Chapter DFI-SB 16

DFI-SB 16.04(3)(a) (a) Refunds. If a debt cancellation contract or debt suspension agreement is terminated, including when the customer prepays the covered loan, the savings bank shall refund to the customer any unearned fees paid for the contract unless the contract provides otherwise. A savings bank may offer a customer a contract that does not provide for a refund only if the savings bank also offers that customer a bona fide option to purchase a comparable contract that provides for a refund.

DFI-SB 16.04(3)(b) (b) Method of calculating refund. The savings bank shall calculate the amount of a refund using a method at least as favorable to the customer as the actuarial method.

DFI-SB 16.04(4) (4) Method of payment of fees. Except as provided in sub. (2) (c) 2., a savings bank may offer a customer the option of paying the fee for a contract in a single payment, provided the savings bank also offers the customer a bona fide option of paying the fee for that contract in monthly or other periodic payments. If the savings bank offers the customer the option to finance the single payment by adding it to the amount the customer is borrowing, the savings bank shall also disclose to the customer, in accordance with sub. (5), whether and, if so, the time period during which, the customer may cancel the agreement and receive a refund.

DFI-SB 16.04(5) (5) Disclosures.

DFI-SB 16.04(5)(a) (a) Content of short form of disclosures. The short form of disclosures required by this section shall include information relating to any of the following that is appropriate to the product offered:

DFI-SB 16.04(5)(a)1. 1. That the product is optional.

DFI-SB 16.04(5)(a)2. 2. Lump sum payment of fee.

DFI-SB 16.04(5)(a)3. 3. Lump sum payment of fee with no refund.

DFI-SB 16.04(5)(a)4. 4. Refund of fee paid in lump sum.

DFI-SB 16.04(5)(a)5. 5. Any additional disclosures.

DFI-SB 16.04(5)(a)6. 6. Eligibility requirements, conditions and exclusions.

DFI-SB 16.04(5)(b) (b) Content of long form disclosures. The long form of disclosures required by this section shall include information relating to any of the following that is appropriate to the product offered:

DFI-SB 16.04(5)(b)1. 1. That the product is optional.

DFI-SB 16.04(5)(b)2. 2. An explanation of debt suspension agreement.

DFI-SB 16.04(5)(b)3. 3. The amount of fee.

DFI-SB 16.04(5)(b)4. 4. Lump sum payment of fee.

DFI-SB 16.04(5)(b)5. 5. Lump sum payment of fee with no refund.

DFI-SB 16.04(5)(b)6. 6. Refund of fee paid in lump sum

DFI-SB 16.04(5)(b)7. 7. Use of card or credit line restricted.

DFI-SB 16.04(5)(b)8. 8. Termination of product.

DFI-SB 16.04(5)(b)9. 9. Eligibility requirements, conditions and exclusions.

DFI-SB 16.04 Note Note: Copies of the short and long form, and instructions for using them may be obtained by writing to the Department of Financial Institutions, Division of Banking, P.O. Box 7876, Madison, WI 53707-7876 or by downloading it from the department’s website, www.wdfi.org. Short form disclosures made in a form that is substantially similar to the disclosures available from the department will satisfy the short form disclosure requirement of this section. Long form disclosures made in a form that is substantially similar to the disclosures available from the department will satisfy the long form disclosure requirements of this section.

DFI-SB 16.04(5)(c) (c) Disclosure requirement, and timing and method of disclosures.

DFI-SB 16.04(5)(c)1. 1. ‘Short form disclosures.’ The savings bank shall make the short form disclosures orally at the time the savings bank first solicits the purchase of a contract.

DFI-SB 16.04(5)(c)2. 2. ‘Long form disclosures.’ The savings bank shall make the long form disclosures in writing before the customer completes the purchase of the contract. If the initial solicitation occurs in person, the savings bank shall provide the long form disclosures in writing at that time.

DFI-SB 16.04(5)(c)3. 3. ‘Transactions by telephone.’ If the contract is solicited by telephone, the savings bank shall provide the short form disclosures orally and shall mail the long form disclosures, and, if appropriate, a copy of the contract to the customer within 3 business days, beginning on the first business day after the telephone solicitation.

DFI-SB 16.04(5)(c)4. 4. ‘Solicitations using written mail inserts or “take one” applications.’ If the contract is solicited through written materials such as mail inserts or “take one” applications, the savings bank may provide only the short form disclosures in the written materials if the savings bank mails the long form disclosures to the customer within 3 business days, beginning on the first business day after the customer contacts the savings bank to respond to the solicitation, subject to the requirements of sub. (6) (c).

DFI-SB 16.04(5)(c)5. 5. ‘Electronic transactions.’ Disclosures described in this section provided through electronic media shall be in a manner consistent with the requirements of the Electronic Signatures in Global and National Commerce Act, 15 USC 7001 et seq.

DFI-SB 16.04(5)(d) (d) Form of disclosures.

