[Federal Register Volume 64, Number 177 (Tuesday, September 14, 1999)]
[Proposed Rules]
[Pages 49688-49699]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-23137]
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Proposed Rules
Federal Register
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This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 64, No. 177 / Tuesday, September 14, 1999 /
Proposed Rules
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FEDERAL RESERVE SYSTEM
12 CFR Part 202
[Regulation B; Docket No. R-1040]
Equal Credit Opportunity
AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Proposed rule.
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SUMMARY: The Board is requesting comment on proposed revisions to
Regulation B, which implements the Equal Credit Opportunity Act. The
Board previously published a proposed rule that permits creditors to
use electronic communication (for example, communication via personal
computer and modem) to provide disclosures required by the act and
regulation, if the applicant agrees to such delivery. (A similar rule
was also proposed under various other consumer financial services
regulations administered by the Board.) In response to comments
received on the proposals, the Board is publishing for comment an
alternative proposal on the electronic delivery of disclosures,
together with proposed commentary that would provide further guidance
on electronic communication issues. The Board is also publishing for
comment proposed revisions to allow disclosures in other languages.
DATES: Comments must be received by October 29, 1999.
ADDRESSES: Comments, which should refer to Docket No. R-1040, may be
mailed to Ms. Jennifer J. Johnson, Secretary, Board of Governors of the
Federal Reserve System, 20th Street and Constitution Avenue, NW,
Washington, DC 20551. Comments addressed to Ms. Johnson may also be
delivered to the Board's mail room between 8:45 a.m. and 5:15 p.m.
weekdays, and to the security control room at all other times. The mail
room and the security control room, both in the Board's Eccles
building, are accessible from the courtyard entrance on 20th Street
between Constitution Avenue and C Street, NW. Comments may be inspected
in room MP-500 between 9:00 a.m. and 5:00 p.m., pursuant to
Sec. 261.12, except as provided in Sec. 261.14 of the Board's Rules
Regarding the Availability of Information, 12 CFR 261.12 and 261.14.
FOR FURTHER INFORMATION CONTACT: Jane E. Ahrens, Senior Counsel, or
Natalie E. Taylor, Staff Attorney, Division of Consumer and Community
Affairs, at (202) 452-3667 or (202) 452-2412. Users of
Telecommunications Device for the Deaf (TDD) only, contact Diane
Jenkins at (202) 452-3544.
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, 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 act.
The ECOA and Regulation B require a number of disclosures to be
provided in writing, presuming that creditors provide paper documents.
Under many laws that call for information to be in writing, information
in electronic form is considered to be ``written.'' Information
produced, stored, or communicated by computer is also generally
considered to be a writing, where visual text is involved.
In May 1996, the Board revised Regulation E (Electronic Fund
Transfers) following a comprehensive review. During that process, the
Board determined that electronic communication for delivery of
information required by federal laws governing financial services could
effectively reduce compliance costs without adversely affecting
consumer protections. Consequently, the Board simultaneously issued a
proposed rule to permit financial institutions to use electronic
communication to deliver disclosures that Regulation E requires to be
given in writing. (61 FR 19696, May 2, 1996.) The 1996 proposal
required that disclosures be provided in a form the consumer may
retain, a requirement that institutions could satisfy by providing
information in a format that may be printed or downloaded. The proposed
rule also allowed consumers to request a paper copy of a disclosure for
up to one year after its original delivery.
Following a review of the comments, on March 25, 1998, the Board
issued an interim rule under Regulation E (the ``interim rule''), 63 FR
14528. The Board also published proposals under Regulations DD (Truth
in Savings), 63 FR 14533, M (Consumer Leasing), 63 FR 14538, Z (Truth
in Lending), 63 FR 14548, and B (Equal Credit Opportunity), 63 FR
14552, (collectively, the ``March 1998 proposed rules''). The rules
would apply to financial institutions, creditors, lessors, and other
entities that are required to give disclosures to consumers and others.
(For ease of reference, this background section uses the terms
``financial institutions,'' ``institutions,'' and ``consumers.'') The
interim rule and the March 1998 proposed rules were similar to the May
1996 proposed rule; however, they did not require financial
institutions to provide paper copies of disclosures to a consumer upon
request if the consumer previously agreed to receive disclosures
electronically. The Board believed that most institutions would
accommodate consumer requests for paper copies when feasible or
redeliver disclosures electronically; and the Board encouraged
financial institutions to do so.
The March 1998 proposed rules and the interim rule permitted
financial institutions to provide disclosures electronically if the
consumer agreed, with few other requirements. The rule was intended to
provide flexibility and did not specify any particular method for
obtaining a consumer's agreement. Whether the parties had an agreement
would be determined by state law. The proposals and the interim rule
did not preclude a financial institution and a consumer from entering
into an agreement electronically, nor did they prescribe a formal
mechanism for doing so.
The Board received approximately 200 written comments on the
interim rule and the March 1998 proposed rules. The majority of
comments were submitted by financial institutions and their trade
associations. Industry commenters generally supported the use of
electronic communication to deliver
[[Page 49689]]
information required by the ECOA and Regulation B. Nevertheless, many
sought specific revisions and additional guidance on how to comply with
the disclosure requirements in particular transactions and
circumstances.
Industry commenters were especially concerned about the condition
that a consumer had to ``agree'' to receive information by electronic
communication, because the rule did not specify a method for
establishing that an ``agreement'' was reached. These commenters
believed that relying on state law created uncertainty about what
constitutes an agreement and, therefore, potential liability for
noncompliance. To avoid uncertainty over which state's laws apply, some
commenters urged the Board to adopt a federal minimum standard for
agreements or for informed consent to receive disclosures by electronic
communication. These commenters believed that such a standard would
avoid the compliance burden associated with tailoring legally binding
``agreements'' to the contract laws of all jurisdictions where
electronic communication may be sent.
Consumer advocates generally opposed the March 1998 interim rule
and proposed rules. Without additional safeguards, they believed,
consumers may not be provided with adequate information about
electronic communication before an ``agreement'' is reached. They also
believed that promises of lower costs could induce consumers to agree
to receive disclosures electronically without a full understanding of
the implications. To avoid such problems, they urged the Board, for
example, either to require institutions to disclose to consumers that
their account with the institution will not be adversely affected if
they do not agree to receive electronic disclosures, or to permit
institutions to offer electronic disclosures only to consumers who
initiate contact with the institution through electronic communication.
