Federal Register / Vol. 66, No. 120 / Thursday, June 21, 2001 / Rules and Regulations 33159

VI. Unfunded Mandates Act of 1995

Section 202 of the Unfunded

Mandates Reform Act of 1995, Pub.

L.104–4 (Unfunded Mandates Act),

requires an agency to prepare a

budgetary impact statement before

promulgating a rule that includes a

federal mandate that may result in

expenditure by state, local, and tribal

governments, in the aggregate, or by the

private sector, of $100 million or more

in any one year. If a budgetary impact

statement is required, section 205 of the

Unfunded Mandates Act also requires

an agency to identify and consider a

reasonable number of regulatory

alternatives before promulgating a rule.

OTS has determined that the final rule

will not result in expenditures by state,

local, or tribal governments or by the

private sector of $100 million or more.

Accordingly, this rulemaking is not

subject to section 202 of the Unfunded

Mandates Act.

List of Subjects in 12 CFR Part 502

Assessments, Federal home loan

banks, Reporting and recordkeeping

requirements, Savings associations.

Accordingly, the Office of Thrift

Supervision amends part 502, chapter

V, title 12, Code of Federal Regulations

as set forth below.

PART 502—ASSESSMENTS AND FEES

1. The authority citation for part 502

continues to read as follows:

Authority: 12 U.S.C. 1462a, 1463, 1467,

1467a.

2. Section 502.20 is revised to read as

follows:

§ 502.20 How does OTS determine my

condition component?

OTS uses the following chart to

determine your condition component.

If your component

rating is:

Then your condition

component is:

1 or 2 ......................... Zero.

3 ................................ 50 percent of your

size component.

4 or 5 ......................... 100 percent of your

size component.

Dated: June 13, 2001.

By the Office of Thrift Supervision.

Ellen Seidman,

Director.

[FR Doc. 01–15654 Filed 6–20–01; 8:45 am]

BILLING CODE 6720–01–P

NATIONAL CREDIT UNION

ADMINISTRATION

12 CFR PART 707

Truth in Savings

AGENCY: National Credit Union

Administration (NCUA).

ACTION: Interim final rule with request

for comments.

SUMMARY: NCUA is amending its

regulation that implements the Truth in

Savings Act (TISA). This interim final

rule establishes uniform standards for

the electronic delivery of disclosures

required by TISA. NCUA is also

amending its regulation to address

electronic advertisements. These

amendments conform to the Electronic

Signatures in Global and National

Commerce Act (E-Sign Act).

DATES: This rule is effective June 21,

2001. To allow time for any necessary

operational changes, however, the

mandatory compliance date is October

1, 2001. Comments must be received on

or before August 20, 2001.

ADDRESSES: Comments should be

directed to Becky Baker, Secretary of the

Board. Mail or hand-deliver comments

to: National Credit Union

Administration, 1775 Duke Street,

Alexandria, VA 22314–3428. You may

also fax comments to (703) 518–6319 or

e-mail comments to

regcomments@ncua.gov. Please send

comments by one method only.

FOR FURTHER INFORMATION CONTACT:

Frank S. Kressman, Staff Attorney, at

the above address or telephone: (703)

518–6540.

SUPPLEMENTARY INFORMATION

A. Background

Part 707 of NCUA’s regulations

implements TISA. 12 CFR part 707. The

purpose of part 707 and TISA is to assist

members in making meaningful

comparisons among accounts offered by

credit unions and other financial

institutions. Part 707 and TISA require,

among other things, disclosure of yields,

fees and other terms concerning share

accounts to members at account

opening, upon request, when changes in

terms occur and in periodic statements.

Many of these disclosures must be

written.

In April 2001, The Board of Governors

of the Federal Reserve System (Federal

Reserve) issued an interim rule

amending its Regulation DD, which

implements TISA (April 2001 Interim

Rule). That rule established uniform

standards for the timing and electronic

delivery of disclosures required by TISA

and Regulation DD, and addressed

electronic advertisements. 66 FR 17795

(April 4, 2001). The Federal Reserve has

stated that electronic disclosures can

effectively reduce compliance costs for

financial institutions and allow them to

provide Regulation DD disclosures to

the consumer more efficiently without

adversely affecting consumer

protections. Under that rule, disclosures

may be sent by e-mail to an electronic

address designated by the consumer, or

made available at another location, such

as an Internet web site. If disclosures are

not sent by e-mail, consumers must

receive a notice informing them that

they are available elsewhere. If posted to

a web site, disclosures must be available

for at least 90 days to allow consumers

adequate time to access them. For

disclosures that must be provided before

account opening, consumers are

required to access them before the

account is opened. Under this rule,

financial institutions must make a good

faith attempt to redeliver electronic

disclosures that are returned as

undelivered, using the address

information available in their files.

