[Federal Register: April 4, 2001 (Volume 66, Number 65)]
[Rules and Regulations]
[Page 17795-17804]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04ap01-4]
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FEDERAL RESERVE SYSTEM
12 CFR Part 230
[Regulation DD; Docket No. R-1044]
Truth in Savings
AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Interim rule; request for comments.
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SUMMARY: The Board is adopting an interim final rule amending
Regulation DD, which implements the Truth in Savings Act, to establish
uniform standards for the electronic delivery of disclosures required
by the act and regulation. The rule provides guidance on the timing and
delivery of electronic disclosures to ensure consumers have adequate
opportunity to access and retain the information. (Similar rules are
being adopted under other consumer financial services and fair lending
regulations administered by the Board.) Under the rule, depository
institutions may deliver disclosures electronically if they obtain
consumers' affirmative consent in accordance with the Electronic
Signatures in Global and National Commerce Act (E-Sign Act). Amendments
are also adopted that address electronic advertisements. The rule is
being adopted as an interim rule to obtain additional public comment.
An interim rule published in 1999, before enactment of the E-Sign Act,
is withdrawn.
DATES: The interim rule is effective March 30, 2001; however, to allow
time for any necessary operational changes, the mandatory compliance
date is October 1, 2001. Comments must be received by June 1, 2001.
ADDRESSES: Comments, which should refer to Docket No. R-1044, may be
mailed to Ms. Jennifer J. Johnson, Secretary, Board of Governors of the
Federal Reserve System, 20th Street and Constitution Avenue, N.W.,
Washington, D.C. 20551 or mailed electronically to
regs.comments@federalreserve.gov. 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, N.W. Comments may be
inspected in room MP-500 in the Board's Martin Building between 9:00
a.m. and 5:00 p.m., pursuant to the Board's Rules Regarding the
Availability of Information, 12 CFR part 261.
FOR FURTHER INFORMATION CONTACT: Jane E. Ahrens, Senior Counsel, and
Deborah J. Stipick, Attorney, Division of Consumer and Community
Affairs, at (202) 452-2412 or (202) 452-3667.
SUPPLEMENTARY INFORMATION:
I. Background
The Truth in Savings Act (TISA), 12 U.S.C. 4301 et seq., requires
depository institutions to disclose yields, fees, and other terms
concerning deposit accounts to consumers at account opening, upon
request, when changes in terms occur, and in periodic statements. It
also includes rules about advertising for deposit accounts. The Board's
Regulation DD (12 CFR part 230) implements the act. Credit unions are
governed by a substantially similar regulation issued by the National
Credit Union Administration.
TISA and Regulation DD require a number of disclosures to be
provided in writing, presuming that depository institutions provide
paper documents. Under the Electronic Signatures in Global and National
Commerce Act (E-Sign Act) (15 U.S.C. 7001 et seq.), however, electronic
documents and signatures have the same validity as paper documents and
handwritten signatures.
Board Proposals Regarding Electronic Disclosures
Over the past few years, the Board has published several interim
rules and proposals regarding the electronic delivery of disclosures.
In 1996, after a comprehensive review of Regulation E (Electronic Fund
Transfers), the Board proposed to amend the regulation to permit
financial institutions to provide disclosures by sending them
electronically. (61 FR 19696, May 2, 1996.) Based on comments received
on the 1996 proposal, on March 25,1998, the Board published an interim
rule permitting the electronic delivery of disclosures under Regulation
E (63 FR 14528) and similar proposals under Regulation DD (63 FR
14533), and other financial services and fair lending regulations
administered by the Board. The 1998 interim rule and proposed rules
were similar to the 1996 proposed rule under Regulation E.
The 1998 proposals and interim rule allowed creditors, depository
institutions, lessors, and others to provide disclosures electronically
if the consumer agreed, with few other requirements. For ease of
reference, this background section uses the terms ``institutions'' and
``consumers.''
Industry commenters generally supported the Board's 1998 proposals
and interim rule, but many of them sought specific revisions and
additional guidance on how to comply with the disclosure requirements
in certain transactions and circumstances. In particular, they
expressed concern that the rule did not specify a uniform method for
establishing that an ``agreement'' was reached for sending disclosures
electronically. Consumer advocates, on the other hand, generally
opposed the 1998 proposals and the interim rule. They believed that
consumer protections in the proposals were inadequate, especially in
connection with transactions that are typically consummated in person
(such as automobile loans and leases, home-secured loans, and door-to-
door credit sales).
September 1999 Proposals
In response to comments received on the 1998 proposals, the Board
published revised regulatory proposals in September 1999 under
Regulations B, E, M, Z, and DD, (64 FR 49688, 49699, 49713, 49722 and
49740, respectively, September 14, 1999) (collectively, the ``1999
proposals''), and an interim rule under Regulation DD (64 FR 49846).
The interim rule under Regulation DD allowed depository institutions to
deliver disclosures on periodic statements electronically if the
consumer agrees.
Generally, the 1999 proposals required institutions to use a
standardized form containing specific information about the electronic
delivery of disclosures so that consumers could make informed decisions
about whether to receive disclosures electronically. If the consumer
affirmatively consented, most disclosures could be provided
electronically. To address concerns about potential abuses, the 1999
proposals generally would have required disclosures to be given in
paper form when consumers transacted business in person. The proposals
contained rules for disclosures that are made available to consumers at
an institution's Internet web site (governing, for example, how long
disclosures must remain posted at a web site).
Comments on the September 1999 proposals--The Board received
letters representing 115 commenters
[[Page 17796]]
expressing views on the revised proposals. Industry commenters
generally supported the Board's approach establishing federal rules for
a uniform method of obtaining consumers' consents to the receipt of
electronic disclosures instead of deferring to state law. Still, many
sought specific additional guidance and in some cases wanted more
flexibility. They were concerned about the length of time the proposals
would have required electronic disclosures to remain available to a
consumer at an institution's Internet web site or upon request. In
addition, they believed the proposed rule requiring paper disclosures
for transactions conducted in person was not sufficiently flexible.
