Question: Senior Management wants to advertise a “free” checking account product. I have seen several ads from other institutions that do advertise a “free” checking with added verbiage in their disclosures about fees for just about everything. I feel this is an area that could be a UDAAP issue. I have many concerns and never said “no,” but I have given the bank risks. What are your thoughts about this?
Answer: The answer to your question hinges directly upon exactly what the fees are that may be charged. You can refer to an account as “free” as long as the only things that would trigger a fee would be through a self-inflicted problem caused by the customer (i.e. overdrafts, falling below a minimum balance, etc.) However, if the bank has any monthly charges that would be imposed without any action taken by the customer (i.e. service fees) then the word “free” cannot be used to describe the account with running into a UDAAP issue.
.
