Format: The Account Opening Disclosure

General Requirements

The disclosure must be clear and conspicuous, in writing, and in a form the consumer or member may keep. [12 CFR 1030.3(a)] You may make disclosures for different accounts on separate forms or on a single form—as long as it is clear to the consumer or member which disclosure applies to the account being opened. [12 CFR 1030.3(a)] Conversely, disclosures for a single account may appear on more than one document—as long as all the documents are given to the consumer or member at the same time. [12 CFR 1030, Commentary, Section 1030.3(a)-1 (-2 in Part 707)] You only need to make disclosures that are applicable to the account for which you are making disclosures. [12 CFR 1030.3(a)] For example, if you are making disclosures about a noninterest bearing account, you need not disclose the annual percentage yield or the interest rate. Finally, if the account has more than one consumer or member (e.g., a joint account), you only need to give a disclosure to one of them. [12 CFR 1030.3(d)]

Unlike the disclosures required by Truth in Lending for closed-end credit, these disclosures do not need to be segregated from other material. In other words, you may incorporate your TISA disclosures into, for example, a brochure with other account information. [12 CFR 1030, Commentary, Section 1030.3(a)-1.ii (-2.ii in Part 707)] Also, none of the disclosures need to be more conspicuous than others (unlike the “Annual Percentage Rate” and “Finance Charge” disclosures under Truth in Lending). [12 CFR 1030, Commentary, Section 1030.3(a)-1 (-2 in Part 707)] You may not use abbreviations or acronyms (such as “APY” for “annual percentage yield”) in the account opening disclosures. [12 CFR 1030.4(b)(1)] (Our chapter dealing with ongoing TISA responsibilities points out that you may use “APY” in an advertisement—only if certain conditions are met.)

Credit unions need to be careful about the descriptive terms they use for accounts in their disclosures. The NCUA, in its Commentary to Part 707, stated that credit unions may not describe a share account as a deposit account, or vice versa: “For example, the term ‘Certificate of Deposit’ or ‘CD’ may not be used to describe share certificates and other dividend-bearing term share accounts. Similarly, the terms ‘time account’…and ‘time deposit’…may not be used to describe term share accounts.” [12 CFR 707, Commentary, 707.2(a)-5.v.]

Special Rules for Electronic Disclosures

In June of 2000, President Clinton signed the Electronic Signatures in Global and National Commerce Act (E-SIGN). [15 USC 7001 et seq.] E-SIGN provided that signatures, contracts, and other records could not be denied validity solely because they are in electronic form. E-SIGN also provided that laws or regulations requiring written disclosures could be satisfied by electronic disclosures—if the consumer affirmatively consents.

In April 2001, the Federal Reserve Board (FRB) published revisions to Regulation DD to take into account the provisions of E-SIGN. (See the Federal Register for April 4, 2001, beginning at page 17795.) The April 2001 revisions were effective March 30, 2001.

In June of 2001, the NCUA issued its implementing regulation, Part 707. The NCUA version is effective June 21, 2001. See our earlier section titled “Institutions and accounts to which TISA applies” for details about which entities are subject to Regulation DD and which are subject to Part 707.

Let’s look first at the statutory provisions, then at the Regulation DD and Part 707 provisions.

E-SIGN authorizes a person obligated to provide consumer disclosures in writing to provide the disclosures by electronic communication. [15 USC 7001(c)] This authority is subject to conditions, however. The conditions—all of which must be met—are:

  • The consumer has affirmatively consented to the use of electronic communication and has not withdrawn that consent. Affirmative consent means the consumer communicates “yes.” It does not include what you might call passive or presumed consent, where a consumer consents by not objecting.
  • The person providing the disclosures has, before the consumer consents, given the consumer a clear and conspicuous statement of the following:
    • Any right the consumer has to have the disclosure delivered in paper or nonelectronic form, as well as the consumer’s right to withdraw consent to the electronic delivery of the disclosure, and any conditions on, or fees or other consequences of, withdrawing consent.
    • Whether the consumer’s consent applies only to a specific transaction or to categories of records and which categories those are.
    • How the consumer can withdraw consent and how the consumer can update information the institution needs to contact the consumer electronically.
    • How the consumer, at any point after consent, can obtain a paper copy of any disclosure and any fees that might be charged for the paper copy.
  • The institution provides—before the consumer consents—a statement of the hardware and software requirements that enable the consumer to obtain and retain electronic disclosures.
  • The consumer either consents electronically, or confirms his or her consent electronically, in such a way that shows the consumer will be able to obtain disclosures in electronic form.
  • If the institution changes the software or hardware requirements that the consumer must meet to access and retain the disclosures, the institution provides a statement of the new requirements and of the consumer’s right to withdraw consent, without fees, conditions, or consequences that were not disclosed above. The consumer must also either consent electronically, or confirm the consent electronically, in such a way that demonstrates the ability to obtain disclosures in electronic form.

