Bill Payment Disclosures

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Question:

If your bank offers bill payment over the Internet banking service, does the Reg E disclosure have to state more than the fees your bank can impose, plus the customer's "agreement to pay any additional reasonable charges not covered by the (internet banking) agreement" (for example, if the payment is NSF and the merchant charges an NSF fee electronically as well)? Can that NSF fee then be charged against the customer's account, or are there additional notices which would need to be provided?

Answer:

If there are aspects of your Bill Payment program (such as fees) that have not already been disclosed to your customer in an earlier Reg. E disclosure, they should be conspicuously disclosed at the time the customer signs up for the program. You will undoubtedly be providing details about how the program works, etc., so adding a reference to the fees won't be an extra mailing.

If your bill payment program creates checks drawn against the customer's account and delivers them to the payees, you should consider making disclosures that would remove those payments from Regulation E coverage. See the Commentary to Section 205.3(b), specifically comment 3(b)-1(vi).

As to fees that might be charged by a merchant for NSF, I can only assume that this means that your system will issue at least some checks drawn on the consumer's account. Otherwise, an NSF check won't ever be an issue. If the merchant uses the ACH to attempt to assess a bounced-check penalty, that is between the merchant and your customer, and not an item you need to disclose.

First published on BankersOnline.com 1/31/05