Federal Register / Vol. 72, No. 82 / Monday, April 30, 2007 / Proposed Rules 21141 

Section 226.7—Advertising 

* * * * * 

7(b)(1) Amount Due at Lease Signing or 

Delivery 

* * * * * 

ø3. Electronic advertisements. For 

advertisements using electronic 

communication, to satisfy the prominence 

rule in § 213.7(b)(1), both the triggering terms 

and the required disclosures must appear in 

the same location so that they can be viewed 

simultaneously.¿ 

7(b)(2) Advertisement of a Lease Rate 

1. Location of statement. The notice 

required to accompany a percentage rate 

stated in an advertisement must be placed in 

close proximity to the rate without any other 

intervening language or symbols. For 

example, a lessor may not place an asterisk 

next to the rate and place the notice 

elsewhere in the advertisement. In addition, 

with the exception of the notice required by 

§ 213.4(s), the rate cannot be more prominent 

than any other § 213.4 disclosure stated in 

the advertisement. øFor advertisements using 

electronic communication, to comply with 

proximity rule in, both the rate and the 

accompanying notice must appear in the 

same location so that they can be viewed 

simultaneously. The prominent rule in 

§ 213.7(b)(2) is not met if the disclosures can 

be viewed only by use of a link that connects 

the consumer to the information appearing at 

another location.¿ 

7(c) Catalogs or Other Multipage 

Advertisements; Electronic Advertisements 

* * * * * 

2. Cross references. A catalog or other 

multiple-page advertisement or an electronic 

advertisement fl(such as an advertisement 

appearing on an Internet web site)fi is a 

single advertisement (requiring only one set 

of lease disclosures) if it contains a table, 

chart, or schedule with the disclosures 

required under § 213.7(d)(2)(i) through (v). If 

one of the triggering terms listed in 

§ 213.7(d)(1) appears in a catalog, or in a 

multiple-page or electronic advertisement, it 

must clearly direct the consumer to the page 

or location where the table, chart, or 

schedule begins. For example, in an 

electronic advertisement, a term triggering 

additional disclosures may be accompanied 

by a link that directly connects the consumer 

to the additional information ø(but see 

comments under § 213.7(b) about rules 

regarding the prominence of disclosures)¿. 

fl3. Electronic form of disclosures. For an 

advertisement that is accessed by the 

consumer in electronic form (such as an 

advertisement appearing on an Internet web 

site), the disclosures required under this 

section must be provided to the consumer in 

electronic form on or with the advertisement. 

Providing the disclosures at a different time 

or place, or in paper form, would not comply. 

Conversely, if a consumer views a paper 

advertisement, the required disclosures must 

be provided in paper form on or with the 

advertisement. For example, if a consumer 

receives an advertisement in the mail, the 

creditor would not satisfy its obligation to 

provide the disclosures at that time by 

including a reference in the advertisement to 

the web site where the disclosures are 

located.fi 

By order of the Board of Governors of the 

Federal Reserve System, April 20, 2007. 

Jennifer J. Johnson, 

Secretary of the Board. 

[FR Doc. E7–7877 Filed 4–27–07; 8:45 am] 

BILLING CODE 6210–01–P 

FEDERAL RESERVE SYSTEM 

12 CFR Part 226 

[Regulation Z; Docket No. R–1284] 

Truth in Lending 

AGENCY: Board of Governors of the 

Federal Reserve System. 

ACTION: Proposed rule; request for 

comments. 

SUMMARY: The Board is proposing to 

amend Regulation Z, which implements 

the Truth in Lending Act, to withdraw 

portions of the interim final rules for the 

electronic delivery of disclosures issued 

March 30, 2001. The interim final rules 

address the timing and delivery of 

electronic disclosures, consistent with 

the requirements of the Electronic 

Signatures in Global and National 

Commerce Act (E-Sign Act). Compliance 

with the 2001 interim final rules is not 

mandatory. Thus, removing the interim 

rules from the Code of Federal 

Regulations would reduce confusion 

about the status of the provisions and 

simplify the regulation. The Board is 

also proposing to amend Regulation Z to 

provide that when an application, 

solicitation, or advertisement is 

accessed by a consumer in electronic 

form, certain disclosures must be 

provided to the consumer in electronic 

form on or with the application, 

solicitation, or advertisement, and that 

in these circumstances the consumer 

consent and other provisions of the ESign Act do not apply. The proposal 

would also implement certain 

provisions of the Bankruptcy Abuse 

Prevention and Consumer Protection 

Act of 2005. Similar rules are being 

proposed under other consumer fair 

lending and financial services 

regulations administered by the Board. 

DATES: Comments must be received on 

or before June 29, 2007. 

ADDRESSES: You may submit comments, 

identified by Docket No. R–1284, by any 

of the following methods: 

• Agency Web site: http:// 

www.federalreserve.gov. Follow the 

instructions for submitting comments at 

http://www.federalreserve.gov/ 

generalinfo/foia/ProposedRegs.cfm. 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• E-mail: 

regs.comments@federalreserve.gov. 

Include the docket number in the 

subject line of the message. 

• FAX: (202) 452–3819 or (202) 452–

3102. 

• Mail: Jennifer J. Johnson, Secretary, 

Board of Governors of the Federal 

Reserve System, 20th Street and 

Constitution Avenue, NW., Washington, 

DC 20551. 

All public comments are available 

from the Board’s Web site at 

www.federalreserve.gov/generalinfo/ 

foia/ProposedRegs.cfm as submitted, 

unless modified for technical reasons. 

Accordingly, your comments will not be 

edited to remove any identifying or 

contact information. Public comments 

may also be viewed electronically or in 

paper form in Room MP–500 of the 

Board’s Martin Building (20th and C 

Streets, NW.) between 9 a.m. and 5 p.m. 

on weekdays. 

FOR FURTHER INFORMATION CONTACT: John 

C. Wood or David A. Stein, Counsels, 

Division of Consumer and Community 

Affairs, at (202) 452–2412 or (202) 452–

3667. For users of Telecommunications 

Device for the Deaf (TDD) only, contact 

(202) 263–4869. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The purpose of the Truth in Lending 

Act (TILA), 15 U.S.C. 1601 et seq., is to 

promote the informed use of consumer 

credit by requiring disclosures about its 

terms and cost. The Board’s Regulation 

Z (12 CFR part 226) implements the act. 

The act requires creditors to disclose the 

cost of credit as a dollar amount (the 

finance charge) and as an annual 

percentage rate (the APR). Uniformity in 

creditors’ disclosures is intended to 

promote the informed use of credit and 

assist in shopping for credit. TILA 

requires additional disclosures for loans 

secured by consumers’ homes and 

permits consumers to rescind certain 

transactions that involve their principal 

dwellings. TILA and Regulation Z 

require a number of disclosures to be 

provided in writing. 

Board Proposals Regarding Electronic 

Disclosures 

On May 2, 1996, the Board proposed 

to amend Regulation E (Electronic Fund 

Transfers) to permit financial 

institutions to provide disclosures by 

sending them electronically (61 FR 

19,696). Based on comments received, 

in 1998 the Board published an interim 

rule permitting the electronic delivery 

of disclosures under Regulation E (63 

FR 14,528, March 25, 1998) and 

proposals under Regulations B (Equal 


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21142 Federal Register / Vol. 72, No. 82 / Monday, April 30, 2007 / Proposed Rules 

Credit Opportunity), M (Consumer 

Leasing), Z (Truth in Lending), and DD 

(Truth in Savings) (63 FR 14,552, 

14,538, 14,548, and 14,533, respectively, 

March 25, 1998). 

Based on comments received on the 

1998 proposals, in September 1999 the 

Board published revised proposals 

under Regulations B, E, M, Z, and DD 

(64 FR 49,688, 49,699, 49,713, 49,722 

and 49,740, respectively, September 14, 

1999). At the same time, the Board 

published an interim rule under 

Regulation DD allowing depository 

institutions to deliver disclosures on 

periodic statements in electronic form if 

the consumer agreed (64 FR 49,846, 

September 14, 1999). While these 

rulemakings were pending, Federal 

legislation was enacted addressing the 

use of electronic documents and 

records, including consumer 

disclosures. 

Federal Legislation Addressing 

Electronic Commerce 

On June 30, 2000, the President 

signed into law the Electronic 

Signatures in Global and National 

Commerce Act (the E-Sign Act) (15 

U.S.C. 7001 et seq.). The E-Sign Act 

provides that electronic documents and 

electronic signatures have the same 

validity as paper documents and 

handwritten signatures. The E-Sign Act 

contains special rules for the use of 

electronic disclosures in consumer 

transactions. Under the E-Sign Act, 

consumer disclosures required by other 

laws or regulations to be provided or 

made available in writing may be 

provided or made available, as 

applicable, in electronic form if the 

consumer affirmatively consents after 

receiving a notice that contains certain 

information specified in the statute, and 

if certain other conditions are met. 

The E-Sign Act, including the special 

consumer notice provisions, became 

effective October 1, 2000, and did not 

require implementing regulations. Thus, 

financial institutions are currently 

permitted to provide in electronic form 

any disclosures that are required to be 

provided or made available to the 

consumer in writing under Regulations 

B, E, M, Z, and DD if the consumer 

affirmatively consents to receipt of 

electronic disclosures in the manner 

required by section 101(c) of the E-Sign 

Act. 

The Interim Final Rules 

On March 30, 2001, the Board 

published for comment interim final 

rules to establish uniform standards for 

the electronic delivery of disclosures 

required under Regulation Z (66 FR 

17,329). Similar interim final rules for 

Regulations B, E, M, and DD were 

published on March 30, 2001 (66 FR 

17,322 (M)) and April 4, 2001 (66 FR 

17,779 (B), 66 FR 17,786 (E), and 66 FR 

17,795 (DD)). The interim final rules 

incorporated most of the provisions that 

were part of the 1999 proposals. 

Each of the interim final rules 

incorporated, but did not interpret, the 

requirements of the E-Sign Act. 

Creditors and other persons, as 

applicable, generally were required to 

obtain consumers’ affirmative consent to 

provide disclosures electronically, 

consistent with the requirements of the 

E-Sign Act. 

The 2001 interim final rule for 

Regulation Z established uniform 

requirements for the timing and delivery 

of electronic disclosures. Under the 

interim rule, disclosures could be sent 

to an e-mail address designated by the 

consumer, or could be made available at 

another location, such as an Internet 

Web site. If the disclosures were not 

sent by e-mail, creditors would have to 

provide a notice to consumers alerting 

them to the availability of the 

disclosures. Disclosures posted on a 

Web site would have to be available for 

at least 90 days to allow consumers 

adequate time to access and retain the 

information. Creditors also would be 

required to make a good faith attempt to 

redeliver electronic disclosures that 

were returned undelivered, using the 

address information available in their 

files. Similar provisions were included 

in the interim final rules adopted under 

Regulations B, E, M, and DD. 

Commenters on the interim final rules 

identified significant operational and 

information security concerns with 

respect to the requirement to send the 

disclosure or an alert notice to an e-mail 

address designated by the consumer. 

For example, commenters stated that 

some consumers do not have e-mail 

addresses or may not want personal 

financial information sent to them by email. Commenters also noted that e-mail 

is not a secure medium for delivering 

confidential information and that 

consumers’ e-mail addresses frequently 

change. The commenters also opposed 

the requirement for redelivery in the 

event a disclosure was returned 

undelivered. In addition, many 

commenters asserted that making the 

disclosures available for at least 90 days, 

as required by the interim final rule, 

would increase costs and would not be 

necessary for consumer protection. 

In August 2001, in response to 

comments received, the Board lifted the 

previously established October 1, 2001 

mandatory compliance date for all of the 

interim final rules. (66 FR 41,439, 

August 8, 2001). Thus, institutions are 

not required to comply with the interim 

final rules. Since that time, the Board 

has not taken further action with respect 

to the interim final rules on electronic 

disclosures in order to allow electronic 

commerce, including electronic 

disclosure practices, to continue to 

develop without regulatory intervention 

and to allow the Board to gather further 

information about such practices. 

II. The Proposed Rules 

The Board is proposing to amend 

Regulation Z and the official staff 

commentary by (1) withdrawing 

portions of the 2001 interim final rule 

on electronic disclosures that restate or 

cross-reference provisions of the E-Sign 

Act and accordingly are unnecessary; (2) 

withdrawing other portions of the 

interim final rule that the Board now 

believes may impose undue burdens on 

electronic banking and commerce and 

may be unnecessary for consumer 

protection; and (3) retaining the 

substance of certain provisions of the 

interim final rule that provide 

regulatory relief or guidance regarding 

electronic disclosures. (Similar 

amendments are also being proposed by 

the Board, in today’s issue of the 

Federal Register, under Regulations B, 

E, M, and DD). In addition, the proposal 

would amend the regulation to 

implement certain provisions of the 

Bankruptcy Abuse Prevention and 

Consumer Protection Act. 

