[Federal Register Volume 66, Number 120 (Thursday, June 21, 2001)]
[Rules and Regulations]
[Pages 33159-33164]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-15471]


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NATIONAL CREDIT UNION ADMINISTRATION

12 CFR PART 707


Truth in Savings

AGENCY: National Credit Union Administration (NCUA).

ACTION: Interim final rule with request for comments.

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SUMMARY: NCUA is amending its regulation that implements the Truth in 
Savings Act (TISA). This interim final rule establishes uniform 
standards for the electronic delivery of disclosures required by TISA. 
NCUA is also amending its regulation to address electronic 
advertisements. These amendments conform to the Electronic Signatures 
in Global and National Commerce Act (E-Sign Act).

DATES: This rule is effective June 21, 2001. To allow time for any 
necessary operational changes, however, the mandatory compliance date 
is October 1, 2001. Comments must be received on or before August 20, 
2001.

ADDRESSES: Comments should be directed to Becky Baker, Secretary of the 
Board. Mail or hand-deliver comments to: National Credit Union 
Administration, 1775 Duke Street, Alexandria, VA 22314-3428. You may 
also fax comments to (703) 518-6319 or e-mail comments to 
[email protected]. Please send comments by one method only.

FOR FURTHER INFORMATION CONTACT: Frank S. Kressman, Staff Attorney, at 
the above address or telephone: (703) 518-6540.

SUPPLEMENTARY INFORMATION

A. Background

    Part 707 of NCUA's regulations implements TISA. 12 CFR part 707. 
The purpose of part 707 and TISA is to assist members in making 
meaningful comparisons among accounts offered by credit unions and 
other financial institutions. Part 707 and TISA require, among other 
things, disclosure of yields, fees and other terms concerning share 
accounts to members at account opening, upon request, when changes in 
terms occur and in periodic statements. Many of these disclosures must 
be written.
    In April 2001, The Board of Governors of the Federal Reserve System 
(Federal Reserve) issued an interim rule amending its Regulation DD, 
which implements TISA (April 2001 Interim Rule). That rule established 
uniform standards for the timing and electronic delivery of disclosures 
required by TISA and Regulation DD, and addressed electronic 
advertisements. 66 FR 17795 (April 4, 2001). The Federal Reserve has 
stated that electronic disclosures can effectively reduce compliance 
costs for financial institutions and allow them to provide Regulation 
DD disclosures to the consumer more efficiently without adversely 
affecting consumer protections. Under that rule, disclosures may be 
sent by e-mail to an electronic address designated by the consumer, or 
made available at another location, such as an Internet web site. If 
disclosures are not sent by e-mail, consumers must receive a notice 
informing them that they are available elsewhere. If posted to a web 
site, disclosures must be available for at least 90 days to allow 
consumers adequate time to access them. For disclosures that must be 
provided before account opening, consumers are required to access them 
before the account is opened. Under this rule, financial institutions 
must make a good faith attempt to redeliver electronic disclosures that 
are returned as undelivered, using the address information available in 
their files.
    These amendments conform to the E-Sign Act. 15 U.S.C. 7001. The E-
Sign Act was enacted in June 2000, to encourage the continued expansion 
of electronic commerce. It generally provides that electronic documents 
and signatures have the same validity as paper documents and 
handwritten signatures. It provides that consumer disclosures may be 
provided in electronic form only if the consumer affirmatively consents 
after receiving information specified in the statute. The consumer 
consent provisions in the E-Sign Act became effective October 1, 2000. 
Section 101(c)(5) of the E-Sign Act provides that consumers who gave 
consent prior to the effective date are not subject to those consent 
requirements.
    In September 1999, before enactment of the E-Sign Act, the Federal 
Reserve issued an interim rule that also amended Regulation DD 
(September 1999 Interim Rule). 64 FR 49846 (September 14, 1999). With 
the issuance of the April 2001 Interim Rule, the Federal Reserve has 
withdrawn the September 1999 Interim Rule.
    TISA requires NCUA to promulgate regulations substantially similar 
to those promulgated by the Federal Reserve within 90 days of the 
effective date of the Federal Reserve's rules. 12 U.S.C. 4311(b). In 
doing so, NCUA is to take into account the unique nature of credit 
unions and the limitations under which they may pay dividends on member 
accounts. In compliance with TISA, as discussed more fully below, NCUA 
is issuing this interim final rule with

[[Page 33160]]

request for comments that is substantially similar to the Federal 
Reserve's April 2001 Interim Rule.

