Federal Register / Vol. 74, No. 57 / Thursday, March 26, 2009 / Proposed Rules 13129 

(HVI) classification services under the 

Cotton Statistics and Estimates Act of 

1927 (7 U.S.C. 471–476) was $2.00 per 

bale during the 2008 harvest season as 

determined by using the formula 

provided in the 1987 Act. The fee 

covered salaries, costs of equipment and 

supplies, and other overhead costs, 

including costs for administration and 

supervision. Also, the fee structure for 

the 2007 crop year was incorporated 

under the authority of the Cotton 

Standards Act of 1923 (7 U.S.C 51–65), 

by an interim final rule effective 

October 1, 2007 (72 FR 56242). 

Section 14201 of the 2008 Farm Bill 

provides that: (1) The Secretary shall 

make available cotton classification 

services to producers of cotton, and 

provide for the collection of 

classification fees from participating 

producers or agents that voluntarily 

agree to collect and remit the fees on 

behalf of the producers; (2) 

classification fees collected and the 

proceeds from the sales of samples 

submitted for classification shall, to the 

extent practicable, be used to pay the 

cost of the services provided, including 

administrative and supervisory costs; (3) 

the Secretary shall announce a uniform 

classification fee and any applicable 

surcharge for classification services not 

later than June 1 of the year in which 

the fee applies; and (4) in establishing 

the amount of fees under this section, 

the Secretary shall consult with 

representatives of the United States 

cotton industry. At pages 313–314, the 

Joint Explanatory Statement of the 

committee of conference for section 

14201 stated the expectation that the 

cotton classification fee would be 

established in the same manner as was 

applied during the 1992 through 2007 

fiscal years. The classification fee 

should continue to be a basic, uniform 

fee per bale fee as determined necessary 

to maintain cost-effective cotton 

classification service. Further, in 

consulting with the cotton industry, the 

Secretary should demonstrate the level 

of fees necessary to maintain effective 

cotton classification services and 

provide the Department of Agriculture 

with an adequate operating reserve, 

while also working to limit adjustments 

in the year-to-year fee. 

Under the provisions of section 

14201, a user fee (dollar per bale 

classed) is established that, when 

combined with other sources of 

revenue, will result in projected 

revenues sufficient to reasonably cover 

budgeted costs—adjusted for inflation— 

and allow for adequate operating 

reserves to be maintained. Costs 

considered in this method include 

salaries, costs of equipment and 

supplies, and other overhead costs, such 

as facility costs and costs for 

administration and supervision. In 

addition to covering expected costs, the 

user fee is set such that projected 

revenues will generate an operating 

reserve adequate to effectively manage 

uncertainties related to crop size and 

cash-flow timing while meeting 

minimum reserve requirements set by 

the Agricultural Marketing Service, 

which require maintenance of a reserve 

fund amount equal to four months of 

projected operating costs. 

Extensive consultations regarding the 

establishment of the classification fee 

with U.S. cotton industry 

representatives were held during the 

period from September 2008 through 

January 2009 during numerous publicly 

held meetings. Representatives of all 

segments of the cotton industry, 

including producers, ginners, bale 

storage facility operators, merchants, 

cooperatives, and textile manufacturers 

were addressed in various industrysponsored forums. 

The user fee established to be charged 

cotton producers for High Volume 

Instrument (HVI) classification in 2009 

is $2.20 per bale. This fee is based on 

the pre-season projection that 14.5 

million bales will be classed by the 

United States Department of Agriculture 

during the 2009 crop year. 

Accordingly § 28.909, paragraph (b) 

would reflect the increase of the HVI 

classification fee to $2.20 per bale. 

A 5 cent per bale discount would 

continue to be applied to voluntary 

centralized billing and collecting agents 

as specified in § 28.909(c). 

Growers or their designated agents 

receiving classification data would 

continue to incur no additional fees if 

classification data is requested only 

once. The fee for each additional 

retrieval of classification data in 

§ 28.910 would remain at 5 cents per 

bale. The fee in § 28.910(b) for an owner 

receiving classification data from the 

National database would remain at 5 

cents per bale, and the minimum charge 

of $5.00 for services provided per 

monthly billing period would remain 

the same. The provisions of § 28.910(c) 

concerning the fee for new classification 

memoranda issued from the National 

database for the business convenience of 

an owner without reclassification of the 

cotton will remain the same at 15 cents 

per bale or a minimum of $5.00 per 

sheet. 

The fee for review classification in 

§ 28.911 would increase to $2.20 per 

bale. 

The fee for returning samples after 

classification in § 28.911 would remain 

at 50 cents per sample. 

A 15-day comment period is provided 

for public comments. This period is 

appropriate because it is anticipated 

that the proposed changes, if adopted, 

would be made effective for the 2009 

cotton crop on July 1, 2009. 

List of Subjects in 7 CFR Part 28 

Administrative practice and 

procedure, Cotton, Cotton samples, 

Grades, Market news, Reporting and 

recordkeeping requirements, Standards, 

Staples, Testing, Warehouses. 

For the reasons set forth in the 

preamble, 7 CFR part 28 is proposed to 

be amended to read as follows: 

PART 28—[AMENDED] 

1. The authority citation for 7 CFR 

part 28, Subpart D, continues to read as 

follows: 

Authority: 7 U.S.C. 51–65; 7 U.S.C. 471– 

476. 

2. In § 28.909, paragraph (b) is revised 

to read as follows: 

§ 28.909 Costs. 

* * * * * 

(b) The cost of High Volume 

Instrument (HVI) cotton classification 

service to producers is $2.20 per bale. 

* * * * * 

3. In § 28.911, the last sentence of 

paragraph (a) is revised to read as 

follows: 

§ 28.911 Review classification. 

(a) * * * The fee for review 

classification is $2.20 per bale. 

* * * * * 

Dated: March 23, 2009. 

Craig Morris, 

Acting Associate Administrator. 

[FR Doc. E9–6805 Filed 3–23–09; 4:15 pm] 

BILLING CODE 

NATIONAL CREDIT UNION 

ADMINISTRATION 

12 CFR Part 707 

RIN 3133–AD57 

Truth in Savings Act Disclosures 

AGENCY: National Credit Union 

Administration (NCUA). 

ACTION: Proposed rule. 

SUMMARY: As required by the Truth in 

Savings Act (TISA), NCUA is proposing 

to amend its TISA rule and official staff 

interpretation to align it with the 

Federal Reserve Board’s Regulation DD. 

Specifically, the rule would amend the 

provisions and provide guidance on the 

electronic delivery of disclosures. 

13130 Federal Register / Vol. 74, No. 57 / Thursday, March 26, 2009 / Proposed Rules 

1NCUA’s general lending rule specifically 

permits a federal credit union to provide overdraft 

protection to members if it has a written policy 

addressing certain requirements, such as individual 

and aggregate limits. 12 CFR 701.21(c)(3). 

Additionally, NCUA is proposing to 

amend the rule and the official staff 

commentary to require all credit unions 

to disclose aggregate overdraft fees on 

periodic statements; currently, this 

disclosure requirement only applies to 

credit unions that promote the payment 

of overdrafts. The proposed rule also 

addresses balance disclosures credit 

unions provide to members through 

automated systems. 

DATES: Comments must be received on 

or before May 26, 2009. 

ADDRESSES: You may submit comments 

by any of the following methods (Please 

send comments by one method only): 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• NCUA Web site: http:// 

www.ncua.gov/ 

RegulationsOpinionsLaws/ 

proposed_regs/proposed_regs.html. 

Follow the instructions for submitting 

comments. 

• E-mail: Address to 

regcomments@ncua.gov. Include ‘‘[Your 

name] Comments on Part 707 Truth in 

Savings’’ in the e-mail subject line. 

• Fax: (703) 518–6319. Use the 

subject line described above for e-mail. 

• Mail: Address to Mary Rupp, 

Secretary of the Board, National Credit 

Union Administration, 1775 Duke 

Street, Alexandria, Virginia 22314– 

3428. 

• Hand Delivery/Courier: Same as 

mail address. 

Public inspection: All public 

comments are available on the agency’s 

website at http://www.ncua.gov/ 

RegulationsOpinionsLaws/comments as 

submitted, except as may not be 

possible for technical reasons. Public 

comments will not be edited to remove 

any identifying or contact information. 

Paper copies of comments may be 

inspected in NCUA’s law library at 1775 

Duke Street, Alexandria, Virginia 22314, 

by appointment, weekdays between 9 

a.m. and 3 p.m. To make an 

appointment, call (703) 518–6540 or 

send an e-mail to OGCMail@ncua.gov. 

FOR FURTHER INFORMATION CONTACT: 

Moisette I. Green, Staff Attorney, at the 

address above or telephone: (703) 518– 

6540. For information regarding the 

paperwork burden, contact Michael 

Ryan, Risk Analysis Officer, at the 

address above or telephone number 

(703) 518–6360. 

