The CFPB recently released their Summer 2020 Supervisory Highlights which provides great insight into what examiners are seeing out in the field. One of the areas addressed on the deposit side, paying a bonus under the Truth in Savings Act (Regulation DD), is one we haven’t seen in some time.
Regulation DD defines a bonus as, …a premium, gift, award, or other consideration worth more than $10 (whether in the form of cash, credit, merchandise, or any equivalent) given or offered to a consumer during a year in exchange for opening, maintaining, renewing, or increasing an account balance. The term does not include interest, other consideration worth $10 or less given during a year, the waiver or reduction of a fee, or the absorption of expenses.
As you are probably well aware, anytime you offer a bonus there are some additional disclosure requirements that need to be included in both your Truth in Savings account disclosure and any related advertising. But, as the CFPB points out, your responsibilities don’t necessarily end there.
Examiners found that one or more financial institutions advertised bonuses for consumers who opened an account at the financial institutions and met certain requirements that the advertisement specified. These financial institutions failed to provide the promised bonuses in instances where consumers met the requirements.
The lack of quality control processes and failure to monitor the accounts to ensure consumers received the bonus they were due caused the CFPB to conclude that the advertisement of (the) bonus offer was misleading and inaccurate in violation of Regulation DD. We’re guessing this could also show up in your consumer complaints as well.
This is a great reminder that if you offer a bonus in connection with a deposit account, ensure you’re doing what you say and saying what you do, both before and after the requirements are met.
This edition of the Supervisory Highlights also addressed Regulation E and a variety of lending topics, such as consumer reporting, fair lending and mortgage servicing to name a few. We will also have a summary coming up in our October Magazine.
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