Electronic Transfer Accounts (ETA's)

My bank has started to offer these wonderful little (problem) accounts. We've made a chart that shows the benefits for each checking product that we offer and the ETA's were included. The chart shows that we limit the withdrawals to 4 per month but I have read that they have to make a minimum of 4 withdrawals per month.

The maximum 4-withdrawal limit is not disclosed in the bank's disclosure. Can we enforce the maximum 4-withdrawal or are we required to allow as many as they want?
Thanks for your help.

We started offering these WONDERFUL accounts also in 2000. How many have we opened? -0- Our regular accounts are much better and less expensive than this account and the "unbanked" were not interested. ETA accounts feature min of 4 cash with and 4 balance inquires a month included in the mthly fee. Don't forget about the mtly reporting if you open any accounts. Good Luck!

We've opened a few - I don't think they're as wildly popular as the Fed thought they would be.

I don't think you have to limit the transactions to 4 per month (or force them to make at least 4 per month) - you just can't charge a transaction fee for the first 4. If you choose to charge the fee for additional transactions, you'd need to disclose that to the account holders - in the new account documents, or some notification to the existing customers at least 30 days before you begin charging.

AAAHHH! Fee income. Now we're talking!

Since we didn't disclose the 4-withdrawal limit in the disclosure, can we still enforce it? As in "close the account" because you have exceeded 4 withdrawals in one month?

I think I'd lean toward no on that one.

From the ETA website Q & A:

"Q47. On what grounds may a financial institution close an ETA?

A47. A financial institution will be permitted to close an ETA where the financial institution has cause to believe that fraud has occurred in connection with the account or that the account has been misused. Any determination that fraud or misuse has occurred must be consistent with the financial institution’s usual criteria for closing accounts. Those criteria could include, for example: where the institution determines that fraud has occurred after conducting the investigation required under Regulation E; excessive overdrafts; negligence in safeguarding an ATM and/or POS card or PIN number; or failure to pay an overdraft within a reasonable period of time.

A financial institution may not close an ETA for any reason other than fraud or misuse unless it is requested by the holder of the ETA to do so; the ETA ceases to be used for the receipt of eligible payments; or the Financial Agency Agreement is terminated in accordance with its terms."

Since you probably wouldn't close another account for this reason, I'm not sure you could justify closing the ETA.

I think it might be a good idea, before you get too many of these accounts, to reissue deposit agreements, and outline all the ETA requirements for your ETA customers. That way, no one gets questioned about who did what and why.

The Fed has a great website with a lot of good information here.

We started offering them in March of 2001 and have approx 45 of them. We open at least one a month. We have experienced a few problems, but overall the account has been well received. I also agree with the others, if you did not disclose in your Reg DD a limit of 4 withdrawals, you can't limit them to four withdrawals or charge them.