GTE Financial Add on CD - changing the rules

[Earl E Retyre]

Several weeks ago I opened one of the GTE add-on 5 year 3.04% CD thanks to someone posting on this forum. I deposited $500 with the understanding that at any time I could add more funds at the rate of 3.04% over the term of the CD.

Today, I received an email indicating that GTE financial has changed the terms such that a maximum of $6,000 can be deposited per year. While I never understood how they could offer the original deal, I only opened the account due to the fact that I could add on and wanted to lock in the rate.

According to the email, GTE says, "This is in accordance with our right to amend terms of our promotional certificates stated on our website during the promotional period."

Is this legal? Did others know about this fine print?

Also, the email was received today (10/2) and said the terms go into affect (9/29) so there is no opportunity to add on more than $6,000.

 

[Golden sunsets]

I also opened an add on CD at GTE for $500 as a place holder for funds currently in a CD which matures in December. I received a disclosure which inaccurately stated that a Max of $6000 can be added per year. Others caught the same error as posted in the CD and MM thread. I, like others contacted GTE regarding the inaccurate disclosure. They sent me a corrected disclosure, adding a phrase that for the "special promotional CD", there was no limit to the add on. I also received an email like the one you referenced.

I don't recall what the EWP for this CD is. 6 months interest or 12 months? So either $7.50 or $15.00. I guess I'll cancel the CD once the 60 days are up.

 

[Dtail]

Interesting. I also opened an add on CD at GTE for $500 as a place holder for funds currently in a CD which matures in December. I received a disclosure which inaccurately stated that a Max of $6000 can be added per year. Others caught the same error as posted in the CD and MM thread. I, like others contacted GTE regarding the inaccurate disclosure. They sent me a corrected disclosure, adding a phrase that for the "special promotional CD", there was no limit to the add on. I did not receive an email like the one you referenced.

Same here with the false disclosure. Went there personally and they printed out the correct disclosure. I did not receive any email, but will now read over the disclosure fine print, plus visit them in person again.

 

[calmloki]

Yep yep. Opened with a $500 placeholder and was sent a paper for a "standard share/IRA certificate disclosure". Called in and was sent (upper right corner, black box) a "Promo share/Ira Certificate Disclosure".

On the right side of the page under "Add-on Share Certificates" the last sentence reads "The Promotional and Jumbo Add-on Certificates also allow for deposits of $20 or more throughout the term of the share certificate, with no limit".

I'm not giving up on this one yet..

 

[Dtail]

I will visit them tomorrow in person or Friday. I live 5 minutes from their office.
It will be an embarrassing situation for them if they try to change the agreement.

BTW, I checked out my agreement and there was no reference about any legal ability to change original agreements, not to mention I couldn't find any fine print in any document on their website about this legal BS.

 

[BeachOrCity]

They basically screwed up offering this, and frankly if rates were to drop significantly they could have HUGE exposure of new deposits getting rates they literally can't pay out. That is why they are doing this.

However, I don't think they understand what a bunch of angry retirees can do.

The statement they can change the terms that they originally issued, is that they can stop offering the promotion (ie not open up new certificates).

Waiting to see what Dtail finds out at their office.

Let us know. If you get pushback, I can file w/ the NCUA inspector general who is local to me near DC

 

[4legsgood]

grrrr

I will visit them tomorrow in person or Friday. I live 5 minutes from their office.
...

Good luck with this and hope you will share the outcome. I too received the email with new terms and am -pretty tic'd-. Feels like bait and switch.

I found an article about this and it notes a case where an add-to feature was changed and the customer did get a bank to rescind the change. It's not all that encouraging though because it sounds like it was a big hassle and involved contacting the FDIC (NCUA for credit union?).

https://www.depositaccounts.com/blog/when-a-bank-changes-the-terms-of-an-existing-cd.html

 

[Dtail]

Yes will definitely share my findings.
The NCUA is our version of the FDIC and would expect similar interaction with them, which BeachOrCity stated he could assist with.

 

[pb4uski]

My 5-year certificate, dated 08/28/2019, says:

Add-On Share Certificates
Subsequent deposits may be made to the 12 Month Add-On Certificate, 12 Month Add-On IRA Certificate and 12 Month Youth Add-On Certificate accounts during the term of the certificate. Funds may be added in amounts of $100 or more up to a combined maximum limit of $6,000 per primary owner per calendar year. The 12 Month Youth Add-On Certificate allows for funds to be added in the amount of $25 or more up to a combined maximum limit of $6,000 per primary owner per calendar year. Deposits may not be made to any other account except at maturity.

 

[Dtail]

My 5-year certificate, dated 08/28/2019, says:

That is the standard language. My promotional language dated 08/13/2019 states your language, but adds the following:
" The Promotional & Jumbo Add-On Certificates also allow for deposits of $20.00 or more throughout the term of the share certificate, with no limit".

 

[pb4uski]

I think the problem is that the webpage was unclear.