Because compliance with the 2001 

interim final rules is not mandatory, 

removing most portions of the interim 

rules from the Code of Federal 

Regulations, while finalizing other 

provisions, would reduce confusion 

about the status of the electronic 

disclosure provisions and simplify the 

regulation. Certain provisions in the 

interim final rules, including provisions 

addressing foreign language disclosures, 

were not affected by the lifting of the 

mandatory compliance date and 

accordingly are now in final form; these 

provisions would not be deleted. The 

Board is also proposing to adopt certain 

provisions that are identical or similar 

to provisions in the 2001 interim final 

rules in order to enhance the ability of 

consumers to shop for credit online, 

minimize the information-gathering 

burdens on consumers, and provide 

guidance or eliminate a substantial 

burden on the use of electronic 

disclosures, as discussed further below. 

Finally, the Board is proposing to 

implement certain provisions of the 

Bankruptcy Abuse Prevention and 

Consumer Protection Act of 2005, Pub. 

L. 109–8, 119 Stat. 23 (the ‘‘Bankruptcy 

Act’’), that amend TILA and relate to 

electronic disclosures. 


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1Section 105(a) of TILA provides that regulations 

prescribed by the Board under TILA ‘‘may provide 

for such adjustments and exceptions * * * as in the 

judgment of the Board, are necessary or proper to 

effectuate the purposes of [TILA], * * * or to 

facilitate compliance [with the requirements of 

TILA].’’ Section 104(d) of the E-Sign Act authorizes 

federal agencies to adopt exemptions for specified 

categories of disclosures from the E-Sign notice and 

consent requirements, ‘‘if such exemption is 

necessary to eliminate a substantial burden on 

electronic commerce and will not increase the 

material risk of harm to consumers.’’ For the 

reasons stated in this Federal Register notice, the 

Board believes that these criteria are met in the case 

of the application, solicitation, and advertising 

disclosures. In addition, the Board believes TILA 

section 105(a) authorizes the Board to permit 

institutions to provide disclosures electronically, 

rather than in paper form, independent of the ESign Act. 

Since 2001, industry and consumers 

have gained considerable experience 

with electronic disclosures. During that 

period, the Board has received no 

indication that consumers have been 

harmed by the fact that compliance with 

the interim final rules is not mandatory. 

The Board also has reconsidered certain 

aspects of the interim final rules, such 

as sending disclosures by e-mail, in 

light of concerns about data security, 

identity theft, and ‘‘phishing’’ (i.e., 

prompting consumers to reveal 

confidential personal or financial 

information through fraudulent e-mail 

requests that appear to originate from a 

financial institution, government 

agency, or other trusted entity) that have 

become more pronounced since 2001. 

Finally, the Board is proposing to 

eliminate certain aspects of the 2001 

interim final rule, such as provisions 

regarding the availability and retention 

of electronic disclosures, as unnecessary 

in light of current industry practices. 

The 2001 interim final rule allowed 

creditors to provide certain disclosures 

to consumers electronically, without 

regard to the consumer consent or other 

provisions of the E-Sign Act, for 

disclosures provided on or with an 

application or solicitation (the 

‘‘shopping disclosures’’) or an 

advertisement. The Board reasoned that 

these disclosures, which would be 

available to the general public while 

shopping for credit, did not ‘‘relate to a 

transaction,’’ which is a prerequisite for 

triggering the E-Sign consumer consent 

provisions, and thus were not subject to 

those provisions. Some commenters on 

the interim final rules did not agree 

with the Board’s rationale. Upon further 

consideration, the Board does not 

believe it is necessary to determine 

whether or not these disclosures are 

related to a transaction. This proposal 

does not make such determinations. 

Instead, pursuant to the Board’s 

authority under section 105(a) of TILA, 

as well as under section 104(d) of the ESign Act,1 the Board is proposing to 

specify the circumstances under which 

certain disclosures may be provided to 

a consumer in electronic form, rather 

than in writing as generally required by 

Regulation Z, without obtaining the 

consumer’s consent under section 

101(c) of the E-Sign Act. The proposed 

rule would also amend various sections 

of Regulation Z, discussed in detail 

below, to clarify that certain disclosures 

must be provided to the consumer in 

electronic form on or with an 

application, solicitation, or 

advertisement that is accessed by the 

consumer in electronic form. 

The Board continues to believe that 

creditors should not be required to 

obtain the consumer’s consent in order 

to provide shopping or advertising 

disclosures to the consumer in 

electronic form if the consumer accesses 

an application, solicitation, or 

advertisement containing those 

disclosures in electronic form, such as 

at an Internet Web site. The Board 

believes consumers would not be 

harmed, and in fact would benefit, by 

having timely access to shopping and 

advertising disclosures in electronic 

form when they are shopping for credit 

online or viewing online credit 

advertising. Conversely, consumers who 

choose to apply for credit online would 

be unduly burdened if they had to 

consent in accordance with the E-Sign 

Act in order to access application forms 

that must be accompanied by 

disclosures. The Board also believes that 

consumers’ ability to shop for credit 

online and compare the terms of various 

credit offers could be substantially 

diminished if consumers had to consent 

in accordance with the E-Sign Act in 

order to access solicitations and 

advertisements that must be 

accompanied by disclosures. Applying 

the consumer consent provisions of the 

E-Sign Act to these disclosures could 

impose substantial burdens on 

electronic commerce and make it more 

difficult for consumers to gather 

information and shop for credit. 

At the same time, the Board 

recognizes that consumers who shop or 

apply for credit online may not want to 

receive other disclosures electronically. 

Therefore, with respect to, for example, 

account-opening disclosures, periodic 

statements, and change-in-terms notices, 

creditors would be required to provide 

written disclosures or obtain the 

consumer’s consent in accordance with 

the E-Sign Act to provide such 

disclosures in electronic form. 

Finally, the Board is proposing to 

delete, as unnecessary, certain 

provisions that restate or cross-reference 

the E-Sign Act’s general rules regarding 

electronic disclosures (including the 

consumer consent provisions) and 

electronic signatures because the E-Sign 

Act is a self-effectuating statute. The 

proposed revisions to Regulation Z and 

the official staff commentary are 

described more fully below in the 

Section-by-Section Analysis. 

The Board solicits comment on all 

aspects of this proposal. Specifically, 

the Board seeks comment on the 

appropriateness of eliminating certain 

provisions and retaining other 

provisions contained in the 2001 

interim final rule. 

III. Section-by-Section Analysis 

12 CFR Part 226 (Regulation Z) 

Subpart B Open-End Credit 

Section 226.5 General Disclosure 

Requirements 

Section 226.5(a) prescribes the form of 

disclosures required for open-end credit 

plans. Section 226.5(a)(1) generally 

requires creditors to provide open-end 

credit disclosures in writing and in a 

form that the consumer may keep. The 

Board proposes to revise § 226.5(a)(1) to 

clarify that creditors may provide openend credit disclosures to consumers in 

electronic form, subject to compliance 

with the consumer consent and other 

applicable provisions of the E-Sign Act. 

Some creditors may provide open-end 

credit disclosures to consumers both in 

paper and electronic form and rely on 

the paper form of the disclosures to 

satisfy their compliance obligations. For 

those creditors, the duplicate electronic 

form of the open-end credit disclosures 

may be provided to consumers without 

regard to the consumer consent or other 

provisions of the E-Sign Act because the 

electronic form of the disclosure is not 

used to satisfy the regulation’s open-end 

credit disclosure requirements. 

Section 226.5(a)(1) would also be 

revised to provide that the open-end 

credit disclosures required by §§ 226.5a, 

226.5b, and 226.16 may be provided to 

the consumer in electronic form, under 

the circumstances set forth in those 

sections, without regard to the 

consumer consent or other provisions of 

the E-Sign Act. The Board believes that, 

for an application, solicitation, or 

advertisement accessed by the consumer 

in electronic form, permitting creditors 

to provide credit and charge card 

application and solicitation disclosures, 

application disclosures for home equity 

lines of credit (HELOCs), and open-end 

credit advertising disclosures in 

electronic form without regard to the 

consumer consent and other provisions 


jlentini on PROD1PC65 with PROPOSAL
21144 Federal Register / Vol. 72, No. 82 / Monday, April 30, 2007 / Proposed Rules 

of the E-Sign Act will eliminate a 

potential significant burden on 

electronic commerce without increasing 

the risk of harm to consumers. This 

approach will facilitate shopping for 

credit by enabling consumers to receive 

important disclosures at the same time 

they access an application, solicitation, 

or advertisement without first having to 

provide consent in accordance with the 

requirements of the E-Sign Act. 

Requiring consumers to follow the 

consent procedures set forth in the ESign Act in order to access an online 

application, solicitation, or 

advertisement, or complete an online 

application is potentially burdensome 

and could discourage consumers from 

shopping for credit online. Moreover, 

because these consumers are viewing 

the application, solicitation, or 

advertisement online, there appears to 

be little, if any, risk that the consumer 

will be unable to view the disclosures 

online as well. 

Section 226.5(a)(5) in the 2001 

interim final rule refers to § 226.36, the 

section of the interim final rule setting 

forth general rules for electronic 

disclosures. Because the Board is 

proposing to delete § 226.36, as 

discussed further below, the Board also 

proposes to delete § 226.5(a)(5). 

The 2001 interim final rule revised 

comment 5(b)(2)(ii)–3 to reference the ESign Act’s consumer consent 

requirements. The Board proposes to 

delete this language as unnecessary 

because the E-Sign Act is a selfeffectuating statute. 

Section 226.5a Credit and Charge Card 

Applications and Solicitations 

5a(a) General Rules 

Section 226.5a(a)(2) prescribes the 

form of disclosures required with credit 

and charge card applications and 

solicitations. The Board proposes to 

amend § 226.5a(a)(2) by adding a new 

paragraph (v) to provide that if a 

consumer accesses an application or 

solicitation for a credit or charge card in 

electronic form, the disclosures required 

on or with an application or solicitation 

for a credit or charge card must be 

provided to the consumer in electronic 

form on or with the application or 

solicitation. A consumer accesses an 

application or solicitation in electronic 

form when, for example, the consumer 

views the application or solicitation on 

his or her home computer. On the other 

hand, if a consumer receives an 

application or solicitation in the mail, 

the creditor would not satisfy its 

obligation to provide § 226.5a 

disclosures at that time by including a 

reference in the application or 

solicitation to the Web site where the 

disclosures are located. Comment 

5a(a)(2)–9 would be added to clarify this 

point. 

Comment 5a(a)(2)–8 of the 2001 

interim final rule states that a consumer 

must be able to access the electronic 

disclosures at the time the application 

form or solicitation reply form is made 

available by electronic communication. 

The Board proposes to revise this 

comment to describe alternative 

methods for presenting electronic 

disclosures, which are examples rather 

than an exhaustive list. Comment 

5a(a)(2)–2.ii., which was added in 2000, 

specifies how the tabular disclosures 

required by § 226.5a can be 

‘‘prominently located’’ if provided on or 

with electronic applications and 

solicitations, and is similar to revised 

comment 5a(a)(2)–8. Revised comment 

5a(a)(2)–8 reminds creditors that for 

disclosures required to be provided in 

tabular form, the electronic form of the 

table must satisfy the requirements of 

comment 5a(a)(2)–2.ii. 

Section 1304 of the Bankruptcy Abuse 

Prevention and Consumer Protection 

Act of 2005, Pub. L. 109–8, 119 Stat. 23 

(the ‘‘Bankruptcy Act’’), amends Section 

127(c) of TILA to require that credit card 

application and solicitation disclosures 

provided ‘‘using the Internet or other 

interactive computer service’’ must be 

‘‘readily accessible to consumers in 

close proximity’’ to the solicitation. 15 

U.S.C. 1637(c)(7). In connection with 

the Board’s ongoing review of 

Regulation Z, the Board issued an 

Advance Notice of Proposed 

Rulemaking (70 FR 60235, October 17, 

2005) (October 2005 ANPR), soliciting 

comments on how these Bankruptcy Act 

amendments should be implemented. 

The Bankruptcy Act provision applies 

to solicitations to open a card account 

‘‘using the Internet or other interactive 

computer service.’’ The term ‘‘Internet’’

is defined as the international computer 

network of both Federal and nonFederal interoperable packet switched 

data networks. The term ‘‘interactive 

computer service’’ is defined as any 

information service, system or access 

software provider that provides or 

enables computer access by multiple 

users to a computer server, including 

specifically a service or system that 

provides access to the Internet and such 

systems operated or services offered by 

libraries or educational institutions. 15 

U.S.C. 1637(c)(7). Based on the 

definitions of ‘‘Internet’’ and 

‘‘interactive computer service,’’ the 

Board believes that Congress intended 

to cover all card offers that are provided 

to consumers in electronic form. In the 

October 2005 ANPR, the Board solicited 

comment on what guidance the Board 

should provide regarding when 

disclosures are ‘‘readily accessible to 

consumers in close proximity’’ to an 

application or solicitation that is made 

in electronic form. In particular, the 

Board asked whether additional or 

different guidance is needed from the 

guidance previously issued by the 

Board. 

Most commenters stated that the 

Board should retain the existing 

guidance in comment 5a(a)(2)–2.ii on 

‘‘prominent location’’ to interpret the 

‘‘close proximity’’ standard. A few 

commenters stated that the 2000 

guidance should not apply, and that, for 

example, it should suffice to provide a 

link to the disclosures that the 

consumer could choose to access or not. 