These amendments conform to the ESign Act. 15 U.S.C. 7001. The E-Sign

Act was enacted in June 2000, to

encourage the continued expansion of

electronic commerce. It generally

provides that electronic documents and

signatures have the same validity as

paper documents and handwritten

signatures. It provides that consumer

disclosures may be provided in

electronic form only if the consumer

affirmatively consents after receiving

information specified in the statute. The

consumer consent provisions in the ESign Act became effective October 1,

2000. Section 101(c)(5) of the E-Sign Act

provides that consumers who gave

consent prior to the effective date are

not subject to those consent

requirements.

In September 1999, before enactment

of the E-Sign Act, the Federal Reserve

issued an interim rule that also

amended Regulation DD (September

1999 Interim Rule). 64 FR 49846

(September 14, 1999). With the issuance

of the April 2001 Interim Rule, the

Federal Reserve has withdrawn the

September 1999 Interim Rule.

TISA requires NCUA to promulgate

regulations substantially similar to those

promulgated by the Federal Reserve

within 90 days of the effective date of

the Federal Reserve’s rules. 12 U.S.C.

4311(b). In doing so, NCUA is to take

into account the unique nature of credit

unions and the limitations under which

they may pay dividends on member

accounts. In compliance with TISA, as

discussed more fully below, NCUA is

issuing this interim final rule with

33160 Federal Register / Vol. 66, No. 120 / Thursday, June 21, 2001 / Rules and Regulations

request for comments that is

substantially similar to the Federal

Reserve’s April 2001 Interim Rule.

B. Interim Final Rule

The NCUA Board is issuing this rule

as an interim final rule because there is

a strong public interest in having in

place consumer oriented rules that are

consistent with those recently

promulgated by the Federal Reserve.

Additionally, as discussed above, NCUA

is statutorily required to issue rules

substantively similar to those of the

Federal Reserve within 90 days of the

effective date of the Federal Reserve’s

rules. Accordingly, for good cause, the

Board finds that, pursuant to 5 U.S.C.

553(b)(3)(B), notice and public

procedures are impracticable,

unnecessary, and contrary to the public

interest; and, pursuant to 5 U.S.C.

553(d)(3), the rule will be effective

immediately and without 30 days

advance notice of publication. Although

the rule is being issued as an interim

final rule and is effective immediately,

the NCUA Board encourages interested

parties to submit comments.

C. Section by Section Analysis

Section 707.3 General Disclosure

Requirements

Section 707.3(a) is revised to reflect

that the disclosures required by the

newly created § 707.10 pertaining to

electronic communications are subject

to the same requirements as other

disclosures required under part 707.

Section 707.3(g) is added to provide a

cross reference to other rules governing

the electronic delivery of disclosures

referenced in the newly created

§ 707.10.

Section 707.4(a)(1) Account

Disclosures—Account-Opening

Credit unions must provide accountopening disclosures to members or

potential members before an account is

opened or a service is provided. Credit

unions may delay delivering these

disclosures if the member is not present

when the account is opened or service

is provided. This section provides that

in such cases, account-opening

disclosures must be mailed or delivered

no later than 20 calendar days after the

account is opened or the service is

provided, whichever is earlier. The

corresponding section in Regulation DD

permits a 10-business day delay. NCUA

amends this provision to conform to the

Federal Reserve’s time frame.

Furthermore, this section is amended

to provide that credit unions may not

delay delivering account-opening

disclosures when an account is opened

by an ‘‘electronic communication’’ as

defined in § 707.10. The Federal Reserve

has determined that the difficulties in

providing disclosures for accounts

opened by mail or telephone are not

present for accounts opened by

electronic communication using visual

text. As a result, required disclosures

must be provided before an account is

opened by an electronic

communication. Neither TISA nor part

707 specifies when an account is

considered opened. Credit unions may

establish policies and procedures to

address after-hours requests to open

accounts to ensure that accurate

disclosures are provided before the

account is deemed opened by the credit

union.