SUPPLEMENTARY INFORMATION: 

I. Statutory Background 

To comply with the Truth in Savings 

Act (TISA), NCUA is issuing this 

proposed rule with request for 

comments, which is substantially 

similar to the Federal Reserve Board’s 

(FRB’s) October 2007 and December 

2008 final rules. See 72 FR 63477 

(November 9, 2007); 74 FR 5584 

(January 29, 2009). TISA requires NCUA 

to promulgate regulations substantially 

similar to those the FRB issues within 

90 days of the effective date of an FRB 

rule. 12 U.S.C. 4311(b). In doing so, 

NCUA is to take into account the unique 

nature of credit unions and limitations 

under which they pay dividends on 

member accounts. Id. 

II. Procedural and Substantive 

Background on Electronic Disclosure 

Provisions 

The Electronic Signatures in Global 

and National Commerce Act (E-Sign 

Act), 15 U.S.C. 7001 et seq., enacted in 

2000, provides that electronic 

documents and electronic signatures 

have the same validity as paper 

documents and handwritten signatures. 

Under the E-Sign Act, member 

disclosures, which are required by other 

laws or regulations to be provided or 

made available in writing, may be 

provided or made available in electronic 

form if a member affirmatively consents 

after receiving disclosures informing the 

member of: (1) The right to receive the 

required information in writing; (2) the 

consent necessary to receive electronic 

notices; (3) procedures to withdraw 

consent; (4) how to receive a paper copy 

of an electronic record and any fees; 

and, (5) the equipment needed to 

receive e-notices. 15 U.S.C. 7001(c). 

The E-Sign Act, including the special 

notice and consent provisions, became 

effective October 1, 2000, and did not 

require implementing regulations. Thus, 

credit unions are currently permitted to 

provide in electronic form any 

disclosures that are required to be 

provided or made available to the 

member in writing under Part 707 if the 

member affirmatively consents to 

receive electronic disclosures in the 

manner required by section 101(c) of the 

E-Sign Act. Id. 

In April 2001, the FRB published an 

interim final rule to establish uniform 

standards for electronic delivery of 

disclosures under its TISA regulation, 

Regulation DD, 12 CFR part 230. 66 FR 

17795 (April 4, 2001). The interim final 

rule incorporated the requirements of 

the E-Sign Act and required depository 

institutions to obtain consumers’ 

consent to provide TISA disclosures 

electronically. Id. NCUA adopted a 

substantially similar rule in June 2001. 

66 FR 33159 (June 21, 2001). 

In October 2007, the FRB adopted 

final amendments changing some 

provisions in the interim rule adopted 

over six years earlier. In brief, some 

regulatory text was dropped and staff 

commentary revised in the FRB’s 

Regulation DD to address confusion 

about electronic disclosure provisions, 

enhance consumers’ ability to shop for 

deposit account products online, and 

minimize burdens on consumers and on 

using electronic disclosures. 72 FR 

63477 (November 9, 2007). In 

accordance with the E-Sign Act as 

applied to account-opening disclosures, 

periodic statements, and change-interms notices, the FRB required 

depository institutions to obtain the 

consumer’s consent, to provide the 

disclosures in electronic form or else 

provide written disclosures. The FRB 

deleted certain regulatory text that 

restated or cross-referenced the E-Sign 

Act’s general rules regarding electronic 

disclosures, including the consumer 

consent provisions because the E-Sign 

Act is a self-effectuating statute. 12 CFR 

230.10 (2007) (section removed by 

October 2007 final rule). Finally, the 

FRB specified the circumstances under 

which certain disclosures may be 

provided in electronic form without 

obtaining the consumer’s consent under 

section 101(c) of the E-Sign Act. 15 

U.S.C. 7001(c). The final rule was 

effective December 10, 2007, with 

October 1, 2008 as the compliance date. 

NCUA did not issue a substantially 

similar rule to revise the staff 

commentary and remove § 707.10 in 

2007 but is incorporating those changes 

now along with other changes the FRB 

made to its Regulation DD in December 

2008. The Board believes the delayed 

compliance date for credit unions and 

their members has not negatively 

affected them because it is unaware of 

any significant confusion for credit 

unions or their members about credit 

unions’ obligation to obtain members’ 

consent to provide disclosures 

electronically, as required by the E-Sign 

Act. 

III. Background on Overdraft Services 

and Regulatory Action 

In recent years, many credit unions 

have largely automated the overdraft 

payment process,1 and use automation 

to set the criteria for determining 

whether to honor overdrafts and the 

limits on overdraft coverage provided. 

Overdraft services vary among credit 

unions but often share certain common 

characteristics. While credit unions 

generally do not initially underwrite on 

an individual account basis when 

enrolling a member in the service, most 

Federal Register / Vol. 74, No. 57 / Thursday, March 26, 2009 / Proposed Rules 13131 

2The Office of Thrift Supervision published 

similar guidance focusing on safety and soundness 

considerations and best practices. See 70 FR 8428 

(February 18, 2005). 

3 In May 2008, NCUA, the FRB, and the Office of 

Thrift Supervision (OTS) jointly proposed 

substantive consumer protections under the Federal 

Trade Commission Act, the so-called unfair and 

deceptive acts and practices (UDAP) rule that, 

among other matters, addressed concerns that 

consumers may not adequately understand the costs 

of overdraft services or how overdraft services 

operate generally. 73 FR 28904 (May 19, 2008). 

Among other provisions, the proposed rule would 

have required consumers to have the right to opt 

out of the payment of overdrafts but the provision 

was dropped from UDAP when it was finalized in 

December based on the agencies’ decision to 

address disclosures on overdraft services through 

TISA regulations. NCUA adopted the UDAP 

provisions in its Credit Practice Rule in Part 706. 

4The FRB has proposed opt-out requirements for 

overdraft programs using its authority under the 

Electronic Fund Transfer Act and Regulation E. 74 

FR 5212 (January 29, 2009). As an alternative, the 

Regulation E proposal would also require financial 

institutions to provide customers an opt-in to 

payment of overdrafts for ATM and debit 

transactions, and includes a proposed model opt-in 

notice. The Regulation E proposal would apply to 

all financial institutions, including credit unions. 

credit unions will review individual 

accounts periodically to determine if a 

member continues to qualify for the 

service, and the amounts that may be 

covered. 

Most credit unions disclose that the 

payment of overdrafts is discretionary 

and that the credit union has no legal 

obligation to pay any overdraft. In the 

past, credit unions generally provided 

overdraft coverage only for check 

transactions; however, in recent years, 

the service has been extended to cover 

overdrafts resulting from non-check 

transactions, including withdrawals at 

automated teller machines (ATMs), 

automated clearinghouse (ACH) 

transactions, point-of-sale debit card 

transactions, pre-authorized automatic 

debits from a member’s account, 

telephone-initiated funds transfers, and 

online banking transactions. A flat fee is 

charged when an overdraft is paid, 

regardless of the overdraft amount. 

Credit unions commonly charge the 

same amount for paying an overdraft as 

they would if they returned the item 

unpaid. A daily fee also may apply for 

each day the account remains 

overdrawn. 

In February 2005, NCUA, along with 

the FRB, Federal Deposit Insurance 

Corporation, and Office of the 

Comptroller of the Currency, published 

guidance on overdraft protection 

programs in response to concerns about 

aspects of the growing marketing, 

disclosure, and implementation of 

overdraft services. 70 FR 9127 (February 

24, 2005) (Joint Guidance). The Joint 

Guidance addressed three primary 

areas: (1) Safety and soundness 

considerations; (2) legal risks; and, (3) 

best practices.2 The best practices in the 

Joint Guidance focused on the 

marketing of overdraft services and the 

disclosure and operation of program 

features, including distinguishing actual 

available account balances from account 

balances that include overdraft 

protection amounts. 

In May 2005, the FRB published 

revisions to Regulation DD and the 

official staff commentary to address 

concerns about the uniformity and 

adequacy of disclosure of overdraft fees 

generally, and the advertisement of 

overdraft services in particular. 70 FR 

29582 (May 24, 2005). Under the May 

2005 final rule, which became effective 

July 1, 2006, all depository institutions 

were required to specify in their account 

disclosures the categories of 

transactions for which an overdraft fee 

may be imposed. Depository institutions 

that promote the payment of overdrafts 

in an advertisement were required to 

include in the advertisements certain 

information about the costs associated 

with the service and the circumstances 

under which the credit union would not 

pay an overdraft. 

Depository institutions were also 

required to disclose separately on their 

periodic statements the total amount of 

fees or charges imposed on the account 

for paying overdrafts and the total 

amount of fees charged for returning 

items unpaid. The disclosures were 

required to be provided for the 

statement period and for the calendar 

year-to-date. NCUA adopted a 

substantially similar rule for credit 

unions in April 2006. 71 FR 24568 

(April 26, 2006). 

In May 2008, under its TISA 

authority,3 the FRB issued a proposed 

rule on new disclosure requirements 

under Regulation DD, which were 

adopted in final in December 2008. 73 

FR 28739 (May 19, 2008); 74 FR 5584 

(January 29, 2009). The final rule 

amended Regulation DD and the official 

staff commentary to expand the 

requirement to disclose overdraft fees 

on periodic statements to apply to all 

depository institutions, and not just 

those that promote the payment of 

overdrafts. The final rule includes 

format requirements to help make the 

aggregate fee disclosures more effective 

and noticeable to consumers. 

