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By order of the Board of Governors of the enable consumers to make informed 17,779 and 66 FR 17,786) (Regulations Federal Reserve System, October 31, 2007. decisions about accounts at depository B and E, respectively). Each of the Jennifer J. Johnson, institutions. The act requires depository interim final rules incorporated, but did Secretary of the Board. institutions to disclose yields, fees, and not interpret, the requirements of the E- [FR Doc. E7–21700 Filed 11–8–07; 8:45 am] other terms concerning deposit accounts Sign Act. Depository institutions, BILLING CODE 6210–01–P to consumers at account opening, upon creditors, and other persons, as request, when changes in terms occur, applicable, generally were required to and in periodic statements. It also obtain consumers’ affirmative consent to FEDERAL RESERVE SYSTEM includes rules about advertising for provide disclosures electronically, deposit accounts. The Board’s consistent with the requirements of the 12 CFR Part 230 Regulation DD (12 CFR part 230) E-Sign Act. The interim final rules also [Regulation DD; Docket No. R–1285] implements the act. Credit unions are incorporated many of the provisions governed by a substantially similar that were part of earlier regulatory Truth in Savings regulation issued by the National Credit proposals issued by the Board regarding Union Administration. TISA and electronic disclosures.1 AGENCY: Board of Governors of the Regulation DD require a number of Under the 2001 interim final rules, Federal Reserve System. disclosures to be provided in writing. disclosures could be sent to an e-mail ACTION: Final rule; official staff The Electronic Signatures in Global address designated by the consumer, or interpretation. and National Commerce Act (the E-Sign could be made available at another Act), 15 U.S.C. 7001 et seq., was enacted SUMMARY: The Board is amending location, such as an Internet Web site. Regulation DD, which implements the in 2000. The E-Sign Act provides that If the disclosures were not sent by e- Truth in Savings Act, and the official electronic documents and electronic mail, institutions would have to provide staff commentary to the regulation, to signatures have the same validity as a notice to consumers (typically by e- withdraw portions of the interim final paper documents and handwritten mail) alerting them to the availability of rules for the electronic delivery of signatures. The E-Sign Act contains the disclosures. Disclosures posted on a disclosures issued March 30, 2001. The special rules for the use of electronic Web site would have to be available for disclosures in consumer transactions. interim final rules addressed the timing at least 90 days to allow consumers Under the E-Sign Act, consumer and delivery of electronic disclosures, adequate time to access and retain the disclosures required by other laws or consistent with the requirements of the information. Institutions also would be regulations to be provided or made Electronic Signatures in Global and required to make a good faith attempt to available in writing may be provided or National Commerce Act (E-Sign Act). redeliver electronic disclosures that made available, as applicable, in Because compliance with the 2001 were returned undelivered, using the electronic form if the consumer interim final rules has not been address information available in their affirmatively consents after receiving a mandatory, withdrawal of these files. notice that contains certain information provisions from the Code of Federal Commenters on the interim final rules specified in the statute, and if certain Regulations reduces confusion about the identified significant operational and other conditions are met. status of the provisions and simplifies information security concerns with The E-Sign Act, including the special respect to the requirement to send the the regulation. consumer notice and consent In addition, the Board is adopting disclosure or an alert notice to an e-mail provisions, became effective October 1, address designated by the consumer. final amendments to Regulation DD to 2000, and did not require implementing provide guidance on the electronic For example, commenters stated that regulations. Thus, depository some consumers who choose to receive delivery of disclosures. For example, the institutions are currently permitted to final rules provide that when a deposit electronic disclosures do not have e- provide in electronic form any mail addresses or may not want account advertisement is accessed by a disclosures that are required to be consumer in electronic form, personal financial information sent to provided or made available to the them by e-mail. Commenters also noted disclosures may be provided to the consumer in writing under Regulation consumer in electronic form in the that e-mail is not a secure medium for DD if the consumer affirmatively delivering confidential information and advertisement without regard to the consents to receipt of electronic consumer consent and other provisions that consumers’ e-mail addresses disclosures in the manner required by frequently change. The commenters also of the E-Sign Act. Similar final rules are section 101(c) of the E-Sign Act. being adopted under other consumer opposed the requirement for redelivery fair lending and financial services II. Board Proposals and Interim Rules in the event a disclosure was returned regulations administered by the Board. Regarding Electronic Disclosures undelivered. In addition, many DATES: The final rule is effective On April 4, 2001, the Board published commenters asserted that making the December 10, 2007. The mandatory for comment interim final rules to disclosures available for at least 90 days, compliance date is October 1, 2008. establish uniform standards for the as required by the interim final rule, FOR FURTHER INFORMATION CONTACT: John electronic delivery of disclosures 1 On May 2, 1996, the Board proposed to amend C. Wood, Counsel, Division of required under Regulation DD (66 FR Regulation E to permit financial institutions to Consumer and Community Affairs, at 17,795). Similar interim final rules for provide disclosures by sending them electronically (202) 452–2412 or (202) 452–3667. For Regulations B, E, M, and Z, (61 FR 19696). Based on comments received, in users of Telecommunications Device for (implementing the Equal Credit 1998 the Board published an interim rule permitting the electronic delivery of disclosures the Deaf (TDD) only, contact (202) 263– Opportunity Act, the Electronic Fund under Regulation E (63 FR 14,528, March 25, 1998) 4869. Transfer Act, the Consumer Leasing Act, and similar proposals under Regulations B, M, Z, SUPPLEMENTARY INFORMATION: and the Truth in Lending Act, and DD (63 FR 14,552, 14,538, 14,548, and 14,533, respectively) were published on March respectively, March 25, 1998). Based on comments I. Statutory Background received on the 1998 proposals, in 1999 the Board 30, 2001 (66 FR 17,322 and 66 FR published revised proposals under Regulations B, E, The purpose of the Truth in Savings 17,329) (Regulations M and Z, M, Z, and DD (64 FR 49688, 49699, 49713, 49722 Act (TISA), 12 U.S.C. 4301 et seq., is to respectively) and April 4, 2001 (66 FR and 49740, respectively, September 14, 1999).