They also noted that some consumers will likely consent to electronic
disclosures believing that they have the technical capability to
retrieve information electronically, but might later discover that they
are unable to do so. They questioned consumers' willingness and ability
to access and retain disclosures posted on Internet websites, and
expressed their apprehension that the goals of federally mandated
disclosure laws will be lost.
Consumer advocates and others were particularly concerned about the
use of electronic disclosures in connection with home-secured loans and
certain other transactions that consumers typically consummate in
person (citing as examples automobile loans and leases, short-term
``payday'' loans, or home improvement financing contracts resulting
from door-to-door sales). They asserted that there is little benefit to
eliminating paper disclosures in such transactions and that allowing
electronic disclosures in those cases could lead to abusive practices.
Accordingly, consumer advocates and others believed that paper
disclosures should always accompany electronic disclosures in mortgage
loans and certain other transactions, and that consumers should have
the right to obtain paper copies of disclosures upon request for all
types of transactions (deposit account, credit card, loan or lease, and
other transactions).
A final issue raised by consumer advocates was the integrity of
disclosures sent electronically. They stated that there may be
instances when the consumer and the institution disagree on the terms
or conditions of an agreement and consumers may need to offer
electronic disclosures as proof of the agreed-upon terms and to enforce
rights under consumer protection laws. Thus, to assure that electronic
documents have not been altered and that they accurately reflect the
disclosures originally sent, consumer advocates recommended that the
Board require that electronic disclosures be authenticated by an
independent third party.
The Board's Consumer Advisory Council considered the electronic
delivery of disclosures in 1998 and again in 1999. Many Council members
shared views similar to those expressed in written comment letters on
the 1998 proposals. For example, some Council members expressed concern
that the Board was moving too quickly in allowing electronic
disclosures for certain transactions, and suggested that the Board
might go forward with electronic disclosures for deposit accounts while
proceeding more slowly on credit and lease transactions. Others
expressed concern about consumer access and consumers' ability to
retain electronic disclosures. They believed that, without specific
guidance from the Board, institutions would provide electronic
disclosures without knowing whether consumers could retain or access
the disclosures, and without establishing procedures to address
technical malfunctions or nondelivery. The Council also discussed the
integrity and security of electronic documents.
II. Overview of Proposed Revisions
Based on a review of the comments and further analysis, the Board
is requesting comment on a modified proposed rule that is more detailed
than the interim rule and March 1998 proposed rules. It is intended to
provide specific guidance for creditors that choose to use electronic
communication to comply with Regulation B's requirements to provide
written disclosures, and to ensure effective delivery of disclosures to
applicants through this medium. Though detailed, the proposal provides
flexibility for compliance with the electronic communication rules. The
modified proposal recognizes that some disclosures may warrant
different treatment under the rule. Where written disclosures are made
to consumers who are transacting business in person, these disclosures
generally would have to be made in paper form. The modified proposal
for Regulation B would not contain this in-person exception as the
Board does not believe the exception is necessary given the timing and
delivery provision for providing information, as discussed below under
4(e)(2).
The Board is soliciting comment on a modified approach that
addresses both industry and consumer group concerns. Under the
proposal, creditors would have to provide specific information about
how the applicant can receive and retain electronic disclosures--
through a standardized disclosure statement--before obtaining
applicants' acceptance of such delivery, with some exceptions. If they
satisfy these requirements and obtain applicants' affirmative consent,
creditors would be permitted to use electronic communication. As a
general rule a creditor would be permitted to offer the option of
receiving electronic disclosures to all applicants, whether they
initially contact the creditor by electronic communication or
otherwise.
Creditors would have the option of delivering disclosures to an e-
mail address designated by the applicant or making disclosures
available at another location such as the creditor's website, for
printing or downloading. If the disclosures are posted at a website
location, creditors generally must notify applicants at an e-mail
address about the availability of the information. (Creditors may offer
consumers the option of receiving alert notices at a postal address.)
The disclosures must remain available at that site for 90 days.
Disclosures provided electronically would be subject to a ``clear
and conspicuous'' standard, must be in a form that the applicant can
retain, and would be subject to the format and timing rules in
Regulation B. For example, a creditor that provides electronic
disclosures and denies an applicant's credit request must provide an
electronic adverse action notice
[[Page 49690]]
within 30 days after receiving a completed application.
Creditors generally must provide a means for applicants to confirm
the availability of equipment to receive and retain electronic
disclosure documents. A creditor would not otherwise have a duty to
verify applicants' actual ability to receive, print, or download the
disclosures. Some commenters suggested that creditors should be
required to verify delivery by return receipt. The Board solicits
comment on the need for such a requirement and the feasibility of that
approach.
As previously mentioned, consumer advocates and others have
expressed concerns that electronic documents can be altered more easily
than paper documents. The issue of the integrity and security of
electronic documents affects electronic commerce in general and is not
unique to the written disclosures required under the consumer
protection laws administered by the Board. Applicants' ability to
enforce rights under the consumer protection laws could be impaired in
some cases, however, if the authenticity of disclosures that they
retain cannot be demonstrated. Signatures, notary seals, and other
established verification procedures are used to detect alterations for
transactions memorialized in paper form. The development of similar
devices for electronic communication should reduce uncertainty over
time about the ability to use electronic documents for resolving
disputes.
The Board's rules require creditors to retain evidence of
compliance with Regulation B. Specific comment is solicited on the
feasibility of complying with a requirement that creditors provide
disclosures in a format that cannot be altered without detection, or
have systems in place capable of detecting whether or not information
has been altered, as well as the feasibility of requiring use of
independent certification authorities to verify disclosure documents.
Elsewhere in today's Federal Register, the Board is publishing
similar proposals for comment under Regulations E, M, Z, and DD. In a
separate notice the Board is publishing an interim rule under
Regulation DD, which implements the Truth in Savings Act, to permit
depository institutions to use electronic communication to deliver
disclosures on periodic statements. For ease of reference, the Board
has assigned new docket numbers to the modified proposals published
today.
III. Section-by-Section Analysis
Pursuant to its authority under section 703 of the ECOA, the Board
proposes to amend Regulation B to permit creditors to use electronic
communication to provide disclosures and other information required by
the act and regulation to be in writing. Below is a section-by-section
analysis of the rules for providing disclosures by electronic
communication, including references to proposed commentary provisions.
