Question & Answer

Question: What is the most common violation of Regulation DD?

Answer: Regulation DD -- Truth in Savings -- has two most common violations. One common error involves the initial disclosures. That involves one of two mistakes - the total failure to give disclosures to the customer at the right time or making a mistake in the information. The latter problem occurs when the disclosure brochure uses a fill-in for the rate information and the employee fails to fill it in or does so incorrectly.

The second common violation of Regulation DD involves renewal notices for time deposits. Timing is one problem with these notices, but the more significant problems involve content. These notices must contain information about the maturity date, the circumstances of renewal (whether it is automatically renewable), the renewal rate (or a "call us" statement) and the grace period, if any. These disclosures must also include the information required by 230.4(b). This means that all of the "new account" disclosures must go with this notice - and this is what gets omitted. It's a good idea to review the time deposit renewal notices every six months. And remember to look at the notices for all categories of time deposits.

Copyright © 1997 Compliance Action. Originally appeared in Compliance Action, Vol. 2, No. 10, 8/97