Terms & Conditions

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Important Notice – Change in Terms & Conditions

Effective Date: October 3, 2016


Explanation of 2016 changes to our Terms and Conditions content:

  1. We added a Table of Contents and numbered the sections. This follows plain language principles and should make it easier for institution staff and accountholders to find specific information. This should also help to mitigate UDAAP arguments that any contested provision is buried within a lengthy document.

  2. We added the Important Information about Procedures for Opening a New Account part to the standard e-form Terms and Conditions to ensure content consistency. This complies with Section 326 Adequate Notice of the Dodd-Frank Act requiring notification to customers of investigation for CIP.

  3. In the Agreement section, we added a statement that nothing in this document is intended to vary the institution’s duty to act in good faith and with ordinary care when required by law. In deposit account disputes, accountholders sometimes present an interpretation of the account agreement that they claim is an attempt by the institution to vary the Uniform Commercial Code in a way that relieves the institution of liability for its own negligence.

  4. In the Deposit section, we have made the following three changes:
    • We have added a provision that unless prohibited by law, the institution can charge back the amount of any item which was initially paid by the payor bank and which is later returned due to an allegedly forged, unauthorized or missing endorsement, claim of alteration, encoding error or other problem which in the institution’s judgment justifies reversal of credit.
    • We added a provision that the institution may attempt to collect previously returned items without giving the depositor notice, and it may permit the payor bank to hold an item beyond the midnight deadline.
    • As an option in our menu Terms and Conditions, we have added this provision. The CFPB determined that Citizens Bank engaged in UDAAP when its customers’ deposit slips showed a lesser amount than was actually deposited and Citizens failed to reconcile the deposit if the discrepancy was under a threshold amount. This text is a description of how an institution will address discrepancies if it always reconciles the discrepancy. It is NOT to be used if the institution does not reconcile the discrepancy in some cases, because, in addition to UDAAP concerns, there could be a breach of contract if an institution included this text in the account agreement and failed to reconcile if the discrepancy was less than a threshold amount.
      • If you deliver a deposit to us and you will not be present when the deposit is counted, you must provide us with an itemized list of the deposit (deposit slip). To process the deposit, we will verify and record the deposit, and credit the deposit to the Account. If there are any discrepancies between the amounts shown on the itemized list of the deposit and the amount we determine to be the actual deposit, we will notify you of the discrepancy. You will be entitled to credit only for the actual deposit as determined by us, regardless of what is stated on the itemized deposit slip.

  5. In the Withdrawals section, we have made the following changes:
    • We added the following text to be very clear that just because funds are available, the credit can still be reversed.
      • An item may be returned after the funds from the deposit of that item are made available for withdrawal. In that case, we will reverse the credit of the item.
    • To our static e-form Terms and Conditions, we added an explanation of debit authorization holds. Note: This text is already included in our menu-driven content.
    • We also revised the text to provide that the right to require notice before withdrawal from an interest earning account does not apply to a demand deposit.

  6. In the Stop Payments section we have replaced the word “verbal” with the more precise word “oral”

  7. In Amendments and Termination, we have deleted the provision that notice to one accountholder is notice to all, and the provision requiring the accountholders to notify the institution of any name or address changes. These provisions would be redundant because of the new Notices section (see #8 below).

  8. We have added a new Notices section. The information is clearer and easier to find in a separate section. We have also added that notice to the institution is effective when it is actually received and it must be received in time for the institution to have a reasonable opportunity to act on it. Furthermore, we have added that notice to the customer is effective when it is mailed.

  9. In the Statements section, we have added text that the customer must examine items for unauthorized or missing indorsements, which is an expansion of the review requirement in UCC 4-406.

  10. To be consistent with other versions of our Terms and Conditions, in the Direct Deposits section, we have revised our e-form version to refer to the federal government rather than the U.S. government.

  11. In the Temporary Account Agreement section, we have replaced, “If this option is selected “with “If the account documentation indicates.” The original text was created to describe selecting a temporary account agreement option on a signature card. Not all signature cards contain that option and that selection might be documented in some other manner.

  12. We have revised the Restrictive Legends section to also apply to restrictive indorsements and provided an example of a restrictive indorsement. The difficulties institutions have in honoring restrictive legends also apply to restrictive indorsements.