Section 202.4 General Rules
4(e) Electronic Communication
4(e)(1) Definition. The definition of the term ``electronic
communication'' in the March 1998 proposed rule remains unchanged.
Section 202.4(e)(1) limits the term to a message transmitted
electronically that can be displayed on equipment as visual text, such
as a message that is displayed on a computer monitor screen. Most
commenters supported the term as defined in the March 1998 proposed
rule. Some commenters favored a more expansive definition that would
encompass communications such as audio and voice response telephone
systems. Because the proposal is intended to permit electronic
communication to satisfy the statutory requirement for written
disclosures, the Board believes visual text is an essential element of
the definition.
Commenters asked the Board to clarify the coverage of certain types
of communications. A few commenters asked about communication by
facsimile. Facsimiles are initially transmitted electronically; the
information may be received either in paper form or electronically
through software that allows a consumer to capture the facsimile,
display it on a monitor, and store it on a computer diskette or drive.
Thus, information sent by facsimile may be subject to the provisions
governing electronic communication. When disclosures are sent by
facsimile, a creditor should comply with the requirements for
electronic communication unless it knows that the disclosures will be
received in paper form. Proposed comment 4(e)(1)-1 contains this
guidance.
4(e)(2) Electronic Communication between Creditor and Applicant.
Section 202.4(e)(2) would permit creditors to provide disclosures using
electronic communication, if the creditor complies with provisions in
new Sec. 202.4(e)(3), discussed below.
1. Presenting Disclosures in a Clear and Conspicuous Format
Currently, Regulation B does not expressly require creditors to
present required information in a clear and conspicuous format. In
contrast, Regulations DD (Truth in Savings), E (Electronic Fund
Transfers), M (Consumer Leasing), and Z (Truth in Lending) all require
that information be provided in a clear and conspicuous (or conspicuous
or clear and readily understandable) format. Because clarity
requirements for written disclosures (whether electronic or not) exist
for those regulations, the Board requested comment in the March 1998
proposed rule on whether these requirements should be extended to
electronic communication under Regulation B. Also, the Board recently
issued a proposed rule for Regulation B as part of its periodic review
of regulations. As part of the review, the Board requested comment on
whether the ``clear and conspicuous'' requirement should apply to all--
paper or electronic--disclosures and information required by Regulation
B. (64 FR 44581, August 16, 1999).
Most commenters to the March 1998 proposed rule suggested that the
Board adopt the clear and conspicuous requirement for electronic
communication under Regulation B. These commenters noted that the
requirements for electronic communication should be consistent among
the regulations, and that extension of this requirement to Regulation B
would not be burdensome. A few commenters, however, suggested that
either the Board adopt the clear and conspicuous requirement for all
disclosures under the regulation--paper or electronic--or that it leave
the requirement as it is. They argued that imposing a different
standard for paper and electronic disclosures might result in
applicants receiving disclosures in different formats based on how they
apply for credit and for what product they apply.
The proposal would extend a ``clear and conspicuous'' requirement
to electronic communication under Regulation B, consistent with the
proposed changes to Regulation B discussed above. See Sec. 202.4(d) of
the August 16, 1999 proposed rule for Regulation B (64 FR 44581). The
Board does not intend to discourage or encourage specific types of
technologies. Regardless of the technology, however, disclosures
provided electronically must be presented in a clear and conspicuous
format.
When applicants consent to receive disclosures electronically and
they confirm that they have the equipment to do so, creditors generally
would have no further duty to determine that applicants are able to
receive the
[[Page 49691]]
disclosures. Creditors do have the responsibility of ensuring the
proper equipment is in place in instances where the creditor controls
the equipment. Proposed comment 4(e)(2)-1 contains this guidance.
2. Providing Disclosures in a Form the Applicant May Keep
Currently under Regulation B, only one notice
(Sec. 202.9(a)(3)(i)(B), regarding business credit) must be provided in
a form the applicant may retain. On the other hand, Regulations DD, E,
M, and Z all require that information be provided in a retainable form.
In the March 1998 proposed rule, the Board requested comment on whether
a retainability requirement should be extended to electronic
communication under Regulation B generally.
Most commenters supported a retainability requirement for
electronic communication under Regulation B. These commenters noted
that the requirements for electronic communication should be as
consistent as practicable for all of the regulations, and that
extension of this requirement would not be burdensome. Some commenters,
however, supported leaving the requirement as it is. They believe a
retainability requirement for disclosures sent by electronic
communication would discourage the use of electronic communication by
creating different rules for disclosures sent by mail and those sent by
electronic communication. As part of its August 1999 proposed rule for
Regulation B, discussed above, the Board requested comment on whether a
``retainability'' requirement should apply to all--paper or
electronic--disclosures and information required by Regulation B. See
Sec. 202.4(d) of the August 16, 1999 Regulation B proposed rule (64 FR
44581).
Under the 1998 proposals and interim rule, a creditor would satisfy
the retainability requirement by providing information that can be
printed or downloaded. The modified proposal adopts the same approach
but also provides that the information must be sent to a specified
location to ensure that applicants have an adequate opportunity to
retain the information.
Applicants communicate electronically with creditors through a
variety of means and from various locations. Depending on the location
(at home, at work, in a public place such as a library), an applicant
may not have the ability at a given time to preserve ECOA disclosures
presented on-screen. Therefore, when a creditor provides disclosures by
electronic communication, to satisfy the retention requirements, the
creditor must send the disclosures to an applicant's e-mail address or
other location where information may be retrieved at a later date.
Proposed comment 4(e)(2)-2 contains this guidance; see also the
discussion under Sec. 202.4(e)(4), below. In instances where a creditor
controls an electronic terminal used to provide electronic disclosures,
a creditor may provide equipment for the applicant to print a paper
copy in lieu of sending the information to the applicant's e-mail
address or posting the information at another location such as the
creditor's website. See proposed comment 4(e)(2)-1.
3. Timing
Creditors must ensure that electronic disclosures comply with all
relevant timing requirements of the regulation. For example, under
Secs. 202.9(a)(1) and (2), a creditor must send a written notice within
30 days after receiving a completed application, if the creditor takes
adverse action.
