Timing: The Account Opening Disclosure

You must supply the disclosures to the consumer or member before the account is opened, before you provide a service, or before you charge a fee, whichever is earliest. [12 CFR 1030.4(a)(1)] If the consumer or member is not present (e.g., the account is opened by mail), you have ten business days (credit unions have 20 calendar days) in which to mail or deliver the disclosures (starting when the account is opened, a fee is charged, or a service is provided, whichever is earliest). [12 CFR 1030.4(a)(1)] This additional time is not available, however, if the consumer or member is not present and is opening an account by electronic communication. Instead, you must provide the disclosures before the account is opened or you provide a service or assess a fee. [12 CFR 1030.4(a)(1)(ii)] You can do this either by having the disclosures automatically appear on the web site or by providing a link to the disclosures that the consumer or member cannot bypass before opening the account. [Commentary, 12 CFR 1030.10(b)-3]

The requirement that you give disclosures before charging a fee applies only in the rare circumstance where you provide a service or charge a fee before opening an account. It does not require that you give initial disclosures in connection with an existing account when you provide a service or impose a fee.

The renewal of a time account or term share account that is not automatically renewable is considered to be the opening of a new account. The same timing rules apply. [Commentary, 12 CFR 1030.4(a)(1)-1.i.] If the consumer or member makes the renewal in person, you must supply the disclosure at the time of renewal. If the consumer or member renews by mail or telephone, you have ten business days (or twenty calendar days if you are a credit union) after the renewal to mail or deliver the disclosures. If the consumer or member renews by electronic communication, the institution must meet the timing rules described above for new account disclosures—before the account is opened or you provide a service or assess a fee. [12 CFR 1030.4(a)(1)(ii)] Again, you can do this either by having the disclosures automatically appear on the web site, or by providing a link to the disclosures that the consumer cannot bypass before opening the account. [Commentary, 12 CFR 1030.10(b)-3]

The renewal of an automatically renewable time or term share account is not treated as the opening of a new account. Instead, TISA requires in most cases that some disclosures be sent before the renewal date. Also, with respect to most time and term share accounts, whether or not automatically renewable, Regulation DD and Part 707 require advance notice of the maturity of the account to be sent to the consumer or member. All of these requirements are explained in our chapter in the second part of this manual dealing with ongoing responsibilities under TISA, since they do not have to do with opening a new account.

The following are also treated as new accounts, requiring new account disclosures:

  1. The consumer or member changes a term for an automatically renewable time or term share account. [Commentary, 12 CFR 1030.4(a)(1)-1.ii.] For example, if the consumer or member requests that, upon renewal, the term of an 18-month Certificate of Deposit (CD) be changed to one year, the institution would have to supply new account disclosures. If the institution initiates the change, new account disclosures are not required; the change is disclosed in the notice before maturity instead.
  2. An institution transfers funds from an account to open a new account, not at the consumer’s request, unless the institution previously gave account disclosures and any change-in-term notices for the new account. [Commentary 12 CFR 1030.4(a)(1)-1.iii.] For example, an institution might convert a money market deposit account (MMDA) into a negotiable order of withdrawal (NOW) account, if the account holder consistently exceeds the check-writing limits. The conversion would require new account disclosures unless the institution had previously given NOW account disclosures and provided a change-in-term notice at the time of the conversion.
  3. An institution accepts a deposit from a consumer or member to an account that the institution had deemed closed for the purpose of treating accrued but uncredited interest as forfeited interest. [Commentary, 12 CFR 1030.4(a)(1)-1.iv.] As we point out in our chapter covering ongoing responsibilities under TISA, an institution is allowed to treat accrued but uncredited interest as forfeited when a consumer or member closes an account if the institution has disclosed that policy in its account disclosures. This rule says that if the institution receives a deposit to an account that the institution has deemed closed and failed to pay accrued interest because of its policy, then the institution must supply new account disclosures. Presumably, the institution would have a reasonable time (as described in the “Timing” section above) after receiving the deposit in which to provide the disclosures.

Since each of these three circumstances is treated as the opening of a new account, you must meet the account-opening timing rules.