Consumer advocates believed the 1999 proposals addressed many of their
concerns about the 1998 proposals. Nevertheless, they urged the Board
to incorporate greater protections for consumers, such as restricting
the delivery of electronic disclosures to only those consumers who
initiate transactions electronically.
The Board also obtained views through four focus groups with
individual consumers, conducted in the Washington-Baltimore
metropolitan area. Participants reviewed and commented on the format
and content of the proposed sample consent forms, as well as on
alternative revised forms.
Federal Legislation Addressing Electronic Commerce
On June 30, 2000, the President signed the E-Sign Act, which was
enacted to encourage the continued expansion of electronic commerce.
The E-Sign Act generally provides that electronic documents and
signatures have the same validity as paper documents and handwritten
signatures. The act contains special rules for the use of electronic
disclosures in consumer transactions. Consumer disclosures may be
provided in electronic form only if the consumer affirmatively consents
after receiving certain information specified in the statute.
The Board and other government agencies are permitted to interpret
the E-Sign Act's consumer consent requirements within prescribed
limits, but may not impose additional requirements for consumer
consent. In addition, agencies generally may not re-impose a
requirement for using paper disclosures in particular transactions,
such as those conducted in person.
The consumer consent provisions in the E-Sign Act became effective
October 1, 2000, and did not require implementing regulations. Thus,
financial institutions are currently permitted to use electronic
disclosures under Regulations B, E, M, Z and DD if the consumer
affirmatively consents in the manner required by the E-Sign Act. Under
section 101(c)(5) of the E-Sign Act, consumers who consented prior to
the effective date of the act to receive electronic disclosures as
permitted by any law or regulation, are not subject to the consent
requirements.
II. The Interim Rule
The Board is adopting an interim final rule to establish uniform
standards for the electronic delivery of disclosures required under
Regulation DD. Consistent with the requirements of the E-Sign Act,
depository institutions generally must obtain consumers' affirmative
consent to provide disclosures electronically. The interim rule
published in 1999, before enactment of the E-Sign Act, is withdrawn.
The interim rules also establish uniform requirements for the
timing and delivery of electronic disclosures. Disclosures may be sent
by electronic mail (e-mail) to an electronic address designated by the
consumer, or they may be made available at another location, such as an
Internet web site. If the disclosures are not sent by e-mail, consumers
must receive a notice alerting them to the availability of the
disclosures. Disclosures posted on a web site must be available for at
least 90 days, to allow consumers adequate time to access and retain
the information. With regard to the timing of electronic disclosures,
for disclosures that must be provided before the consumer opens an
account, consumers are required to access the electronic disclosures
before the account is opened. Under the interim rule, institutions must
make a good faith attempt to redeliver electronic disclosures that are
returned undelivered, using the address information available in their
files. Similar rules are being adopted under Regulations B, E, M and Z.
III. Request for Comment
Interim Rules
The interim rules include most of the revisions that were part of
the 1999 proposals and were not affected by the E-Sign Act. The Board
is adopting these rules with some minor changes discussed below. The
rules are adopted as interim rules, to allow commenters to present new
information or views not previously considered in the context of the
1998 and 1999 proposals. Since the Board's 1999 proposals were issued,
more institutions have gained experience in offering financial services
electronically. The Board believes that additional comments, beyond
those previously considered in connection with the Board's earlier
proposals, might inform the Board whether any developments in
technology or industry practices have occurred that warrant further
changes in the rules. The comment period ends on June 1, 2001. The
Board expects to adopt final rules on a permanent basis prior to
October 1, 2001.
Interpreting E-Sign Provisions
Under section 104(b) of the E-Sign Act, the Board and other
government agencies are permitted to interpret the act, within
prescribed limits. The Board may issue rules that interpret how the E-
Sign Act's consumer consent requirements apply for purposes of the laws
administered by the Board. Also, the Board may, by regulation, exempt a
particular category of disclosures from the E-Sign Act's consumer
consent requirements if it will eliminate a substantial burden on
electronic commerce without creating material risk for consumers.
The Board requests comment on whether the Board should exercise its
authority under the E-Sign Act in future rulemakings to interpret the
consumer consent provisions or other provisions of the act, as they
affect the Board's consumer protection regulations. Comment is
requested on whether the statutory provisions relating to consumer
consent are sufficient, or whether additional guidance is needed. For
example, is interpretative guidance needed concerning the statutory
requirement that consumers confirm their consent electronically in a
manner that reasonably demonstrates they can access information in the
form to be used by the depository institution? Is clarification needed
on the effect of consumers' withdrawing their consent, or on requesting
paper copies of electronic disclosures? Institutions must also inform
consumers of changes in hardware or software requirements if the change
creates a material risk that the consumer will not be able to access or
retain the disclosure. The Board solicits comment on whether regulatory
standards are needed for determining a ``material risk'' for purposes
of Regulation DD and other financial services and fair lending laws
administered by the Board, and if so what standards should apply.
Under section 104(d) of the E-Sign Act, the Board is authorized to
exempt specific disclosures from the consumer consent requirements of
section 101(c) of the E-Sign Act, if the exemption is
[[Page 17797]]
necessary to eliminate a substantial burden on electronic commerce and
will not increase the material risk of harm to consumers. The Board
requests comment on whether it should consider exercising this
exemption authority.
Study on Adapting Requirements to Online Banking and Lending
The E-Sign Act eliminated legal impediments to the use of
electronic records and signatures, the Board requests comment on
whether other legislative or regulatory changes are needed to adapt
current requirements to online banking and lending and facilitate
electronic delivery of consumer financial services.
As an example, under Regulations Z and DD, periodic statements
inform consumers about their account activity over a period of time,
typically monthly. The beginning and ending dates of the cycle
determine costs and other information that must be disclosed. In
addition, transmittal of the periodic statement triggers important
consumer protections such as billing error resolution procedures.
Online banking, however, can provide consumers with up-to-date
information about their accounts on a continuing basis. Such
information is a helpful supplement to--but does not comply as a
substitute for--periodic statements. Should the rules for periodic
statements be modified for online banking, and if so, how could the
rules be crafted to maintain for consumers (1) a perspective of the
cost and activity of an account over time, and (2) protections for
resolving errors or liability for unauthorized transactions.
