Full text of Federal Reserve Bank of New York Circulars : 8178. Regulation Z

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F E D E R A L R E S E R V E BANK
O F N EW YO R K
r

Circular No.

81781

L September 12, 1977 J

R E G U LA TIO N Z
Postponement o f Full Implementation
o f Rule Regarding Descriptive Billing o f Nonsale Credit Transactions

To A ll Member Banks, and Others Concerned,
in the Second Federal Reserve District:

The Board of Governors of the Federal Reserve System has postponed the effective
date— from October 28, 1977 to March 28, 1978— for full implementation of §226.7(k)(3 ) (ii) of Regulation Z, which prescribes rules regarding descriptive billing of nonsale
credit transactions on open-end credit accounts.
Following is the text of the Board of Governors’ press release in this matter:
The Board of Governors of the Federal Reserve System today announced that it is postpon­
ing the effective date of a section of the Truth in Lending Regulation Z dealing with rules for the
billing of credit transactions, such as cash advance checks.
The section of the regulation involved (226.7(k ) (3 ) ( i i ) ) was scheduled to go into effect
October 28, 1977. The date for full implementation of this section of the regulation is being post­
poned to March 28, 1978.
The announcement said the action was taken because the Board is considering proposals de­
signed to facilitate compliance with the regulation by creditors, while maintaining requirements
for description of transactions adequate to allow customers to identify them.
At present, full implementation of this part of Regulation Z calls for the creditor to send a
bill to the customer showing the date of the transaction or the date on the credit document (such
as a cash advance check) and the amount of the transaction and stating what type of nonsale credit
transaction is involved, such as a cash advance check, an overdraft credit or other.
Until full implementation on March 28, 1978, creditors may substitute for the transaction date
or the date on the credit document the date the transaction is debited to the customer’s account, or
the creditor may omit any of the required information that is not available and treat any resulting
inquiry from the customer as a billing error, triggering the billing error requirements of Regula­
tion Z.
Any changes in this section (226.7(k ) (3 ) ( i i ) ) of Regulation Z will be published for com­
ment and possible revision before final action by the Board.

Enclosed is a copy of the Board’s Order in this matter. Any questions regarding the
Board’s action may be directed to our Consumer Affairs Division (Tel. No. 212-791-5919).




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Board o f Governors o f the Federal Reserve System
RE G U LA TIO N Z
Order Postponing Full Implementation o f Section 2 2 6 .7 (k ) (3 ) (ii)
(Docket Nos. R-0093 and R-0087)
P A R T 226— T R U T H IN LEN D IN G
Description of Transactions
A G E N C Y : Board of Governors of the Federal
Reserve System.
A C T IO N : Final rule.
S U M M A R Y : This rule postpones the date for
full implementation of the regulation regarding
descriptive billing of nonsale credit transac­
tions, such as cash advance checks, on open end
credit accounts (Reg. Z, § 226.7(k) (3 ) (ii) )
until March 28, 1978. The action is taken in
order to permit the full consideration of pro­
posals to amend this section of the regulation,
which are designed to facilitate compliance with
the regulation by creditors and, at the same
time, to retain the essential description require­
ments of the present regulation for the benefit
of consumers.
E F F E C TIV E D A T E : August 31, 1977.
FO R F U R TH E R IN F O R M A T IO N CON­
T A C T : Glenn E. Loney, Attorney, Division of
Consumer Affairs, Board of Governors of the
Federal Reserve System, Washington, D.C.
20551 (202-452-2412).
S U P P L E M E N T A R Y IN F O R M A T IO N : By
this document the Board of Governors of the
Federal Reserve System ( “ Board” herein)
postpones the date for full implementation of
§ 226.7(k ) (3 ) (ii) of Regulation Z, which pre­
scribes rules regarding descriptive billing of
nonsale credit transactions reflected on open
end credit periodic statements. That section of
the regulation was scheduled to become fully
effective on October 28, 1977. However, be­
cause of the pendency of Board consideration
of proposals to amend the section, it is neces­
sary to postpone the date until March 28, 1978,
in order to have sufficient time to complete the
consideration of the proposals and any rulemaking proceedings that become necessary.

[Enc. Cir. Np. 8178]




This postponement is also necessary in order to
avoid the commitment of resources by creditors
to comply with the requirements of the section
as it is currently written until the Board has
determined whether or not it should be changed,
and to give creditors sufficient time to adjust
their systems to comply with the requirements
ultimately adopted.
It should be made clear that this suspension
relates only to the requirements of § 226.7(k )(3 ) ( ii) of Regulation Z regarding identifica­
tions of nonsale credit transactions, such as
cash advance checks. The requirements of
§226.7(k ) relating to other types of credit
transactions are not affected hereby.
Pursuant to 5 U.S.C. § 553 (1970) the
Board finds that notice and public participation
in this rulemaking are impractical and unnec­
essary since (1 ) time is of the essence in post­
poning the date for full implementation of the
section, (2 ) the effective date is merely tempo­
rarily postponed, and (3 ) opportunity will be
afforded for public comment on any changes
in the substance of the subject regulation pro­
posed by the Board.
In consideration of the foregoing and pur­
suant to the authority granted in 15 U.S.C.
1604 (1970) the Board hereby postpones the
October 28, 1977 date for full implementation
of § 226.7(k ) (3 ) (ii) of Regulation Z, as re­
flected in § 226.7(k) (7 ) ( i ) , until March 28,
1978. During the period of the postponement a
creditor may comply with the requirements for
identifying nonsale credit transactions on or
with open end credit periodic statements either
by use of the methods prescribed in § 226.7(k ) (3 ), by use of the alternatives prescribed in
§ 226.7(k) (4 ) or § 226.7(k) (7 ) (i ) , or by
use of a combination of those methods.
By order of the Board of Governors of the
Federal Reserve System, August 31, 1977.

P R IN T E D IN N E W Y O R K