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would increase costs and would not be identical or similar to provisions in the the circumstances under which certain necessary for consumer protection. 2001 interim rules in order to enhance disclosures may be provided to a In August 2001, in response to the ability of consumers to shop for consumer in electronic form, rather than comments received, the Board lifted the deposit account products online, in writing as generally required by previously established October 1, 2001 minimize the information-gathering Regulation DD, without obtaining the mandatory compliance date for all of the burdens on consumers, and provide consumer’s consent under section interim final rules. (66 FR 41439, guidance or eliminate a substantial 101(c) of the E-Sign Act. August 8, 2001.) Thus, institutions are burden on the use of electronic Commenters supported the Board’s not required to comply with the interim disclosures, as discussed further below. approach with regard to this issue. This final rules. Since that time, the Board Since 2001, industry and consumers final rule adopts the approach in the had not taken further action with have gained considerable experience April 2007 proposal. The Board respect to the interim final rules on with electronic disclosures. During that continues to believe that depository electronic disclosures in order to allow period, the Board has received no institutions should not be required to electronic commerce, including indication that consumers have been obtain the consumer’s consent in order electronic disclosure practices, to harmed by the fact that compliance with to provide advertising disclosures to the continue to develop without regulatory the interim final rules is not mandatory. consumer in electronic form if the intervention and to allow the Board to The Board also has reconsidered certain consumer accesses an advertisement gather further information about such aspects of the interim final rules, such containing those disclosures in practices. as sending disclosures by e-mail, in electronic form, such as at an Internet In April 2007, the Board proposed to light of concerns about data security, Web site. Similarly, the Board continues amend Regulation DD and the official identity theft, and ‘‘phishing’’ (i.e., to believe that institutions should not be staff commentary by (1) withdrawing prompting consumers to reveal required to follow the E-Sign consent portions of the 2001 interim final rule confidential personal or financial requirements in order to respond to a that restate or cross-reference provisions information through fraudulent e-mail consumer’s request for account of the E-Sign Act and accordingly are requests that appear to originate from a disclosures (although under the final unnecessary; (2) withdrawing other depository institution, government rule, the institution could provide the portions of the interim final rule that the agency, or other trusted entity) that have disclosures in electronic form only if the Board now believes may impose undue become more pronounced since 2001. consumer agrees). burdens on electronic banking and Finally, the Board is eliminating certain The Board believes that when viewing commerce and may be unnecessary for aspects of the 2001 interim final rule, online deposit product advertising, consumer protection; and (3) retaining such as provisions regarding the consumers would not be harmed if the the substance of certain provisions of availability and retention of electronic E-Sign consent procedures do not apply the interim final rule that provide disclosures, as unnecessary in light of and would obtain significant benefits by regulatory relief or guidance regarding current industry practices. having timely access to advertising electronic disclosures. (72 FR 21155, The 2001 interim final rule allowed disclosures in electronic form. The April 30, 2007.) Similar amendments depository institutions to provide Board also believes that consumers’ were also proposed by the Board under certain disclosures to consumers ability to shop for deposit accounts Regulations B, E, M, and Z (72 FR electronically without regard to the online and compare the terms of various 21125, 72 FR 21131, 72 FR 21135, and consumer consent or other provisions of offers could be substantially diminished 72 FR 21141, respectively). the E-Sign Act. These included if consumers had to consent in III. Summary of the Final Rule disclosures in connection with accordance with the E-Sign Act in order to access advertisements that must be The Board received about 20 advertisements and disclosures about deposit accounts that are provided upon accompanied by disclosures, or in order comments on the April 2007 proposal, to obtain account disclosures upon primarily from depository institutions a consumer’s request. The Board reasoned that these disclosures, which request. Applying the consumer consent and their representatives. Most of the provisions of the E-Sign Act to these financial industry commenters generally would be available to the general public while shopping for deposit products, disclosures could impose substantial supported the proposal, although some burdens on electronic commerce and provided suggestions for clarifications did not ‘‘relate to a transaction,’’ which is a prerequisite for triggering the E-Sign make it more difficult for consumers to or changes to particular elements of the gather information and shop for deposit proposal. A comment letter was also consumer consent provisions, and thus were not subject to the consent accounts. submitted on behalf of four consumer At the same time, the Board provisions. Some commenters on the groups. The consumer group recognizes that consumers who shop or interim final rules agreed with the result commenters suggested a number of apply for deposit accounts online may changes to strengthen consumer but did not agree with the Board’s rationale. protections. The comments are to carry out the purposes of [TISA], * * * or to discussed in more detail in the Section- In the April 2007 proposal, the Board facilitate compliance with the requirements of by-Section Analysis below. stated that, upon further consideration, [TISA].’’ Section 104(d) of the E-Sign Act authorizes For the reasons discussed below, the it did not believe it was necessary to federal agencies to adopt exemptions for specified determine whether or not these categories of disclosures from the E-Sign notice and Board is now adopting amendments to consent requirements, ‘‘if such exemption is Regulation DD in final form, largely as disclosures are related to a transaction. necessary to eliminate a substantial burden on proposed in April 2007. As stated in the Instead, pursuant to the Board’s electronic commerce and will not increase the authority under section 269 of TISA, as material risk of harm to consumers.’’ For the proposal, because compliance with the reasons stated in this Federal Register notice, the 2001 interim final rules has not been well as under section 104(d) of the E- 2 Board believes that these criteria are met in the case mandatory, the final rule will reduce Sign Act, the Board proposed to specify of the advertising disclosures and the disclosures confusion about the status of the provided to a consumer upon request. In addition, 2 Section 269 of TISA provides that regulations the Board believes TISA section 269 authorizes the electronic disclosure provisions and prescribed by the Board under TISA ‘‘may provide Board to permit institutions to provide disclosures simplify the regulation. The Board is for such adjustments and exceptions * * * as, in electronically, rather than in paper form, also adopting certain provisions that are the judgment of the Board, are necessary or proper independent of the E-Sign Act.

