[Federal Register Volume 72, Number 240 (Friday, December 14, 2007)]
[Rules and Regulations]
[Pages 71056-71057]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-24221]


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FEDERAL RESERVE SYSTEM

12 CFR Part 202

[Regulation B; Docket No. R-1281]


Equal Credit Opportunity

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Final rule; technical amendment.

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SUMMARY: The Board is revising the official staff commentary to 
Regulation B, which implements the Equal Credit Opportunity Act, to 
clarify an amendment published on November 9, 2007. The clarification 
and the earlier amendment relate to the electronic delivery of 
disclosures under Regulation B.

DATES: The amendment is effective January 14, 2008. The mandatory 
compliance date is October 1, 2008.

FOR FURTHER INFORMATION CONTACT: John C. Wood, Counsel, Division of 
Consumer and Community Affairs, at (202) 452-2412 or (202) 452-3667. 
For users of Telecommunications Device for the Deaf (TDD) only, contact 
(202) 263-4869.

SUPPLEMENTARY INFORMATION:

I. Background

    The Equal Credit Opportunity Act (ECOA), 15 U.S.C. 1691 et seq., 
makes it unlawful for creditors to discriminate in any aspect of a 
credit transaction on the basis of sex, race, color, religion, national 
origin, marital status, or age (provided the applicant has the capacity 
to contract), because all or part of an applicant's income derives from 
public assistance, or because an applicant has in good faith exercised 
any right under the Consumer Credit Protection Act. The Board's 
Regulation B (12 CFR part 202) implements the ECOA. The ECOA and 
Regulation B require certain disclosures to be provided to applicants, 
and some of those disclosures must be provided in writing.
    The Electronic Signatures in Global and National Commerce Act (the 
E-Sign Act), 15 U.S.C. 7001 et seq., was enacted in 2000. The E-Sign 
Act provides that electronic documents and electronic signatures have 
the same validity as paper documents and handwritten signatures. The E-
Sign Act contains special rules for the use of electronic disclosures 
in consumer transactions. Under the E-Sign Act, consumer disclosures 
required by other laws or regulations to be provided or made available 
in writing may be provided or made available, as applicable, in 
electronic form if the consumer affirmatively consents after receiving 
a notice that contains certain information specified in the statute, 
and if certain other conditions are met.
    Recently the Board published amendments to Regulation B and the 
official staff commentary to the regulation to provide guidance on the 
use of electronic disclosures, consistent

[[Page 71057]]

with the E-Sign Act (72 FR 63,445, November 9, 2007). The amendments 
take effect on a mandatory basis on October 1, 2008. The Board has 
received questions about one aspect of the official staff commentary 
accompanying the November 2007 amendments to Regulation B. The Board is 
now issuing this clarification to the staff commentary to address the 
questions raised.

II. The November 2007 Final Rule

    Under the Board's November 2007 final rule, creditors may provide 
certain disclosures required by Regulation B in electronic form without 
obtaining the consumer's consent pursuant to the E-Sign Act. These 
include the disclosures required in some circumstances to accompany a 
credit application (set forth in Sec. Sec.  202.5, 202.13, and 202.14). 
Many creditors that commented on the Board's proposed rules, which were 
published for comment in April 2007, urged that they be permitted to 
provide these disclosures in paper form in appropriate cases, even when 
the application is accessed by the consumer electronically. They noted 
that a consumer or creditor's employee might complete an electronic 
application by entering information at a terminal or kiosk located in 
the creditor's office and that paper disclosures would be more 
appropriate in such cases. In response to the commenters' concerns, the 
November 2007 final rule states that if an application is accessed by 
the consumer in electronic form, the required application-related 
disclosures may (rather than must) be provided in electronic form on or 
with the application. See 12 CFR 202.4(d)(2).
    Because the regulation allows disclosures to be given in either 
paper or electronic form when consumers access an application 
electronically, the Board also revised the commentary to Regulation B 
to provide examples of how creditors can satisfy the requirement that 
the disclosures be ``on or with'' the application in particular 
circumstances. As revised, the commentary reflects that where a 
consumer accesses and submits an application form using a home computer 
via the creditor's Web site, the creditor must provide the disclosures 
electronically with the application form on the Web site to provide 
disclosures in a timely manner on or with the application. If the 
creditor instead mailed paper disclosures to the consumer, the 
disclosures would not be timely and would not be provided on or with 
the application. In contrast, if a consumer is physically present in 
the creditor's office, and accesses and submits an electronic 
application--such as via a terminal or kiosk--the revised commentary 
notes that the creditor could use paper disclosures to comply with the 
timing and delivery requirements of the regulation (``on or with''). 
See comment 4(d)-2. For example, a loan officer could give the 
disclosures to the consumer in paper form, or in the case of an 
unattended kiosk, the kiosk could have a printer and provide paper 
disclosures.

