We offer e-Statements to our customers. Currently we require them to read the online EFT disclosure and select “I accept” to opt-in for e-Statements.

Now management wants to change the process in order to promote e-Statements. It has been decided that we will automatically opt-in everyone for e-Statements. The customers will have to log onto home banking to opt-out of e-Statements.

My concern…if we opt in everyone, where is their consent to receive e-Statements. What about the disclosure? Now I’m puzzled. What do I do now? We haven’t started this yet but will be soon.

You can't do it that way:

230.10(c) When consent is required. Under the E-Sign Act, a depository institution is required to obtain a consumer’s affirmative consent when providing disclosures related to a transaction. For purposes of this requirement, the disclosures required under §§ 230.4(a)(2) and 230.8 are deemed not to be related to a transaction.

We have a vendor who is trying to sell this automatic opt-in idea to our management too. When I brought up the issue of having the customer demonstrate that they could actually access the statements, he pooh-poohed it. Guess who management believes?

Ask management to have the vendor representative provide them with their legal opinion that supports their claim. Neither the vendor nor management should balk at a reasonable request such as that.

Then of course have your own attorney review it for concurrence. Once everyone is in agreement - feel free to proceed :).

If your management will not at least go that far, then.........update your resume???

What you are describing could lead to very serious problems.

Those statements your management and vendors want to switch from paper to electrons contain disclosures subject to Regs E, DD, and Z (if HELOCs or other revolvers are involved.) All of these disclosures must be "in writing" or else they do not count. Failure to provide disclosures can result in civil liability and enforcement actions. Electronic documents can be a legal substitute for paper disclosures, PROVIDED you follow the "informed consent" procedure in the federal ESIGN Act.

In a similar case a few years ago, the bank's failure to use ESIGN was picked up by its regulator and the bank was ordered to send paper statements, retroactively, for all affected cycles. Also, the bank was directed to reopen the Reg. E error resolution window for all of these late statements.

What about all those customers that do not own a home computer? How does Management/vendor expect them to access their statements?

Banking has never been about providing universal service to everyone (they are not public utilities). It's been about deploying products designed to further the bank's mission or goals while contributing to the bottom line.

Banks are permitted to design and deploy e-only products. When they do so, it is with the knowledge that some individuals will not have access to their products and some who elect not to buy them.

Good point, John. E-only products are perfectly legal. The distinction between e-only and cramdown is that the customer gets the choice of selecting a suitable paper-based product if s/he wishes. It is not legal to allow customers to enter a paper-based product and then spring the e-delivery trap.

I have had to fight this "cramdown" issue for 3 years...they are wearing me down.

What we need is a big ugly lawsuit where some business (doesn't have to be a bank) loses its shirt because a judge throws out e-docs that are not supported by a proper consent.

I don't have much faith in the legal opinions. I did request a legal opinion from our courtesy pay vendor and the wording was so tricky that the average person (e.g. senior manager ) would think that everything was okay. The real answer lie in the fact that they would not warrant a regulatory compliant product in the contract! P.S. am definitely updating my resume.