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not want to receive other disclosures Board believes that, for a deposit disclosures when, for example, an electronically. Therefore, with respect to account advertisement accessed by the account is opened by telephone. The account-opening disclosures, periodic consumer in electronic form, permitting 2001 interim final rule provided that statements, and change-in-terms notices, institutions to provide the required depository institutions opening depository institutions are required to disclosures in electronic form without accounts by electronic communication obtain the consumer’s consent, in regard to the consumer consent and (for example, on the Internet) may not accordance with the E-Sign Act, to other provisions of the E-Sign Act will delay providing disclosures under provide such disclosures in electronic eliminate a potential significant burden § 230.4(a)(1). The difficulties in form, or else provide written on electronic commerce without providing disclosures for accounts disclosures. increasing the risk of harm to opened by mail or telephone do not Finally, as proposed, certain consumers. This approach will facilitate exist for requests to open accounts provisions that restate or cross-reference shopping for deposit products by received by electronic communication the E-Sign Act’s general rules regarding enabling consumers to receive using visual text. Thus, the 2001 interim electronic disclosures (including the important disclosures at the same time final rule required that disclosures must consumer consent provisions) are being they access an advertisement without be provided before accounts are opened deleted as unnecessary, because the E- first having to provide consent in using electronic communication. New Sign Act is a self-effectuating statute. accordance with the requirements of the paragraph (ii) was added to § 230.4(a)(1) The revisions to Regulation DD and the E-Sign Act. Requiring consumers to to effectuate this requirement. In the official staff commentary are described follow the consent procedures set forth April 2007 proposal, the Board stated more fully below in the Section-by- in the E-Sign Act in order to access an that it continued to believe that the Section Analysis. online advertisement is potentially rationale underlying § 230.4(a)(1)(ii) was IV. Section-by-Section Analysis burdensome and could discourage valid, and accordingly proposed to consumers from shopping for deposit retain the new provision. 12 CFR Part 230 (Regulation DD) products online. Moreover, because Several commenters requested that Section 230.3 General Disclosure these consumers are viewing the the regulation allow delayed disclosures Requirements advertisement online, there appears to in a number of situations involving the be little, if any, risk that the consumer use of electronic means to open an Section 230.3(a) prescribes the form of will be unable to view the disclosures account. Commenters noted, for disclosures required for deposit online as well. example, that small hand-held accounts, and generally requires Similarly, § 230.4(a)(2) requires that electronic devices, such as Internet- depository institutions to provide the depository institutions provide enabled cellphones or personal digital disclosures in writing and in a form that disclosures, setting forth account terms assistants, may not be well suited to the consumer may keep. As proposed, and conditions, to consumers upon displaying or retaining disclosures. the Board is revising § 230.3(a) to clarify request. If a consumer is not present at Commenters argued, therefore, that that institutions may provide the depository institution and requests institutions should be permitted to open disclosures to consumers in electronic the account disclosures, it would appear an account electronically and mail form, subject to compliance with the unnecessary and burdensome to require paper disclosures to the consumer consumer consent and other applicable the consumer to go through the E-Sign within ten business days, rather than provisions of the E-Sign Act. Some consent procedures before the request providing electronic disclosures that the institutions may provide disclosures to could be satisfied, as long as the consumer might view using a small consumers both in paper and electronic consumer agrees that the disclosures hand-held device. Some commenters form and rely on the paper form of the can be provided electronically. suggested that the delayed disclosure disclosures to satisfy their compliance Applying the E-Sign consent procedures provision should apply to other obligations. For those institutions, the in this context could discourage situations as well, such as ‘‘enhanced duplicate electronic form of the consumers from requesting account ATMs’’ and computers not owned by disclosures may be provided to disclosures. the consumer (e.g., a computer in an consumers without regard to the Section 230.3(g) in the 2001 interim employer’s office or a public library). consumer consent or other provisions of final rule refers to § 230.10, the section However, it does not appear that at the E-Sign Act because the electronic of the interim final rule setting forth present, use of such devices for form of the disclosure is not used to general rules for electronic disclosures. financial transactions has advanced to satisfy the regulation’s disclosure Because the Board is deleting § 230.10, the point where the relief suggested by requirements. as discussed further below, § 230.3(g) is the commenters is necessary to avoid Section 230.3(a) is also revised, as also deleted, as proposed. burdens on electronic commerce. proposed, to provide that the Therefore, § 230.4(a)(1)(ii) is retained in Section 230.4 Account Disclosures disclosures required by §§ 230.4(a)(2) the final rule with minor wording (disclosures provided upon request) and Depository institutions generally must changes. 230.8 (advertising) may be provided to provide account-opening disclosures to As noted above, depository the consumer in electronic form, under consumers before an account is opened institutions must also provide account the circumstances set forth in those or a service is provided. Depository disclosures to a consumer upon request. sections, without regard to the institutions may delay delivering the Section 230.4(a)(2)(i) provides that if a consumer consent or other provisions of disclosures if the consumer is not consumer is not present at the the E-Sign Act. Commenters supported present at the institution when the institution when a request for account this aspect of the proposal. account is opened (or service is disclosures is made, the institution must Section 230.8 requires that if certain provided). Section 230.4(a)(1) provides mail or deliver the disclosures within a information is stated in a deposit that in such cases, account-opening reasonable time after the institution account advertisement, or if an disclosures must be mailed or delivered receives the request; ten days is deemed advertisement promotes the payment of within ten business days. The rationale to be a reasonable time. The 2001 overdrafts, the advertisement must also underlying the ten-day delay is that the interim final rule revised § 230.4(a)(2)(i) include specified disclosures. The institution cannot provide written to allow institutions to mail or deliver

