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FE D E R A L R E SE R V E B AN K
OF N EW YORK

r Circular No. 3 3 9 0 1
L October 28, 1948 J

CONSUMER INSTALMENT CREDIT CONTROL
Amendment No. 1 to Regulation W of the Board of Governors of the
Regulation
Boai
Federal Reserve System

To Financial Institutions and Certain Other Persons in the
Second F ederal Reserve District Concerned with Regulation W :

The Board of Governors of the F ed eral R eserv e System lias adopted Amendment No. 1
to Regulation W , effective November 1,1948. F o r your inform ation we quote below from a
press statem ent issued by the Board of Governors relating to this amendment, and released
for publication on October 28, 1948:
The Board of Governors of the Federal Reserve System has adopted an amendment to
Regulation W— Consumer Instalment Credit—which will permit customer trials of appliances
without prior down payment under certain specified conditions. The amendment, which
becomes effective November 1, 1948, is designed to reduce certain technical difficulties experi­
enced by instalment dealers subject to the regulation, and is not intended to result in any
relaxing of the credit restrictions.
It has been the custom for some dealers to deliver appliances and other articles subject
to the customer’s approval or for demonstration purposes. When such deliveries were made
in anticipation of an instalment sale, the regulation has heretofore required a down pay­
ment at or before the time of delivery. The amendment provides that if certain specified
conditions are followed the seller may allow a trial period of not more than ten days without
previously obtaining the down payment.

A printed copy of Amendment No. 1 to Regulation W is enclosed. Additional copies
may be obtained upon request.




A lla n

S pro u l,

P resident.

AMENDMENT NO. 1 TO REGULATION W
ISSUED B Y T H E BOARD OF GOVERNORS OF T H E FEDERAL RESERVE SYSTEM

Effective November 1, 1948, section 6(gr) of Regulation W is
amended to read as follows:
“ (gr) Delivery in Anticipation of Instalment Sale. — Except as
provided in the following paragraph, in case a listed article is delivered
in anticipation of an instalment sale of that article or a similar article
(such as a delivery ‘ on approval’, ‘ on tria l’, or as a ‘ demonstrator’),
the Registrant shall require, at or before the time of such delivery,
a deposit equal to the down payment that would be required on such
an instalment sale.
“ In order to qualify as an exception to the preceding paragraph
the article must be an article listed in Group B, the delivery must be
exclusively for the purpose of a bona fide trial, approval, or demonstra­
tion, and the Registrant must, within ten days after such delivery,
obtain the down payment referred to in the preceding paragraph or
the return of the article. Every such case shall be evidenced by a
written agreement signed by the respective parties, of which a copy
shall be given the prospective purchaser at or before the delivery of
the article, and such written agreement shall clearly and prominently
state that (1) the delivery is exclusively for the purpose of a bona fide
trial, approval, or demonstration, and (2) the prospective purchaser
will make the required down payment (the amount of which shall be
stated in the agreement) within ten days after delivery of the article
for trial, approval, or demonstration or will return or release the
article within such ten day period.
“ In calculating the maximum maturity in connection with trans­
actions under either of the two preceding paragraphs, the date of
delivery of the article sold shall be considered the date of the sale.”





Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102