USC Chapter 44

in effect

12 U.S.C. § 4301 Findings and purpose

(a) FindingsThe Congress hereby finds that economic stability would be enhanced, competition between depository institutions would be improved, and the ability of the consumer to make informed decisions regarding deposit accounts, and to verify accounts, would be strengthened if there was uniformity in the disclosure of terms and conditions on which interest is paid and fees are assessed in connection with such accounts. (b) PurposeIt is the purpose of this chapter to require the clear and uniform disclosure of—(1) the rates of interest which are payable on deposit accounts by depository institutions; and (2) the fees that are assessable against deposit accounts, so that consumers can make a meaningful comparison between the competing claims of depository institutions with regard to deposit accounts.

12 U.S.C. § 4302 Disclosure of interest rates and terms of accounts

(a) In generalExcept as provided in subsections (b) and (c), each advertisement, announcement, or solicitation initiated by any depository institution or deposit broker relating to any demand or interest-bearing account offered by an insured depository institution which includes any reference to a specific rate of interest payable on amounts deposited in such account, or to a specific yield or rate of earnings on amounts so deposited, shall state the following information, to the extent applicable, in a clear and conspicuous manner:(1) The annual percentage yield. (2) The period during which such annual percentage yield is in effect. (3) All minimum account balance and time requirements which must be met in order to earn the advertised yield (and, in the case of accounts for which more than 1 yield is stated, each annual percentage yield and the account minimum balance requirement associated with each such yield shall be in close proximity and have equal prominence). (4) The minimum amount of the initial deposit which is required to open the account in order to obtain the yield advertised, if such minimum amount is greater than the minimum balance necessary to earn the advertised yield. (5) A statement that regular fees or other conditions could reduce the yield. (6) A statement that an interest penalty is required for early withdrawal. (b) Broadcast and electronic media and outdoor advertising exceptionThe Bureau may, by regulation, exempt advertisements, announcements, or solicitations made by any broadcast or electronic medium or outdoor advertising display not on the premises of the depository institution from any disclosure requirements described in paragraph (4) or (5) of subsection (a) if the Bureau finds that any such disclosure would be unnecessarily burdensome. (c) Disclosure required for on-premises displaysThe disclosure requirements contained in this section shall not apply to any sign (including a rate board) disclosing a rate or rates of interest which is displayed on the premises of the depository institution if such sign contains—(1) the accompanying annual percentage yield; and (2) a statement that the consumer should request further information from an employee of the depository institution concerning the fees and terms applicable to the advertised account. (d) Misleading descriptions of free or no-cost accounts prohibitedNo advertisement, announcement, or solicitation made by any depository institution or deposit broker may refer to or describe an account as a free or no-cost account (or words of similar meaning) if—(1) in order to avoid fees or service charges for any period—(A) a minimum balance must be maintained in the account during such period; or (B) the number of transactions during such period may not exceed a maximum number; or (2) any regular service or transaction fee is imposed. (e) Misleading or inaccurate advertisements, etc., prohibitedNo depository institution or deposit broker shall make any advertisement, announcement, or solicitation relating to a deposit account that is inaccurate or misleading or that misrepresents its deposit contracts.

