraft totals: Verify all overdraft fees, including any daily overdraft fees, are captured in the monthly and year-to-date overdraft totals table on periodic statements. 
• Verify how your system calculates overdraft fees: If your system charges an overdraft fee when an overdraft occurs as a result of a bank fee, ensure that bank fees are listed in the categories of transactions that may result in an overdraft within your TISA disclosure.
• Verify daily overdraft fees: If you charge a daily overdraft fee, verify that the disclosed period of time in which an account is in overdraft status prior to being assessed the daily overdraft fee is accurate. If not using business days, verify that the system will not charge the fee the day before the calendar day that may fall on a non-business day, rather than the day after. For example, if the daily overdraft fee may occur on the third calendar day the account is overdrawn, and the third calendar day falls on a weekend or federal holiday, verify that the fee would be charged the day after the non-business day rather than the day before.

The don’ts:

• Don’t change fees without verification: When you add or update a fee to the fee schedule, you need to verify consistency with the rest of your disclosures.
• Don’t forget to notify your customers: Customers must be notified 30 days in advance of any adverse change to a deposit account.
• Don’t provide an “internal use only” rate schedule to a customer: A rate sheet is considered an advertisement and must include all required language.
• Don’t assume disclosures are accurate: Don’t assume because the auditor or examiner has not looked at a disclosure in several years or has looked at it and had no findings that it is accurate or not relevant.
• Don’t forget to review what is included in the available balance: Don’t include a customer’s overdraft protection limit, overdraft line of credit or available transfer from another account in the available balance disclosed at an ATM or in the online banking or telephone banking system. If disclosed, this balance must be prominently disclosed and segregated from the actual available balance.
• Don’t charge overdraft fees on preauthorized transactions: If the funds were good at the time of a signature-based debit card preauthorization and a hold was placed on the preauthorized amount, don’t allow your system to charge an overdraft fee on a preauthorized transaction that settles on insufficient funds.

The goal is not to add work to an already full to-do list; however, this may be a reminder to your financial institution to give pause to Regulation DD.

No one wants their financial institution to be the latest class-action lawsuit in the news or to be subject to a costly lookback to calculate reimbursements. The takeaways above can help guide your financial institution’s monitoring and controls to avoid unwanted surprises.

How Wipfli can help

Wipfli’s team includes former industry professionals who have lived experienced with the compliance challenges you face. Reach out to learn more about how our financial services support can help you strengthen compliance programs, reduce regulatory risk and keep pace with evolving supervisory expectations.

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