We are pleased to provide you with our Deposit Account Agreement (the "Agreement" as further defined below), which applies to any personal or business checking, savings, money market or CD accounts (each an "Account") you may have with Frost Bank. We urge you to carefully read the Agreement and keep it for future reference. We are here to answer any questions you may have about this Agreement or about your Frost Bank Account(s). Please feel free to call us at 1-800-513-7678.
In this Agreement, each and all of the depositors may be referred to as "you," "your," or "Account Holder." Frost Bank may also be referred to as "Bank," "we," "our," and "us." This Agreement contains the general terms and conditions governing your deposit Accounts with us. The term "Agreement" includes this document, the Account signature card ("Signature Card"), Truth in Savings disclosures, any other agreement that is applicable to the specific type of Account you open that we provide to you, including, but not limited to: the My Frost Online Banking Agreement and Disclosure (which includes optional Mobile Banking Services); the Treasury Management Services Agreement; the Personal ATM & Checkcard Agreement and Disclosure (or other similar agreement); the Frost Momentum Debit Card Agreement and Disclosure; the Business ATM & Checkcard Agreement and Disclosure (or other similar agreement); and the Electronic Funds Transfer Agreement and Disclosure. In this Agreement, the word "Checkcard" refers to the Personal Checkcard, Health Savings Account Checkcard and Frost Momentum Debit Card. In this Agreement, the word "Schedule" refers to any document specifying rates, fees or transaction limits pertaining to the Account in question, which may be called a Rate and Fee Schedule, Time Certificate of Deposit, Confirmation of Time Deposit, or ATM Fees and Limits Schedule. Each of you signing the Signature Card for an Account acknowledges receipt of this Agreement, and agrees to the terms set forth in the Agreement, as amended from time to time. You agree that we may, in our sole discretion, waive any fee, charge, term, or condition set forth in this Agreement at the time the Account is opened or later, on a one-time basis or for any period, without changing the terms of the Agreement or your obligation to be bound by the Agreement, and we need not provide similar waivers in the future or waive our rights to enforce the terms of this Agreement. This Agreement, together with specific terms and conditions governing your Account(s), provided separately, details our relationship with you. Please carefully read this Agreement and other related Account and Frost Bank documents, and save them for future reference.
OUR COMMITMENT TO SECURITY
Frost Bank recognizes and respects our customers' right to privacy and security concerning their financial information. We are committed to maintaining the confidentiality and security of our customers' financial information, which is consistent with Frost Bank's values and commitment to customer service. As part of our banking services, we employ various authentication technologies for your protection.
ATM Card and Checkcard Services–As part of our ATM Card and Checkcard Services, Frost Bank utilizes a unique Personal Identification Number ("PIN") associated with each card. Our Personal ATM and Checkcard Agreement and Disclosure (or similar agreement) (for personal Accounts), our Frost Momentum Debit Card Agreement and Disclosure (for personal Accounts) and our Business ATM and Checkcard Agreement and Disclosure (or similar agreement) (for commercial and business Accounts) contains a description of the Frost Bank recommended customer practices for maintaining the security of your ATM Card and Checkcard number and associated PIN. We strongly encourage you to review the security procedures, requirements and recommended practices.
My Frost Online Banking Services For Personal And Commercial Accounts–As part of the My Frost Online Banking Services (for personal Accounts) and the Business ATM and Checkcard Agreement and Disclosure (or other similar agreement) (for commercial and business Accounts), you may use your computer to obtain Account information, make certain funds transfers, and to arrange for payment of bills. These Frost Bank agreements and disclosures contain a description of Frost Bank's security procedures for online banking activities. You should know that Frost Bank employs various security and authentication technologies to ensure that you (an authorized customer) are communicating directly with the Frost Bank website. Frost Bank also employs various security and authentication measures to ensure to you that the computer you are connected to for Online Banking Services is a legitimate Frost Bank computer. Such Frost Bank authentication procedures include, but are not limited to, use of customer online banking User IDs, passwords and other "Additional Authentication Information" ("AAI") that Frost Bank may require you to provide, in its sole discretion. Such AAI is used in conjunction with various online banking authentication procedures that we may employ, including, but not limited to, security questions and responses and/or use of other hardware-based and software-based security and authentication tools, programs and procedures. We strongly encourage you to review the security procedures, requirements and recommended practices in your applicable agreement and disclosure and any supporting documentation regarding Frost Bank online banking activities, which include Mobile Banking Services and Bank's remote deposit capture services, "Frost Digital Deposits."
Mobile Device And Wireless Internet Access–To help safeguard against potential unauthorized use of your Account, you should employ reasonable caution when using a mobile phone, mobile device or cordless telephone to conduct any telephonic transactions with us (including SMS text message transactions). If your use of a mobile device, cordless phone or wireless Internet access is not encrypted, then any confidential Account information contained in such wireless or mobile communications can be intercepted without your knowledge or authorization. In addition, if you use wireless Internet access via laptop or personal computer to conduct any online banking activities provided by the Frost Bank website, please be advised that we strongly encourage you to only conduct wireless Internet transactions over a secured wireless network facility. Although Frost Bank employs security and authentication procedures for customers using our Online Banking Services (including optional Mobile Banking Services), we strongly encourage you to only conduct wireless Internet online banking activities via laptop or personal computer over a secure wireless network to further ensure that your Account information, password, User ID and any Additional Authentication Information cannot be intercepted during transmission over a wireless network without your knowledge or authorization.
ELECTRONIC BANKING SERVICES
(A) Electronic Funds Transfers Generally.
Electronic Funds Transfers–refers to the following activities with respect to a consumer Account (an Account used for personal, family or household purposes): ATM and Checkcard transactions (including Point-Of-Sale ("POS") transactions), direct deposits of payroll checks or government checks, preauthorized withdrawals, other direct deposits, use of our 24-hour automated phone system or use of My Frost Online Banking Services. These electronic funds transfers are generally governed by regulations issued by the Federal Reserve Board of Governors. Similar electronic funds transactions made with respect to commercial or business Accounts are governed by the Texas Business and Commerce Code and any applicable federal law, rule or regulation. You understand that all electronic funds transfers (consumer and commercial) must originate from an Account on which you are an Account Holder. We reserve the right to refuse the acceptance of any particular transfer for any reason. If you have overdraft protection with us, you authorize us to make transfers and/or advances to your Account(s) pursuant to the Frost Bank "Overdraft Protection Agreement" if the balance in your Account is at any time insufficient to support any transfers you authorize.
(B) Required Disclosures Under Electronic Funds Transfer Act and Federal Reserve Regulation E.
General Information–These provisions apply to electronic fund transfers involving consumer Accounts used primarily for personal, family or household purposes. You understand and acknowledge these provisions do not apply to any commercial or business Account. These provisions generally apply to electronic funds transfers, deposits, cash withdrawals and purchases made with any Frost Bank ATM Card, Checkcard, Debit Card or similar card, PIN, Frost Bank User ID, or other device or code which accesses a consumer Account, and to direct deposits and some types of preauthorized and telephoneinitiated transfers involving consumer Accounts (including a transaction you may initiate by check but which a merchant converts into an electronic funds transfer). These provisions do NOT apply to: debits which the Bank is authorized to make from your Account(s) for service charges and other fees; preauthorized automatic transfers you have instructed Bank to make to another of your Account(s); payment of any loan that you have with us; and to certain other types of consumer transactions which are excluded from Regulation E issued by the U.S. Federal Reserve Board.
Your Liability for Unauthorized Transfers–Tell us AT ONCE if you believe your Frost Bank ATM Card, Checkcard or similar card, or your Frost Bank User ID, PIN or other device or code which accesses your Account has been lost, stolen or otherwise learned or acquired by an unauthorized person, or if you believe that an electronic funds transfer has been made without your permission using information from your check or otherwise. The best way to minimize your loss is to call us immediately. The unauthorized use of your card or PIN could cause you to lose all of your money in your Accounts, plus any amount available under your overdraft protection if you do not notify us in a timely manner. Also, if your Account statement shows transfers that you did not make, including those made by card, code or other means, tell us at once.
You will have no liability for unauthorized transactions if you notify us within sixty (60) calendar days after the statement showing the transaction has been mailed to you. If you do not tell us within sixty (60) calendar days after the statement was mailed to you, you may not get back any money you lost after the sixty (60) calendar days if we can prove that we could have stopped someone from taking the money if you had told us in time. If a valid reason (such as a long trip or a hospital stay) kept you from telling us, we will extend the time periods.
For transactions processed through the VISA or MasterCard system (for example, use of your personal Checkcard when no PIN is used), liability limits differ from those set forth above. For transactions processed through the VISA or MasterCard system, you will have no liability for unauthorized transactions in accordance with each network's respective policies regarding "zero liability" if you report the unauthorized transactions to us. We may impose greater liability, to the extent allowed by law, if we reasonably determine that you were grossly negligent or fraudulent in the handling of your Account or your personal Checkcard. This may include your delay for an unreasonable time in reporting unauthorized transactions.
How to Notify Us–The telephone number and relevant address for notification are as follows:
Telephone Customer Service
P.O. Box 1600, San Antonio, TX 78296
My Frost Online Banking users can also report a lost or stolen card online at www.frostbank.com by accessing the ATM/Checkcard section in My Frost Online Banking.
Error Resolution Procedures–In case of errors or questions about your electronic funds transfers, either call or write to us using our contact information as listed above. Call or write as soon as you can if you think your statement or receipt is wrong, or if you need more information about a transfer listed on the statement or receipt. We must hear from you no later than sixty (60) calendar days after we sent you the FIRST statement on which the problem or error appeared. You must provide us with the following information:
- Tell us your name and Account number.
- Describe the error or the transfer you are unsure about and explain as clearly as you can why you believe it is an error or why you need more information.
- Tell us the dollar amount of the suspected error.
If you tell us orally or electronically, we may require that you send us your complaint or question in writing within ten (10) Business Days after you initially inform us. We will determine whether an error occurred within ten (10) Business Days after we hear from you and will correct any error promptly. However, if we need more time, we may take up to forty-five (45) calendar days to investigate your complaint or question. If we decide to do this, we will credit your Account within ten (10) Business Days for the amount you think is in error, so that you will have the use of the money during the time it takes us to complete our investigation. If we ask you to put your complaint or question in writing and we do not receive it within ten (10) Business Days of our request, we may not credit your Account.
For errors involving a transfer to or from an Account within thirty (30) calendar days after the first deposit to that Account (herein referred to as a "New Account"), or for errors involving POS or foreign-initiated transactions, we may take up to ninety (90) calendar days to investigate your complaint or question. For New Accounts, we may take up to twenty (20) Business Days to credit your Account for the amount you think is in error.
If a notice of error involves unauthorized use of your card for a transaction processed through the VISA or MasterCard system (for example, use of your personal Checkcard when no PIN is used), we will provide provisional credit within five (5) Business Days after you notify us instead of within the usual ten (10) or twenty (20) Business Days. We may in our sole discretion withhold providing this accelerated provisional credit, to the extent allowed under applicable law, if we believe that the circumstances or Account history warrants the delay.
We will tell you the results within three (3) Business Days after completing our investigation. If we decide that there was no error, we will send you a written explanation. You may ask for copies of the documents that we used in our investigation.
Business Days–For purposes of these electronic banking disclosures, and for this Agreement in general, our "Business Days" are Monday through Friday, excluding federal holidays.
TRANSFER TYPES AND LIMITATIONS
ATM and Checkcard Transfers
Account Access–you may use your card and PIN to:
- Withdraw money from your checking or savings Account
- Make deposits to your checking or savings Account
- Transfer funds between your checking and savings Accounts
- Pay for purchases at places that have agreed to accept the card
- Obtain balance information for your checking or savings Account
- However, some of these services may not be available at all POS or ATM terminals
- You may withdraw up to $1,000 per card per day at ATM terminals.
- You may purchase up to $4,500 per Account per day at VISA or MasterCard merchants and POS terminals.
- You may obtain cash advances up to $1,000 per card per day
For further information regarding the use of your ATM or Checkcard, please refer to the applicable Frost Bank Card Agreement and Disclosure applicable to those services.
24 Hour Automated Phone Line
Account Access–you may use your PIN or code to:
- Transfer funds between your checking and savings Accounts
- Obtain balance information for your checking or savings Account
Limitations–there are no limitations on the number or dollar amount of transfers you may make per day.
ONLINE BANKING, MOBILE BANKING AND BILL PAYMENT SERVICES
Account access and limitations on transfers associated with our Online Banking Services (which include optional Mobile Banking Services) are described in our My Frost Online Banking Agreement and Disclosure.
Electronic Check Conversion–You may authorize a merchant or other payee to make payment via a one-time electronic funds transfer from your checking Account using information from your check to:
- Pay for purchases
- Pay bills
Represented Check Transaction–You may authorize a merchant or other payee to electronically collect a fee associated with the re-presentment of a check that is returned due to insufficient or unavailable funds. The resulting fee transaction if debited as an electronic funds transfer from a consumer Account is covered by the Electronic Funds Transfer Act and this disclosure. When a merchant re-presents a check electronically, that transaction is not covered by the Electronic Funds Transfer Act or this disclosure. A description of the transaction will appear on your statement.
ATM and Checkcard Fees–For information regarding our fees applicable to the use of your card, see our current Schedule of Fees.
ATM Fees Charged by Others–If you use an ATM that is not operated by us, you may also be charged a fee by the ATM operator and/or by any automated transfer network used, and you may be charged a fee for a balance inquiry even if you do not complete a funds transfer.
Stop Payments on ATM, POS or Debit Card Transactions–You may not place a stop payment order on any ATM, POS or Debit Card Transaction.
We will disclose information to third parties or our affiliates about your Account(s) or transfers you make:
- Where it is necessary for completing transfers
- In order to verify the existence and condition of your Account(s) for a third party, such as a credit bureau or merchant
- In order to comply with government agency or court orders, or other applicable law
- If you give us your written permission
- In accordance with our privacy statement as set forth in our Customer Privacy Disclosure
DOCUMENTATION OF TRANSFERS
ATM Transactions–You can get a receipt at the time you make any transfer to or from your Account using one of our ATM's.
Preauthorized Credits–If you have arranged to have direct deposits made to your Account at least once every sixty (60) calendar days from the same person or company, you can call us at 1-800-513-7678 to find out whether or not the deposit has been made.
Periodic Statements–You will get a monthly Account statement from us, unless there are no transfers in a particular month. In any case, you will get an Account statement at least quarterly.