The comments may assist the Board in future efforts to update the
regulations. The comments may also be used in connection with a study
required under the Gramm-Leach-Bliley Act of 1999. That act requires
the federal bank supervisory agencies to conduct a study of banking
regulations that affect the electronic delivery of financial services
and to submit to the Congress a report recommending any legislative
changes that are needed to facilitate online banking and lending.
IV. Section-by-Section Analysis
Pursuant to its authority under section 269 of TISA, the Board
amends Regulation DD to establish uniform standards for the use of
electronic communication to provide disclosures required by this
regulation. Electronic disclosures can effectively reduce compliance
costs without adversely affecting consumer protections. The purpose of
Regulation DD disclosures is to ensure that consumers have meaningful
information about account terms so that consumers can compare savings
and investment products. The use of electronic communication may allow
institutions to provide Regulation DD disclosures to the consumer more
efficiently. To the extent that a depository institution may make
electronic disclosures available at its web site instead of providing
the disclosures directly to the consumer, the Board finds that such an
exception is warranted pursuant to its authority under section
269(a)(3) of TISA. Below is a section-by-section analysis of the rules
for providing disclosures by electronic communication, including
references to changes in the official staff commentary.
Section 230.3 General Disclosure Requirements
3(a) Form
Section 230.3(a) has been revised to reflect that the disclosures
provided under Sec. 230.10 for electronic communications are subject to
the same requirements as other disclosures provided under Regulation
DD.
3(g) Electronic Communication
Section 230.3(g) is added to provide a cross reference to rules
governing the electronic delivery of disclosures in Sec. 230.10.
Section 230.4 Account Disclosures
4(a) Delivery of Account Disclosures
Depository institutions generally must provide account-opening
disclosures to consumers before an account is opened or a service is
provided. Currently, depository institutions may delay delivering TISA
disclosures if the consumer is not present at the institution when the
account is opened (or service is provided). The rationale underlying
the ten-day delay is that the institution cannot provide written
disclosures is such cases, for example, when an account is opened by
telephone. Section 230.4(a) provides that in such cases, account-
opening disclosures must be mailed or delivered within ten business
days.
Under the 1999 proposal, the delayed timing rule under
Sec. 230.4(a) did not apply to depository institutions opening accounts
by ``electronic communication'' (for example, those offered on the
Internet). Some commenters agreed that the ten-day delay should not
apply in such cases. Others expressed concern about providing accurate
disclosures if a consumer ``opens'' an account electronically after
normal business hours, and account terms change when the institution
next opens for business.
The interim final rule, as in the 1999 proposal, provides that
depository institutions opening accounts by ``electronic
communication'' (for example, those offered on the Internet) may not
delay providing disclosures under Sec. 230.4(a). This rule is adopted
pursuant to the Board's exception authority under Section 269(a)(3) of
TISA, to carry out the purposes of the statute. The difficulties in
providing disclosures for accounts opened by mail or telephone are not
present for requests to open accounts received by electronic
communication using visual text. Thus, specific disclosures must be
provided before accounts are opened using electronic communication.
TISA and Regulation DD do not define when an account is deemed to be
opened; thus, institutions 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 by the
institution to be ``opened.''
Depository institutions must also provide account disclosures to a
consumer upon request. Section 230.4(a)(2)(i) provides that if a
consumer is not present at the institution when a request for account
disclosures is made, the institution must mail or deliver the
disclosures within a reasonable time after the institution receives the
request; ten days is deemed to be a reasonable time. The 1999 proposal
extended the rule to requests for disclosures made by electronic
communication. Most commenters agreed that a ten-day period was
reasonable for responding to electronic requests for disclosures. Some
stated that having one uniform time period would aid compliance. The
interim final rule provides that ten days is a reasonable time for
responding to request for account disclosures made by electronic
communication. Comment 4(a)(2)(i)-3 has been revised to include this
guidance.
Section 230.4(a)(2)(i) is revised to require institutions to mail
or deliver disclosures in paper form or electronically to consumers who
are not present at the institution when a request is made. To provide
disclosures electronically, the institution must send the disclosures
to the consumer's e-mail address, or send a notice alerting the
consumer to the location of the disclosures, such as on the
institution's Internet web site. Posting disclosures on a depository
institution's web site does not relieve the institution's duty to
provide the disclosures upon request.
[[Page 17798]]
Comment 4(a)(2)(i)-4 is added to contain this advice.
Section 230.6 Periodic Statement Disclosures
6(c) Electronic Communication
Section 230.6(c) was adopted by the Board in 1999 as an interim
rule allowing the electronic delivery of periodic statements, if the
consumer agreed. (64 FR 49846, September 14, 1999.) The electronic
delivery of periodic statements for consumer asset accounts was already
permissible under an interim rule to Regulation E issued in March 1998.
The 1999 interim rule allowed institutions to delivery electronically a
single statement that complied with Regulation E and Regulation DD. The
interim rule did not specify the manner or form of consumers' consent
to electronic statements.
Effective October 1, 2000, the E-Sign Act permits depository
institutions to provide disclosures to consumers using electronic
communication, if the depository institution complies with Section
101(c) of that act. Section 101(c) of the E-Sign Act requires
depository institutions to provide specific information about the
electronic delivery of disclosures and obtain the consumer's
affirmative consent to receive electronic disclosures. As discussed
below, Sec. 226.10(b) is being adopted to set forth the general rule
that depository institutions subject to Regulation DD may provide
disclosures electronically only if the institution complies with
Section 101(c) of the E-Sign Act. This requirement applies to
disclosures on periodic statements that are provided electronically,
and Sec. 230.6(c) is withdrawn accordingly.
Section 230.8 Advertising
8(a) Misleading or Inaccurate Advertisements
Stating certain account terms in an advertisement for a deposit
account triggers the disclosure of additional terms. Although
Regulation DD does not currently address multiple-page advertisements,
Regulations Z (Truth in Lending) and M (Consumer Leasing) permit
creditors and lessors to provide required advertising disclosures on
more than one page, if certain conditions are met. In September 1999,
the Board proposed consistent approaches under Regulations Z, M, and DD
for complying with the regulations' advertising requirements in the
context of electronic advertising. Under the proposal, a depository
institution that advertises using electronic communication can comply
with the regulation's advertising requirements if the required terms
are disclosed in more than one location, under certain conditions. Most
commenters addressing the issue agreed with the proposed approach.