[15 USC 7001(c)(1)]

More rules: If the consumer withdraws consent, the institution must treat the withdrawal as effective within a reasonable period of time after receiving the withdrawal. [15 USC 7001(c)(4)] Neither oral communications nor recordings of oral communications are electronic messages for purposes of E-SIGN. [15 USC 7001(c)(6)]

Those are the statutory provisions; now on to the April 2001 revisions to Regulation DD.

These revisions take the form of a new section, Section 10, titled “Electronic Communication.” [12 CFR 1030.10] Section 10 first defines “electronic communication” as a “message transmitted electronically between a financial institution and a consumer in a format that allows visual text to be displayed on equipment, for example, a personal computer monitor.” [12 CFR 1030.10(a)] An institution is authorized to use an electronic communication to make any disclosure required by Regulation DD, so long as the institution meets the requirements of E-SIGN, described above. [12 CFR 1030.10(b)] Again, one of those requirements is that the institution obtain the affirmative consent of the consumer. There are two exceptions, however. You don’t need to obtain the consumer’s affirmative consent if you are electronically providing disclosures in response to a request from a consumer. You also don’t need to obtain the consumer’s consent to disclosures you provide in an advertisement that triggers additional disclosures in the advertisement. [12 CFR 1030.10(c)] See our TISA chapter in Part II of this manual for more details on providing disclosures on request and advertising of deposit accounts.

The institution must either send the disclosure to the consumer’s e-mail address or make the disclosure available in some other way, such as at an Internet web site. [12 CFR 1030.10(d)] If the institution opts to make the disclosure available on the web (rather than e-mail it), the institution must alert the consumer to the disclosure’s presence at the location. The institution must do this by sending the notice to the consumer’s e-mail or postal address. This “availability” notice must specify the account to which the disclosure relates and must specify the location or web site address at which the disclosure is available. [12 CFR 103010(d)(1) and (2)] Specifying the account does not mean the notice must include the account number. For example, the notice may refer to a type of account or the commercial name for the account, or a truncated (shortened) account number. [Commentary, 12 CFR 1030.10(d)(2)-1] The disclosure must be available at the location or on the web site for at least 90 days from when the institution sends the notice to the consumer, or the first day on which the disclosure is available at the location or on the web site, whichever is later. [12 CFR 1030.10(d)(2)(ii)]

Neither the “availability” notice requirement, nor the 90-day retention requirement applies to disclosures you provide in advertisements under Section 8 of Regulation DD. The 90-day retention requirement also does not apply to disclosures you make in response to a request from a consumer under Section 4(a)(2) of Regulation DD. [12 CFR 1030.10(d)(3)] We describe, in detail, the advertising and on-request disclosure requirements in our later chapter “Truth in Savings: Ongoing Responsibilities.”

Like paper disclosures, electronic disclosures must be in a form the consumer can keep. [12 CFR 1030.3(a)] For electronic disclosures, that means the disclosures must be such that the consumer can either save them electronically or print them out in paper form. [Commentary, 12 CFR 1030.10(b)-4] The disclosures must also be consistent with the hardware and software requirements the institution discloses under E-SIGN described earlier in this section. [Commentary, 12 CFR 1030.10(b)-4] Similarly, if the institution gives electronic disclosures on its own equipment, such as an automated teller machine (ATM), it must also either send the disclosures to the consumer’s e-mail address, or make them available on another location, such as its web site. The institution could also have the ATM automatically print out the disclosures. [Commentary, 12 CFR 1030.10(b)-5]

Finally, if the institution e-mails a disclosure and the e-mail is returned undelivered, the institution must make a reasonable attempt at redelivering, using information in its files. [12 CFR 1030.10(e)] A reasonable attempt would not include sending a second e-mail to the same address if the institution has a different address on file. [Commentary, 12 CFR 1030.10(e)-1]