1 . Account Disclosures : Due to the UDAAP risk , it is critical FDIC-supervised institutions , and other non- FDIC regulated institutions , start evaluating consumer account disclosures , such as terms and conditions , truth in savings , fee schedules and similar forms to ensure documents clearly outline the institutions decision to allow representments to occur . Moreover , the institution should also clearly document its decision to continue to charge multiple fees for duplicate unpaid transaction representments and consider placing limits on such fees to minimize the financial impact to consumers .
2 . Unfairness Considerations : It is important for your institution to know updating your existing disclosures may not fully address UDAAP risk and may only be perceived as a bandage in addressing a larger issue of fairness . Specifically , the FDIC notes that , “ While revising disclosures may address the risk of deception , doing so may not fully address the unfairness risk .” They further explain the larger concern that simply updating disclosures alone does not address the potential financial impact on a consumer if they are assessed multiple NSF fees for representments in a short period of time without
being given sufficient notice or an opportunity to bring their account positive in time to avoid the fees .
3 . Third-Party Risk Management : Third-party risk remains a continued risk for all institutions regardless of their regulator . The FDIC notes , “ Third parties , including core processors , often play significant roles in processing payments , such as identifying and tracking represented items and providing systems that determine when NSF fees are assessed . Such third-party arrangements may present heightened UDAAP risk if not properly managed . Institutions are expected to maintain adequate oversight of thirdparty activities and appropriate quality control over products and services provided through third-party arrangements .”
In addition to updating disclosures , reviewing fee practices and managing third parties , the FDIC also provided a comprehensive list of other risk mitigating practices they observed institutions use to help manage representments .
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