Some commenters urged the Board 

generally to allow maximum flexibility 

to creditors regarding the display of 

electronic disclosures, and stated that 

no guidance or specific rules were 

necessary. 

The Board intends to interpret the 

Bankruptcy Act’s ‘‘close proximity’’

standard in its ongoing review of the 

credit card provisions of Regulation Z. 

Based on comments received on the 

October 2005 ANPR, the Board is 

considering how to apply the ‘‘close 

proximity’’ standard to electronic 

applications and solicitations, including 

whether to retain the existing guidance 

in comment 5a(a)(2)–2.ii. The Board 

anticipates issuing a proposal 

addressing these and other Regulation Z 

issues within the next few months. 

5a(b) Required Disclosures 

5a(c) Direct-Mail and Electronic 

Applications and Solicitations 

Section 226.5a(b)(1) sets forth rules 

for accuracy of the annual percentage 

rate (APR) disclosure in an application 

or solicitation for a variable-rate credit 

card plan. Section 226.5a(b)(1)(ii) 

provides, in part, that direct mail APR 

disclosures are accurate if the rate was 

in effect within 60 days before mailing 

the disclosures. The 2001 interim final 

rule added a new § 226.5a(b)(1)(iii) to 

provide that, in the case of electronic 

disclosures, the variable APR disclosure 

is considered accurate if the disclosed 

rate was in effect within 30 days before 

the disclosure was sent by electronic 

mail to a consumer or made available at 

another location, such as the card 

issuer’s Internet Web site, and amended 

§ 226.5a(b)(1)(ii) to reference the new 

section. Preparing revised electronic 

disclosures when the index rate for a 

variable APR changes should require 

less time than revising printed materials 

in preparation for a direct mail 


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Federal Register / Vol. 72, No. 82 / Monday, April 30, 2007 / Proposed Rules 21145 

campaign. Thus, specifying a shorter 

time frame for accuracy of electronic 

disclosures than for printed disclosures 

appeared reasonable. The 2001 interim 

final rule did not contain specific 

guidance on accuracy requirements for 

other disclosures provided 

electronically, such as fee disclosures. 

Section 226.5a(c) requires that certain 

disclosures be included on or with a 

credit card application or solicitation 

that is sent to consumers by direct mail. 

The 2001 interim final rule revised 

§ 226.5a(c) to apply the direct mail rules 

to applications and solicitations 

provided to consumers electronically. 

More recently, section 1304 of the 

Bankruptcy Act amended Section 127(c) 

of TILA to require that solicitations to 

open a card account using the Internet 

or other interactive computer service 

must contain the same disclosures as 

those made for applications or 

solicitations sent by direct mail. 

Although this Bankruptcy Act provision 

refers to credit card solicitations (where 

no application is required), the Board 

requested comment in the October 2005 

ANPR on whether the provision should 

be interpreted also to include 

applications provided electronically. 

Almost all commenters on this issue 

stated that there is no reason to treat 

electronic applications differently from 

electronic solicitations in applying the 

Bankruptcy Act provision. The Board 

concurs. With respect to both electronic 

applications and solicitations, it is 

important for consumers who are 

shopping for a card to receive accurate 

cost information about the card before 

submitting an electronic application or 

responding to an electronic solicitation. 

Thus, the Board proposes to use its 

authority in section 105(a) of TILA to 

apply the Bankruptcy Act provision 

relating to electronic offers to both 

electronic solicitations and applications, 

as necessary to effectuate the informed 

use of credit, a primary purpose of 

TILA. 15 U.S.C. 1601(a), 1604(a). 

The Bankruptcy Act also provides 

that the disclosures for electronic credit 

card offers must be ‘‘updated regularly 

to reflect the current policies, terms, and 

fee amounts.’’ In the October 2005 

ANPR, the Board solicited comment on 

how that standard should be 

implemented. 

The majority of commenters to the 

October 2005 ANPR who addressed the 

accuracy of variable rates agreed that a 

30-day standard would be appropriate 

to implement the ‘‘updated regularly’’

standard in the Bankruptcy Act. Some 

commenters advocated longer periods 

such as 60 days, or shorter periods such 

as daily or weekly updating, or 

suggested that the Board should not 

provide specific guidance or rules, 

instead allowing maximum flexibility in 

this area. 

The Board proposes to revise 

§§ 226.5a(b)(1) and 226.5a(c) to make 

the direct-mail provision of § 226.5a 

applicable to electronic applications 

and solicitations and to implement the 

‘‘updated regularly’’ standard in the 

Bankruptcy Act with regard to the 

accuracy of variable APRs. Current 

§ 226.5a(c) would be revised and 

renumbered as new § 226.5a(c)(1). A 

new § 226.5a(c)(2) would be added to 

address the accuracy of a variable APR 

in direct mail solicitations. This new 

section would require issuers to update 

variable APRs disclosed on mailed 

applications and solicitations every 60 

days and variable APRs disclosed on 

applications and solicitations provided 

in electronic form every 30 days, and to 

update other terms when they change. 

The Board believes the 30-day and 60- 

day accuracy requirements for variable 

APRs strike an appropriate balance 

between seeking to ensure consumers 

receive updated information and 

avoiding imposing undue burdens on 

creditors. The Board does not believe it 

is necessary for creditors to disclose to 

consumers the exact variable APR in 

effect on the date the application or 

solicitation is accessed by the consumer 

because consumers should understand 

that variable APRs are subject to change. 

Moreover, it could be costly and 

operationally burdensome for creditors 

to comply with a requirement to 

disclose the exact variable APR in effect 

at the time the application or 

solicitation is accessed. The obligation 

to update the other terms when they 

change ensures that consumers receive 

information that is reasonably accurate 

and current, and should not impose 

significant burdens on issuers. Based on 

discussions with industry concerning 

operational issues, the Board 

understands that issuers typically 

change other terms infrequently, 

perhaps once or twice a year. 

Section 226.5a(c)(2) consists of two 

subsections. Section 226.5a(c)(2)(i) 

would provide that § 226.5a disclosures 

mailed to a consumer must be accurate 

as of the time the disclosures are 

mailed. This section would also provide 

that an accurate variable APR is one that 

is in effect within 60 days before 

mailing. Section 226.5a(c)(2)(ii) would 

provide that § 226.5a disclosures 

provided in electronic form (except for 

a variable APR) must be accurate as of 

the time they are sent to a consumer’s 

e-mail address, or as of the time they are 

viewed by the public on a web site. For 

the reasons discussed above, this 

section would provide that a variable 

APR is accurate if it is in effect within 

30 days before it is sent, or viewed by 

the public, as applicable. Presently, 

variable APRs on most credit cards may 

change on a monthly basis, so the Board 

believes the 30-day accuracy 

requirement for variable APRs is 

appropriate. 

Many of the provisions included in 

proposed § 226.5a(c)(2) have been 

incorporated from § 226.5a(b)(1). To 

eliminate redundancy, the Board 

proposes to revise § 226.5a(b)(1) by 

deleting § 226.5a(b)(1)(ii) and (iii) and 

comment 5a(c)–1. The portion of 

§ 226.5a(b)(1)(ii) that relates to the 

accuracy of APRs provided in ‘‘takeones’’ would be incorporated in new 

§ 226.5a(e)(5). 

Section 226.5b Requirements for 

Home-Equity Plans 

Section 226.5b(a) sets forth 

requirements for the form of disclosures 

required to be made on or with 

applications for HELOCs. The Board 

proposes to amend § 226.5b(a) by 

adding a new paragraph (3) to provide 

that if a consumer accesses a HELOC 

application in electronic form, the 

disclosures required on or with an 

application for a HELOC must be 

provided to the consumer in electronic 

form on or with the application. A 

consumer accesses a HELOC application 

in electronic form when, for example, 

the consumer views the application on 

his or her home computer. On the other 

hand, if a consumer receives a HELOC 

application in the mail, the creditor 

would not satisfy its obligation to 

provide § 226.5b disclosures at that time 

by including a reference in the 

application to the web site where the 

disclosures are located. Comment 

5b(a)(3)–1 would be added to clarify this 

point. 

Section 226.5b(c) states that persons 

other than the creditor that provide 

HELOC applications to consumers must 

provide the required home equity 

disclosures in certain cases. The 2001 

interim final rule added a new 

§ 226.5b(c)(2) to clarify that such third 

parties may use electronic disclosures. 

The Board is proposing to delete this 

provision as unnecessary because the ESign Act is a self-effectuating statute 

and permits any person to use electronic 

records subject to the conditions set 

forth in the Act. 

Comment 5b(b)–7 of the 2001 interim 

final rule states that a consumer must be 

able to access the electronic disclosures 

at the time the application form or 

solicitation reply form is made available 

by electronic communication. This 

comment is substantially similar to 


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comment 5a(a)(2)–8 of the 2001 interim 

final rule, discussed above. 

The Board proposes to delete 

comment 5b(b)–7 and substitute a new 

comment 5b(a)(1)–5 in its place, which 

generally parallels the content of the 

revised comment 5a(a)(2)–8. The new 

comment would describe alternative 

methods for presenting electronic 

disclosures, which are examples rather 

than an exhaustive list. Comment 

5b(a)(1)–5 would omit all references to 

reply forms to recognize that the HELOC 

disclosures are application disclosures. 

The renumbering of the comment 

reflects the Board’s belief that the focus 

of this comment is the form of electronic 

disclosures, rather than the timing of 

those disclosures. 

Section 226.15 Right of Rescission 

Section 226.15 gives consumers the 

right to rescind certain open-end credit 

plans secured by their principal 

dwelling. Under § 226.15(b), creditors 

must provide two copies of a notice of 

this right to each consumer entitled to 

rescind. For written (paper) disclosures, 

this allows consumers to return one 

copy to the creditor if they exercise the 

right of rescission and retain the second 

copy. For rescission notices provided in 

electronic form, the 2001 interim final 

rule added language permitting 

creditors to provide only one copy of 

the electronic notice to each consumer 

when the notice is provided in 

electronic form in accordance with the 

consumer consent and other applicable 

provisions of the E-Sign Act. The Board 

proposes to retain this provision. It does 

not appear that consumers would 

benefit by receiving two electronic 

copies of rescission notices because a 

second electronic ‘‘copy’’ is unnecessary 

for purposes of consumer retention. 

In the 2001 interim final rule, 

comment 15(b)–1 was revised to state 

that if there is more than one property 

owner, a single rescission notice may be 

sent to each consumer if electronic 

communication is used, that each coowner must consent to electronic 

disclosures, and that each must 

designate an electronic (e-mail) address 

to be used for this purpose. The Board 

believes, as discussed above, that 

provisions requiring the use of e-mail 

are no longer appropriate; comment 

15(b)–1 would be revised accordingly. 

The Board also proposes to delete the 

statement that each co-owner must 

consent to electronic disclosures. 

Section 226.16 Advertising 

Section 226.16 contains requirements 

for advertisements for open-end credit, 

and in particular requires that if an 

advertisement includes certain ‘‘trigger 

terms’’ (such as an APR), the 

advertisement must also include certain 

required disclosures (such as minimum 

finance charge and transaction charges 

and annual fees). 

Section 226.16(c) relates to catalogs 

and other multiple-page advertisements 

and to electronic advertisements. The 

Board proposes to add a new paragraph 

(3) to § 226.16(c) to clarify that if a 

consumer accesses an advertisement for 

open-end credit in electronic form, the 

disclosures required on or with the 

open-end credit advertisement must be 

provided to the consumer in electronic 

form on or with the advertisement. A 

consumer accesses an advertisement in 

electronic form when, for example, the 

consumer views the advertisement on 

his or her home computer. On the other 

hand, if a consumer receives a written 

advertisement in the mail, the creditor 

would not satisfy its obligation to 

provide § 226.16 disclosures at that time 

by including a reference in the 

advertisement to the web site where the 

disclosures are located. Comment 

16(c)(3)–1 would be added to clarify this 

point. 

Section 226.16(c) provides that in a 

catalog or other multiple-page 

advertisement, the required disclosures 

need not be shown on each page where 

a ‘‘trigger term’’ appears, as long as each 

such page includes a cross-reference to 

the page where the required disclosures 

appear. The 2001 interim final rule 

clarified that this multiple-page rule 

also applies to credit advertisements in 

electronic form. For example, if a 

‘‘trigger term’’ appears on a particular 

web page, the additional disclosures 

may appear in a table or schedule on 

another web page and still be 

considered part of a single 

advertisement if there is a clear 

reference to the page or location where 

the table or schedule begins (which may 

be accomplished, for example, by 

including a link). The Board proposes to 

retain the rule (in § 226.16(c)(1) and (2)) 

allowing the use of links or other crossreferences in electronic credit 

advertisements to provide guidance on 

how the advertising rules apply to Web 

sites. 

