Auto Pay Question

If a customer signs up to have a loan paid by Auto Pay (ACH), is it required by regulation to send them a quarterly statement and annual statement?

On the loan? No. There may be other requirements that loan account statements be sent, however. For example, mortgage servicers who aren't exempt have to provide a periodic statement to their mortgage loan borrowers even if they have signed up for auto-pay.

On the deposit account side, the auto-pay is a form of EFT that will mean that the bank holding the deposit account will need to provide a quarterly statement at minimum, plus a monthly statement in any month in which one of the auto-pay debits hits the account. But if the deposit account is held by the same institution holding or servicing the loan account, the transfers won't be considered EFTs subject to Regulation E (aside from the prohibition on mandatory use of electronic transfers as a condition of credit), so they won't, by themselves, create a statement requirement.

Other than the mortgage servicing requirement for periodic statements, for open-end credit (i.e. HELOC, credit card), the auto-pay/ACH payment would be a credit to the loan balance so wouldn't there be a requirement to provide a statement for open-end credit? As interest is charged and there could be fees assessed periodically, my understanding is a statement would be required. For non-mortgage closed-end credit, not finding anything specific in Reg Z that speaks to statements or more specifically to auto payments not requiring a statement. Operations has told me that other than mortgage, if the customer elects to auto-pay their loan payment, the customer can choose to not receive a statement. I'm not sure I follow why we would not send a statement if there is activity on the account. In your response, you indicate that an EFT transfer from a deposit account to a loan account at the same institution may not in itself create a statement requirement. Is this only on non-mortgage closed-end loans? Is there a reference in the regulation that I'm overlooking that actually addresses auto payments and statements? Thank you for any guidance.

Unless State law requires, there are no statement requirements on non-mortgage closed-end loans - auto-pay or not.

Thank you!