B. Interim Final Rule

    The NCUA Board is issuing this rule as an interim final rule 
because there is a strong public interest in having in place consumer 
oriented rules that are consistent with those recently promulgated by 
the Federal Reserve. Additionally, as discussed above, NCUA is 
statutorily required to issue rules substantively similar to those of 
the Federal Reserve within 90 days of the effective date of the Federal 
Reserve's rules. Accordingly, for good cause, the Board finds that, 
pursuant to 5 U.S.C. 553(b)(3)(B), notice and public procedures are 
impracticable, unnecessary, and contrary to the public interest; and, 
pursuant to 5 U.S.C. 553(d)(3), the rule will be effective immediately 
and without 30 days advance notice of publication. Although the rule is 
being issued as an interim final rule and is effective immediately, the 
NCUA Board encourages interested parties to submit comments.

C. Section by Section Analysis

Section 707.3 General Disclosure Requirements

    Section 707.3(a) is revised to reflect that the disclosures 
required by the newly created Sec. 707.10 pertaining to electronic 
communications are subject to the same requirements as other 
disclosures required under part 707. Section 707.3(g) is added to 
provide a cross reference to other rules governing the electronic 
delivery of disclosures referenced in the newly created Sec. 707.10.

Section 707.4(a)(1) Account Disclosures--Account-Opening

    Credit unions must provide account-opening disclosures to members 
or potential members before an account is opened or a service is 
provided. Credit unions may delay delivering these disclosures if the 
member is not present when the account is opened or service is 
provided. This section provides that in such cases, account-opening 
disclosures must be mailed or delivered no later than 20 calendar days 
after the account is opened or the service is provided, whichever is 
earlier. The corresponding section in Regulation DD permits a 10-
business day delay. NCUA amends this provision to conform to the 
Federal Reserve's time frame.
    Furthermore, this section is amended to provide that credit unions 
may not delay delivering account-opening disclosures when an account is 
opened by an ``electronic communication'' as defined in Sec. 707.10. 
The Federal Reserve has determined that the difficulties in providing 
disclosures for accounts opened by mail or telephone are not present 
for accounts opened by electronic communication using visual text. As a 
result, required disclosures must be provided before an account is 
opened by an electronic communication. Neither TISA nor part 707 
specifies when an account is considered opened. Credit unions may 
establish policies and procedures to address after-hours requests to 
open accounts to ensure that accurate disclosures are provided before 
the account is deemed opened by the credit union.

Section 707.4(a)(2) Account Disclosures--Requests

    Section 707.4(a)(2)(i) is revised to require credit unions to mail 
or deliver disclosures in paper form or electronically to members or 
potential members who request them, but who are not present at the 
credit union when the request is made. The credit union has a 
reasonable time in which to do this. To provide disclosures 
electronically, the credit union must send the disclosures to the 
member's e-mail address, or send a notice alerting the member to the 
location of the disclosures, such as the credit union's web site.

Appendix C--Section 707.4(a)(2)(i)-3--Timing for Response

    Section 707.4(a)(2)(i) does not define what a ``reasonable time'' 
is for responding to requests for account information from members who 
are not present at the credit union at the time of the request. Section 
707.4(a)(2)(i)-3 in Appendix C to part 707 is revised to provide that 
ten business days is a reasonable time for responding to these 
requests.

Appendix C--Section 707.4(a)(2)(i)-4--Request by Electronic 
Communication

    Section 707.4(a)(2)(i) permits credit unions to deliver requested 
disclosures electronically if the member provides an e-mail address 
where the disclosures may be sent. Section 707.4(a)(2)(i)-4 in Appendix 
C to part 707 is added to clarify that posting disclosures on a credit 
union's web site generally does not relieve the credit union's duty to 
provide disclosures upon request. If the member has provided an e-mail 
address, the credit union must either send the disclosures by e-mail or 
send a notice to the member pursuant to Sec. 707.10(d)(2)(i) to inform 
the member where the disclosures are posted.

