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.
ABA BANKING JOURNAL
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
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
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ABA Banking Journal - June 2014