Both the Account Disclosure and the Certificate Disclosure indicate that the Add-On feature only applies to 12 month certificates:

From Account Disclosure:
The 12-month Add-On Share Certificate and 12-month Add-On IRA Share Certificate includes an add-on feature. This feature allows for additional deposits of $100 or more throughout the term of the share certificate, up to a maximum of $6,000 per primary owner during a calendar year. The 12-month Youth Add-On Share Certificate also includes the add-on feature, allowing for additional deposits of $25 or more throughout the term of the share certificate, up to a maximum of $6,000 per primary owner during a calendar year. The Promotional and Jumbo Add-On Certificates also allow for deposits of $20.00 or more throughout the term of the share certificate, with with a limit of $6,000 annually (per calendar year) per certificate.

From Certificate Disclosure:
Add-On Share Certificates
For the 12 Month Add-on Share Certificate the minimum deposit is $100, with up to a combined maximum limit of $6,000 per primary owner per calendar year. The 12 Month Youth Add-On Certificate allows for the funs to be added in amounts of $25 or more up to a combined maximum limit of $6,000 per account per calendar year. Deposits may not be made to any other account except at maturity.

But on the Share Certificate Specials page it says:

**Add-On option available in deposits of $20 or greater throughout the term of the certificate with no cap. This add-on feature is an exclusive feature related to this special and will not apply when the special is over, or to existing Share Certificates opened prior to or after this promotion.

The way they put the double-asteriks it looks as if the Add-On option applies to all terms but the disclosures are clear that it only applies to the 12 month term.

https://www.gtefinancial.org/for-members/current-offers/share-certificate-special

 

[BeachOrCity]

Weird thing about this, is I originally thought it was a huge risk for them to offer this, so back when I opened it I printed out both the website and the disclosure because I figured 2 years in if interest rates were low GTE would try to wiggle out of it.

 

[pb4uski]

That is the standard language. My promotional language dated 08/13/2019 states your language, but adds the following:
" The Promotional & Jumbo Add-On Certificates also allow for deposits of $20.00 or more throughout the term of the share certificate, with no limit".

I dunno... my share certificate doesn't have that additional language... but the description is "60MOTrad Promo AddOn ShareCert"

I'll admit that it is strange that they would include AddOn in description of the certificate but no addon provisions in the certificate.

I admit that my understanding was that you could add on during the term based on what the webpage said and I didn't read the disclosures until just now since I had no intention to make additional deposits, but it seemed to good to be true... and you know what they say about that!

 

[Dtail]

I dunno... my share certificate doesn't have that additional language... but the description is "60MOTrad Promo AddOn ShareCert"

I'll admit that it is strange that they would include AddOn in description of the certificate but no addon provisions in the certificate.

I admit that my understanding was that you could add on during the term based on what the webpage said and I didn't read the disclosures until just now since I had no intention to make additional deposits, but it seemed to good to be true... and you know what they say about that!

Weird thing about this, is I originally thought it was a huge risk for them to offer this, so back when I opened it I printed out both the website and the disclosure because I figured 2 years in if interest rates were low GTE would try to wiggle out of it.

BeachOrCity - do you have the printout of the account disclosure stating unlimited add ons? I realize the current account disclosure does not contain that language. I never thought of looking at the account disclosure, since my actual contract was clear.

PB4USKI - so in my case, when I signed up, they printed the document which stated unlimited add ons. Then I received the same document in the mail, which took out that last sentence. I visited them and they printed out the original add on document and stated that unlimited add ons was indeed the terms.
So perhaps your actual contract if it would have been printed the day you signed up might have had the add on language, which then was changed by the time you were mailed the contract.

 

[pb4uski]

^^^ That could be... I'm not in FL and did everything by email and mail so I only have the document that I received in the mail which doesn't include the last sentence.

I did a IRA rollover in an amount designed to stay under the NCUA limit at maturity... so even if I could add-on more money, it would put me over the limit and I don't want to assume the incremental credit risk.

I tend to doubt that they intended to allow depositors up to 5 years to make add on deposits at 3%.... these bankers aren't the brightest bulb but they don't seem that stupid. If one was willing to assume the credit risk and rates went down one could walk in and say "I'd like to add $100 million to my add on certificate" and watch them soil their pants.

 

[4legsgood]

^^^ That could be... I'm not in FL and did everything by email and mail so I only have the document that I received in the mail which doesn't include the last sentence.

I did a IRA rollover in an amount designed to stay under the NCUA limit at maturity... so even if I could add-on more money, it would put me over the limit and I don't want to assume the incremental credit risk.

I tend to doubt that they intended to allow depositors up to 5 years to make add on deposits at 3%.... these bankers aren't the brightest bulb but they don't seem that stupid. If one was willing to assume the credit risk and rates went down one could walk in and say "I'd like to add $100 million to my add on certificate" and watch them soil their pants.

I did everything by email (their secure messaging) and the account disclosure they sent me does include the 'no limit' phrase.

I have another unlimited add-to CD at 3.75% at a different credit union. Now where can I get $100 million...

 

[Golden sunsets]

^^^
I tend to doubt that they intended to allow depositors up to 5 years to make add on deposits at 3%.... these bankers aren't the brightest bulb but they don't seem that stupid. If one was willing to assume the credit risk and rates went down one could walk in and say "I'd like to add $100 million to my add on certificate" and watch them soil their pants.