Section 707.4(a)(2) Account

Disclosures—Requests

Section 707.4(a)(2)(i) is revised to

require credit unions to mail or deliver

disclosures in paper form or

electronically to members or potential

members who request them, but who are

not present at the credit union when the

request is made. The credit union has a

reasonable time in which to do this. To

provide disclosures electronically, the

credit union must send the disclosures

to the member’s e-mail address, or send

a notice alerting the member to the

location of the disclosures, such as the

credit union’s web site.

Appendix C—Section 707.4(a)(2)(i)–3—

Timing for Response

Section 707.4(a)(2)(i) does not define

what a ‘‘reasonable time’’ is for

responding to requests for account

information from members who are not

present at the credit union at the time

of the request. Section 707.4(a)(2)(i)–3

in Appendix C to part 707 is revised to

provide that ten business days is a

reasonable time for responding to these

requests.

Appendix C—Section 707.4(a)(2)(i)–4—

Request by Electronic Communication

Section 707.4(a)(2)(i) permits credit

unions to deliver requested disclosures

electronically if the member provides an

e-mail address where the disclosures

may be sent. Section 707.4(a)(2)(i)–4 in

Appendix C to part 707 is added to

clarify that posting disclosures on a

credit union’s web site generally does

not relieve the credit union’s duty to

provide disclosures upon request. If the

member has provided an e-mail address,

the credit union must either send the

disclosures by e-mail or send a notice to

the member pursuant to § 707.10(d)(2)(i)

to inform the member where the

disclosures are posted.

Section 707.6 Periodic Statement

Disclosures

The E-Sign Act permits credit unions

to provide disclosures to members using

electronic communication, if the credit

union complies with Section 101(c) of

that statute. Section 101(c) of the E-Sign

Act requires credit unions to provide

specific information about the electronic

delivery of disclosures and obtain the

member’s affirmative consent to receive

electronic disclosures. As discussed

more fully below, § 707.10(b) is adopted

to set forth the general rule that credit

unions may provide disclosures

electronically only if the credit union

complies with Section 101(c) of the ESign Act. This requirement applies to

periodic statement disclosures.

After the Federal Reserve issued the

September 1999 Interim Rule, NCUA

amended § 707.6 by adding paragraph

(c) to permit credit unions to deliver

periodic statements electronically. 64

FR 66355 (November 26, 1999); 65 FR

21131 (April 20, 2000). With the

adoption of § 707.10(b), however,

§ 707.6(c) is no longer current and is

withdrawn.

Appendix C—Section 707.8(a)—

Misleading or Inaccurate

Advertisements

Stating certain account terms in an

advertisement for a deposit account

triggers the disclosure of additional

terms. If an advertisement using

electronic communication displays a

triggering term, such as ‘‘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 in

close proximity that directly takes the

member to the additional information.

Paragraph (9) is added to § 707.8(a) in

Appendix C to part 707 to reflect this

interpretation.

Appendix C—Section 707.8(b)—

Permissible Rates

Section 707.8(b) generally permits

credit unions to state a dividend rate in

addition to the annual percentage yield

(APY), provided the dividend rate is

stated in conjunction with, but not more

conspicuously than, the APY. For

advertisements using electronic

communications, the member must be

able to view both rates simultaneously.

This requirement is not satisfied if the

member can only view the APY by use

of a link that connects the member to

information appearing at another

location. Paragraph (4) is added to

Federal Register / Vol. 66, No. 120 / Thursday, June 21, 2001 / Rules and Regulations 33161

§ 707.8(b) in Appendix C to part 707 to

reflect this interpretation.

Appendix C—Section 707.8(e)(1)(i)—

Exemption for Certain Advertisements

Section 707.8(e) exempts from some

requirements advertisements made

through broadcast or electronic media,

such as television and radio or outdoor

billboards. This exemption does not

apply to electronic advertisements using

electronic communication, such as

Internet advertisements, because they

do not have the same time and space

constraints as other exempted

advertisements. New paragraph (1) is

added to § 707.8(e)(1)(i) in Appendix C

to part 707 to reflect this interpretation.

Section 707.10(a) Electronic

Communication

Electronic communication is defined

as a message transmitted electronically

between a credit union and a member in

a format that allows visual text to be

displayed on equipment, for example, a

personal computer monitor. Equipment

is not limited to personal computers,

provided the visual display used to

deliver the disclosures meets the ‘‘clear

and conspicuous’’ format requirement

discussed below. Credit unions that

accommodate vision-impaired members

by providing disclosures that do not use

visual text must also provide

disclosures using visual text.