12 U.S.C. § 4303 Account schedule

(a) In generalEach depository institution shall maintain a schedule of fees, charges, interest rates, and terms and conditions applicable to each class of accounts offered by the depository institution, in accordance with the requirements of this section and regulations which the Bureau shall prescribe. The Bureau shall specify, in regulations, which fees, charges, penalties, terms, conditions, and account restrictions must be included in a schedule required under this subsection. A depository institution need not include in such schedule any information not specified in such regulation. (b) Information on fees and chargesThe schedule required under subsection (a) with respect to any account shall contain the following information:(1) A description of all fees, periodic service charges, and penalties which may be charged or assessed against the account (or against the account holder in connection with such account), the amount of any such fees, charge, or penalty (or the method by which such amount will be calculated), and the conditions under which any such amount will be assessed. (2) All minimum balance requirements that affect fees, charges, and penalties, including a clear description of how each such minimum balance is calculated. (3) Any minimum amount required with respect to the initial deposit in order to open the account. (c) Information on interest ratesThe schedule required under subsection (a) with respect to any account shall include the following information:(1) Any annual percentage yield. (2) The period during which any such annual percentage yield will be in effect. (3) Any annual rate of simple interest. (4) The frequency with which interest will be compounded and credited. (5) A clear description of the method used to determine the balance on which interest is paid. (6) The information described in paragraphs (1) through (4) with respect to any period after the end of the period referred to in paragraph (2) (or the method for computing any information described in any such paragraph), if applicable. (7) Any minimum balance which must be maintained to earn the rates and obtain the yields disclosed pursuant to this subsection and a clear description of how any such minimum balance is calculated. (8) A clear description of any minimum time requirement which must be met in order to obtain the yields disclosed pursuant to this subsection and any information described in paragraph (1), (2), (3), or (4) that will apply if any time requirement is not met. (9) A statement, if applicable, that any interest which has accrued but has not been credited to an account at the time of a withdrawal from the account will not be paid by the depository institution or credited to the account by reason of such withdrawal. (10) Any provision or requirement relating to nonpayment of interest, including any charge or penalty for early withdrawal, and the conditions under which any such charge or penalty may be assessed. (d) Other informationThe schedule required under subsection (a) shall include such other disclosures as the Bureau may determine to be necessary to allow consumers to understand and compare accounts, including frequency of interest rate adjustments, account restrictions, and renewal policies for time accounts. (e) Style and formatSchedules required under subsection (a) shall be written in clear and plain language and be presented in a format designed to allow consumers to readily understand the terms of the accounts offered.

12 U.S.C. § 4304 Disclosure requirements for certain accounts

The Bureau shall require, in regulations which the Bureau shall prescribe, such modification in the disclosure requirements under this chapter relating to annual percentage yield as may be necessary to carry out the purposes of this chapter in the case of— (1) accounts with respect to which determination of annual percentage yield is based on an annual rate of interest that is guaranteed for a period of less than 1 year; (2) variable rate accounts; (3) accounts which, pursuant to law, do not guarantee payment of a stated rate; (4) multiple rate accounts; and (5) accounts with respect to which determination of annual percentage yield is based on an annual rate of interest that is guaranteed for a stated term.

12 U.S.C. § 4305 Distribution of schedules

(a) In generalA schedule required under section 4303 of this title for an appropriate account shall be—(1) made available to any person upon request; (2) provided to any potential customer before an account is opened or a service is rendered; and (3) provided to the depositor, in the case of any time deposit which has a maturity of more than 30 days 11 So in original. Probably should be followed by “and”. is renewable at maturity without notice from the depositor, at least 30 days before the date of maturity. (b) Distribution in case of certain initial depositsIf—(1) a depositor is not physically present at an office of a depository institution at the time an initial deposit is accepted with respect to an account established by or for such person; and (2) the schedule required under section 4303(a) of this title has not been furnished previously to such depositor, the depository institution shall mail the schedule to the depositor at the address shown on the records of the depository institution for such account no later than 10 days after the date of the initial deposit. (c) Distribution of notice of certain changesIf—(1) any change is made in any term or condition which is required to be disclosed in the schedule required under section 4303(a) of this title with respect to any account; and (2) the change may reduce the yield or adversely affect any holder of the account, all account holders who may be affected by such change shall be notified and provided with a description of the change by mail at least 30 days before the change takes effect. (d) Distribution in case of accounts established by more than 1 individual or by a groupIf an account is established by more than 1 individual or for a person other than an individual, any distribution described in this section with respect to such account meets the requirements of this section if the distribution is made to 1 of the individuals who established the account or 1 individual representative of the person on whose behalf such account was established. (e) Notice to account holders as of effective date of regulationsFor any account for which the depository institution delivers an account statement on a quarterly or more frequent basis, the depository institution shall include on or with the first regularly scheduled mailing sent after the end of the 6-month period beginning on the date of publication of regulations issued by the Bureau in final form, a statement that the account holder has the right to request an account schedule containing the terms, charges, and interest rates of the account, and that the account holder may wish to request such an account schedule.