Section 707.6 Periodic Statement Disclosures

    The E-Sign Act permits credit unions to provide disclosures to 
members using electronic communication, if the credit union complies 
with Section 101(c) of that statute. Section 101(c) of the E-Sign Act 
requires credit unions to provide specific information about the 
electronic delivery of disclosures and obtain the member's affirmative 
consent to receive electronic disclosures. As discussed more fully 
below, Sec. 707.10(b) is adopted to set forth the general rule that 
credit unions may provide disclosures electronically only if the credit 
union complies with Section 101(c) of the E-Sign Act. This requirement 
applies to periodic statement disclosures.
    After the Federal Reserve issued the September 1999 Interim Rule, 
NCUA amended Sec. 707.6 by adding paragraph (c) to permit credit unions 
to deliver periodic statements electronically. 64 FR 66355 (November 
26, 1999); 65 FR 21131 (April 20, 2000). With the adoption of 
Sec. 707.10(b), however, Sec. 707.6(c) is no longer current and is 
withdrawn.

Appendix C--Section 707.8(a)--Misleading or Inaccurate Advertisements

    Stating certain account terms in an advertisement for a deposit 
account triggers the disclosure of additional terms. If an 
advertisement using electronic communication displays a triggering 
term, such as ``bonus'' or ``annual percentage yield'', the 
advertisement must clearly refer the member to the location where the 
additional required information begins. For example, an advertisement 
that includes a bonus or annual percentage yield may be accompanied by 
a link in close proximity that directly takes the member to the 
additional information. Paragraph (9) is added to Sec. 707.8(a) in 
Appendix C to part 707 to reflect this interpretation.

Appendix C--Section 707.8(b)--Permissible Rates

    Section 707.8(b) generally permits credit unions to state a 
dividend rate in addition to the annual percentage yield (APY), 
provided the dividend rate is stated in conjunction with, but not more 
conspicuously than, the APY. For advertisements using electronic 
communications, the member must be able to view both rates 
simultaneously. This requirement is not satisfied if the member can 
only view the APY by use of a link that connects the member to 
information appearing at another location. Paragraph (4) is added to

[[Page 33161]]

Sec. 707.8(b) in Appendix C to part 707 to reflect this interpretation.

Appendix C--Section 707.8(e)(1)(i)--Exemption for Certain 
Advertisements

    Section 707.8(e) exempts from some requirements advertisements made 
through broadcast or electronic media, such as television and radio or 
outdoor billboards. This exemption does not apply to electronic 
advertisements using electronic communication, such as Internet 
advertisements, because they do not have the same time and space 
constraints as other exempted advertisements. New paragraph (1) is 
added to Sec. 707.8(e)(1)(i) in Appendix C to part 707 to reflect this 
interpretation.

Section 707.10(a) Electronic Communication

    Electronic communication is defined as a message transmitted 
electronically between a credit union and a member in a format that 
allows visual text to be displayed on equipment, for example, a 
personal computer monitor. Equipment is not limited to personal 
computers, provided the visual display used to deliver the disclosures 
meets the ``clear and conspicuous'' format requirement discussed below. 
Credit unions that accommodate vision-impaired members by providing 
disclosures that do not use visual text must also provide disclosures 
using visual text.

