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#451016 - 11/02/05 01:47 PM Reg DD and online deposit account opening
M&M Offline
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Posts: 530
Midwest
We're revamping our online deposit application. In doing so, we're forcing the online customer to accept eSign. We are going to send a "welcome email" that contains the APY for IBA's, as well as our deposit rules, and we're going to give them the path to the site on our website where the remainder of the disclosures reside.

In reviewing the commentary to Reg DD, 230.10(b)(3), it states:
When a consumer opens an account on-line. When a consumer opens an account on-line, the consumer must be required to access the disclosures required under ยง230.4 before the account is opened or a service is provided, whichever is earlier. A link to the disclosures satisfies the timing rule if the consumer cannot bypass the disclosures before opening the account. Or the disclosures in this example must automatically appear on the screen, even if multiple screens are required to view the entire disclosure. The institution is not required to confirm that the consumer has read the disclosure.

Does the section in italics mean that even though we're sending the disclosures to their email address under eSign, we also have to ensure that the customer accesses the disclosures (via a checkbox or similar method) before the application is completed and the account is opened?

Note: we technically do not open the account until the signature card and funding have been returned to the bank.

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#451017 - 11/02/05 05:34 PM Re: Reg DD and online deposit account opening
Andy_Z Offline
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First, I assume E-Sign is "forced" upon them if they want to do it online, and not in general. Mutual consent is a requirement in E-Sign and if the customer doesn't want it, or wants to back out, you have to allow for this, disclose fees and implications, etc. You also have to worry about demonstrable consent.

Second, before you can have a contractual obligation, you have to explain the terms. The consumer has to have the terms available BEFORE they agree under E-Sign. At the new accounts desk, they give the disclosures and deposit agreement, THEN sign the signature card. This is the same sequence. You can't tell them to sign here, now here are the terms you agreed to and if you don't like them you can close now, but that will cost you $50 for an early closure fee. This fee was disclosed in the e-mail we sent you right after you agreed to it.
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AndyZ CRCM
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#451018 - 11/02/05 09:09 PM Re: Reg DD and online deposit account opening
M&M Offline
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Joined: Nov 2003
Posts: 530
Midwest
Thanks Andy.
You are correct- eSign is forced. If they don't want to consent, then they cannot open via this channel.

To your second point, at the end of completing the application, the customer must print the signature cards. At the time they submit the application online, the email with the disclosure information is sent to them intstantaneously. The customer's account is not opened until they sign the signature cards and return them to the bank. By doing so, they are accepting the account terms.

Further, I'm confused by your comment that the customer has to have the terms available before they agree under eSign. Reg DD has electronic delivery of account opening disclosures built into it, so how can we be required to give them the terms before they accept eSign if they haven't agreed to receive the disclosures electronically? This all seems somewhat circular....

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#451019 - 11/03/05 12:22 PM Re: Reg DD and online deposit account opening
M&M Offline
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Joined: Nov 2003
Posts: 530
Midwest
To rephrase my issue, we have a process outlined to send some of the disclosures required under 230.4 via an email and some are accessed via a link in that email. The consumer is not required to click on that link and read the disclosures.

According to the commentary for 230.10(b)(3), in my opinion, our proposed method allows the customer to bypass the disclosures required under 230.4 and therefore is a violation of the timing requirements. Do you agree?

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#451020 - 11/03/05 06:43 PM Re: Reg DD and online deposit account opening
Andy_Z Offline
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M&M and I corresponded apart from this. But basically the disclosures need to be made prior to account opening. (Reg. DD has some exceptions, but this would seem to be the rule.) So the disclosures should be available and the consumer should prove they can read them. This is easily done on the web if they can read and complete the app, they can read the disclosures. This assumes the disclosures are in a similar format. If the app is in HTML and the disclosures are in PDF, this wouldn't be the case.

The other point is that if they're accepting e-statements, push or pull delivery, it is important to get demonstrable consent. They need a valid email address. You need to test it. Can they read your email and follow it to a page where a sample statement exist, or can they open a sample statement you send? Do one of these and ask what it said. That demonstrates they can do it.

And make the other required disclosures about rights to paper, the ability to cancel, what the implications of that would be, etc.

In this case, the process is largely done online. The actual opening won't happen until the bank has a traditionally signed (pen and ink) signature card. So it isn't truly opened online as in with a digital signature.
_________________________
AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

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#451021 - 11/03/05 09:00 PM Re: Reg DD and online deposit account opening
Anonymous
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OK-I want to be sure we're doing this correctly-I'm also working on this issue right now.

Here, the customer is unable to actually apply online until they agree to the E-Sign consent and disclosure. Is this acceptable in your opinion?

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#451022 - 11/04/05 04:25 PM Re: Reg DD and online deposit account opening
Andy_Z Offline
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Andy_Z
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That is fine. The issue is one of what they do online and how they demonstrate they can do it.

They can't "accept" e-statements as an example in the terms of your account agreement if they can't prove to you that they can in fact, "accept" them. If they cannot receive email attachments for some reason, and you will be sending the statements as a PDF attached to an email, they can never get them, review them, or understand anything you communicated this way. But they figured they had online statements to keep up with their account balances and they wanted the lower cost of this account, so they accepted the terms. You can't let this happen.
_________________________
AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

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