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disclosures either in paper form or The Board proposed to add new and that this requirement is not satisfied electronically to consumers who are not comment 8(a)–11, to clarify that if a if the consumer can view the APY only present at the institution when they consumer accesses an advertisement for by use of a link that takes the consumer make their request. Under the 2001 deposit accounts in electronic form, to another web location. In the April interim final rule, to provide the such as on a home computer, the 2007 proposal, the Board proposed to requested disclosures electronically, the disclosures required on or with the delete comment 8(b)–4 as unnecessary, institution must send the disclosures to advertisement must be provided to the because the requirement to state the the consumer’s e-mail address, or send consumer in electronic form on or with simple annual rate or periodic rate in a notice alerting the consumer to the the advertisement. The proposed conjunction with, and not more location of the disclosures, such as on comment also clarified that if a conspicuously than, the APY, continues the institution’s Internet Web site. The consumer receives a written to apply to electronic advertisements no interim rule revised comment 4(a)(2)(i)– advertisement in the mail, the required less than to advertisements in other 3 and added comment 4(a)(2)(i)–4 to disclosures must be provided in paper media. In the supplementary provide guidance. form on or with the advertisement (and information, the Board stated that In the April 2007 proposal, the Board not, for example, by including a requiring the consumer to scroll to proposed to retain the changes made to reference in the advertisement to the another part of the page, or access a § 230.4(a)(2)(i) and the accompanying Web site where the disclosures are link, in order to view the APY would commentary by the interim final rule, located). Commenters did not address likely not satisfy this requirement. with some revisions for clarification and this aspect of the proposal. Some commenters were concerned by to provide greater flexibility for both In the final regulation, new comment the foregoing discussion in the April institutions and consumers (in 8(a)–11 is not being adopted. Section 2007 proposal, and contended that in particular, by not requiring that e-mail 230.8 requires that if an advertisement the case of small hand-held electronic be used to provide the disclosures includes trigger terms, the devices that a consumer might use to electronically). The Board stated that it advertisement itself must ‘‘state’’ the view a deposit account advertisement, continued to believe that if the required disclosures ‘‘clearly and the small size of the screen might consumer is not present at the conspicuously.’’ Therefore, under the necessitate scrolling or the use of links institution when requesting disclosures, existing regulation, providing paper for viewing the APY. Commenters also it is appropriate to allow institutions to disclosures for an advertisement in said the proposal was confusing in that respond to requests by electronic means electronic form, or vice versa, would not comment 8(b)–4, stating that the use of (without following the E-Sign consent comply because the disclosures would links would not comply, was proposed provisions, as discussed above under not be stated in the advertisement itself. to be deleted, yet the supplementary § 230.3) provided the consumer agrees. Comment 8(a)–9, as added by the information appeared to impose the A few commenters suggested that the interim final rule, provides that in an same restriction. last sentence in proposed revised electronic advertisement, the required Comment 8(b)–4 is being deleted as comment 4(a)(2)(i)–4, which states that disclosures need not be shown on each proposed. As stated in the proposal, the the regulation ‘‘does not require an page where a ‘‘trigger term’’ appears, as regulatory requirement is to state the institution to provide, nor a consumer to long as each such page includes a cross- interest rate in conjunction with, but not agree to receive, disclosures in reference to the page where the required more conspicuously than, the APY, and electronic form,’’ should be eliminated disclosures appear. For example, if a this rule applies in the electronic as unnecessary. The Board believes, ‘‘trigger term’’ appears on a particular context as well. However, the Board however, that the sentence is web page, the additional disclosures believes that the rule can be applied appropriate because it clarifies that may appear on another web page if there with some degree of flexibility, to institutions are required to provide is a clear reference to that page (which account for variations in devices account disclosures in paper form if a may be accomplished, for example, by consumers may use to view electronic consumer requests that they be provided including a link). In April 2007, the advertisements. Therefore, the use of in paper form. However, in the final rule Board proposed to retain this comment. scrolling or links would not necessarily language has been added to the sentence Commenters did not address this issue. fail to comply with the regulation in all to make clear that the sentence applies The final rule retains the comment as cases; however, institutions should only to disclosures provided upon proposed. ensure that electronic advertisements request under § 230.4(a)(2). An In April the Board also proposed to comply with the equal conspicuousness institution would not be prohibited add new comment 8(a)–12 to clarify that requirement. from offering accounts online that use the rules regarding advertising Section 230.8(e) exempts from some only electronic disclosures at account- disclosures provided in electronic form disclosure requirements advertisements opening and for periodic statements, also apply to the disclosures described made through broadcast or electronic provided the consumer consents in in § 230.11(b), which are incorporated media, such as television and radio or accordance with the E-Sign Act. by reference in § 230.8(f). Commenters outdoor billboards. The interim final Accordingly, the revisions made to did not address this issue; the comment rule added comment 8(e)(1)(i)–1 to § 230.4(a)(2)(i) and the accompanying is adopted as proposed (and provide that this exemption would not commentary are adopted as proposed, renumbered as comment 8(a)–11). apply to advertisements using electronic with the minor wording changes noted. Section 230.8(b) permits institutions communication, such as Internet to state an interest rate in addition to the advertisements, which do not have the Section 230.8 Advertising APY, as long as the rate is stated in same time and space constraints as Section 230.8 contains requirements conjunction with, but not more radio or television advertisements. In for advertisements for deposit accounts, conspicuously than, the APY. In the April, the Board proposed to retain including the requirement that if an 2001 interim final rule, comment 8(b)– comment 8(e)(1)(i)–1 with minor advertisement includes certain ‘‘trigger 4 was added to state that in an wording changes. Commenters did not terms’’ (such as a bonus or the annual advertisement using electronic address this issue. The Board continues percentage yield), the advertisement communication, the consumer must be to believe that space constraints for must also include certain disclosures. able to view both rates simultaneously, advertisements on Internet Web sites are