Stop Payment Rights–If you have told us in advance to make regular electronic funds transfers out of your Account(s), you can stop any of these payments. Here's how: call us at 1-800-513-7678, or write to us at Frost Bank, Attn: Stop Payment Clerk, P.O. Box 1600, San Antonio, Texas, 78296 in time for us to receive your request three (3) Business Days or more before the transfer is scheduled to be made. If you call us, we may also require you to put your request in writing and mail or otherwise transmit it to us within fourteen (14) calendar days after you call. You must tell us the exact amount of the payment you have stopped, as well as any other identifying information which we may request. We may charge you a fee for each stop payment order you give us in accordance with our Rate and Fee Schedule. If we require written confirmation and do not receive it, we may remove the stop payment order after fourteen (14) calendar days from the date we requested such written confirmation.
Notice of Varying Amounts–If these regular payments might vary in amount and/or timing, the person you are going to pay will tell you ten (10) calendar days before each payment is due when it will be made and how much it will be. You may choose to get this notice only when the payment will differ by more than a certain amount from the previous payment, or when the amount would fall outside certain limits that you set.
Right to Revoke Authorization for Pre-Authorized Transfers–You may revoke your authorization for any payee to originate pre-authorized transfers from your Account by giving us written notification on our prescribed revocation form. You must also inform the payee in writing of your revocation. Your revocation will become binding upon us upon the last to occur of the following: (i) three (3) Business Days after we receive your written notice of revocation, or (ii) the day that we receive a copy of your written notice to the payee that your authorization has been revoked.
Liability for Failure to Stop Payments–If you order us to stop one of these payments three (3) Business Days or more before the transfer is scheduled, and you have given us the information we requested, including the exact amount of the payment, we will be liable if we fail to stop the payment for your losses or damages up to the amount of the payment. However, we are not liable to you for any special, incidental, exemplary, punitive or consequential losses or damages of any kind.
Financial Institution's Liability For Failure To Make Transfers–If we do not complete a transfer to or from your Account on time or in the correct amount according to our Agreement with you, we will be liable for your losses or damages up to the amount of the transfer. We are not liable to you for any special, incidental, exemplary, punitive or consequential losses or damages of any kind. However, there are some exceptions to our liability. We will not be liable, for instance:
- If, through no fault of ours, you do not have enough money in your Account to make the transfer
- If the transfer would go over the credit limit on any overdraft line associated with your Account
- If the ATM where you are making the transfer does not have enough cash
- If the ATM, terminal or system was not working properly and you knew about the breakdown when you started the transfer
- If circumstances beyond our control (such as power outages, equipment failures, fire or flood) prevent the transfer, despite commercially reasonable precautions that we have taken
- If the funds are subject to legal process or other encumbrance restricting the transfer
- If an Account becomes dormant (in which case we may terminate card or code access to that Account)
- If your card or code has been revoked due to inactivity or at our discretion
There may be other exceptions, in addition to those listed above, stated in any other of our agreements with you, or as permitted by law.
Notices–All notices from us will be effective when we have mailed them or delivered them to your last known address in our records. Notices from you will be effective when received by us at the telephone number or the address specified in this Agreement. We reserve the right to change the terms and conditions upon which our services are offered. We will mail notice to you at least twenty one (21) calendar days before the effective date of any change, as required by law. Use of our electronic funds transfer services is subject to existing regulations governing your Account and any future changes to those regulations.
(C) ATM and Checkcard Safety Tips
- Protect your card just as you would cash, checks or credit cards. Always keep your card in a safe place. Don't allow anyone to use your card.
- Keep your PIN a secret. To ensure confidentiality, memorize your PIN. Don't write your PIN on your card, its carrier or other papers in your wallet. Never tell anyone your PIN and don't let anyone enter your PIN for you.
- Never give information to anyone about your card over the telephone. No one should know your PIN. The bank will never call to verify your PIN, so do not reveal your number to anyone claiming to be a bank representative.
- Minimize time spent at the ATM by having your card ready. When you've completed your transaction, take your money, your card and receipt, and leave the area.
- Be courteous and keep an adequate distance between yourself and other customers. When you're waiting to use a terminal, allow the customer in front of you to complete his/her transactions before you approach the terminal. Also, stand in front of the keyboard, to block the view of anyone behind you, while entering your PIN.
- Protect the magnetic strip on the back of the card. Keep your card in the carrier provided and never store the card with its magnetic strip in direct contact with the strip of another card.
- Check your ATM receipts against your monthly Account statement to guard against fraud. Notify us immediately if you suspect any unauthorized transactions.
- Always observe the surroundings at an ATM before conducting a transaction. Observe the area before approaching. If you see anything or anyone suspicious, leave the area immediately.
- When using a drive-up ATM, keep your engine running, the doors locked and your windows up until you approach the terminal. It's also a good idea to keep a distance between cars should you need to leave the area quickly.
- When using a drive-up ATM at night, keep your headlights on so you will be able to see the area as you drive in. Try to pull your car up as close to the terminal as possible. Keep in mind locations of other ATMs if you're concerned about your safety when using a terminal.
- Be alert and select a visible, well-lit area when you're handling transactions at night. If an ATM is obstructed or poorly lit, report any problem to the financial institution. If you're concerned about your safety while using an ATM, take a friend with you to the terminal, or consider using another ATM site such as a drive-up ATM or an ATM at a 24-hour convenience store.
- Report a lost or stolen card at once. If your card or PIN is lost or stolen, please notify us immediately by calling the number in your area or 1-800-513-7678 (after hours 1-800-233-9874). If you use My Frost Online Banking, go to your My Frost homepage and click "ATM/Checkcard" to report a lost or stolen card.
- If anyone follows you after conducting a transaction, go to a crowded, well-lit area and call the police.
FUNDS AVAILABILITY POLICY DISCLOSURE
Your Ability To Withdraw Funds–Our policy is to make funds from your check deposits available to you on the first Business Day after the day we receive your deposit. Funds from cash and electronic direct deposits will be available on the day we receive the deposit. Once they are available, you can withdraw the funds in cash and we will use the funds to pay checks that you have written. For determining the availability of your deposits, every day is a Business Day, except Saturdays, Sundays, and federal holidays. If you make a deposit on a day that is not a Business Day, we will consider the deposit made on the next Business Day we are open.
Longer Delays May Apply–In some cases, we will not make all of the funds that you deposit by check available to you on the first Business Day after the day of your deposit. Depending on the type of check that you deposit, funds may not be available until the second Business Day after the day of your deposit. The first $200 of your deposits, however, will be available on the first Business Day. If we are not going to make all of the funds from your deposit available on the first Business Day, we will notify you at the time you make your deposit. We will also tell you when the funds will be available. If your deposit is not made directly to one of our employees, or if we decide to take this action after you have left the premises, we will mail you the notice by the Business Day after we receive your deposit. If you will need the funds from a deposit right away, you should ask us when the funds will be available.
In addition, funds you deposit by check may be delayed for a longer period under the following circumstances:
- We believe a check you deposit will not be paid
- You deposit checks totaling more than $5,000 on any one day
- You redeposit a check that has been returned unpaid
- You have overdrawn your Account repeatedly in the last six months
- There is an emergency, such as failure of computer or communications equipment
We will notify you if we delay your ability to withdraw funds for any of these reasons, and we will tell you when the funds will be available. They will generally be available no later than the seventh Business Day after the day of your deposit.
FROST DIGITAL DEPOSITS
Your Ability To Withdraw Funds–These provisions apply only to demand deposit checking Accounts where deposits are made via Frost Digital Deposits. You agree that Electronic Images submitted via Frost Digital Deposits (from either your personal computer or mobile device) are not subject to the funds availability requirements of the Federal Reserve Board's Regulation CC. Our policy is generally to make funds from your Frost Digital Deposits available to you on the first Business Day after the day we receive your deposit. Funds that are deposited using Frost Digital Deposits will not be deemed "received" by us until we have received an Electronic Image that meets all of the requirements for deposits via Frost Digital Deposits (including all requirements to create a Substitute Check) stated in this Agreement and in the Frost Digital Deposits documentation. Once the funds are available, you can withdraw the funds in cash and we will use the funds to pay items and transactions drawn on your account. For determining the availability of your deposits, every day is a Business Day, except Saturdays, Sundays, and federal holidays. If you make deposit via Frost Digital Deposits on a day that is not a Business Day, we will consider such deposit made on the next Business Day we are open.
Longer Delays May Apply–In some cases, we will not make all of the funds that you deposit via Frost Digital Deposits available to you on the first Business Day after the day of your deposit. Depending on the type of check that you deposit via Frost Digital Deposits, funds may not be available until the second Business Day after the day of your deposit. The first $200 of your Frost Digital Deposits, however, will be available on the first Business Day. If we are not going to make all of the funds from your Frost Digital Deposits available on the first Business Day, we will notify you at the time you make your deposit. We will also tell you when the funds will be available.
In addition, funds you deposit by check may be delayed for a longer period under the following circumstances:
- We believe a check you deposit will not be paid
- You deposit checks totaling more than $5,000 on any one day
- You redeposit a check that has been returned unpaid
- You have overdrawn your Account repeatedly in the last six months
- There is an emergency, such as failure of computer or communications equipment
The availability of Funds you deposit via Frost Digital Deposits may also be delayed for a variety of additional reasons as determined in Bank's sole discretion, including, but not limited to:
- We believe a check you deposit via Frost Digital Deposits is a duplicate image
- You deposit checks via Frost Digital Deposits totaling more than any applicable daily dollar amount limit, monthly item limit or any other limitations on your Frost Digital Deposits that Bank may impose
- We exercise our rights to investigate any unusual or suspicious Frost Digital Deposits items as determined in Bank's sole discretion
We will generally notify you if we delay your ability to withdraw funds for any of these or other reasons, and we will attempt to tell you when such funds will be available. If you will need the funds from a deposit via Frost Digital Deposits, you should contact us to inquire when the funds will be available.
HOLDS ON OTHER FUNDS (CHECK CASHING)
If we cash a check for you that is drawn on another bank, we may withhold the availability of a corresponding amount of funds that are already in your Account. Those funds will be available at the time funds from the check we cashed would have been available to you if you had deposited the check.
HOLDS ON OTHER FUNDS (OTHER ACCOUNTS)
If we accept for deposit a check that is drawn on another bank, we may make funds from the deposit available for withdrawal immediately but delay your availability to withdraw a corresponding amount of funds that you have on deposit in another Account with us. The funds in the other Account would then not be available for withdrawal until the time periods that are described elsewhere in this disclosure for the type of check that you deposited.
SUBSTITUTE CHECK POLICY DISCLOSURE
Under regulations established by the Federal Reserve Board pursuant to the Check Clearing for the 21st Century Act (referred to as "Check 21") that were written to comply with the Check 21 Act any check you write or deposit need no longer be returned for payment by the bank of the person to whom you wrote the check. Such other bank may instead send us a Substitute Check or, in some cases, an electronic image by which we can create a Substitute Check. As explained more fully below, a "Substitute Check" means a paper reproduction of an original check with an accurate, legible image of the front and back of the original check, and that conforms to standards established by the Federal Reserve Board. A Substitute Check that you receive is the legal equivalent of an original check for all purposes.
The Check Clearing for the 21st Century Act requires that we provide you with the following disclosure entitled "Substitute Checks and Your Rights." If you have any questions about this – or anything else relating to Check 21 – please give us a call at 1-800-513-7678.
Substitute Checks and Your Rights
What is a Substitute Check?
To make check processing faster, federal law permits banks to replace original checks with "Substitute Checks." These checks are similar in size to original checks with a slightly reduced image of the front and back of the original check. The front of a Substitute Check states: "This is a legal copy of your check. You can use it the same way you would use the original check." You may use a Substitute Check as proof of payment just like the original check.
Some or all of the checks issued by you for payment, or other checks deposited by you, that you receive from us may be Substitute Checks. This notice describes the rights you have when you receive Substitute Checks from us. The rights in this notice do not apply to original checks or to electronic funds transfers to or from your Account. However, you have rights under other law with respect to those transactions as described elsewhere in this Agreement.
What are your rights regarding Substitute Checks?
In certain cases, federal law provides a special procedure that allows you to request a refund for losses you suffer if a Substitute Check is posted to your Account (for example, if you think that we withdrew the wrong amount from your Account or that we withdrew money from your Account more than once for the same check). The losses you may attempt to recover under this procedure may include the amount that was withdrawn from your Account and fees that were charged as a result of the withdrawal (for example, non-sufficient funds fees).
The amount of your refund under this procedure is limited to the amount of your loss or the amount of the Substitute Check, whichever is less. You also are entitled to interest on the amount of your refund if your Account is an interest-bearing Account. If your loss exceeds the amount of the Substitute Check, you may be able to recover additional amounts under law.
If you use this procedure with respect to a consumer Account that is used primarily for personal, family or household purposes, you may receive up to $2,500 of your refund (plus interest if your Account earns interest) within ten (10) Business Days after we receive your claim and the remainder of your refund (plus interest if your Account earns interest) not later than forty-five (45) calendar days after we receive your claim. We may reverse the refund (including interest on the refund) if we later are able to demonstrate that the Substitute Check was correctly posted to your Account.
How do you make a claim for a refund?
If you believe that you have suffered a loss relating to a Substitute Check you received and that was posted to your Account, please promptly contact us at 1-800-513-7678 or write to us at Frost Bank, Customer Service, P.O. Box 1600, San Antonio, TX 78296. You must contact us within forty (40) calendar days of the date that we mailed (or otherwise delivered by a means to which you agreed) the Substitute Check in question or the Account statement showing that the Substitute Check was posted to your Account, whichever is later. We will extend this time period if you were not able to make a timely claim because of extraordinary circumstances.
Your claim must include:
- A description of why you have suffered a loss (for example, you think the amount withdrawn was incorrect)
- An estimate of the amount of your loss
- An explanation of why the Substitute Check you received is insufficient to confirm that you suffered a loss
- And a copy of the Substitute Check or the following information to help us identify the Substitute Check: the check number, the name of the person to whom you wrote the check, and the approximate amount of the check
You understand that even if you have asked for your original paper checks to be returned to you with your statement, those paper checks may not all be your original checks. Some or all of these original paper checks may be replaced with Substitute Checks.
