CUNA Comment Letter
Proposed Amendments to Regulation B Regarding Electronic Delivery of Disclosures
May 15, 1998
Mr. William W. Wiles
Board of Governors of the
Federal Reserve System
20th Street and Constitution Avenue, N.W.
Washington, D.C. 20551
RE: Docket No.: 1006, Proposed Amendments to Regulation B Regarding Electronic Delivery of Disclosures
Dear Secretary Wiles:
The Credit Union National Association, CUNA, which represents more than 11,500 state and federal credit unions serving over 72 million Americans, appreciates the opportunity to comment on the Board's proposed amendment to Regulation B, Equal Credit Opportunity Act. The proposal, which appeared in the Federal Register March 25, 1998, would permit creditors to use electronic communications, such as through personal computers, to provide consumer disclosures required by the Act and regulation if the consumer agrees to such delivery.
As part of its Regulatory Planning and Review Program, the Board determined that the use of electronic communication for delivery of disclosures required by consumer laws could effectively reduce institutions' compliance burdens without jeopardizing consumer protections.
As a result of this review, the Board proposes to amend Regulation B to allow creditors to provide disclosures electronically as long as such disclosures comply with any applicable timing, format, and other requirements of the Act and the regulation.
Proposed Regulatory Revisions
The Act and Regulation B require certain disclosures to be provided to applicants in writing. Under Regulation B, this written disclosure requirement has been presumed to require that creditors provide paper documents. However, information produced, stored, or communicated by computer is also generally considered to be a writing at least where visual text is involved. The Board proposes to amend Regulation B to permit creditors to use electronic communication where the regulation calls for information to be provided in writing. The term "electronic communication" refers to a communication that can be displayed as visual text. Communications by telephone voicemail would not be sufficient for disclosure purposes because they do not have the feature generally associated with a writing, visual text. We agree with this interpretation.
Agreements Between Financial Institutions and Consumers
Section 202.5(f) would permit creditors to send electronic disclosures if the consumer agrees. There may be various ways that a creditor and an applicant agree to the electronic delivery of disclosures and other information. Applicable state law would determine whether such an agreement exists between the parties. The regulation would not preclude a creditor and an applicant from entering into an agreement electronically, nor does it prescribe a formal mechanism for doing so. CUNA supports the Board's flexible approach.
Delivery Requirements for Electronic Communication
The Board believes that consumers receiving disclosures by electronic communication should have protections regarding delivery similar to those afforded consumers receiving disclosures in paper form. This means that posting information to an Internet site without some appropriate notice and instructions about how the applicant may obtain the required information would not satisfy the delivery requirements. We agree.
"Clear and Conspicuous" Requirement
Currently, Regulation B does not expressly require creditors to present required information in a "clear and conspicuous" format. The Board is proposing to apply these standards, which apply to disclosures under Regulations CC (Availability of Funds), E (Electronic Fund Transfers), M (Consumer Leasing), and Z (Truth in Lending). We support the Board's objective, but note that unlike ECOA, the other statutes require a "clear and conspicuous" standard.
Applicant's Ability to Retain Disclosures
The Board is proposing to require that electronic disclosures be in a form that the consumer may keep. Creditors would satisfy the retention requirement if disclosures could be printed or downloaded by the applicant. In circumstances where the creditor controls the equipment to be used for the application, the creditor would have the responsibility of ensuring the disclosures could be retained. We support this approach.
Thank you for the opportunity to comment on this proposal.
Mary Mitchell Dunn
Associate General Counsel