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#1340579 - 02/09/10 10:04 PM Reg E Opt-In question
JoAnne Offline
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Joined: Feb 2001
Posts: 795
Michigan
1. If you have business accounts set up in a consumer product for whatever reason (most probably, by error), can you automatically opt them in to the Overdraft service (not give them the option) or because they are in a consumer or retail product and you cannot determine from their account titling what the account is used for, do you include them in the opt-in mailing?

2. Include all consumer accounts in mailing or just those with ATM or Debit Cards?
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#1340651 - 02/09/10 10:45 PM Re: Reg E Opt-In question JoAnne
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 40,086
Cape Cod
The fact that an account is coded one way or another doesn't make it a consumer account or a business account for Reg. E. Look to whether the account is owned by one or more individuals and opened and maintained for personal, family or householder purposes. That said, having business accounts in your consumer product listings is going to raise the eyebrows of an examiner, so clean up the problem if you can do so.

It's a waste of time, energy, postage and money to send the opt-in disclosure under 205.17(b) to consumers whose accounts don't have cards issued, since it not only won't apply to them, but also will confuse them and lead to unneeded questions. Wait until one of those customers requests a card, then give the disclosure.
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#1350348 - 03/01/10 02:28 PM Re: Reg E Opt-In question John Burnett
bstritecky Offline
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Joined: Feb 2005
Posts: 313
sd
We are in the process of cleaning this up but we are struggling with ag customers. If we have a family farm and they run all farm expenses through the account it that considered for "household" purposes? I can't seem to find any guidance on this.

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#1350375 - 03/01/10 03:23 PM Re: Reg E Opt-In question bstritecky
Elwood P. Dowd Offline
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Elwood P. Dowd
Joined: Aug 2001
Posts: 21,939
Next to Harvey
There is no third party guidance on how to decide whether an account is for business or household use. That's your bank's basic due diligence responsibility at account inception.

If the account title is:

"Sam Fouts or Laura Fouts" then as far as I'm concerned it's a consumer account for the purposes of Reg E, Reg DD, etc. They may run business receipts and expenditures through the account, but I'm comfortable with that classification because 1) the water isn't muddied with the name of a business and 2) that's the conclusion that best protects the consumers.

"Fouts Farms, LLC," then I'm comfortable saying the account was not opened for personal, family or household use regardless of the fact that they run non business expenses through the account.

"Sam Fouts or Laura Fouts dba Fouts Farms," but the account was not documented as a partnership, no EIN was obtained, and no dba certificate was obtained then you have some real holes in your account set ups. On this issue (and many others) the bank has just decided to flip a coin whenever an important choice needs to be made. You may default to classifying it as a consumer account for this purpose, but it does not resolve the more critical issues.

Yes, I was reared in an ag bank. "Sam & Laura" are my great grandparents.
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#1350605 - 03/01/10 07:44 PM Re: Reg E Opt-In question Elwood P. Dowd
bstritecky Offline
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Joined: Feb 2005
Posts: 313
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Thanks! Mine were George and Gladys!

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