Electronic Statements

Does anyone currenlty offer electronic statements? If so, what procedures must be completed in order to comply with regulations?

Mickey:

Take a look at the Fed's recent press release describing five new "interim final" rules. Here's a link: http://www.federalreserve.gov/boarddocs/press/boardacts/2001/20010329/default.htm

Look especially at the new rules in the Reg E and Reg DD sections.

Interim final, as in intervening, temporary, final. When you have interim finals you know you're gonna get a kick out the reg itself.

I was going to read these this weekend, because they do want comments and I do want to help shape the regulatory environment for years to come, but alas I had to do the laundry.

Seriously, I do plan on getting them read in the weeks to come as this is part of our future. I hear a lot of e-sign questions out there and believe we may be able to use e-sign in differing degrees and with differing degrees of acceptable risk, without waiting for secured digital signatures and document protection. That is, there are some things taht we can do today to make life easier while waiting for better things to come.

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Andy Zavoina
Opinions stated are not necessarily that of my employer.

Statements will require an ESIGN disclosure and opt-in. Delivery must involve e-mail. You can either deliver the periodic disclosures (statements) on or with an e-mail message, or deliver the disclosures to a URL and notify the accountholder via e-mail. You can NOT use proprietary e-mail for this purpose, so you face some interesting security & privacy challenges.

Most vendors that are doing this now are credit card companies. They typically send the customer an e-mail announcing that their statement is ready for review. The e-mail usually includes a link to a secure Website which requires password access. While there, you can view a couple of back months' statements (this is a requirement of the new Fed rules). The interesting thing will be to see how banks and others include monthly disclosures such as the short form error resolution notices (Z and E), etc. The new Regs provide some help and guidance on this point.

Of course, as Richard so capably said, you have to get the customer to agree to accept disclosures electronically first, under e-sign rules. And then, the content of what you make available to the customer must be almost exactly what you would put in the mail to him/her.

Sending a statement via e-mail is fraught with security problems since you must send it to a "public" e-mail address, not a secure e-mail link you might have on a proprietary system (see Richard's comment).

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John Burnett
Cape Cod Bank and Trust Co., N.A.
jsburnett@ccbt.com

We have internet banking which will be where they review the statements once available. It is an exact image of the paper copy so I think we are good their. I understand that we must e-mail them that it is available. I forgot about the billing error resolution, but I am glad you reminded me. Do you think we could just put a link to this resolution when we e-mail them that the statement is available?

We will soon be going to check imaging so those will also be available to view.

At least for the time being, putting a link to your error resolution notice in the e-mail notifying the customer that a statement can be picked up may not be enough. The interim rule doesn't address it clearly. However, since the printed statement usually has the disclosure on its backside (and that passes examinations), you could argue that having the link in the e-mail gives the consumer at least the same ability to get to it as provided in the print version. I'm not very comfortable with that, though.

Another, possibly better, approach, would be to include another page in each Web-based statement that provides that sort of disclosure (along with your caveats about prompt review of statements, etc., etc.). Or, if the customer has to log in with a password to get to the statement, perhaps the message could be on the logon page.

Finally, you could think about including the error resolution language in the e-mail notice not as a link, but as part of the message. If so, put it above the link to the statement.

This is an area that the Fed wants comments on, folks. They specifically ask whether the rules for periodic statements should be altered for on-line banking.

John raises good points here. Looks like now would be a great time to reconsider the long form notices that have to be sent only once per year under Regs E and Z. One more e-mail message isn't going to cost much, the consumer will discard it as spam, and you won't have to send the first one for a year! By then, the Fed may have figured out a better solution.