SUBSTITUTE CHECKS DEPOSITED BY YOU
Should you receive a valid Substitute Check from someone else that has not yet been collected, you may deposit that Substitute Check in the same manner as you would deposit an Original Check (defined below) you received. Creating a valid Substitute Check takes specialized equipment and adherence to precise specifications. Accordingly, you agree not to attempt to change any Original Check you write or receive into a Substitute Check unless we, in our discretion, have first entered into a separate written agreement with you to permit you to create substitute checks that we will honor when deposited into your Account. If you do not have a separate written agreement with us granting you the ability to create Substitute Checks, then you can only deposit Substitute Checks (as defined by federal law) or any Image Replacement Document ("IRD") that purports to be a Substitute Check if such Substitute Checks have already been endorsed by a bank.
FROST DIGITAL DEPOSITS
Should you desire to utilize Frost Digital Deposits (Bank's remote deposit capture services), then you must request such services from Bank either in person, via telephone or via the applicable Internet Banking Service. Depending on the type of Frost Digital Deposits you request, and depending on whether you are a commercial or personal Account holder, you must have specialized equipment and access via the Internet to Bank's (or Bank's third-party vendor's) server-based Processing Software or access via Bank's (or Bank's third-party vendor's) mobile device Processing Software. Such equipment and Processing Software is required to enable you to generate Electronic Images of Original Checks that comply with applicable Standards.
Bank retains the ability to either approve or deny your use of Frost Digital Deposits in Bank's sole and absolute discretion. If Bank approves you to use the Frost Digital Deposits, then by using such services, you agree to the provisions set forth in this Agreement, you agree to pay any fees that Bank may charge in conjunction with such Frost Digital Deposits (as set forth in Bank's Fee Schedule) and you understand and agree that the meanings of the defined terms set forth in this section are applicable both to this Agreement and the Documentation (as defined below) made available to you by us for use with the Frost Digital Deposits. If any capitalized term defined below is used in Federal Reserve Board's Regulation CC (Vol. 12 of the U.S. Code of Federal Regulations, part 229) promulgated to comply with Check 21, as it may be amended, substituted for, or recodified from time to time ("Reg. CC"), then such term generally shall have the meaning assigned to it in Reg. CC. To the extent that any of the defined terms in this Agreement or in the Documentation use a term not defined herein but otherwise defined in Reg. CC, then such definition also incorporates the meaning assigned to the applicable term as set forth in Reg. CC. To the extent that any term used by Bank in providing you the Frost Digital Deposits is a term that is not used or defined in this Agreement or in the Documentation, you and Bank agree to such term commonly used with regard to remote deposit capture services shall have the meaning as defined in Reg. CC if such term is so defined.
All other capitalized terms used that are not otherwise defined in this Agreement or in the Documentation shall have the meaning given to such term in Article 3 or Article 4 of the Uniform Commercial Code (as amended from time to time ("UCC")) effective in Texas as adopted in the Texas Business and Commerce Code. In addition, you acknowledge that the Electronic Image of the Original Check submitted to us shall be deemed an "item" within the meaning of Article 4 of the Uniform Commercial Code as adopted in the Texas Business and Commerce Code.
(a) "Check 21" means Federal Reserve Board Reg. CC, Subpart D, promulgated to implement the provisions of the Check Clearing for the 21st Century Act.
(b) "CTA" means the Check Clearing for the 21st Century Act, which became effective October 28, 2004.
(c) "Documentation" means the online help files or written instructions and materials made available or supplied by Bank that provide the description, methods of operation, and required procedures to engage in Frost Digital Deposits activities.
(d) "Electronic Image" means a digital or electronic representation of an Original Check that is a Sufficient Copy and meets all of the Standards and is submitted by you to Bank for processing and collection as a Substitute Check.
(e) "Electronic Deposit" means a file that contains information regarding each Electronic Image(s) to be submitted by you to Bank that meets all of the requirements imposed from time to time by Bank as set forth in this Agreement and the Documentation.
(f) "Magnetic Ink Character Recognition Line" or "MICR Line" means the numbers, which may include the routing number, account number, check number, check amount and other information, that are printed near the bottom of a check in magnetic ink in accordance with the Standards.
(g) "Original Check" means the first paper check issued to or endorsed in your favor with respect to a particular payment transaction.
(h) "Processing Software" means the software for personal computer or mobile device hosted by the Bank that administers the Frost Digital Deposits process and captures Electronic Images for deposit.
(i) "Reconverting Bank" means: (1) the bank that creates a Substitute Check; or (2) with respect to a Substitute Check that was created by a person that is not a bank, the first bank that transfers, presents, or returns that Substitute Check or, in lieu thereof, the first paper or electronic representation of that Substitute Check.
(j) "Standards" means the applicable standards set forth in CTA, Check 21 or as promulgated by the American National Standards Institute ("ANSI") for image quality and transmission protocols, including but not limited to, ANS X9.13, ANS 9.37 and ANS X9.100-140 (or any amendment or substitute for such standards as may be promulgated from time to time), whether such standard pertains to the MICR Line, the image quality of the Original Check, the placement of an image of the Original Check on the Substitute Check, or the manual or electronic transfer of a Sufficient Image Copy or other electronic representation of an Original Check or a Substitute Check, unless the Federal Reserve Board, by rule or order determines that a different standard is to apply.
(k) "Substitute Check" means a paper reproduction of an Original Check that: (1) contains an image of the front and back of the Original Check; (2) bears a MICR line that, except as provided under the applicable Standard, contains all the information appearing on the MICR line of the Original Check at the time that the Original Check was issued and any additional information that was encoded on the Original Check's MICR line before an image of the Original Check was captured; (3) conforms in paper stock, dimension, and otherwise with ANS X9.100-140 (unless the Federal Reserve Board by rule or order determines that a different standard applies); and (4) is suitable for automated processing in the same manner as the Original Check.
(l) "Sufficient Copy" and "Copy" means: (1) A sufficient copy is a copy of an Original Check that accurately represents all of the information on the front and back of the Original Check as of the time the Original Check was Truncated or is otherwise sufficient to determine whether or not a claim is valid. (2) A copy of an Original Check means any paper reproduction of an Original Check, including a paper printout of an electronic image of the Original Check, a photocopy of the Original Check, or a Substitute Check.
(s) "Sufficient Image Copy" means an Electronic Image of an Original Check or Substitute Check that is capable of printing a Sufficient Copy of such Original Check or Substitute Check.
(m) "Third Parties" means with regard to commercial account holders any party whom you hire, employ, or to whom you delegate your duties or responsibilities to administer Frost Digital Deposits.
(n) "Truncate" means to remove an Original Check from the forward collection or return process and send to a recipient, in lieu of such Original Check, a Substitute Check or, by agreement, information relating to the Original Check (including data taken from the MICR line of the Original Check or an electronic image of the Original Check), whether with or without the subsequent delivery of the Original Check.
If you have met, in our sole discretion, the conditions we have established for use of Frost Digital Deposits to make deposits via Electronic Images, we will provide Internet access to our computer network and accept for deposit to your Account(s) the Electronic Images of Original Checks for collection as allowed under this Agreement and the Documentation. However, you agree that you will not use Frost Digital Deposits to submit any of the following:
- Checks or items payable to any person or entity other than you/your company
- Checks or items drawn on foreign financial institutions or payable other than in United States money
- Checks or other items containing apparent alteration to any of the information on the front of the check or item, or which you know or suspect (or should know or suspect) are fraudulent or otherwise not authorized by the owner of the account on which the check or item is drawn
- Original Checks or other items previously converted to a Substitute Check
- Checks or items that are Remotely Created Checks (as defined in Reg. CC)
- Checks or items dated more than six (6) months prior to the date of deposit
- Checks or items prohibited by Bank's current Documentation relating to Frost Digital Deposits, or checks or items which are otherwise not acceptable under the terms of your Account(s)
Such Electronic Images shall be deemed received by us for deposit based upon time of receipt as well as successful receipt of Electronic Images that are complete, usable, and adhere to the Standards. If any Electronic Image is not complete, is not usable, or does not adhere to the Standards, the Electronic Image may not be processed by us, in which event your deposit will be adjusted and notification provided.
You understand we will process only your Electronic Images that comply with the Standards and are Sufficient Image Copies, and we will use commercially reasonable efforts to present these Sufficient Image Copies for collection under the Check 21 framework. For information regarding our applicable depository cut-off times with regard to receipt of deposits via Frost Digital Deposits, you should consult the Documentation made available to you for this purpose. The availability of funds for deposits via Frost Digital Deposits is set forth in the Funds Availability Policy Disclosure section of this Agreement.
Should a Drawee Financial Institution return an item to us unpaid, we will charge your respective Account for such returned item and may either (i) return the item to you, or (ii) re-present it to the Drawee Financial Institution before returning it to you. Items may be returned as Image Exchange Items, rather than Substitute Checks. Should a Drawee Financial Institution or other third party make a claim against us or seek recredit with respect to any Electronic Image, we may provisionally freeze or hold aside a like amount in your Account pending investigation and resolution of the claim.
You agree that you will submit to us for deposit to your Account only Electronic Images that are Sufficient Image Copies of Original Checks for deposit via Frost Digital Deposits. No Electronic Image submitted by you to us represents an Original Check that has already been collected. You further agree that you will retain each Original Check that is Truncated through any Frost Digital Deposits activity for a reasonable period of time, but in no event fewer than ten (10) Business Days from the date of deposit or such longer time as we may request from time to time with respect to any specific Original Check. You understand that in all cases you are solely responsible for safeguarding all items you retain, during the reasonable period of time described above, as required or permitted by Frost Digital Deposits from destruction, alteration or theft.
Also, you understand that in certain instances we may request from time to time the Original Check to respond to claims made by the Drawer of the check. You should be able to retrieve and produce for us the Original Check in question within seventy-two (72) hours of a written request by us. In the absence of retaining the relevant Original Check, you understand and agree you shall be solely responsible for the cost of any claim brought by the Drawer of the check that for resolution would reasonably require access to relevant Original Check and shall indemnify us in accordance with the terms of the "Frost Digital Deposits Indemnity" given to us as set forth below. You understand and agree that after the reasonable period of time for retention of Original Checks has passed, you will destroy the Original Check in a method that renders it unusable or otherwise unreadable. You understand and acknowledge that we are relying on the truth and veracity of all Electronic Images submitted for deposit via Frost Digital Deposits by you to us, and you warrant that such Electronic Images accurately reflect Original Checks that are, or at the time of the creation of the Substitute Checks, were, in your possession.
If you deposit such an Electronic Image, you give us the same warranties and indemnities that we, as a reconverting bank, would give under applicable law or regulation. You understand and acknowledge that all of the warranties deemed given by a depositor of a check to a bank under the Uniform Commercial Code ("UCC") as applicable from time to time in the State of Texas shall also apply to any Electronic Image of an Original Check, and also apply to any Substitute Check deposited by you (as described in the "Substitute Checks Deposited By You" section of this Agreement) the same as if such Electronic Image or Substitute Check were a paper check within the meaning of the UCC as adopted by the State of Texas ("Texas UCC"). Accordingly, except to the extent that any warranties deemed given under the Texas UCC are expressly superseded by the Check 21 Act or the Check 21 regulations, you understand that you are deemed to give us all the same warranties you would have given under the Texas UCC for the deposit of an Original Check by transferring to us: (a) any Substitute Check; (b) an IRD or other item purporting to be a Substitute Check; or (c) any Electronic Image that purports to contain a Sufficient Copy of an Original Check or a Substitute Check. Such warranties also include the following two (2) specific warranties regarding transfer and presentment:
- You warrant that the Electronic Image that we convert to a Substitute Check meets the requirements described in § 229.51(a)(1) – (2) of the Check 21 Regulation (found at 12 CFR § 229.51(a)(1) – (2)) for legal equivalence
- And your warranty given above is deemed given to us and any other person, company or bank to which we transfer, present or return the Substitute Check or a paper or electronic representation of the Substitute Check
WITH YOUR USE OF FROST DIGITAL DEPOSITS, AND IN ADDITION TO ANYTHING ELSE SET FORTH IN THIS AGREEMENT, YOU ASSUME LIABILITY FOR, AND HEREBY AGREE TO INDEMNIFY, PROTECT AND HOLD HARMLESS BANK AND ITS AGENTS, OFFICERS, DIRECTORS, EMPLOYEES, SUCCESSORS AND ASSIGNS ("BANK INDEMNITEES"), FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES AND EXPENSES, INCLUDING REASONABLE ATTORNEYS' FEES, OF ANY KIND OR NATURE ("DAMAGES") ARISING OUT OF THE USE OF, CONDITION (INCLUDING LATENT AND DEFECTS AND WHETHER OR NOT DISCOVERABLE BY YOU OR BANK), OPERATION, OWNERSHIP, SELECTION, DELIVERY, INSTALLATION OR LICENSING OF ANY ITEM OF PROCESSING SOFTWARE OR EQUIPMENT. HOWEVER, SUCH INDEMNIFICATION SHALL NOT EXTEND TO ANY DAMAGE OR LOSS DUE TO THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF BANK.
In addition, you agree to reimburse us for all claims, losses, costs and damages we may incur regarding any Electronic Image, Substitute Checks or IRD deposited by you. Furthermore, if you provide us with an Electronic Image of a Substitute Check for deposit into your Account instead of an Original Check, you agree to reimburse us for all claims, losses, costs and damages we incur because the Substitute Check resulting from the Electronic Image does not meet applicable Substitute Check Standards or causes duplicate payments. The amount of our loss which we may recover from you may be limited under the Check 21 Regulations.
You agree that we shall not have any liability for any breach of any representation, warranty or covenant of this Agreement to the extent caused by: (i) the unavailability of the external connection services and other Internet network functions for Frost Digital Deposits; (ii) any use of the Frost Digital Deposits by you in a manner not as set forth in this Agreement or the Documentation, or in a manner for which it was not designed, or in combination with systems, products or components not supplied or approved in writing by us; or (iii) your use of Processing Software, equipment or other systems not approved or supplied by us. YOU UNDERSTAND AND EXPRESSLY ACKNOWLEDGE AND AGREE THAT, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, WE SHALL NOT BE LIABLE FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, EXEMPLARY, SPECIAL OR PUNITIVE DAMAGES (INCLUDING, WITHOUT LIMITATION, LOSS OF REVENUE OR ANTICIPATED PROFITS) OR FOR ANY INDIRECT LOSS THAT YOU MAY INCUR OR SUFFER IN CONNECTION YOUR USE OF FROST DIGITAL DEPOSITS OR OUR TERMINATING YOUR FROST DIGITAL DEPOSITS SERVICES IN ACCORDANCE WITH THIS AGREEMENT.