Section 707.10(b) General Rule

The E-Sign Act permits credit unions

to provide disclosures using electronic

communication, if the credit union

complies with the consumer consent

requirements in Section 101(c) of the ESign Act. Section 101(c) requires credit

unions to provide specific information

about the electronic delivery of

disclosures before obtaining the

member’s affirmative consent to receive

electronic disclosures.

The E-Sign Act does not affect any

requirement imposed under TISA other

than a provision that requires

disclosures to be in paper form, nor

does it affect the content or timing of

disclosures. Electronic disclosures are

subject to the format, timing and

retainability rules and the clear and

conspicuous standard of part 707. This

guidance is reflected generally in

§ 707.10(b) in Appendix C to part 707.

Credit unions must provide electronic

disclosures using a clear and

conspicuous format. Also, in accordance

with the E-Sign Act: (1) The credit

union must disclose the requirements

for accessing and retaining disclosures

in that format; (2) the member must

demonstrate the ability to access the

information electronically and

affirmatively consent to electronic

delivery; and (3) the credit union must

provide the disclosures in accordance

with the specified requirements. Except

to the extent required by part 707,

disclosures do not have to be provided

separately from other information.

Electronically delivered disclosures

must comply with existing timing

requirements under TISA and part 707.

Consistent with rules for paper

disclosures, disclosures provided

periodically by e-mail are timely if sent

by the required time. Disclosures posted

at an Internet web site are timely if, by

the required time, the credit union

makes the disclosures available at that

location and sends a notice alerting the

member that the disclosures have been

posted. This guidance is reflected in

§ 707.10(b)(3)(ii) in Appendix C to part

707.

When a credit union permits a

member to open an account on-line, the

member must be required to access

disclosures required by § 707.4 before

the account is opened. A link to the

disclosures satisfies this timing rule if

the member cannot bypass the

disclosure before opening the account,

or the disclosures must automatically

appear on the screen, even if multiple

screens are required to view the entire

disclosure. It is not sufficient for credit

unions to provide a bypassable

navigational tool that gives members the

option of receiving disclosures. This

approach reduces the likelihood that

members will actually receive the

disclosures. This guidance is reflected

in § 707.10(b)(3)(i) in Appendix C to

part 707.

Disclosures required by TISA and part

707 to be in writing must also be in a

form the member can retain. Electronic

disclosures are subject to this same

requirement. This guidance is reflected

in § 707.10(b)(4) in Appendix C to part

707.

A credit union that controls the

equipment providing electronic

disclosures to a member, such as a

computer terminal in the credit union’s

lobby or a public kiosk, must ensure

that the equipment satisfies part 707’s

requirements to provide timely

disclosures in a clear and conspicuous

format and in a form that the member

may keep. For example, if disclosures

are required at the time of an on-line

transaction, the disclosures must be sent

to the member’s e-mail address or must

be posted at another location such as the

credit union’s web site, unless the credit

union provides a printer that

automatically prints the disclosures.

This guidance is reflected in

§ 707.10(b)(5) in Appendix C to part

707.

Section 707.10(c) When Consent Is

Required

Under the E-Sign Act, a member must

give his affirmative consent to receive

from the credit union electronic

disclosures ‘‘relating to a transaction’’

that are required to be in writing by law

or regulation. Section 707.10(c) provides

that disclosures related to

advertisements (§ 707.8) and those that

are provided upon request (§ 707.4(a)(2))

are deemed not to be ‘‘related to a

transaction’’ for purposes of this consent

requirement.

Section 707.10(d)(1) Address or

Location To Receive Electronic

Communication.

Credit unions may deliver electronic

disclosures to a member’s e-mail

address or make them available at

another location such as a web site. If

the credit union makes a disclosure

available at such a location, it

effectively delivers the disclosure by

sending a notice alerting the member

when the disclosure can be accessed

and making it available for at least 90

days.

For purposes of § 707.10(d), a

member’s electronic address is an e-mail

address that is not limited to receiving

communications transmitted solely by

the credit union. This guidance is

reflected in § 707.10(d) in Appendix C

to part 707. An electronic address

would not include systems that permit

communication only between the

member and the credit union, such as a

home-banking program that allows a

member to communicate directly with

the credit union on-line with the use of

a computer and modem. These systems,

like a credit union’s web site accessed

via the Internet, give members access to

account information at a location

controlled by the credit union. In both

instances, the credit union determines

how long disclosures will be available

to the member. Members who receive

disclosures at their e-mail addresses,

however, may choose when to review,

and for how long to retain, account

information. Members who receive

disclosures by contacting a credit

union’s web site, however, also need to

be alerted when the information is first

available to ensure that they have the

opportunity to access the information

before it is removed. Accordingly,

disclosures provided using systems

such as home-banking programs are

treated in the same manner as

disclosures made available at a web site.

