Recovering a Bonus for Early Closure

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Question:

We offer a bonus for certain accounts of $100 or more. In our advertisements we state that the account must remain open for X months. We offer payment of the bonus long before this, as incentive for consumers to open their accounts. Is there any problem with us capturing this bonus if they close before the X date? Our Reg DD disclosures state that there is a $25 early closure fee when an account is closed within the first 90 days. The bonuses above extend well beyond this 90 days. Is that a problem as our ads stated X months?

Answer:

As long as you disclosed that the bonus would be paid and that it would be recaptured if the account was closed before X, I believe you would be fine. I would include it in my Reg DD disclosures. Remember those disclosures can be on one or more documents, so this bonus disclosure could be a separate attachment. That would allow its disclosure only when needed. It would also allow you to disclose it separately from the early closure fee of $25, which is more to offset the costs of building that new account on your system. That way there is no confusion over the fees, which are different. The advertisement itself should not be relied upon as a part of your disclosures. These must be clear and conspicuous.

First published on BankersOnline.com 5/11/09