Section 707.10(b) General Rule

    The E-Sign Act permits credit unions to provide disclosures using 
electronic communication, if the credit union complies with the 
consumer consent requirements in Section 101(c) of the E-Sign Act. 
Section 101(c) requires credit unions to provide specific information 
about the electronic delivery of disclosures before obtaining the 
member's affirmative consent to receive electronic disclosures.
    The E-Sign Act does not affect any requirement imposed under TISA 
other than a provision that requires disclosures to be in paper form, 
nor does it affect the content or timing of disclosures. Electronic 
disclosures are subject to the format, timing and retainability rules 
and the clear and conspicuous standard of part 707. This guidance is 
reflected generally in Sec. 707.10(b) in Appendix C to part 707.
    Credit unions must provide electronic disclosures using a clear and 
conspicuous format. Also, in accordance with the E-Sign Act: (1) The 
credit union must disclose the requirements for accessing and retaining 
disclosures in that format; (2) the member must demonstrate the ability 
to access the information electronically and affirmatively consent to 
electronic delivery; and (3) the credit union must provide the 
disclosures in accordance with the specified requirements. Except to 
the extent required by part 707, disclosures do not have to be provided 
separately from other information. Electronically delivered disclosures 
must comply with existing timing requirements under TISA and part 707. 
Consistent with rules for paper disclosures, disclosures provided 
periodically by e-mail are timely if sent by the required time. 
Disclosures posted at an Internet web site are timely if, by the 
required time, the credit union makes the disclosures available at that 
location and sends a notice alerting the member that the disclosures 
have been posted. This guidance is reflected in Sec. 707.10(b)(3)(ii) 
in Appendix C to part 707.
    When a credit union permits a member to open an account on-line, 
the member must be required to access disclosures required by 
Sec. 707.4 before the account is opened. A link to the disclosures 
satisfies this timing rule if the member cannot bypass the disclosure 
before opening the account, or the disclosures must automatically 
appear on the screen, even if multiple screens are required to view the 
entire disclosure. It is not sufficient for credit unions to provide a 
bypassable navigational tool that gives members the option of receiving 
disclosures. This approach reduces the likelihood that members will 
actually receive the disclosures. This guidance is reflected in 
Sec. 707.10(b)(3)(i) in Appendix C to part 707.
    Disclosures required by TISA and part 707 to be in writing must 
also be in a form the member can retain. Electronic disclosures are 
subject to this same requirement. This guidance is reflected in 
Sec. 707.10(b)(4) in Appendix C to part 707.
    A credit union that controls the equipment providing electronic 
disclosures to a member, such as a computer terminal in the credit 
union's lobby or a public kiosk, must ensure that the equipment 
satisfies part 707's requirements to provide timely disclosures in a 
clear and conspicuous format and in a form that the member may keep. 
For example, if disclosures are required at the time of an on-line 
transaction, the disclosures must be sent to the member's e-mail 
address or must be posted at another location such as the credit 
union's web site, unless the credit union provides a printer that 
automatically prints the disclosures. This guidance is reflected in 
Sec. 707.10(b)(5) in Appendix C to part 707.

Section 707.10(c) When Consent Is Required

    Under the E-Sign Act, a member must give his affirmative consent to 
receive from the credit union electronic disclosures ``relating to a 
transaction'' that are required to be in writing by law or regulation. 
Section 707.10(c) provides that disclosures related to advertisements 
(Sec. 707.8) and those that are provided upon request 
(Sec. 707.4(a)(2)) are deemed not to be ``related to a transaction'' 
for purposes of this consent requirement.

Section 707.10(d)(1) Address or Location To Receive Electronic 
Communication.

    Credit unions may deliver electronic disclosures to a member's e-
mail address or make them available at another location such as a web 
site. If the credit union makes a disclosure available at such a 
location, it effectively delivers the disclosure by sending a notice 
alerting the member when the disclosure can be accessed and making it 
available for at least 90 days.
    For purposes of Sec. 707.10(d), a member's electronic address is an 
e-mail address that is not limited to receiving communications 
transmitted solely by the credit union. This guidance is reflected in 
Sec. 707.10(d) in Appendix C to part 707. An electronic address would 
not include systems that permit communication only between the member 
and the credit union, such as a home-banking program that allows a 
member to communicate directly with the credit union on-line with the 
use of a computer and modem. These systems, like a credit union's web 
site accessed via the Internet, give members access to account 
information at a location controlled by the credit union. In both 
instances, the credit union determines how long disclosures will be 
available to the member. Members who receive disclosures at their e-
mail addresses, however, may choose when to review, and for how long to 
retain, account information. Members who receive disclosures by 
contacting a credit union's web site, however, also need to be alerted 
when the information is first available to ensure that they have the 
opportunity to access the information before it is removed. 
Accordingly, disclosures provided using systems such as home-banking 
programs are treated in the same manner as disclosures made available 
at a web site. They require a notice to alert the member when 
disclosures are posted and the notice must be sent by e-mail or

[[Page 33162]]

to a postal address, at the credit union's option.

