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RESERVE B AN K OF DALLAS
DALLAS, TEXAS
75222
Circular No. 76-129
September 17, 1976
A m e r ic a n R e v o l u tio n B ic e n te n n ia l
AMENDMENTS TO REGULATION Z— TRUTH-IN-LENDING
Identification of Transactions; Miscellaneous Amendments
TO ALL BANKS, OTHER CREDITORS,
AND OTHERS CONCERNED IN THE
ELEVENTH FEDERAL RESERVE DISTRICT:
The Board of Governors of the Federal Reserve System has announced the
adoption of changes in i s Regulation Z (Truth-in-Lending) for identifying transactions
t
charged to consumers using open-end charge accounts such as charges on credit card
billing statements or department store accounts. The amendments are effective immedi
ately and differ only slightly from proposals published for comment May 12, 1976.
The original identification of transaction rules would have required that, effec
tive July 1 1976, when other information was not available to identify a sale, a number or
,
symbol (for instance, a voucher number) must appear on the billing statement. The
May 12 proposal to change this rule suspended the July 1 deadline.
As adopted, this provision i amended as follows:
s
( ) In a two-party transaction (generally involving only the customer and the mer
1
chant) i the seller cannot provide a description of the property or services otherwise
f
required to identify the transaction on a billing statement, a voucher number may be used
instead.
( ) I , however, the customer cannot identify the transaction from the voucher num
2 f
ber, the creditor would be required to treat any resulting inquiry from the customer as a
billing error. This would trigger the billing error settlement procedures under the Fair
Credit Billing Act, including: no finance charge on the transaction until the matter i
s
settled; an additional period free of finance charges i the creditor normally allows such a
f
period after billing; and provision of a copy of the sales voucher to the customer without
charge.
Creditors in three-party transactions (involving the customer, merchant, and
credit card issuer other than the merchant) would have had this alternative available to
them under the May 12 proposals, but not under the amendment as adopted.
The amendments also:
(3) Provide that, when a transaction did not take place at a seller's fixed business
location, an appropriate identifying designation may be used for transactions that take
This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)
- 2 place by mail, by phone, at a customer's home, or on a public conveyance, such as a
plane or train.
( ) In the case of purchases in a foreign country, allow the creditor to identify the
4
transaction by date of debit, instead of date of purchase, and require the creditor to treat
any resulting inquiry by the customer as triggering the Fair Credit Billing Act billing
error procedures.
( ) Provide that disclosure of a seller's name in the same way as i appears on a
5
t
sales voucher i adequate identification of the seller.
s
Printed on the following pages i the text of the Board's press release and order
s
as submitted for publication in the FEDERAL REGISTER. The enclosed copy of the Board's
amendments to Regulation Z include a number of other changes, of a technical nature, not
related to identification of transactions. Member banks and others who maintain Regula
tions Binders should f l the amendments in their binders. Please remove and destroy the
ie
amendment effective May 7, 1976, to Section 226.7(b) (1 ( i as i has been rescinded.
) i)
t
I you have any questions concerning the amendments, please contact George H .
f
McElroy of our Regulations Department at (214) 651-6169. Additional copies of the amend
ments will be furnished upon request to the Secretary's Office of this Bank (214) 651-6267.
Sincerely yours,
T. W. Plant
First Vice President
Enclosures
FEDERAL
p r e s s
RESERVE
r e l e a s e
Rtf: •
A u g u s t 3 1 , 1976
F o r i m m e d ia te r e l e a s e
The B o a rd o f G o v e r n o rs o f t h e F e d e r a l R e s e r v e S y s te m t o d a y
announced a d o p ti o n o f changes i n i t s
R e g u la tio n Z (T ru th i n L ending)
f o r i d e n t i f y i n g t r a n s a c t i o n s c h a r g e d t o c o n s u m e rs u s i n g o p e n - e n d
c h a r g e a c c o u n t s s u c h a s c h a r g e s on c r e d i t c a r d b i l l i n g s t a t e m e n t s , o r
d epartm ent s t o r e a c c o u n ts.
The a c t i o n i s e f f e c t i v e i m m e d i a t e l y .