III. Revisions to the Staff Commentary

    Following publication of the November 2007 final rule, questions 
have been raised about other situations where creditors could provide 
paper disclosures in a timely manner to consumers accessing a credit 
application electronically, even though the consumers are not 
physically present in the creditor's office. For example, consumers 
might access a credit application using an electronic terminal or kiosk 
on the premises of the creditor's affiliate or a third party (such as a 
retail store) that has arranged with the creditor to provide 
applications to consumers. In these cases, consumers could receive 
paper disclosures with the credit application in the same manner as in 
the creditor's own office. This is consistent with the revised 
regulation and the Board's intent in issuing the November 2007 final 
rule. Accordingly, the Board is revising comment 4(d)-2 to clarify that 
these are additional examples where paper disclosures would satisfy the 
rule's requirements for providing disclosures ``on or with'' the 
application.
    The Board is issuing this commentary revision in final form. Under 
the Administrative Procedure Act, 5 U.S.C. 551 et seq., publication of 
a notice of proposed rulemaking is not required for interpretative 
rules, general statements of policy, or rules of agency organization, 
procedure, or practice. 5 U.S.C. 553(b)(A). In this case, the Board has 
determined that the public notice and comment provisions do not apply 
to this rulemaking because the revisions are interpretative rules. The 
commentary revision does not establish new regulatory requirements and 
merely clarifies, through additional examples, how creditors can meet 
the existing requirement for providing disclosures ``on or with'' 
applications in particular circumstances. Moreover, the commentary 
revision provides creditors with an expanded safe harbor for complying 
with the rule by allowing them to use either paper or electronic 
disclosures in the circumstances described, consistent with the public 
comments previously received by the Board. The changes, therefore, meet 
the requirements for exemption from notice and comment in 5 U.S.C. 
553(b)(A).

List of Subjects in 12 CFR Part 202

    Aged, Banks, Banking, Civil rights, Credit, Federal Reserve System, 
Marital status discrimination, Penalties, Religious discrimination, 
Reporting and recordkeeping requirements, Sex discrimination.

0
For the reasons set forth in the preamble, the Board amends the 
Official Staff Commentary to Regulation B, 12 CFR part 202, as set 
forth below:

PART 202--EQUAL CREDIT OPPORTUNITY (REGULATION B)

0
1. The authority citation for part 202 continues to read as follows:

    Authority: 15 U.S.C. 1691-1691f.


0
2. In Supplement I to part 202, in Section 202.4--General Rules, under 
Paragraph (4)(d), paragraph 2 is revised, to read as follows:

SUPPLEMENT I TO PART 202--OFFICIAL STAFF INTERPRETATIONS

* * * * *


Section 202.4  General Rules

* * * * *
    Paragraph (4)(d).
* * * * *
    2. Form of disclosures. Whether the disclosures required to be 
on or with an application must be in electronic form depends upon 
the following:
    i. If an applicant accesses a credit application electronically 
(other than as described under ii below), such as online at a home 
computer, the creditor must provide the disclosures in electronic 
form (such as with the application form on its website) in order to 
meet the requirement to provide disclosures in a timely manner on or 
with the application. If the creditor instead mailed paper 
disclosures to the applicant, this requirement would not be met.
    ii. In contrast, if an applicant is physically present in the 
creditor's office, and accesses a credit application electronically, 
such as via a terminal or kiosk (or if the applicant uses a terminal 
or kiosk located on the premises of an affiliate or third party that 
has arranged with the creditor to provide applications to 
consumers), the creditor may provide disclosures in either 
electronic or paper form, provided the creditor complies with the 
timing, delivery, and retainability requirements of the regulation.
* * * * *

    By order of the Board of Governors of the Federal Reserve 
System, acting through the Director of the Division of Consumer and 
Community Affairs under delegated authority, December 11, 2007.
Jennifer J. Johnson,
Secretary of the Board.
 [FR Doc. E7-24221 Filed 12-13-07; 8:45 am]
BILLING CODE 6210-01-P