To illustrate the timing requirements for electronic communication,
assume that a consumer is interested in obtaining a loan and uses a
personal computer at home to access the creditor's website on the
Internet. The creditor provides disclosures to the consumer about the
use of electronic communication (the Sec. 202.4(e)(3) disclosures
discussed below) and the consumer responds affirmatively. If the
creditor's procedures permit the consumer to apply for a loan at that
time, and the creditor denies the credit request, the written notice
required by Sec. 202.9 must be provided. Under the proposal, the
creditor would satisfy the regulation's timing requirements if, within
30 days of receiving the completed application, an adverse action
notice is sent to the applicant's e-mail address, or is posted on the
creditor's website and the applicant is informed that the notice is
available.
If an applicant is transacting business at a creditor's website and
is at a point in the transaction where in order to go forward the
applicant must receive disclosures, the disclosures must appear on the
screen. By displaying the disclosures on the screen, creditors meet the
timing and delivery requirements of the regulation. For example, if an
applicant applies over the Internet for a loan to purchase a principal
dwelling, the request for monitoring information required by
Sec. 202.13(a) and the disclosure required by Sec. 202.13(c) concerning
the collection of the information must appear on the screen before the
application can be sent to the creditor for processing. The timing
requirements for requesting the information and providing the
disclosure would not be met if, in this example, the creditor permitted
the applicant to complete the application and apply for credit and sent
the request for monitoring information and the applicable disclosure to
an e-mail address thereafter. Proposed comment 4(e)(2)-3 contains this
guidance.
4(e)(3) Disclosure Notice. Section 202.4(e)(3) would identify the
specific steps required before a creditor could use electronic
communication to satisfy the regulation's disclosure requirements.
Proposed Sample Forms C-11, C-12, C-14, and C-15 are published to aid
compliance with these requirements.
4(e)(3)(i) Notice by Creditor. Section 202.4(e)(3)(i) outlines the
information that creditors must provide before electronic disclosures
can be given. The creditor must: (1) Describe the information to be
provided electronically and specify whether the information is also
available in paper form or whether the credit product is offered only
with electronic disclosures; (2) identify the address or location where
the information will be provided electronically, and if it will be
available at a location other than the applicant's electronic address,
specify for how long and where it can be obtained once that period
ends; (3) specify any technical requirements for receiving and
retaining information sent electronically, and provide a means for the
applicant to confirm the availability of equipment meeting those
requirements; and (4) provide a toll-free telephone number and, at the
creditor's option, an electronic or a postal address for questions
about receiving electronic disclosures or for updating applicants'
electronic addresses, and for seeking assistance with technical or
other difficulties (see proposed comments to 4(e)(3)(i)). The Board
requests comment on whether other information should be disclosed
regarding the use of electronic communication and on any format changes
that might improve the usefulness of the notice for applicants.
Under the proposal, the Sec. 202.4(e)(3)(i) disclosures must be
provided, as applicable, before the creditor uses electronic
communication to deliver any information required by the regulation.
The approach of requiring a standardized disclosure statement
addresses, in several ways, the concern that applicants may be steered
into using electronic communication without fully understanding the
implications. Under this approach, the specific disclosures that would
be delivered electronically
[[Page 49692]]
must be identified, and applicants must be informed whether there is
also an option to receive the information in paper form. Applicants
must provide an e-mail address where one is required. Technical
requirements must also be stated, and applicants must affirm that their
equipment meets the requirements, and that they have the capability of
retaining electronic disclosures by downloading or printing them (see
proposed comment 4(e)(3)-1). Thus, the Sec. 202.4(e)(3)(i) disclosures
should allow applicants to make informed judgments about receiving
electronic disclosures.
Some commenters requested clarification of whether a creditor may
use electronic communication to provide some required disclosures while
using paper for others. The proposed rule would permit creditors to do
so; the disclosure given under Sec. 202.4(e)(3)(i) must specify which
ECOA disclosures will be provided electronically.
Commenters requested further guidance on a creditor's obligation
under the regulation if the applicant chooses not to receive
information by electronic communication. A creditor could offer an
applicant the option of receiving disclosures in paper form, but it
would not be required to do so. A creditor could establish credit
products for which disclosures are given only by electronic
communication. Section 202.4(e)(3)(i)(A) would require creditors to
tell applicants whether or not they have the option to receive
disclosures in paper form. Section 202.4(e)(3)(i)(D) would require
creditors to provide a toll-free number that applicants could use to
inform creditors if they wish to discontinue receiving electronic
disclosures. In such cases the creditor must inform the applicant
whether the credit product is also available with disclosures in paper
form. Proposed sample notices in which the applicant has an option to
receive electronic or paper disclosures (Form C-14) or electronic
disclosures only (Form C-15) are contained in appendix C.
4(e)(3)(ii) Response by Applicant. Proposed Sec. 202.4(e)(3)(ii)
would require creditors to provide a means for the applicant to
affirmatively indicate that information may be provided electronically.
Examples include a ``check box'' on a computer screen or a signature
line (for requests made in paper form). The requirement is intended to
ensure that applicants' consent is established knowingly and
voluntarily, and that consent to receive electronic disclosures is not
inferred from the submission of an application for credit. See proposed
comment 4(e)(3)(ii)-1.
4(e)(3)(iii) Changes. Creditors would be required to notify
applicants about changes to the information that is provided in the
notice required by Sec. 202.4(e)(3)(i)--for example, if upgrades to
computer software are required. Proposed comment 4(e)(3)(iii)-1
contains this guidance.
The notice must include the effective date of the change and be
provided before that date. Proposed comment 4(e)(3)(iii)-2 would
provide that the notice must be sent a reasonable period of time before
the effective date of the change. Although the number of days that
constitutes reasonable notice may vary, depending on the type of change
involved, the comment would provide creditors with a safe harbor:
fifteen days' advance notice would be considered a reasonable time in
all cases. The same time period is stated in similar proposals under
Regulations E, Z, and DD published in today's Federal Register. Comment
is requested on whether a safe harbor of 15 days is an appropriate time
period, and whether a uniform period for changes involving electronic
communication is desirable. Proposed comment 4(e)(3)(iii)-3 contains
guidance on delivery requirements for the notice of change.
The notice of a change must also include a toll-free telephone
number or, at the creditor's option, an address for questions about
receiving electronic disclosures. For example, a consumer may call
regarding problems related to a change, such as an upgrade to computer
software that is not provided by the creditor. Applicants may also use
the toll-free number if they wish to discontinue receiving electronic
disclosures. In such cases, the creditor must inform applicants whether
the credit product is also available with disclosures in paper form.
(See proposed comments 4(e)(3)(iii)-4 through -6).