The am endm ents
t o R e g u l a t i o n Z , a s a d o p t e d , d i f f e r e d o n l y s l i g h t l y fro m p r o p o s a l s
p u b l i s h e d f o r comment May 1 2 , 1976.
The p o r t i o n s o f R e g u l a t i o n Z amended by t h e B o a r d w e r e
o r i g i n a l l y ad o p ted e f f e c t i v e l a s t O c to b e r 28, t o g e t h e r w i t h o th e r
am endm ents t o t h e r e g u l a t i o n i m p l e m e n t i n g t h e s e p a r a t e b u t r e l a t e d
F a ir C re d it B i l li n g A ct.
The o r i g i n a l i d e n t i f i c a t i o n o f t r a n s a c t i o n
r u l e s w ould h a v e r e q u i r e d t h a t , e f f e c t i v e J u l y 1 , 1 9 7 6 , when o t h e r
i n f o r m a t i o n was n o t a v a i l a b l e t o i d e n t i f y a s a l e , a n u m b e r, o r sym bol
( f o r i n s t a n c e , a v o u c h e r num ber) m u s t a p p e a r on t h e b i l l i n g s t a t e m e n t .
The May 12 p r o p o s a l t o c h a n g e t h i s r u l e s u s p e n d e d t h e J u l y 1 d e a d l i n e .
As a d o p t e d , t h i s p r o v i s i o n i s amended a s f o l l o w s :
- - I n a tw o -p a rty t r a n s a c t i o n ( g e n e r a l l y in v o lv in g o n ly the
c u s t o m e r an d t h e m e r c h a n t ) i f t h e s e l l e r c a n n o t p r o v i d e a d e s c r i p t i o n o f t h e
p ro p e rty o r s e r v ic e s o th erw ise r e q u ire d to i d e n t i f y th e t r a n s a c t i o n
o n a b i l l i n g s t a t e m e n t , a v o u c h e r num ber may b e u s e d i n s t e a d .
— I f , how ever, th e cu sto m er c a n n o t i d e n t i f y t h e t r a n s a c t i o n
fro m t h e v o u c h e r num ber, t h e c r e d i t o r w o u ld b e r e q u i r e d t o t r e a t any
re su ltin g
i n q u i r y fro m t h e c u s t o m e r a s a b i l l i n g e r r o r .
T h i s w ould
-2 -
t r i g g e r th e b i l l i n g e r r o r s e ttle m e n t procedures under th e F a ir C re d it
B i l li n g A ct, in c lu d in g :
no f i n a n c e c h a r g e on t h e t r a n s a c t i o n u n t i l t h e
m a tte r is s e t t l e d , an a d d itio n a l p e rio d
fre e of fin a n c e charges i f th e
c r e d i t o r n o r m a l l y a l l o w s s u c h a p e r i o d a f t e r b i l l i n g , and p r o v i s i o n
o f a c opy o f t h e s a l e s v o u c h e r t o t h e c u s t o m e r w i t h o u t c h a r g e .
C re d ito rs in th re e -p a r ty tra n s a c tio n s
( in v o lv in g th e cu sto m e r,
m e r c h a n t and c r e d i t c a r d i s s u e r o t h e r t h a n t h e m e r c h a n t ) w ould h a v e h a d
t h i s a l t e r n a t i v e a v a i l a b l e t o th em u n d e r t h e May 12 p r o p o s a l s , b u t n o t
u n d e r t h e amendment a s a d o p t e d .
The amendments a l s o :
- - P r o v i d e t h a t , when a t r a n s a c t i o n d i d n o t t a k e p l a c e a t a
s e lle r 's
f ix e d b u s in e s s l o c a t i o n , an a p p r o p r i a t e i d e n t i f y i n g d e s i g n a t i o n
may be u s e d f o r t r a n s a c t i o n s t h a t t a k e p l a c e b y m a i l , by p h o n e , a t
a c u s t o m e r ' s home o r on a p u b l i c c o n v e y a n c e , s u c h a s a p l a n e o r t r a i n .