They require a notice to alert the

member when disclosures are posted

and the notice must be sent by e-mail or

33162 Federal Register / Vol. 66, No. 120 / Thursday, June 21, 2001 / Rules and Regulations

to a postal address, at the credit union’s

option.

Section 707.10(d)(2)(i) Identifying the

Account

Section 707.10(d)(2)(i) requires that

the alert notice discussed above identify

the account involved and the address or

other location where the disclosure is

available. Section 707.10(d)(2)-1 in

Appendix C to part 707 provides

guidance on the level of detail required

in identifying the account.

Section 707.10(d)(2)(ii) 90-Day Rule

Section 707.10(d)(2)(ii) requires that

disclosures provided at a web site must

remain available for at least 90 days.

This helps ensure that members have

adequate time to access and retain a

disclosure under a variety of

circumstances, such as when a member

may not be able for an extended period

of time to access the information due to

computer malfunctions, travel, or

illness. The 90-day period is uniform for

all disclosures, for ease of compliance.

Section 707.10(d)(2)-2 in Appendix C to

part 707 provides that while disclosures

must be available for the entire 90-day

period, the credit union has the

discretion to determine whether they

should be available at the same location

for the entire period.

Section 707.10(d)(3) Exceptions

Section 707.10(d)(3) clarifies that the

requirements of § 707.10(d)(2)(i) and (ii)

do not apply to disclosures in certain

advertisements (§ 707.8), and the

requirements of § 707.10(d)(2)(ii) do not

apply to disclosures made available

upon a member’s request(§ 707.4(a)).

Section 707.10(e) Redelivery

Part 707 does not require a credit

union to verify that electronic

disclosures it has sent were actually

received by its members. The cost and

burden of doing so would not be

warranted. When electronic disclosures

are returned undelivered, however,

§ 707.10(e) imposes a duty on the credit

union to attempt redelivery (either

electronically or to a postal address)

based on information in the credit

union’s own files. Where a credit union

actually knows that the delivery of an

electronic disclosure did not take place,

the credit union should take reasonable

steps to effectuate delivery in some way.

For example, if an e-mail message to a

member containing an alert notice or

other disclosure is returned as

undeliverable, the credit union satisfies

the redelivery requirement if it sends

the disclosure to a different e-mail

address or postal address that it has on

file. Sending the disclosure a second

time to the same electronic address

would not be sufficient if the credit

union has a different address for the

member on file. Section 707.10(e)-1 in

Appendix C to part 707 provides this

guidance.

This redelivery requirement is limited

to instances where the electronic

communication has not been delivered.

It does not apply to instances where the

disclosure is delivered but cannot be

read by the member due to technical

problems with the member’s software. A

credit union will have complied with

timing requirements for sending a

disclosure when the disclosure is

initially sent in a timely manner, even

though it is returned undelivered and

the credit union is required to take

reasonable steps to attempt redelivery.

Section 707.10(f) Entities Other Than a

Credit Union

Section 707.10(f) provides that a

person other than a credit union that is

required to comply with part 707 may

use electronic communication in

accordance with the requirements of

§ 707.10, as applicable.

D. Regulatory Procedures

Regulatory Flexibility Act

The Regulatory Flexibility Act

requires NCUA to prepare an analysis to

describe any significant economic

impact agency rulemaking may have on

a substantial number of small credit

unions. For purposes of this analysis,

credit unions under $1 million in assets

are considered small credit unions.

This interim final rule provides credit

unions with the flexibility of using an

optional and alternative method of

delivering certain required disclosures.

Credit unions are free to choose not to

utilize this alternative. Credit unions

that choose to use this alternative will

likely realize a reduction in their costs

of delivery as a result. The NCUA has

determined and certifies that this

interim final rule will not have a

significant economic impact on a

substantial number of small credit

unions. Accordingly, the NCUA has

determined that a Regulatory Flexibility

Analysis is not required.

