Frequently asked questions regarding a change in Wolters Kluwer deposit terms and conditions, effective August 1, 2019
Who is affected by the Terms and Conditions change versus the Regulation CC changes?Changes to Wolters Kluwer’s deposit terms and conditions impact any customer utilizing our content through any channel (i.e., e-form, Expere, ComplianceOne Deposit, and menu content are all impacted). The Regulation CC COLA changes impact all financial institutions with a federal funds availability policy, regardless of their relationship with Wolters Kluwer. Updates to our menu content are being rolled out first. Updates to our E-Forms and software solutions will occur late in 2019.
Why has Wolters Kluwer decided to update Terms & Conditions?
Wolters Kluwer continuously monitors regulatory changes and evaluates potential improvements to our Terms and Conditions. We evaluate those potential improvements over time, and try to consolidate the implementation of multiple changes when either a regulatory change occurs or we have sufficient changes that provide a significant benefit to the financial institutions that use our Terms and Conditions. Because we are making a revision due to the mandatory Regulation CC amendments, we are taking the opportunity to make several other revisions at this time.
We consider a broad variety of sources in the process of evaluating potential improvements. Among other things, we consider:
- reported court decisions that involve deposit account law and account agreements that do not require an immediate change
- requests from our customer about additions or other changes they would like us to make
- recommendations and opinions that are proposed in professional publications
- changes in technology and industry practices that may affect account agreements
- questions we receive about the meaning or purpose of particular provisions in our Terms and Conditions
Our goal is to continue to improve our Terms and Conditions to:
- make them easier to read and understand (for our customers and their account holders),
- to help reduce the risks to financial institutions of disputes with account holders or third parties, and (3) to help financial institutions better protect themselves from liability.
Why now?Using the process described above and, based on recent historical trends, we usually update our deposit Terms and Conditions every 3-4 years. Past changes have been in 2009, 2012 and 2016. Wolters Kluwer had slated the next round of Terms and Conditions updates for 2020. However, due to the mandatory compliance changes to Regulation CC, we made the decision to make these updates sooner so that the two events could be combined. By combining these two events, we afford our customers the opportunity to send just a single change notice instead of forcing two change notices in a short period of time.
What are we changing and why?
See the separate explanation of changes for a detailed discussion of what is changing and why.
That said, the primary driver behind the deposit Terms and Conditions changes relates to the legal and regulatory trends regarding overdrafts and nonsufficient funds.
There have been numerous lawsuits in recent years challenging financial institutions’ overdraft practices. The themes of these lawsuits have tended to be very similar – mostly involving claims of unfair, deceptive or abusive acts or practices. Specific allegations include claims that:
- The financial institution is using the “available balance” method to determine if there is enough money in the account to pay for a transaction but the financial institution does not define that term for the account holder;
- The financial institution charged an overdraft fee on a transaction that had been previously authorized (due to an intervening transaction there was not enough money available in the account to cover the previously authorized transaction) but the financial institution had not explained to the account holder that this could happen; and
- The financial institution is charging multiple NSF fees on the same transaction in violation of the institution’s own terms and conditions (e.g., the same preauthorized transfer gets presented and returned multiple times but the terms and conditions do not inform the account holder that this can happen). In general, these cases have not received final rulings from any court. Instead, the trend has been for the claim to survive a motion to dismiss with the result being that the parties reach a mutual settlement.
Are these changes mandatory?These changes are strongly recommended by Wolters Kluwer as your compliance partner and will impact your Wolters Kluwer Warranty, see warranty section below.
Do I have to send a change notice?Regulations E, CC, and DD all have specific requirements for when change notices must be sent to consumers. For Terms and Conditions, it’s hard to point to a single regulation requiring a change notice. However, regulation is not the only reason for sending a change notice.
One simple, very practical, reason for sending a change notice is to ensure all account holders are on the same terms. Developing processes to manage different accounts on different Terms and Conditions, depending upon when the account was opened, can be a logistical challenge. It can also create risk if, for example, an institution attempts to enforce a new provision on a pre-existing contract.
But the main reason to send a change notice for these 2019 Terms and Conditions updates is to mitigate the financial institution’s risk as it relates to its overdraft practices. Given the recent trend in overdraft litigation, using the template we’ve developed to help solve for the issues only partially solves the problem if the updates are not rolled out to existing account holders.
What is the difference between the updated Terms and Conditions documents and a Change Notice?Terms and Conditions content, whether static or menu driven, is for new accounts opened. The Change Notice document includes the newly updated Terms and Conditions, however it is designed and includes language that is to be used for updating existing accounts.
Will the changes impact my current Wolters Kluwer Warranty?Yes. The Wolters Kluwer limited product warranty applies to documents produced by WKFS to the extent that such document has not been replaced, corrected, updated or otherwise superseded by a more recent version (See the What Documents We Cover section of the Wolters Kluwer Limited Warranty).
However, in order to give customers ample time to convert to the updated content, Wolters Kluwer will continue to warrant the TC in E-Forms (TC-XX) and menu (AIB) until August 1, 2020.
Can I post the Terms and Conditions to my general website and send a notice to my customers which directs them to the website for the recent Terms and Conditions instead of sending a change notice?We cannot act as legal counsel for any financial institution. Nor can we advise on what may be the best approach for any specific institution. What works best may vary under the circumstances. However, posting the Terms and Conditions online and sending the account holder notice to go look at them will likely be ineffective for any accountholder who has not agreed to do business electronically. Plain and simple, the approach would send the account holder to a location where the information would be viewed electronically. If the account holder has agreed to do business electronically, the solution could work but you should make sure it is carefully crafted to give the accountholder quick and easy access to the posted content. Otherwise, you leave to door open to an argument that the changes weren’t delivered. Also, although there aren’t clearly established statutory requirement for giving a TC change notice, a court might look to typical consumer disclosure laws and apply them by analogy. So, a court could require the disclosure to be made in a form the consumer can keep. Thus, any such solution would need to consider how the institution can say they’ve effectively notified a customer of the changes and that they were in a form the customer can keep.
What do you need to do?You will need to update your disclosures for new account openings and license change notice content to send to your existing customers.
Keeping up with these changes can be tough — We have you covered!In 2016, there were 25 changes to Terms and Conditions. We’ve identified 20 changes. Wolters Kluwer continuously monitors regulatory changes and case law for changes to Terms and Conditions requirements so you don’t have to. When changes are made, we let you know and help print up new disclosures so you stay compliant.