Regulation DD

Regulation DD is a directive set forth by the Federal Reserve. Regulation DD was enacted to implement the Truth in Savings Act that was passed in 1991. This act requires lenders to provide certain uniform information about fees and interest when opening an account for a customer.

Regulation DD applies only to accounts opened by individuals; it does not apply to corporate or other organizational accounts. Regulation DD helps consumers to make intelligent decisions about where to open financial accounts.

The regulation applies to depository institutions with the exception of credit unions. Advertising rules apply to any individual, including deposit brokers, who advertises the types of accounts offered by the institutions subject to the regulation. For instance, if a deposit broker places an ad to offer consumers interest in an account, the advertising rules apply to the advertisement regardless of the account is held by the consumer or broker.

The advertising rules restrict institutions from advertising in such a way that could mislead consumers, present inaccurate or otherwise misrepresent the contract for the deposit account.

Furthermore, the advertisements cannot use the term profit in regards to the interest that would be paid on an account.

The types of accounts the regulation is intended to assist consumers with include savings accounts, checking accounts, money market accounts, certificates of deposit, variable-rate accounts, and accounts denominated in a foreign currency.

Financial institutions are required under Regulation DD to disclose information to consumers regarding annual percentage yield, interest rates, minimum-balance requirements, account-opening disclosures, and fee schedules.

Amendments have been made to Regulation DD since its implementation in order to address issues such as concerns about uniformity of information provided to consumers when deposit accounts are overdrawn.

Other amendments include a directive that depository institutions comply with rules changes governing disclosures on periodic statements for aggregate overdraft and returned item fees. The amendments also featured a rule on providing balance disclosures to consumers made through automated systems.

Regulation DD stipulates that the disclosures provided to consumers are clear and conspicuous, made available in writing in form or medium the consumer can keep and refer to. The disclosures must also make it clear and identifiable when these disclosures for different accounts have been combined.  

The disclosures must reflect the terms of the legal obligation established for the accounts in question and the agreement between the consumer and the institution. These disclosures can be rendered in electronic form at the approval of the consumer.