If the change involves providing additional disclosures by
electronic communication, creditors generally would be required to
provide the notice in Sec. 202.4(e)(3)(i) and obtain the applicant's
consent. That notice would not be required if the creditor previously
obtained the applicant's consent to the additional disclosures in its
initial notice by disclosing the possibility and specifying which
disclosures might be provided electronically in the future. Comment is
specifically requested on this approach. A list of additional
disclosures may be necessary to ensure that applicants' consent is
informed and knowing (provided it does not cause confusion).
4(e)(4) Address or Location to Receive Electronic Communication.
Proposed Sec. 202.4(e)(4) identifies addresses and locations where
creditors using electronic communication may send information to the
applicant. Creditors may send information to an applicant's electronic
address, which is defined in proposed comment 4(e)(4)(i)-1 as an e-mail
address that the applicant also may use for receiving communications
from parties other than the creditor. For notices of action taken, for
example, a creditor's responsibility to provide notice under Sec. 202.9
will be satisfied when the notice of action taken is sent to the
applicant's electronic address in accordance with the applicable
proposed rules concerning delivery of disclosures by electronic
communication.
Guidance accompanying the March 1998 proposed rule provided that a
creditor would not meet delivery requirements by simply posting
information to an Internet site such as a creditor's ``home page''
without appropriate notice on how applicants can access the
information. Industry commenters wanted to retain the flexibility of
posting disclosures on an Internet website. They did not object to
providing a separate notice alerting applicants about the disclosures'
availability but requested more guidance on the issue. Consumer
advocates and others expressed concern that the mere posting of
information inappropriately places the responsibility to obtain
disclosures on applicants, and undermines the purpose of the delivery
requirements of the regulation.
The Board recognizes that currently, because of security and
privacy concerns associated with data transmissions, a number of
creditors may choose to provide disclosures at their websites, where
the applicant may retrieve them under secure conditions. Under
Sec. 202.4(e)(4), a creditor may make disclosures available to an
applicant at a location other than the applicant's electronic address.
The creditor must notify the applicant when the information becomes
available and identify the credit transaction involved. The notice must
be sent to the electronic mail address designated by the applicant; the
creditor may, at its option, permit the applicant to designate a postal
address. A proposed sample notice (Form C-13) is published below; see
also proposed comment 4(e)(4)(ii)-1.
The Board believes it would be inconsistent with the ECOA to
require an applicant to initiate a search--for example, to search the
website of each creditor with whom the applicant applied for credit--to
determine whether a disclosure has been provided.
[[Page 49693]]
The proposed approach ensures that an applicant would not be required
to check a creditor's website repeatedly, for example, to learn whether
the creditor posted a notice of adverse action.
The requirements of the regulation would be met only if the
required information is posted on the website and the applicant is
notified of its availability in a timely fashion. For example,
creditors must provide adverse action notices to applicants within 30
days after receiving a completed application. For an adverse action
notice posted on the Internet, a creditor must both post the notice and
notify the applicant of its availability within 30 days of receiving a
completed application.
Commenters sought guidance on how long disclosures posted at a
particular location must be available to applicants. There is a variety
of circumstances when an applicant may not be able immediately to
access the information due to illness, travel, or computer malfunction,
for example. Under Sec. 202.4(e)(4), creditors must post information
that is sent to a location other than the applicant's electronic mail
address for 90 days. Proposed comment 4(e)(4)(ii)-2 contains this
guidance.
Under the modified proposal, creditors that post information at a
location other than the applicant's electronic mail address are
required--after the 90 day period--to make disclosures available to
applicants upon request for a period of not less than 25 months, except
as otherwise provided, from the date disclosures are required to be
made, consistent with the record retention requirements under
Sec. 202.12(b). (See Sec. 202.12(b) of the August 16, 1999 proposed
rule for Regulation B (64 FR 44581). The Board requests comment on this
approach, including suggestions for alternative means for providing
consumers continuing access to disclosures.
4(e)(5) Applicant Use of Electronic Communication. Proposed
Sec. 202.4(e)(5) would clarify applicants' ability to provide certain
information to creditors by electronic communication. Regulation B
provides that an applicant, upon written request, is entitled to
receive a copy of an appraisal report under Sec. 202.5a and a statement
of specific reasons for adverse action under Sec. 202.9(a)(3)(ii).
Under the proposal, applicants generally would have the option to use
electronic communication for these written notices if the applicant has
chosen to receive information by electronic communication. Because the
applicant's electronic communication serves as written notice, the
creditor could not also require paper notice. Creditors could, however,
specify a particular electronic address for receiving the notices.
The issue of the applicant's ability to provide certain information
to creditors by electronic communication was not raised in the March
1998 proposed rule for Regulation B. In issuing the March 1998
Regulation E interim rule, the Board stated that financial institutions
could require paper confirmation of electronic notices in the two
instances where the regulation allows written confirmation--stop-
payment notices and notices of error. This approach was consistent with
guidance provided in the May 1996 proposed rule, where the Board stated
that (as in the case of an oral communication) if the consumer sends an
electronic communication to the financial institution, the institution
could require paper confirmation from the consumer (particularly since
the consumer was entitled to a paper copy of a disclosure upon request
under the May 1996 proposal).
Views were mixed on whether financial institutions should be
permitted to require paper confirmations of electronic notices. Many
industry commenters requested that the Board allow financial
institutions to request paper confirmations; some stated that paper
confirmations protect both the consumer and the financial institution.
Consumer advocates and other commenters believed it would be unfair to
require paper confirmation of an electronic communication from
consumers who receive electronic communication from a financial
institution.
Based upon the comments received and further analysis, and subject
to certain limitations discussed below, the Board is proposing that
applicants be permitted to provide electronically any information that
an applicant is required to provide a creditor to exercise the
applicant's rights under the regulation, such as the request for a
written statement of reasons. If a creditor uses electronic
communication to provide disclosures about appraisal rights under
Sec. 202.5a and notices under Sec. 202.9, it is appropriate to allow
applicants to use electronic communication to provide notices to the
creditor. If, however, a creditor limits its use of electronic
communication to the delivery of information required at the time the
application is taken--the disclosure concerning the collection of
monitoring information for home-secured loans--creditors would not be
required to accept electronic communication from applicants.
4(e)(5)(ii) Creditor's Designation of Address. Section
202.4(e)(5)(ii) would provide that a creditor may designate the
electronic address that must be used by an applicant for sending
electronic communication as permitted by Sec. 202.4(e)(5)(i).