— In th e c a se o f p u rch ases in a f o r e ig n c o u n try , allo w th e
c r e d i t o r to i d e n t i f y th e t r a n s a c t i o n by d a te o f d e b i t ,
in ste a d o f d a te
o f p u r c h a s e , and r e q u i r e t h e c r e d i t o r t o t r e a t an y r e s u l t i n g i n q u i r y by
t h e cu sto m er as t r i g g e r i n g t h e F a i r C r e d i t B i l l i n g A ct b i l l i n g e r r o r
procedures.
- - P r o v i d e t h a t d i s c l o s u r e o f a s e l l e r ' s name i n t h e same way
a s i t a p p e a r s on a s a l e s v o u c h e r i s a d e q u a t e i d e n t i f i c a t i o n o f t h e
se lle r.
The a t t a c h e d c opy o f t h e B o a r d ' s amendm ents t o R e g u l a t i o n Z
i n c l u d e a num ber o f o t h e r c h a n g e s , o f a t e c h n i c a l n a t u r e , n o t r e l a t e d
to i d e n t i f i c a t i o n o f tr a n s a c tio n s .
- 0 -
Title 12— Banks and Banking
CHAPTER II— FEDERAL RESERVE
SYSTEM
S U B C H A P T E R A— B O A R D O F G O V E R N O R S
O F T H E FEDERAL R ESERVE S YSTE M
[Beg. Z; Docket No. R-0036]
PART 226— TRUTH IN LENDING
Identification of Transactions;
Miscellaneous Amendments
E xtract From
FEDERAL REGISTER
V O L . 41, NO. 170,
T u e sd ay, August 31, 1976
pp . 36662 - 36665
On Septem ber 19,1975, th e Board pub
lished am endm ents to Regulation JZ in
th e F ederal R e g is t e r setting fo rth dis
closure requirem ents for identifying
transactions reflected on open end credit
account periodic statem ents and for
other purposes (40 FR 4320). Subse
quently, questions were raised regarding
these requirem ents and on May 18,1976,
the Board published for comment in th e
F ederal R eg is t e r (41 FR 20421) pro
posed am endm ents intended to clarify
certain requirem ents, add flexibility as
necessary, and insure th a t consumers
would be able to procure complete infor
m ation regarding th eir open end credit
accounts quickly and w ithout undue
expense.
Comments were received and analyzed
during the comment period, w hich ended
June 18. On the basis of those comments
and its own analysis th e Board h as
adopted th e regulations which follow:
I d e n t if ic a t io n
of
T ra nsa ctio ns
Under these am endm ents the require
m ents for identifying transactions on
open end credit periods statem ents are
changed in th e following ways:
1. To enhance the clarity of th e text,
a new section 226.7 (k) is added to the
Regulation. T his new section would con
ta in th e requirem ents for identifying
transactions. Section 226.7(b) (1) (ii),
which form erly contained th e Identifica
tio n of transactions requirem ents, would
m erely reference S 226.7 (k) and require
th a t th e disclosures set fo rth therein
be made on or w ith periodic statem ents.
2. As adopted in th e Septepiber 19 pub
lication, th e Regulation required the
creditor to provide a reference num ber
or identifying symbol (such as a sales
voucher num ber) w hich appears on the
docum ent evidencing th e transaction in
those cases in w hich th e prim arily re
quired inform ation is n o t available. Be
cause of questions th a t were raised re
garding th e usefulness of th e num ber or
symbol to th e consumer and regarding
th e cost to creditors of instituting a
capability to capture the num ber or
symbol for potential use in all tran sac
tions when it may, in fact, be needed
for only a few, th e B oard proposed in
its May 18 publication to perm it a cred
ito r to provide an identifying num ber or
symbol when any of th e prim arily re
quired inform ation is n o t available pr,
alternatively, to perm it th e creditor to
disclose only th a t inform ation which is
available and tre a t any Inquiry regard
ing th e description or identification of
th e transaction as a billing error and
a n erroneous billing subject to th e pro-
Second, because of th e Importance and
visions of I 226.14. F urther, under the substitute a vouchee num ber or other
proposal of May 18, the creditor would identifying symbol which appears on th e complexities of the issues Involved and
have been required to provide documen docum ent evidencing th e transaction for th e need fo r interested parties to fully
tary evidence of the transaction w ithout th e description of property or services. evaluate th e requirem ents of th is regula
charge. These alternatives were to be However, If th is alternative Is used cus tion, th e Board has extended th e begin
available to those creditors th a t have tom er inquiries m ust be treated as bill ning date of th e second tran sitio n period
procedures In place adapted to provide ing errors and erroneous billings under tow ard compliance w ith th e ultim ate re
$ 226.14 and, if a proper w ritten notifica quirem ents of th e regulation to Octo
th e prim arily required Inform ation.