Additionally, the final rule requires an 

account balance, which is disclosed to 

consumers by an automated system 

such as an ATM, Web site, or telephone 

response system, to exclude additional 

amounts institutions may provide or 

which institutions may transfer from 

another account to cover an item where 

there are insufficient funds in an 

account. The rule is designed to ensure 

consumers are not confused or misled 

about the available funds in their 

accounts when they request account 

balances. The final rule permits an 

institution to disclose an additional 

balance that includes funds provided by 

a discretionary overdraft service or a 

line of credit, or funds that could be 

transferred from a consumer’s linked 

individual or joint account, so long as 

the institution prominently states the 

balance includes these additional 

amounts.4

The Proposed Rule 

The Board is proposing to revise 

NCUA’s TISA rule to adopt the FRB’s 

recent changes to Regulation DD and its 

accompanying staff commentary. NCUA 

is required to issue rules substantively 

similar to those of the FRB within 90 

days of the effective date of the FRB’s 

rules. 12 U.S.C. 4311(b). The FRB’s most 

recent final rule will not be effective 

until January 1, 2010, and the Board 

wants to permit credit unions to 

comment on the proposed changes to 

the TISA rule and allow sufficient time 

for necessary operational adjustments. 

To ensure uniformity in disclosure 

requirements for financial institutions, 

the Board intends for the provisions 

dealing with electronic disclosure to be 

effective within 30 days of a final rule 

but, for the provisions changing 

disclosure requirements for overdraft 

programs, to issue provide the same 

effective date as the FRB’s recent final 

amendments to Regulation DD, namely, 

January 1, 2010. The Board encourages 

interested parties to submit comments 

on this proposal but commenters should 

keep in mind that NCUA’s TISA 

regulation must be substantially similar 

to the FRB’s rule and vary only to the 

extent necessary to address unique 

credit union differences. A section-bysection discussion of the proposed 

revisions follows below. 

IV. Section-by-Section Analysis 

Section 707.3 General Disclosure 

Requirements 

Section 707.3(a) prescribes the form of 

disclosures required for member 

accounts and generally requires credit 

unions to provide the disclosures in 

writing and in a form a member or 

potential member may keep. The 

proposed rule would revise § 707.3(a) to 

clarify that credit unions may provide 

disclosures to members or potential 

members in electronic form, subject to 

compliance with the consent and other 

applicable provisions of the E-Sign Act. 

13132 Federal Register / Vol. 74, No. 57 / Thursday, March 26, 2009 / Proposed Rules 

Some credit unions may provide 

disclosures to members or potential 

members both in paper and electronic 

form and rely on the paper form of the 

disclosures to satisfy their compliance 

obligations. For those credit unions, the 

proposal would permit the duplicate 

electronic form of the disclosures to 

members or potential members without 

regard to the consent or other provisions 

of the E-Sign Act because the electronic 

form of the disclosure would not be 

used to satisfy the regulation’s 

disclosure requirements. The proposed 

revisions to § 707.3(a) would also permit 

credit unions to provide the disclosures 

required by §§ 707.4(a)(2) (disclosures 

provided upon request) and 707.8 

(advertising) in electronic form, under 

the circumstances in those sections, 

without regard to the consent or other 

provisions of the E-Sign Act. 

Section 707.8 currently requires that, 

if certain information is stated in an 

advertisement, or if an advertisement 

promotes the payment of overdrafts, the 

advertisement must also include 

specified disclosures. The Board 

believes that, for an advertisement 

accessed by a member or potential 

member in electronic form, permitting 

credit unions to provide the required 

disclosures in electronic form without 

regard to the 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 members 

or potential members. This approach 

will facilitate shopping for deposit 

products by enabling members or 

potential members to receive important 

disclosures at the same time they access 

an advertisement without first having to 

provide consent in accordance with the 

requirements of the E-Sign Act. 

Requiring members or potential 

members to follow the consent 

procedures in the E-Sign Act in order to 

access an online advertisement is 

potentially burdensome and could 

discourage members from shopping for 

deposit products online. Moreover, 

because the members or potential 

members are viewing the advertisement 

online, there appears to be little, if any, 

risk that a member or potential member 

will be unable to view the disclosures 

online as well. 

Similarly, the current § 707.4(a)(2) 

requires credit unions to provide 

disclosures with account terms and 

conditions upon request. If a member or 

potential member is not present at the 

credit union and requests the account 

disclosures, it appears unnecessary and 

burdensome to require the member or 

potential member to go through the ESign consent procedures before the 

request could be satisfied, as long as the 

member or potential member agrees the 

disclosures can be provided 

electronically. Applying the E-Sign 

consent procedures in this context 

could actually discourage members or 

potential members from requesting the 

disclosures. 

Currently, § 707.3(g) contains a crossreference to § 707.10 for rules governing 

the delivery of electronic disclosures. 

NCUA is proposing to delete § 707.3(g) 

for the same reasons it proposes to 

delete § 707.10, as discussed below. 

Section 707.4 Account Disclosures 

Credit unions generally must provide 

account-opening disclosures to 

members or potential members before 

an account is opened or a service is 

provided. Credit unions may delay 

delivering disclosures if a member or 

potential member is not present at the 

credit union when the account is 

opened or service is provided. Section 

707.4(a)(1) provides that, in such cases, 

account-opening disclosures must be 

mailed or delivered within ten business 

days. The rationale underlying the tenday grace period is credit unions cannot 

provide written disclosures immediately 

when, for example, an account is 

opened by telephone. The proposed rule 

would clarify credit unions opening 

accounts by electronic communication, 

for example, on the internet, may not 

delay providing disclosures under 

§ 707.4(a)(1). The difficulties in 

providing disclosures for accounts 

opened by mail or telephone do not 

exist for requests to open accounts 

received by electronic communication 

using visual text; disclosures can be 

provided at the same time. Thus, the 

proposed rule would amend paragraph 

(ii) to § 707.4(a)(1) and require 

disclosures must be provided before 

accounts are opened using electronic 

communication. 

Section 707.4(a)(2)(i) provides that, if 

a member or potential member is not 

present at the credit union when a 

request for account disclosures is made, 

the credit union must mail or deliver 

the disclosures within a reasonable time 

after the credit union receives the 

request. The Board believes ten days is 

a reasonable time. The rule in 

§ 707.4(a)(2)(i) allows credit unions to 

mail or deliver disclosures either in 

paper form or electronically to members 

or potential members who are not 

present at the credit union when they 

make their request. Under the proposal, 

to provide the requested disclosures 

electronically, the credit union must 

send the disclosures to the member or 

potential member’s e-mail address, or 

send a notice alerting the member or 

potential member to the location of the 

disclosures, such as on the credit 

union’s internet Web site. 

Staff Interpretation—Section 707.8

Advertising 

The current § 707.8 addresses 

requirements for advertisements for 

member accounts, including the 

requirement that, if an advertisement 

includes certain ‘‘trigger terms’’ such as 

a bonus or the annual percentage yield, 

the advertisement must also include 

certain disclosures. Section 707.8 

requires that, if an advertisement 

includes trigger terms, the 

advertisement itself must ‘‘state’’ the 

required disclosures ‘‘clearly and 

conspicuously.’’ Therefore, under the 

existing regulation, providing paper 

disclosures for an advertisement in 

electronic form, or vice versa, would not 

comply because the disclosures would 

not be stated in the advertisement itself. 

Comment 8(a)–9 provides that in an 

electronic advertisement, the required 

disclosures need not be shown on each 

page where a ‘‘trigger term’’ appears, as 

long as each page includes a crossreference to the page where the required 

disclosures appear. For example, if a 

‘‘trigger term’’ appears on a particular 

web page, the additional disclosures 

may appear on another Web page if 

there is a clear reference to that page, 

which may be accomplished, for 

example, by including a link. 

The proposed rule would add a new 

comment 8(a)–11 to clarify that rules 

regarding advertising disclosures 

provided in electronic form would also 

apply to the disclosures described in 

§ 707.11(b), which are incorporated by 

reference in § 707.8(f). Section 707.8(b) 

permits credit unions to state a rate of 

return in addition to an annual 

percentage yield (APY), as long as the 

rate is stated in conjunction with, but 

not more conspicuously than, the APY. 

Comment 8(b)–4 states that, in an 

advertisement using electronic 

communication, a member must be able 

to view both rates simultaneously and 

this requirement is not satisfied if the 

member can view the APY only by use 

of a link that takes the member to 

another web location. The proposed rule 

would delete Comment 8(b)–4. The 

regulatory requirement is to state the 

rate of return in conjunction with, but 

not more conspicuously than, the APY, 

and this rule applies in the electronic 

context as well. The Board believes the 

rule can be applied with some flexibility 

to account for variations in devices 

members may use to view electronic 

advertisements. Therefore, using 

scrolling or links would not necessarily 

fail to comply with the regulation; 

Federal Register / Vol. 74, No. 57 / Thursday, March 26, 2009 / Proposed Rules 13133 

however, credit unions should ensure 

electronic advertisements comply with 

the equal conspicuousness requirement. 

As for the electronic devices members 

might use to conduct financial 

transactions, for example, personal 

digital assistants, Internet-enabled cell 

phones, and other small hand-held 

devices, the Board believes disclosures 

would comply with the ‘‘clear and 

conspicuous’’ requirement as long as 

they are provided in a manner that 

would be clear and conspicuous if 

viewed on a typical home personal 

computer monitor. 

