[Vicki Kramer]

Good morning. We plan to offer a product that rounds up debit card purchases to the nearest dollar and deposits the difference to a savings account.

1. Do we need to provide a product disclosure? I think so, but Senior Management only wants to post info on website and via general advertising.

2. Do we need to provide a new Reg E disclosure to customers who had accounts opened before we began this product? (We’re revising our Reg E disclosure to include this product; new customers will, of course, receive the updated Reg E disclosure at account opening. My concern is customers who sign-up for the product today but the Reg E disclosure they received at their account opening did not include this product info.)

We will allow customers to telephone or come to the bank to sign-up, without signing anything. My idea is that the employee that signs the customer up would mail or hand the product disclosure and a revised Reg E disclosure to the customer and scan for record; Senior Management does not think this additional step is required.

My concern is that we’d be cited for “consumer harm” if we don’t provide both disclosures at sign-up because there is a possibility that the product could overdraw their account and they’d be charged an NSF Fee.

Thanks in advance for your help!

[rcooper]

I don’t have much experience with this feature, but I agree with you that disclosures would need to be provided prior to activating the product so you have documentation that the customer was clearly informed prior to acceptance of the feature.

In regards to the OD fee, I do have concern with applying an OD fee because of this product. It seems to result in the opposite effect of what the bank is promoting which is “saving”. In an effort to avoid a UDAP issue, at the least I think this would have to be very clearly disclosed before implementation, as I mentioned above. Even with clear disclosures, which could eliminate the deceptive prong of UDAP/UDAAP it could still result in being unfair or abusive if not handled properly. Is there a way to set up the feature so it wouldn’t roll funds up if the round up would result in a negative balance?

I think your best approach would be to walk through this with your regulator before you get too far into the process. They’ll be able to advise you on what your best practices should be and what they will expect to see.

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