As finally adopted herein a creditor tion of a billing error is received regard ber 28,1976. T he Board believes this to be
m ay not supply merely a voucher num ber ing th e description of th e goods or serv adequate tim e, given th e earlier rule
when, despite th e m aintenance of pro ices, th e creditor m ust provide th e cus m aking proceedings on th is subject, for
cedures reasonably adapted to procure tom er w ith docum entary evidence of the interested parties to adapt th eir proce
th e prim arily required Inform ation, the transaction. This is m eant to be a gen dures to the rule. Because of th e need for
creditor falls to Obtain it. In such cases erally available alternative which a th is added transition period as reflected
these am endm ents require th e creditor to. creditor m ay use to program its billing by the issues raised by the comments, th e
Board herein rescinds its earlier suspen
tre a t any inquiry as a billing error and system in th e first instance.
This alternative will allow the creditor sion of th e transition period. No require
a n erroneous billing ,and, unless previ
ously furnished w ith a periodic sta te to evaluate and make its own m arket m ents other th a n those embodied in
m ent, provide copies of docum entary evi judgm ent as to w hether to provide the earlier rulem aking proceedings have been
dence of the transaction free of charge. m ore complete description and avoid, to imposed during the tran sition periods.
5. These am endm ents provide guid
Providing an Identifying num ber or sym a large extent, the billing error resolution
bol would, of course, be permissible. F u r process which may otherwise result from ance regarding th e disclosure of an ad
ther, creditors th a t use “descriptive” using a voucher num ber system or, alter dress for certain types of three-p arty
billing systems are required to substitute natively, to institute th e voucher num ber transactions which are not encompassed
th e d ate of debiting th e am ount of a system and face the potential expense of w ithin th e usual scenario of a purchase
transaction to th e account fo r the p ri answering th e inquiries which may be m ade a t a fixed seller location. Recog
m arily required date whenever th e p ri engendered thereby. T his solution to the nizing th a t it is often problem atic to a s
m arily required date is n o t available and problem was suggested in some of the sign one address o r designation which is
tre a t any inquiry regarding th e absence comments. As discussed fu rth er in a later helpful to customers in all situations (for
of the d ate as a billing erro r and an erro paragraph herein, a transition period is example, w ith a transaction th a t occurs
neous billing under the procedures dis provided to enable creditors to design by telephone, m ail order, In th e custom
cussed previously herein. Previously, the systems which will comply w ith the u lti er’s home, or a t a nonfixed location, such
regulations and proposals for comment m ate requirem ents of th e Act of th e as aboard a public conveyance), th e
h ad required th a t the identifying num Regulation by October 28, 1977. During am endm ents provide some flexibility.
ber or symbol be substituted whenever the th is transition period some experience They perm it the creditor to (a) om it th e
prim arily required date was n o t avail m ay be gained using th e voucher num address in cases where supplying an ad
able. I t seems th a t the debiting date is ber alternative and, to th e extent th a t it dress would, in itself, be misleading, or
a more useful substitute for the p ri m ay be representative, may aid creditors (b) supply an address or appropriate
m arily required date.
in determ ining w hether this type of sys designation (such as “m ail order”) ,
which, in th e creditors opinion, is helpful
T his addition to th e Regulation is de tem should be used.
signed to provide a n alternative to th e
4.
T his am endm ent provides an alte r in identifying the transaction or relating
requirem ent th a t an Identifying num ber native sim ilar to th a t discussed in p ara th e transaction to a docum ent previously
or symbol be provided in all cases when graph 2 for th e tran sitio n period which furnished. Use of th e disclosure provi
th e prim arily required inform ation is not lasts u n til October 28, 1977, provided to sions of this paragraph should n ot be for
available. I t is designed to insure a better enable creditors to adjust forms, proce th e purpose of evading or circum venting
an d more complete description to the dures, and com puter program s. During th e Act or Regulation, however.
