Comment for 1030.2 - Definitions
1. Covered accounts. Examples of accounts subject to the regulation are:
i. Interest-bearing and noninterest-bearing accounts.
ii. Deposit accounts opened as a condition of obtaining a credit card.
iii. Accounts denominated in a foreign currency.
iv. Individual retirement accounts (IRAs) and simplified employee pension (SEP) accounts.
v. Payable on death (POD) or “Totten trust” accounts.
2. Other accounts. Examples of accounts not subject to the regulation are:
i. Mortgage escrow accounts for collecting taxes and property insurance premiums.
ii. Accounts established to make periodic disbursements on construction loans.
iii. Trust accounts opened by a trustee pursuant to a formal written trust agreement (not merely declarations of trust on a signature card such as a “Totten trust,” or an IRA and SEP account).
iv. Accounts opened by an executor in the name of a decedent's estate.
3. Other investments. The term “account” does not apply to all products of a depository institution. Examples of products not covered are:
i. Government securities.
ii. Mutual funds.
iv. Securities or obligations of a depository institution.
v. Contractual arrangements such as repurchase agreements, interest rate swaps, and bankers acceptances.
1. Covered messages. Advertisements include commercial messages in visual, oral, or print media that invite, offer, or otherwise announce generally to prospective customers the availability of consumer accounts - such as:
i. Telephone solicitations.
ii. Messages on automated teller machine (ATM) screens.
iii. Messages on a computer screen in an institution's lobby (including any printout) other than a screen viewed solely by the institution's employee.
iv. Messages in a newspaper, magazine, or promotional flyer or on radio.
v. Messages that are provided along with information about the consumer's existing account and that promote another account at the institution.
2. Other messages. Examples of messages that are not advertisements are:
i. Rate sheets in a newspaper, periodical, or trade journal (unless the depository institution, or a deposit broker offering accounts at the institution, pays a fee for or otherwise controls publication).
ii. In-person discussions with consumers about the terms for a specific account.
iii. For purposes of § 1030.8(b) of this part through § 1030.8(e) of this part, information given to consumers about existing accounts, such as current rates recorded on a voice-response machine or notices for automatically renewable time account sent before renewal.
iv. Information about a particular transaction in an existing account.
v. Disclosures required by federal or other applicable law.
vi. A deposit account agreement.
1. Examples. Bonuses include items of value, other than interest, offered as incentives to consumers, such as an offer to pay the final installment deposit for a holiday club account. Items that are not a bonus include discount coupons for goods or services at restaurants or stores.
2. De minimis rule. Items with a de minimis value of $10 or less are not bonuses. Institutions may rely on the valuation standard used by the Internal Revenue Service to determine if the value of the item is de minimis. Examples of items of de minimis value are:
i. Disability insurance premiums valued at an amount of $10 or less per year.
ii. Coffee mugs, T-shirts or other merchandise with a market value of $10 or less.
3. Aggregation. In determining if an item valued at $10 or less is a bonus, institutions must aggregate per account per calendar year items that may be given to consumers. In making this determination, institutions aggregate per account only the market value of items that may be given for a specific promotion. To illustrate, assume an institution offers in January to give consumers an item valued at $7 for each calendar quarter during the year that the average account balance in a negotiable order of withdrawal (NOW) account exceeds $10,000. The bonus rules are triggered, since consumers are eligible under the promotion to receive up to $28 during the year. However, the bonus rules are not triggered if an item valued at $7 is offered to consumers opening a NOW account during the month of January, even though in November the institution introduces a new promotion that includes, for example, an offer to existing NOW account holders for an item valued at $8 for maintaining an average balance of $5,000 for the month.
4. Waiver or reduction of a fee or absorption of expenses. Bonuses do not include value that consumers receive through the waiver or reduction of fees (even if the fees waived exceed $10) for banking-related services such as the following:
i. A safe deposit box rental fee for consumers who open a new account.
ii. Fees for travelers checks for account holders.
iii. Discounts on interest rates charged for loans at the institution.
1. Professional capacity. Examples of accounts held by a natural person in a professional capacity for another are attorney-client trust accounts and landlord-tenant security accounts.
2. Other accounts. Accounts not held in a professional capacity include accounts held by an individual for a child under the Uniform Gifts to Minors Act.
3. Sole proprietors. Accounts held by individuals as sole proprietors are not covered.
4. Retirement plans. IRAs and SEP accounts are consumer accounts to the extent that funds are invested in covered accounts. Keogh accounts are not subject to the regulation.
2(j) Depository institution and institution.
1. Foreign institutions. Branches of foreign institutions located in the United States are subject to the regulation if they offer deposit accounts to consumers. Edge Act and Agreement corporations, and agencies of foreign institutions, are not depository institutions for purposes of this part.
2(k) Deposit broker.
1. General. A deposit broker is a person who is in the business of placing or facilitating the placement of deposits in an institution, as defined by the Federal Deposit Insurance Act (12 U.S.C. 29(g)).
1. Relation to bonuses. Bonuses are not interest for purposes of this part.
2(p) Passbook savings account.
1. Relation to Regulation E. Passbook savings accounts include accounts accessed by preauthorized electronic fund transfers to the account (as defined in 12 CFR 1005.2(j)), such as an account that receives direct deposit of social security payments. Accounts permitting access by other electronic means are not “passbook saving accounts” and must comply with the requirements of § 1030.6 if statements are sent four or more times a year.
2(q) Periodic statement.
1. Examples. Periodic statements do not include:
i. Additional statements provided solely upon request.
ii. General service information such as a quarterly newsletter or other correspondence describing available services and products.
2(t) Tiered-rate account.
1. Time accounts. Time accounts paying different rates based solely on the amount of the initial deposit are not tiered-rate accounts.
2. Minimum balance requirements. A requirement to maintain a minimum balance to earn interest does not make an account a tiered-rate account.
2(u) Time account.
1. Club accounts. Although club accounts typically have a maturity date, they are not time accounts unless they also require a penalty of at least seven days' interest for withdrawals during the first six days after the account is opened.2. Relation to Regulation D. Regulation D of the Board of Governors of the Federal Reserve System (12 CFR part 204) permits in limited circumstances the withdrawal of funds without penalty during the first six days after a “time deposit” is opened. (See 12 CFR 204.2(c)(1)(i).) But the fact that a consumer makes a withdrawal as permitted by Regulation D does not disqualify the account from being a time account for purposes of this part.
2(v) Variable-rate account.
1. General. A certificate of deposit permitting one or more rate adjustments prior to maturity at the consumer's option is a variable-rate account.