During our Monthly Connection, we received a question about closing a customer’s account due to fraud and reopening a new account.
TISA lays out specifics as to the timing and content of required disclosures. It really doesn’t address fraud or provide exceptions to those requirements in cases of fraud.
Many times, an institution will just open the exact same account for the customer, but here we were asked about what if the new account will be different and include a feature that could adversely impact the customer, such as a minimum opening deposit.
In this case, the institution isn’t changing the terms of an existing account, they are opening a new one. Generally, account-opening disclosures for a new account need to be provided in order to describe any fees associated with the new account. As far as the timing of the new disclosures, §1030.4(a)(1)(i) states:
A depository institution shall provide account disclosures to a consumer before an account is opened or a service is provided, whichever is earlier. An institution is deemed to have provided a service when a fee required to be disclosed is assessed. Except as provided in paragraph (a)(1)(ii) of this section, if the consumer is not present at the institution when the account is opened or the service is provided and has not already received the disclosures, the institution shall mail or deliver the disclosures no later than 10 business days after the account is opened or the service is provided, whichever is earlier.
TISA also requires 30-days advance notice if an institution is going to change a term previously required to be disclosed, if the change may reduce the annual percentage yield or adversely impact a consumer. Whether an institution wants to waive a fee is really a customer service/management decision. If the only change between the old and new account is a minimum opening deposit that will be waived, there really is no change that would adversely impact the customer and, as a result, the 30-days advance notice would not apply in this case.
Listen to Diane answer the question:
This is what the Monthly Connection is all about…learning from us and learning from your peers. Every month we tackle timely compliance topics as well as some old ones and answer your compliance questions. We’d love to have you join us!
Published
2025/07/14
