[Federal Register: December 14, 2007 (Volume 72, Number 240)]
[Rules and Regulations]
[Page 71056-71057]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14de07-2]
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FEDERAL RESERVE SYSTEM
12 CFR Part 202
[Regulation B; Docket No. R-1281]
Equal Credit Opportunity
AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Final rule; technical amendment.
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SUMMARY: The Board is revising the official staff commentary to
Regulation B, which implements the Equal Credit Opportunity Act, to
clarify an amendment published on November 9, 2007. The clarification
and the earlier amendment relate to the electronic delivery of
disclosures under Regulation B.
DATES: The amendment is effective January 14, 2008. The mandatory
compliance date is October 1, 2008.
FOR FURTHER INFORMATION CONTACT: John C. Wood, Counsel, Division of
Consumer and Community Affairs, at (202) 452-2412 or (202) 452-3667.
For users of Telecommunications Device for the Deaf (TDD) only, contact
(202) 263-4869.
SUPPLEMENTARY INFORMATION:
I. Background
The Equal Credit Opportunity Act (ECOA), 15 U.S.C. 1691 et seq.,
makes it unlawful for creditors to discriminate in any aspect of a
credit transaction on the basis of sex, race, color, religion, national
origin, marital status, or age (provided the applicant has the capacity
to contract), because all or part of an applicant's income derives from
public assistance, or because an applicant has in good faith exercised
any right under the Consumer Credit Protection Act. The Board's
Regulation B (12 CFR part 202) implements the ECOA. The ECOA and
Regulation B require certain disclosures to be provided to applicants,
and some of those disclosures must be provided in writing.
The Electronic Signatures in Global and National Commerce Act (the
E-Sign Act), 15 U.S.C. 7001 et seq., was enacted in 2000. The E-Sign
Act provides that electronic documents and electronic signatures have
the same validity as paper documents and handwritten signatures. The E-
Sign Act contains special rules for the use of electronic disclosures
in consumer transactions. Under the E-Sign Act, consumer disclosures
required by other laws or regulations to be provided or made available
in writing may be provided or made available, as applicable, in
electronic form if the consumer affirmatively consents after receiving
a notice that contains certain information specified in the statute,
and if certain other conditions are met.
Recently the Board published amendments to Regulation B and the
official staff commentary to the regulation to provide guidance on the
use of electronic disclosures, consistent
[[Page 71057]]
with the E-Sign Act (72 FR 63,445, November 9, 2007). The amendments
take effect on a mandatory basis on October 1, 2008. The Board has
received questions about one aspect of the official staff commentary
accompanying the November 2007 amendments to Regulation B. The Board is
now issuing this clarification to the staff commentary to address the
questions raised.
II. The November 2007 Final Rule
Under the Board's November 2007 final rule, creditors may provide
certain disclosures required by Regulation B in electronic form without
obtaining the consumer's consent pursuant to the E-Sign Act. These
include the disclosures required in some circumstances to accompany a
credit application (set forth in Sec. Sec. 202.5, 202.13, and 202.14).
Many creditors that commented on the Board's proposed rules, which were
published for comment in April 2007, urged that they be permitted to
provide these disclosures in paper form in appropriate cases, even when
the application is accessed by the consumer electronically. They noted
that a consumer or creditor's employee might complete an electronic
application by entering information at a terminal or kiosk located in
the creditor's office and that paper disclosures would be more
appropriate in such cases. In response to the commenters' concerns, the
November 2007 final rule states that if an application is accessed by
the consumer in electronic form, the required application-related
disclosures may (rather than must) be provided in electronic form on or
with the application. See 12 CFR 202.4(d)(2).
Because the regulation allows disclosures to be given in either
paper or electronic form when consumers access an application
electronically, the Board also revised the commentary to Regulation B
to provide examples of how creditors can satisfy the requirement that
the disclosures be ``on or with'' the application in particular
circumstances. As revised, the commentary reflects that where a
consumer accesses and submits an application form using a home computer
via the creditor's Web site, the creditor must provide the disclosures
electronically with the application form on the Web site to provide
disclosures in a timely manner on or with the application. If the
creditor instead mailed paper disclosures to the consumer, the
disclosures would not be timely and would not be provided on or with
the application. In contrast, if a consumer is physically present in
the creditor's office, and accesses and submits an electronic
application--such as via a terminal or kiosk--the revised commentary
notes that the creditor could use paper disclosures to comply with the
timing and delivery requirements of the regulation (``on or with'').