Section 707.8(e) exempts from some 

disclosure requirements advertisements 

made through broadcast or electronic 

media, such as television and radio or 

outdoor billboards. Proposed Comment 

8(e)(1)(i)–1 would provide this 

exemption would not apply to 

advertisements using electronic 

communication, such as internet 

advertisements, which do not have the 

same time and space constraints as 

radio or television advertisements. 

Section 707.10 Electronic 

Communication 

The proposed rule would delete 

§ 707.10 that addresses the general 

requirements for electronic 

communications. The proposed deletion 

does not change applicable legal 

requirements under the E-Sign Act and 

has no impact on the general 

applicability of the E-Sign Act to TISA 

disclosures. The E-Sign Act is a selfeffectuating statute and permits any 

person to use electronic records subject 

to the conditions it sets. 

Sections 707.10(d) and (e) have 

addressed specific timing and delivery 

requirements for electronic disclosures, 

such as the requirement to send 

disclosures to a member’s e-mail 

address or post the disclosures on a Web 

site and send a notice alerting the 

member to the disclosures. Section 

707.10(e) has required credit unions to 

take reasonable steps to attempt to 

redeliver returned electronic 

disclosures. Tracking the FRB’s rule, the 

Board believes these provisions are no 

longer necessary or appropriate. 

Electronic disclosures have evolved as 

credit unions and members have gained 

experience with them. The Board notes, 

however, increased risks to members 

with the use of electronic mail related 

to data security, identity theft, and 

phishing. Accordingly, the Board 

believes it is preferable not to mandate 

use of any particular means of electronic 

delivery of disclosures, but instead to 

allow credit unions to use whatever 

method may be best suited to particular 

types of disclosure, for example, 

account-opening, periodic statements, 

or change in terms. 

Regarding the general disclosure 

requirement in § 707.3(a), credit unions 

would satisfy the requirement for 

providing electronic disclosures in a 

form a member can retain if they are 

provided in a standard electronic format 

that can be downloaded and saved or 

printed on a home personal computer. 

Typically, any document that can be 

downloaded by a member can also be 

printed. In a situation where the 

member is provided electronic 

disclosures through equipment under 

the credit union’s control, such as a 

terminal or kiosk in the credit union’s 

offices, the credit union could, for 

example, provide a printer that 

automatically prints the disclosures. 

While the Board is not requiring 

disclosures to be maintained on an 

internet Web site for any specific time 

period, the general requirements of the 

rule continue to apply to electronic 

disclosures, such as the requirement to 

provide disclosures to members at 

certain specified times and in a form a 

member may keep. The Board expects 

credit unions to maintain disclosures on 

Web sites for a reasonable period of 

time, which may vary depending upon 

the particular disclosure, so that 

members have an opportunity to access, 

view, and retain the disclosures. 

Section 707.11 Additional Disclosure 

Requirements Regarding Overdraft 

Services 

11(a) Disclosure of Total Fees on 

Periodic Statements 

Applicability of Aggregate Fee 

Disclosures 

Although periodic statements are not 

required under TISA, credit unions that 

provide periodic statements must 

disclose fees or charges imposed on a 

member account during the statement 

period. 12 CFR 707.6(a)(3). Currently, 

§ 707.11(a) requires credit unions that 

promote the payment of overdrafts in an 

advertisement to provide on periodic 

statements the aggregate dollar amount 

totals for overdraft fees and, for returned 

item fees, the aggregate totals for both 

the statement period and the calendar 

year-to-date. 

To inform members about the fees 

charged for using discretionary 

overdraft services and to help them 

better understand the costs associated 

with their accounts, this proposed rule 

would expand § 707.11(a) to require all 

credit unions, regardless of whether 

they promote the payment of overdrafts, 

to disclose the aggregate fee information 

for the statement period and calendar 

year-to-date. The rule would also add 

format requirements to help make the 

aggregate fee disclosures more effective 

and noticeable to members. The 

proposed rule would delete examples of 

communications that would not trigger 

the aggregate fee disclosure requirement 

in existing § 707.11(a)(2). Additionally, 

the proposed commentary would clarify 

that the aggregate fee total does not 

include fees for transferring funds from 

another member account to avoid an 

overdraft, or fees charged under a 

service subject to 12 CFR part 226 

(Regulation Z). 

The intent of the proposed rule is to 

provide members who use discretionary 

overdraft services information to help 

them better understand the overdraft 

and returned item costs associated with 

their accounts. The aggregate fee 

disclosures would benefit members who 

overdraw their accounts with some 

frequency, but do not currently receive 

aggregate fee disclosures because their 

credit union does not promote its 

overdraft service. The Board believes 

the proposed rule would promote 

greater transparency about the terms 

and costs of overdraft services for all 

credit unions. Under the current rule, 

credit unions that do not promote their 

overdraft service may be reluctant to 

provide information about the service 

out of concern that these disclosures 

might trigger the aggregate fee 

disclosure requirements. The Board 

believes the rule will create consistency 

in disclosures and will eliminate 

compliance challenges inherent in a 

regulatory scheme based on a 

‘‘promoting’’ or ‘‘marketing’’ distinction. 

Additionally, the Board believes this 

requirement is appropriate because 

overdraft and returned item fees are not 

as predictable as many other types of 

account fees. 

Members cannot always know when 

settlement on any one item will occur, 

particularly relative to other 

transactions, where a credit union 

processes items using different methods. 

Therefore, and balance inquiries may 

not always contain real-time balance 

information. Therefore, members may 

not realize that one overdrawn item 

could trigger overdrafts on other 

transactions and, thus, may not be able 

to predict the total fees that will be 

charged for any one overdraft 

occurrence. When there are multiple 

overdrafts, fee amounts may be 

significant, even though each item may 

represent a relatively small dollar 

amount. The aggregate fee disclosures 

would benefit members by showing the 

total expenditures on overdraft fees for 

the statement period and year, which 

may encourage members to explore 

alternatives that might be less costly. 

13134 Federal Register / Vol. 74, No. 57 / Thursday, March 26, 2009 / Proposed Rules 

The Board further notes some members 

are already receiving year-to-date totals 

from credit unions currently subject to 

the rule; thus, requiring year-to-date 

disclosures for all credit unions will 

promote consistency of disclosure 

across credit unions. Because the 

proposed rule would expand the 

applicability of the aggregate fee 

disclosures to all credit unions, the 

existing comment 11(a)(3)–1 would be 

revised, and comment 11(a)(5)–1 would 

be deleted. 

Format of Aggregate Fee Disclosures 

The proposed final rule would add 

proximity and format requirements to 

enhance the effectiveness of the 

disclosures and make them more 

noticeable. Aggregate fee disclosures 

must be provided in close proximity to 

the fees identified under § 707.6(a)(3). 

The Board believes uniform proximity 

requirements are necessary to enable 

members to find fee information easily 

so they better understand the costs of 

using the service. Aggregate fee 

disclosures would be provided using a 

format substantially similar to proposed 

Sample Form B–10. 

The proposed rule would revise 

comment 11(a)(1)–3 to clarify that credit 

unions may use terminology such as 

‘‘returned item fee’’ or ‘‘NSF fee’’ to 

describe the fees for returning items 

unpaid. It also would redesignate 

comment 11(a)(1)–6 as comment 

11(a)(1)–4 and address the issue where 

a credit union provides a statement for 

the current period reflecting that fees 

imposed during a previous period were 

waived and credited to the account. The 

comment would provide that, in these 

circumstances, credit unions may, but 

are not required to, reflect the 

adjustment in the total for the calendar 

year-to-date and in the applicable 

statement period. For example, if a 

credit union assesses a fee in January 

and refunds the fee in February, the 

credit union could disclose a year-todate total reflecting the amount 

credited, but it should not affect the 

total disclosed for the February 

statement period, because the fee was 

not assessed in the February statement 

period. However, because some credit 

unions may assess and then waive and 

credit a fee within the same statement 

cycle, the comment is revised to clarify 

that, in such a case, the credit union 

may reflect the adjustment in the total 

disclosed for fees imposed during the 

current statement period and for the 

total for the calendar year-to-date. If the 

credit union assesses and waives the fee 

in February, the February fee total could 

reflect a total net of the waived fee. 

11(b) Advertising Disclosures for 

Overdraft Services 

Section 707.11(b)(2) lists the types of 

communications about the payment of 

overdrafts not subject to additional 

advertising disclosures under 

§ 707.11(b)(1). The proposed rule would 

expand the list in § 707.11(b)(2) to 

include an opt-out or opt-in notice 

regarding the credit union’s payment of 

overdrafts or provision of discretionary 

overdraft services. 

11(c) Disclosure of Account Balances 

Section 707.11(b)(1) currently 

requires credit unions that promote the 

payment of overdrafts to include certain 

disclosures in their advertisements 

about the service to avoid confusion 

between overdraft services and 

traditional lines of credit. In particular, 

the commentary stated that a credit 

union must include the additional 

advertising disclosures if it ‘‘discloses 

an overdraft limit or includes the dollar 

amount of an overdraft limit in a 

balance disclosed on an automated 

system, such as a telephone response 

machine, ATM screen or the credit 

union’s internet site.’’ 70 FR 72895, 

72901 (December 8, 2005) (adopted 

without change at 71 FR 24568 (April 

26, 2006)). 