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not significantly different from those for mail to provide required disclosures in that offer online periodic statements to a print advertisement (a newspaper, for electronic form, arguing that e-mail is consumers typically make those example). Accordingly, comment the only reliable way to ensure that statements available without charge for 8(e)(1)(i)–1 is adopted as proposed. consumers are able to actually access, six months or longer in electronic form. receive, and retain disclosures. The This practice has developed even Section 230.10 Electronic consumer groups also disagreed with Communication though Regulation DD does not the statement that concerns relating to currently require institutions to Section 230.10 was added by the 2001 phishing, identity theft, and data maintain disclosures for any specific interim final rule to address the general security are a valid reason for not period of time. In addition, the Board requirements for electronic requiring the use of e-mail, noting that continues to believe that an appropriate communications. In the April 2007 phishing involves gathering information time period consumers may want proposal, the Board proposed to delete from the consumer, while disclosures electronic disclosures to be available § 230.10 from Regulation DD and the would be provided to the consumer, and may vary depending upon the type of accompanying sections of the staff need not include sensitive information. disclosure, and is reluctant to establish commentary. Depository institution While the consumer’s receipt of an e- specific time periods that would vary commenters largely supported the mail message that is actually from the depending on the disclosures, which proposed deletion, and § 230.10 and the consumer’s depository institution would increase the compliance burden. accompanying commentary are deleted would not in general pose a security Therefore, the 90-day retention in the final rule. risk, consumers might ignore or delete provision is deleted as proposed. In the interim rule, § 230.10(a) defines e-mails from depository institutions Nevertheless, while the Board is not the term ‘‘electronic communication’’ to (real or purported), in order to avoid requiring disclosures to be maintained mean a message transmitted falling victim to fraud schemes. Thus, on an Internet Web site for any specific electronically that can be displayed on disclosures sent by consumers’ time period, the general requirements of equipment as visual text, such as a depository institutions may not receive Regulation DD continue to apply to message displayed on a personal the attention they should. Consequently, electronic disclosures, such as the computer monitor screen. The deletion some depository institutions may be requirement to provide disclosures to of § 230.10(a) does not change reluctant to communicate by e-mail. To consumers at certain specified times applicable legal requirements under the the extent consumers are instructed not and in a form that the consumer may E-Sign Act. to ignore electronic mail messages from keep. The Board expects institutions to Sections 230.10 (b) and (c) their depository institutions, the risk of maintain disclosures on Web sites for a incorporate by reference provisions of consumers being victimized by reasonable period of time (which may the E-Sign Act, such as the provision fraudulent e-mail might be increased. In vary depending upon the particular allowing disclosures to be provided in any event, the Board believes it is disclosure) so that consumers have an electronic form and the requirement to preferable not to mandate the use of any obtain the consumer’s affirmative opportunity to access, view, and retain particular means of electronic delivery the disclosures. As stated in the April consent before providing disclosures in of disclosures, but instead to allow electronic form. The deletion of these 2007 proposal, the Board will monitor flexibility for institutions to use institutions’ electronic disclosure provisions has no impact on the general whatever method may be best suited to applicability of the E-Sign Act to practices with regard to the ability of particular types of disclosure (for consumers to retain Regulation DD Regulation DD disclosures. Section example, account-opening, periodic 230.10(f) was added in the interim final disclosures and would consider further statements, or change in terms). revisions to the regulation to address rule to clarify that persons, other than With regard to the requirement to this issue if necessary. depository institutions, that are required attempt to redeliver returned electronic to comply with Regulation DD may use disclosures, institutions would be V. Other Issues Raised by Commenters electronic disclosures. This provision is required to search their files for an Clear and Conspicuous Disclosures unnecessary because the E-Sign Act is a additional e-mail address to use, and self-effectuating statute and permits any might be required to use a postal mail An issue raised in the comments on person to use electronic records subject address for redelivery if no additional e- the April 2007 proposal related to small to the conditions set forth in the Act. mail address was available. As stated in hand-held electronic devices through Sections 230.10 (d) and (e) address the April 2007 proposal, the Board which consumers may conduct financial specific timing and delivery continues to believe that both transactions using the Internet or other requirements for electronic disclosures requirements would likely be unduly electronic means (for example, personal under Regulation DD, such as the burdensome. digital assistants, Internet-enabled requirement to send disclosures to a Under the April 2007 proposed rule, cellphones, and similar devices). One consumer’s e-mail address (or post the the requirement in the 2001 interim commenter requested clarification on disclosures on a Web site and send a final rule for institutions to maintain whether institutions would be deemed notice alerting the consumer to the disclosures posted on a Web site for at to comply with the requirement to disclosures). The Board stated in the least 90 days would be deleted. provide disclosures in a clear and proposal that it no longer believed that Depository institution commenters conspicuous form, even when the these additional provisions were supported the proposed deletion; consumer views them on a small screen necessary or appropriate. The Board consumer group commenters expressed of a hand-held electronic device. The noted that electronic disclosures have concern about its impact on consumers. commenter noted that the institution evolved since 2001, as industry and As stated in the proposal, based on a has no control over what devices consumers have gained experience with review of industry practices, it appears consumers choose to use, for example, them, and also noted concerns about e- that many institutions maintain to view disclosures on a Web page. The mail related to data security, identity disclosures posted on an Internet Web Board believes that disclosures comply theft, and phishing. site for several months, and, in a with the ‘‘clear and conspicuous’’ The consumer group commenters number of cases, for more than a year. requirement as long as they are urged the Board to require the use of e- For example, it appears that institutions provided in a manner such that they