4(f) Foreign Language Disclosures. To provide consistency among the
regulations, the Board would add guidance permitting disclosures to be
made in languages other than English (provided they are available in
English upon request). This guidance would be set forth in proposed
Sec. 202.4(f).
Appendix C to Part 202--Sample Notification Forms
The Board solicits comment on two proposed sample disclosure forms
and three sample notice forms for use by creditors to aid compliance
with the disclosure requirements of Secs. 202.4(e)(3) and (e)(4). Forms
C-11 and C-12 would implement Sec. 202.4(e)(3), regarding the notice
that creditors must give prior to using electronic communication to
provide required disclosures. Form C-13 would implement
Sec. 202.4(e)(4), regarding notices to applicants about the
availability of electronic information at locations such as the
creditor's website. Use of any modified version of these forms would be
in compliance as long as the creditor does not delete information
required by the regulation or rearrange the format in a way that
affects the substance, clarity, or meaningful sequence of the
disclosure. For example, where a creditor combines Regulation B and
Regulation Z disclosures for a credit card account, the creditor may
provide a single disclosure statement about electronic delivery.
Sample Form C-14 illustrates the disclosures under
Sec. 202.4(e)(3). The sample assumes the creditor also offers paper
disclosures for applicants who choose not to receive electronic
disclosures. Sample Form C-15 assumes that applicants must accept
electronic disclosures if they want to apply for the particular credit
product.
Other issues
Preemption
A few commenters suggested that any final rule issued by the Board
permitting electronic disclosures should explicitly preempt any state
law requiring paper disclosures. Under Sec. 202.11(a) of the
regulation, state laws are preempted if they are inconsistent with the
act and regulation and only to the extent of the inconsistency. The
proposed rule would provide creditors with the option of
[[Page 49694]]
giving required disclosures by electronic communication as an
alternative to paper. There is no apparent inconsistency with the act
and regulation if state laws require paper disclosures. The Board will,
however, review preemption issues that are brought to the Board's
attention. Section 202.11(b)(2) outlines the Board's procedures for
determining whether a specific law is preempted, which will guide the
Board in any determination requested by a creditor, state, or other
interested party following publication of a final rule regarding
electronic communication.
IV. Form of Comment Letters
Comment letters should refer to Docket No. R-1040, and, when
possible, should use a standard typeface with a type size of 10 or 12
characters per inch. This will enable the Board to convert the text to
machine-readable form through electronic scanning, and will facilitate
automated retrieval of comments for review. Also, if accompanied by an
original document in paper form, comments may be submitted on 3\1/2\
inch computer diskettes in any IBM-compatible DOS- or Windows-based
format.
V. Initial Regulatory Flexibility Analysis
In accordance with section 3(a) of the Regulatory Flexibility Act,
the Board has reviewed the proposed amendments to Regulation B.
Although the proposal would add disclosure requirements with respect to
electronic communication, overall, the proposed amendments are not
expected to have any significant impact on small entities. A creditor's
use of electronic communication to provide disclosures required by the
regulation is optional. The proposed rule would give creditors
flexibility in providing disclosures. A final regulatory flexibility
analysis will be conducted after consideration of comments received
during the public comment period.
VI. Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
3506; 5 CFR 1320 Appendix A.1), the Board reviewed the proposed rule
under the authority delegated to the Board by the Office of Management
and Budget (OMB). The Federal Reserve may not conduct or sponsor, and
an organization is not required to respond to, this information
collection unless it displays a currently valid OMB number. The OMB
control number is 7100-0201.
The collection of information requirements that are relevant to
this proposed rulemaking are in 12 CFR part 202. This information is
mandatory (15 U.S.C. 1691b(a)(1) and Public Law 104-208, Sec. 2302(a))
to evidence compliance with the requirements of Regulation B and the
Equal Credit Opportunity Act. The purpose of the act is to ensure that
credit is made available to all creditworthy customers without
discrimination on the basis of race, color, religion, national origin,
sex, marital status, age (provided the applicant has the capacity to
contract), receipt of public assistance, or the fact that the applicant
has in good faith exercised any right under the Consumer Credit
Protection Act (15 U.S.C. 1600 et. seq.). The respondents/recordkeepers
are for-profit financial institutions, including small businesses.
Creditors are also required to retain records for 12 to 25 months. This
regulation applies to all types of creditors, not just state member
banks; however, under Paperwork Reduction Act regulations, the Federal
Reserve accounts for the burden of the paperwork associated with the
regulation only for state member banks. Other agencies account for the
paperwork burden on their respective constituencies under this
regulation.
The proposed revisions would allow creditors the option of using
electronic communication (for example, via personal computer and modem)
to provide disclosures and other information required by the
regulation. Although the proposal would add disclosure requirements
with respect to electronic communication, the optional use of
electronic communication would likely reduce the paperwork burden of
creditors. With respect to state member banks, it is estimated that
there are 988 respondents/recordkeepers and an average frequency of
4,765 responses per respondent each year. Therefore, the current amount
of annual burden is estimated to be 123,892 hours. There is estimated
to be no additional annual cost burden and no capital or start-up cost.
Because the records would be maintained at state member banks and
the notices are not provided to the Federal Reserve, no issue of
confidentiality under the Freedom of Information Act arises; however,
any information obtained by the Federal Reserve may be protected from
disclosure under exemptions (b)(4), (6), and (8) of the Freedom of
Information Act (5 U.S.C. 522(b)(4), (6) and (8)). The adverse action
disclosure is confidential between creditors and the applicants
involved.
The Federal Reserve requests comments from creditors, especially
state member banks, that will help to estimate the number and burden of
the various disclosures that would be made in the first year this
proposed regulation would be effective. Comments are invited on: (a)
The cost of compliance; (b) ways to enhance the quality, utility, and
clarity of the information to be disclosed; and (c) ways to minimize
the burden of disclosure on respondents, including through the use of
automated disclosure techniques or other forms of information
technology. Comments on the collection of information should be sent to
the Office of Management and Budget, Paperwork Reduction Project (7100-
0201), Washington, DC 20503, with copies of such comments sent to Mary
M. West, Federal Reserve Board Clearance Officer, Division of Research
and Statistics, Mail Stop 97, Board of Governors of the Federal Reserve
System, Washington, DC 20551.
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.