See comment 4(d)-2. For example, a loan officer could give the
disclosures to the consumer in paper form, or in the case of an
unattended kiosk, the kiosk could have a printer and provide paper
disclosures.
III. Revisions to the Staff Commentary
Following publication of the November 2007 final rule, questions
have been raised about other situations where creditors could provide
paper disclosures in a timely manner to consumers accessing a credit
application electronically, even though the consumers are not
physically present in the creditor's office. For example, consumers
might access a credit application using an electronic terminal or kiosk
on the premises of the creditor's affiliate or a third party (such as a
retail store) that has arranged with the creditor to provide
applications to consumers. In these cases, consumers could receive
paper disclosures with the credit application in the same manner as in
the creditor's own office. This is consistent with the revised
regulation and the Board's intent in issuing the November 2007 final
rule. Accordingly, the Board is revising comment 4(d)-2 to clarify that
these are additional examples where paper disclosures would satisfy the
rule's requirements for providing disclosures ``on or with'' the
application.
The Board is issuing this commentary revision in final form. Under
the Administrative Procedure Act, 5 U.S.C. 551 et seq., publication of
a notice of proposed rulemaking is not required for interpretative
rules, general statements of policy, or rules of agency organization,
procedure, or practice. 5 U.S.C. 553(b)(A). In this case, the Board has
determined that the public notice and comment provisions do not apply
to this rulemaking because the revisions are interpretative rules. The
commentary revision does not establish new regulatory requirements and
merely clarifies, through additional examples, how creditors can meet
the existing requirement for providing disclosures ``on or with''
applications in particular circumstances. Moreover, the commentary
revision provides creditors with an expanded safe harbor for complying
with the rule by allowing them to use either paper or electronic
disclosures in the circumstances described, consistent with the public
comments previously received by the Board. The changes, therefore, meet
the requirements for exemption from notice and comment in 5 U.S.C.
553(b)(A).
List of Subjects in 12 CFR Part 202
Aged, Banks, Banking, Civil rights, Credit, Federal Reserve System,
Marital status discrimination, Penalties, Religious discrimination,
Reporting and recordkeeping requirements, Sex discrimination.
0
For the reasons set forth in the preamble, the Board amends the
Official Staff Commentary to Regulation B, 12 CFR part 202, as set
forth below:
PART 202--EQUAL CREDIT OPPORTUNITY (REGULATION B)
0
1. The authority citation for part 202 continues to read as follows:
Authority: 15 U.S.C. 1691-1691f.
0
2. In Supplement I to part 202, in Section 202.4--General Rules, under
Paragraph (4)(d), paragraph 2 is revised, to read as follows:
SUPPLEMENT I TO PART 202--OFFICIAL STAFF INTERPRETATIONS
* * * * *
Section 202.4 General Rules
* * * * *
Paragraph (4)(d).
* * * * *
2. Form of disclosures. Whether the disclosures required to be
on or with an application must be in electronic form depends upon
the following:
i. If an applicant accesses a credit application electronically
(other than as described under ii below), such as online at a home
computer, the creditor must provide the disclosures in electronic
form (such as with the application form on its website) in order to
meet the requirement to provide disclosures in a timely manner on or
with the application. If the creditor instead mailed paper
disclosures to the applicant, this requirement would not be met.
ii. In contrast, if an applicant is physically present in the
creditor's office, and accesses a credit application electronically,
such as via a terminal or kiosk (or if the applicant uses a terminal
or kiosk located on the premises of an affiliate or third party that
has arranged with the creditor to provide applications to
consumers), the creditor may provide disclosures in either
electronic or paper form, provided the creditor complies with the
timing, delivery, and retainability requirements of the regulation.
* * * * *
By order of the Board of Governors of the Federal Reserve
System, acting through the Director of the Division of Consumer and
Community Affairs under delegated authority, December 11, 2007.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. E7-24221 Filed 12-13-07; 8:45 am]
BILLING CODE 6210-01-P