The final disclosure that I received, seems unequivecal and to me at any rate is intentional and not gray. "The Promotional and Jumbo ADD-ON Certificates also allow for deposits of $20 or more throughout the term of the share certificate with no limit."

To me that is not vague at all. Nowhere on the disclosure does it state that GTE can change the terms of the certificate.

I'll be curious to see what Dtail reports back to us after visiting the bricks and mortar branch. A complaint to NCUA may be in order.

 

[mbb_boy]

Count me in

All,


Just joined the community BECAUSE of this issue. I actually work in banking (not a credit union though) and my spidey senses went nuts after receiving the email. I noticed the retroactive date (usually a BIG no-no) and then my mind immediately went to UDAAP concerns (unfair / deceptive abusive acts or practices). Not clear that UDAAP applies to NCUA regulated institutions, but assume there is something similar.


Even IF the account disclosures say that you can't add on, the website says you can. I'm quite confident a regulator would side with the consumer in this one, and accuse the institution of intentional bait and switch.



Looking forward to hear more about how today's visit goes, I'm certainly planning on contacting NCUA

 

[calmloki]

photo of my (corrected)disclosure




After getting a hard copy sent to me after funding which didn't show the terms I'd relied on the CSR assured me that incorrect forms had been sent out and then sent me this hard copy, which showed the terms I had signed up for. Note marked sentence. Are we all talking about the same language?

 

[Golden sunsets]

View attachment 32720


After getting a hard copy sent to me after funding which didn't show the terms I'd relied on the CSR assured me that incorrect forms had been sent out and then sent me this hard copy, which showed the terms I had signed up for. Note marked sentence. Are we all talking about the same language?

Yep. Mine is identical. Nowhere on this form does it state that they can change the terms of the CD. They maintain that their website stated that they could change the terms at any time.

 

[Dtail]

Yep. Mine is identical. Nowhere on this form does it state that they can change the terms of the CD. They maintain that their website stated that they could change the terms at any time.

Same here for me. I could not find any language on their website indicating that they could change any terms.

 

[Dtail]

Okay I visited the GTE brick and mortar location.

Summary:
The highest level manager stated that there has been a separate department set up to handle this situation and they will most likely call me today.
She indicated that she had no idea of what they will say.

Details:
I overwhelmed the local rep plus the high level manager. Stated that we have a legal agreement of which there is no language written anywhere on the site which allows changes of terms.
Basically stated that there are many sophisticated investors which bought into this deal due to high rates and more importantly the prospect of adding on locked in rate monies in a declining environment. GTE exposed themselves to interest rate risk. Too bad.
Additionally threatening them with tremendous bad press, plus many legal documents will be sent to the NCUA, plus there is precedent (actually FDIC) of overturning decisions such as this one.
Made it clear that any stonewalling call delays won't work with me, as I live literally 5 minutes away and being retired I will visit them everyday until it is resolved in my favor.
We shall see.

 

[pb4uski]

View attachment 32720


After getting a hard copy sent to me after funding which didn't show the terms I'd relied on the CSR assured me that incorrect forms had been sent out and then sent me this hard copy, which showed the terms I had signed up for. Note marked sentence. Are we all talking about the same language?

That language seems pretty clear and definitive to me... though I'm sure that they didn't intend that... or perhaps they are more stupid than I am giving them credit for.

Moot point for me since I don't care to exceed the NCUA limits... though I can see it is important for those who started a certificate to access the high rate and planned to add on later with proceeds from other maturing CDs.

 

[pb4uski]

Okay I visited the GTE brick and mortar location.

Summary:
The highest level manager stated that there has been a separate department set up to handle this situation and they will most likely call me today.
She indicated that she had no idea of what they will say.

Details:
I overwhelmed the local rep plus the high level manager. Stated that we have a legal agreement of which there is no language written anywhere on the site which allows changes of terms.
Basically stated that there are many sophisticated investors which bought into this deal due to high rates and more importantly the prospect of adding on locked in rate monies in a declining environment. GTE exposed themselves to interest rate risk. Too bad.
Additionally threatening them with tremendous bad press, plus many legal documents will be sent to the NCUA, plus there is precedent (actually FDIC) of overturning decisions such as this one.
Made it clear that any stonewalling call delays won't work with me, as I live literally 5 minutes away and being retired I will visit them everyday until it is resolved in my favor.
We shall see.

You sound like a dog who has his teeth set into a burglar.

I suspect that they will regret ever sending out that email that I got yesterday... it was like pouring gasoline on a very small fire.

 

[RetiredAndLovingIt]

View attachment 32720


After getting a hard copy sent to me after funding which didn't show the terms I'd relied on the CSR assured me that incorrect forms had been sent out and then sent me this hard copy, which showed the terms I had signed up for. Note marked sentence. Are we all talking about the same language?

That is the disclosure certificate I have as well which was e-mailed to me after the first certificate sent had a 0 dividend rate and no mention of the Promo CD. I did e-mail the person that sent it to question if the rumors were true but got an out of the office for a week reply.