Text of Proposed Revisions
Certain conventions have been used to highlight proposed changes to
Regulation B. New language is shown inside bold-faced arrows.
For the reasons set forth in the preamble, the Board proposes to
amend Regulation B, 12 CFR part 202, as set forth below:
PART 202--EQUAL CREDIT OPPORTUNITY (REGULATION B)
1. The authority citation for part 202 would continue to read as
follows:
Authority: 15 U.S.C. 1691-1691f.
2. Section 202.4 as proposed to be revised at 64 FR 44595, August
16, 1999, is further amended by adding new paragraphs (e) and (f) to
read as follows:
Sec. 202.4 General rules.
* * * * *
(e) Electronic communication--(1) Definition. Electronic
communication means a message transmitted electronically between an
applicant and a creditor in a format that allows visual text to be
displayed on equipment such as a personal computer monitor.
(2) Electronic communication between creditor and applicant. A
creditor that has complied with paragraph (e)(3) of this section may
provide by electronic communication any information required by this
regulation to be in writing.
[[Page 49695]]
(3) Disclosure notice. The disclosure notice required by paragraph
(e)(3) of this section shall be clear and conspicuous and in a form the
consumer may keep, and shall be provided in a manner substantially
similar to the applicable sample notice set forth in Appendix C of this
part (Sample Forms C-11 and C-12).
(i) Notice by creditor. A creditor shall:
(A) Describe the information to be provided electronically and
specify whether the information is also available in paper form or
whether the credit product is offered only with electronic disclosures;
(B) Identify the address or location where the information will be
provided electronically; and if it is made available at a location
other than the applicant's electronic address, how long the information
will be available, and how it can be obtained once that period ends;
(C) Specify any technical requirements for receiving and retaining
information sent electronically, and provide a means for the applicant
to confirm the availability of equipment meeting those requirements;
and
(D) Provide a toll-free telephone number and, at the creditor's
option, an address for questions about receiving electronic
disclosures, for updating applicants' electronic addresses, and for
seeking technical or other assistance related to electronic
communication.
(ii) Response by applicant. A creditor shall provide a means for
the applicant to accept or reject electronic disclosures.
(iii) Changes. (A) A creditor shall notify affected applicants of
any change to the information provided in the notice required by
paragraph (e)(3)(i) of this section. The notice shall include the
effective date of the change and must be provided before that date. The
notice shall also include a toll-free telephone number, and, at the
creditor's option, an address for questions about receiving electronic
disclosures.
(B) In addition to the notice under paragraph (e)(3)(iii)(A) of
this section, if the change involves providing additional disclosures
by electronic communication, a creditor shall provide the notice in
paragraph (e)(3)(i) of this section and obtain the applicant's consent.
A notice is not required under paragraph (e)(3)(i) if the creditor's
initial notice states that additional disclosures may be provided
electronically in the future and specifies which disclosures could be
provided.
(4) Address or location to receive electronic communication. A
creditor that uses electronic communication to provide information
required by this regulation shall:
(i) Send the information to the applicant's electronic address; or
(ii) Post the information for at least 90 days at a location such
as a website, and send a notice to the applicant when the information
becomes available. Thereafter the information shall be available upon
request for a period of not less than 25 months, except as otherwise
provided, from the date disclosures are required to be made. The notice
required by this paragraph (e)(4)(ii) shall identify the credit product
or application involved, shall be sent to an electronic address
designated by the applicant (or to a postal address, at the creditor's
option), and shall be substantially similar to the sample notice set
forth in Appendix C of this part (Sample Form C-13).
(5) Applicant use of electronic communication. (i) General. An
applicant may use electronic communication to exercise any right under
Sec. 202.5a and Sec. 202.9(a)(3) if the applicant has consented to
receive information required by these sections by electronic
communication.
(ii) Creditor's designation of address. A creditor may designate
the electronic address or location that applicants must use if they
send electronic communication under this paragraph.
(f) Foreign language disclosures. Disclosures may be made in
languages other than English, provided they are available in English
upon request.
3. Appendix C to Part 202 as proposed to be revised at 64 FR 44616,
August 16, 1999, is further amended by adding new Forms C-11, C-12, C-
13, C-14, and C-15 to read as follows:
Appendix C to Part 202--Sample Notification Forms
* * * * *
Form C-11--Sample Disclosures for Electronic Communication (Disclosures
Available in Paper or Electronically)
You can choose to receive important information required by the
Equal Credit Opportunity Act in paper or electronically.
Read this notice carefully and keep a copy for your records.
You can choose to receive the following information in
paper form or electronically: (description of specific disclosures
to be provided electronically).
How would you like to receive this information
{time} I want paper disclosures.
{time} I want electronic disclosures.
[We may provide the following additional disclosures
electronically in the future: (description of specific
disclosures).]
[If you choose electronic disclosures, this information
will be available at: (specify location) for ______ days. After
that, the information will be available upon request (state how to
obtain the information). When the information is posted, we will
send you a message at the electronic mail address you designate
here: (applicant's electronic mail address).]
[If you choose electronic disclosures this information will be
sent to the electronic mail address that you designate here:
(applicant's electronic mail address).]
To receive this information you will need: (list
hardware and software requirements).
Do you have access to a computer that satisfies these
requirements?
{time} Yes {time} No
Do you have access to a printer, or the ability to
download information, in order to keep copies for your records?
{time} Yes {time} No
To update your electronic address, if you have
questions about receiving disclosures, or need technical or other
assistance concerning these disclosures, contact us at (telephone
number).
Form C-12--Sample Disclosures for Electronic Communication (Disclosures
Available Only Electronically)
You will receive important information required by the Equal
Credit Opportunity Act electronically.
Read this notice carefully and keep a copy for your records.
The following information will be provided
electronically: (description of specific disclosures to be provided
electronically).
This credit product is not available unless you accept
electronic disclosures.
[We may provide the following additional disclosures
electronically in the future: (description of specific
disclosures).]
[If you choose electronic disclosures, this information
will be available at: (specify location) for ______ days. After
that, the information will be available upon request (state how to
obtain the information). When the information is posted, we will
send you a message at the electronic mail address you designate
here: (applicant's electronic mail address).]
[If you choose electronic disclosures this information will be
sent to the electronic mail address that you designate here:
(applicant's electronic mail address).]
To receive this information you will need: (list
hardware and software requirements).
Do you have access to a computer that satisfies these
requirements?