To facilitate responsible use of 

overdraft services and ensure that 

members receive accurate information 

about their account balances, the 

proposed rule would provide that the 

balance credit unions disclose may not 

include: Any funds it may provide to 

cover an overdraft; funds that will be 

paid by the credit union under a service 

subject to Regulation Z; or funds 

transferred from another member 

account. The proposed rule would 

permit a credit union to disclose 

another balance that includes these 

additional funds, so long as the credit 

union prominently states the balance 

includes them. 

Under § 707.11(c) of the proposed 

rule, if a credit union discloses balance 

information through an automated 

system, it would be required to disclose 

an account balance that excludes funds 

the credit union may provide to cover 

an overdraft in its discretion, funds that 

will be paid by the credit union under 

a service subject to Regulation Z, or 

funds transferred from another member 

account. For example, although a credit 

union may add a $500 cushion to the 

member’s account balance when 

determining whether to pay an 

overdrawn item, under the proposed 

rule, the additional $500 would not be 

included in the balance provided to the 

member through an automated system. 

The Board believes the requirement to 

provide a balance not supplemented by 

overdraft funds should apply equally in 

these circumstances to ensure members 

are given an accurate account balance. 

Thus, the proposed rule would delete 

the reference to the member’s inquiry. 

Funds Included in and Excluded From 

Balance 

The rule is not intended to define 

what funds are available under 12 CFR 

Part 229 (Regulation CC). Accordingly, 

to avoid ambiguity, the proposed rule 

would add § 707.11(c). As discussed 

below, the proposed rule would not 

require disclosures of real-time balances 

nor otherwise affect what funds a credit 

union considers to be available. 

Additionally, the proposed rule 

would not permit credit unions to 

include amounts available under a 

member’s overdraft line of credit with 

the credit union or funds from a linked 

account, such as a share savings 

account, in the balance disclosure. The 

Board is concerned that permitting a 

balance to include funds available 

under a member’s overdraft line of 

credit or through a transfer from a 

member’s share savings or other linked 

account would cause confusion 

regarding the amount a member may 

withdraw or spend without incurring an 

overdraft. Thus, the proposal would 

revise § 707.11(c) to clarify that a credit 

union must disclose a balance that does 

not include: additional amounts the 

credit union may provide in its 

discretion to cover an overdraft; funds 

that will be paid by the credit union 

under a service subject to Regulation Z; 

or funds transferred from another 

member account. 

Proposed Comment 11(c)–1 would 

clarify a credit union may, but need not, 

include in the balance funds deposited 

in the member’s account, such as from 

a check, but that are not yet made 

available for withdrawal in accordance 

with the funds availability rules under 

Regulation CC. Similarly, the comment 

states the balance may, but need not, 

include any funds a credit union holds 

to satisfy a prior obligation of the 

member, for example, to cover a hold for 

an ATM or debit card transaction that 

has been authorized but not settled. 

Section 707.11(c) would not require 

credit unions to provide a ‘‘real-time’’ 

balance, but would only prohibit credit 

unions from including additional 

overdraft funds such as a discretionary 

overdraft cushion in the disclosed 

balance. 

Additional Balances 

The Joint Guidance stated that, if 

more than one balance is provided, a 

Federal Register / Vol. 74, No. 57 / Thursday, March 26, 2009 / Proposed Rules 13135 

credit union should ‘‘separately (and 

prominently) identify the balance 

without the inclusion of overdraft 

protection.’’ 70 FR at 9132. The 

proposed rule would permit, but does 

not require, disclosure of an additional 

balance that includes these additional 

overdraft funds, which may be useful to 

some members. For example, members 

may wish to receive a balance 

disclosure indicating how much 

overdraft coverage they have available, 

so they can make an informed decision 

regarding a transaction. The proposed 

rule would permit an additional balance 

to be disclosed, so long as the credit 

union prominently states the balance 

contains additional overdraft funds. 

To address concerns that members 

would be confused if multiple balances 

are disclosed to them on an automated 

system, new comment 11(c)–2 would 

provide guidance on how credit unions 

can appropriately identify that an 

additional balance includes overdraft 

funds. Comment 11(c)–2 would explain 

the credit union may not simply state, 

for instance, that the second balance is 

the member’s ‘‘available balance,’’ or 

contains ‘‘available funds.’’ Rather, the 

credit union would provide enough 

information to convey that the second 

balance includes the overdraft amounts. 

For example, the credit union may state 

that the balance includes ‘‘overdraft 

funds.’’ 

Further, the Board notes proposed 

§ 707.11(c) would not affect the existing 

application of the advertising disclosure 

rules of § 707.11(b). Thus, to the extent 

a credit union includes the dollar 

amount of a discretionary overdraft 

limit in a disclosed balance on an 

automated system, the disclosure would 

continue to be considered an 

advertisement promoting the payment 

of overdrafts. Therefore, credit unions 

would provide the disclosures required 

by the current § 707.11(b)(1), including 

the amount of overdraft fees. The 

existing exemption in § 707.11(b)(2) 

from these disclosures for ATM receipts 

would also continue to apply. Any 

receipt containing a second balance 

including overdraft funds, however, 

would be required to prominently state 

that those funds are included and may 

not simply label the second balance as 

the member’s ‘‘available balance’’ or 

‘‘available funds.’’ 

Many credit unions currently provide 

members the ability to opt out of or opt 

into their overdraft service. Where a 

member has opted out of the credit 

union’s overdraft service, or where a 

credit union offers an opt-in and the 

member has not opted in, proposed 

comment 11(c)–2 would also clarify that 

any additional balance disclosed may 

not include funds provided under a 

credit union’s overdraft service because, 

presumably, the member would not 

have access to those funds. For example, 

if a member has $200 in his or her 

account and has opted out of the credit 

union’s overdraft service, a second 

balance could not reflect the additional 

$100 the credit union might otherwise 

have provided under the service. If the 

member is not enrolled in the credit 

union’s overdraft service, but has a line 

of credit or other overdraft alternative, 

the additional balance could continue to 

include funds available pursuant to that 

other alternative. 

Similarly, some credit unions may 

provide members the ability to opt out 

of overdraft services for ATM and debit 

card transactions. In this instance, a 

credit union would continue to offer the 

overdraft service for other transactions, 

such as check transactions. Because the 

credit union’s overdraft service would 

be available for some, but not all 

transactions, proposed comment 11(c)– 

2 states that, if a credit union discloses 

an additional balance where a member 

has opted out of some but not all of the 

credit union’s overdraft services, the 

credit union may choose whether to 

include the overdraft funds in the 

balance. If the credit union chooses to 

include the overdraft funds in the 

additional balance, however, it would 

be required to indicate the additional 

overdraft funds are not available for all 

transactions. 

Automated Systems 

Proposed comment 11(c)–3 explains 

the balance disclosure requirement 

would apply to any automated system 

through which the member requests a 

balance, including but not limited to, a 

telephone response machine, such as an 

interactive voice response system, at an 

ATM, both on the ATM screen and on 

receipts, or on a credit union’s internet 

site, other than live chats with an 

account representative. The balance 

disclosure requirements would apply to 

account balances a credit union 

discloses through any ATM. Because 

account-holding credit unions have 

discretion with respect to the balances 

they provide to an ATM network, they 

ultimately determine what additional 

funds, whether from the credit union’s 

discretionary overdraft service, an 

overdraft line of credit, or a linked 

account, are included in those balances. 

In other words, the credit union has the 

discretion to provide to the network 

only balances that exclude overdraft 

funds. Thus, the Board believes it is 

appropriate to include the information 

that account-holding credit unions 

disclose through foreign ATMs within 

the scope of the rule. 

The proposed rule would apply only 

when a credit union chooses to provide 

balance information, or when an ATM 

or other electronic terminal has the 

capability to provide a balance only to 

the extent balance information is offered 

on an automated system. It would not 

require credit unions or other automated 

systems owners to provide balance 

information on automated systems 

available to members. The Board 

believes the compliance burden and 

enforcement challenges associated with 

monitoring individual conversations 

and responses would outweigh the 

benefits provided by such a rule. 

Therefore, the proposed rule would 

apply only to balance information 

disclosed through an automated system. 

V. Regulatory Procedures 

Regulatory Flexibility Analysis 

The Board has prepared a regulatory 

flexibility analysis as required by the 

Regulatory Flexibility Act, 5 U.S.C. 601 

et seq. TISA was enacted, in part, for the 

purpose of requiring clear and uniform 

disclosures regarding deposit account 

terms and fees assessable against these 

accounts. These disclosures allow 

consumers to make meaningful 

comparisons between different financial 

institutions and also allow consumers to 

make informed judgments about the use 

of their accounts. 12 U.S.C. 4301. TISA 

requires the Board to prescribe 

regulations to carry out the purpose and 

provisions of the statute. 12 U.S.C. 

4308(a)(1), 4311(b). The Board is 

proposing revisions to part 707 to 

address the uniformity and adequacy of 

credit union disclosure of fees 

associated with overdraft services. 

There are other laws credit unions 

must consider when administering an 

overdraft protection program. Although 

other laws and regulations may apply to 

credit union payment of overdrafts, the 

proposed revisions to part 707 do not 

duplicate or conflict with the 

requirements imposed by these laws. 