Comment 8(a)-9 is adopted as proposed, with technical amendments
for clarity. If an advertisement using electronic communication
displays a triggering term (such as a bonus or annual percentage yield)
the advertisement must clearly refer the consumer 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
consumer to the additional information.
8(b) Permissible Rates
Section 230.8(b) permits depository institutions to state an
interest rate in addition to the APY, as long as the rate is stated in
conjunction with, but not more conspicuously than, the APY. As
proposed, both rates must appear at the same location so the consumer
can view both rates simultaneously. An advertised interest rate with a
link to another location that contains the related APY would not comply
with the requirements of Sec. 230.8(b); the interest rate would be the
only rate readily visible to consumers, and therefore would be more
conspicuous. Commenters generally agreed with this requirement. Comment
8(b)-4 is adopted as proposed.
8(e) Exemption for Certain Advertisements
8(e)(1) Certain Media
Section 230.8(e) exempts from some requirements advertisements made
through broadcast or electronic media, such as television and radio or
outdoor billboards. Proposed comment 8(e)(1)(i)-1 provided that this
exemption would not apply to electronic advertisements using electronic
communication, such as Internet advertisements, which do not have the
same time and space constraints as radio or television advertisements.
Views were mixed on whether advertisements using electronic
communication should be subject to the broadcast or media exception.
Many commenters noted that a frequent form of advertisement on the
Internet is the ``banner'' advertisement and these are often priced
based on size. Similarly, they noted that space limitations may exist,
especially on third-party web sites. Accordingly, these commenters
requested that the Board consider extending a similar exception to
Internet advertisements that currently exists for television and
billboards. However, other commenters agreed with the Board's position
that these types of advertisements (for example Internet advertisements
with link capability) do not possess the same time and space
limitations as those that are currently exempted.
The Board believes that space constraints for advertisements on
Internet web sites are not significantly different than those for a
print advertisement (a newspaper, for example). Thus, requiring
advertisements provided by electronic communication to comply with the
regulation's advertising requirements is not overly burdensome.
Accordingly, advertisements made via electronic communication, such as
advertisements posted on the Internet, are subject to Regulation DD's
general advertising rules. Comment 8(e)(1)(i)-1 is adopted as proposed.
Section 230.10 Electronic Communication
10(a) Definition
As adopted, the definition of the term ``electronic communication''
remains substantially unchanged from the 1999 proposals. Section
230.10(a) limits the term to a message transmitted electronically that
can be displayed on equipment as visual text; an example is a message
displayed on a personal computer monitor screen. Thus, audio and voice
response telephone systems are not included. Because the rule permits
the use of electronic communication to satisfy the statutory
requirement for written disclosures that must be clear and conspicuous,
the Board believes visual text is an essential element of the
definition. Institutions that accommodate vision-impaired consumers by
providing disclosures that do not use visual text must also provide
disclosures using visual text.
Some commenters asked for clarification that the definition was not
intended to preclude the use of devices other than personal computers,
which also can display visual text. The equipment on which the text
message is received is not limited to a personal computer, provided the
visual display used to deliver the disclosures meets the ``clear and
conspicuous'' format requirement, discussed below.
10(b) General Rule
Effective October 1, 2000, the E-Sign Act permits depository
institutions to provide disclosures using electronic
[[Page 17799]]
communication, if the depository institution complies with the consumer
consent requirements in Section 101(c). Under section 101(c) of the E-
Sign Act, depository institutions must provide specific information
about the electronic delivery of disclosures before obtaining the
consumer's affirmative consent to receive electronic disclosures. The
consent requirements in the E-Sign Act are similar but not identical to
the Board's 1999 proposal. Accordingly, Sec. 230.10(b) sets forth the
general rule that depository institutions subject to Regulation DD may
provide disclosures electronically if the institution complies with
section 101(c) of the E-Sign Act.
The E-Sign Act authorizes the use of electronic disclosures. The
act does not affect any requirement imposed under TISA other than a
provision that requires disclosures to be in paper form, and the act
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. Comment
10(b)-1 contains this guidance.
Presenting Disclosures in a Clear and Conspicuous Format
Electronic disclosures must be clear and conspicuous, as is the
case for all written disclosures under TISA and the Regulation DD. See
Secs. 230.3(a). An institution must provide electronic disclosures
using a clear and conspicuous format. Also, in accordance with the E-
Sign Act: (1) The institution must disclose the requirements for
accessing and retaining disclosures in that format; (2) the consumer
must demonstrate the ability to access the information electronically
and affirmatively consent to electronic delivery; and (3) the
institution must provide the disclosures in accordance with the
specified requirements. Comment 10(b)-2 contains this guidance.
Comments posed a few questions about the applicability of the clear
and conspicuous standard to particular situations. Some asked whether
electronic advertisements or other unrelated promotional information
may appear on the same screen as mandatory disclosures that are posted
on an Internet web site. Except to the extent required by the
regulation, disclosures do not have to be provided separately from
other information. Advertisements should not be integrated into the
text of the disclosure in a manner that violates the clear and
conspicuous standard.
Commenters also had questions about the use of navigational tools
with electronic disclosures. For example, some believed that such tools
might be helpful in directing consumers to related information that
explains the terminology used in the disclosures. Many Internet web
sites use navigational tools that are conspicuous through the use of
bold text, larger fonts, different colors, underlining, or other
methods of highlighting. Such tools are not per se prohibited so long
as they are not used in a manner that would violate the clear and
conspicuous standard.
Providing Timely Disclosures
Disclosures delivered electronically must comply with existing
timing requirements under TISA and Regulation DD. See Sec. 230.4(a).
Commenters on the Board's 1999 proposals requested specific guidance
that an electronic disclosure would be considered timely based on the
time it is sent by e-mail or posted on an Internet web site, regardless
of when the consumer receives or reads the disclosure.