{time} Yes {time} No
Do you have access to a printer, or the ability to
download information, in order to keep copies for your records?
{time} Yes {time} No
Do you want this credit product with electronic disclosures?
{time} Yes {time} No
To update your electronic address, if you have
questions about receiving disclosures, or need technical or other
assistance concerning these disclosures, contact us at (telephone
number).
Form C-13--Sample Notice for Delivery of Information Posted at Certain
Locations
Information about your (identify loan application or credit
transaction) is now
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available at [website address or other location]. The information
discusses (describe the disclosure). It will be available for ______
days.
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4. Supplement I to Part 202, as proposed to be revised at 64 FR
44618, August 16, 1999, is further amended under Section 202.4--General
Rules by adding a new paragraph 4(e) Electronic Communication to read
as follows:
Supplement I to Part 202--Official Staff Interpretations
* * * * *
Section 202.4--General Rules
* * * * *
4(e) Electronic Communication
4(e)(1) Definition.
1. Coverage. Information transmitted by facsimile may be
received in paper form or electronically, although the party
initiating the transmission may not know at the time the disclosures
are sent which form will be used. A creditor that provides
disclosures by facsimile should comply with the requirements for
electronic communication unless the creditor knows that the
disclosures will be received in paper form.
4(e)(2) Electronic communication between creditor and applicant.
1. Disclosures provided on creditor's equipment. Creditors that
control equipment providing electronic disclosures to applicants
(for example, computer terminals in a creditor's lobby or kiosks
located in public places) must ensure that the equipment satisfies
the regulation's requirements to provide disclosures in a clear and
conspicuous format and in a form the consumer may keep. A creditor
that controls the equipment may provide a printer for applicants'
use in lieu of sending the information to the applicant's electronic
mail address or posting the information at another location such as
the creditor's website.
2. Retainability. Creditors must provide electronic disclosures
in a retainable format (for example, they can be printed or
downloaded). Applicants may communicate electronically with
creditors through a variety of means and from various locations.
Depending on the location (at home, at work, in a public place such
as a library), an applicant may not have the ability at a given time
to preserve ECOA disclosures presented on-screen. To ensure that
applicants have an adequate opportunity to retain the disclosures,
the creditor also must send them to the applicant's designated
electronic mail address or to another location, for example, on the
creditor's website, where the information may be retrieved at a
later date.
3. Timing and delivery. When an applicant applies for credit on
the Internet, for example, in order to meet the timing and delivery
requirements, creditors must ensure that disclosures applicable at
that time appear on the screen and are in a retainable format. The
delivery requirements would not be met if disclosures do not either
appear on the screen or if the applicant is allowed to apply for
credit before receiving the disclosures. For example, a creditor can
provide a link to electronic disclosures appearing on a separate
page as long as applicants cannot bypass the link and they are
required to access the disclosures before completing the
application.
4(e)(3) Disclosure notice.
1. Applicant's affirmative responses. Even though an applicant
accepts electronic disclosures in accordance with
Sec. 202.4(e)(3)(ii), a creditor may deliver disclosures by
electronic communication only if the applicant provides an
electronic address where one is required, and responds affirmatively
to questions about technical requirements and the ability to print
or download information (see sample forms C-14 and C-15 in appendix
C to this part).
Paragraph 4(e)(3)(i)
1. Toll-free telephone number. The number must be toll-free for
nonlocal calls made from an area code other than the one used in the
creditor's dialing area. Alternatively, a creditor may provide any
telephone number that allows an applicant to call for information
and reverse the telephone charges.
2. Creditor's address. Creditors have the option of providing
either an electronic or postal address for applicants' use in
addition to the toll-free telephone number.
3. Discontinuing electronic disclosures. Applicants may use the
toll-free number (or optional address) if they wish to discontinue
receiving electronic disclosures. In such cases, the creditor must
inform applicants whether the credit product is also available with
disclosures in paper form.
Paragraph 4(e)(3)(ii)
1. Nature of consent. Applicants must agree to receive
disclosures by electronic communication knowingly and voluntarily.
An agreement to receive electronic disclosures is not implied from
an applicant's submission of an application for credit.
Paragraph 4(e)(3)(iii)
1. Examples. Examples of changes include a change in technical
requirements, such as upgrades to software affecting the creditor's
disclosures provided on the Internet.
2. Timing for notices. A notice of a change must be sent a
reasonable period of time before the effective date of the change.
The length of a reasonable notice period may vary, depending on the
type of change involved; however, fifteen days is a reasonable time
for providing notice in all cases.
3. Delivery of notices. A creditor meets the delivery
requirements if the notice of a change is sent to the address
provided by the applicant for receiving other disclosures. For
example, if the applicant provides an electronic address to receive
a notice of action taken, the same electronic address may be used
for the change notice. The applicant's postal address must be used,
however, if the applicant consented to additional disclosures by
electronic communication when receiving the initial notice under
Sec. 202.4(e)(3)(i), but provided a postal address to receive the
notice of action taken.
4. Toll-free number. See comment 4(e)(3)(i)-1.
5. Creditor's address. See comment 4(e)(3)(i)-2.
6. Applicant inquiries. Applicants may use the toll-free number
(or optional address) for questions or assistance with problems
related to a change, such as an upgrade to computer software, that
is not provided by the creditor. Applicants may also use the toll-
free number if they wish to discontinue receiving electronic
disclosures; in such cases, the creditor must inform applicants
whether the credit product is also available with disclosures in
paper form.
4(e)(4) Address or location to receive electronic communication.
Paragraph 4(e)(4)(i)
1. Electronic address. An applicant's electronic address is an
electronic mail address that may be used by the applicant for
receiving communications transmitted by parties other than the
creditor.
Paragraph 4(e)(4)(ii)
1. Identifying application or transaction involved. A creditor
is not required to identify a loan application or credit transaction
by reference to a number. For example, where the applicant has not
applied for credit with the creditor before, and no confusion would
result, the creditor may refer to ``your credit card application,''
or ``your home equity line application.''
2. Availability. Information that is not sent to an applicant's
electronic mail address must be available for at least 90 days from
the date the information becomes available or from the date the
notice required by Sec. 202.4(e)(4)(ii) is sent to the applicant,
whichever occurs later.
* * * * *
By order of the Board of Governors of the Federal Reserve
System, August 31, 1999.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 99-23137 Filed 9-13-99; 8:45 am]
BILLING CODE 6210-01-P