The 2001 interim final rule revised 

comment 16(c)(1)–1 and added 

comment 16(c)(1)–2 to provide guidance 

on multiple-page advertisements in 

electronic form. Because the Board is 

proposing to retain the changes to 

§ 226.16(c)(1) with minor wording 

changes, the Board is also proposing to 

retain comments 16(c)(1)–1 and 2 as 

revised by the 2001 interim final rule 

with corresponding wording changes. 

Subpart C Closed-end Credit 

Section 226.17 General Disclosure 

Requirements 

Section 226.17(a) prescribes the form 

of disclosures required for closed-end 

credit. Section 226.17(a)(1) requires 

creditors to provide closed-end credit 

disclosures in writing and in a form that 

the consumer may keep. The Board 

proposes to revise § 226.17(a)(1) to 

clarify that creditors may provide the 

closed-end credit disclosures to 

consumers in electronic form, subject to 

compliance with the consumer consent 

and other applicable provisions of the ESign Act. Some creditors may provide 

closed-end credit disclosures to 

consumers both in paper and electronic 

form and rely on the paper form of the 

disclosures to satisfy their compliance 

obligations. For those creditors, the 

duplicate electronic form of the closedend credit disclosures may be provided 

to consumers without regard to the 

consumer consent and other provisions 

of the E-Sign Act because the electronic 

form of the disclosure is not used to 

satisfy the regulation’s closed-end credit 

disclosure requirements. 

Section 226.17(a)(1) would also be 

revised to provide that the closed-end 

credit disclosures required by 

§§ 226.19(b) and 226.24 may be 

provided to the consumer in electronic 

form, and that the disclosures required 

by § 226.17(g) may be made available to 

the consumer or to the public in 

electronic form, under the 

circumstances set forth in those 

sections, without regard to the 

consumer consent or other provisions of 

the E-Sign Act. The Board believes that, 

for an application or advertisement 

accessed by the consumer in electronic 

form, permitting creditors to provide 

disclosures relating to applications for 

adjustable-rate mortgage (ARM) loans 

secured by the consumer’s principal 

dwelling (§ 226.19(b)) and closed-end 

credit advertising (§ 226.24) in 

electronic form, without regard to the 

consumer consent and other provisions 

of the E-Sign Act, will eliminate a 

potential significant burden on 

electronic commerce without increasing 

the risk of harm to consumers. This 

approach will assist consumers in 

shopping for credit by enabling them to 

receive important disclosures at the 

same time they access an application or 

advertisement without first having to 

provide consent in accordance with the 

requirements of the E-Sign Act. 

Requiring consumers to follow the 

consent procedures set forth in the ESign Act in order to access an online 

application or advertisement, or 

complete an online application is 


jlentini on PROD1PC65 with PROPOSAL
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potentially burdensome and could 

discourage consumers from shopping 

for credit online. Moreover, because 

these consumers are viewing the 

application or advertisement online, 

there appears to be little, if any, risk that 

the consumer will be unable to view the 

disclosures online as well. 

Section 227.17(g) applies where a 

creditor receives a request for credit by 

mail, telephone, or electronic 

communication without face-to-face or 

direct telephone solicitation. In these 

circumstances, the creditor may delay 

making the TILA disclosures for the 

credit transaction until the due date of 

the first payment, provided certain 

disclosures (specified in § 226.17(g)(1)–

(5)) have been made available to the 

consumer or to the public generally 

(such as in a catalog or advertisement). 

For example, a retailer may mail 

catalogs to consumers, or provides 

advertising inserts in newspapers, 

containing information for ordering 

merchandise by telephone or mail. If a 

consumer calls the retailer, orders an 

item, and agrees to pay for the item by 

obtaining a closed-end extension of 

credit from the retailer, the TILA closedend disclosures would normally be 

required to be provided to the consumer 

before the consummation of the 

transaction. Since this is impracticable 

where the transaction is consummated 

by telephone, however, § 226.17(g) 

permits the retailer to delay providing 

the specific disclosures for the 

transaction, as long as the disclosures in 

§ 226.17(g)(1)–(5), for representative 

amounts or ranges of credit, are 

included in the catalog or newspaper 

insert. 

In the 2001 interim final rule, the 

Board replaced the term ‘‘electronic 

communication’’ in § 226.17(g) with 

‘‘facsimile machine.’’ The Board 

explained that the rule in § 226.17(g) 

predated Internet commerce, and the 

term ‘‘electronic communication’’ was 

intended to cover credit requests by 

facsimile or telegram. The rationale 

underlying the rule was that creditors 

are unable to provide written 

transaction-specific disclosures at the 

time of the consumer’s credit request 

where the request is made by facsimile 

or telegram, no less than in the case of 

requests made by telephone or mail. 

That practical problem does not exist, 

however, where a consumer requests 

credit at a web site. Therefore, the Board 

believes it would be inappropriate to 

extend the application of § 226.17(g) to 

electronic requests for credit made at an 

Internet Web site. Accordingly, the 

Board proposes to retain the amendment 

to § 226.17(g) from the 2001 interim 

final rule. 

Where § 226.17(g) does apply, i.e., 

where the consumer requests credit by 

telephone, mail, or facsimile machine, 

the regulation requires the creditor to 

make available in written form to the 

consumer or the public the disclosures 

set forth in § 226.17(g)(1)–(5) before the 

actual purchase order or request. The 

Board believes that these disclosures 

can appropriately be made available to 

the consumer or to the public either in 

electronic form (for example, on the 

creditor’s web site) or in paper form. 

Accordingly, the Board proposes to 

amend § 226.17(g) to provide that the 

requirement to make available the 

§ 226.17(g)(1)–(5) disclosures in written 

form to the consumer or to the public 

may be satisfied by making the 

disclosures available in electronic form, 

such as at a creditor’s Web site. Thus, 

for example, a consumer might see 

information about a product on a 

retailer’s web site and order the product 

by telephone using closed-end credit; 

the transaction-specific disclosures 

could be delayed, provided the 

§ 226.17(g)(1)–(5) disclosures are set 

forth on the Web site. In this situation, 

the E-Sign consent procedures would 

not have to be followed in order for the 

§ 226.17(g)(1)–(5) disclosures to be 

provided in electronic form. On the 

other hand, if the consumer ordered the 

product via the web site itself, the 

transaction-specific disclosures could 

not be delayed and would be required 

to be provided before consummation of 

the transaction. For the disclosures to be 

provided in electronic form in this 

situation, the E-Sign consent procedures 

would have to be followed. 

Section 226.17(a)(3) in the interim 

final rule cross-references § 226.36, the 

section of the interim final rule setting 

forth general rules for electronic 

disclosures. Because the Board is 

proposing to delete § 226.36, as 

discussed further below, the Board also 

proposes to delete § 226.17(a)(3). 

Section 226.19 Certain Residential 

Mortgage and Variable-Rate 

Transactions 

Section 226.19(b) requires creditors to 

provide certain disclosures relating to 

ARM loans secured by the consumer’s 

principal dwelling when an application 

form is provided to the consumer or 

before the consumer pays a 

nonrefundable fee, whichever is earlier. 

The Board proposes to amend § 226.19 

by adding a new paragraph (c) to 

provide that if a consumer accesses a 

ARM application in electronic form, the 

disclosures required on or with an 

application for an ARM must be 

provided to the consumer in electronic 

form on or with the application. A 

consumer accesses an ARM application 

in electronic form when, for example, 

the consumer views the ARM 

application on his or her home 

computer. On the other hand, if a 

consumer receives an ARM application 

in the mail, the creditor would not 

satisfy its obligation to provide § 226.19 

disclosures at that time by including a 

reference in the application to the web 

site where the disclosures are located. 

Comment 19(c)–1 would be added to 

clarify this point. 

Comment 19(b)–2 of the 2001 interim 

final rule states that a consumer must be 

able to access the electronic disclosures 

at the time the blank application form 

for ARMs is made available by 

electronic communication. The Board 

proposes to revise comment 19(b)–2 in 

a manner substantially similar to 

proposed comment 5b(a)(1)–5, 

discussed above. The revised comment 

would describe alternative methods for 

presenting electronic disclosures, which 

are examples rather than an exhaustive 

list. 

Section 226.23 Right of Rescission 

Section 226.23 gives consumers the 

right to rescind certain closed-end 

mortgage loans secured by their 

principal dwelling. Under § 226.23(b), 

creditors must provide two copies of a 

notice of this right to each consumer 

entitled to rescind. For written (paper) 

disclosures, this allows consumers to 

return one copy to the creditor if they 

exercise the right of rescission and 

retain the second copy. For rescission 

notices provided in electronic form, the 

2001 interim final rule added language 

permitting creditors to provide only one 

copy of the electronic notice to each 

consumer when the notice is provided 

in electronic form in accordance with 

the consumer consent and other 

applicable provisions of the E-Sign Act. 

The Board proposes to retain this 

provision. It does not appear that 

consumers would benefit by receiving 

two electronic copies of rescission 

notices because a second electronic 

‘‘copy’’ is unnecessary for purposes of 

consumer retention. 

In the 2001 interim final rule, 

comment 23(b)–1 was revised to state 

that if there is more than one property 

owner, a single rescission notice may be 

sent to each consumer if electronic 

communication is used, that each coowner must consent to electronic 

disclosures, and that each must 

designate an electronic (e-mail) address 

to be used for this purpose. The Board 

believes, as discussed above, that 

provisions requiring the use of e-mail 

are no longer appropriate; comment 

23(b)–1 would be revised accordingly. 


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21148 Federal Register / Vol. 72, No. 82 / Monday, April 30, 2007 / Proposed Rules 

The Board also proposes to delete the 

statement that each co-owner must 

consent to electronic disclosures. The 

proposed revisions are consistent with 

the proposed revisions to comment 

15(b)–1, discussed above, which relates 

to rescission in the context of open-end 

credit. 

Section 226.24 Advertising 

Section 226.24 contains requirements 

for advertisements for closed-end credit 

and requires that if an advertisement 

includes certain ‘‘trigger terms’’ (such as 

the payment amount), the advertisement 

must also include certain required 

disclosures (such as the APR, the 

amount or percentage of any 

downpayment, and the terms of 

repayment, as applicable). 

Section 226.24(d) relates to catalogs 

and other multiple-page advertisements 

and to electronic advertisements. The 

Board is proposing to add a new 

paragraph (3) to § 226.24(d) (comparable 

to proposed new paragraph (3) to 

§ 226.16(c) for open-end credit 

advertising) to clarify that if a consumer 

accesses an advertisement for closedend credit in electronic form, the 

disclosures required on or with the 

closed-end credit advertisement must be 

provided to the consumer in electronic 

form on or with the advertisement. A 

consumer accesses an advertisement in 

electronic form when, for example, the 

consumer views the advertisement on 

his or her home computer. On the other 

hand, if a consumer receives a written 

advertisement in the mail, the creditor 

would not satisfy its obligation to 

provide § 226.24 disclosures at that time 

by including a reference in the 

advertisement to the web site where the 

disclosures are located. Comment 24(d)–

5 would be added to clarify this point. 

Section 226.24(d) provides that in a 

catalog or other multiple-page 

advertisement, the required disclosures 

need not be shown on each page where 

a ‘‘trigger term’’ appears, as long as each 

such page includes a cross-reference to 

the page where the required disclosures 

appear. As it did for open-end credit 

advertising, the 2001 interim final rule 

clarified that the multiple-page rule for 

closed-end credit advertising also 

applies to credit advertisements in 

electronic form. For example, if a 

‘‘trigger term’’ appears on a particular 

Web page, the additional disclosures 

may appear in a table or schedule on 

another Web page and still be 

considered part of a single 

advertisement if there is a clear 

reference to the page or location where 

the table or schedule begins (which may 

be accomplished, for example, by 

including a link). The Board proposes to 

retain the rule (in § 226.24(d)(1) and (2)) 

allowing the use of links or other crossreferences in electronic credit 

advertisements to provide guidance on 

how the advertising rules apply to Web 

sites. 

The 2001 interim final rule revised 

comment 24(d)–2 and added comment 

24(d)–4 to provide guidance on 

multiple-page advertisements in 

electronic form. Because the Board is 

proposing to retain the changes to 

§ 226.24(d) with minor wording 

changes, the Board is also proposing to 

retain comments 24(d)–2 and 24(d)–4 as 

revised by the 2001 interim final rule 

with corresponding wording changes. 

Section 226.24(b) permits creditors to 

state a simple annual rate of interest or 

periodic rate in addition to the APR, as 

long as the rate is stated in conjunction 

with, but not more conspicuously than, 

the APR. In the 2001 interim final rule, 

comment 24(b)–6 was added to state 

that in an advertisement using 

electronic communication, the 

consumer must be able to view both 

rates simultaneously, and that this 

requirement is not satisfied if the 

consumer can view the APR only by use 

of a link that takes the consumer to 

another Web location. The Board 

proposes to delete comment 24(b)–6 as 

unnecessary. The requirement to state 

the simple annual rate or periodic rate 

in conjunction with, and not more 

conspicuously than, the APR, applies to 

electronic advertisements no less than 

to advertisements in other media. 

Requiring the consumer to scroll to 

another part of the page, or access a 

link, in order to view the APR would 

likely not satisfy this requirement. 