The Board has also considered the 

interagency guidance on overdraft 

protection programs issued in February 

2005, and has determined that issuance 

of the proposed revisions to part 707 is 

consistent with the interagency 

guidance. 70 FR 9127 (February 24, 

2005). 

Approximately 3,318 of the credit 

unions in the United States that must 

comply with TISA have assets of $10 

million or less and, thus, are considered 

small entities for purposes of the 

Regulatory Flexibility Act, based on 

2008 call report data. The Board 

13136 Federal Register / Vol. 74, No. 57 / Thursday, March 26, 2009 / Proposed Rules 

5As of December 31, 2008, there are 7,860 

federally-insured credit unions. Privately-insured 

credit unions must also comply with Part 707, and 

NCUA estimates there are approximately 130 of 

them. 

believes almost all small credit unions 

that offer accounts where overdraft or 

returned-item fees are imposed 

currently send periodic statements on 

those accounts, although the number of 

small credit unions that promote their 

overdraft services is unknown. For those 

credit unions that do not promote the 

payment of overdrafts in an 

advertisement, periodic statement 

disclosures would need to be revised to 

display aggregate overdraft and 

aggregate returned-item fees for the 

statement period and year to date. All 

small credit unions will have to review 

and perhaps revise account-opening 

disclosures and marketing materials. 

NCUA’s Office of Small Credit Union 

Initiatives (OSCUI) reviewed the 

proposed rule and concluded the rule 

will have minimal impact on small 

credit unions. OSCUI stated small credit 

unions have adequate vendor processing 

assistance to comply with the proposed 

delivery, disclosure, and notice 

requirements in the rule. It also stated 

the proposed rule would result in 

greater efficiencies and ensure members 

and potential members are not confused 

or misled by account disclosures. 

The proposed revisions to part 707 

would require all credit unions to 

provide more complete information to 

members regarding overdraft services. 

Account-opening disclosures and 

marketing materials would describe 

more completely how fees may be 

triggered. Credit unions that provide 

overdraft services would be required to 

separately disclose on periodic 

statements the total dollar amount of 

fees and charges imposed on the 

account for paying overdrafts and the 

total dollar amount for returning items 

unpaid. These disclosures would be 

required for the statement period and 

for the calendar year to date for each 

account to which the service is 

provided. Certain advertising practices 

would be prohibited, and additional 

disclosures on advertisements of 

overdraft services would be required. 

The Board is soliciting comment on 

how the burden of disclosures on credit 

unions could be minimized. The 

proposed rule would limit the 

requirement to disclose aggregate totals 

for overdraft and returned-item fees for 

the statement period and the calendar 

year to date to credit unions that 

provide ad hoc payments of overdrafts 

or promote the payment of overdrafts in 

an advertisement, thereby encouraging 

the routine use of the service. It would 

also specify certain practices that would 

not trigger the new overdraft 

disclosures. The safe harbors would 

provide additional certainty to credit 

unions in determining whether 

compliance with the rule is required in 

particular circumstances. Consistent 

with the rule requiring periodic 

statement disclosures, the proposed rule 

would also provide safe harbors to 

specify circumstances when a credit 

union would not be required to provide 

additional advertising disclosures. 

Under the proposed rule, credit 

unions would be permitted to provide 

an illustrative list of categories by which 

overdrafts may be created to generally 

eliminate the need to provide a changein-terms notice each time a new channel 

for creating overdrafts is added. The 

proposed rule would also provide 

additional guidance regarding the types 

of fees that should be included in the 

total dollar amount of fees and charges 

imposed on the account for paying 

overdrafts and in the total dollar amount 

for returning items unpaid. 

Paperwork Reduction Act 

In accordance with the Paperwork 

Reduction Act of 1995, 44 U.S.C. 3501 

et seq., the Board has submitted the 

information collection requirements in 

this proposed rule to the Office of 

Management and Budget (OMB). The 

NCUA 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 current OMB 

control number for the Truth in Savings 

program is 3133–0134. This information 

collection will be revised to address the 

requirements of this proposed rule. 

The collection of information that 

would be revised by this rulemaking is 

found in 12 CFR part 707 and Appendix 

C. This collection is mandatory to 

evidence compliance with the 

requirements of part 707 and TISA. 15 

U.S.C. 4301 et seq. Credit unions must 

retain records for twenty-four months. 

This regulation applies to all types of 

credit unions, not just federally-insured 

credit unions. 

Under the proposed rule, credit 

unions offering certain overdraft 

payment services would be required to 

provide more complete information 

regarding those services. Accountopening disclosures and other 

marketing materials would describe 

more completely how fees may be 

triggered. Credit unions that offer the 

payment of overdrafts would be 

required to separately disclose on 

periodic statements the total dollar 

amount of fees and charges imposed on 

the account for paying overdrafts and 

the total dollar amount of fees charged 

to the account for returning items 

unpaid. Credit unions would provide 

these disclosures for the statement 

period and for the calendar year to date 

for each account to which an overdraft 

payment is applied. Certain advertising 

practices would be prohibited, and 

additional disclosures in advertisements 

for the payment of overdrafts would be 

required. Although the proposed rule 

would add these requirements, it is 

expected these revisions would not 

significantly increase the ongoing 

paperwork burden of credit unions. 

Respondents would have a one-time 

burden to reprogram and update their 

systems to include these new notice 

requirements. 

There are an estimated 7,990 credit 

unions.5 NCUA estimates it will take the 

respondents, on average, 8 hours or one 

business day to make these one-time 

system changes. NCUA estimates 

respondents will incur a burden of 

63,920 hours meeting the requirements 

of this proposed rule. NCUA estimates 

that the total, continuing annual burden 

for the Truth in Savings program to be 

12,064,677 hours. Before this proposed 

rule, NCUA estimated the annual 

burden to be 12,076,057 hours. The 

annual burden under this proposed rule 

would decrease 11,380 burden hours 

due to the decrease in the number of 

credit unions. 

NCUA invites comment on: 

(1) The accuracy of NCUA’s estimate 

of the burden of the information 

collection; 

(2) Ways to minimize the burden of 

the information collection on credit 

unions, including the use of automated 

collection techniques or other forms of 

information technology; and 

(3) Estimates of capital or start-up 

costs and costs of operation, 

maintenance, and purchase of services 

to provide information. 

Interested parties may submit 

comments regarding the information 

collection requirements in this proposed 

rule. Comments should be mailed to 

Jeryl Fish, Paperwork Clearance Officer, 

National Credit Union Administration, 

1775 Duke Street, Alexandria, VA 

22314–3428; faxed to (703) 518–6319; or 

sent by e-mail to 

regcomments@ncua.gov. Please include 

‘‘Comments on Part 707 Truth in 

Savings Act Disclosures’’ in the 

comments header and send them to 

NCUA using one of the methods 

described above and to: 

NCUA Desk Officer, Office of 

Management and Budget, New 

Executive Office Building, Washington, 

DC 20503, Fax number: (202) 395–6974. 

Federal Register / Vol. 74, No. 57 / Thursday, March 26, 2009 / Proposed Rules 13137 

NCUA will post comments on its Web 

site at http://www.ncua.gov/ 

RegulationsOpinionsLaws/ 

proposedregs/proposedregs.html. 

Interested persons may inspect the 

comments at NCUA, 1775 Duke Street, 

Alexandria, Virginia 22314, by 

appointment. To make an appointment, 

call (703) 518–6540, send an e-mail to 

ogcmail@ncua.gov, or send a facsimile 

transmission to (703) 518–6667. 

Executive Order 13132 

Executive Order 13132 encourages 

independent regulatory agencies to 

consider the impact of their actions on 

state and local interests. In adherence to 

fundamental federalism principles, 

NCUA, an independent regulatory 

agency as defined in 44 U.S.C. 3502(5), 

voluntarily complies with the executive 

order. The proposed rule would not 

have substantial direct effect on the 

states, on the connection between the 

national government and the states, or 

on the distribution of power and 

responsibilities among the various 

levels of government. NCUA has 

determined this proposed rule does not 

constitute a policy that has federalism 

implications for purposes of the 

executive order. 

The Treasury and General Government 

Appropriations Act, 1999—Assessment 

of Federal Regulations and Policies on 

Families 

NCUA has determined that this 

proposed rule would not affect family 

well-being within the meaning of 

section 654 of the Treasury and General 

Government Appropriations Act, 1999, 

Public Law 105–277, 112 Stat. 2681 

(1998). 

Agency Regulatory Goal 

NCUA’s goal is to promulgate clear 

and understandable regulations that 

impose minimal regulatory burden. The 

Board requests your comments on 

whether the rule is understandable and 

minimally intrusive if implemented as 

proposed. 

List of Subjects in 12 CFR Part 707 

Advertising, Consumer protection, 

Credit Unions, Reporting and 

recordkeeping requirements, Truth in 

Savings. 

For the reasons set forth in the 

preamble, NCUA amends 12 CFR Part 

707 and the Official Staff Commentary 

as set forth below: 

PART 707—TRUTH IN SAVINGS 

1. The authority citation for part 707 

continues to read as follows: 

Authority: 12 U.S.C. 4311. 

