[tcranshaw]

Reg. DD states an account bonus is tied to “opening, maintaining, renewing or increasing” of an account balance. If our ad says, when you open a new checking account we will give you $150 ($75 for a direct deposit minimum monthly deposit amount of $200 and $75 for completing a signature based transaction of $50 or more) is this considered a bonus and does it require a TISA disclosure? The consumer must open the account to be able to obtain the bonus. Additionally, could one argue that the direct deposit is considered “maintaining” because it requires a minimum monthly deposit of $200? Perhaps I just overthinking this whole thing?

Topic

[rcooper]

If our ad says, when you open a new checking account we will give you $150 ($75 for a direct deposit minimum monthly deposit amount of $200 and $75 for completing a signature based transaction of $50 or more) is this considered a bonus and does it require a TISA disclosure?

From what you’ve stated it seems your add is potentially misleading by stating that you will give the customer $150 when they open the account. It seems the bonus will not be paid unless there the customer sets up a monthly direct deposit of $200 +/- and a signature based transaction of $50 or more. You should ensure that your disclosure are clear about what is required to obtain the $150.

Generally I would say that paying a bonus for establishing a direct deposit would not be considered a bonus, but I agree that by requiring a minimum monthly dollar amount to the direct deposit it could be considered a bonus.

[rcooper]

Response by Don Blaine:
I think this meets the definition of a bonus in Regulation DD because it’s a gift given to a consumer for opening a new account even though there are other stipulations such as Direct Deposit and a card transaction. If the bank was paying existing customers to add a direct deposit service then the “bonus” requirements would not apply since the purpose is to get the consumer to add a new service to an existing account rather than to open a new account. Since it’s a bonus, the plan would trigger account opening disclosures related to bonuses in 1030.8(d) which was also part of the inquiry.

The 1030.4 account opening disclosure does not need to be provided until “requested” by a consumer but must be given before the account is opened. If a consumer simply saw the ad with the bonus information and called or visited the bank inquiring about the interest rate, APY or fees associated with the account that inquiry did not trigger the need to give written account disclosures. But if the consumer specifically asks for more information in writing or for the specific account disclosures this action would trigger the bank’s need to provide the initial account disclosures. Those initial account disclosures must also state the amount or type of bonus, when the bonus will be provided and any minimum balance and time requirements to obtain the bonus.

Suggestions – use the term “new money” in the ad versus “new account”. Otherwise, current accountholders will want to close their existing account and transfer to the new promotion to earn the $150. Timeframes must also be set forth, such as the timeframe in which a consumer must apply to obtain the bonus or the timeframe that the signature based card transaction must be conducted. Ad likely would need to say that the signature based transaction must be conducted within a certain period of time such as 90 days. Ad would also need to say when this bonus program ends such as “offer valid until xx/xx/xx” or bonus program will never end. Ad should say when bonus will be deposited into the consumers account such as within 30 days after meeting signature based transaction requirement and xx number of months of having direct deposit into an account unless simply setting up the direct deposit is all that the bank is after. Bank would also need to set forth any stipulations where it is able to debit account for bonus amount after bonus credited.

I agree its misleading to say that bonus will be provided at account opening if there are conditions that the consumer will need to meet such as a signature based card transaction.

[Author]

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