Overview
The Truth in Savings Act (TISA), implemented by Regulation DD, is a federal law designed to help consumers make informed decisions about deposit accounts by requiring clear and uniform disclosures of terms, fees, and annual percentage yields (APY). Enacted in 1991, TISA promotes transparency and comparability among savings products. The Consumer Financial Protection Bureau (CFPB) is the primary enforcer of Regulation DD, with oversight also provided by other federal banking regulators.
Who It Applies To
- Banks and credit unions
- Savings associations and thrifts
- Other depository institutions offering consumer deposit accounts
- Non-bank financial institutions offering similar deposit products
TISA applies to any institution offering consumer deposit accounts, including checking, savings, money market, and time deposit accounts.
Key Requirements
- Disclosure of Terms: Institutions must provide clear, written disclosures of account terms, including interest rates, APY, fees, minimum balances, and transaction limitations, before an account is opened. See CFPB Regulation DD Guidance.
- Periodic Statements: Regular account statements must include information on interest earned, fees charged, and the APY paid.
- Advertising Standards: All advertisements for deposit accounts must accurately state the APY and avoid misleading claims.
- Rate and Fee Changes: Institutions must notify consumers in advance of any changes to terms, such as rate reductions or new fees.
- Bonus Disclosures: Any bonuses or promotional offers must be clearly explained, including conditions and timing.
- Record Retention: Institutions must retain evidence of compliance and disclosures for a specified period.
Practical Impact
- Consumers can easily compare deposit accounts and understand the true cost and yield of banking products.
- Banks and credit unions must standardize disclosures and ensure all marketing materials are accurate and transparent.
- Institutions are required to promptly notify account holders of changes that could affect their earnings or costs.
- Compliance programs must be updated regularly to reflect regulatory changes and evolving disclosure requirements.
Examples
- A bank provides a new customer with a disclosure form detailing the APY, monthly maintenance fees, and minimum balance requirements before opening a savings account.
- A credit union updates its members about a reduction in interest rates via written notice at least 30 days in advance.
- An online advertisement for a certificate of deposit includes the APY, term, and any early withdrawal penalties.
Compliance Checklist
- Provide clear, written account disclosures before account opening.
- Issue periodic statements with required information on interest, fees, and APY.
- Ensure all advertising and marketing materials comply with Regulation DD standards.
- Notify consumers in advance of any changes to account terms or fees.
- Disclose all conditions and timing for bonuses or promotional offers.
- Retain records of disclosures and compliance for at least two years.
- Train staff on TISA/Regulation DD requirements and consumer communication best practices.
Penalties for Non-Compliance
- Civil money penalties and enforcement actions by the CFPB or other regulators
- Restitution to affected consumers for undisclosed or misleading terms
- Increased regulatory scrutiny and possible restrictions on business activities
- Reputational harm and loss of consumer trust
Recent Updates or Changes
- The CFPB has issued updated guidance on electronic disclosures and digital account opening procedures.
- Enhanced requirements for online and mobile banking advertisements to ensure APY and fee disclosures are clear and conspicuous.
- Ongoing clarifications regarding the calculation and disclosure of APY, especially for variable-rate accounts and promotional offers.
Future Amendments and Regulatory Trends
- Anticipated updates to reflect new digital banking practices, including mobile app disclosures and real-time notifications.
- Potential harmonization with other consumer protection rules, such as those for overdraft fees and electronic fund transfers.
- Increased focus on transparency in promotional offers, tiered-rate accounts, and bundled banking products.
- Ongoing monitoring of fintech and non-bank providers to ensure consistent consumer protections.
Comparison: TISA/Regulation DD vs. International Disclosure Standards
| Feature | TISA/Regulation DD (U.S.) | International Standards (EU, UK, Canada) |
|---|---|---|
| Disclosure of APY | Mandatory, standardized format | Similar requirements under EU Payment Accounts Directive |
| Advance Notice of Changes | Required for rate/fee changes | Required in EU, UK, and Canada |
| Advertising Standards | Strict rules for clarity and accuracy | Comparable standards in major economies |
| Periodic Statements | Required with detailed information | Required globally, though format may differ |
| Bonus/Promotional Disclosure | Mandatory, with clear conditions | Required in EU and Canada |
| Enforcement | CFPB, federal banking agencies | National financial regulators |
TISA’s disclosure and transparency requirements are broadly consistent with international standards, ensuring consumers receive clear information about deposit accounts.
Challenges Faced by Institutions
- Keeping disclosures and marketing materials up to date with changing rates, fees, and regulatory requirements
- Managing compliance across multiple product lines, including digital and mobile banking platforms
- Training staff to accurately communicate account terms and respond to consumer inquiries
- Implementing systems for timely notifications of changes to account terms or fees
- Ensuring all promotional offers and bonuses are clearly disclosed and compliant
- Addressing consumer expectations for real-time, digital disclosures and instant access to account information
Looking Ahead
The Truth in Savings Act remains central to consumer protection in deposit account marketing and management. As banking becomes increasingly digital, institutions must prioritize clear, accessible disclosures and adapt to evolving regulatory expectations. Ongoing investment in compliance, staff training, and technology will be essential for maintaining trust and regulatory compliance.
Useful Resources
- CFPB Truth in Savings Act (Regulation DD)
- Federal Reserve Regulation DD Summary
- FDIC Truth in Savings Act Guidance
- National Credit Union Administration TISA Resources
- American Bankers Association TISA Compliance
FAQs
Q: What is the main purpose of the Truth in Savings Act?
A: To ensure consumers receive clear, standardized information about deposit account terms, fees, and yields, enabling informed comparison and decision-making.
Q: Who must comply with Regulation DD?
A: All banks, credit unions, and other institutions offering consumer deposit accounts in the United States.
Q: What must be disclosed under TISA?
A: Interest rates, APY, fees, minimum balances, transaction limits, and any bonus or promotional terms.
Q: How are consumers protected from misleading advertisements?
A: Regulation DD requires accurate, clear, and conspicuous advertising of APY and other key terms, with penalties for misleading claims.
Q: Are online and mobile accounts covered by TISA?
A: Yes, all consumer deposit accounts, including those offered digitally, are subject to TISA/Regulation DD requirements.