2. Section 707.1 is amended by 

revising paragraph (a) to read as follows: 

§ 707.1 Authority, purpose, coverage, and 

effect on state laws. 

(a) Authority. This regulation is 

issued by the National Credit Union 

Administration to implement the Truth 

in Savings Act of 1991 (TISA), 

contained in the Federal Deposit 

Insurance Corporation Improvement Act 

of 1991, 12 U.S.C. 3201 et seq., Public 

Law 102–242, 105 Stat. 2236. 

Information collection requirements in 

this regulation have been approved by 

the Office of Management and Budget 

under the provisions of 44 U.S.C. 3501 

et seq. and have been assigned OMB No. 

3133–0134. 

* * * * * 

3. Section 707.3 is amended by 

revising paragraph (a), to read as 

follows, and removing paragraph (g): 

§ 707.3 General disclosure requirements. 

(a) Form. Credit unions must make the 

disclosures required by §§ 707.4 through 

707.6 of this part, as applicable, clearly 

and conspicuously, in writing, and in a 

form the member or potential member 

may keep. Credit unions may provide 

the disclosures required by this part to 

a member or potential member in 

electronic form, subject to compliance 

with the 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. 

Credit unions may provide the 

disclosures required by §§ 707.4(a)(2) 

and 707.8 to a member or potential 

member in electronic form without 

regard to the consent or other provisions 

of the E-Sign Act in the circumstances 

set forth in those sections. Disclosures 

for each account offered by a credit 

union may be presented separately or 

combined with disclosures for the credit 

union’s other accounts, as long as it is 

clear which disclosures are applicable 

to the member or potential member’s 

account. 

* * * * * 

4. Section 707.4 is amended by 

republishing paragraph (a)(1)(i) and 

revising paragraphs (a)(1)(ii) and 

(a)(2)(i), to read as follows: 

§ 707.4 Account disclosures. 

(a) Delivery of account disclosures— 

(1) Account opening—(i) General. A 

credit union must provide account 

disclosures to a member or potential 

member before an account is opened or 

a service is provided, whichever is 

earlier. A credit union is deemed to 

have provided a service when a fee 

required to be disclosed is assessed. 

Except as provided in paragraph 

(a)(1)(ii) of this section, if a member or 

potential member is not present at the 

credit union when the account is 

opened or the service is provided and 

has not already received the disclosures, 

the credit union must mail or deliver 

the disclosures no later than 10 business 

days after the account is opened or the 

service is provided, whichever is earlier. 

(ii) Timing of electronic disclosures. If 

a member or potential member who is 

not present at the credit union uses 

electronic means, for example, an 

Internet Web site, to open an account or 

request a service, the disclosures 

required under paragraph (a)(1) of this 

section must be provided before the 

account is opened or the service is 

provided. 

(2) Requests. (i) A credit union must 

provide account disclosures to a 

member or potential member upon 

request. If a member or potential 

member who is not present at the credit 

union makes a request, the credit union 

must mail or deliver the disclosures 

within a reasonable time after it receives 

the request and may provide the 

disclosures in paper form or 

electronically if the member or potential 

member agrees. 

* * * * * 

§ 707.10 [Removed and Reserved] 

4. Section 707.10 is removed and 

reserved. 

5. Section 707.11 is amended by 

revising the heading, paragraphs (a), 

(b)(2)(x) and (b)(2)(xi), and adding 

paragraphs (b)(2)(xii) and (c) to read as 

follows: 

§ 707.11 Additional disclosure 

requirements for overdraft services. 

(a) Disclosure of total fees on periodic 

statements—(1) General. A credit union 

must separately disclose on each 

periodic statement, as applicable: 

(i) The total dollar amount for all fees 

or charges imposed on the account for 

paying checks or other items when there 

are insufficient or unavailable funds and 

the account becomes overdrawn; and 

(ii) The total dollar amount for all fees 

or charges imposed on the account for 

returning items unpaid. 

(2) Totals required. The disclosures 

required by paragraph (a)(1) of this 

section must be provided for the 

statement period and for the calendar 

year-to-date. 

(3) Format requirements. The 

aggregate fee disclosures required by 

paragraph (a) of this section must be 

disclosed in close proximity to fees 

identified under § 707.6(a)(3), using a 

format substantially similar to Sample 

Form B–10 in appendix B. 

13138 Federal Register / Vol. 74, No. 57 / Thursday, March 26, 2009 / Proposed Rules 

(b) Advertising disclosures for 

overdraft services. * * * 

(2) * * * 

(x) A notice provided to a member, 

such as at an ATM, that completing a 

requested transaction may trigger a fee 

for overdrawing an account, or a general 

notice that items overdrawing an 

account may trigger a fee; 

(xi) Informational or educational 

materials concerning the payment of 

overdrafts if the materials do not 

specifically describe the credit union’s 

overdraft service; or 

(xii) An opt-out or opt-in notice 

regarding the credit union’s payment of 

overdrafts or provision of discretionary 

overdraft services. 

* * * * * 

(c) Disclosure of account balances. If 

a credit union discloses balance 

information to a member through an 

automated system, the balance may not 

include additional amounts that the 

credit union may provide to cover an 

item when there are insufficient or 

unavailable funds in the member’s 

account, whether under a service 

provided in its discretion, a service 

subject to part 226 of this title 

(Regulation Z), or a service to transfer 

funds from another member account. 

The credit union may, at its option, 

disclose additional account balances 

that include such additional amounts, if 

the credit union prominently states that 

any such balance includes such 

additional amounts and, if applicable, 

that additional amounts are not 

available for all transactions. 

6. Amend Appendix B to part 707, by 

adding B–12 to read as follows: 

Appendix B to Part 707—Model Clauses 

and Sample Forms 

* * * * * 

B–12—AGGREGATE OVERDRAFT AND

RETURNED ITEM FEES SAMPLE FORM

Total for this 

period 

Total yearto-date 

Total Overdraft 

Fees .............. $60.00 $150.00 

Total Returned 

Item Fees ...... 0.00 30.00 

7. In Appendix C to Part 707, the 

following amendments are made: 

a. In Section 707.4—Account 

disclosures, under (a)(2)(i), paragraphs 

3. and 4. are revised. 

b. In Section 707.8—Advertising, 

under (a) Misleading or inaccurate 

advertisements, paragraph 9. is revised 

and new paragraph 11. is added. 

c. In Section 707.8—Advertising, 

under (b) Permissible rates, paragraph 4. 

is removed. 

d. In Section 707.8—Advertising, 

under (e)(1)(i), paragraph 1. is revised. 

e. Section 707.10—Electronic 

Communication is removed and 

reserved. 

f. In Section 707.11, the heading is 

revised, (a) heading and (a)(1) heading 

are revised, and paragraphs (a)(1)–1. and 

(a)(1)–2. are removed. 

g. In Section 707.11, paragraphs 

(a)(1)–3. through (a)(1)–8. are 

redesignated as paragraphs (a)(1)–1. 

through (a)(1)–6, respectively. 

h. In Section 707.11, new paragraphs 

(a)(1)–2. through (a)(1)–4 are revised. 

i. In Section 707.11, paragraph (a)(3)– 

1. is revised. 

j. In Section 707.11, paragraph (a)(5)– 

1. is removed. 

k. In Section 707.11, new paragraphs 

(c)–1. through (c)–3. are added. 

The amendments read as follows: 

Appendix C to Part 707—Official Staff 

Interpretations 

* * * * * 

Section 707.4—Account Disclosures 

(a) Delivery of Account Disclosures 

* * * * * 

(a)(2) Requests 

(a)(2)(i) 

* * * * * 

3. Timing for response. Ten business days 

is a reasonable time for responding to 

requests for account information that 

members or potential members do not make 

in person, including requests made by 

electronic means, such as by electronic mail. 

4. Use of electronic means. If a member or 

potential member who is not present at the 

credit union makes a request for account 

disclosures, including a request made by 

telephone, e-mail, or via the credit union’s 

Web site, the credit union may send the 

disclosures in paper form or, if the member 

or potential member agrees, may provide the 

disclosures electronically, such as to an email address that the member or potential 

member provides for that purpose, or on the 

credit union’s Web site, without regard to the 

consent or other provisions of the E-Sign Act. 

The regulation does not require a credit 

union to provide, nor a member or potential 

member to agree to receive, the disclosures 

required by § 707.4(a)(2) in electronic form. 

* * * * * 

Section 707.8—Advertising 

(a) Misleading or Inaccurate Advertisements 

* * * * * 

9. Electronic advertising. If an electronic 

advertisement, such as an advertisement 

appearing on an Internet Web site, displays 

a triggering term, such as a bonus or annual 

percentage yield, the advertisement must 

clearly refer the member to the location 

where the additional required information 

begins. For example, an advertisement that 

includes a bonus or annual percentage yield 

may be accompanied by a link that directly 

takes the member to the additional 

information. 

* * * * * 

11. Additional disclosures in connection 

with the payment of overdrafts. The rule in 

§ 707.3(a), providing that disclosures 

required by § 707.8 may be provided to the 

member in electronic form without regard to 

E-Sign Act requirements, applies to the 

disclosures described in § 707.11(b), which 

are incorporated by reference in § 707.8(f). 

