We have been testing E Statements and have been informed by our vendor that they do not have the capability of notifying the bank when emails are returned undeliverable when the notification email is sent. When the customer initially enrolls for E Statements that customer and the bank perform an electronic handshake by sending a "shell" statement and a password. I know that in the E-Sign Act there is a requirement that you must revert back to paper statements upon 3 failed attempts to deliver an E Statement. Can someone please point me to the cite in the reg so I can forward it on to the vendor? Any help would be appreciated!

Not so. The rule on bounced disclosuregrams came from the Fed in the 2001 "e-Regs" (optional amendments to Regs B, E, M, Z, and DD.) It is not part of ESIGN. The Fed is now proposing to dump this concept, so the regs should catch up with your vendor later this year. Savor the moment! Things like this don't happen very often.

It isn't E-Sign but the current "interim final" rules that require redelivery. As one example, "§205.17(d) Redelivery. When a disclosure provided by electronic communication is returned to a financial institution undelivered, the financial institution
shall take reasonable steps to attempt redelivery using information in its files."

However, this is a big however, these rules are in a state of flux and may go away. Look at the Top Stories articles on the e-rules from April 30. http://www.bankersonline.com/topstory/topstory_0407.html

Thanks, they may go away but for right now if we receive an undeliverable e-statement I should revert back to paper statements, right? When is the deadline for this rule to become final?

The "bounced email followup" is not currently mandatory because compliance with the interim final rules is not mandatory. For example, the section 205.17 citation that Andy gives above is something you cannot be held liable for if you don't comply with it.

The comment period on the new proposals is June 29, 2007. I believe that the Fed will want to finalize the rule as quickly as possible after that date, to remove a cloud that's been hanging over its e-communication rules since they were first issued. But there is no deadline. It's strictly a "wait and see."

Okay, so if a customer has agreed to receive their periodic statement electronically and we have to provide them one as disclosed on our Terms and Conditions and as required by Reg E for electronic transactions, if the customer is unable to receive the statement because they have changed their address or it bounces, we are under no obligation to revert to sending them paper statements? I'm confused. I know our agreement states we are but I guess that was based on the 2001 E-Sign requirements. How else would you know that a customer is not receiving a required periodic statement unless the email bounces when you try to send the notice? Please help me John!!

That's the irony of all of this. There are a lot of emails that get bounced that never result in a message back to the sender, so you'd never know until the customer complains.

The 2001 amendments to Reg. E, et al, never had a mandatory compliance date. To be exact, they all had such dates, but they were eliminated before they arrived. So you don't HAVE to comply with those provisions. What you DO have to comply with is the E-Sign Act, and your deposit or stand-alone e-statement agreement.

I agree. If the bank has elevated the optional "bounced disclosuregram" rule to a provision of its contract, then it doesn't matter what the regs say--the bank must follow its contract and provide paper statements.