Looking for some feedback on the advertising of a checking account that has no service or maintenance fees. Once upon a time the account was called "Free Checking". After an exam we were advised not to call it a "free" checking because the customer had to pay for check printing fees and they could be charged NSF fees for overdrawing their account. So we changed the name of our checking account and removed the word "free" from all documents. Everything I read, however, states that check printing charges are not considered maintenance or activity fees. NSF fees I'm little more unsure of. I know we have to disclose these fees - but are they considered maintenance or activity fees. We are thinking about a billboard or radio advertisement and we are just trying to figure out how to go about advertising the account. I think we should avoid "free" or "no cost" all around. However, there are no other fees on the account. Can we simply say "no minimum balance" and "no maintenance fees"?

Any help would be appreciated!

Thanks

Refer to 1030.8(a) and the associated commentary go into a lengthy explanation on the use of the words "Free" and "no cost".

https://www.bankersonline.com/regulations/12-1030-008

Bankwoman, I'm wondering if you ever came to a conclusion on your NSF fees? I'm looking into the same thing right now and reached out to ABA for guidance but didn't receive a definitive answer yet. Our "free" accounts come with an overdraft protection (courtesy pay) program and while I feel this is an issue, I'm having trouble pointing to something that says it is.

NSF Fees are not maintenance/activity fees. Look at the Commentary to §1030.8(a)(4)

4. Other fees. Examples of fees that are not maintenance or activity fees include:

i. Fees not required to be disclosed under § 1030.4(b)(4).

ii. Check printing fees.

iii. Balance inquiry fees.

iv. Stop-payment fees and fees associated with checks returned unpaid.

v. Fees assessed against a dormant account.

vi. Fees for ATM or electronic transfer services (such as preauthorized transfers or home banking services) not required to obtain an account.

Afternoon David! We discussed the 'fees associated with checks being returned unpaid' - but via the courtesy pay (overdraft protection) these are paid checks/items. Do you feel it is similar enough to stand on?

GilaMonster.....we came to the same conclusion that Randy and Daivd explained in their posts above. However, it didn't change our opinion of how to advertise our account. No "Free". We have a "Free" checking account where the only fees the customer would receive would be check printing fees or NSF fees. But during an exam a few years ago we were pretty much told that we could not advertise this account as free because of these fees. (It really confuses a person who is trying to get a handle on the Reg.) We have since removed the word free from all disclosures and brochures and we have decided any advertisement would simply state that there is no minimum balance fee or maintenance fee.

Thank you all! Randy, that was EXACTLY what I needed to see - perfect!

David,

Am I understanding this correctly that RETURNED UNPAID Item Fees are permissible but PAID Overdraft fees are not allowed?

iv. Stop-payment fees and fees associated with checks returned unpaid.


According to the CFPB, Overdraft Fees are permissible too:
However, a “free” account may still have certain fees such as ATM fees, overdraft fees, bounced check fees, balance inquiry fees, fees to stop payment on a check, fees on a dormant account, or check-printing fees.
I was under the understanding that "Overdraft Fees" were not allowed on a 'FREE' account. I just want to get this right!!

No. Just the opposite. Reg DD has always said NSF (returned unpaid) was NOT a maintenance/activity fee. I've also said that OD fees are the same thing. There was a preamble in 1992 that clarified this, but it never made the printed regs. The CFPB finally clarified this with their statement that you CAN call an account "free" even if you have OD fees. Randy gave the link to it and you quote it:

a “free” account may still have certain fees such as . . . overdraft fees,