Paperwork Reduction Act

NCUA has determined that these

amendments to part 707 do not increase

paperwork requirements under the

Paperwork Reduction Act of 1995 and

regulations of the Office of Management

and Budget.

Executive Order 13132

Executive Order 13132 encourages

independent regulatory agencies to

consider the impact of their regulatory

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. This interim

final rule applies to all federally-insured

credit unions, but does not have

substantial direct effect on the states, on

the relationship between the national

government and the states, or on the

distribution of power and

responsibilities among the various

levels of government. NCUA has

determined that this interim final rule

does not constitute a policy that has

federalism implications for purposes of

the executive order.

Assessment of Federal Regulations and

Policies on Families

NCUA has determined that this rule

will not affect family well-being within

the meaning of Section 654 of the

Treasury and General Government

Appropriations Act, 1999, Pub. L. 105–

277, 112 Stat. 2681 (1998).

Small Business Regulatory Enforcement

Fairness Act

The Small Business Regulatory

Enforcement Fairness Act of 1996 (Pub.

L. 104–121) provides generally for

congressional review of agency rules. A

reporting requirement is triggered in

instances where NCUA issues a final

rule as defined by Section 551 of the

Administrative Procedure Act. 5 U.S.C.

551. The Office of Management and

Budget has determined that this rule is

not a major rule for purposes of the

Small Business Regulatory Enforcement

Fairness Act of 1996.

List of Subjects 12 CFR Part 707

Advertising, Consumer protection,

Credit unions, Reporting and

recordkeeping requirements, Truth in

savings.

By the National Credit Union

Administration Board on June 14, 2001.

Becky Baker,

Secretary of the Board.

For the reasons stated above, NCUA

amends 12 CFR part 707 as follows:

PART 707—TRUTH IN SAVINGS

1. The authority citation for part 707

continues to read as follows:

Authority: 12 U.S.C. 4301 et seq.

2. Section 707.3 is amended by

revising paragraph (a) and adding a new

paragraph (g) to read as follows:

§ 707.3 General disclosure requirements.

(a) Form. Credit unions must make

the disclosures required by §§ 707.4

Federal Register / Vol. 66, No. 120 / Thursday, June 21, 2001 / Rules and Regulations 33163

through 707.6 and § 707.10 of this part,

as applicable, clearly and

conspicuously, in writing, and in a form

the member or potential member may

keep. 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’s account.

* * * * *

(g) Electronic communication. For

rules governing the electronic delivery

of disclosures, including the definition

of electronic communication, see

§ 707.10.

3. Section 707.4 is amended by

revising paragraph (a)(1) and paragraph

(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 the 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) Electronic communication. If a

member or potential member who is not

present at the credit union uses

electronic communication (as defined in

§ 707.10) to open an account or request

a service, the disclosures required under

paragraph (a)(1) of this section must be

provided before an account is opened or

a service is provided.

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

provide account disclosures to a

member or potential member upon

request. If a 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 provides

an electronic mail address.

* * * * *

4. Section 707.6 is amended by

removing paragraph (c).

5. Add a new § 707.10 to read as

follows:

§ 707.10 Electronic communication.

(a) Definition. Electronic

communication means a message

transmitted electronically between a

credit union and a member in a format

that allows visual text to be displayed

on equipment, for example, a personal

computer monitor.

(b) General rule. In accordance with

the Electronic Signatures in Global and

National Commerce Act (the E-Sign Act)

(15 U.S.C. 7001 et seq.) and the rules of

this part, a credit union may provide by

electronic communication any

disclosure required by this part to be in

writing.

(c) When consent is required. Under

the E-Sign Act, a credit union must

obtain a member’s affirmative consent

when providing disclosures related to a

transaction. For purposes of this

requirement, the disclosures required

under §§ 707.4(a)(2) and 707.8 are

deemed not to be related to a

transaction.

(d) Address or location to receive

electronic communication. A credit

union that uses electronic

communication to provide disclosures

required by this part must:

(1) Send the disclosure to the

member’s electronic address; or

(2) Make the disclosure available at

another location such as an Internet web

site; and

(i) Alert the member of the

disclosure’s availability by sending a

notice to the member’s electronic

address (or to a postal address, at the

credit union’s option). The notice must

identify the account involved (if

applicable) and the address of the

Internet web site or other location where

the disclosure is available; and

(ii) Make the disclosure available for

at least 90 days from the date the

disclosure first becomes available or

from the date of the notice alerting the

member of the disclosure, whichever

comes later.