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

    Section 707.10(d)(2)(i) requires that the alert notice discussed 
above identify the account involved and the address or other location 
where the disclosure is available. Section 707.10(d)(2)-1 in Appendix C 
to part 707 provides guidance on the level of detail required in 
identifying the account.

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

    Section 707.10(d)(2)(ii) requires that disclosures provided at a 
web site must remain available for at least 90 days. This helps ensure 
that members have adequate time to access and retain a disclosure under 
a variety of circumstances, such as when a member may not be able for 
an extended period of time to access the information due to computer 
malfunctions, travel, or illness. The 90-day period is uniform for all 
disclosures, for ease of compliance. Section 707.10(d)(2)-2 in Appendix 
C to part 707 provides that while disclosures must be available for the 
entire 90-day period, the credit union has the discretion to determine 
whether they should be available at the same location for the entire 
period.

Section 707.10(d)(3) Exceptions

    Section 707.10(d)(3) clarifies that the requirements of 
Sec. 707.10(d)(2)(i) and (ii) do not apply to disclosures in certain 
advertisements (Sec. 707.8), and the requirements of 
Sec. 707.10(d)(2)(ii) do not apply to disclosures made available upon a 
member's request(Sec. 707.4(a)).

Section 707.10(e) Redelivery

    Part 707 does not require a credit union to verify that electronic 
disclosures it has sent were actually received by its members. The cost 
and burden of doing so would not be warranted. When electronic 
disclosures are returned undelivered, however, Sec. 707.10(e) imposes a 
duty on the credit union to attempt redelivery (either electronically 
or to a postal address) based on information in the credit union's own 
files. Where a credit union actually knows that the delivery of an 
electronic disclosure did not take place, the credit union should take 
reasonable steps to effectuate delivery in some way. For example, if an 
e-mail message to a member containing an alert notice or other 
disclosure is returned as undeliverable, the credit union satisfies the 
redelivery requirement if it sends the disclosure to a different e-mail 
address or postal address that it has on file. Sending the disclosure a 
second time to the same electronic address would not be sufficient if 
the credit union has a different address for the member on file. 
Section 707.10(e)-1 in Appendix C to part 707 provides this guidance.
    This redelivery requirement is limited to instances where the 
electronic communication has not been delivered. It does not apply to 
instances where the disclosure is delivered but cannot be read by the 
member due to technical problems with the member's software. A credit 
union will have complied with timing requirements for sending a 
disclosure when the disclosure is initially sent in a timely manner, 
even though it is returned undelivered and the credit union is required 
to take reasonable steps to attempt redelivery.

Section 707.10(f) Entities Other Than a Credit Union

    Section 707.10(f) provides that a person other than a credit union 
that is required to comply with part 707 may use electronic 
communication in accordance with the requirements of Sec. 707.10, as 
applicable.

D. Regulatory Procedures

Regulatory Flexibility Act

    The Regulatory Flexibility Act requires NCUA to prepare an analysis 
to describe any significant economic impact agency rulemaking may have 
on a substantial number of small credit unions. For purposes of this 
analysis, credit unions under $1 million in assets are considered small 
credit unions.
    This interim final rule provides credit unions with the flexibility 
of using an optional and alternative method of delivering certain 
required disclosures. Credit unions are free to choose not to utilize 
this alternative. Credit unions that choose to use this alternative 
will likely realize a reduction in their costs of delivery as a result. 
The NCUA has determined and certifies that this interim final rule will 
not have a significant economic impact on a substantial number of small 
credit unions. Accordingly, the NCUA has determined that a Regulatory 
Flexibility Analysis is not required.

Paperwork Reduction Act

    NCUA has determined that these amendments to part 707 do not 
increase paperwork requirements under the Paperwork Reduction Act of 
1995 and regulations of the Office of Management and Budget.

