We would like to do a promotion for a "Free" Buisness Checking. I know it's not supject to Reg DD, but could fall under UDAAP.

Free would mean no maintenance fee. Items fees under 200 items is free, over 200 items would be 25 cents per item. Etc...

Our promotional materials and fee schedule would clearly outline the fees that are assessed.

I am uncomfortable with calling something free that isn't free. But we have printouts from the internet of Banks that offer Free Business Checking accounts that clearly have some fees that are free and some fees that aren't.

Maybe we would never have a UDAAP violation if everything is disclosed, but I don't think we could afford to take the hit if it did happen.

Am I over thinking this. If we clearly disclose all the terms, do we really have any risk calling the account Free?

Please weight in...thanks

Not a Udaap specialist (I do not believe anyone is at this time)over 200 items would be 25 cents does not appear to be "free"

Sorry...let me clarify...Item fees per check/debits up to 200 items is free, over 200 debit items the fee per item would be 25 cents.

The fees that could be assessed on this account would be very minimal, but just not completely free. Which is why I was concerned.

If I run 500 debits a month, the account is not free. While the focus of UDAAP is mainly consumer oriented, I know of no provision that says it has to be limited to consumers.

Not only would it not be free, it would cost you $75.00 per month!

I went to an ABA school in October and thought it was said that UDAAP could include the treatment of commercial customers. But now I think I may be mistaken. In looking through my notes I don't see any reference to coverage of commercial customers. However, they did use a Business Checking Simply Free advertisement (made up I'm sure) to drive home the point about misleading ads.

I still think free is free, but maybe the lack of clarity is how some banks can offer Free Business Checking (with fees).

I have an additional question....

If we go forward with this promotion...can we offer it in only one market area?

I've seen bank's (large ones, at that!) offer what you are referring too, SRR...free to a certain extent...I wouldn't be comfortable with it myself!

Randy: Section 1031 of Dodd-Frank, which is the section that gives the CFPB authority to enforce UDAAP, does say that it applies to transactions with a consumer for a consumer financial product or service.

That doesn't mean that deceptive advertising is OK in other situations, just that it seems to fall outside of UDAAP.

Ted - granted, but there is one portion of the Act that is not written very well and (while maybe a stretch) a literal interpretation might lead one to believe that it might be much broader. There are no qualifications listed in Subparagrah B and normally laws do not carry qualifications from one subparagraph to the other when connected with an "or":

SEC. 1036. PROHIBITED ACTS.

(a) IN GENERAL.—It shall be unlawful for—
(1) any covered person or service provider—

(A) to offer or provide to a consumer any financial product or service not in conformity with Federal consumer financial law, or otherwise commit any act or omission in violation of a Federal consumer financial law; or
(B) to engage in any unfair, deceptive, or abusive act or practice;

But as you point out, deceptive advertising practices would not be limited to consumers under other laws.

Forget about whether the law allows it. What about your bank's reputation? Use a few of those "free but..." ads for business customers and folks might start looking at your bank as less than forthcoming on charges and fees.

There is a national bank in our area that used to be just in the credit card business that advertises free if you meet certain balance requirements (monthly minimum), fewer than 15 debit card transactions, and less than 250 checks per month. If you miss any one of the 3, it has a monthly fee. This is all stated in the radio ads they run multiple times a day, and also in print.

No fast talk, no small print, just the actual way the account works. I'm not aware of any negative feedback on this, and as a competitor, we would have heard.

Thank you all for weighing in...What we want to offer is a very good product and we plan to clearly disclose the terms of the account...I've suggested to management that we give it a different title...I even looked up synonyms for "low cost"...for ideas of other ways to title and advertise the account. Something that more accurately describes the account since Free is misleading.

You aren't going to like this alliterative attempt: "Cheap Checking"

We used to have one called "Small Business Checking". Ads clearly explained that it was targeted to small businesses (with limits similar to those mentioned above). If a customer seriously went over limits, we would meet with them to discuss ongoing account needs, waive (one-time) the SC and move them to a more appropriate account.