[Melanie Loggins]

We are implementing new terms and conditions for our deposit customer, so I need to ask a question. I need to know if there is a regulatory requirement that says I need to send out the new terms and conditions disclosure to all of our customers even if we are not making changes to their APY nor does anything adversely affect the consumer?

[Brent V]

The following response is from Reg DD expert Rebekah Leonard:

Yes. Notice is still required. Reg DD 1030.5(a) mandates 30 days ADVANCE NOTICE of “any change in a term required to be disclosed under Sec. 1030.4(b)… if the change may reduce the annual percentage yield or adversely affect the consumer.” This advanced notice requirement, therefore, is limited to changes to the disclosed items of 1030.4(b). See https://www.bankersonline.com/regulations/12-1030-004 for the full description of such items.

Now, if the changes to your Terms and Conditions (T&Cs) are not causing any rate increases or adverse effect to any of these items, then you are not required by Reg DD to send ADVANCE NOTICE of the change.

This does not mean “no notice” is permissible for other changes. That would be a misapplication of the regulatory context. The context of paragraph 1030.5(a) is clearly about “advance notice”. The next paragraph 1030.5(b) broadens this context, by describing “No notice required” at all, but that is a very short list limited to certain variable rate changes, check printing fees, or changes to time accounts with a maturity of 1 month of less.

Taken in totality, this means that any other change in terms still requires notification to the account holder. This fits with the spirit and intent of the Truth in Savings Act (the law behind Reg DD) which is all about truthfully describing deposit account terms to keep consumers informed.

Disclosing updated T&Cs also keeps you on the right side of any UDAP claims or legal challenges to your contract. The T&Cs are the legal deposit account contract with your customer, and undoubtedly your existing T&Cs include some sort of “Amendments” section that includes giving “reasonable notice”. That language contractually obligates to you do so.

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