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Internet Disclosures - Prior Consent

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The E-SIGN Act authorized institutions to provide electronic disclosures if prior customer consent is properly obtained. There is some discussion that amendments were made to Regs E and DD to withdraw portions of the rules on electronic disclosures. Is prior consent to receive notices electronically required if consumers receive internet banking disclosures via an electronic channel as part of their online registration process for internet banking and/or bill payment services?

The provisions that were removed from Regs E and DD (also Regs Z, B, and M) were interim rules on electronic communications that went beyond the specific requirements of E-SIGN in terms of how disclosures for these regulations delivered electronically could be considered to be in writing. These interim rules were never made mandatory and ultimately have now been deleted. That said, E-SIGN itself is the governing statute for delivering electronic documents as written documents. E-SIGN always has required that the customer consent to receive electronic documents. The consent must be made after specific information about the equipment requirements, fees and the ability to obtain paper are provided to the customer. In addition, what is often overlooked in E-SIGN (by banks and vendors alike) is that the customer's consent must be made or affirmed in a manner that reasonably demonstrates their ability to receive the disclosures as they will be delivered. This means there has to be some type of closing of the loop that establishes that your customer can both receive and open and read the provided disclosures (or e-statements, which by their nature contain embedded disclosures) required by the various regulations.

First published on 2/23/09

First published on 02/23/2009

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