Subpart E Special Rules for Certain 

Home Mortgage Transactions 

Section 226.31 General Rules 

Subpart E implements the Home 

Ownership and Equity Protection Act 

(HOEPA) and sets forth special rules, 

including disclosure requirements, for 

certain mortgage loans with rates or fees 

above specified thresholds (HOEPA 

loans) and for reverse mortgage loans. 

Section 226.31(b) prescribes the form of 

disclosures required under subpart E. 

Section 226.31(b)(1) requires creditors 

to provide the HOEPA and reverse 

mortgage disclosures in writing and in 

a form that the consumer may keep. 

Section 226.31(b)(1) would be 

renumbered as § 226.31(b) and revised 

to clarify that the HOEPA and reverse 

mortgage disclosures may be provided 

to the consumer in electronic form, 

subject to compliance with the 

consumer consent and other applicable 

provisions of the E-Sign Act. Some 

creditors may provide the HOEPA and 

reverse mortgage disclosures to 

consumers both in paper and electronic 

form and rely on the paper form of the 

disclosures to satisfy their compliance 

obligations. For those creditors, the 

duplicate electronic form of the HOEPA 

and reverse mortgage disclosures may 

be provided to consumers without 

regard to the consumer consent and 

other provisions of the E-Sign Act 

because the electronic form of the 

disclosure is not used to satisfy the 

regulation’s HOEPA and reverse 

mortgage disclosure requirements. 

Section 226.31(b)(2) in the interim 

final rule cross-references § 226.36, the 

section of the interim final rule setting 

forth general rules for electronic 

disclosures. Because the Board is 

proposing to delete § 226.36, as 

discussed further below, the Board also 

proposes to delete § 226.31(b)(2). 

Subpart F Electronic Communication 

Section 226.36 Requirements for 

Electronic Communication 

Section 226.36 was added by the 2001 

interim final rule to address the general 

requirements for electronic 

communications. The Board proposes to 

delete § 226.36 (which constitutes all of 

subpart F) from Regulation Z and the 

accompanying sections of the staff 

commentary. 

In the interim rule, § 226.36(a) defines 

the term ‘‘electronic communication’’ to 

mean a message transmitted 

electronically that can be displayed on 

equipment as visual text, such as a 

message displayed on a personal 

computer monitor screen. The deletion 

of § 226.36(a) would not change 

applicable legal requirements under the 

E-Sign Act. 

Sections 226.36(b), (c) and (f) 

incorporate by reference provisions of 

the E-Sign Act, such as the provision 

allowing disclosures to be provided in 

electronic form, the requirement to 

obtain the consumer’s affirmative 

consent before providing disclosures in 

electronic form, and the provision 

allowing electronic signatures. The 

deletion of these provisions will have 

no impact on the general applicability of 

the E-Sign Act to Regulation Z 

disclosures. 

Sections 226.36(d) and (e) address 

specific timing and delivery 

requirements for electronic disclosures 

under Regulation Z, such as the 

requirement to send disclosures to a 

consumer’s e-mail address (or post the 

disclosures on a Web site and send a 

notice alerting the consumer to the 

disclosures). The Board no longer 

believes that these additional provisions 


jlentini on PROD1PC65 with PROPOSAL
Federal Register / Vol. 72, No. 82 / Monday, April 30, 2007 / Proposed Rules 21149 

are necessary or appropriate. Electronic 

disclosures have evolved since 2001, as 

industry and consumers have gained 

experience with them. Although many 

institutions offer e-mail alert notices to 

consumers in connection with online 

services, some consumers may choose 

not to receive notifications by e-mail 

and the Board sees no reason to require 

e-mail alert notices in all cases. In 

addition, the Board has reconsidered 

certain aspects of the interim final rules, 

such as sending disclosures by e-mail, 

in light of concerns about data security, 

identity theft, and phishing that have 

become more pronounced since 2001. 

With regard to the requirement to 

attempt to redeliver returned electronic 

disclosures, as the commenters noted, 

creditors would be required to search 

their files for an additional e-mail 

address to use, and might be required to 

use a postal mail address for redelivery 

if no additional e-mail address was 

available. The Board believes that both 

requirements would likely be unduly 

burdensome. In addition, the concerns 

that have been raised about the 

requirement to use e-mail for the initial 

delivery of a disclosure or notice apply 

equally to the use of e-mail for an 

attempted redelivery. 

Under the proposed rule, the Board 

would not require creditors to maintain 

disclosures posted on a Web site for at 

least 90 days as provided in the 2001 

interim final rule for several reasons. 

First, based on a review of industry 

practices, it appears that many 

institutions maintain disclosures posted 

on an Internet web site for several 

months, and, in a number of cases, for 

more than a year. For example, it 

appears that credit card issuers that 

offer online periodic statements to 

consumers typically make those 

statements available without charge for 

six months or longer in electronic form. 

This practice has developed even 

though Regulation Z does not currently 

require institutions to maintain 

disclosures for any specific period of 

time. Second, the Board believes that an 

appropriate time period consumers may 

want electronic disclosures to be 

available may vary depending upon the 

type of disclosure, and is reluctant to 

establish specific time periods 

depending on the disclosures. 

Nevertheless, while the Board is not 

proposing to require disclosures to be 

maintained on an Internet web site for 

any specific time period, the general 

requirements of Regulation Z continue 

to apply to electronic disclosures, such 

as the requirement to provide 

disclosures to consumers at certain 

specified times and in a form that the 

consumer may keep. Although these 

general requirements apply to electronic 

disclosures, the Board does not believe 

that the 90-day time period set out in 

§ 226.36(d) of the 2001 interim final rule 

is needed to ensure that creditors satisfy 

these requirements when they provide 

electronic disclosures. The Board, 

however, will monitor creditors’

electronic disclosure practices with 

regard to the ability of consumer to 

retain Regulation Z disclosures and will 

consider further regulatory action if it 

appears necessary. 

The official staff commentary to 

§ 226.36 of the interim final rule 

provides guidance on the provisions set 

forth in § 226.36 such as delivery of 

disclosures or alert notices by e-mail, 

redelivery if disclosures or a notice is 

returned undelivered, and retention of 

disclosures on a Web site for 90 days. 

As noted above, because the Board is 

proposing to delete § 226.36 (which 

constitutes all of subpart F) of the 

regulation, the Board also proposes to 

delete the accompanying provisions of 

the official staff commentary. 

IV. Solicitation of Comments Regarding 

the Use of ‘‘Plain Language’’

Section 722 of the Gramm-LeachBliley Act of 1999 requires the Board to 

use ‘‘plain language’’ in all proposed 

and final rules published after January 

1, 2000. The Board invites comments on 

whether the proposed rules are clearly 

stated and effectively organized, and 

how the Board might make the proposed 

text easier to understand. 

V. Initial Regulatory Flexibility 

Analysis 

The Regulatory Flexibility Act (5 

U.S.C. 601 et seq.) (RFA) generally 

requires an agency to perform an 

assessment of the impact a rule is 

expected to have on small entities. 

However, under section 605(b) of the 

RFA, 5 U.S.C. 605(b), the regulatory 

flexibility analysis otherwise required 

under section 604 of the RFA is not 

required if an agency certifies, along 

with a statement providing the factual 

basis for such certification, that the rule 

will not have a significant economic 

impact on a substantial number of small 

entities. Based on its analysis and for 

the reasons stated below, the Board 

believes that this proposed rule will not 

have a significant economic impact on 

a substantial number of small entities. A 

final regulatory flexibility analysis will 

be conducted after consideration of 

comments received during the public 

comment period. 

1. Statement of the objectives of the 

proposal. The Board is proposing 

revisions to Regulation Z to withdraw 

the 2001 interim final rule on electronic 

communication and to allow creditors 

to provide certain disclosures to 

consumers in electronic form on or with 

an application, solicitation, or 

advertisement that is accessed by the 

consumer in electronic form without 

regard to the consumer consent and 

other provisions of the E-Sign Act. The 

Board is also proposing to clarify that 

other Regulation Z disclosures may be 

provided to consumers in electronic 

form in accordance with the consumer 

consent and other applicable provisions 

of the E-Sign Act. 

TILA was enacted to enhance 

economic stabilization and competition 

for credit by strengthening the informed 

use of credit, including an awareness of 

the cost of credit by consumers. The 

purpose of TILA is to assure a 

meaningful disclosure of credit terms so 

that the consumer can compare the 

various credit terms available and avoid 

the uninformed use of credit, and to 

protect the consumer against inaccurate 

and unfair credit billing and credit card 

practices. 15 U.S.C. 1601. TILA 

authorized the Board to prescribe 

regulations to carry out the purposes of 

the statute. 15 U.S.C. 1604(a). The Act 

expressly states that the Board’s 

regulations may contain ‘‘such 

classifications, differentiations, or other 

provisions, * * *, as in the judgment of 

the Board are necessary or proper to 

effectuate the purposes of [the Act], to 

prevent circumvention or evasion of 

[the Act], or to facilitate compliance 

with [the Act].’’ 15 U.S.C. 1604(a). The 

Board believes that the revisions to 

Regulation Z discussed above are within 

Congress’s broad grant of authority to 

the Board to adopt provisions that carry 

out the purposes of the statute. These 

revisions facilitate the informed use of 

credit by consumers in circumstances 

where a consumer accesses a credit 

application, solicitation, or 

advertisement in electronic form. 

2. Small entities affected by the 

proposal. The ability to provide 

shopping and advertising disclosures in 

electronic form on or with an 

application, solicitation, or 

advertisement that is accessed by the 

consumer in electronic form applies to 

all creditors, regardless of their size. 

Accordingly, the proposed revisions 

would reduce burden and compliance 

costs for small entities by providing 

relief, to the extent the E-Sign Act 

applies in these circumstances. The 

number of small entities affected by this 

proposal is unknown. 

3. Other Federal rules. The Board 

believes no Federal rules duplicate, 

overlap, or conflict with the proposed 

revisions to Regulation Z. 


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21150 Federal Register / Vol. 72, No. 82 / Monday, April 30, 2007 / Proposed Rules 

7The disclosure required by section 226.9(d) 

when a finance charge is imposed at the time of a 

transaction need not be written. 

4. Significant alternatives to the 

proposed revisions. The Board solicits 

comment on any significant alternatives 

that may provide additional ways to 

reduce regulatory burden associated 

with this proposed rule. 

VI. Paperwork Reduction Act 

In accordance with the Paperwork 

Reduction Act of 1995 (PRA) (44 U.S.C. 

3506; 5 CFR 1320 Appendix A.1), the 

Board reviewed the rule under the 

authority delegated to the Board by the 

Office of Management and Budget 

(OMB). The collection of information 

that is required by this proposed rule is 

found in 12 CFR 226. The Federal 

Reserve may not conduct or sponsor, 

and an organization is not required to 

respond to, this information collection 

unless it displays a currently valid OMB 

control number. The OMB control 

number is 7100–0199. 

Title I of the Consumer Credit 

Protection Act authorizes the Federal 

Reserve to issue regulations to carry out 

the provisions of that Act. 15 U.S.C. 

1601, 1604(a). This information 

collection is mandatory. Since the 

Federal Reserve does not collect any 

information, no issue of confidentiality 

normally arises. However, the 

information may be protected from 

disclosure under the exemptions (b)(4), 

(6), and (8) of the Freedom of 

Information Act (5 U.S.C. 522(b)). 

Transaction- or account-specific 

disclosures and billing error allegations 

are not publicly available and are 

confidential between the creditor and 

the consumer. General disclosures of 

credit terms that appear in 

advertisements or take-one applications 

are available to the public. 

TILA and Regulation Z ensure 

adequate disclosure of the costs and 

terms of credit to consumers. For openend credit, creditors are required to 

disclose information about the initial 

costs and terms and to provide periodic 

statements of account activity, notices of 

changes in terms, and statements of 

rights concerning billing error 

procedures. The regulation also requires 

specific types of disclosures for credit 

and charge card accounts, and homeequity plans. For closed-end loans, such 

as mortgage and installment loans, cost 

disclosures are required to be provided 

prior to consummation. Special 

disclosures are required of certain 

products, such as reverse mortgages, 

certain variable-rate loans, and certain 

mortgages with rates and fees above 

specified thresholds. TILA and 

Regulation Z also contain rules 

concerning credit advertising. To ease 

the burden and cost of complying with 

Regulation Z (particularly for small 

entities), the Federal Reserve provides 

model forms, which are appended to the 

regulation. Creditors are required to 

retain evidence of compliance for 

twenty-four months (subpart D, section 

226.25), but the regulation does not 

specify the types of records that must be 

retained. 

Under the PRA, the Federal Reserve 

accounts for the paperwork burden 

associated with Regulation Z for the 

State member banks and other creditors 

supervised by the Federal Reserve that 

engage in lending covered by Regulation 

Z and, therefore, are respondents under 

the PRA. Appendix I of Regulation Z 

defines the Federal Reserve-regulated 

institutions as: State member banks, 

branches and agencies of foreign banks 

(other than Federal branches, Federal 

agencies, and insured state branches of 

foreign banks), commercial lending 

companies owned or controlled by 

foreign banks, and organizations 

operating under section 25 or 25A of the 

Federal Reserve Act. Other Federal 

agencies account for the paperwork 

burden on other creditors. The annual 

burden is estimated to be 552,398 hours 

for the 1,172 Federal Reserve-regulated 

institutions that are deemed to be 

respondents for the purposes of the 

PRA. 