You agree to the security procedures ("Security Procedures") used by the Bank in connection with the Frost Digital Deposits. Such Security Procedures offered by the Bank are described herein and in Documentation applicable to such services. As part of the Security Procedures, Bank may employ various authentication technologies, including, but are not limited to, use of Internet Banking Services User IDs, passwords and other "Additional Authentication Information" ("AAI") that Bank may require you to provide at Bank's sole discretion. Bank employs various security and authentication technologies to ensure that you, your employees, agents or third parties (if a commercial Account holder), are communicating directly with the Bank, and also to ensure that your computer or mobile device is communicating with a legitimate Bank computer. You are responsible for the establishment and maintenance of your internal procedures reasonably adapted to insure the confidentiality and security of Security Procedures. YOU UNDERSTAND AND AGREE THAT YOU WILL BE RESPONSIBLE FOR MAINTAINING SECURITY AND CONTROL OVER ALL USER IDS AND PASSWORDS PROVIDED BY BANK, AND SHALL USE SECURITY FOR SUCH ITEMS COMPARABLE TO THE SECURITY AND CONTROL YOU WOULD USE FOR CASH, BUT IN NO EVENT LESS THAN REASONABLE SECURITY AND CONTROL IN THE CIRCUMSTANCES.
If you, as well as your employees, agents or Third Parties (if a commercial Account holder), have reason to believe that any Security Procedure has or may have become known by unauthorized persons (whether or not employed by you), you shall immediately notify the Bank by telephone and confirm such oral notification in writing to the Bank within twenty-four (24) hours of the oral notification. The Bank will replace the Security Procedures in accordance with the Bank's standard security requirements related to Frost Digital Deposits. To the maximum extent permitted by applicable law, you will be solely liable for all transactions initiated before the Bank has received such notification and has had a reasonable opportunity to act on such notification. The Bank reserves the right to change any or all of the Security Procedures offered and/or used at any time by giving oral or written notice to you. You agree that your use of the Frost Digital Deposits after the Bank provides notice of such changes constitutes your acceptance of the new Security Procedures. You acknowledge that the purpose of Security Procedures is to authenticate the identity of the person initiating the action, not to detect errors in any transmission or content. The Bank is not agreeing to any Security Procedures or other procedure for the detection of errors. You represent that for Frost Digital Deposits, you consider the Security Procedures to be commercially reasonable with respect to the size, type, and frequency of deposits you anticipate submitting.
With regard to your obtaining Frost Digital Deposits services under this Agreement, you must comply with the personal computer, check scanner and mobile device hardware, software, and other requirements, as well as applicable Security Procedures, as set forth in this Agreement and as set forth in any Documentation or any supplemental information and/or instructions provided by the Bank. The Bank reserves the right as encryption technology develops to impose further reasonable requirements to maintain the appropriate level of security for Frost Digital Deposits and transactions contemplated hereunder and you agree to abide by such requirements. Furthermore, you understand and acknowledge that if you do not implement and follow your own commercially reasonable hardware, software, physical access and physical storage security procedures regarding any of the data owned by you, which includes such data containing the sensitive personally identifiable information ("PII") of any individual, the security of your Frost Digital Deposits and/or the data owned by you (including sensitive PII) may be compromised. You understand, acknowledge and agree that installation, maintenance and operation of your personal computer or mobile device (hardware and software) and related security procedures that you adopt and follow, including, but not limited to, data security protection, firewalls and anti-virus software, is your sole responsibility, and that you are solely responsible for securing, encrypting, protecting and otherwise safeguarding the data owned by you.
You understand, acknowledge and agree that the Bank is not responsible for any loss or damages resulting from any errors or failures of your personal computer, mobile device or data processing systems, including, but not limited to any personal computer or mobile device virus or malware attack (such as a keystroke logging program or similar malware), any attack by a person attempting or actually gaining unauthorized access to the data owned by you, or any Internet-related problems that may be associated with your access and use of our Frost Digital Deposits.
For avoidance of doubt, you understand, acknowledge and agree that all data provided by you to Bank (including, but not limited to, Electronic Images or Substitute Checks retained on any processing equipment, Processing Software, or any other processing equipment or software (including your personal computer or mobile device) used by you in conjunction with Frost Digital Deposits), and all data produced, compiled or otherwise provided by Bank to you, in any form or format, is your sole and exclusive property and copies thereof shall be provided to you at your request from time to time and at any time. Once such data owned by you is delivered by Bank to you, retrieved by you from Bank, or otherwise created as a byproduct of a transaction between you and Bank and retained by you, such data owned by you is solely within your possession and control.
If you are a commercial Account holder, then in the event of any security breach incident involving any potential or actual unauthorized access or acquisition of data owned by you (e.g. computer hacking, virus attack, or theft or loss of any equipment containing data owned by you), it is your sole responsibility to determine whether you have the obligation, under applicable law, to notify potentially affected individuals whose sensitive PII may have been compromised by the security breach incident. You bear the sole responsibility for any and all costs of complying with required data breach notifications to individuals, credit bureaus and/or governmental entities as required by applicable law, and any and all costs for credit report monitoring of fraud monitoring associated with such security breach incident.
If, despite your efforts, you suffer any damage or loss as a result of your failure to comply with its data security obligations, and regardless of whether such damage or loss results from the activities of you, or if a commercial account holder, your employees, agents, subcontractors or any unaffiliated third party, any such loss or damage shall be your sole responsibility.
If you are a commercial Account holder and intend to make use of a Third Party to administer your Frost Digital Deposits activities, you agree to notify us in writing, in a form that is acceptable to Bank, of the name of any Third Party whom you hire, employ, or to whom you delegate your duties or responsibilities under the Agreement, before that Third Party initiates any transaction or performs any obligation authorized or required under this Agreement. You agree that you, as the commercial Account holder, shall be solely responsible for all acts of any such Third Party. By using Frost Digital Deposits, you agree to provide information, including financial information, which we may, in our sole discretion, require from time to time regarding you or any Third Party which you hire, employ, or retain in any manner, to administer Frost Digital Deposits or assume any of your duties under the Agreement. You understand and acknowledge that because of the risks involved, we may refuse, in our sole discretion, to provide Frost Digital Deposits to you for any reason in our sole discretion, including if you or the Third Party retained by you does not meet our qualification criteria. Our acceptance of any Third Party retained by you based on our qualification criteria is not a representation or warranty by us regarding the fitness of the Third Party's capabilities or financial condition, nor is such acceptance by us an endorsement of any Third Party's ability to perform the Third Party services for you. You agree that you will not allow any Third Party to use our Frost Digital Deposits or to process Electronic Deposits to your Accounts without our prior written consent.
We may, in our sole discretion, terminate your Frost Digital Deposits effective immediately if: (i) there is an occurrence of a material change in your Account activity or other risk analysis criteria as determined by us in our sole and absolute discretion; (ii) we at any time determine that you (or your Third Party) does not meet our risk or other qualification requirements; (iii) we discover any willful misconduct (including but not limited to types of fraudulent activity) on your part or any other party with respect to Electronic Images submitted for deposit by you using our Frost Digital Deposits; (iv) you are in default of any terms of this Agreement where such default gives us the right to terminate, immediately or otherwise, or close your Account; (v) you have not used Frost Digital Deposits for a period of time deemed to constitute an inactive service by us (in our sole discretion); or (vi) you are in default of any terms of the Agreement or any other agreement with us. In any of these events, you agree that our sole obligation shall be to provide notice of our termination of Frost Digital Deposits to you, and that such notification will be reasonable if it is mailed to your statement mailing address immediately upon termination.
Either you or Bank may terminate Frost Digital Deposits, with or without cause, upon thirty (30) days written notice to the other of its intent to do so, sent to you at your statement address and sent to us at the address provided herein. In the event of termination of Frost Digital Deposits, your rights and responsibilities as well as ours, shall continue through any applicable settlement period, including your responsibility to pay us for Frost Digital Deposits and with respect to transactions processed prior to the effective date of termination. If Frost Digital Deposits are terminated by us, we may accelerate all amounts due and to become due, and you agree to promptly make full payment to us of all amounts due and amounts incurred by you through your use of our Frost Digital Deposits.
When we use the term "check" in the rest of this Agreement, we are referring to both Original Checks and Substitute Checks.
From time to time, we may offer or you may open various types of deposit Accounts. Each Account you open is subject to these general terms and conditions and any specific terms and conditions relating to that type of Account that may be set forth in any applicable Agreement or any Schedule. If you open multiple Accounts, you may receive Schedule information and certain disclosures for each Account, but this Agreement will cover all your Accounts with us. If there is more than one Account owner, then each of you will be jointly and severally liable to us for debit balances in the Account, including without limitation overdrafts and Account charges, and you each jointly and severally promise to pay, upon demand, any and all debit balances, all fees and charges, and our reasonable attorneys' fees and costs and expenses of collection, including but not limited to those incurred at trial and on any appeal.
If your Account earns interest, the following information applies:
(A) Payment of Interest–We will pay interest at the annual rate specified on the applicable Schedule, which does not reflect compounding. The Schedule also shows how often we will pay you interest, if that interest is compounded, how we will calculate the interest we will pay, the balance on which we will pay interest, and any minimum balance requirements. Compounding generally means that interest is being accrued on interest previously earned but not yet paid. Interest may be compounded more frequently than interest is credited to your Account. Interest that has been calculated, but not paid to the Account, is called accrued unpaid interest.
(B) Minimum Balance Requirements–The Schedule may specify a minimum balance that you are required to maintain in your Account. If the minimum balance is not maintained as shown on the Schedule, we, at our option, may not pay interest on your Account and/or may charge a fee for that period. You should review any minimum balance requirements on any applicable Schedule(s).
(C) Initial Interest Rate–The initial "Interest Rate" is the current annual rate of interest that we will pay on the specified balance in your Account. We may pay interest at different rates, depending on the amount deposited and the type of depositor (individual, business, non-profit organization, etc.).
(D) Changes–We have the right to change the rates and fees in accordance with the Schedule. We also reserve the right to change any other term of this Agreement at our sole discretion, but we will make reasonable attempts to notify you of such changes.
FEES AND CHARGES
Except as limited by law, you agree to pay us the fees and charges shown in the Schedules applicable to your Accounts and for other services we perform. You agree that we may change the fees and charges from time to time and you authorize us to charge your Account for their payment even if the charge results in an overdraft of your Account. We may set the rate of both existing and future fees and charges upon the overall costs of providing Account services, and they need not be based upon the direct cost of providing the particular service involved. We may establish the rate and amount of fees and charges based on profit, competitive position, deterrence of misuse of Account privileges by customers, and the safety and soundness of the bank. We will notify you of any changes as required by law.
As used in this Agreement, the "average daily balance" method means "the application of a periodic rate to the average daily balance in the Account for the period, determined by adding the full amount of principal in the Account for each day of the period and dividing that figure by the number of days in the period." The "daily balance" method means "the application of a daily periodic rate to the full amount of principal in the Account each day."
The following terms apply to deposits made to your Account(s):
(A) Endorsements–You authorize us to accept transfers, checks and other items for deposit to your Account if they are made payable to, or to the order of, any one or more of you, whether or not they are endorsed by you. You authorize us to supply missing endorsements, and you warrant that all endorsements are genuine. All checks and other items deposited to your Account should be endorsed payable to the order of Frost Bank for deposit only, followed by your signature and Account number. All endorsements must appear on the back of the check or other item within the first 1-1/2 inches from the left side of the item when looking at it from the front, except that for substitute checks, endorsements that appeared on the back of the original check must also appear on the back of the substitute check. While we may accept non-conforming endorsements, you will be responsible for any loss incurred by us due to the delay in processing or returning the item for payment.
(B) Final Payment–All non-cash items (for example, checks) deposited to your Account are posted subject to our receipt of final payment by the payor bank upon which the check is drawn. Upon receipt of final payment, the item becomes a collected item. If final payment is not received or if any item you have deposited or cashed is charged back to us for any reason, you authorize us to charge any of your Accounts, without prior notice and at any time, for the amount of the returned item, our returned item fee, any interest paid on that item, and any other fee we pay or incur, including, if applicable, foreign exchange fees or charges resulting from checks or drafts drawn on foreign banks. If an item to be charged back is lost in the process of collection or unavailable for return, we may rely upon a photocopy of the item or upon any other generally accepted notification of return of the item, in charging you or any of your Accounts for the amount of the returned item. We reserve the right to refuse any item for deposit into your Account.
(C) Certain Direct Deposits–If we offer direct deposit services for automatic preauthorized deposits to your Account of Social Security payments or automatic transfers from your other Accounts with us, you must notify us at least thirty (30) calendar days prior to the next scheduled direct deposit or preauthorized transfer if you wish to cancel the direct deposit or transfer service. If any amount deposited must be returned to the government for any reason, you authorize us to deduct the amount from your Account as provided in the "Final Payment" paragraph above.
The following terms apply to withdrawals from your Account(s):
(A) Manner of Withdrawal–You may make withdrawals from your Account in any manner that is permitted by us for the type of Account you have. Withdrawals by mail will be posted to your Account as of the day the transaction is processed by us. We may refuse to accept any check other than (1) standard checks provided by us or approved by us in advance, or (2) substitute checks conforming to Check 21 Regulations standards that were created from images of original standard checks provided by us. Your Account may be debited at the time and on the day a check or other item drawn on your Account is presented to us for payment, by electronic or other means, or at an earlier time based on notification received by us that the check or other item has been deposited for collection in another financial institution. Withdrawals and transfers from your Account may be restricted as provided in any applicable Agreement or Schedule, or applicable law.
