Technology

E-Statements: Comply With E-Sign

Failure to comply significantly increases a CU’s loss exposure under Reg E.

August 11, 2011
KEYWORDS comply , e-statement
/ PRINT / ShareShare / Text Size +

To reduce mailing costs, many credit unions are encouraging members to sign-up for electronic statements.

Credit unions typically use a vendor to provide e-statements, so be sure the enrollment process your vendor offers complies with consent provisions in the Electronic Signatures in Global and National Commerce Act (E-Sign).

Failure to comply with E-Sign provisions for enrolling members for e-statements significantly increases the risk of financial loss to credit unions.

Credit unions wishing to send e-statements to members must, prior to obtaining members’ consent, deliver a clear and conspicuous statement informing them of:

  • The option to have the records provided in paper format;
  • The right to withdraw consent and any conditions or consequences of such withdrawal;
  • Whether the consent applies only to a single transaction or the entire relationship with the credit union;
  • Procedures members must follow to withdraw consent;
  • Procedures members must follow to update their contact information;
  • After consent, how members can obtain a paper copy of the statement and the fee involved; and
  • Hardware and software requirements for access to and retention of the e-statements.

After receiving this disclosure statement, members must give their approval electronically in a manner that “reasonably demonstrates” they can access the e-statement in the electronic format to be used.

To determine if members can access e-statements, credit unions should adopt a “test drive” process that incorporates either a “pull” or “push” system.

In a “pull system” test drive, members are sent an e-mail with a link or the URL address to access a sample e-statement. Members must access the e-statement as instructed, open the document, and retrieve a pre-determined personal identification number (PIN) or code.

The member then returns to the e-statement sign-up page, enters the PIN or code in a form, and submits the form.

In a “push system” test drive, members are sent an e-mail containing a sample e-statement as an attachment or html text. The credit union includes a PIN or code in the e-statement, which members must open to retrieve the PIN or code.

Members are instructed to communicate the PIN or code by going to the e-statement sign-up page to enter the PIN or code in a form, which is submitted to the credit union.

Some vendors may be under the impression that providing a link to download Adobe Reader during the enrollment process satisfies the requirement for members to “reasonably demonstrate” they can access the e-statement. This does not satisfy the consent provisions because members aren’t required to demonstrate they can access e-statements in Adobe PDF format.

Failure to comply with E-Sign’s consent provisions significantly increases a credit union’s loss exposure under Federal Reserve Regulation E and the statement review provisions under UCC 4-406, Customer’s Duty to Discover and Report Unauthorized Signature or Alteration.

If members only receive e-statements and their consent wasn’t properly obtained, the Reg E error resolution period (60 days) and the timeframe provided in the member account agreement for reporting unauthorized checks and alterations could extend until a paper statement containing the error is provided.

KEN OTSUKA is senior analyst, risk management with CUNA Mutual Group, Madison, Wis.

Post a comment to this story

heroes

What's Popular

Popular Stories

Recent Discussion

Great article! Unfortunately, most employees don’t feel valued or appreciated by their supervisors or employers. In fact, research has shown that the predominant reason team members quit their jobs is because they don’t feel valued. This is in spite of the fact that employee recognition programs have proliferated in the workplace – over 90% of all organizations in the U.S. has some form of employee recognition activities in place. But most employee recognition programs are viewed with skepticism and cynicism – because they aren’t viewed as being genuine in their communication of appreciation. Getting the “employee of the month” award, receiving a certificate of recognition, or a “Way to go, team!” email just don’t get the job done. How do you communicate authentic appreciation? We have found people have different ways that they want to be shown appreciation, and if you don’t communicate in the language of appreciation important to them, you essentially “miss the mark”. Additionally, employees need to receive recognition more than once a year at their performance review. Otherwise, they view the praise as “going through the motions”. A third component of authentic appreciation is that the communication has to be about them personally – not the department, not their group, but something they did. Finally, they have to believe that you mean what you say. How you treat them has to match the words you use. If you are not sure how your team members want to be shown appreciation, the Motivating By Appreciation Inventory (www.appreciationatwork.com/assess) will identify the language of appreciation and specific actions preferred by each employee. You then can create a group profile for your team, so everyone knows how to encourage one another. Remember, employees want to know that they are valued for what they contribute to the success of the organization. And communicating authentic appreciation in the ways they desire it can make the difference between keeping your quality team members or having a negative work environment that everyone wants to leave. Paul White, Ph.D., is the co-author of The 5 Languages of Appreciation in the Workplace with Dr. Gary Chapman.

Your Say: Who should be Credit Union Magazine's 2014 CU Hero of the Year?

View Results Poll Archive