VIDEO: Disclosing Fees for an Expedited Debit Card
In this Compliance Clip (video), Adam answers the question whether a bank's fee schedule must disclose charges for expediting a debit card. Adam explores how Regulation DD and Regulation E apply to this fee and determine if it needs to be included in the bank's official disclosures.
Video Transcript
The following is a transcript of this video.
This Compliance Clip is going to talk about disclosing fees for an expedited debit card.
The question I received was this: does the bank's fee schedule need to include a fee for expediting a debit card?
Specifically, this was a financial institution who had never implemented an expedited debit card fee, but what they had seen was an increase in requests from customers asking to speed up the process. When they talked to their vendor, their vendor told them they can expedite a debit card, but there's a cost involved. And the bank, of course, was wanting to pass this on to the customer. So, that is the question at hand. Now, the bank specifically had a separate fee schedule that they were using to comply with the requirements of Regulation DD and Regulation E.
The answer to our question, I kind of gave it away here, is going to come from, of course, Regulation DD and Regulation E. So, does the bank's fee schedule, or better, Reg DD or Reg E disclosures, need to include a fee for expediting a debit card?
This is something that would not be required for every customer. It's only when a customer specifically requests to expedite the card, and they agree to pay the fee. So, let's take a look at our answer.
For Regulation DD, this fee does not need to be disclosed as part of the TISA disclosure as it is considered an incidental fee that is occasionally assessed at the request of a customer. This comes from Comment 2(ii) to 1030.4(b)(4) of Regulation DD that says institutions need not disclose fees such as the following. Number one says fees for services offered to account and non-account holders alike, like traveler's checks, wire transfers, even if different amounts are charged to account holders and non-account holders. But that's not the case here, because our fee for an expedited debit card is only going to be assessed to account holders. So we look for Comment 2(ii), which refers to incidental fees. They say the incidental fees, such as fees associated with estate escheat laws, garnishments, or attorney fees, and fees for photocopying, do not need to be disclosed under the Reg DD. So an incidental fee is something that happens upon the request of a consumer, and because the expedited debit card fee is not required every time, but it's optional for the consumer to request, that would be considered an incidental fee, and not subject to 1030.4(b)(4).
Now, we do have to check Regulation E, because there are fee disclosure requirements under Regulation E. Under Regulation E, this fee is also not covered or required to be disclosed, as this is not a charge to conduct electronic funds transfers, which is the requirement to disclose fees. In other words, Reg E tells us that fees must be disclosed if they are for an electronic funds transfer, or for the right to have an electronic funds transfer. So, what this means is, it's considered an “other fee”. It's an optional other fee to speed up the process of getting a customer's debit card.
Now, specifically, the commentary tells us this. It's Comment 1 to 1005.7(b)(5). It says, “Disclosures of EFT fees. An institution is required to disclose all fees for EFTs (electronic funds transfers), or the right to make electronic funds transfers. Other fees, for example, minimum balance fees, stop payment fees, or account overdrafts, however, may but not need to be disclosed.” So, we're allowed to, but they are not required. .
Therefore, under Reg DD and Reg E, that tells us that a fee for an expedited debit card does not need to be included on the fee schedule at this financial institution.
That's all I have for today in this Compliance Clip.