(B) Withdrawal Restrictions and Overdrafts–We are not obligated to allow you to make a withdrawal from your Account if you don't have sufficient available funds in the Account to cover the full amount of the withdrawal. If there are available funds to cover some, but not all, of the withdrawals or other debits (such as charges) to your Account, we post those withdrawals in the manner described in this section. The manner in which we process withdrawals or other debits may affect the amount of overdraft or non-sufficient funds charges or penalties you may incur. We establish different categories of withdrawals or other debits to your Account for this purpose. For example, we process ATM and debit card transactions, teller withdrawals and loan payments payable to us before checks. Within each category, we currently process withdrawals for that category in the following manner:
- For ATM and debit card transactions, provided that such ATM or point-of-sale terminal or network is properly operating, we process such transactions as they are received by us
- For ATM and debit card re-presented transactions, and for all other items for which authorization has already occurred, we process such transactions from the lowest dollar amount to the highest dollar amount
- For contractual obligations, such as loans payable to us, we process such transactions from the lowest dollar amount to the highest dollar amount
- For Customer-initiated items, such as checks and ACH transactions, we process such transactions from the lowest dollar amount to the highest dollar amount
- For Bank service fees and bank penalty fees, we process such transactions from the lowest dollar amount to the highest dollar amount (within each category)
We may change the categories or the processing order of one or more of the categories at any time without notice to you, provided that such categories and processing order comply with applicable law, rule or regulation. If there are insufficient available funds to cover some of the withdrawals or debits presented against your Account, such items will be handled in accordance with our overdraft procedures or any other agreement you may have with us (such as an Overdraft Protection Agreement). Even if we choose to pay one or more overdrafts, we are not obligated to cover any future overdrafts. We may determine the balance of your Account in connection with determining whether payment of an item will create an overdraft at any time between the earlier of: (1) the time the item is presented to us for payment (by electronic or other means) or the time we receive notification that the item has been deposited for collection in another financial institution; and (2) the deadline for us to take action on the item. We are not required to determine your Account balance more than one (1) time during this period. A per item service charge may be assessed on any item that will overdraw the available Account balance, regardless of whether we pay or dishonor (i.e. return) the item. You agree immediately upon notice from us to deposit funds sufficient to cover any overdraft plus service charges, if required. We will not be liable for the dishonor of any item when the dishonor occurs because we setoff a debt against your Account. We also may refuse to allow a withdrawal if there is a dispute about the Account (unless a court has ordered us to allow the withdrawal), the Account is garnished or attached, the Account has been pledged as collateral for a debt, the availability of the funds on deposit cannot be verified, any required documentation has not been presented, or you fail to repay an obligation to us on time.
(C) Notice Requirements–We retain the right to require you to give at least seven (7) calendar days notice in writing prior to any intended withdrawal from your Account. Although we usually pay withdrawals or checks without notice on your Account, doing so does not mean that we give up our right to require you to provide such prior written notice.
(D) Postdated Items–You agree that when you write a check you will not date the check in the future. If you do and the check is presented for payment before the actual date on the check, we may pay it or return it unpaid. You agree that if we pay the check, the check will be posted to your Account on the date we pay the check, even though the posting date is prior to the date shown on the check. You further agree that we are not responsible for any loss to you in doing so. If we are required by state law not to honor a postdated check after advance notice from you, you agree to give us advance notice early enough for us to act on it, to do so in writing, and to specify the date, exact amount, and number of the check, along with the name of the payee. You agree that we may return a postdated check to the presenter.
(E) Stale Checks–We reserve the right to pay or dishonor a check more than six (6) months old without prior notice to you.
(F) Power of Attorney–For purposes of this subsection, the person executing a power of attorney will be referred to as the "principal," and the person acting for the principal under the power of attorney will be referred to as the "agent." If you desire to grant someone power of attorney over your Account, we ask that you complete a power of attorney form that is legally binding within the State of Texas ("Power of Attorney").
We may accept any Power of Attorney form that we believe was executed by you and may act on instructions we receive under such form. However, you agree to reimburse us for all claims, costs, losses and damages that we incur in accepting and acting on any Power of Attorney form that we believe you executed. When we accept a Power of Attorney we may continue to recognize the authority of your agent as attorney-in-fact until we receive written notice of revocation from you and we have had a reasonable time to act in response to such notice.
We reserve the right in our sole and absolute discretion to refuse to honor any Power of Attorney you grant presented to us with or without cause and at no liability to you. We also reserve the right, in our sole and absolute discretion, to require additional information, documentation or actions from you that are sufficient, in our sole discretion, to satisfy any questions or concerns we may have regarding a Power of Attorney submitted to us. For example, we may require additional documentation or information from you that is sufficient to resolve any conflicting information or conflicting Power of Attorney forms, or we may require that you register the Power of Attorney with the appropriate recording authorities.
We may also restrict the types or sizes of transactions we permit an agent to conduct. We may require a separate form for each agent and for each Account for which you want to grant a Power of Attorney.
(G) Signatures–We have adopted commercially reasonable automated collection and payment procedures for processing checks for collection or payment that are in accordance with procedures commonly used in the financial services industry so that we can process the greatest volume of items at the lowest possible cost to our customers. Automated processing means that in almost all cases we will not visually inspect checks to verify signatures or other information. We have no duty to visually inspect signatures or other information on a check presented for payment, and other than the signature of the drawer, the identification of the payor bank and payee, the amount (numeric over words if contradictory) and any MICR encoded information, we have no duty nor are we bound to look at any other information on the check and can disregard such information in our sole discretion. In addition, you agree that we do not fail to exercise ordinary care in paying an item solely because our procedures do not provide for the sight examination of items with a face amount below an amount determined solely by us from time to time. You authorize us to store and use Signature Card information in any reasonable form we deem necessary, including any digitized signature capture or electronic storage process.
(H) Facsimile Signatures–If you use a procedure or mechanism that causes checks to be drawn on your Account(s) (such as, but not limited to: typed signature; facsimile signature; desktop publishing, digitized, or computer software generated signature; notation; or mark or other form of mechanical symbol (collectively, the "Mark")) that is not the signature that is on the Signature Card that you signed when you opened your Account, you are adopting such Mark as your signature and authorizing us to pay checks upon which the Mark appears or purports to appear. You should understand, however, that it is easier for someone to imitate, duplicate, counterfeit, or gain unauthorized access to, or otherwise manipulate, a form or mechanical signature than it is for someone to imitate, duplicate, counterfeit, or gain unauthorized access to, or otherwise manipulate, a unique and distinctive signature. For this reason, by adopting a form of Mark, you agree you shall have the sole responsibility for maintaining security of the Mark and the device by which the Mark is affixed, and you are assuming all risk of loss resulting from the unauthorized use and or forgery of the Mark. Furthermore, you are explicitly authorizing us to pay any and all checks presented against your Account which contain any mechanical signature which reasonably resembles the Mark you have adopted
- Regardless of whether the Mark is actually that which you have adopted
- Regardless of how or by whom the Mark was affixed
- And regardless of whether the check, which bears or purports to bear the Mark was, in fact, authorized by you
You are responsible even if the size or color of the Mark is different from that of any signature previously presented to us. You agree to indemnify and hold us and our correspondent banks harmless against any and all losses, damages, claims, liability, costs, and expenses which we or they may suffer arising directly or indirectly out of the misuse, unlawful or unauthorized use of the Mark. We may pay the withdrawal and may charge your Account for it. You agree to reimburse us (and we may charge your Account) for all claims, costs, losses and damages, including attorneys' fees, that result from our payment of a withdrawal bearing either a facsimile that resembles or purports to bear your signature or Mark or a facsimile that we believe you authorized. If you use any Mark, you agree to deliver a sample to us upon our request.
(I) Preauthorized Drafts–If you voluntarily give information about your Account (such as our routing number and your Account number) to a party who is seeking to sell you goods or services for payment of such goods and services, and you do not physically deliver a check to the party, any debit to your Account initiated by the party to whom you gave the information is deemed authorized by you.
(J) Converting Checks To Electronic Debits–(1) Some businesses, including merchants, retailers and billers for services, convert original paper checks that you give them into electronic debits (sometimes referred to as an electronic check) through use of Accounts Receivable Conversion ("ARC"), Point of Purchase ("POP") conversion, or Back Office Conversion ("BOC"). Such electronic debits generated by ARC, POP or BOC conversion are separate and distinct from substitute checks discussed previously under the "Check 21 Regulations" section of this Agreement, and are governed by separate laws rules and regulations for electronic debits. ARC conversion may occur when you mail your check to a biller (e.g., credit card company, utility company) who uses the check information to initiate an electronic debit against your Account and may, at the biller's discretion, destroy your check. POP conversion may occur at a POS location where the business or merchant will have posted notice that your check will be converted to an electronic debit and may have you sign a receipt and may return your check to you after scanning your check. If the business uses POP to take a blank check to initiate an electronic debit at the POS, the business should give you notice of the POP conversion and return the voided check to you. You should treat the voided check with care because someone else who obtains possession of it could use the information to initiate additional debits against your Account. BOC conversion may occur at a retailer who posts notice that your check may be converted to an electronic debit via the retailer's back-office processes, and the retailer or merchant may provide you with written notice of these conversion procedures and may, at the retailer's discretion, destroy your check. A business that receives your check by mail or otherwise, and converts it to an electronic debit via ARC, POP or BOC should give you notice of the conversion, and such business has the option to destroy the original check. (2) If you authorize the conversion of your check into an electronic debit under one of the situations described above, funds may be withdrawn from your Account sooner than the funds would have been withdrawn had the original paper check been sent to us for payment. We charge any such electronic debit to your Account when we receive it. We may receive the electronic debit to your Account immediately after the business enters the transaction so you may have a reduced right to stop payment and you may incur an overdraft if you do not have sufficient funds in your Account to cover the amount of the check at the time you write the check or authorize the transaction. Also, you will not receive either your original check or a substitute check back from us in your monthly statement since no original or substitute check is sent to us for processing. While these electronic debits are listed on your Account statement, the electronic debit of the funds from your Account will not appear under the "Checks Paid" section of your monthly statement. Instead, the debiting amount, along with the corresponding check number (if available) will appear under the "Other Withdrawals/Debits" section of your statement. (3) If your Account is used for personal, family or household purposes, then these electronic debit transfers are governed by the Electronic Funds Transfer Act and the U.S. Federal Reserve Board's Regulation E, and all electronic checks (both debits and credits) are also governed by the Operating Rules and Operating Guidelines of the National Automated Clearing House Association ("NACHA") and are also subject to separate Frost Bank Electronic Funds Transfer Agreement and Disclosure.
(K) Re-presented Checks–You may authorize a merchant to create an electronic withdrawal from your Account for the amount of your check when the original paper check is returned to the merchant for insufficient or uncollected funds. Checks used in these types of transactions will not be returned with your statement. The entry for the debit of the funds will appear under the "Other Withdrawals/Debits" section of your monthly statement. The transaction is not covered by the Electronic Funds Transfer Act or Regulation E, but is governed by the Uniform Commercial Code and other Federal Reserve Board Regulations.
(L) Electronic Checks–You may give a merchant information about your checking Account over the phone or over the Internet and authorize them to create an electronic withdrawal from your Account. Funds will normally be withdrawn from your Account the next Business Day. The transaction will appear in the "Other Withdrawals/Debits" section of your monthly Account statement. If the Account is used for personal, family or household purposes, then these transfers are governed by the Electronic Funds Transfer Act and Regulation E, and are also governed by the NACHA Operating Rules and Operating Guidelines and are also subject to the separate Frost Bank Electronic Funds Transfer Agreement and Disclosure.
(M) Check Legends–We may disregard information on any check or item other than the signature of the drawer, the identification of the drawee financial institution and payee, the amount, the endorsements, and any other information that appears on the MICR line. In addition, we are not responsible to take action on, or otherwise to notify you of restrictive language placed on checks or other items, including but not limited to terms such as "Void after 90 Days," "Paid in Full," "Two Signatures Required," "Void Over $100" or similar statements. In accordance with commercially reasonable banking industry standards and practices, most checks and other items are processed through automated processing and, except in limited circumstances and in our sole discretion, most items are not individually examined. You agree that we act within commercially reasonable banking industry standards and practices by processing most checks and other items through automated processing systems.
For each checking Account, we establish a master account and two subaccounts. All information made available to you about your checking Account will be at the master account level. The separation of the two subaccounts is for regulatory accounting purposes and does not affect your use of your checking Account in any way. All of our rules, regulations, and disclosures (including any provisions relating to interest) apply to your checking Account as a whole (i.e., at the master account level), without reference to the two subaccounts. The subaccounts will be comprised of a savings account and a transaction account. At the beginning of each statement period, we will allocate funds between the two subaccounts as we deem appropriate. Checks received by us that are drawn against your master account will be presented for payment against the transaction subaccount. Funds will be transferred from the savings subaccount to cover checks presented against the transaction subaccount as may be needed. On the sixth (6th) transfer from the savings subaccount to the transaction subaccount during a given statement period, all of the funds on deposit in the savings subaccount will be automatically transferred to the transaction subaccount. Use of the savings subaccount as a holding account may resume at the beginning of the next statement period.
INTEREST BEARING CHECKING ACCOUNTS
We may choose, in our sole discretion, to offer interest-bearing consumer Accounts (i.e. Accounts for individuals), and interest-bearing commercial Accounts (including Accounts for sole proprietors, business partnerships, professional associations, limited liability companies, for-profit corporations and governmental units). In addition, if we offer interest-bearing Accounts, such Accounts may also be held by a for-profit organization serving in a fiduciary or trustee capacity for a person or an entity that is itself permitted to hold an interest-bearing checking Account, and by an organization that is operated primarily for religious, philanthropic, charitable, educational or other similar purpose.
If your Account is an interest-bearing Account and is not a checking Account or time deposit, the following terms may apply:
(A) Transfers and Withdrawals–If your Account is a savings or money market deposit Account, federal law requires that you as the Account Holder may make no more than six (6) transfers and/or withdrawals during any one (1) calendar month or statement cycle (the period from one statement to the next) or similar period of at least four (4) weeks, to another of your Accounts with us, or to a third party, by means of: check, draft, debit card, or similar order; a preauthorized or automatic transfer; by telephonic agreement, order or instruction; or by any agreement, order or instruction initiated by you using Frost online banking services. If you exceed more than six (6) such transfers, we need not honor any subsequent items. A "preauthorized transfer" includes any arrangement by us to pay a third party from your Account upon written or oral instruction (including an order received through ACH or any arrangement by us to pay a third party from your Account at a predetermined time or on a fixed schedule.)
(B) Excess Transactions–In accordance with federal law, if you have more than the allowable preauthorized transfers or preauthorized checks or drafts in any one period, your Account may be subject to closure by us and the funds placed in another Account that you are eligible to maintain, or we may take away the transfer and draft capabilities of the Account. In addition to the above preauthorized transfers, you may make "unlimited withdrawals" (defined for purposes of this subsection as payments directly to you or to your loan Accounts with us), either in person at our locations, by mail, messenger, or use of an ATM card, if applicable. Telephone-initiated withdrawals will only be deemed to fall within the "unlimited withdrawal" category if such withdrawals result in a withdrawal by check payable to an Account Holder. All withdrawals initiated via My Frost Online Banking Services are never deemed to be included in the "unlimited withdrawal" category, but are subject to the limitations set forth in subsection (A) above.