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would be clear and conspicuous when Expansion of Exception From E-Sign below, the Board certifies that the rule viewed on a typical home personal Notice and Consent Requirements will not have a significant economic computer monitor. One commenter suggested that the impact on a substantial number of small Board adopt additional exemptions from entities. Retainable Form 1. Statement of the need for, and the E-Sign notice and consent objectives of, the final rule. The Board Several industry commenters requirements. For example, if a is adopting revisions to Regulation DD requested guidance on how institutions consumer opened a deposit account to withdraw the 2001 interim final rule can be sure of meeting the requirement online, the commenter suggested that on electronic communication and to to provide disclosures in a form that the the institution should be able to provide allow depository institutions to provide consumer can keep. Commenters noted the account-opening disclosures online certain disclosures to consumers in that some of the disclosures that are under § 230.4(a)(1) (in addition to the electronic form on or with an exempted from the E-Sign requirements advertising-related disclosures, and advertisement that is accessed by the regarding notice and consent are disclosures provided upon request, consumer in electronic form, or if the nevertheless required to be given in already permitted under this final rule) consumer requests the disclosure, retainable form (for example, account without notice and consent under the E- without regard to the consumer consent disclosures provided upon request Sign Act. The commenter argued that, and other provisions of the E-Sign Act. under § 230.4(a)(2)). Commenters since Internet commerce has expanded The Board is also clarifying that other pointed out that the E-Sign Act requires, greatly over the past few years, when Regulation DD disclosures may be with regard to consumer disclosures consumers choose to conduct financial provided to consumers in electronic generally, that an institution disclose transactions online, they presume that form in accordance with the consumer ‘‘the hardware and software they will receive any related disclosures consent and other applicable provisions requirements for access to and retention online as well. The Board believes that, of the E-Sign Act. of the electronic records’’ and that the at this time, there is insufficient TISA was enacted to enhance consumer consent to electronic evidence that the consent requirements economic stabilization, improve disclosures ‘‘in a manner that are a burden on electronic commerce in competition between depository reasonably demonstrates that the this situation; and that consumers who institutions, and strengthen the ability consumer can access’’ the disclosures shop for deposit products online may of consumers to make informed electronically. A commenter noted that not necessarily want to receive account- decisions regarding deposit accounts. 12 if the E-Sign procedures are followed, opening disclosures online. U.S.C. 4301. It is the purpose of TISA an institution has some degree of VI. Use of ‘‘Plain Language’’ to require the clear and uniform comfort that the retainability disclosure of rates of interest payable on requirement has been met; however, Section 722 of the Gramm-Leach- deposit accounts and the fees that are with regard to disclosures that are Bliley Act of 1999 requires the Board to assessable against deposit accounts, so exempted from the E-Sign notice and use ‘‘plain language’’ in all proposed that consumers can make a meaningful consent provisions (such as those under and final rules published after January comparison between the competing § 230.4(a)(2)), it is not clear how the 1, 2000. In the proposal, the Board claims of institutions. TISA authorizes institution can demonstrate compliance invited comments on whether the the Board to prescribe regulations to with the retainability requirement. proposed rules are clearly stated and carry out the purposes of the statute. 12 effectively organized, and how the U.S.C. 4308. The Act expressly states The consumer group commenters Board might make the proposed text were concerned about retainability of that the Board’s regulations may contain easier to understand. No comments ‘‘such classifications, differentiations, or disclosures in light of the deletion of the were received on ‘‘plain language’’ requirement to maintain disclosures on other provisions, * * * , as in the issues involving Regulation DD. judgment of the Board, are necessary or a Web site for at least 90 days. They proper to carry out the purposes of [the urged that the final regulations require VII. Final Regulatory Flexibility Act], to prevent circumvention or that disclosures be delivered in a format Analysis evasion of [the Act], or to facilitate that is both downloadable and printable. The Board prepared an initial compliance with [the Act].’’ 12 U.S.C. The Board believes that institutions regulatory flexibility analysis as 4308(a). The Board believes that the satisfy the requirement for providing required by the Regulatory Flexibility revisions to Regulation DD discussed electronic disclosures in a form the Act (5 U.S.C. 601 et seq.) (RFA) in above are within Congress’s broad grant consumer can retain if they are provided connection with the April 2007 of authority to the Board to adopt in a standard electronic format that can proposal. The Board received no provisions that carry out the purposes of be downloaded and saved or printed on comments on its initial regulatory the statute. These revisions facilitate a typical home personal computer. flexibility analysis. informed decisions about deposit Typically, any document that can be The RFA generally requires an agency accounts by consumers in downloaded by the consumer can also to perform an assessment of the impact circumstances where a consumer be printed. The Board will, however, a rule is expected to have on small accesses a deposit account monitor institutions’ practices to entities. However, under section 605(b) advertisement, or requests deposit evaluate whether further guidance is of the RFA, 5 U.S.C. 605(b), the account disclosures, in electronic form. needed on this issue. In a situation regulatory flexibility analysis otherwise 2. Issues raised by comments in where the consumer is provided required under section 604 of the RFA response to the initial regulatory electronic disclosures through is not required if an agency certifies, flexibility analysis. In accordance with equipment under the institution’s along with a statement providing the section 603(a) of the RFA, the Board control—such as a terminal or kiosk in factual basis for such certification, that conducted an initial regulatory the institution’s offices—the institution the rule will not have a significant flexibility analysis in connection with could, for example, provide a printer economic impact on a substantial the proposed rule. The Board did not that automatically prints the number of small entities. Based on its receive any comments on its initial disclosures. analysis and for the reasons stated regulatory flexibility analysis.

