ABA Banking Journal - June 2014 - (Page 50)

ABA COMPLIANCE CENTER | INBOX Online products, E-SIGN, and "demonstrable consent" Q. We open most deposit accounts in person. During opening, we demonstrate online banking, discuss electronic statements, introduce mobile apps, etc. If the customer wishes, we enroll them right there. However, if they would like to enroll in electronic delivery of statements and/ or disclosures, we must comply with E-SIGN. That requires that consumers must reasonably demonstrate ability to access and retrieve the electronic disclosures as we send them. I understand that to mean that customers must utilize their own computers. Sending them home to perform the E-SIGN process seems counterintuitive. Is there any process that could take place entirely in the branch and still comply with E-SIGN? A. The only qualifying process would involve a consumer's using his own laptop or a tablet in your offices. That would provide demonstrable consent. With more consumers using portable devices, that is certainly an option. E-Sign requires that there be an electronic process that demonstrates both the consumer's agreement to obtain the records via electronic means and the consumer's ability to electronically receive/access the record. "Demonstrable consent" generally means more than just checking a box or signing up using a terminal in the branch. For example, if you send PDF disclosures and the consumer does not have Adobe Acrobat Reader, the customer could not demonstrate conclusively the ability to receive and open those disclosures on his own computer. Without demonstrable consent, you are not meeting E-SIGN requirements. If you send required disclosures without demonstrable consent, you have, effectively, never sent them. The challenge is to comply with E-SIGN and treat that as an opportunity to educate customers on alternative ways to interact with the bank. Allowing customers to go through the process on their own can provide valuable feedback on the ease of use of your system. Providing consumers with a "help" number allows them one more way to experience your extraordinary levels of customer service. (Response provided March 2014.) Anti-tying rules allow no quid pro quo signups Q. We are making a mortgage loan secured by the borrower's second home. Can we require that the borrower open a deposit account? A. No. Under the Bank Holding Company Act, you cannot require that a customer obtain one product to To comply with E-SIGN, you must send customers to their own devices. 50 | ABA BANKING JOURNAL | JUNE 2014 get another. The anti-tying provisions generally prohibit banks from extending credit, leasing or selling property, furnishing services, or varying prices on the condition that the customer: * Obtain an additional product or service from or provide an additional product or service to the same bank, its holding company, or another subsidiary of its holding company; or * Not obtain an additional product or service from competitors of the bank, its holding company, or another subsidiary of its holding company. The anti-tying provisions provide exceptions to the prohibitions. These exceptions permit a bank to extend credit, furnish services, or vary prices on the condition that the customer obtain another loan, discount, deposit, or service from the same bank. (This is commonly known as the "traditional bank product exception.") Note: This exception applies only if all products involved in the tying arrangement are separately available for purchase. There's a distinction best illustrated by example: You can offer a loan to your customer and provide an incentive for the customer to establish a deposit account-such as offering a discounted rate on the loan or a bonus tied to the deposit account-as long as both products are available separately. What you cannot do is require a deposit account in order to make the loan. (Response provided March 2014.) Surprising detail on LARs found in federal guide Q. I am reviewing our Loan Application Register, and coming up with edit code "V385." This indicates "Reasons for Denial." I then referred to the Getting It Right booklet, which states: "...Institutions subject to ... FDIC regulations in 12 C.F.R. 390.147, however, must complete the 'reasons for denial' in accordance with the requirements of those regulations." We are an FDIC-regulated bank. Are we now required to report the

Table of Contents for the Digital Edition of ABA Banking Journal - June 2014

Chairman's View
Editor's Column
The Economy
Bank Notes
Picture This
Affordable housing pioneer
Pass the Aspirin
Tech Topics
Lines of defense
Top performing community banks
Compliance Clinic
Compliance Inbox
Around the ABA
Legal Issues
First Person

ABA Banking Journal - June 2014

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