12 U.S.C. § 4306 Payment of interest

(a) Calculated on full amount of principalInterest on an interest-bearing account at any depository institution shall be calculated by such institution on the full amount of principal in the account for each day of the stated calculation period at the rate or rates of interest disclosed pursuant to this chapter. (b) No particular method of compounding interest requiredSubsection (a) shall not be construed as prohibiting or requiring the use of any particular method of compounding or crediting of interest. (c) Date by which interest must accrueInterest on accounts that are subject to this chapter shall begin to accrue not later than the business day specified for interest-bearing accounts in section 4005 of this title, subject to subsections (b) and (c) of such section.

12 U.S.C. § 4307 Periodic statements

Each depository institution shall include on or with each periodic statement provided to each account holder at such institution a clear and conspicuous disclosure of the following information with respect to such account: (1) The annual percentage yield earned. (2) The amount of interest earned. (3) The amount of any fees or charges imposed. (4) The number of days in the reporting period.

12 U.S.C. § 4308 Regulations

(a) In general(1) Regulations requiredBefore the end of the 9-month period beginning on December 19, 1991, the Bureau, after consultation with each agency referred to in section 4309(a) of this title and public notice and opportunity for comment, shall prescribe regulations to carry out the purpose and provisions of this chapter. (2) Effective date of regulationsThe regulations prescribed under paragraph (1) shall take effect not later than 9 months after publication in final form. (3) Contents of regulationsThe regulations prescribed under paragraph (1) may contain such classifications, differentiations, or other provisions, and may provide for such adjustments and exceptions for any class of accounts as, in the judgment of the Bureau, are necessary or proper to carry out the purposes of this chapter, to prevent circumvention or evasion of the requirements of this chapter, or to facilitate compliance with the requirements of this chapter. (4) Date of applicabilityThe provisions of this chapter shall not apply with respect to any depository institution before the effective date of regulations prescribed by the Bureau under this subsection (or by the National Credit Union Administration Bureau 11 So in original. Probably should be “Board”. under section 4311(b) 22 See References in Text note below. of this title, in the case of any depository institution described in clause (iv) of section 461(b)(1)(A) of this title). (b) Model forms and clauses(1) In generalThe Bureau shall publish model forms and clauses for common disclosures to facilitate compliance with this chapter. In devising such forms, the Bureau shall consider the use by depository institutions of data processing or similar automated machines. (2) Use of forms and clauses deemed in complianceNothing in this chapter may be construed to require a depository institution to use any such model form or clause prescribed by the Bureau under this subsection. A depository institution shall be deemed to be in compliance with the disclosure provisions of this chapter if the depository institution—(A) uses any appropriate model form or clause as published by the Bureau; or (B) uses any such model form or clause and changes it by—(i) deleting any information which is not required by this chapter; or (ii) rearranging the format, if in making such deletion or rearranging the format, the depository institution does not affect the substance, clarity, or meaningful sequence of the disclosure. (3) Public notice and opportunity for commentModel disclosure forms and clauses shall be adopted by the Bureau after duly given notice in the Federal Register and an opportunity for public comment in accordance with section 553 of title 5.