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3. Small entities affected by the final compliance for twenty-four months, but Authority: 12 U.S.C. 4301 et seq. rule. The ability to provide advertising the regulation does not specify types of I 2. Section 230.3 is amended by disclosures in electronic form on or records that must be retained. This revising paragraph (a), to read as with an advertisement that is accessed information collection is mandatory. follows, and removing paragraph (g): by the consumer in electronic form, or Since the Federal Reserve does not to provide disclosures in electronic form collect any information, no issue of § 230.3 General disclosure requirements. if requested to do so by the consumer, confidentiality arises. (a) Form. Depository institutions shall applies to all depository institutions, Regulation DD applies to all make the disclosures required by regardless of their size. Accordingly, the depository institutions except credit §§ 230.4 through 230.6 of this part, as final rule would reduce burden and unions. Credit unions are covered by a applicable, clearly and conspicuously, compliance costs for small entities by substantially similar rule issued by the in writing, and in a form the consumer providing relief, to the extent the E-Sign National Credit Union Administration. may keep. The disclosures required by Act applies in these circumstances. The The Federal Reserve accounts for the this part may be provided to the number of small entities affected by this paperwork burden associated with consumer in electronic form, subject to final rule is unknown. Regulation DD only for Federal Reserve- compliance with the consumer consent 4. Other federal rules. The Board supervised institutions. Federal Reserve and other applicable provisions of the believes no federal rules duplicate, supervised institutions are defined by Electronic Signatures in Global and overlap, or conflict with the final Regulation DD as: State member banks, National Commerce Act (E-Sign Act) (15 revisions to Regulation DD. branches and agencies of foreign banks U.S.C. 7001 et seq.). The disclosures 5. Significant alternatives to the (other than federal branches, federal required by §§ 230.4(a)(2) and 230.8 proposed revisions. The Board solicited agencies, and insured state branches of may be provided to the consumer in comment on any significant alternatives foreign banks), commercial lending electronic form without regard to the that could provide additional ways to companies owned or controlled by consumer consent or other provisions of reduce regulatory burden associated foreign banks, and organizations the E-Sign Act in the circumstances set with the proposed rule. Commenters did operating under section 25 or 25A of the forth in those sections. Disclosures for not suggest any significant alternatives Federal Reserve Act. Other federal each account offered by an institution to the proposed rule. agencies account for the paperwork may be presented separately or combined with disclosures for the VIII. Paperwork Reduction Act burden imposed on the depository institutions for which they have institution’s other accounts, as long as it In accordance with the Paperwork administrative enforcement authority. is clear which disclosures are applicable Reduction Act of 1995 (PRA) (44 U.S.C. The annual burden is estimated to be to the consumer’s account. 3506; 5 CFR Part 1320 Appendix A.1), 232,443 hours for 1,172 Federal * * * * * the Board reviewed the rule under the Reserve-supervised institutions that are I 3. Section 230.4 is amended by authority delegated to the Board by the deemed respondents for purposes of the republishing paragraph (a)(1)(i) and Office of Management and Budget PRA. As mentioned in the Preamble, on revising paragraphs (a)(1)(ii) and (OMB). The collection of information April 30, 2007, a notice of proposed (a)(2)(i), to read as follows: that is subject to the PRA by this final rulemaking was published in the rulemaking is found in 12 CFR Part 230. § 230.4 Account disclosures. Federal Register (72 FR 21155). No The Federal Reserve may not conduct or comments specifically addressing the (a) Delivery of account disclosures— sponsor, and an organization is not burden estimate were received. (1) Account opening. (i) General. A required to respond to, this information The Federal Reserve has a continuing depository institution shall provide collection unless it displays a currently interest in the public’s opinions of our account disclosures to a consumer valid OMB control number. The OMB collections of information. At any time, before an account is opened or a service control number is 7100–0271. comments regarding the burden is provided, whichever is earlier. An Section 269 of the Truth in Savings institution is deemed to have provided Act (TISA) (12 U.S.C. 4308) authorizes estimate, or any other aspect of this collection of information, including a service when a fee required to be the Board to issue regulations to carry disclosed is assessed. Except as out the provisions of TISA. TISA and suggestions for reducing the burden, may be sent to: Secretary, Board of provided in paragraph (a)(1)(ii) of this Regulation DD require depository section, if the consumer is not present institutions to disclose yields, fees, and Governors of the Federal Reserve System, 20th and C Streets, NW., at the institution when the account is other terms concerning deposit accounts opened or the service is provided and to consumers at account opening, upon Washington, DC 20551; and to the Office of Management and Budget, has not already received the disclosures, request, and when changes in terms the institution shall mail or deliver the occur. Depository institutions that Paperwork Reduction Project (7100– 0199), Washington, DC 20503. disclosures no later than 10 business provide periodic statements are required days after the account is opened or the to include information about fees List of Subjects in 12 CFR Part 230 service is provided, whichever is earlier. imposed, interest earned, and the Advertising, Banks, banking, (ii) Timing of electronic disclosures. If annual percentage yield earned during Consumer protection, Federal Reserve a consumer who is not present at the those statement periods. The act and System, Reporting and record keeping institution uses electronic means (for regulation mandate the methods by requirements, Truth in Savings. example, an Internet Web site) to open which institutions determine the an account or request a service, the I account balance on which interest is For the reasons set forth in the disclosures required under paragraph calculated. They also contain rules preamble, the Board amends 12 CFR (a)(1) of this section must be provided about advertising deposit accounts. To part 230 as set forth below: before the account is opened or the ease the compliance cost (particularly PART 230—TRUTH IN SAVINGS service is provided. for small entities), model clauses and (REGULATION DD) (2) Requests. (i) A depository sample forms are appended to the institution shall provide account regulation. Depository institutions are I 1. The authority citation for part 230 disclosures to a consumer upon request. required to retain evidence of continues to read as follows: If a consumer who is not present at the

