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#76636 - 04/29/03 01:47 PM free checking
Anonymous
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Is it permissible to advertise a checking account as free if a direct deposit is required?

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General Discussion
#76637 - 04/29/03 02:01 PM Re: free checking
Kara S Offline
Platinum Poster
Joined: Oct 2002
Posts: 927
Milwaukee, WI
A bank may not use the word “free” or any similar term to describe an account if it is possible under any circumstances for a maintenance or activity fee to be charged on the account. Monthly service charges and minimum-balance fees are examples of maintenance charges. Fee imposed for exceeding a specified number of transactions and per-check charges are examples of activity charges. Balance inquiry step-payment, dominant account, NSF, check certification, check reorder, and similar charges are neither maintenance nor activity charges. Though a bank may not advertise an account as free because it imposes maintenance charges, the bank may advertise a service as free. Free deposits or free withdrawals are examples.
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#76638 - 04/29/03 02:30 PM Re: free checking
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
If the account doesn't have any "maintenance" or "activity" fees, you can call the account free. Requiring direct deposits doesn't matter.
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David Dickinson
http://www.bankerscompliance.com

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#76639 - 04/29/03 03:55 PM Re: free checking
Anonymous
Unregistered

the account doesn't have any maintenance fees or service fees as long as the direct deposit is maintained. Should the direct deposit stop then there could be fees.

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#76640 - 04/29/03 04:11 PM Re: free checking
Andy_Z Offline
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Andy_Z
Joined: Oct 2000
Posts: 27,748
On the Net
That would be a different account type and new disclosures would be prompted, in my opinion, similar to going from a MMDA to a NOW.

The customer should be aware that the direct deposit is a requirement of that account type.
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My opinions are not necessarily my employers.
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#76641 - 06/04/03 03:11 PM Re: free checking
Anonymous
Unregistered

In my bank, the customer stays in the same account type but then is assessed a maintenance fee if the direct deposit is stopped. Our initial disclosures state that there is no maintenance fee with direct deposit and also states what the maintenance fee is without direct deposit.

I have let marketing advertise "Free Checking with Direct Deposit" in the past but now they want to say we have "Free Checking Options" (and this is the only option). Similar to the commentary 230.8(a)8 regarding "free for persons over 65" I felt ok to use "free" with the condition of direct deposit. Any thoughts? And if you agree - would you think it would be ok to say that we have "free checking options"?
Thanks.

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#76642 - 06/04/03 05:39 PM Re: free checking
Deena Offline
Power Poster
Deena
Joined: Nov 2000
Posts: 2,701
PA
I think it's fine to say "free checking with direct deposit" in an ad for that specific account. If the onlu "option" to be able to get free checking is direct deposit, then I think a more generic ad stating that the bank has "free checking options," might be a bit misleading and I wouldn't do it.
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Opinions expressed are mine and not necessarily those of my employer.

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