Hold Notices Via Email?

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Question:

A hold was placed on a deposited check that the bank received by mail. The bank was unable to reach the customer by phone, but mailed the hold notification the same day. The customer contacted the bank by email a week later, upset that he wasn't notified at the time the hold was placed. He stated he received the notification three days after the deposit was made. Would it have been acceptable to notify the customer by email if the message was not detailed, but stated something to the effect "Please contact (bank employee) at (bank name) concerning a hold."?

Answer:

Answer by David Dickinson:You could email the customer, but it wouldn't be an "official" Reg CC notification. This may be a good customer service issue, just like trying to contact them by phone. If you have set the customer up under ESIGN, you could provide the Reg CC Hold Notice to them by email as well.

Answer:

Answer by Jim Bedsole:I agree with David, but would like to take it a step or two further. You can set your customers up to be able to receive all disclosures related to a deposit account electronically. You do that by including this in the scope portion of your E-SIGN pre-consent disclosure. Assuming the customer consents to electronic disclosure in a manner that reasonably demonstrates ability, you're ready to start delivering Reg CC hold notices electronically, but here's where it gets a little tricky.

If you are anticipating sending these notices via e-mail, you've got a couple of factors to consider. One is information security. As you have correctly noted, e-mail is not necessarily a secure format and you'd want to be careful that you do not inadvertently violate GLB privacy provisions with the information you include in the e-mail. This means you must ensure that the account number is truncated. Reg CC has a provision allowing this. You'd also want to be sure that none of the other information included would be deemed non-public personal financial information.

The second provision relates back to the demonstrated ability. If you anticipate delivering most of your disclosures via PDF form downloaded from your online banking service, as is typical for many e-statement programs, your customer must have demonstrated ability in the consent process with that format. If you're using a different format, namely e-mail delivery, for Reg CC hold notices, your customer will also have to demonstrate ability with that format as part of the consent process for you to be able to use that format. All in all, for Reg CC hold notices, you may be better off still doing them via paper, but as a customer service nicety, follow that with a phone call or e-mail, as long as the e-mail does not provide any non-public personal financial information.

First published on BankersOnline.com 10/26/09