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institution makes a request, the percentage yield) the advertisement must the current view of the staff that, institution shall mail or deliver the clearly refer the consumer to the location consistent with the guidance in disclosures within a reasonable time where the additional required information Statement of Financial Accounting after it receives the request and may begins. For example, an advertisement that Standards No. 156, Accounting for includes a bonus or annual percentage yield provide the disclosures in paper form, may be accompanied by a link that directly Servicing of Financial Assets, and or electronically if the consumer agrees. takes the consumer to the additional Statement of Financial Accounting * * * * * information. Standards No. 159, The Fair Value Option for Financial Assets and § 230.10 [Removed] * * * * * 11. Additional disclosures in connection Financial Liabilities, the expected net I 4. Section 230.10 is removed and with the payment of overdrafts. The rule in future cash flows related to the reserved. § 230.3(a), providing that disclosures associated servicing of the loan should I 5. In Supplement I to Part 230, the required by § 230.8 may be provided to the be included in the measurement of all following amendments are made: consumer in electronic form without regard written loan commitments that are to E-Sign Act requirements, applies to the I a. In Section 230.4—Account accounted for at fair value through disclosures described in § 230.11(b), which earnings. SAB 105 also indicated that disclosures, under (a)(2)(i), paragraphs are incorporated by reference in § 230.8(f). 3. and 4. are revised. the staff believed that internally- * * * * * I b. In Section 230.8—Advertising, developed intangible assets (such as (e) Exemption for certain advertisements under (a) Misleading or inaccurate customer relationship intangible assets) (e)(1) Certain media should not be recorded as part of the fair advertisements, paragraph 9. is revised (e)(1)(i) and new paragraph 11. is added. 1. Internet advertisements. The exemption value of a derivative loan commitment. I c. In Section 230.8—Advertising, for advertisements made through broadcast This SAB retains that staff view and under (b) Permissible rates, paragraph 4. or electronic media does not extend to broadens its application to all written is removed. advertisements posted on the Internet or sent loan commitments that are accounted I d. In Section 230.8—Advertising, by e-mail. for at fair value through earnings. under (e)(1)(i), paragraph 1. is revised. * * * * * The staff expects registrants to apply I e. Section 230.10—Electronic the views in Question 1 of SAB 109 on By order of the Board of Governors of the a prospective basis to derivative loan Communication is removed and Federal Reserve System, October 31, 2007. commitments issued or modified in reserved. Jennifer J. Johnson, The amendments read as follows: fiscal quarters beginning after December Secretary of the Board. 15, 2007. Supplement I to Part 230—Official Staff [FR Doc. E7–21701 Filed 11–8–07; 8:45 am] DATES: November 5, 2007. Interpretations BILLING CODE 6210–01–P FOR FURTHER INFORMATION CONTACT: * * * * * Ashley W. Carpenter, Office of the Chief Accountant (202) 551–5300 or Craig C. Section 230.4—Account Disclosures SECURITIES AND EXCHANGE (a) Delivery of Account Disclosures Olinger, Division of Corporation COMMISSION Finance (202) 551–3400, Securities and * * * * * Exchange Commission, 100 F Street NE., (a)(2) Requests 17 CFR Part 211 (a)(2)(i) Washington, DC 20549. [Release No. SAB 109] SUPPLEMENTARY INFORMATION: The * * * * * statements in staff accounting bulletins 3. Timing for response. Ten business days Staff Accounting Bulletin No. 109 is a reasonable time for responding to are not rules or interpretations of the requests for account information that AGENCY: Securities and Exchange Commission, nor are they published as consumers do not make in person, including Commission. bearing the Commission’s official requests made by electronic means (such as ACTION: Publication of staff accounting approval. They represent interpretations by electronic mail). bulletin. and practices followed by the Division 4. Use of electronic means. If a consumer of Corporation Finance and the Office of who is not present at the institution makes SUMMARY: This staff accounting bulletin the Chief Accountant in administering a request for account disclosures, including (‘‘SAB’’) expresses the views of the staff the disclosure requirements of the a request made by telephone, e-mail, or via regarding written loan commitments the institution’s Web site, the institution may Federal securities laws. send the disclosures in paper form or, if the that are accounted for at fair value Dated: November 5, 2007. through earnings under generally consumer agrees, may provide the Florence E. Harmon, disclosures electronically, such as to an e- accepted accounting principles. SAB Deputy Secretary. mail address that the consumer provides for No. 105, Application of Accounting that purpose, or on the institution’s Web site, Principles to Loan Commitments (‘‘SAB PART 211—[AMENDED] without regard to the consumer consent or 105’’), provided the views of the staff other provisions of the E-Sign Act. The regarding derivative loan commitments I Accordingly, Part 211 of Title 17 of regulation does not require an institution to that are accounted for at fair value the Code of Federal Regulations is provide, nor a consumer to agree to receive, through earnings pursuant to Statement the disclosures required by § 230.4(a)(2) in amended by adding Staff Accounting electronic form. of Financial Accounting Standards No. Bulletin No. 109 to the table found in 133, Accounting for Derivative Subpart B. * * * * * Instruments and Hedging Activities. Section 230.8—Advertising SAB 105 stated that in measuring the Staff Accounting Bulletin No. 109 (a) Misleading or Inaccurate Advertisements fair value of a derivative loan I The staff hereby amends and replaces * * * * * commitment, the staff believed it would Section DD of Topic 5, Miscellaneous 9. Electronic advertising. If an electronic be inappropriate to incorporate the Accounting, of the Staff Accounting advertisement (such as an advertisement expected net future cash flows related to Bulletin Series. Topic 5: DD (as appearing on an Internet Web site) displays the associated servicing of the loan. This amended) expresses the views of the a triggering term (such as a bonus or annual SAB supersedes SAB 105 and expresses staff regarding written loan

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