NAFCU Compliance Blog

Grab Bag

Posted by Anthony Demangone

For those working on Regulation Z issues, you're probably aware of this upcoming requirement:

Proposed § 226.7(b)(12)(iv)(A) provides that a card issuer must provide through the toll-free telephone number disclosed pursuant to proposed § 226.7(b)(12)(i)(E) or (ii)(E) the name, street address, telephone number, and Web site address for at least three organizations that have been approved by the United States Trustee or a bankruptcy administrator pursuant to 11 U.S.C.  111(a)(1) to provide credit counseling services in the state in which the billing address for the account is located or the state specified by the consumer.

Wouldn't it be great if a web site existed that organized all of these approved organizations by state?  It does, right here. 

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Remember that member business lending webinar hosted by NCUA?  It is now available on NCUA's website.   As much as I love the webinar, I really love the fact that NCUA has posted a series of 49 Questions and Answers to go with it.  All of the Q and A's deal with MBL issues.  You know I love me some FAQs.

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The Fed has published its most recent issue of its Consumer Compliance Outlook.  As usual, it is a very good read.  There's an article on E-SIGN. (Read it.) Payroll cards.  (Read it.)  And a fantastic grouping of consumer-compliance-related resources.  (Read it. Love it.  Live it.)  And there's more.  (Read that, too.)

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Have a great weekend, everyone!

E-Statements

Posted by Sarah Loats

It's been a busy day here so I'm going to cheat a little and use a Q&A from NAFCU's Book of Answers for today's blog. The topic - E-statements and the E-Sign Act. A recurring question that we receive is whether the credit union can convert all members over to E-Statements, requiring them to opt-out if they want paper statements. The short answer is no, if you want to be compliant with the E-Sign Act. See below for the long answer.

Question: A senior manager wants to reduce costs by reducing the number of statements that we print and mail. She proposes that we approach new members about receiving statements electronically and supply an opt-out notice for members who would not be interested. Are there any regulatory issues we would run into by doing it this way?

Answer: Yes. Credit unions may satisfy the requirement to send periodic statements electronically, but the credit union must obtain the member’s consent before doing so. In 2000, the Electronic Signatures in Global and National Commerce Act (E-Sign Act) became law.

The E-Sign Act, among other things, empowered financial institutions to use electronic records to provide required disclosures electronically, rather than in written form. In 2001, NCUA issued Regulatory Alert 01-RA-03 regarding the E-Sign Act. NCUA indicated that before a credit union could send required disclosures electronically, two things had to happen. First, the credit union must provide members with certain, mandatory information. Second, after the member receives this information, he or she must consent to receive electronic disclosures. In short, the E-Sign Act creates an “opt-in” system for consumers. Your credit union’s proposal appears to run contrary to this requirement.
January 2007

FDIC Consumer News - Summer 2008; Going Green

The Federal Deposit Insurance Corporation (FDIC) recently issued their Summer 2008 issue of FDIC Consumer News.   Not surprisingly, the issue contains answers to common insurance-related questions posed by consumers.  For example, the FDIC explains the timeline if a consumer had deposits which were not protected:

"What happens to my money that is over the FDIC's insurance limits?

Let's say you alone have one deposit account at a bank with a balance of $105,000, including interest earned. If your bank fails, you'll immediately be paid $100,000 covered by FDIC insurance and you'll receive a "claim" against the closed bank for the remaining $5,000 that is not FDIC-insured. The amount you recover on your uninsured deposits will depend on how much the FDIC recovers by selling the bank's assets. While that process can take several years, most payments to uninsured depositors are made within a year or two of the bank failure. In some cases, the FDIC is able to make an advance payment to uninsured depositors."

In the closure of IndyMac Bank, the FDIC paid an advance dividend equal to 50% of their uninsured amount.

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The issue also contains an article entitled "Green" Banking: Saving the Environment as You Save and Borrow Money which highlights many of the advantages (both to the consumer and the financial institution) of going green.  One recommendation that caught my eye:

"Another option is to have your payroll or Social Security checks deposited directly into your bank account, which reduces paper and saves gas by cutting down on car rides to the bank or ATM."

As members' behavior are altered by rising energy prices, credit unions might be able to convince some members who have been otherwise reluctant to make the switch to direct deposit.