(3) Exceptions. A credit union need

not comply with paragraph (d)(2)(ii) of

this section for disclosures required

under § 707.4(a)(2), and need not

comply with paragraphs (d)(2)(i) and (ii)

of this section for disclosures required

under § 707.8.

(e) Redelivery. When a disclosure

provided by electronic communication

is returned to a credit union

undelivered, the credit union must take

reasonable steps to attempt redelivery

using information in its files.

(f) Entities other than a credit union.

A person other than a credit union that

is required to comply with this part may

use electronic communication in

accordance with the requirements of

this section, as applicable.

6. In Appendix C to part 707, the

following amendments are made:

a. Under Section 707.2 Definitions,

under (t) Periodic statement, paragraph

2.ii. is removed and paragraph 2.iii. is

redesignated as paragraph 2.ii.

b. Under Section 707.4 Account

disclosures, under (a)(2) Requests,

under (a)(2)(i), paragraph 3. is revised

and a new paragraph 4. is added.

c. Under Section 707.8 Advertising,

under (a) Misleading or inaccurate

advertisements, a new paragraph 9. is

added.

d. Under Section 707.8 Advertising,

under (b) Permissible rates, a new

paragraph 4. is added.

e. Under Section 707.8 Advertising,

under (e)(1) Certain media, under

(e)(1)(i), a new paragraph 2 is added.

f. A new Section 707.10,

Requirements for electronic

communication, is added after Section

707.9.

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 do not make in person, including

requests made by electronic communication.

4. Requests by electronic communication.

Posting disclosures on a credit union’s web

site generally does not relieve the credit

union’s duty to provide disclosures upon

request. If the member provides an e-mail

address, the credit union may provide the

disclosures electronically, but the credit

union must either send the disclosures by email or send a notice to the member’s e-mail

address pursuant to § 707.10(d)(2)(i) to

inform the member where the disclosures are

posted.

* * * * *

Section 707.8—Advertising

(a) Misleading or Inaccurate Advertisements

* * * * *

9. Electronic advertising. If an

advertisement using electronic

communication 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.

(b) Permissible Rates

* * * * *

33164 Federal Register / Vol. 66, No. 120 / Thursday, June 21, 2001 / Rules and Regulations

4. Electronic communication. A dividend

rate may be stated only if it is provided in

conjunction with, but not more

conspicuously than, the annual percentage

yield to which it relates. In an advertisement

using electronic communication, the member

must be able to view both rates

simultaneously. This requirement is not

satisfied if the member can view the annual

percentage yield only by use of a link that

connects the member to information

appearing at another location.

* * * * *

(e)(1) Certain Media

(e)(1)(i)

2. Internet advertisements. The exemption

for advertisements made through broadcast

or electronic media does not extend to

advertisements made by electronic

communication, such as advertisements

posted on the Internet or sent by e-mail.

* * * * *

Section 707.10—Electronic Communication

(b) General Rule

1. Relationship to the E-Sign Act. The ESign Act authorizes the use of electronic

disclosures. It does not affect any

requirement imposed under this part other

than a provision that requires disclosures to

be in paper form, and it does not affect the

content or timing of disclosures. Electronic

disclosures are subject to the regulation’s

format, timing, and retainability rules and the

clear and conspicuous standard. For

example, to satisfy the clear and conspicuous

standard for disclosures, electronic

disclosures must use visual text.

2. Clear and conspicuous standard. A

credit union must provide electronic

disclosures using a clear and conspicuous

format. Also, in accordance with the ESignAct:

i. The credit union must disclose the

requirements for accessing and retaining

disclosures in that format;

ii. The member must demonstrate the

ability to access the information

electronically and affirmatively consent to

electronic delivery; and

iii. The credit union must provide the

disclosures in accordance with the specified

requirements.

3. Timing and effective delivery.

i. When a member opens an account online. When a member opens an account online, the member must be required to access

the disclosures required under § 707.4 before

the account is opened or a service is

provided, whichever is earlier. A link to the

disclosures satisfies the timing rule if the

member cannot bypass the disclosures before

opening the account. Or the disclosures in

this example must automatically appear on

the screen, even if multiple screens are

required to view the entire disclosure. The

credit union is not required to confirm that

the member has read the disclosure.

ii. For disclosures provided periodically.

Disclosures provided by mail are timely

based on when the disclosures are sent.