As mentioned in the Preamble, 

§ 226.5 would be revised to clarify the 

disclosure requirements in §§ 226.5a 

and 226.5b. The Federal Reserve 

estimates that 279 respondents would 

take approximately 8 hours per month 

to comply with the existing disclosure 

requirements in § 226.5a and estimates 

the annual burden to be 26,784 hours; 

and 632 respondents would take 

approximately 4.5 minutes per 

transaction to comply with the existing 

disclosure requirements in § 226.5b and 

estimates the annual burden to be 

12,798 hours. Sections 226.17 and 

226.19 would be revised to clarify the 

existing disclosure requirements in 

§§ 226.17(g) and 226.19(b). The Federal 

Reserve estimates that 1,172 

respondents would take approximately 

6.5 minutes per transaction to comply 

with the existing disclosure 

requirements in §§ 226.17(g) and 

226.19(b), and estimates the annual 

burden to be 313,765 hours. Sections 

226.5 and 226.17 would also be revised 

to clarify the disclosure requirements in 

§§ 226.16 and 226.24 respectively. The 

Federal Reserve estimates that 1,172 

respondents would take approximately 

25 minutes per transaction to comply 

with the existing disclosure 

requirements in § 226.16 and 226.24, 

and estimates the annual burden to be 

2,442 hours, collectively. The Federal 

Reserve requests specific comment on 

whether the revisions in this proposed 

rule would change the burden on 

respondents. 

Comments are invited on: (a) Whether 

the collection of information is 

necessary for the proper performance of 

the Federal Reserve’s functions; 

including whether the information has 

practical utility; (b) the accuracy of the 

Federal Reserve’s estimate of the burden 

of the information collection, including 

the cost of compliance; (c) ways to 

enhance the quality, utility, and clarity 

of the information to be collected; and 

(d) ways to minimize the burden of 

information collection on respondents, 

including through the use of automated 

collection techniques or other forms of 

information technology. Comments on 

the collections of information should be 

sent to Secretary, Board of Governors of 

the Federal Reserve System, 

Washington, DC 20551, with copies of 

such comments to be sent to the Office 

of Management and Budget, Paperwork 

Reduction Project (7100–0199), 

Washington, DC 20503. 

List of Subjects in 12 CFR Part 226 

Advertising, Federal Reserve System, 

Mortgages, Reporting and recordkeeping 

requirements, Truth in Lending. 

Text of Proposed Revisions 

Certain conventions have been used 

to highlight the proposed changes to 

Regulation Z. New language is shown 

inside bold-faced arrows, while 

language that would be removed is set 

off with bold-faced brackets. 

For the reasons set forth in the 

preamble, the Board proposes to amend 

Regulation Z, 12 CFR part 226, as set 

forth below: 

PART 226—TRUTH IN LENDING 

(REGULATION Z) 

1. The authority citation for part 226 

continues to read as follows: 

Authority: 12 U.S.C. 3806; 15 U.S.C. 1604 

and 1637(c)(5). 

Subpart B—Open-End Credit 

2. Section 226.5 would be amended 

by revising paragraph (a)(1) and 

removing paragraph (a)(5), to read as 

follows: 

§ 226.5 General disclosure requirements. 

(a) Form of disclosures. (1) The 

creditor shall make the disclosures 

required by this subpart clearly and 

conspicuously in writing,7 in a form 


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Federal Register / Vol. 72, No. 82 / Monday, April 30, 2007 / Proposed Rules 21151 

8The disclosures required under § 226.5a for 

credit and charge card applications and 

solicitations, the home equity disclosures required 

under § 226.5b(d), the alternative summary billing 

rights statement provided for in § 226.9(a)(2), the 

credit and charge card renewal disclosures required 

under § 226.9(e), and the disclosures made under 

§ 226.10(b) about payment requirements need not 

be in a form that the consumer can keep. 

that the consumer may keep.8flThe 

disclosures required by this subpart may 

be provided to the consumer in 

electronic form, subject to compliance 

with the consumer consent and other 

applicable provisions of the Electronic 

Signatures in Global and National 

Commerce Act (E-Sign Act) (15 U.S.C. 

7001 et seq.). The disclosures required 

by §§ 226.5a, 226.5b, and 226.16 may be 

provided to the consumer in electronic 

form without regard to the consumer 

consent or other provisions of the ESign Act in the circumstances set forth 

in those sections.fi 

* * * * * 

ø(5) Electronic communication. For 

rules governing the electronic delivery 

of disclosures, including the definition 

of electronic communication, see 

§ 226.36.¿ 

* * * * * 

3. Section 226.5a would be amended 

by adding a new paragraph (a)(2)(v), 

removing paragraphs (b)(1)(ii) and 

(b)(1)(iii), revising paragraph (c), and 

adding new paragraph (e)(5), to read as 

follows: 

§ 226.5a Credit and charge card 

applications and solicitations. 

* * * * * 

(a) General rules. * * * 

(2) Form of disclosures. * * * 

fl(v) For an application or a 

solicitation that is accessed by the 

consumer in electronic form, the 

disclosures required under this section 

must be provided to the consumer in 

electronic form on or with the 

application or solicitation.fi 

(b) Required disclosures. * * * 

(1) Annual percentage rate. * * * 

ø(ii) When variable rate disclosures 

are provided under paragraph (c) of this 

section, an annual percentage rate 

disclosure is accurate if the rate was in 

effect within 60 days before mailing the 

disclosures. When variable rate 

disclosures are provided under 

paragraph (e) of this section, an annual 

percentage rate disclosure is accurate if 

the rate was in effect within 30 days 

before printing the disclosures. 

Disclosures provided by electronic 

communication are subject to paragraph 

(b)(1)(iii) of this section.¿ 

ø(iii) When variable rate disclosures 

are provided by electronic 

communication, an annual percentage 

rate disclosure is accurate if the rate was 

in effect within 30 days before mailing 

the disclosures to a consumer’s 

electronic mail address. If disclosures 

are made available at another location 

such as the card issuer’s Internet Web 

site, the annual percentage rate must be 

one in effect within the last 30 days.¿ 

* * * * * 

(c) Direct-mail and electronic 

applications and solicitations. fl(1) 

General.fi The card issuer shall 

disclose the applicable items in 

paragraph (b) of this section on or with 

an application or solicitation that is 

mailed to consumers øor provided by 

electronic communication¿ flor 

provided to consumers in electronic 

formfi. 

fl(2) Accuracy. (i) Disclosures in 

direct mail applications and 

solicitations must be accurate as of the 

time the disclosures are mailed. An 

accurate variable annual percentage rate 

is one in effect within 60 days before 

mailing. 

(ii) Disclosures provided in electronic 

form must be accurate as of the time 

they are sent, in the case of disclosures 

sent to a consumer’s electronic mail 

address, or as of the time they are 

viewed by the public, in the case of 

disclosures made available at a location 

such as a card issuer’s Internet Web site. 

An accurate variable annual percentage 

rate provided in electronic form is one 

in effect within 30 days before it is sent 

to a consumer’s electronic mail address, 

or viewed by the public, as 

applicable.fi 

* * * * * 

(e) Applications and solicitations 

made available to general public. * * * 

fl(5) Accuracy. The disclosures given 

pursuant to paragraph (e)(1) of this 

section must be accurate as of the date 

of printing. An accurate annual 

percentage rate is one in effect within 30 

days before printing.fi 

* * * * * 

4. Section 226.5b would be amended 

by adding a new paragraph (a)(3), 

removing the heading for paragraph 

(c)(1), redesignating paragraph (c)(1) as 

paragraph (c), and removing paragraph 

(c)(2), to read as follows: 

§ 226.5b Requirements for home equity 

plans. 

* * * * * 

(a) Form of disclosures. * * * 

fl(3) For an application that is 

accessed by the consumer in electronic 

form, the disclosures required under 

this section must be provided to the 

consumer in electronic form on or with 

the application.fi 

* * * * * 

(c) Duties of third parties. ø(1) 

General.¿ * * * 

ø(2) Electronic communication. 

Persons other than the creditor that are 

required to comply with paragraphs (d) 

and (e) of this section may use 

electronic communication in 

accordance with the requirements of 

§ 226.36, as applicable.¿ 

* * * * * 

5. Section 226.15 would be amended 

by revising the first sentence of the 

introductory text of paragraph (b), to 

read as follows: 

§ 226.15 Right of rescission. 

* * * * * 

(b) Notice of right to rescind. In any 

transaction or occurrence subject to 

rescission, a creditor shall deliver two 

copies of the notice of the right to 

rescind to each consumer entitled to 

rescind (one copy to each if the notice 

is delivered flin electronic form in 

accordance with the consumer consent 

and other applicable provisions of the ESign Actfi øby electronic 

communication as provided in 

§ 226.36(b)¿). * * * 

* * * * * 

6. Section 226.16 would be amended 

by revising paragraph (c) to read as 

follows: 

§ 226.16 Advertising. 

* * * * * 

(c) Catalogs or other multiple-page 

advertisements; electronic 

advertisements. (1) If a catalog or other 

multiple-page advertisement, or an 

flelectronicfi advertisement fl(such 

as an advertisement appearing on an 

Internet web site)fi øusing electronic 

communication¿, gives information in a 

table or schedule in sufficient detail to 

permit determination of the disclosures 

required by paragraph (b) of this section, 

it shall be considered a single 

advertisement if: 

(i) The table or schedule is clearly and 

conspicuously set forth; and 

(ii) Any statement of terms set forth in 

§ 226.6 appearing anywhere else in the 

catalog or advertisement clearly refers to 

the page or location where the table or 

schedule begins. 

(2) A catalog or other multiple-page 

advertisement or an flelectronicfi 

advertisement fl(such as an 

advertisement appearing on an Internet 

Web site)fi øusing electronic 

communication¿ complies with this 

paragraph if the table or schedule of 

terms includes all appropriate 

disclosures for a representative scale of 

amounts up to the level of the more 

commonly sold higher-priced property 

or services offered. 


jlentini on PROD1PC65 with PROPOSAL
21152 Federal Register / Vol. 72, No. 82 / Monday, April 30, 2007 / Proposed Rules 

37The disclosures may include an 

acknowledgment of receipt, the date of the 

transaction, and the consumer’s name, address, and 

account number. 

38The following disclosures may be made 

together with or separately from other required 

disclosures: The creditor’s identity under 

§ 226.18(a), the variable rate example under 

§ 226.18(f)(1)(iv), insurance or debt cancellation 

under § 226.18(n), and certain security interest 

charges under § 226.18(o). 

fl(3) For an advertisement that is 

accessed by the consumer in electronic 

form, the disclosures required under 

this section must be provided to the 

consumer in electronic form on or with 

the advertisement.fi 

* * * * * 

Subpart C—Closed-End Credit 

7. Section 226.17 would be amended 

by revising paragraph (a)(1), removing 

paragraph (a)(3), and revising paragraph 

(g) introductory text, to read as follows: 

§ 226.17 General disclosure requirements. 

(a) Form of disclosures. (1) The 

creditor shall make the disclosures 

required by this subpart clearly and 

conspicuously in writing, in a form that 

the consumer may keep. flThe 

disclosures required by this subpart may 

be provided to the consumer in 

electronic form, subject to compliance 

with the consumer consent and other 

applicable provisions of the Electronic 

Signatures in Global and National 

Commerce Act (E-Sign Act) (15 U.S.C. 

7001 et seq.). The disclosures required 

by §§ 226.17(g), 226.19(b), and 226.24 

may be provided to the consumer in 

electronic form without regard to the 

consumer consent or other provisions of 

the E-Sign Act in the circumstances set 

forth in those sections.fi The 

disclosures shall be grouped together, 

shall be segregated from everything else, 

and shall not contain any information 

not directly related 37 to the disclosures 

required under § 226.18.38 The 

itemization of the amount financed 

under § 226.18(c)(1) must be separate 

from the other disclosures under that 

section. 

* * * * * 

ø(3) Electronic communication. For 

rules governing the electronic delivery 

of disclosures, including a definition of 

electronic communication, see 

§ 226.36.¿ 

* * * * * 

(g) Mail or telephone orders—delay in 

disclosures. If a creditor receives a 

purchase order or a request for an 

extension of credit by mail, telephone, 

or facsimile machine without face-toface or direct telephone solicitation, the 

creditor may delay the disclosures until 

the due date of the first payment, if the 

following information for representative 

amounts or ranges of credit is made 

available in written form flor in 

electronic formfi to the consumer or to 

the public before the actual purchase 

order or request: 

* * * * * 

8. Section 226.19 would be amended 

by adding a new paragraph (c), to read 

as follows: 

§ 226.19 Certain residential mortgage and 

variable-rate transactions. 