If your Account is a time deposit, you have agreed to keep the funds on deposit until maturity. If your Account has not matured, any withdrawal of all or part of the funds from your Account may result in an early withdrawal penalty. We will consider requests for early withdrawal and, if granted, the penalty provided in the Schedule will apply.
(A) Penalty–The early withdrawal penalty is calculated as a forfeiture of part of the accrued interest that has or would be earned on the Account. If your Account has not yet earned enough interest so that the penalty can be deducted from earned interest, or if the interest has already been paid, the difference will be deducted from the principal amount of your Account. For fixed rate Accounts, we will use the rate in effect for your deposit.
(B) Exceptions–We may let you withdraw money from your Account before the maturity date without an early withdrawal penalty: (1) when one or more owners on the Account dies or is determined legally incompetent by a court or other administrative body of competent jurisdiction; or (2) when the Account is an Individual Retirement Account (IRA) established in accordance with Title 26 U.S.C. Section 408 and the money is paid within seven (7) calendar days after the Account is opened; or (3) when the Account is a Keogh Plan (Keogh), if you forfeit at least the interest earned on the withdrawn funds; or (4) if the time deposit is an IRA or Keogh Plan established pursuant to Title 26 U.S.C. Section 408 or Title 26 U.S.C. Section 401, when you reach age 59 1/2 or become disabled; or (5) within an applicable grace period (if any).
STOP PAYMENT ORDERS
Subject to certain limitations, you may order us to stop payment on any check or other item payable for your Account, whether drawn by you or any other Account Holder. The stop payment request will be effective if we receive the order at such time and in such manner as to afford us a reasonable opportunity to act upon the order. For purposes of determining whether we have a reasonable opportunity to act upon a stop payment order, a check or other item drawn on your Account is deemed received by us when it is presented to us for payment, by electronic or other means, or at an earlier time based on notification received by us that the check or other item has been deposited for collection in another financial institution. We will require you to provide the date, the exact amount, and the number of the item, together with the name of the payee. If you give us incorrect information, we will not be liable for failing to stop payment on the item. Stop payment orders are in effect for six months and will automatically expire at the end of six months from the date of the stop payment order unless renewed in writing. Our acceptance of a stop payment order will not constitute a representation that the item has not already been paid or that we have a reasonable opportunity to act upon the order. You may not stop payment on an official, certified, cashier's, or teller's check issued by us, or request us to stop payment if we have otherwise become accountable for the items, except as set forth in the "Preauthorized Payments" section of this Agreement. In addition, you may not stop payment on checks governed by separate agreement, such as a check guaranty agreement. Further, you may generally not stop payment on an item after acceptance of the item by us, except as set forth in the "Preauthorized Payments" section of this Agreement, and except as specifically allowed under NACHA Rules (defined herein) with regard to ACH transactions.
TYPES OF ACCOUNT OWNERSHIP
Based upon the type of Account ownership that you have designated, the following terms and conditions apply:
NOTICE TO YOU: THE TYPE OF ACCOUNT YOU SELECT MAY DETERMINE HOW PROPERTY PASSES ON YOUR DEATH. YOUR WILL MAY NOT CONTROL THE DISPOSITION OF FUNDS HELD IN SOME OF THE FOLLOWING ACCOUNTS. You may select some of the following Accounts by placing your initials next to the Account you select on the "Texas Uniform Single or Multiple-Party Account Selection Form."
(A) Individual Accounts–An Individual ("Single-Party") Account is an Account in the name of one depositor only. This section pertains to individual Accounts:
(1) Single-Party Account without P.O.D. (Payable on Death) Designation–The party to the Account owns the Account. On the death of the party, ownership of the Account passes as a part of the party's estate under the party's will or by intestacy.
(2) Single-Party Account with P.O.D. (Payable on Death) Designation–If you have opened this type of Account then you are the sole owner of the Account. On your death, ownership of the Account passes to the payable-on-death ("P.O.D.") beneficiaries you have designated. The Account does not become part of your estate. A sole proprietorship may open a Single-Party Account and may contain a P.O.D. designation.
(3) Health Savings Account with Beneficiary Designation–We can serve as your custodian for a Health Savings Account. A Health Savings Account is an Account now permitted by the federal government which qualifying individuals may be able to use to obtain tax advantages when saving and paying for medical and other permitted health expenses. Despite the name, these Accounts can be checking Accounts, and not just savings Accounts. Only natural persons can own this type of Account, and you must execute a separate Health Savings Account Custodial Account Agreement to establish a Health Savings Account. This Account may only be owned by one individual, but you can give your spouse, or another agent, the power to make transactions with respect to this Account. You must fill out a beneficiary designation at the time you open this Account. If your beneficiary is your spouse who is still alive at the time of your death, then the Account will thereafter be treated as your spouse's Health Savings Account, and no tax on the Account balance will be due at your death. If your spouse predeceases you, or if someone other than your spouse is named as your beneficiary, including your estate, then tax may be due on the balance remaining at your death.
(B) Multiple–Party Accounts
Our rights and liabilities for payment of any sums on deposit in this type of Account shall be governed by the Texas Probate Code, as amended from time to time. This section pertains to multiple-party Accounts:
(1) Joint Account Ownership–An Account with two or more Account Holders is a joint ("multiple-party") Account.
(i) Multiple-Party Account without Right of Survivorship–If this is the type of Account you have with us, then you own the Account in proportion to your net contributions to the Account. Frost Bank may pay any sum in the Account to a party at any time. On your death, your ownership passes as a part of your estate under your will or by intestacy.
(ii) Community Property without Right of Survivorship–In Texas, this type of Account only applies to husbands and wives, both of whom need to be named on the Account. If you have designated your Account as a community property Account without right of survivorship, the money in your Account is the community property of you and your spouse. You will need to select the Multiple-Party Account Without Right of Survivorship designation on the "Texas Uniform Single or Multiple-Party Account Selection Form" according to Section 439A of the Texas Probate Code. The ownership of the community property Account during your lifetime and after your death is determined solely by state law and may be affected by a will.
(iii) Multiple-Party Account with Right of Survivorship–You and the other parties to this type of Account own the Account in proportion to each of your net contributions to the Account. We may pay any sum in the Account to a party at any time. On your death, your ownership of the Account passes to the surviving parties.
(iv) Community Property with Right of Survivorship–Texas law allows a husband and wife to agree in writing that community property funds in an Account shall become the property of the surviving spouse on the death of either spouse. If you and your spouse have this type of Account and desire the spouse to have right of survivorship in those funds upon the death of the husband or wife, you each will need to choose the Multiple-Party Account With Right of Survivorship designation on the Texas Uniform Single or Multiple-Party Account Selection Form according to Section 439A of the Texas Probate Code. However, you should consult your own attorney if you have any questions regarding community property laws and the division of property at the death of either spouse.
(v) Multiple-Party Account with Right of Survivorship and P.O.D. (Payable on Death) Designation–You and the other parties to the Account own the Account in proportion to each of your net contributions to the Account. We may pay any sum in the Account to a party at any time. On the death of the last surviving party, the ownership of the Account passes to the P.O.D. beneficiaries.
(2) Convenience Account–This type of Account is often used with family members where the owner needs help managing the Account, or simply wants a contingency signer. To select a convenience Account, you will need to choose the convenience Account option of the Texas Uniform Single or Multiple-Party Account Selection Form according to Section 439A of the Texas Probate Code. If you select a convenience Account, you own the Account, but your convenience signer may make Account transactions. If you have this type of Account, your convenience signer has no ownership of the Account, and may not pledge or otherwise create a security interest in your Account(s). On your death, ownership of the Account passes as part of your estate by will or by intestacy. We may pay funds in the Account to the convenience signer or at the convenience signer's direction either before we receive notice of your death, or before we receive written notice signed by you that the authority of the convenience signer has been revoked and instructing us to remove the convenience signer from your Account. We will not be liable for any actions of the convenience signer until we have received either notice of the Account owner's death, or written notification of the revocation of the convenience signer's authority, and have had a reasonable time to act on such notice. Any payment to the convenience signer will not affect your ownership of the Account. We reserve the right to verify any transaction carried out by a convenience signer with the owner(s) of the Account.
(3) Totten Trust Account–If you, either alone or in combination with someone else, are named trustee(s) to this type of Account then you own the Account in proportion to each of your net contributions to the Account. Any named trustee may withdraw funds from the Account. A beneficiary may not withdraw funds from the Account before all trustees are deceased. On the death of the last surviving trustee, the ownership of the Account passes to the beneficiary. The trust Account does not become part of your estate and does not pass under your will or by intestacy, unless you were to survive all of the beneficiaries and all other trustees.
Each joint Account Holder, designated agency signer (see below for description of Agency Account) and convenience signer, without the consent of any other Account Holder or signatory, may, and hereby is authorized by every other joint Account Holder, to make any transaction permitted under the Agreement, including without limitation: to withdraw all or any part of the Account funds; to (except for agency signers and convenience signers) pledge the Account funds as collateral to us for any obligation, whether that of one or more Account Holders or of a third party; to endorse and deposit checks and other items payable to any joint Account Holder; to give stop payment orders on any check or item, whether drawn by that Account Holder or not; and, to close the Account, with the disbursement of Account proceeds as instructed by the Account owner or joint Account Holder. Each joint Account Holder is authorized to act for the other Account Holder(s) and we may accept orders and instructions regarding the Account from any joint Account Holder. If we believe there is a dispute between joint Account Holders or we receive inconsistent instructions from the Account Holders, we may suspend or close the Account, require a court order to act, and/or require that all joint Account Holders agree in writing to any transaction concerning the Account. Each Joint Account Holder's obligations under the Agreement are joint and several. This means that each joint Account Holder, but not a designated agency signer or convenience signer, is fully and personally obligated to Frost Bank under the terms of the Agreement, including liability for overdrafts and debit balances, irrespective of which joint Account Holder or signatory benefited from the withdrawal. If you establish a joint Account without the signature of the other joint Account Holder(s), you agree to hold us harmless for our reliance upon your designation of the other joint Account Holder(s) listed on our documents. Further, the Account is subject to the right of setoff as set forth below.
(C) Additional Account Types
This section applies to other deposit Account types:
(1) Formal Trust Account–A Formal Trust Account is an Account held by you and one or more other persons, each acting as a trustee for the benefit of one or more beneficiaries according to a written trust agreement. Upon our request, you will supply us a copy of any trust agreement covering the Account. We act only as custodian of the trust funds and we are not acting as a trustee, nor do we need to inquire as to the powers or duties of the trustee(s). You and any other trustee or person opening the Account, in your individual capacity and jointly and severally, agree to indemnify and hold us harmless from and against any and all loss, costs, damage, liability, or exposure, including reasonable attorneys' fees, we may suffer or incur arising out of any action or claim by any beneficiary or other trustee with respect to the authority or actions taken by you in handling or dealing with the Account.
(2) Uniform Transfer to Minors–If you have established the Account as a custodian for a minor beneficiary under the Texas version of the Uniform Transfers to Minors Act or the Uniform Gifts to Minors Act, your rights and duties are governed by that act. We will not allow you to pledge the Account as collateral for any loan to you. We will hold all deposits in the Account for the exclusive benefit of the minor. You agree to indemnify and hold us harmless from and against any and all loss, costs, damage, liability, or exposure, including reasonable attorneys' fees, we may suffer or incur arising out of any action or claim by any beneficiary or other custodian with respect to the authority or actions taken by you in handling or dealing with the Account.
(3) Agency Account–An Agency Account is an Account to which funds may be deposited and withdrawn by an agent designated by the owner of the Account. If you are the agent, then you have the full authority over the Account, except that the agent may not pledge or otherwise create a security interest in the Account. In addition, you will not have an ownership interest in the Account. On death of the Account owner, ownership of the Account passes as part of the Account owner's estate by will or by intestacy. The owner of an Agency Account may revoke the agent's authority over the Account at any time by notifying us in writing. We will not be liable for any actions of the agent until we have received either notice of the Account owner's death, or written notification that the Account owner has revoked the agent's authority, and have had reasonable time to act on such notice. An Agency Account designation may be combined with one of the other forms of Account ownership, except that it may not be combined with a convenience signer Account. We reserve the right to verify that any transaction carried out by an agent with the owner(s) of the Account.
(4) Business Accounts–If the Account is not owned by a natural person (for example, it is owned by a corporation, partnership, limited liability company, sole proprietorship, unincorporated association, etc.), then the Account Holder must provide us with a copy of the business entity's certificate of incorporation or other comparable organizational document, and evidence to our satisfaction of the authority of the individuals who sign the Signature Card to act on behalf of the Account Holder. On any transactions involving the Account, we may act on the instructions of the person(s) authorized in the resolutions, banking agreement, or certificate of authority to act on behalf of the Account Holder. If you operate as a sole proprietorship, you agree to notify us promptly of any change in the name of the business owner, in the physical address of the business, in the home address of the business owner, in the driver's license number of the business owner, or in the business owner's personal identification card number issued by the applicable Department of Public Safety. You further agree to notify us in writing of any changes in the person(s) authorized to act on behalf of the Account Holder, and change in the business entity's certificate of incorporation or other organizational document, or the form of ownership. If we receive conflicting instructions or a dispute arises as to authorization with regard to the handling of the Account, you agree we may place a hold on the Account until such conflict or dispute is resolved to our satisfaction and we will not be liable for dishonored items as a result of such hold.
(5) Fiduciary Accounts–With respect to all fiduciary Accounts, including but not limited to estate Accounts, guardianship Accounts, and conservatorship Accounts, and any formal trust Account, Uniform Transfers to Minors Act Account, or Agency Account, at any time we may require such documents and authorizations as we may deem necessary or appropriate to satisfy us that the person(s) requesting or directing the withdrawal of funds held in the Account have the authority to withdraw such funds. This applies at the time of Account opening and at all times thereafter.
(6) Attorney Client Trust–(IOLTA) Subject to applicable law, an Attorney Client Trust (also referred to as an "Interest On Lawyer's Trust Account," or "IOLTA") Account is an Account set up by an attorney or law firm to hold client or third party funds in trust, separate from the attorney's or law firm's funds. Upon our request, the authorized signers for an Attorney Client Trust Account will provide documentation required by applicable state law and applicable bar association (or similar entity) rules. We act only as custodian of the trust funds and are not acting as a trustee, nor do we need to inquire as to the powers or duties of the attorney or law firm as trustee(s). The attorney, law firm, or any authorized individual on the Account agrees to indemnify and hold us harmless from and against any and all loss, costs, damage, liability, or exposure, including reasonable attorney's fees, we may suffer or incur arising out of any action or claim by any beneficiary or third party with respect to the authority, actions, or inaction taken by the trustee(s) or authorized individuals in handling or dealing with the Account. Additional Account terms are governed by a separate agreement.