Disclosures posted at an Internet web site,

such as periodic statements or change-interms and other notices, are timely when the

credit union has both made the disclosures

available and sent a notice alerting the

member that the disclosures have been

posted. For example, under § 707.5, credit

unions must give advance notice to affected

members at least 30 calendar days in advance

of certain changes. For a change in terms

notice posted on the Internet, a credit union

must both post the notice and notify

members of its availability at least 30 days in

advance of the change.

4. Retainability of disclosures. Credit

unions satisfy the requirement that

disclosures be in a form that the member may

keep if electronic disclosures are delivered in

a format that is capable of being retained

(such as by printing or storing electronically).

The format must also be consistent with the

information required to be provided under

Section 101(c)(1)(C)(i) of the E-Sign Act, 15

U.S.C. 7001(c)(1)(C)(i)), about the hardware

and software requirements for accessing and

retaining electronic disclosures.

5. Disclosures provided on credit union’s

equipment. A credit union that controls the

equipment providing electronic disclosures

to members (for example, a computer

terminal located in a credit union’s lobby or

at a public kiosk) must ensure that the

equipment satisfies the regulation’s

requirements to provide timely disclosures in

a clear and conspicuous format and in a form

that the member may keep. For example, if

disclosures are required at the time of an online transaction, the disclosures must be sent

to the member’s e-mail address or must be

posted at another location such as the credit

union’s Internet web site, unless the credit

union provides a printer that automatically

prints the disclosures.

(d) Address Or Location To Receive

Electronic Communication

(d)(1)

1. Electronic address. A member’s

electronic address is an e-mail address that

is not limited to receiving communications

transmitted solely by the credit union.

(d)(2)

1. Identifying account involved. A credit

union may identify a specific account in a

variety of ways and is not required to identify

an account by reference to the account

number. For example, where the member has

only one share account, and no confusion

would result, the credit union may refer to

‘‘your share account.’’ If the member has two

accounts, the credit union may, for example,

differentiate accounts by using terms such as

‘‘primary account’’ and ‘‘secondary account’’

or by using a truncated account number.

2. 90-day rule. The actual disclosures

provided to a member must be available for

at least 90 days, but the credit union has

discretion to determine whether they should

be available at the same location for the

entire period.

(e) Redelivery

1. E-mail returned as undeliverable. If an

e-mail to the member (containing an alert

notice or other disclosure) is returned as

undeliverable, the redelivery requirement is

satisfied if, for example, the credit union

sends the disclosure to a different e-mail

address or postal address that the credit

union has on file for the member. Sending

the disclosures a second time to the same

electronic address is not sufficient if the

credit union has a different address for the

member on file.

[FR Doc. 01–15471 Filed 6–20–01; 8:45 am]

BILLING CODE 7535–01–U

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. 2000–NE–15–AD; Amendment

39–12275; AD 2001–12–19]

RIN 2120–AA64

Airworthiness Directives; Turbomeca

S.A. Artouste II and Artouste III Series

Turboshaft Engines

AGENCY: Federal Aviation

Administration, DOT.

ACTION: Final rule.

SUMMARY: This amendment adopts a

new airworthiness directive (AD), that is

applicable to Turbomeca S.A. Artouste

II and Artouste III series turboshaft

engines. This amendment requires

installation of modification TU 24, TU

167, or TU 164, depending on the

specific engine series. These

modifications will prevent

uncommanded partial closing or total

closing of the electrical fuel cock, which

will prevent uncommanded in-flight

engine shutdown. From the effective

date of this AD, and until the

modification is installed, this

amendment will also limit the duration

of the engine operating cycle. This

amendment is prompted by reports of

unexpected power loss during test

flights. The actions specified by this AD

are intended to prevent unexpected

power loss, which could result in an

uncommanded in-flight engine

shutdown, autorotation, and forced

landing.

DATES: Effective date July 26, 2001. The

incorporation by reference of certain

publications listed in the regulations is

approved by the Director of the Federal

Register as of July 26, 2001.

ADDRESSES: The service information

referenced in this AD may be obtained

from Turbomeca S.A, Turbomeca

S.A.64511 Bordes Cedex, France;

telephone 33 05 59 64 40 00, fax 33 05

59 64 60 80. This information may be

examined at the FAA, New England

Region, Office of the Regional Counsel,

12 New England Executive Park,

Burlington, MA., or at the Office of the

Federal Register, 800 North Capitol

Street, NW., suite 700, Washington, DC.