* * * * * 

fl(c) Electronic disclosures. For an 

application that is accessed by the 

consumer in electronic form, the 

disclosures required by paragraph (b) of 

this section must be provided to the 

consumer in electronic form on or with 

the application.fi 

9. Section 226.23 would be amended 

by revising the first sentence of 

paragraph (b)(1), to read as follows: 

§ 226.23 Right of rescission. 

* * * * * 

(b)(1) Notice of right to rescind. In a 

transaction subject to rescission, a 

creditor shall deliver two copies of the 

notice of the right to rescind to each 

consumer entitled to rescind (one copy 

to each if the notice is delivered flin 

electronic form in accordance with the 

consumer consent and other applicable 

provisions of the E-Sign Actfi øby 

electronic communication as provided 

in § 226.36(b)¿). * * * 

* * * * * 

10. Section 226.24 would be amended 

by revising paragraphs (d)(1) and (d)(2) 

and adding a new paragraph (d)(3), to 

read as follows: 

§ 226.24 Advertising. 

* * * * * 

(d) Catalogs or other multiple-page 

advertisements; electronic 

advertisements. (1) If a catalog or other 

multiple-page advertisement, or an 

flelectronicfi advertisement fl(such 

as an advertisement appearing on an 

Internet Web site)fi øusing electronic 

communication¿, gives information in a 

table or schedule in sufficient detail to 

permit determination of the disclosures 

required by paragraph (c)(2) of this 

section, it shall be considered a single 

advertisement if: 

(i) The table or schedule is clearly and 

conspicuously set forth; and 

(ii) Any statement of terms of the 

credit terms in paragraph (c)(1) of this 

section appearing anywhere else in the 

catalog or advertisement clearly refers to 

the page or location where the table or 

schedule begins. 

(2) A catalog or other multiple-page 

advertisement or an flelectronicfi 

advertisement fl(such as an 

advertisement appearing on an Internet 

Web site)fi øusing electronic 

communication¿ complies with 

paragraph (c)(2) of this section if the 

table or schedule of terms includes all 

appropriate disclosures for a 

representative scale of amounts up to 

the level of the more commonly sold 

higher-priced property or services 

offered. 

fl(3) For an advertisement that is 

accessed by the consumer in electronic 

form, the disclosures required under 

this section must be provided to the 

consumer in electronic form on or with 

the advertisement.fi 

Subpart E—Special Rules for Certain 

Home Mortgage Transactions 

11. Section 226.31 would be amended 

by revising paragraph (b) to read as 

follows: 

§ 226.31 General rules. 

* * * * * 

(b) Form of disclosures. ø(1) General.¿ 

The creditor shall make the disclosures 

required by this subpart clearly and 

conspicuously in writing, in a form that 

the consumer may keep. flThe 

disclosures required by this subpart may 

be provided to the consumer in 

electronic form, subject to compliance 

with the consumer consent and other 

applicable provisions of the Electronic 

Signatures in Global and National 

Commerce Act (E-Sign Act) (15 U.S.C. 

7001 et seq.).fi 

ø(2) Electronic communication. For 

rules governing the electronic delivery 

of disclosures, including a definition of 

electronic communication, see 

§ 226.36.¿ 

* * * * * 

12. Subpart F to part 226 would be 

removed. 

13. In Supplement I to part 226, the 

following amendments would be made: 

a. In Section 226.5—General 

Disclosure Requirements, under 

Paragraph 5(b)(2)(ii), paragraph 3. 

would be revised. 

b. In Section 226.5a—Credit and 

Charge Card Applications and 

Solicitations, under 5a(a)(2) Form of 

Disclosures, paragraph 8. would be 

revised and new paragraph 9. would be 

added. 

c. In Section 226.5a—Credit and 

Charge Card Applications and 

Solicitations, under 5a(c) Direct Mail 

Applications or Solicitations, the 

heading would be revised to read 5a(c) 

Direct Mail and Electronic Applications 

or Solicitations, paragraph 1. would be 

removed, and paragraph 2. would be 

redesignated as paragraph 1. 


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d. In Section 226.5b—Requirements 

for Home Equity Plans, under 5b(a) 

Form of Disclosures, under Paragraph 

5b(a)(1), new paragraph 5. would be 

added. 

e. In Section 226.5b—Requirements 

for Home Equity Plans, under 5b(a) 

Form of Disclosures, new heading 

Paragraph 5b(a)(3) and new paragraph 

1. would be added. 

f. In Section 226.5b—Requirements 

for Home Equity Plans, under 5b(b) 

Time of Disclosures, paragraph 7. would 

be removed. 

g. In Section 226.15—Right of 

Rescission, under 15(b) Notice of Right 

to Rescind., paragraph 1. would be 

revised. 

h. In Section 226.16—Advertising, 

under Paragraph 16(c)(1), paragraphs 1. 

and 2. would be revised. 

i. In Section 226.16—Advertising, new 

heading Paragraph 16(c)(3) and new 

paragraph 1. would be added. 

j. In Section 226.19—Certain 

Residential Mortgage and Variable-Rate 

Transactions, under 19(b) Certain 

variable-rate transactions., paragraph 

2.v. would be revised. 

k. In Section 226.19—Certain 

Residential Mortgage and Variable-Rate 

Transactions, new heading 19(c) 

Electronic disclosures and new 

paragraph 1. would be added. 

l. In Section 226.23—Right of 

Rescission, under 23(b) Notice of Right 

to Rescind., paragraph 1. would be 

revised. 

m. In Section 226.24—Advertising, 

under 24(b) Advertisement of Rate of 

Finance Charge, paragraph 6. would be 

removed. 

n. In Section 226.24—Advertising, 

under 24(d), paragraphs 2. and 4. would 

be revised, and new paragraph 5. would 

be added. 

o. Subpart F would be removed. 

The amendments read as follows: 

Supplement I To Part 226—Official Staff 

Interpretations 

* * * * * 

Subpart B—Open-End Credit 

Section 226.5—General Disclosure 

Requirements 

* * * * * 

5(b)(2) Periodic statements. 

* * * * * 

Paragraph 5(b)(2)(ii). 

* * * * * 

3. Calling for periodic statements. When 

the consumer initiates a request, the creditor 

may permit, but may not require, consumers 

to pick up their periodic statements. If the 

consumer wishes to pick up the statement 

and the plan has a free-ride period, the 

statement must be made available in 

accordance with the 14-day rule. øIf the 

consumer wishes to receive the statement by 

electronic communication, the creditor must 

comply with the consumer consent 

requirements as provided in § 226.36(b).¿ 

* * * * * 

Section 226.5a—Credit and Charge Card 

Applications and Solicitations 

* * * * * 

5a(a) General rules. 

5a(a)(2) Form of disclosures. 

* * * * * 

8. øTiming of disclosures for¿fl Form of 

electronic disclosures provided on or withfi 

electronic applications or solicitations. 

flCard issuers must provide the disclosures 

required by this section on or with a blank 

application or reply form that is made 

available to the consumer in electronic form, 

such as on a card issuer’s Internet web site. 

Card issuers have flexibility in satisfying this 

requirement. For example, the disclosures 

could automatically appear on the screen 

when the application or reply form appears. 

Alternatively, the disclosures could be 

located on the same web ‘‘page’’ as the 

application or reply form without necessarily 

appearing on the initial screen, if the 

application or reply form contains a clear and 

conspicuous reference to the location of the 

disclosures and indicates that the disclosures 

contain rate, fee, and other cost information, 

as applicable. Or, card issuers could provide 

a link to the electronic disclosures on or with 

the application (or reply form) as long as 

consumers cannot bypass the disclosures 

before submitting the application or reply 

form. Whatever method is used, a card issuer 

need not confirm that the consumer has read 

the disclosures. For disclosures required to 

be provided in tabular form, card issuers 

must satisfy the requirements with respect to 

electronic disclosures set forth in comment 

5a(a)(2)–2(ii).fi øIn all cases, a consumer 

must be able to access the disclosures at the 

time the blank application or reply form is 

made available by electronic communication 

such as on a card issuer’s Internet web site. 

Card issuers have flexibility in satisfying this 

requirement. For example, if a link is not 

used, the application or reply form must 

clearly and conspicuously refer to the fact 

that rate, fee, and other cost information 

either precedes or follows the application or 

reply form. Alternatively, card issuers may 

provide a link to electronic disclosures on or 

with the application (or reply form) as long 

as consumers cannot bypass the disclosures 

before submitting the application or reply 

form. Or the disclosures could automatically 

appear on the screen when the application or 

reply form appears. A card issuer need not 

confirm that the consumer has read the 

disclosures.¿ 

fl9. Form of disclosures. If a consumer 

accesses an application or solicitation in 

electronic form, the required disclosures 

must be provided to the consumer in 

electronic form on or with the application or 

solicitation; providing the disclosures at a 

different time or place, or in paper form, 

would not comply. Conversely, if a consumer 

is provided with a paper application or 

solicitation, the required disclosures must be 

provided in paper form on or with the 

application or solicitation. For example, if a 

consumer receives an application or 

solicitation in the mail, the creditor would 

not satisfy its obligation to provide § 226.5a 

disclosures at that time by including a 

reference in the application or solicitation to 

the web site where the disclosures are 

located.fi 

* * * * * 

5a(c) Direct-Mail fland Electronicfi 

Applications and Solicitations 

ø1. Accuracy. In general, disclosures in 

direct mail applications and solicitations 

must be accurate as of the time of mailing. 

(An accurate variable annual percentage rate 

is one in effect within 60 days before 

mailing.)¿ 

ø2.¿ fl1.fi Mailed publications. 

Applications or solicitations contained in 

generally available publications mailed to 

consumers (such as subscription magazines) 

are subject to the requirements applicable to 

‘‘take-ones’’ in § 226.5a(e), rather than the 

direct mail requirements of § 226.5a(c). 

However, if a primary purpose of a card 

issuer’s mailing is to offer credit or charge 

card accounts—for example, where a card 

issuer ‘‘prescreens’’ a list of potential 

cardholders using credit criteria, and then 

mails to the targeted group its catalog 

containing an application or a solicitation for 

a card account—the direct mail rules apply. 

In addition, a card issuer may use a single 

application form as a ‘‘take-one’’ (in racks in 

public locations, for example) and for direct 

mailings, if the card issuer complies with the 

requirements of § 226.5a(c) even when the 

form is used as a ‘‘take-one’’—that is, by 

presenting the required § 226.5a disclosures 

in a tabular format. When used in a direct 

mailing, the credit term disclosures must be 

accurate as of the mailing date whether or not 

the § 226.5a(e)(1) (ii) and (iii) disclosures are 

included; when used in a take-one, the 

disclosures must be accurate for as long as 

the take-one forms remain available to the 

public if the § 226.5a(e)(1) (ii) and (iii) 

disclosures are omitted. (If those disclosures 

are included in the take-one, the credit term 

disclosures need only be accurate as of the 

printing date) 

* * * * * 

Section 226.5b—Requirements for Home 

Equity Plans 

* * * * * 

5b(a) Form of disclosures. 

5b(a)(1) General. 

* * * * * 

fl5. Form of electronic disclosures 

provided on or with electronic applications. 

Creditors must provide the disclosures 

required by this section (including the 

brochure) on or with a blank application that 

is made available to the consumer in 

electronic form, such as on a creditor’s 

Internet Web site. Creditors have flexibility 

in satisfying this requirement. For example, 

the disclosures could automatically appear 

on the screen when the application appears. 

Alternatively, the disclosures could be 

located on the same Web ‘‘page’’ as the 

application without necessarily appearing on 

the initial screen, if the application contains 

a clear and conspicuous reference to the 


jlentini on PROD1PC65 with PROPOSAL
21154 Federal Register / Vol. 72, No. 82 / Monday, April 30, 2007 / Proposed Rules 

location of the disclosures and indicates that 

the disclosures contain rate, fee, and other 

cost information, as applicable. Or, creditors 

could instead provide a link to the electronic 

disclosures as long as consumers cannot 

bypass the disclosures before submitting the 

application. Whatever method is used, a 

creditor need not confirm that the consumer 

has read the disclosures or brochure.fi 

* * * * * 

flParagraph 5b(a)(3). 

1. Form of disclosures. If a consumer 

accesses an application in electronic form, 

the required disclosures must be provided to 

the consumer in electronic form on or with 

the application; providing the disclosures at 

a different time or place, or in paper form, 

would not comply. Conversely, if a consumer 

is provided with a paper application, the 

required disclosures must be provided in 

paper form on or with the application. For 

example, if a consumer receives an 

application in the mail, the creditor would 

not satisfy its obligation to provide § 226.5b 

disclosures at that time by including a 

reference in the application to the Web site 

where the disclosures are located.fi 

5b(b) Time of disclosures. 

* * * * * 

ø7. Applications available by electronic 

communication. In all cases, a consumer 

must be able to access the disclosures 

(including the brochure) at the time the blank 

application or reply form is made available 

by electronic communication, such as on a 

creditor’s Internet web site. Creditors have 

flexibility in satisfying this requirement. For 

example, if a link is not used, the application 

or reply form must clearly and conspicuously 

refer the consumer to the fact that rate, fee, 

and other cost information either precedes or 

follows the application or reply form. 