Executive Order 13132

    Executive Order 13132 encourages independent regulatory agencies to 
consider the impact of their regulatory actions on state and local 
interests. In adherence to fundamental federalism principles, NCUA, an 
independent regulatory agency as defined in 44 U.S.C. 3502(5), 
voluntarily complies with the executive order. This interim final rule 
applies to all federally-insured credit unions, but does not have 
substantial direct effect on the states, on the relationship between 
the national government and the states, or on the distribution of power 
and responsibilities among the various levels of government. NCUA has 
determined that this interim final rule does not constitute a policy 
that has federalism implications for purposes of the executive order.

Assessment of Federal Regulations and Policies on Families

    NCUA has determined that this rule will not affect family well-
being within the meaning of Section 654 of the Treasury and General 
Government Appropriations Act, 1999, Pub. L. 105-277, 112 Stat. 2681 
(1998).

Small Business Regulatory Enforcement Fairness Act

    The Small Business Regulatory Enforcement Fairness Act of 1996 
(Pub. L. 104-121) provides generally for congressional review of agency 
rules. A reporting requirement is triggered in instances where NCUA 
issues a final rule as defined by Section 551 of the Administrative 
Procedure Act. 5 U.S.C. 551. The Office of Management and Budget has 
determined that this rule is not a major rule for purposes of the Small 
Business Regulatory Enforcement Fairness Act of 1996.

List of Subjects 12 CFR Part 707

    Advertising, Consumer protection, Credit unions, Reporting and 
recordkeeping requirements, Truth in savings.

    By the National Credit Union Administration Board on June 14, 
2001.
Becky Baker,
Secretary of the Board.

    For the reasons stated above, NCUA amends 12 CFR part 707 as 
follows:

PART 707--TRUTH IN SAVINGS

    1. The authority citation for part 707 continues to read as 
follows:

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


    2. Section 707.3 is amended by revising paragraph (a) and adding a 
new paragraph (g) to read as follows:


Sec. 707.3  General disclosure requirements.

    (a) Form. Credit unions must make the disclosures required by 
Secs. 707.4

[[Page 33163]]

through 707.6 and Sec. 707.10 of this part, as applicable, clearly and 
conspicuously, in writing, and in a form the member or potential member 
may keep. Disclosures for each account offered by a credit union may be 
presented separately or combined with disclosures for the credit 
union's other accounts, as long as it is clear which disclosures are 
applicable to the member's account.
* * * * *
    (g) Electronic communication. For rules governing the electronic 
delivery of disclosures, including the definition of electronic 
communication, see Sec. 707.10.

    3. Section 707.4 is amended by revising paragraph (a)(1) and 
paragraph (a)(2)(i) to read as follows:


Sec. 707.4  Account disclosures.

    (a) Delivery of account disclosures.--(1) Account opening.--(i) 
General. A credit union must provide account disclosures to a member or 
potential member before an account is opened or a service is provided, 
whichever is earlier. A credit union is deemed to have provided a 
service when a fee required to be disclosed is assessed. Except as 
provided in paragraph (a)(1)(ii) of this section, if the member is not 
present at the credit union when the account is opened or the service 
is provided and has not already received the disclosures, the credit 
union must mail or deliver the disclosures no later than 10 business 
days after the account is opened or the service is provided, whichever 
is earlier.
    (ii) Electronic communication. If a member or potential member who 
is not present at the credit union uses electronic communication (as 
defined in Sec. 707.10) to open an account or request a service, the 
disclosures required under paragraph (a)(1) of this section must be 
provided before an account is opened or a service is provided.
    (2) Requests. (i) A credit union must provide account disclosures 
to a member or potential member upon request. If a member who is not 
present at the credit union makes a request, the credit union must mail 
or deliver the disclosures within a reasonable time after it receives 
the request and may provide the disclosures in paper form, or 
electronically if the member provides an electronic mail address.
* * * * *

    4. Section 707.6 is amended by removing paragraph (c).

    5. Add a new Sec. 707.10 to read as follows:


Sec. 707.10  Electronic communication.

