Applicability of Reg CC

Regulation CC applies to transaction accounts as defined in Regulation D. In most institutions, that means NOW and demand deposit accounts. (The definition of "account" at the end of this post shows others may be included.) Unlike many "consumer" protection laws, Regulation CC does not specifically exclude business purpose deposits; it applies to consumer, fiduciary and business accounts.

The regulation does not apply to any type of savings account as defined in Regulation D, which would include money market deposit accounts.

Distributing Regulation CC disclosures for accounts not covered by the regulation would not be a violation of law, but two possibilities come to mind. First, the regulatory agency may criticize your institution's training, saying that the disclosures are being distributed in circumstances where the law does not apply. Second, by distributing the disclosure in connection with a money market deposit (savings) account you can be reasonably said to make it a part of the contract. In other words, you voluntarily limit your holds on deposits to savings accounts to those mentioned in the disclosure.

As noted in a recent Bankers Thread, some institutions intentionally distribute the disclosures in connection with savings accounts. They accept the implication that the regulation applies and instruct their employees to accept its limitations regardless of account type. (That is not an approach I would recommend.)

Reg CC at 12CFR 229(a): Account means a deposit as defined in 12 CFR 204.2(a)(1)(i) that is a transaction account as described in 12 CFR 204.2(e). As defined in these sections, account generally includes accounts at a bank from which the account holder is permitted to make transfers or withdrawals by negotiable or transferable instrument, payment order of withdrawal, telephone transfer, electronic payment, or other similar means for the purpose of making payments or transfers to third persons or others. Account also includes accounts at a bank from which the account holder may make third party payments at an ATM, remote service unit, or other electronic device, including by debit card, but the term does not include savings deposits or accounts described in 12 CFR 204.2(d)(2) even though such accounts permit third party transfers. An account may be in the form of

1. A demand deposit account,
2. A negotiable order of withdrawal account,
3. A share draft account,
4. An automatic transfer account, or
5. Any other transaction account described in 12 CFR 204.2(e).

First published on BankersOnline.com 4/01/02