* * * * * 

(e) Exemption for Certain Advertisements 

(e)(1) Certain Media 

(e)(1)(i) 

1. Internet advertisements. The exemption 

for advertisements made through broadcast 

or electronic media does not extend to 

advertisements posted on the Internet or sent 

by e-mail. 

* * * * * 

Section 707.11 Additional Disclosures 

Regarding the Payment of Overdrafts 

(a) Disclosure of Total Fees on Periodic 

Statements 

(a)(1) General 

* * * * * 

2. Fees for paying overdrafts. Credit unions 

must disclose on periodic statements a total 

dollar amount for all fees or charges imposed 

on the account for paying overdrafts. The 

credit union must disclose separate totals for 

the statement period and for the calendar 

year-to-date. The total dollar amount 

includes per-item fees as well as interest 

charges, daily or other periodic fees, or fees 

charged for maintaining an account in 

overdraft status, whether the overdraft is by 

check or by other means. It also includes fees 

charged when there are insufficient funds 

because previously deposited funds are 

subject to a hold or are uncollected. It does 

not include fees for transferring funds from 

another member account to avoid an 

overdraft, or fees charged under a service 

subject to part 226 of this title (Regulation Z). 

3. Fees for returning items unpaid. The 

total dollar amount for all fees for returning 

items unpaid must include all fees charged 

to the account for dishonoring or returning 

checks or other items drawn on the account. 

The credit union must disclose separate 

totals for the statement period and for the 

calendar year-to-date. Fees imposed when 

deposited items are returned are not 

included. Credit unions may use terminology 

such as ‘‘returned item fee’’ or ‘‘NSF fee’’ to 

describe fees for returning items unpaid. 

4. Waived fees. In some cases, a credit 

union may provide a statement for the 

current period reflecting that fees imposed 

during a previous period were waived and 

credited to the account. Credit unions may, 

but are not required to, reflect the adjustment 

in the total for the calendar year-to-date and 

in the applicable statement period. For 

example, if a credit union assesses a fee in 

January and refunds the fee in February, the 

credit union could disclose a year-to-date 

total reflecting the amount credited, but it 

should not affect the total disclosed for the 

Federal Register / Vol. 74, No. 57 / Thursday, March 26, 2009 / Proposed Rules 13139 

February statement period, because the fee 

was not assessed in the February statement 

period. If a credit union assesses and then 

waives and credits a fee within the same 

cycle, the credit union may, at its option, 

reflect the adjustment in the total disclosed 

for fees imposed during the current statement 

period and for the total for the calendar yearto-date. Thus, if the credit union assesses and 

waives the fee in the February statement 

period, the February fee total could reflect a 

total net of the waived fee. 

* * * * * 

(a)(3) Time Period Covered by Disclosures 

1. Periodic statement disclosures. The 

disclosures under § 707.11(a) must be 

included on periodic statements provided by 

a credit union starting with the first 

statement period that begins after January 1, 

2010. For example, if a member’s statement 

period typically closes on the 15th of each 

month, a credit union must provide the 

disclosures required by § 707.11(a)(1) on 

subsequent periodic statements for that 

member beginning with the statement 

reflecting the period from January 16, 2010 

to February 15, 2010. 

* * * * * 

(c) Disclosure of Account Balances 

1. Balance that does not include additional 

amounts. For purposes of the balance 

disclosure requirement in § 707.11(c), if a 

credit union discloses balance information to 

a member through an automated system, it 

must disclose a balance that excludes any 

funds the credit union may provide to cover 

an overdraft pursuant to a discretionary 

overdraft service that will be paid by the 

credit union under a service subject to part 

226 of this title (Regulation Z) or that will be 

transferred from another account held 

individually or jointly by a member. The 

balance may, but need not, include funds 

that are deposited in the member’s account, 

such as from a check, that are not yet made 

available for withdrawal in accordance with 

the funds availability rules under part 229 of 

the title (Regulation CC). In addition, the 

balance may, but need not, include funds 

that are held by the credit union to satisfy a 

prior obligation of the member, for example, 

to cover a hold for an ATM or debit card 

transaction that has been authorized but for 

which the credit union has not settled. 

2. Additional balance. The credit union 

may disclose additional balances 

supplemented by funds that may be provided 

by the credit union to cover an overdraft, 

whether pursuant to a discretionary overdraft 

service, a service subject to part 226 of this 

title (Regulation Z), or a service that transfers 

funds from another account held 

individually or jointly by the member, so 

long as the credit union prominently states 

that any additional balance includes these 

additional overdraft amounts. The credit 

union may not simply state, for instance, that 

the second balance is the member’s 

‘‘available balance,’’ or contains ‘‘available 

funds.’’ Rather, the credit union should 

provide enough information to convey that 

the second balance includes these amounts. 

For example, the credit union may state that 

the balance includes ‘‘overdraft funds.’’ 

Where a member has opted out of the credit 

union’s discretionary overdraft service, any 

additional balance disclosed should not 

include funds credit unions provide under 

that service. Where a member has opted out 

of the credit union’s discretionary overdraft 

service for some, but not all transactions, e.g., 

the member has opted out of overdraft 

services for ATM and debit card transactions, 

a credit union that includes funds from its 

discretionary overdraft service in the balance 

should convey that the overdraft funds are 

not available for all transactions. For 

example, the credit union could state that 

overdraft funds are not available for ATM 

and debit card transactions. 

3. Automated systems. The balance 

disclosure requirement in § 707.11(c) applies 

to any automated system through which the 

member requests a balance, including, but 

not limited to, a telephone response system, 

the credit union’s internet site, or an ATM. 

The requirement applies whether the credit 

union discloses a balance through an ATM 

owned or operated by the credit union or 

through an ATM not owned or operated by 

the credit union, including an ATM operated 

by an entity that is not a financial institution. 

If the balance is obtained at an ATM, the 

requirement also applies whether the balance 

is disclosed on the ATM screen or on a paper 

receipt. 

* * * * * 

By the National Credit Union 

Administration Board, on March 19, 2009. 

Mary F. Rupp, 

Secretary of the Board. 

[FR Doc. E9–6728 Filed 3–25–09; 8:45 am] 

BILLING CODE 7535–01–P 

NATIONAL CREDIT UNION 

ADMINISTRATION 

12 CFR Parts 741, 748, and 749 

RIN 3133–AD56 

Credit Union Reporting 

AGENCY: National Credit Union 

Administration (NCUA). 

ACTION: Proposed rule. 

SUMMARY: NCUA is modernizing the 

way insured credit unions submit 

reports and other important information 

and has developed an online, Webbased system to make reporting more 

efficient and cost effective. The new 

system will also enhance the accuracy 

of information by providing a means for 

updating certain data outside the 

financial reporting cycle. NCUA is 

proposing revisions to its regulations 

involving reporting procedures and 

record retention requirements to 

conform regulatory provisions to the 

new online system. The proposal 

incorporates into the regulation a 

statutory requirement on reporting 

changes in senior officials resulting 

from election or appointments and 

would clarify requirements on when 

credit unions file reports with NCUA 

online. The proposal also includes 

provisions that provide alternative 

reporting methods for credit unions 

unable to submit online reports. 

DATES: Comments must be received on 

or before May 26, 2009. 

ADDRESSES: You may submit comments 

by any of the following methods (Please 

send comments by one method only): 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• NCUA Web Site: http:// 

www.ncua.gov/news/proposed_regs/ 

proposed_regs.html. Follow the 

instructions for submitting comments. 

• E-mail: Address to 

regcomments@ncua.gov. Include ‘‘[Your 

name] Comments on Proposed Rule— 

Parts 741, 748 and 749’’ in the e-mail 

subject line. 

• Fax: (703) 518–6319. Use the 

subject line described above for e-mail. 

• Mail: Address to Mary Rupp, 

Secretary of the Board, National Credit 

Union Administration, 1775 Duke 

Street, Alexandria, Virginia 22314– 

3428. 

• Hand Delivery/Courier: Same as 

mail address. 

Public inspection: All public 

comments are available on the agency’s 

Web site at http://www.ncua.gov/ 

RegulationsOpinionsLaws/ 

proposed_regs/comments.html as 

submitted, except as may not be 

possible for technical reasons. Public 

comments will not be edited to remove 

any identifying or contact information. 

Paper copies of comments may be 

inspected in NCUA’s law library at 1775 

Duke Street, Alexandria, Virginia 22314, 

by appointment weekdays between 9 

a.m. and 3 p.m. To make an 

appointment, call (703) 518–6540 or 

send an e-mail to ogcmail@ncua.gov. 

FOR FURTHER INFORMATION CONTACT: 

Amber Gravius, Risk Management 

Officer, Office of Examination and 

Insurance, (703) 518–6360; George 

Curtis, Corporate Program Specialist, 

Office of Corporate Credit Unions, (703) 

518–6640; or Moisette Green, Staff 

Attorney, Office of General Counsel, 

(703) 518–6540, National Credit Union 

Administration, 1775 Duke Street, 

Alexandria, Virginia 22314. 

SUPPLEMENTARY INFORMATION: NCUA is 

modernizing the way insured credit 

unions submit reports and other 

important information. The current 

software used to submit the Report of 

Officials and financial reports will be 

replaced with an integrated, Web-based 

information management system. The 

online system will make reporting more