If you’re offering Rewards Checking accounts, you should take another look at your account disclosures.
According to the FDIC, many banks are simply not being clear about exactly how the “reward” in Reward Checking can be earned. Frequently the bank’s disclosures are “ambiguous and misleading.”
In an example the FDIC cites in the Winter 2012 edition of “Supervisory Insights,” banks fail to make clear that the reward for debit card use won’t be paid unless the transaction posts and settles during the statement cycle. So, let’s say a bank requires 15 swipes a month to earn higher interest, but the bank doesn’t pay the reward unless those swipes “post” and “settle” during the statement cycle. If the bank’s disclosure doesn’t explicitly explain about the “posting and settling” then it is violation of not only Truth in Savings, but, maybe, also Unfair, Deceptive and Abusive Acts and Practices (UDAAP). Oops. That’s not good. The bank may get its name in the paper plus have to pay restitution and, maybe, a CMP.
Usually, this kind of error is found in a deposit audit before the examination team shows. Of course, you have to actually do the audit before you can benefit from the findings.
If you want to talk this over, give me a call at 800-544-8269, or email me with REWARD CHECKING in the subject line. (Remember, there’s never a charge to call us up and do some brainstorming.)