Under the final rule, consistent with rules for disclosures that
are sent by postal mail, disclosures provided by e-mail are timely when
they are sent by the required time. Disclosures posted periodically at
an Internet web site are timely if, by the required time, the
depository institution both makes the disclosures available at that
location and, in accordance with Sec. 230.10(d)(2), sends a notice
alerting the consumer that the disclosures have been posted. For
example, under Sec. 230.5, institutions must give advance notice to
affected customers at least 30 calendar days in advance of certain
changes. For a change in terms notice posted on the Internet, an
institution must both post the notice and notify consumers of its
availability at least 30 days in advance of the change. Comment 10(b)-
3(ii) contains this guidance.
Certain disclosures must be provided before the consumer opens an
account or a service is provided. When a depository institution permits
the consumer to open an account on-line, the consumer must be required
to access the disclosures required under Sec. 230.4 before the account
is opened. A link to the disclosures satisfies the timing rule if the
consumer cannot bypass the disclosure 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. Comment 10(b)-3(i) contains this guidance, as proposed.
Some industry commenters believed that requiring disclosures to
automatically appear or be accessed by the consumer is cumbersome and
unnecessary. Some commenters suggested that the Board allow the
required disclosures to be accessible via a clearly marked navigational
tool; they believe that once the tool is provided, the disclosure
should be deemed to have been provided to the consumer.
TISA and Regulation DD require that depository institutions provide
or send disclosures to consumers. It is not sufficient for institutions
to provide a bypassable navigational tool that merely gives consumers
the option of receiving disclosures. Such an approach reduces the
likelihood that consumers actually receive the disclosures. The interim
final rule ensures that consumers actually see the disclosures provided
electronically so that they have the opportunity to read them before
opening an account.
Commenters on the various proposals requested guidance on the
depository institution's duty in cases where an automated teller
machine (ATM) or other automated equipment controlled by the depository
institution malfunctions or otherwise fails to operate properly and
cannot provide timely disclosures. Where the depository institution
controls the equipment and disclosures are required at that time, an
institution might not be liable for failing to provide timely
disclosures if the defense in section 271(c) of TISA is available.
Providing Disclosures in a Form the Consumer May Keep
Under TISA and Regulation DD, disclosures required to be in writing
also must be in a form the consumer can retain. (See Sec. 230.3(a))
Electronic disclosures are subject to this requirement. Comment 10(b)-4
contains guidance on this requirement.
Consumers may communicate electronically with depository
institutions 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), a consumer may not have the ability at a given time to
preserve TISA disclosures presented on-screen. To ensure that consumers
have an adequate opportunity to access and retain the disclosures, the
depository institution also must send them to the consumer's designated
e-mail address or make them available at another location, for example,
on the depository institution's Internet web site, where the
information may be retrieved at a later date.
Where the depository institution controls the equipment providing
the electronic disclosures (for example, an ATM or computer terminal
located in the depository institution's lobby), the
[[Page 17800]]
depository institution must ensure that the consumer has the
opportunity to retain the required information. Comment 10(b)-5
contains this guidance.
10(c) When Consent Is Required
Under the E-Sign Act, consumers must affirmatively consent before
they receive electronic disclosures ``relating to a transaction'' if
the disclosures are required by law or regulation to be in writing.
Section 230.10(c) is added to provide that certain disclosures are not
deemed to be related to a transaction for purposes of the E-Sign Act's
consumer consent provision. These include disclosures in connection
with advertisements (Sec. 230.8) and disclosures about deposit accounts
that are provided upon request (Sec. 230.4(a)(2)). Advertising
disclosures are available to the general public. Consumers receiving
disclosures on request may not open an account; those that do open an
account will ultimately receive account opening disclosures subject to
the consent requirements.
10(d) Address or Location To Receive Electronic Communication
Consistent with the 1999 proposals, the interim rule provides that
depository institutions may deliver electronic disclosures by sending
them to a consumer's e-mail address. Alternatively, the rule provides
that depository institutions may make the disclosures available at
another location such as an Internet web site. If the depository
institution makes a disclosure available at such a location, the
depository institution effectively delivers the disclosure by sending a
notice alerting the consumer when the disclosure can be accessed and
making the disclosure available for at least 90 days. The time period
for keeping disclosures available at a location such as a depository
institution's Internet web site under the interim rule differs from the
1999 proposals, based on commenters' concerns as discussed below.
10(d)(1)
For purposes of Sec. 226.10(d), a consumer's electronic address is
an e-mail address that is not limited to receiving communications
transmitted solely by the depository institution, as proposed. This
guidance is contained in comment 10(d)(1)-1.
An electronic address would not include systems that permit
communication only between the consumer and the depository institution,
for example, home-banking programs that allow consumers to communicate
directly with a depository institution on-line with the use of a
computer and modem. These systems, like a depository institution's web
site accessed via the Internet, give consumers access to information
about their accounts at a location controlled by the depository
institution. In both cases, the depository institution determines how
long disclosures will be available to the consumer. Consumers who
receive disclosures at their e-mail address may choose when to review,
and for how long to retain, account information. Consumers who receive
disclosures by contacting a depository institution's site, however,
need to be alerted when the information is first available in order to
ensure that they have the opportunity to access the information before
it is removed. Thus, disclosures provided using systems such as home-
banking programs are treated in the same manner as disclosures made
available at an Internet web site, and a notice alerting the consumer
when disclosures are posted must be sent, by e-mail or to a postal
address, at the depository institution's option.
10(d)(2)
Under Sec. 230.10(d)(2)(i) of the interim rule, for disclosures
made available at an Internet web site, a notice alerting the consumer
when disclosures are posted must be sent, by e-mail (or to a postal
address, at the depository institution's option). Section
230.10(d)(2)(i) requires that the alert notice identify the account
involved and the address or other location where the disclosure is
available. Comment 10(d)(2)-1 provides guidance on the level of detail
required in identifying the account.
As proposed, under Sec. 230.10(d)(2)(ii) the interim rule,
disclosures provided at an Internet web site must remain available for
at least 90 days. The requirement seeks to ensure that consumers have
adequate time to access and retain a disclosure under a variety of
circumstances, such as when a consumer 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. Comment 10(d)(2)-2 is added to provide that
during this period, the actual disclosures must be available to the
consumer, but the institution has discretion to determine whether they
should be available at the same location for the entire period.