DFI-SB 16.04(5)(d)1. 1. ‘Understandable disclosures.’ The disclosures required by this section shall be conspicuous, simple, direct, readily understandable, and designed to call attention to the nature and significance of the information provided.

DFI-SB 16.04(5)(d)2. 2. ‘Meaningful disclosures.’ The disclosures required by this section shall be in a meaningful form.

DFI-SB 16.04 Note Note: The following are examples of means that call attention to the nature and significance of the information provided in the disclosure: a plain language heading to call attention to the disclosures; typeface and type size that are easy to read; wide margins and ample line spacing; boldface or italics for key words; and distinctive type style, and graphic devices, such as shading or sidebars, when the disclosures are combined with other information.

DFI-SB 16.04(5)(e) (e) Advertisements and other promotional material for debt cancellation contracts and debt suspension agreements. The short form disclosures are required in advertisements and promotional material for contracts unless the advertisements and promotional materials are of a general nature describing or listing the services or products offered by the savings bank.

DFI-SB 16.04(6) (6) Affirmative election to purchase and acknowledgement of receipt of disclosures required.

DFI-SB 16.04(6)(a) (a) Affirmative election and acknowledgement of receipt of disclosures. Before entering into a contract the savings bank shall obtain a customer’s written affirmative election to purchase a contract and written acknowledgement of receipt of the disclosures required by s. DFI-Bkg 3.08 (5) (b). The election and acknowledgement information shall be conspicuous, simple, direct, readily understandable, and designed to call attention to their significance. The election and acknowledgement satisfy these standards if they conform with the requirements in s. DFI-Bkg 3.08 (5) (d).

DFI-SB 16.04(6)(b) (b) Telephone solicitations. If the sale of a contract occurs by telephone, the customer’s affirmative election to purchase may be made orally, provided the savings bank does all of the following:

DFI-SB 16.04(6)(b)1. 1. Maintains sufficient documentation to show that the customer received the short form disclosures and then affirmatively elected to purchase the contract.

DFI-SB 16.04(6)(b)2. 2. Mails the affirmative written election and written acknowledgement, together with the long form disclosures required by sub. (5), to the customer within 3 business days after the telephone solicitation, and maintains sufficient documentation to show it made reasonable efforts to obtain the documents from the customer.

DFI-SB 16.04(6)(b)3. 3. Permits the customer to cancel the purchase of the contract without penalty within 30 days after the savings bank has mailed the loan form disclosures to the customer.

DFI-SB 16.04(6)(c) (c) Solicitations using written mail inserts or “take one” applications. If the contract is solicited through written materials such as mail inserts or “take one” solicitations and the savings bank provides only the short form discourses in the written materials, then the savings bank shall mail the acknowledgment of receipt of disclosures, together with the long form disclosures required by sub. (5), to the customer within 3 business days, beginning of the first business day after the customer contacts the savings bank or otherwise responds to the solicitation. The savings bank may not obligate the customer to pay for the contract until after the savings bank has received the customer’s written acknowledgment of receipt of disclosures unless the savings bank does all of the following:

DFI-SB 16.04(6)(c)1. 1. Maintains sufficient documentation to show that the savings bank provided the acknowledgement of receipt of disclosures to the customer as required by this section.

DFI-SB 16.04(6)(c)2. 2. Maintains sufficient documentation to show that the savings bank made reasonable efforts to obtain from the customer a written acknowledgement of receipt of the long form disclosures.

DFI-SB 16.04(6)(c)3. 3. Permits the customers to cancel the purchase of the contract without penalty within 30 days after the savings bank has mailed the long form disclosures to the customer.

DFI-SB 16.04(6)(d) (d) Electronic election. An affirmative election and acknowledgement made electronically shall be in a manner consistent with the requirements of the Electronic Signatures in Global and National Commerce Act, 15 USC 7001 et seq.

DFI-SB 16.04(7) (7) Safety and soundness requirements. A savings bank shall manage the risks associated with debt cancellation contracts and debt suspension agreements in accordance with safe and sound savings banking principles. Accordingly, a savings bank shall establish and maintain effective risk management and control processes over its debt cancellation contracts and debt suspension agreements. Such processes include appropriate recognition and financial reporting of income, expenses, assets and liabilities, and appropriate treatment of all expected and unexpected losses associated with the products. A savings bank shall also assess the adequacy of its internal control and risk mitigation activities in view of the nature and scope of its debt cancellation contract and debt suspension agreement programs.

DFI-SB 16.04 Note Note: This section takes effect on April 1, 2006, except for those provisions comparable to the provisions of 12 CF R sec. 37 that are subject to a delayed effective date by the United States Office of the Comptroller of Currency. These provisions shall become effective when the comparable provisions of 12 CFR sec. 37 become effective. The administrator for the division of banking shall issue interpretive letters confirming which provisions of this section have become effective and the effective date of these provisions.

DFI-SB 16.04 History History: CR 05-045: cr. Register January 2006 No. 601, eff. 4-1-06.