Quarterly Statement for Passbook Savings

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Question:

Are we required to send a quarterly statement to our Passbook Savings customers if there are no electronic transactions that post to the customer's account? We have a Statement Savings account that a customer can use for ATM transactions and to set up electronic activity and we do send the required statements monthly if there is electronic activity and quarterly if there is not, but on our Passbook Savings, since we update the passbook each time a customer brings it into the bank we only generate a statement if the customer has an electronic transaction post to the account. The Passbook Savings cannot be accessed with an ATM card, but we do not block a customer from setting up an electronic transaction.

Answer:

If the only EFTs hitting a passbook account are preauthorized EFT credits (direct deposit of SSA or payroll, for example), and if you make the appropriate disclosure/updates when the passbook is presented, you don't need to provide a statement at all under Regulation E, based on Section 1005.9(c)(1)(i):

"(c) Exceptions to the periodic statement requirement for certain accounts. (1) Preauthorized transfers to accounts. For accounts that may be accessed only by preauthorized transfers to the account the following rules apply:

"(i) Passbook accounts. For passbook accounts, the financial institution need not provide a periodic statement if the institution updates the passbook upon presentation or enters on a separate document the amount and date of each electronic fund transfer since the passbook was last presented."

If the consumer sets up a direct debit, however (a recurring insurance premium or health club dues fee, for example), the Section 1005.9(c)(1)(i) exception won't apply, and you'll have to provide at least a quarterly and probably a monthly statement. In that case, you'll review your deposit contract to see if you have the right to refuse those debits.

First published on BankersOnline.com 5/21/12.