12 U.S.C. § 4309 Administrative enforcement

(a) In generalSubject to subtitle B of the Consumer Financial Protection Act of 2010 [12 U.S.C. 5511 et seq.], compliance with the requirements imposed under this chapter shall be enforced under—(1) section 8 of the Federal Deposit Insurance Act [12 U.S.C. 1818] by the appropriate Federal banking agency (as defined in section 3(q) of that Act [12 U.S.C. 1813(q)]), with respect to—(A) insured depository institutions (as defined in section 3(c)(2) of that Act [12 U.S.C. 1813(c)(2)]); (B) depository institutions described in clause (i), (ii), or (iii) of section 19(b)(1)(A) of the Federal Reserve Act [12 U.S.C. 461(b)(1)(A)] which are not insured depository institutions (as defined in section 3(c)(2) of the Federal Deposit Insurance Act [12 U.S.C. 1813(c)(2)]); and (C) depository institutions described in clause (v) or (vi) of section 19(b)(1)(A) of the Federal Reserve Act [12 U.S.C. 461(b)(1)(A)] which are not insured depository institutions (as defined in section 3(c)(2) of the Federal Deposit Insurance Act [12 U.S.C. 1813(c)(2)]); (2) the Federal Credit Union Act [12 U.S.C. 1751 et seq.], by the National Credit Union Administration Bureau 11 So in original. Probably should be “Board”. in the case of depository institutions described in clause (iv) of section 19(b)(1)(A) of the Federal Reserve Act [12 U.S.C. 461(b)(1)(A)]; and (3) subtitle E of the Consumer Financial Protection Act of 2010 [12 U.S.C. 5561 et seq.], by the Bureau, with respect to any person subject to this chapter. (b) Additional enforcement powers(1) Violation of this chapter treated as violation of other ActsFor purposes of the exercise by any agency referred to in subsection (a) of such agency’s powers under any Act referred to in such subsection, a violation of a requirement imposed under this chapter shall be deemed to be a violation of a requirement imposed under that Act. (2) Enforcement authority under other ActsIn addition to the powers of any agency referred to in subsection (a) under any provision of law specifically referred to in such subsection, each such agency may exercise, for purposes of enforcing compliance with any requirement imposed under this chapter, any other authority conferred on such agency by law. (c) Regulations by agencies other than the BureauThe authority of the Bureau to issue regulations under this chapter does not impair the authority of any other agency referred to in subsection (a) to make rules regarding its own procedures in enforcing compliance with the requirements imposed under this chapter.

12 U.S.C. § 4311 Credit unions

(a) In generalNo regulation prescribed by the Bureau under this chapter shall apply directly with respect to any depository institution described in clause (iv) of section 461(b)(1)(A) of this title. (b) Regulations prescribed by NCUAWithin 90 days of the effective date of any regulation prescribed by the Bureau under this chapter, the National Credit Union Administration Board shall prescribe a regulation substantially similar to the regulation prescribed by the Bureau taking into account the unique nature of credit unions and the limitations under which they may pay dividends on member accounts.

12 U.S.C. § 4312 Effect on State law

The provisions of this chapter do not supersede any provisions of the law of any State relating to the disclosure of yields payable or terms for accounts to the extent such State law requires the disclosure of such yields or terms for accounts, except to the extent that those laws are inconsistent with the provisions of this chapter, and then only to the extent of the inconsistency. The Bureau may determine whether such inconsistencies exist.

12 U.S.C. § 4313 Definitions

For the purposes of this chapter— (1) AccountThe term “account” means any account intended for use by and generally used by consumers primarily for personal, family, or household purposes that is offered by a depository institution into which a consumer deposits funds, including demand accounts, time accounts, negotiable order of withdrawal accounts, and share draft accounts. (2) Annual percentage yieldThe term “annual percentage yield” means the total amount of interest that would be received on a $100 deposit, based on the annual rate of simple interest and the frequency of compounding for a 365-day period, expressed as a percentage calculated by a method which shall be prescribed by the Bureau in regulations. (3) Annual rate of simple interestThe term “annual rate of simple interest”—(A) means the annualized rate of interest paid with respect to each compounding period, expressed as a percentage; and (B) may be referred to as the “annual percentage rate”. (4) BureauThe term “Bureau” means the Bureau of Consumer Financial Protection. (5) Deposit brokerThe term “deposit broker”—(A) has the meaning given to such term in section 1831f(f)(1) 11 See References in Text note below. of this title; and (B) includes any person who solicits any amount from any other person for deposit in an insured depository institution. (6) Depository institutionThe term “depository institution” has the meaning given such term in clauses (i) through (vi) of section 461(b)(1)(A) of this title, but does not include any nonautomated credit union that was not required to comply with the requirements of this chapter 1 as of September 30, 1996, pursuant to the determination of the National Credit Union Administration Bureau.22 So in original. Probably should be “Board.” (7) InterestThe term “interest” includes dividends paid with respect to share draft accounts which are accounts within the meaning of paragraph (3). (8) Multiple rate accountThe term “multiple rate account” means any account that has 2 or more annual rates of simple interest which take effect at the same time or in succeeding periods and which are known at the time of disclosure.