Some industry commenters believed the 90-day time period is
reasonable and feasible. About an equal number of commenters believed
it was too burdensome and costly; some of these commenters suggested
periods that ranged from 30 to 60 days.
The 1999 proposals provided that after the 90-day time period,
disclosures would be available upon consumers' request, generally for
24 months, in the same format as initially provided to the consumer.
The 24-month period is consistent with a depository institution's duty
to retain records that evidence their compliance. Consumer advocates
supported the proposed retention period; some recommended that
disclosures should be available upon request for the length of the
contractual relationship with the consumer.
Industry commenters strongly opposed the 24-month period. Many
believed that keeping copies of electronic disclosures actually
provided to consumers for that period of time would be costly and
burdensome. Moreover, industry commenters believed that once a consumer
has accessed the disclosures, the consumer rather than the depository
institution should have the duty to retain them for future reference.
They also noted that under existing record retention requirements
applicable to paper disclosures, a depository institution need only
demonstrate compliance with the rules, but need not retain copies of
the actual disclosures provided to consumers.
The requirement for depository institutions to retain the
disclosures in the format provided duplicate disclosures upon request
for 24 months has not been adopted. A depository institution's duty to
retain evidence of compliance for 24 months remains unchanged.
10(d)(3) Exceptions
Section 230.10(d)(3) is added to make clear that the requirements
of paragraphs (i) and (ii) of Sec. 230.10(d)(2) do not apply to
disclosures in certain advertisements (Sec. 230.8), and that paragraph
(ii) of Sec. 230.10(d)(2) does not apply to disclosures made available
upon a consumer's request (Sec. 230.4(a)).
10(e) Redelivery
Industry commenters on the 1998 proposal asked for clarification
that sending the electronic disclosures complies with the regulation,
and that institutions are not required to confirm that the consumer
actually received them. Consumer advocates asked that institutions be
required to verify the delivery of disclosures by return receipt, in
the case of e-mail. In the 1999
[[Page 17801]]
proposals, the Board solicited comment on the need for and the
feasibility of such a requirement.
Consumer advocates believe that e-mail systems are not yet
sufficiently reliable and that safeguards are necessary to ensure that
consumers actually receive disclosures. Industry commenters stated that
a return receipt requirement would be costly and burdensome, and would
require depository institutions to monitor return receipts in every
case to determine that individual consumers received the disclosures.
Section 101(c) of the E-Sign Act requires that consumers consent
electronically, or confirm their consents electronically, in a manner
that reasonably demonstrates that the consumer can access the
information that the institution will be providing. This requirement
seeks to verify at the outset that the consumer is actually capable of
receiving the information in the electronic format being used by the
institution. After the consumer consents, the E-Sign Act also requires
the institution to notify consumers of changes that materially affect
consumers' ability to access electronic disclosures.
The interim rule does not impose a verification requirement because
the cost and burden associated with verifying delivery of all
disclosures would not be warranted. When electronic disclosures are
returned undelivered, however, Sec. 230.10(e) imposes a duty to attempt
redelivery (either electronically or to a postal address) based on
information in the institution's own files. Unlike paper disclosures
delivered by the postal service, there generally is no commonly-
accepted mechanism for reporting a change in electronic address or for
forwarding e-mail. Where a depository institution actually knows that
the delivery of an electronic disclosure did not take place, the
institution should take reasonable steps to effectuate delivery in some
way. For example, if an e-mail message to the consumer (containing an
alert notice or other disclosure) is returned as undeliverable, the
redelivery requirement is satisfied if the institution sends the
disclosure to a different e-mail address or postal address that the
institution has on file. Sending the disclosures a second time to the
same electronic address would not be sufficient if the institution has
a different address for the consumer on file. Comment 10(e)-1 provides
this guidance.
This redelivery requirement is limited to situations where the
electronic communication cannot be delivered and does not apply to
situations where the disclosure is delivered but, for example, cannot
be read by the consumer due to technical problems with the consumer's
software. A depository institution's duty to redeliver a disclosure
under Sec. 230.10(e) does not affect the timeliness of the disclosure.
Depository institutions comply with the timing requirements of the
regulation when a disclosure is initially sent in a timely manner, even
though the disclosure is returned undelivered and the depository
institution is required under Sec. 230.10(e) to take reasonable steps
to attempt redelivery.
10(f) Entities Other Than a Depository Institution
The requirements of Sec. 230.8 apply to advertisements by deposit
brokers. Section 230.10(f) is added to clarify that deposit brokers who
are required to comply with Regulation DD may use electronic
communication to do so, provided the requirements of Sec. 230.10 are
satisfied.
Additional Issues
Document Integrity
The interim rule does not impose document integrity standards.
Consumer advocates and others have expressed concerns that electronic
documents can be altered more easily than paper documents. They say
that consumers' ability to enforce rights under the consumer protection
laws could be impaired, in some cases, if the authenticity of
disclosures they retain cannot be demonstrated.
Institutions are generally required to retain evidence of
compliance with the Board's consumer regulations. Accordingly, the
Board requested comment on the feasibility of requiring institutions to
have systems in place capable of detecting whether or not information
has been altered, or to use independent certification authorities to
verify disclosure documents.
Consumer advocates strongly supported document integrity
requirements (including the use of certification authorities) that
would apply to all-electronic disclosures. Signatures, notary seals,
and verification procedures such as recordation are used to protect
against alterations for transactions memorialized in paper form.
Consumer advocates believe that comparable verification procedures are
needed for electronic disclosures as well.
Industry commenters opposed mandatory document integrity standards
for electronic disclosures. Because the technology in this area is
still evolving, they believed that mandatory standards would be
premature. Others believed that imposing document integrity standards
or requiring the use of certification authorities would be costly to
implement.
The Board recognizes the concerns about document integrity, but
believes it is not practicable at this time to impose document
integrity standards for consumer disclosures or mandate the use of
independent certification authorities. Effective methods may be too
costly. Other less costly methods may deter alterations in some cases,
but would not necessarily ensure document integrity.