    (a) Definition. Electronic communication means a message 
transmitted electronically between a credit union and a member in a 
format that allows visual text to be displayed on equipment, for 
example, a personal computer monitor.
    (b) General rule. In accordance with the Electronic Signatures in 
Global and National Commerce Act (the E-Sign Act) (15 U.S.C. 7001 et 
seq.) and the rules of this part, a credit union may provide by 
electronic communication any disclosure required by this part to be in 
writing.
    (c) When consent is required. Under the E-Sign Act, a credit union 
must obtain a member's affirmative consent when providing disclosures 
related to a transaction. For purposes of this requirement, the 
disclosures required under Secs. 707.4(a)(2) and 707.8 are deemed not 
to be related to a transaction.
    (d) Address or location to receive electronic communication. A 
credit union that uses electronic communication to provide disclosures 
required by this part must:
    (1) Send the disclosure to the member's electronic address; or
    (2) Make the disclosure available at another location such as an 
Internet web site; and
    (i) Alert the member of the disclosure's availability by sending a 
notice to the member's electronic address (or to a postal address, at 
the credit union's option). The notice must identify the account 
involved (if applicable) and the address of the Internet web site or 
other location where the disclosure is available; and
    (ii) Make the disclosure available for at least 90 days from the 
date the disclosure first becomes available or from the date of the 
notice alerting the member of the disclosure, whichever comes later.
    (3) Exceptions. A credit union need not comply with paragraph 
(d)(2)(ii) of this section for disclosures required under 
Sec. 707.4(a)(2), and need not comply with paragraphs (d)(2)(i) and 
(ii) of this section for disclosures required under Sec. 707.8.
    (e) Redelivery. When a disclosure provided by electronic 
communication is returned to a credit union undelivered, the credit 
union must take reasonable steps to attempt redelivery using 
information in its files.
    (f) Entities other than a credit union. A person other than a 
credit union that is required to comply with this part may use 
electronic communication in accordance with the requirements of this 
section, as applicable.

    6. In Appendix C to part 707, the following amendments are made:
    a. Under Section 707.2 Definitions, under (t) Periodic statement, 
paragraph 2.ii. is removed and paragraph 2.iii. is redesignated as 
paragraph 2.ii.
    b. Under Section 707.4 Account disclosures, under (a)(2) Requests, 
under (a)(2)(i), paragraph 3. is revised and a new paragraph 4. is 
added.
    c. Under Section 707.8 Advertising, under (a) Misleading or 
inaccurate advertisements, a new paragraph 9. is added.
    d. Under Section 707.8 Advertising, under (b) Permissible rates, a 
new paragraph 4. is added.
    e. Under Section 707.8 Advertising, under (e)(1) Certain media, 
under (e)(1)(i), a new paragraph 2 is added.
    f. A new Section 707.10, Requirements for electronic communication, 
is added after Section 707.9.
    The amendments read as follows:

Appendix C to Part 707--Official Staff Interpretations

* * * * *

Section 707.4--Account Disclosures

(a) Delivery of Account Disclosures

* * * * *

(a)(2) Requests

(a)(2)(i)

* * * * *
    3. Timing for response. Ten business days is a reasonable time 
for responding to requests for account information that members do 
not make in person, including requests made by electronic 
communication.
    4. Requests by electronic communication. Posting disclosures on 
a credit union's web site generally does not relieve the credit 
union's duty to provide disclosures upon request. If the member 
provides an e-mail address, the credit union may provide the 
disclosures electronically, but the credit union must either send 
the disclosures by e-mail or send a notice to the member's e-mail 
address pursuant to Sec. 707.10(d)(2)(i) to inform the member where 
the disclosures are posted.
* * * * *

Section 707.8--Advertising

(a) Misleading or Inaccurate Advertisements

* * * * *
    9. Electronic advertising. If an advertisement using electronic 
communication displays a triggering term (such as a bonus or annual 
percentage yield) the advertisement must clearly refer the member to 
the location where the additional required information begins. For 
example, an advertisement that includes a bonus or annual percentage 
yield may be accompanied by a link that directly takes the member to 
the additional information.

