[TheBank]

We are considering adding two features to a checking account that has no monthly fee or service charge. Until now, we have been able to advertise the checking account as free since there is no monthly maintenance fee or service charge, or minimum balance to avoid a fee. We are considering adding the requirement of receiving statements electronically only on this account and if the account holder wants a paper statement, the fee would be $2.00 per statement. The statements are produced monthly unless the account is dormant which would be quarterly for dormant accounts. Would this fee be considered “any maintenance or activity fee” for the purpose of Reg DD 1030.8(a)(2)? Would we still be able to advertise the account as free?

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[rcooper]

I would not advertise this account as free if there is a fee to get monthly paper statements; since what you’ve described sounds like you would be adding a monthly fee for statements that didn’t exist before it would likely be an issue. Using “free” always comes with risk, more now than ever, and I’m not sure it is worth the risk – Reg DD and UDAP (IMO). If you could grandfather the existing accountholder where there were no fees (including no paper statement fee) and create criteria going forward (that has clearly disclose criteria, timeframes for completion, and action/costs that result if criteria aren’t met (e.g. converting to new account with new account disclosures given XX (30, 60, 90 days) prior to change) it reduces the risk.

While you’re making these decisions take a look at this enforcement action from the CFPB: https://www.consumerfinance.gov/about-us/newsroom/cfpb-takes-action-against-mt-bank-for-deceptively-advertising-free-checking/. Keep in mind this has been on the regualtors’ radar for years and is a very easy to identify issues.

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