Moreover, the issue of document integrity affects electronic
commerce generally and is not unique to the written disclosures
required under the consumer protection laws administered by the Board.
Section 104(b)(3) of the E-Sign Act authorizes federal or state
regulatory agencies to specify performance standards to assure the
accuracy, record integrity, and accessibility of records that are
required to be retained, but prohibits the agencies from requiring the
use of a particular type of software or hardware in order to comply
with record retention requirements. Technology is likely to develop to
protect electronic contracts and other legal documents. Thus, it seems
premature for the Board to specify any particular standards or methods
for consumer disclosure at this time.
V. Form of Comment Letters
Comment letters should refer to Docket No. R-1044, and, when
possible, should use a standard typeface with a font size of 10 or 12.
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.
VI. Regulatory Flexibility Analysis
The Board has reviewed these interim amendments to Regulation DD in
accordance with section 3(a) of the Regulatory Flexibility Act (5
U.S.C. Sec. 604), the Board has reviewed these interim amendments to
Regulation DD. Two of the three requirements of a final regulatory
flexibility analysis under the Act are (1) a succinct statement of the
need for and the objectives of the rule and (2) a summary of the issues
raised
[[Page 17802]]
by the public comments, the agency's assessment of those issues, and a
statement of the changes made in the final rule in response to the
comments. These two areas are discussed above.
The third requirement of the analysis is a description of
significant alternatives to the rule that would minimize the rule's
economic impact on small entities and reasons why the alternatives were
rejected. This interim final rule is designed to provide depository
institutions with an alternative method of providing disclosures; the
rule will relieve compliance burden by giving depository institutions
flexibility in providing disclosures required by the regulation.
Overall, the costs of providing electronic disclosures are not expected
to have significant impact on small entities. The expectation is that
providing electronic disclosures may ultimately reduce the costs
associated with providing disclosures.
VII. 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 rule under the
authority delegated to the Board by the Office of Management and
Budget. The Federal Reserve may not conduct or sponsor, and an
organization is not required to respond to, this information collection
unless it displays a currently valid OMB control number. The OMB
control number is 7100-0271.
The collection of information that is revised by this rulemaking is
found in 12 CFR part 230 and in Appendix B. This information is
mandatory (15 U.S.C. 4301 et seq.) to evidence compliance with the
requirements of the Regulation DD and the Truth in Savings Act (TISA).
The respondents/recordkeepers are for-profit financial institutions,
including small businesses. Institutions are required to retain records
for twenty-four months. This regulation applies to all types of
depository institutions, 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 revisions provide that depository institutions may deliver
disclosures electronically upon obtaining consumers affirmative consent
in accordance with the E-Sign Act. The revisions provide guidance to
institutions on the timing and delivery of electronic disclosures, to
ensure that consumers have adequate opportunity to access and retain
the information. With respect to state member banks, it is estimated
that there are 1,000 respondent/recordkeepers and an average frequency
of 87,071 responses per respondent each year. Current annual burden is
estimated to be 1,482,000 hours. No comments specifically addressing
the burden estimate were received, therefore, the numbers remain
unchanged. There is estimated to be no additional cost burden and no
capital or start up cost associated with the interim rule.
Because the records would be maintained at state member banks and
the notices are not provided to the Federal Reserve, no issue of
confidentiality arises under the Freedom of Information Act.
The Board has a continuing interest in the public's opinions of the
Federal Reserve's collections of information. At any time, comments
regarding the burden estimate, or any other aspect of this collection
of information, including suggestions for reducing the burden, may be
sent to: Secretary, Board of Governors of the Federal Reserve System,
20th and C Streets, NW., Washington, DC 20551; and to the Office of
Management and Budget, Paperwork Reduction Project (7100-0271),
Washington, DC 20503.
VIII. Solicitation of Comments Regarding the Use of ``Plain
Language''
Section 722 of the Gramm-Leach-Bliley Act of 1999 requires the
Board to use ``plain language'' in all proposed and final rules
published after January 1, 2000. The Board invites comments on whether
the interim rule is clearly stated and effectively organized, and how
the Board might make the rule easier to understand.
List of Subjects in 12 CFR Part 230
Advertising, Banks, banking, Consumer protection, Federal Reserve
System, Reporting and record keeping requirements, Truth in Savings.
For the reasons set forth in the preamble, the Board amends
Regulation DD, 12 CFR part 230, as set forth below:
PART 230--TRUTH IN SAVINGS (REGULATION DD)
1. The authority citation for part 230 continues to read as
follows:
Authority: 12 U.S.C. 4301 et seq.
2. Section 230.3 is amended by revising paragraph (a) and adding a
new paragraph (g) as follows:
Sec. 230.3 General disclosure requirements.
(a) Form. Depository institutions shall make the disclosures
required by Secs. 230.4 through 230.6 and Sec. 230.10 of this part, as
applicable, clearly and conspicuously, in writing, and in a form the
consumer may keep. Disclosures for each account offered by an
institution may be presented separately or combined with disclosures
for the institution's other accounts, as long as it is clear which
disclosures are applicable to the consumer's account.
* * * * *
(g) Electronic communication. For rules governing the electronic
delivery of disclosures, including the definition of electronic
communication, see Sec. 230.10.0
3. Section 230.4 is amended by revising paragraph (a)(1) and
paragraph (a)(2)(i) to read as follows:
Sec. 230.4 Account disclosures.
(a) Delivery of account disclosures. (1) Account opening. (i)
General. A depository institution shall provide account disclosures to
a consumer before an account is opened or a service is provided,
whichever is earlier. An institution 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 consumer is
not present at the institution when the account is opened or the
service is provided and has not already received the disclosures, the
institution shall 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 consumer who is not present at
the institution uses electronic communication (as defined in
Sec. 230.10) 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 depository institution shall provide account
disclosures to a consumer upon request. If a consumer who is not
present at the institution makes a request, the institution shall 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 consumer provides an electronic mail address.
* * * * *
Sec. 230.6 [Amended]
4. Section 230.6 is amended by removing paragraph (c).
[[Page 17803]]
5. Add a new Sec. 230.10 to read as follows:
Sec. 230.10 Electronic communication.
