A variety of federal laws and regulations require banks and financial institutions to make certain disclosures to holders of deposit accounts. Many of these disclosures are designed for consumer protection and accordingly, are only required to be made to those "consumer" deposit accountholders who hold deposit accounts primarily for personal, family, or household purposes.
Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank Act") transferred the rulemaking authority for some of these consumer regulations from other federal regulators to the Consumer Financial Protection Bureau ("CFPB") on July 21, 2011. To reflect this change in authority, the CFPB has republished certain previously existing regulations to Title 12, Chapter X of the Code of Federal Regulations ("C.F.R."), effective December 30, 2011. (It is unclear when the older versions of these regulations will be removed from the CFPB’s predecessors’ sections of the C.F.R.) This recent republication included regulations requiring financial institutions to provide account disclosures, thus providing an excellent opportunity to review the newly republished regulations and take note of how disclosures required to be made to consumer deposit accountholders differ from those required to be made to business deposit accountholders.
Disclosures Required for Consumer Deposit Accounts Only
Many federal regulations requiring financial institutions to make disclosures to holders of deposit accounts are designed for the protection of consumers, and therefore are not required to be made in the case of business deposit accounts. Regulation DD, implemented under the Truth in Savings Act of 1991, for example, only requires financial institutions to give account disclosures to "a consumer," defined as "a natural person who holds an account primarily for personal, family, or household purposes, or to whom such an account is offered," and specifically excluding "a natural person who holds an account for another in a professional capacity." (12 C.F.R. 1030.2(h)). Disclosures required under the Truth in Savings Act are designed to provide information that enables consumers to make informed decisions about accounts at depository institutions, such as descriptions of minimum balance requirements, rates of interest payable on and fees assessable against deposit accounts. Although financial institutions are not required by Regulation DD to provide these disclosures to customers holding business deposit accounts, they may wish to provide such information for other reasons, such as the disclosure to accountholders of general contractual terms. To reflect the new authority of the CFPB, the regulations implementing the Truth in Savings Act as it concerns banks, formerly found at 12 C.F.R. Part 230, have been republished to 12 C.F.R. Part 1030. The National Credit Union Administration, however, will retain authority over 12 C.F.R. Part 707, which will continue to implement the Truth in Savings Act as it concerns credit unions.
Regulations under the Gramm-Leach Bliley Act ("GLBA") are also designed to protect consumer accountholders. (15 U.S.C. 6801, et seq.). These regulations require financial institutions to disclose to consumers the manner in which nonpublic customer financial information held by the institution is disclosed, used and protected. As used in the GLBA, "consumer" means "an individual who obtains, from a financial institution, financial products or services which are to be used primarily for personal, family, or household purposes, and also means the legal representative of such an individual." (15 U.S.C. 6809). Pursuant to the Dodd-Frank Act, the CFPB now has authority over the regulations under the GLBA governing account disclosures, previously found at 12 C.F.R. Parts 216 (banks) and 716 (credit unions), and has republished them as a new Regulation P, at 12 C.F.R. Part 1016.
Although it is not one of the laws transferred to the authority of the CFPB by the Dodd-Frank Act, the Check 21 Act and the regulations implementing it include a consumer awareness element, requiring financial institutions to disclose to holders of consumer accounts the consumer re-credit rights that apply when a consumer in good faith believes that a substitute check was not properly charged to his or her account, as well as an explanation that a substitute check is the legal equivalent of an original check. (12 U.S.C. 5011, et seq.; 12 C.F.R. 229.57). These disclosures need only be made to holders of "consumer accounts," which, for the purpose of the Check 21 Act, means "any account used primarily for personal, family, or household purposes." (12 C.F.R. 229.2).
More Broadly Required Disclosures
In contrast to the disclosures described above, disclosures by financial institutions under the Electronic Fund Transfer Act and the Expedited Funds Availability Act may be required for business deposit accounts as well as those deposit accounts held for personal, family, or household purposes. (See 15 U.S.C. 1693; 12 U.S.C. 4001, et seq.).
Regulation E, implementing the Electronic Fund Transfer Act, requires financial institutions to make certain disclosures regarding the type of electronic fund transfers that consumer accountholders may make and any limitations on the frequency and dollar amount of transfers, as well as other related information. Although Regulation E only requires that disclosures be made to consumer accountholders, it defines a "consumer" much more broadly than do the regulations above, as "a natural person." (12 C.F.R. 205.2). This means that disclosures under Regulation E must be made to natural persons who hold accounts for professional or business purposes, as well as to those who hold accounts primarily for personal, family, or household purposes. Despite this broader applicability, Regulation E, formerly found at 12 C.F.R. Part 205, is among the regulations now under the authority of the CFPB, and has accordingly been republished to 12 C.F.R. Part 1005.
The Expedited Funds Availability Act is implemented by Regulation CC, pursuant to which a financial institution must make certain clear and conspicuous disclosures regarding the institution’s policy as to when funds deposited in an account are available for withdrawal. The initial specific availability policy disclosure required under Regulation CC must be made to all customers, including business deposit accountholders, although some additional disclosures are required to be made only to holders of consumer accounts. Regulation CC was not among those regulations transferred to the authority of the CFPB and therefore was not republished; it can be found at 12 C.F.R. 229.1, et seq.