  13. In the Death or Incompetence section, we have replaced legally incompetent with adjudication of incompetence, which is a more accurate description and more closely follows the text of UCC 4-405.

  14. In the Fiduciary Accounts section, we have clarified that the institution is not responsible for the actions of the fiduciary, including the misuse of funds.

  15. In the Waiver of Notices section, we added an example of a notice of nonpayment and specified that the waiver does not apply if the notice is required by Regulation CC.

  16. In the ACH and Wire Transfers section, we added a statement that credit entries can be made by ACH to address concerns raised by some auditors that our existing text did not sufficiently satisfy NACHA rules notice requirements.

  17. In the Remotely Created Checks section, we deleted the reference to a remotely created check by a telemarketer because of the ban established by the Telemarketing Sales Act.

  18. We have made the following changes to the Monitoring and Recording Telephone Calls section.
    • We have included this section as a part of the standard Terms and Conditions.
    • We have specified that calls can be recorded to maintain a record.
    • We have added customer consent, other than for telemarketing, to the institution contacting them using any telephone numbers or email addresses on file. We added this to satisfy Telephone Consumer Protection Act of 1991 and the CAN-SPAM Act.

  19. For clarification, we have added the text to the UTMA Accounts section:
    • We are not responsible to monitor age or eligibility for an UTMA account, even though our records may include the minor’s date of birth. It is the custodian’s responsibility to properly distribute the funds in the account upon the minor’s death or attainment of the age of majority.

  20. In the Security section, we made the following changes:
    • We added a reference to the use of an account number to issue a fraudulent electronic debit, because this is a common example of fraud.
    • We deleted the reference to a remotely created check by a telemarketer because of the ban established by the Telemarketing Sales Rule.
    • We also clarified that the paragraph regarding commercially reasonable security procedures does not apply if Regulation E applies. We specified that if the institution offers a commercially reasonable security procedure and the customer selects another security procedure, the customer is responsible for any payment order accepted pursuant to that security procedure whether it is authorized or not.

  21. In the Payment Order of Items section we deleted the parenthetical in the following text to clarify, in plain language, the limitation on charging fees for ATM and one-time debit card overdrafts.
    • “If a check, item or transaction (other than an ATM or everyday debit card transaction) is presented without sufficient funds” with a new sentence “We will not charge you a fee for paying an overdraft of an ATM or everyday debit card transaction if this is a consumer account and you have not opted-in to that service.”

  22. In the Check Processing section, we have made the following changes:
    • We have added a provision that the institution can properly pay an item payable to multiple payees unless the accountholder gives the institution notice in writing that multiple indorsements are required. Generally, UCC 3-110(d) establishes that a check is not properly payable if multiple indorsements are required and the check does not include all of the required indorsements.
    • We have added a provision that the institution is not responsible if an unauthorized signature or alteration that would not be identified by a reasonable inspection of the item.
    • We have clarified the following text:
      • Current Text: You agree that we have not failed to exercise ordinary care solely because we use our automated system to process items and do not inspect all items processed in such a manner.
      • New Text: You agree that we have exercised ordinary care if our automated processing is consistent with general banking practice, even though we do not inspect each item.

  23. We have made several revisions to the Right to Repayment of Indebtedness (for credit unions) or Set-off (for other institutions charters) section.
    • We eliminated the provision that the debt that is set-off is to the extent of the person or entity’s right of withdrawal. The text was unnecessary since the account agreement does not establish any limits on the right to withdraw. Furthermore, there is a concern that it might be considered a limitation on the right to withdraw if multiple signatures are required for withdrawal.
    • We expanded the right of set-off for partner and partnership accounts and clarified the right of set-off for joint accounts and joint accountholder accounts.
    • We expanded to the list of examples to specifically provide that the right of set-off does not apply if it is prohibited by the Military Lending Act or its implementing regulations.
    • We made the following revision to increase clarification.
      • Current text: If the debt arises from a note, “any due and payable debt” includes the total amount of which we are entitled to demand payment under the terms of the note at the time we set off, including any balance the due date for which we properly accelerate under the note.
      • New text: If your debt arises from a promissory note, then the amount of the due and payable debt will be the full amount we have demanded, as entitled under the terms of the note, and this amount may include any portion of the balance for which we have properly accelerated the due date.

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