You may not assign the Account established under this Agreement except with our written consent. We must approve in writing any pledge of the Account and any such pledge remains subject to any right we have under the Agreement and applicable state and federal law. If you want to transfer ownership, we may require that you close the Account and open a new Account in the name of the transferee or pledgee.
You agree that, other than our liability under Check 21 Regulations, if we do not properly complete a transaction according to the Agreement, we will not be liable in any event for losses or damages in excess of the amount of the transaction, and we will never be liable if circumstances beyond our control prevent the transaction, or if the funds in your Account are or may be subject to legal process or other claim. Except to the extent expressly provided for in the Check 21 Regulations, in no event will we be liable for special, incidental, exemplary, punitive or consequential losses or damages of any kind. In receiving checks from you for withdrawal or deposit, we act only as your agent. You are responsible for the condition of a check or item when you issue it. If a check or item is returned or payment is delayed as a result of any writing or marking that you or a prior endorser placed on the front or back of the check or item, you will be responsible for any cost and liabilities associated with such return or delay. We reserve the right to refuse any item for deposit, to reverse credit for any deposited items or to charge your Account for items should they become lost in the collection process.
RIGHT OF SETOFF
Subject to applicable law, we may exercise our right of setoff that we are entitled to exercise under common law, under this Agreement and under statute (see Texas Finance Code Section 34.307), or security interest to recover amounts you owe us from any and all Accounts you maintain with us or with our affiliates without notice to you, except that this provision does not apply to any IRA Keogh plan, certain Trust Accounts (but excluding Totten Trust Accounts), or Health Savings Accounts. We may exercise our right of setoff for any liability or debt of any of you, whether joint or individual, whether direct or contingent, whether now or hereafter existing, and whether arising from overdrafts, endorsements, guarantees, loans, attachments, garnishments, levies, attorneys' fees, or other obligations. However, under Article XVI, Section 50(a)(6)(H) of the Texas Constitution, we may not setoff against any of your Accounts for a liability arising from a home equity loan secured by Texas Homestead Property. If you are a sole proprietor, we may charge any of your personal or business Accounts. If you are a business partnership, we may also charge the personal Accounts of any general partner. If the Account is a joint or multiple-party Account, each joint or multiple-party Account Holder authorizes us to exercise our right of setoff against any and all Accounts of each Account Holder. We may use funds held in joint or multipleparty Accounts to repay the debts on which any one of you is liable, whether jointly with another or individually. We may charge any such debt against your Account at any time, without regard to the origin of deposits to the Account or beneficial ownership of the funds.
If you have not made a withdrawal from, or a deposit to, your Account for an extended period of time and we have been unable to contact you, your Account may be classified by us as dormant account. Subject to applicable law, we may charge a dormant account fee on the Account, and the Account will be presumed to be abandoned. In accordance with applicable Texas law, funds in abandoned accounts will be remitted as unclaimed property to the custody of the Texas State Comptroller's Office (or any subsequently applicable state agency), and we will have no further liability to you for such funds. We reserve the right not to send statements on Accounts we consider dormant.
You are responsible for promptly examining your Account statement each statement period and reporting any irregularities to us. The periodic Account statement shall be considered correct for all purposes, and we will not be liable for any payment made and charged to your Account, unless you notify us in writing within certain time limits after the statement is made available to you. Those time limits are applicable as follows:
(a) We will not be liable for any original check that is altered or any signature that is forged or unauthorized unless you notify us within thirty (30) calendar days after the statement was first made available to you. In addition, we will not be liable for any items that are later paid where an unauthorized signature or alteration is made by the same wrongdoer unless you notify us within thirty (30) calendar days after the statement was first made available to you.
(b) We will not be liable for any substitute check that is altered or any signature that is forged or unauthorized unless you notify us within forty (40) calendar days after the statement was first made available to you.
(c) For consumer transactions (transactions on Accounts that are used primarily for personal, family or household purposes) covered by the federal Electronic Funds Transfer Act and Regulation E, you must report any unauthorized transactions within sixty (60) calendar days after the statement is first made available to you.
(d) For commercial Account holders, you must promptly review and report any fraudulent, unauthorized or erroneous transactions for any payment made or charged to your commercial Account. Any fraudulent, unauthorized or erroneous transactions must be reported to us, and failure to do so within thirty (30) calendar days from the transaction date may prohibit you from recovering certain funds that were transmitted electronically, and may also preclude us from being able to return ACH transactions in accordance with NACHA Operating Rules and Operating Guidelines. (Please refer to the separate Frost Bank Treasury Management Services Agreement and Electronic Funds Transfer Agreement and Disclosure for further details.)
(e) For commercial Account holders, you understand and agree that any employees or applicant for a job responsible for handling your financial affairs (including processing, writing or receiving checks, handling Account statements or acting otherwise in a responsible manner regarding your financial affairs) has been asked specifically whether they have ever been convicted of a felony, that a thorough background check of such employee or applicant has been conducted, that a system of reasonable financial controls is in place, and that you have instituted a program that encourages your employees to report fraudulent or dishonest activities to you or company management.
(f) The Texas Business and Commerce Code shall govern liability for any losses regarding your commercial Account.
(g) If you have requested us to hold your Account statements (a "Hold Request") you acknowledge and agree that we will hold your Account statement(s) rather than mailing them to you. You expressly acknowledge and agree: (1) our implementation of your Hold Request means any statement received and held by us per your Hold Request is deemed delivered to you as of the date the statement is first made available and placed on hold with us, regardless of when you physically pick up the statement from us; (2) you are solely responsible for reviewing any Account statement(s) for which you have made a Hold Request; (3) a Hold Request does not delay, postpone or otherwise affect or modify any provisions of this Agreement regarding your responsibilities and relevant deadlines for notifying us of any Account statement irregularities or potentially unauthorized, erroneous or fraudulent transfers, and any time period for any applicable notice deadline begins running when the statement is first made available to you, which, in the case of any Hold Request, is the date the Statement Call division receives the statement. In addition, we have the right to destroy your statements if you have not claimed them within sixty (60) calendar days.
(h) If we truncate your checks, you understand that neither your original checks nor substitute checks will be returned with your statement. You agree that our retention of checks does not alter or waive your responsibility to examine your statements or change the time limits for notifying us of any errors.
(i) Account statements sent or made available to any Account Holder are deemed to be received by all Account Holders. If Account statements are held by us at your request or because you fail to provide us with a current address, they will be deemed delivered to you when they are either prepared (if held by us) or delivered to the Statement Call division (if held pursuant to a Hold Request from you), mailed (for return mail), or otherwise made available to you.
(j) Any written notice you give to us regarding your Account statement, or a problem with your Account statement, is effective when it is actually received by us and we have had a reasonable opportunity to act on it. Any written notice we give to you regarding your Account statement is effective when it is deposited in the U.S. Mail, postage prepaid and addressed to you at your statement mailing address.
(k) If any problems arise regarding your Account, you agree to provide us with all information necessary for us to investigate the alleged error or unauthorized transaction. You also agree to promptly file a report with proper law enforcement agencies and otherwise to provide supporting affidavits, evidence and testimony we reasonably request in connection with the alleged error or unauthorized transaction. If you fail to comply with all of the above, we are not obligated to reimburse you for any claimed loss, except for consumer transactions that may be governed by Regulation E.
POSITIVE PAY SERVICES
If you are a commercial customer and choose to participate in our Positive Pay services, which are designed to help prevent check fraud, and you fail to utilize or follow the procedures required for those services, you may assume the risk that checks presented against your Account may be forged or altered, to the extent that the services we offered may have prevented any loss.
WIRE TRANSFERS AND AUTOMATED CLEARING HOUSE (ACH) TRANSACTIONS
With respect to wire transfers or other transfers of funds not governed by the Electronic Funds Transfer Act, you agree to enter into and comply with our Funds Transfer agreement for wire transfers (if applicable) and to comply with this section and any of our security procedures designed to verify the authenticity of such wire transfers or other transfers (which security procedures may include, but are not limited to, call-back procedures, request for personal identification, password, PIN number, telephone code words, or any other security code, algorithms, encryption or similar security devices). You agree to be bound by any payment order for any wire or other transfers not governed by the Electronic Funds Transfer Act, whether or not such payment order is authorized, issued in your name and accepted and executed by us in compliance with any commercially reasonable security procedures as mutually agreed to by you and us. In the event that we offer you one of our standard security procedures commensurate with the type of wire or other transfer you request, and you reject such security procedures and instead opt for different security procedures, you hereby agree that such security procedures are deemed commercially reasonable and you agree you are bound by any such payment order executed pursuant to such security procedures you have selected. Any receiving financial institution (including us) is entitled to rely on any Account or bank number you have provided even though that Account or bank number may identify a party different from the person or entity you have described by name in any transfer order. You agree not to use wire transfers or the ACH system to conduct any transaction in violation of federal or state law. You expressly warrant that no entry delivered to us will, if we accept it, cause us to be in violation of any sanction administered by the United States Department of Treasury's Office of Foreign Assets Control ("OFAC") or any applicable anti-money laundering statute, including but not limited to the federal Bank Secrecy Act and the USA-PATRIOT Act. With regard to any international ("IAT") ACH transactions received by you, you understand and acknowledge that these types of ACH transactions will be subject to increased scrutiny by Bank of the originator (i.e. sender) and receiver (i.e. recipient) as required by OFAC and the United States Department of Treasury's Financial Crimes Enforcement Network ("FinCEN").
(A) Provisional Payment–Credit we give you with respect to an ACH credit or wire funds transfer entry is provisional until we receive final settlement for such entry through a Federal Reserve Bank. If we do not receive final settlement, you agree that we are entitled to a refund of the amount credited to your Account in connection with such entry, and the party (the originator of the entry) making payment to you by such entry shall not be deemed to have paid you the amount of such entry.
(B) Notice of Receipt–We will notify you of the receipt of payments in the periodic Account statements we provide to you. You acknowledge that we will not give next day notice to you of receipt of an ACH or wire funds transfer item.
(A) Notice of Amendments–You agree that from time to time we may amend the terms and conditions of this Agreement, including without limitation all rates, fees, and charges, to the extent permitted by law. We will notify you of amendments as required by law. Your use of the Account after the effective date of the amendment is your consent to the amendment. Notices will be sent to the most recent address shown on our records for your Account, or, if relevant, as provided in the agreement between you and us regarding your use of the My Frost Online Banking Services or Treasury Management Services. Only one notice will be given in the case of joint Account Holders, and notice to any one Account owner is deemed notice to all Account owners.
(B) Account Changes–Each Account Holder or person authorized to sign on the Account is required to notify us in writing if any Account Holder or other person authorized to sign on the Account dies or is declared incompetent by a court. You must promptly notify us of any change in your address or name. We are required to honor items drawn only on the listed Account name. Further, we are required to attempt to communicate with you only at the most recent address provided to us.
(C) Delivery and Receipt of Notices–Notices sent or made available to any Account Holder are deemed to be received by all Account Holders you. Any written notice you give to us regarding your Account, including any problem with your Account, is effective when such notice is actually received by us and we have had a reasonable opportunity to act on it. Any written notice we give to you is effective when it is deposited in the U.S. mail, postage prepaid and addressed to you at your mailing address as described in subsection (A) above.
You and Frost Bank agree that either of us may close your Account and terminate this Agreement at any time with or without cause. We will provide written notice to you before we terminate your Account for any reason other than abuse of the Account relationship or to prevent a loss. You agree that advance written notice from us will be reasonable if it is mailed to your statement mailing address immediately upon Account closure. You agree that in instances of Account abuse or to prevent a loss, notice is reasonably given by us if mailed or transmitted immediately upon Account closure. You may close any of your Accounts by notifying us in writing. We will consider your Account closed when the Account balance reaches $0.00. When we close an interest bearing Account we will pay you any accrued interest on the Account that we had not previously credited to the Account UNLESS we have told you otherwise.
Furthermore, for security reasons, we may require you to close your Account and to open a new Account if: there is a change in authorized signers; there has been a forgery or fraud reported or committed involving your Account; any Account checks are lost or stolen; you have too many transfers from your Account; or any other provision of our Agreement with you is violated. After the Account is closed, we have no obligation to accept deposits or pay any outstanding checks on that Account.
You agree to hold us harmless for refusing to honor any check drawn on a closed Account. In the event that we close your Account, we may mail you a cashier's check for the applicable remaining Account balance. The termination of this Agreement and closing of an Account will not release you from any fees or other obligations incurred prior to the date upon which this Agreement is terminated and the Account closed, any fees assessed by us in the process of closing an Account, or from your responsibility to maintain sufficient funds in your Accounts to cover any outstanding checks or other debit items.
GOVERNING LAW; DISPUTE RESOLUTION; ARBITRATION
Any disputes arising from or related to your Accounts shall be governed by federal law and all applicable substantive laws of the State of Texas (without regard to its conflict of laws principles). We are located in Texas and that is where you opened your Account. In addition, we are subject to certain federal and state regulations, as well as national and local clearing house rules regarding some of the matters addressed in this Agreement and we must comply with these laws, regulations and rules. You agree that if there is any inconsistency between the terms of the Agreement and any applicable law, regulation or rule, the terms of the Agreement will prevail to the extent any such law, regulation or rule may be modified by agreement. IN THE EVENT OF ANY DISPUTE ARISING OUT OF OR RELATED TO THIS AGREEMENT, YOU AND BANK SHALL FIRST ATTEMPT IN GOOD FAITH TO PROMPTLY RESOLVE SUCH DISPUTE THROUGH NEGOTIATION. IN THE EVENT OF ANY DISPUTE, YOU (OR YOUR AUTHORIZED REPRESENTATIVE) AND BANK SHALL MEET AT LEAST ONCE TO NEGOTIATE IN GOOD FAITH TO RESOLVE THE DISPUTE. EITHER YOU OR BANK MAY REQUEST TO MEET TO CONDUCT SUCH NEGOTIATION OF A DISPUTE WITHIN FIFTEEN (15) CALENDAR DAYS OF SUCH REQUEST AT A MUTUALLY AGREED TIME AND PLACE.
