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CUNA Regulatory Comment Call

June 15, 2001

EXECUTIVE SUMMARY

• The NCUA Board unanimously approved an interim final rule on how credit unions can provide electronically the disclosures that are required to be given in writing under Regulation DD, the Truth in Savings Act (TISA).
• The rule revises and supersedes the interim rule that was issued in 1999. These revisions were necessary as a result of the enactment of the Electronic Signatures in Global and National Commerce Act (E-Sign Act), which became effective on October 1, 2000. The E-Sign Act permits the use of electronic signatures and disclosures, as long as appropriate consent is received from the consumer.
• Here are the significant provisions of the interim final rule:
• Members must provide affirmative consent to receive the disclosures electronically.
• Disclosures may be sent by e-mail or made available at another location, such as an Internet website. If the disclosures are not sent by e-mail, members must receive notice alerting them to the availability of these disclosures.
• Disclosures posted at a location, such as an Internet website, must be available for 90 days.
• The disclosures must be provided before the account is opened, and the member must be required to access these disclosures before the account is opened.
• Credit unions must make a reasonable attempt to redeliver electronic disclosures that are returned undelivered, using information that is on file.
• As required under TISA, the NCUA must issue rules that are substantially similar to the rules issued by the Federal Reserve Board (Fed), taking into account the unique nature of credit unions and the limitations under which they may pay dividends on member accounts.
• The Fed issued their rule in March 2001. Click here for CUNA's summary of the Fed's rule, which will provide more information that will be applicable to the NCUA rule.
• Click here for CUNA's comment letter that was submitted in response to the rule issued by the Fed.
• The rule was effective on June 21, 2001. The mandatory compliance date will be October 1, 2001.

Comments on the interim final rule are due by August 20, 2001. Please submit your comments to CUNA by August 8, 2001. Please feel free to fax your responses to CUNA at 202-371-8240; e-mail them to Associate General Counsel Mary Dunn at mdunn@cuna.com or to Assistant General Counsel Jeffrey Bloch at jbloch@cuna.com; or mail them to Mary or Jeff in c/o CUNA's Regulatory Advocacy Department, 805 15th Street, NW, Suite 300, Washington, DC 20005.

• Many provisions of the rule were developed in 1998 and 1999. Have there been any developments since then or recent industry practices that warrant changes in the rule?
  
  

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• Should there be more regulatory guidance regarding member consent? For example, what guidance, if any, is needed regarding the requirement that members confirm consent electronically and in a manner that "reasonably demonstrates" that they can access the information? What guidance, if any, is needed regarding the effect of withdrawing consent or on requesting paper copies? (The E-Sign Act permits the withdraw of consent.)
  
  

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• Credit unions must inform members about changes in hardware or software requirements if there is a "material risk" that the member will no longer be able to access and retain the information. Is more guidance needed regarding the term "material risk?"
  
  

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• Are other regulatory or legislative changes needed to take into account online banking and lending or would otherwise facilitate electronic delivery of financial services? For example, with online banking, financial institutions can provide up-to-date information in addition to the periodic statements that are required under Regulations Z and DD. Should the requirements regarding periodic statements be changed for online banking? How can such changes be made that would provide consumers with an understanding of the cost and activity of an account over time and provide protections for resolving errors for unauthorized transactions?
  
  

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• An e-mail address is defined as one that is not limited to receiving communications transmitted solely by the credit union. This is intended to exclude systems, such as home-banking programs, that allow communications solely between the credit union and the member. Should electronic message capability within home-banking programs be included in the definition of e-mail address? What are the benefits to credit unions and their members for including home-banking programs within this definition?
  
  

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• Is the interim rule clearly written and easily organized? How can the rule be written to make it easier to understand?
  
  

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• Other comments?
  
  

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