(a) Definition. ``Electronic communication'' means a message
transmitted electronically between a depository institution and a
consumer 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 depository institution 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 depository
institution is required to obtain a consumer's affirmative consent when
providing disclosures related to a transaction. For purposes of this
requirement, the disclosures required under Secs. 230.4(a)(2) and 230.8
are deemed not to be related to a transaction.
(d) Address or location to receive electronic communication. A
depository institution that uses electronic communication to provide
disclosures required by this part shall:
(1) Send the disclosure to the consumer's electronic address; or
(2) Make the disclosure available at another location such as an
Internet web site; and
(i) Alert the consumer of the disclosure's availability by sending
a notice to the consumer's electronic address (or to a postal address,
at the depository institution's option). The notice shall 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 consumer of the disclosure, whichever comes later.
(3) Exceptions. A depository institution need not comply with
paragraph (d)(2)(ii) of this section for disclosures required under
Sec. 230.4(a)(2), and need not comply with paragraphs (d)(2)(i) and
(ii) of this section for disclosures required under Sec. 230.8.
(e) Redelivery. When a disclosure provided by electronic
communication is returned to a depository institution undelivered, the
depository institution shall take reasonable steps to attempt
redelivery using information in its files.
(f) Entities other than a depository institution. A person other
than a depository institution that is required to comply with this part
may use electronic communication in accordance with the requirements of
this section, as applicable.
6. In Supplement I to Part 230, the following amendments are made:
a. Under Section 230.2 Definitions, under (q) Periodic statement,
paragraph ii. is removed and paragraph iii. is redesignated as
paragraph ii.
b. Under Section 230.4 Account disclosures, under (a)(2) Requests,
under (a)(2)(i), paragraph 3. is revised and a new paragraph 4. is
added.
c. Under Section 230.8 Advertising, under (a) Misleading or
inaccurate advertisements, a new paragraph 9. is added.
d. Under Section 230.8 Advertising, under (b) Permissible rates, a
new paragraph 4. is added.
e. Under Section 230.8 Advertising, under (e)(1) Certain media, a
new heading (e)(1)(i), and a new paragraph 1. are added.
f. A new Section 230.10 Requirements for electronic communication
is added at the end of Supplement I.
The amendments read as follows:
* * * * *
Supplement I to Part 230--Official Staff Interpretations
* * * * *
Section 230.4 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 consumers do
not make in person, including requests made by electronic
communication.
4. Requests by electronic communication. Posting disclosures on
a depository institution's web site generally does not relieve the
institution's duty to provide disclosures upon request. If the
consumer provides an e-mail address, the institution may provide the
disclosures electronically, but the institution must either send the
disclosures by e-mail or send a notice to the consumer's e-mail
address pursuant to Sec. 230.10(d)(2)(i) to inform the consumer
where the disclosures are posted.
* * * * *
Section 230.8 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 consumer
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 consumer to the additional information.
(b) Permissible Rates
* * * * *
4. Electronic communication. An interest 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 consumer must be
able to view both rates simultaneously. This requirement is not
satisfied if the consumer can view the annual percentage yield only
by use of a link that connects the consumer to information appearing
at another location.
* * * * *
(e)(1) Certain Media
(e)(1)(i)
1. Internet advertisements. The exemption for advertisements
made through broadcast or electronic media does not extend to
advertisements made by electronic communication, such as
advertisements posted on the Internet or sent by e-mail.
* * * * *
Section 230.10 Electronic Communication
(b) General Rule
1. Relationship to the E-Sign Act. The E-Sign 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. An institution must provide
electronic disclosures using a clear and conspicuous format. Also,
in accordance with the E-Sign Act:
i. The institution must disclose the requirements for accessing
and retaining disclosures in that format;
ii. The consumer must demonstrate the ability to access the
information electronically and affirmatively consent to electronic
delivery; and
iii. The institution must provide the disclosures in accordance
with the specified requirements.
3. Timing and effective delivery. i. When a consumer opens an
account on-line. When a consumer opens an account on-line, the
consumer must be required to access the disclosures required under
Sec. 230.4 before the account is opened or a service is provided,
whichever is earlier. A link to the disclosures satisfies the timing
rule if the consumer 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 institution is not required to confirm
that the consumer has read the disclosure.
[[Page 17804]]
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-in-terms and other notices, are timely when the
institution has both made the disclosures available and sent a
notice alerting consumer that the disclosures have been posted. For
example, under Sec. 230.5, institutions must give advance notice to
affected customers at least 30 calendar days in advance of certain
changes. For a change in terms notice posted on the Internet, an
institution must both post the notice and notify consumers of its
availability at least 30 days in advance of the change.
4. Retainability of disclosures. Depository institutions satisfy
the requirement that disclosures be in a form that the consumer 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 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 depository institution's equipment. A
depository institution that controls the equipment providing
electronic disclosures to consumers (for example, a computer
terminal located in a depository institution'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 consumer may keep. For
example, if disclosures are required at the time of an on-line
transaction, the disclosures must be sent to the consumer's e-mail
address or must be posted at another location such as the
institution's Internet web site, unless the institution provides a
printer that automatically prints the disclosures.
(d) Address or Location To Receive Electronic Communication
(d)(1)
1. Electronic address. A consumer's electronic address is an e-
mail address that is not limited to receiving communications
transmitted solely by the depository institution.
(d)(2)
1. Identifying account involved. A depository institution 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 consumer has only one deposit account, and no
confusion would result, the depository institution may refer to
``your deposit account.'' If the consumer has two accounts, the
depository institution 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 consumer must
be available for at least 90 days, but the institution 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
consumer (containing an alert notice or other disclosure) is
returned as undeliverable, the redelivery requirement is satisfied
if, for example, the depository institution sends the disclosure to
a different e-mail address or postal address that the depository
institution has on file for the consumer. Sending the disclosures a
second time to the same electronic is not sufficient if the
depository institution has a different address for the consumer on
file.
By order of the Board of Governors of the Federal Reserve
System, March 27, 2001.
Robert deV. Frierson,
Associate Secretary of the Board.
[FR Doc. 01-8149 Filed 4-3-01; 8:45 am]
BILLING CODE 6210-01-P