IF YOU AND BANK ARE NOT ABLE TO CONDUCT SUCH MEETING WITHIN THE SAID FIFTEEN (15) CALENDAR DAY PERIOD, OR ARE UNABLE TO RESOLVE THE DISPUTE WITHIN THIRTY (30) CALENDAR DAYS AFTER THE INITIAL NEGOTIATION MEETING, THEN YOU AND BANK AGREE TO SUBMIT THE DISPUTE TO MEDIATION. YOU AND BANK FURTHER AGREE THAT PARTICIPATION IN MEDIATION IS A CONDITION PRECEDENT TO ARBITRATION. EITHER YOU OR BANK MAY REQUEST MEDIATION UPON WRITTEN NOTICE TO THE OTHER PARTY, AND THE MEDIATION MUST TAKE PLACE WITHIN THIRTY (30) CALENDAR DAYS AFTER THE DATE SUCH NOTICE IS GIVEN. YOU AND BANK MUST JOINTLY APPOINT A MUTUALLY ACCEPTABLE MEDIATOR. IF YOU AND BANK ARE UNABLE TO AGREE UPON THE APPOINTMENT OF A MEDIATOR WITHIN SEVEN (7) CALENDAR DAYS AFTER EITHER YOU OR BANK HAS GIVEN NOTICE OF A DESIRE TO MEDIATE THE DISPUTE, BOTH YOU AND BANK SHALL EACH DESIGNATE A MEDIATOR, AND SUCH MEDIATORS SHALL SELECT A THIRD MEDIATOR WHO SHALL ACT AS THE NEUTRAL MEDIATOR IN ASSISTING YOU AND BANK IN RESOLVING THE DISPUTE. ALL COSTS, EXPENSES AND FEES WITH REGARD TO ANY MEDIATION, EXCEPT FOR EACH PARTY'S ATTORNEYS' FEES, SHALL BE DIVIDED EQUALLY BETWEEN YOU AND THE BANK, AND YOU AND THE BANK SHALL EACH BE SOLELY RESPONSIBLE FOR PAYMENT OF SUCH COSTS, EXPENSES AND FEES, AND EACH PARTY SHALL ALSO BE RESPONSIBLE FOR PAYMENT OF ITS OWN ATTORNEYS' FEES, IF ANY, RELATED TO SUCH MEDIATION. ALL MEDIATIONS SHALL OCCUR IN THE CLOSEST TEXAS CITY TO YOUR PERMANENT RESIDENCE, OR IF YOUR PERMANENT RESIDENCE IS OUTSIDE OF THE STATE OF TEXAS OR THE U.S., THEN IN SAN ANTONIO, TEXAS. IN THE EVENT THAT THE DISPUTE OR CLAIM IS RESOLVED SUCCESSFULLY THROUGH THE MEDIATION PROCESS, SUCH RESOLUTION WILL BE DOCUMENTED BY A CONFIDENTIAL WRITTEN AGREEMENT EXECUTED BY YOU AND US.
IF THE MEDIATION DOES NOT SUCCESSFULLY RESOLVE THE DISPUTE OR CLAIM, THE MEDIATOR SHALL PROVIDE WRITTEN NOTICE TO YOU AND BANK REFLECTING THE SAME, AND EITHER YOU OR BANK MAY THEN PROCEED TO SEEK BINDING ARBITRATION, WITH THE EXCEPTION OF ANY DISPUTE IN WHICH THE AMOUNT IN CONTROVERSY IS WITHIN THE JURISDICTIONAL LIMITS OF, AND IS FILED IN, A SMALL CLAIMS COURT. BY EXECUTION OF THIS AGREEMENT YOU ACKNOWLEDGE AND AGREE THAT YOU HAVE HAD AN OPPORTUNITY TO CONSULT WITH COUNSEL AND KNOWINGLY AND VOLUNTARILY WAIVE YOUR RIGHT TO A TRIAL BY JURY. EITHER YOU OR BANK MAY REQUEST ARBITRATION BY WRITTEN REQUEST TO THE OTHER, AND THE ARBITRATION MUST TAKE PLACE WITHIN THIRTY (30) CALENDAR DAYS AFTER THE DATE SUCH NOTICE IS GIVEN. THE ARBITRATION WILL BE ADMINISTERED BY THE AMERICAN ARBITRATION ASSOCIATION ("AAA") IN ACCORDANCE WITH ITS COMMERCIAL ARBITRATION RULES, INCLUDING THE CONSUMER DUE PROCESS PROTOCOL, IF APPLICABLE, AND TITLE 9 OF THE U.S. CODE. YOU AND BANK MUST JOINTLY APPOINT A MUTUALLY ACCEPTABLE PANEL OF THREE ARBITRATORS, ONE OF WHOM SHALL BE APPOINTED BY EACH OF THE PARTIES AND THE THIRD OF WHOM SHALL BE SELECTED BY MUTUAL AGREEMENT OF THE PARTIES. IF YOU AND BANK ARE UNABLE TO AGREE UPON THE APPOINTMENT OF THE THIRD ARBITRATOR WITHIN SEVEN (7) CALENDAR DAYS AFTER EITHER YOU OR BANK HAS GIVEN NOTICE OF A DESIRE TO ARBITRATE THE DISPUTE, BOTH YOUR AND BANK'S DESIGNATED ARBITRATORS SHALL JOINTLY SELECT A THIRD ARBITRATOR WHO SHALL ACT AS THE THIRD ARBITRATOR ON THE PANEL OF THREE ARBITRATORS. ANY PERSON APPOINTED OR SELECTED TO SERVE AS AN ARBITRATOR MUST HAVE PRACTICAL WORKING EXPERIENCE IN THE COMMERCIAL BANKING INDUSTRY. ALL ARBITRATIONS SHALL OCCUR IN THE CLOSEST TEXAS CITY TO YOUR PERMANENT RESIDENCE, OR IF YOUR PERMANENT RESIDENCE IS OUTSIDE OF THE STATE OF TEXAS OR THE U.S., THEN IN SAN ANTONIO, TEXAS. THE ARBITRATORS SHALL HAVE NO AUTHORITY TO AWARD PUNITIVE DAMAGES OR ANY OTHER DAMAGES NOT MEASURED BY THE PREVAILING PARTY'S ACTUAL DAMAGES. THE ARBITRATORS SHALL IN NO EVENT, NOTWITHSTANDING ANY RULE TO THE CONTRARY AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, HAVE ANY POWER OR AUTHORITY TO CONSOLIDATE CLAIMS ASSERTED BY DIFFERENT CLAIMANTS OR COUNTER-CLAIMANTS, ADJUDICATE ANY CLAIMS PRESENTED TO THEM ON A CLASS WIDE BASIS, TREAT ANY CLAIMANT OR COUNTER-CLAIMANT AS A REPRESENTATIVE OF A CLASS OF CLAIMANTS OR COUNTER-CLAIMANTS, OR AWARD ANY RELIEF ON A CLASSWIDE BASIS. THE ARBITRATORS SHALL EXPRESS THEIR DECISION IN A WRITTEN AWARD SUPPORTED BY FINDINGS MADE BY THE ARBITRATORS, AND JUDGMENT MAY BE ENTERED UPON ANY AWARD IN ANY COURT HAVING JURISDICTION. HOWEVER YOU AND BANK AGREE THAT THE FACT OF THE ARBITRATION, ALL SUBMISSIONS TO AND PROCEEDINGS BEFORE THE ARBITRATORS, AND THE WRITTEN DECISION AND FINDINGS OF THE ARBITRATORS SHALL REMAIN CONFIDENTIAL BETWEEN YOU AND BANK UNLESS NECESSARY TO SECURE JUDICIAL REVIEW OR CONFIRMATION, OR AS REQUIRED BY LAW.
SYSTEMS AND SOFTWARE
We shall not be responsible to you for any loss or damages suffered by you as a result of the failure of systems and software used by you to interface with our systems and software utilized by you to initiate or process banking transactions whether such transactions are initiated or processed directly with our systems or through a third party service provider. You acknowledge that you are solely responsible for the adequacy of systems and software utilized by you to process banking transactions and the ability of such systems and software to do so accurately.
NOTIFY US OF INACCURATE INFORMATION WE REPORT
TO CONSUMER REPORTING AGENCIES
Please notify us if we report any inaccurate information about your Account(s) to a consumer reporting agency. You should send your written notice describing the specific inaccuracy(ies) to Frost Bank, P.O. Box 1600, San Antonio, Texas, 78296, Attention: Recovery Department.
CREDIT VERIFICATION AND REPORTING
You authorize us to request and obtain one or more credit reports about you from one or more credit reporting agencies for the purpose of considering your application for the Account, reviewing or collecting any Account opened for you, or for any other legitimate business purpose. You authorize us to disclose information about your Account to a credit-reporting agency if your Account was closed because you have abused it. In addition, federal statute permits us to report information about your Account to credit bureaus, and you hereby consent for us to do so. Late payments, missed payments or other defaults on your Account may be reflected in your credit report.
FRAUD AND LOSS PREVENTION;
LEGAL COMPLIANCE; RESERVATION OF RIGHTS
Frost Bank reserves the right to inquire about any deposits made, withdrawals from, or other disposition of funds or Account activity, regarding any or all of your Frost Bank Accounts, including the right to contact you directly regarding any Account activities. You agree not to use the Account in any illegal activity, including, but not limited to, "restricted transactions" as defined under the Unlawful Internet Gambling Enforcement Act. In order to help us prevent fraud or other loss regarding your Account(s), you agree to exercise ordinary care to safeguard all Account checks, ATM Card and Checkcards, PINs, User IDs, Account statements, and any other document or instrument that contains or may contain your sensitive financial information. In addition, if you are a commercial Account holder, you acknowledge and agree to your duty to exercise ordinary care in safeguarding such materials with regard to your employees in accordance with the requirements of Texas Business and Commerce Code Sections 3.405, 3.406 and 4A-202.
If you or your Account becomes involved in legal proceedings, your use of the Account may be restricted. We shall be entitled to act upon any legal process served upon us which we reasonably believe to be binding, with no liability to you for doing so. In addition, the Bank reserves the right, unilaterally and in its sole judgment, to interplead regarding any dispute or proceeding involving your Account(s). If you ask us to follow instructions that we believe might expose us to any claim, liability, or damages, we may refuse to follow your instructions or may require a bond or other protection, including your agreement to indemnify us. You agree to be liable to us, to the extent permitted by law, for any loss, costs, or expenses that we may incur as a result of any dispute or legal proceeding involving your Account. You authorize us to deduct any such loss, costs, or expenses from your Account without prior notice to you or to bill you separately. This obligation includes disputes between you and us involving your Account and situations where we become involved in disputes between you and an authorized signer, a joint owner, or a third party claiming an interest in your Account. It also includes situations where any action taken on your Account by you, an authorized signer, a joint owner, or a third party causes us to seek the advice of an attorney, whether or not we actually become involved in a dispute. Any action by us for reimbursement from you for any costs or expenses may also be made against your estate, heirs and legal representatives, who shall be liable for any claims made against and expenses incurred by us. If a court finds any provision of the Agreement to be invalid or unenforceable, such finding shall not make the rest of the Agreement invalid or unenforceable. If feasible, any such offending provision shall be deemed to be modified to be within the limits of enforceability or validity; however, if the offending provision cannot be so modified, it shall be stricken and all other provisions of the Agreement in all other respects shall remain valid and enforceable.
When you open an Account with us, you give us information about yourself and confirm that it is correct. We enter the information into our records. We may rely on that information until you notify us of a change and we have had a reasonable time to act on the new information. All financial institutions are required by law (including but not limited to the USA PATRIOT Act) to obtain, verify and record information that identifies each customer who opens an account with that financial institution.
In order to serve your better, and for quality assurance and other purposes, we reserve the right, but are not obligated to, record any customer service or other telephone calls between you and the Bank, and you consent to any recording. You also understand that supervisory personnel may randomly monitor customer service telephone conversations to ensure that you receive accurate, courteous and fair treatment. If you are a commercial customer, you expressly grant permission for Bank to monitor and record calls made by any of your employees regarding your Account(s).
As part of our legal compliance and loss prevention program, when we suspect that irregular, unauthorized or unlawful activities may be involved with your Account, we may "freeze" (or place a hold on) the balance in your Account and in other Accounts you maintain with us, without any liability to you, pending an investigation of such suspected activities. We may also block certain transactions that we suspect are illegal, including, but not limited to, transactions in violation of the Unlawful Internet Gambling Enforcement Act. If we freeze your Account, we may give notice, as required by the laws governing your Account, and you may contact the Frost Bank Customer Service Call Center at 1-800-513-7678 with questions about your Account(s).
We cannot facilitate any transactions involving any individuals or entities that are listed on the United States Department of Treasury's Office of Foreign Assets Control's "Specially Designated Nationals and Blocked Persons List."
The federal Bank Secrecy Act ("Act") also requires all financial institutions to report cash transactions of more than $10,000 to the Internal Revenue Service (IRS). In addition, we may report to the IRS multiple cash transactions which together total more than $10,000 in any one (1) day.
To better comply with the law, we are obligated by law to maintain a log of all sales of bank checks or drafts, cashier's checks, money orders, travelers' cheques in cash or certain other products purchased in cash.
We are obligated by federal law to report to applicable government agencies transactions that may be structured with the intent to avoid the reporting requirements, and other transactions that appear to involve illegal activity. It is important that you understand that breaking transactions into amounts under any reporting amounts, commonly referred to as structuring, is a violation of federal law.
In order to satisfy the Act's requirements, we may, and in many cases, must request certain information about the individual presenting the transaction, as well as the organization or individual for whom the transaction is being conducted. This includes the individual's/organization's full name, permanent street address, Social Security number, Taxpayer Identification number, other identification numbers (such as driver's license, ID or passport), date of birth (if applicable), and business, occupation or profession.
You acknowledge that the terms of the Texas Uniform Commercial Code Section 4.209 pertain to all encoded items. If you encode information on or with respect to an item after issue, you warrant to us, any subsequent collecting bank, and to the payor bank that the information is correctly encoded. After we have made a good faith effort to collect any discrepancies, you agree we may debit your Account for any losses charged to us resulting from encoding errors created by you.
We reserve the right to convert or change your Account type at any time when we consider it appropriate or necessary to do so. For example, we may close, revoke privileges or convert your Account to another type of Account if we think another type of Account would better suit the way you use your Account, if you make frequent transactions on a money market deposit or savings Account, if your Account frequently has debits against uncollected funds, if your Account has excessive deposit activity or if you use a personal Account for business purposes. If we convert your Account, we will send you information about your new Account.