Alternatively, creditors may provide a link to 

electronic disclosures as long as consumers 

cannot bypass the disclosures before 

submitting the application or reply form. Or 

the disclosures could automatically appear 

on the screen when the application or reply 

form appears. A creditor need not confirm 

that the consumer has read the disclosures or 

brochure.¿ 

* * * * * 

Section 226.15—Right of Rescission 

* * * * * 

15(b) Notice of right to rescind. 

1. Who receives notice. Each consumer 

entitled to rescind must be given: 

• Two copies of the rescission notice. 

• The material disclosures. 

In a transaction involving joint owners, 

both of whom are entitled to rescind, both 

must receive the notice of the right to rescind 

and disclosures. For example, if both spouses 

are entitled to rescind a transaction, each 

must receive two copies of the rescission 

notice fl(one copy if the notice is provided 

in electronic form in accordance with the 

consumer consent and other applicable 

provisions of the E-Sign Act)fi and one copy 

of the disclosures. øIf e-mail is used, the 

creditor complies with § 226.15(b)(1) if one 

notice is sent to each co-owner. Each coowner must consent to receive electronic 

disclosures and each must designate an 

electronic address for receiving the 

disclosure.¿ 

* * * * * 

Section 226.16—Advertising 

* * * * * 

16(c) Catalogs or other multiple-page 

advertisements; electronic advertisements. 

* * * * * 

Paragraph 16(c)(1). 

1. General. Section 226.16(c)(1) permits 

creditors to put credit information together in 

one place in a catalog or other multiple-page 

advertisement or an electronic advertisement 

fl(such as an advertisement appearing on an 

Internet Web site)fi. The rule applies only if 

the advertisement contains one or more of 

the triggering terms from § 226.16(b). 

2. Electronic fladvertisementfi 

øcommunication¿. If an flelectronic 

advertisement (such as an advertisement 

appearing on an Internet Web site)fi 

øadvertisement using electronic 

communication¿ contains the table or 

schedule permitted under § 226.16(c)(1), any 

statement of terms set forth in § 226.6 

appearing anywhere else in the 

advertisement must clearly direct the 

consumer to the location where the table or 

schedule begins. For example, a term 

triggering additional disclosures may be 

accompanied by a link that directly takes the 

consumer to the additional information. 

* * * * * 

flParagraph 16(c)(3). 

1. Form of disclosures. If a consumer 

accesses an advertisement in electronic form, 

the required disclosures must be provided to 

the consumer in electronic form on or with 

the advertisement; providing the disclosures 

at a different time or place, or in paper form, 

would not comply. Conversely, if a consumer 

views a paper advertisement, the required 

disclosures must be provided in paper form 

on or with the advertisement. For example, 

if a consumer receives an advertisement in 

the mail, the creditor would not satisfy its 

obligation to provide § 226.16 disclosures at 

that time by including a reference in the 

advertisement to the Web site where the 

disclosures are located.fi 

* * * * * 

Subpart C—Closed-End Credit 

Section 226.19—Certain Residential 

Mortgage and Variable-Rate 

Transactions 

* * * * * 

19(b) Certain variable-rate transactions. 

* * * * * 

2. Timing. * * * 

v. øElectronic applications.¿ flForm of 

electronic disclosures provided on or with 

electronic applications. Creditors must 

provide the disclosures required by this 

section (including the brochure) on or with 

a blank application that is made available to 

the consumer in electronic form, such as on 

a creditor’s Internet Web site. Creditors have 

flexibility in satisfying this requirement. For 

example, the disclosures could automatically 

appear on the screen when the application 

appears. Alternatively, the disclosures could 

be located on the same Web ‘‘page’’ as the 

application without necessarily appearing on 

the initial screen, if the application contains 

a clear and conspicuous reference to the 

location of the disclosures and indicates that 

the disclosures contain rate, fee, and other 

cost information, as applicable. Or, creditors 

could instead provide a link to the electronic 

disclosures as long as consumers cannot 

bypass the disclosures before submitting the 

application. Whatever method is used, a 

creditor need not confirm that the consumer 

has read the disclosures or brochure.fi 

øIn all cases, a consumer must be able to 

access the disclosures (including the 

brochure) at the time the blank application 

form is made available by electronic 

communication, such as on a creditor’s 

Internet Web site. Creditors have flexibility 

in satisfying this requirement. For example, 

if a link is not used, the application form 

must clearly and conspicuously refer the 

consumer to the fact that rate, fee, and other 

cost information either precedes or follows 

the application or reply form. Alternatively, 

creditors may provide a link to electronic 

disclosures as long as consumers cannot 

bypass the disclosures before submitting the 

application form. Or the disclosures could 

automatically appear on the screen when the 

application form appears. A creditor need not 

confirm that the consumer has read the 

disclosures or brochure.¿ 

* * * * * 

fl19(c) Electronic disclosures. 

1. Form of disclosures. If a consumer 

accesses an ARM application in electronic 

form, the required disclosures must be 

provided to the consumer in electronic form 

on or with the application; providing the 

disclosures at a different time or place, or in 

paper form, would not comply. Conversely, 

if a consumer is provided with a paper ARM 

application, the required disclosures must be 

provided in paper form on or with the 

application. For example, if a consumer 

receives an application in the mail, the 

creditor would not satisfy its obligation to 

provide the ARM disclosures at that time by 

including a reference in the application to 

the Web site where the disclosures are 

located.fi 

* * * * * 

Section 226.23—Right of Rescission 

* * * * * 

23(b) Notice of right to rescind. 

1. Who receives notice. Each consumer 

entitled to rescind must be given: 

• Two copies of the rescission notice. 

• The material disclosures. 

In a transaction involving joint owners, 

both of whom are entitled to rescind, both 

must receive the notice of the right to rescind 

and disclosures. For example, if both spouses 

are entitled to rescind a transaction, each 

must receive two copies of the rescission 

notice fl(one copy if the notice is provided 

in electronic form in accordance with the 

consumer consent and other applicable 

provisions of the E-Sign Act)fi and one copy 

of the disclosures. øIf e-mail is used, the 

creditor complies with § 226.23(b)(1) if one 

notice is sent to each co-owner. Each coowner must consent to receive electronic 


jlentini on PROD1PC65 with PROPOSAL
Federal Register / Vol. 72, No. 82 / Monday, April 30, 2007 / Proposed Rules 21155 

disclosures and each must designate an 

electronic address for receiving the 

disclosure.¿ 

* * * * * 

Section 226.24—Advertising 

* * * * * 

24(b) Advertisement of rate of finance 

charge. 

* * * * * 

ø6. Electronic communication. A simple 

annual rate or periodic rate that is applied to 

an unpaid balance may be stated only if it is 

provided in conjunction with an annual 

percentage rate. In an advertisement using 

electronic communication, the consumer 

must be able to view both rates 

simultaneously. This requirement is not 

satisfied if the consumer can view annual 

percentage rate only by use of a link that 

takes the consumer to information appearing 

at another location.¿ 

* * * * * 

24(d) Catalogs or other multiple-page 

advertisements; electronic advertisements. 

* * * * * 

2. General. Section 226.24(d) permits 

creditors to put credit information together in 

one place in a catalog or other multiple-page 

advertisement, or in an electronic 

advertisement fl(such as an advertisement 

appearing on an Internet Web site)fi. The 

rule applies only if the advertisement 

contains one or more of the triggering terms 

from § 226.24(c)(1). A list of different annual 

percentage rates applicable to different 

balances, for example, does not trigger 

further disclosures under § 226.24(c)(2) and 

so is not covered by § 226.24(d). 

* * * * * 

4. Electronic fl advertisementfi 

øcommunication¿. If an flelectronic 

advertisement (such as an advertisement 

appearing on an Internet Web site)fi 

øadvertisement using electronic 

communication¿ contains the table or 

schedule permitted under § 226.24(d)(1), any 

statement of terms set forth in § 226.24(c)(1) 

appearing anywhere else in the 

advertisement must clearly direct the 

consumer to the location where the table or 

schedule begins. For example, a term 

triggering additional disclosures may be 

accompanied by a link that directly takes the 

consumer to the additional information ø(but 

see comment 24(b)–6)¿. 

fl5. Form of disclosures. If a consumer 

accesses an advertisement in electronic form, 

the required disclosures must be provided to 

the consumer in electronic form on or with 

the advertisement; providing the disclosures 

at a different time or place, or in paper form, 

would not comply. Conversely, if a consumer 

views a paper advertisement, the required 

disclosures must be provided in paper form 

on or with the advertisement. For example, 

if a consumer receives an advertisement in 

the mail, the creditor would not satisfy its 

obligation to provide § 226.16 disclosures at 

that time by including a reference in the 

advertisement to the Web site where the 

disclosures are located.fi 

By order of the Board of Governors of the 

Federal Reserve System, April 20, 2007. 

Jennifer J. Johnson, 

Secretary of the Board. 

[FR Doc. E7–7878 Filed 4–27–07; 8:45 am] 

BILLING CODE 6210–01–P 

FEDERAL RESERVE SYSTEM 

12 CFR Part 230 

[Regulation DD; Docket No. R–1285] 

Truth in Savings 

AGENCY: Board of Governors of the 

Federal Reserve System. 

ACTION: Proposed rule; request for 

comments. 

SUMMARY: The Board is proposing to 

amend Regulation DD, which 

implements the Truth in Savings Act, to 

withdraw portions of the interim final 

rules for the electronic delivery of 

disclosures issued March 30, 2001. The 

interim final rules address the timing 

and delivery of electronic disclosures, 

consistent with the requirements of the 

Electronic Signatures in Global and 

National Commerce Act (E-Sign Act). 

Compliance with the 2001 interim final 

rules is not mandatory. Thus, removing 

the interim rules from the Code of 

Federal Regulations would reduce 

confusion about the status of the 

provisions and simplify the regulation. 

The Board is also proposing to amend 

Regulation DD to provide that certain 

disclosures may be provided to a 

consumer in electronic form without 

regard to the consumer consent and 

other provisions of the E-Sign Act; and 

that, when an advertisement is accessed 

by the consumer in electronic form, the 

disclosures must be provided in 

electronic form on or with the 

advertisement. Similar rules are being 

proposed under other consumer fair 

lending and financial services 

regulations administered by the Board. 

DATES: Comments must be received on 

or before June 29, 2007. 

ADDRESSES: You may submit comments, 

identified by Docket No. R–1285, by any 

of the following methods: 

• Agency Web site: http:// 

www.federalreserve.gov. Follow the 

instructions for submitting comments at 

http://www.federalreserve.gov/ 

generalinfo/foia/ProposedRegs.cfm. 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• E-mail: 

regs.comments@federalreserve.gov. 

Include the docket number in the 

subject line of the message. 

• FAX: (202) 452–3819 or (202) 452–

3102. 

• Mail: Jennifer J. Johnson, Secretary, 

Board of Governors of the Federal 

Reserve System, 20th Street and 

Constitution Avenue, NW., Washington, 

DC 20551. 

All public comments are available 

from the Board’s Web site at http:// 

www.federalreserve.gov/generalinfo/ 

foia/ProposedRegs.cfm as submitted, 

unless modified for technical reasons. 

Accordingly, your comments will not be 

edited to remove any identifying or 

contact information. Public comments 

may also be viewed electronically or in 

paper form in Room MP–500 of the 

Board’s Martin Building (20th and C 

Streets, NW.) between 9 a.m. and 5 p.m. 

on weekdays. 

FOR FURTHER INFORMATION CONTACT: John 

C. Wood or David A. Stein, Counsels, 

Division of Consumer and Community 

Affairs, at (202) 452–2412 or (202) 452–

3667. For users of Telecommunications 

Device for the Deaf (TDD) only, contact 

(202) 263–4869. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The purpose of the Truth in Savings 

Act (TISA), 12 U.S.C. 4301 et seq., is to 

enable consumers to make informed 

decisions about accounts at depository 

institutions. The act requires depository 

institutions to disclose yields, fees, and 

other terms concerning deposit accounts 

to consumers at account opening, upon 

request, when changes in terms occur, 

and in periodic statements. It also 

includes rules about advertising for 

deposit accounts. The Board’s 

Regulation DD (12 CFR part 230) 

implements the act. Credit unions are 

governed by a substantially similar 

regulation issued by the National Credit 

Union Administration. TISA and 

Regulation DD require a number of 

disclosures to be provided in writing. 

Board Proposals Regarding Electronic 

Disclosures 

On May 2, 1996, the Board proposed 

to amend Regulation E (Electronic Fund 

Transfers) to permit financial 

institutions to provide disclosures by 

sending them electronically (61 FR 

19696). Based on comments received, in 

1998 the Board published an interim 

rule permitting the electronic delivery 

of disclosures under Regulation E (63 

FR 14528, March 25, 1998) and 

proposals under Regulations B (Equal 

Credit Opportunity), M (Consumer 

Leasing), Z (Truth in Lending), and DD 

(Truth in Savings) (63 FR 14552, 14538, 

14548, and 14533, respectively, March 

25, 1998). 


jlentini on PROD1PC65 with PROPOSAL