(b) Permissible Rates

* * * * *

[[Page 33164]]

    4. Electronic communication. A dividend rate may be stated only 
if it is provided in conjunction with, but not more conspicuously 
than, the annual percentage yield to which it relates. In an 
advertisement using electronic communication, the member must be 
able to view both rates simultaneously. This requirement is not 
satisfied if the member can view the annual percentage yield only by 
use of a link that connects the member to information appearing at 
another location.
* * * * *

(e)(1) Certain Media

(e)(1)(i)

    2. Internet advertisements. The exemption for advertisements 
made through broadcast or electronic media does not extend to 
advertisements made by electronic communication, such as 
advertisements posted on the Internet or sent by e-mail.
* * * * *

Section 707.10--Electronic Communication

(b) General Rule

    1. Relationship to the E-Sign Act. The 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. A credit union must provide 
electronic disclosures using a clear and conspicuous format. Also, 
in accordance with the E-SignAct:
    i. The credit union must disclose the requirements for accessing 
and retaining disclosures in that format;
    ii. The member must demonstrate the ability to access the 
information electronically and affirmatively consent to electronic 
delivery; and
    iii. The credit union must provide the disclosures in accordance 
with the specified requirements.
    3. Timing and effective delivery.
    i. When a member opens an account on-line. When a member opens 
an account on-line, the member must be required to access the 
disclosures required under Sec. 707.4 before the account is opened 
or a service is provided, whichever is earlier. A link to the 
disclosures satisfies the timing rule if the member cannot bypass 
the disclosures before opening the account. Or the disclosures in 
this example must automatically appear on the screen, even if 
multiple screens are required to view the entire disclosure. The 
credit union is not required to confirm that the member has read the 
disclosure.
    ii. For disclosures provided periodically. Disclosures provided 
by mail are timely based on when the disclosures are sent. 
Disclosures posted at an Internet web site, such as periodic 
statements or change-in-terms and other notices, are timely when the 
credit union has both made the disclosures available and sent a 
notice alerting the member that the disclosures have been posted. 
For example, under Sec. 707.5, credit unions must give advance 
notice to affected members at least 30 calendar days in advance of 
certain changes. For a change in terms notice posted on the 
Internet, a credit union must both post the notice and notify 
members of its availability at least 30 days in advance of the 
change.
    4. Retainability of disclosures. Credit unions satisfy the 
requirement that disclosures be in a form that the member may keep 
if electronic disclosures are delivered in a format that is capable 
of being retained (such as by printing or storing electronically). 
The format must also be consistent with the information required to 
be provided under Section 101(c)(1)(C)(i) of the E-Sign Act, 15 
U.S.C. 7001(c)(1)(C)(i)), about the hardware and software 
requirements for accessing and retaining electronic disclosures.
    5. Disclosures provided on credit union's equipment. A credit 
union that controls the equipment providing electronic disclosures 
to members (for example, a computer terminal located in a credit 
union's lobby or at a public kiosk) must ensure that the equipment 
satisfies the regulation's requirements to provide timely 
disclosures in a clear and conspicuous format and in a form that the 
member may keep. For example, if disclosures are required at the 
time of an on-line transaction, the disclosures must be sent to the 
member's e-mail address or must be posted at another location such 
as the credit union's Internet web site, unless the credit union 
provides a printer that automatically prints the disclosures.

(d) Address Or Location To Receive Electronic Communication

(d)(1)

    1. Electronic address. A member's electronic address is an e-
mail address that is not limited to receiving communications 
transmitted solely by the credit union.

(d)(2)

    1. Identifying account involved. A credit union may identify a 
specific account in a variety of ways and is not required to 
identify an account by reference to the account number. For example, 
where the member has only one share account, and no confusion would 
result, the credit union may refer to ``your share account.'' If the 
member has two accounts, the credit union may, for example, 
differentiate accounts by using terms such as ``primary account'' 
and ``secondary account'' or by using a truncated account number.
    2. 90-day rule. The actual disclosures provided to a member must 
be available for at least 90 days, but the credit union has 
discretion to determine whether they should be available at the same 
location for the entire period.

(e) Redelivery

    1. E-mail returned as undeliverable. If an e-mail to the member 
(containing an alert notice or other disclosure) is returned as 
undeliverable, the redelivery requirement is satisfied if, for 
example, the credit union sends the disclosure to a different e-mail 
address or postal address that the credit union has on file for the 
member. Sending the disclosures a second time to the same electronic 
address is not sufficient if the credit union has a different 
address for the member on file.
[FR Doc. 01-15471 Filed 6-20-01; 8:45 am]
BILLING CODE 7535-01-U