If the Bank is going to reimburse/pay for an annual membership somewhere in exchange for X number of direct deposits and X number of debit card transactions, does this fall under Reg DD Bonus since it's in exchange for the direct deposit and debit card transactions? Would we need to follow the Reg DD 1030.8 advertising rules and the 1030.4 disclosure content on the TISD? Would it be reported as 1099-INT or 1099-MISC?

No. It's not a bonus under Reg DD because it's not for making the deposit or maintaining it for a period of time. It would be 1099-MISC type income. Be very careful in how you describe the bonus in your ads and in other customer communications to be precise in how you count transactions (initiated or posted within the statement period/within the month). Any lower limit on direct deposit amounts? What are you counting as direct deposits? Payroll? Annuity payments? SSA? What sorts of annual memberships?

I should have clarified that it will be opening a new account with those stipulations along with it.

Right - but the bonus does not happen until those conditions are met. So, it is not for the account opening, making a deposit or maintaining it for a period of time.

Would you mind directing me to where I would get guidance on how to advertise and disclose this? If I’m understanding things correctly, we wouldn’t need to disclose anything to the customer in the TISD. Would we disclose anything anywhere besides the 1099-MISC? Thank you for the information!

It's outside the perimeter of Regulation DD, but you do need to provide your customer information on what you are providing (benefits) and what the customer must do to earn those benefits. When you do that, you need to be careful to make the "rules" clear and understandable. Some of the concerns are outlined in my post above.

You also want to make sure that when the customer meets the qualifications each measurement period, the reward gets posted without the customer having to contact the bank and remind someone about the benefit. If it's not automatic, you'll have problems.

Avoid pinning any benefit on "average collected" or "minimum available" balance or any other measurement the customer can't readily determine.

You have to avoid anything that might be considered unfair or deceptive.

We are thinking about advertising a new IRA product with a higher rate. The stipulation is you can only get the higher rate if you open a checking account with us that will have a minimum balance requirement. (This will be for brand new customers only)

Is there anything special I need to consider in advertising this product?

Is this considered a bonus because you have to open a checking account to get the higher rate?

No, it's not a bonus, because it is interest (even if you call it a bonus rate, it's still interest, and doesn't fit the definition of "bonus" in the regulation. Just be clear and transparent in your ads and customer information materials. Make the conditions easy to understand.

Piggy-backing on these questions. Would we still be okay to exclude this as a "bonus" if the requirement is that the customer must have a certain $$ amount of direct deposits within the first 90 days in order to qualify? There are no minimum balance requirements for maintaining the account to earn the reward - customer must have $$$ of direct deposits to get one reward, or can have $$$ direct deposits and ## of debit card transactions for higher reward. I agree all of this must be made crystal clear in the disclosures.

I would be concerned that tying the payment to a $$ amount of direct deposits falls into "given or offered to a consumer during a year in exchange for opening, maintaining, renewing, or increasing an account balance."