6. Guidance for disclosing th e seller's
custom er w ithout financial disadvantage, th e transition phase these am endm ents
to provide creditors w ith an alternative allow the creditor to provide th a t infor nam e for th ree-party transactions Is pro
to th e costly requirem ent of developing m ation which is available while requir vided. Previously, the creditor was re
th e additional capability to provide a ing th a t any inquiry regarding the quired to disclose a seller’s nam e which
voucher num ber fo r all transactions identification of th e transaction be appeared on th e sales voucher. The
w hen th eir systems a re designed to pro treated as a billing erro r and as an er M ay 18 publication provided th a t if th e
vide th e prim ary Inform ation, an d to roneous billing when th e prim arily re nam e on th e voucher was alphabetically
supply a n incentive for th e creditor to quired inform ation Is n o t available. H ie abbreviated a m ore complete spelling
provide a complete description in th e first am endm ents also reta in th e alternative could be provided. I t fu rth e r provided
Instance. As noted above, under this of supplying th e Identifying num ber or th a t if th e nam e was encoded on th e sales
alternative th e creditor rem ains obli symbol when prim arily required infor voucher In a m anner n o t understandable
gated to m aintain procedures reasonably m ation regarding th e m erchant’s nam e to customers th e encoded symbol and a
adapted to procure th e prim arily required and address or description of property or m ore complete spelling of th e seller’s
Inform ation.
services is n ot available during the nam e m ust be provided on or w ith the
3. In th e May 18 proposal, th e Board tran sitio n period. F urther, during the periodic statem ent. This provision was
asked for com ment regarding difficulties, transitio n period th e date of debiting an designed to provide certainty in the
and possible solutions to those difficulties, am ount to th e account m ay be sub m ethod of disclosure and to provide a
w hich creditors m ay have regarding de stituted for th e otherwise required dates. description which a custom er can verify
T he language regarding th e transition and understand.
scribing property or services purchased
Some creditors commented th a t th e
In transactions a t m erchant establish period for compliance, which ends Octo
m ents which sell a single homogenous ber 28, 1977, has been changed from th e regulation needed m ore flexibility in this
line of m erchandise or which use a September 19 publication In two respects. respect and th a t they should be per
cen tral checkout facility. A significant F irst, the language has been changed to m itted to provide a seller’s nam e other
proportion of th e comments received ad fu rth er clarify th e fa c t th a t th e alte r th a n by reference to w hat appears cm th e
dressed th is Issue, pointing out th a t in natives provided In th e section are gen sales voucher. T he regulation as finally
these tw o-party situations it is often in erally available an d -th at creditors do not adopted provides th a t disclosure of a
convenient to th e custom er and burden need to Institute procedures reasonably seller’s nam e w hich appears on th e sales
Voucher (or a m ore complete spelling of
some and tim e consuming to th e creditor
to Itemize th e property o r services p u r adapted to procure th e inform ation such a nam e If It has been alphabetically
chased In such transactions. T he regula which will be required to be disclosed abbreviated) Is adequate. However, th e
tion is, therefore, amended herein to pro a fte r October 28,1977, during th is tran si regulation no longer requires Chat this be
vide th a t a tw o-party creditor m ay freely tio n phase.
th e nam e disclosed. O ther nam es may be
adequate for these purposes as well. H ie
regulation, therefore, provides th e cer
tainty th a t some creditor desire and th e
flexibility others feel they need.
7. Footnote 9b (footnote 7c as it ap
peared in th e Septem ber 19 am end
m ents) has been positioned w ithin the
regulation to indicate th a t all references
to “th e sam e person or related persons”
in i 226.7(k) are governed by th e guide
lines set fo rth in th a t footnote.
8. Section
226.7(k)(l)
regarding
“country club” billing has been changed
from th e May 18 publication by the addi
tion of th e words “a t the creditor’s op
tio n ” im m ediately preceding th e words
“either th e d ate of the transaction or th e
date th e transaction is debited to the
custom er’s account.” This is intended to
allow “country club” billers to program
th e ir systems and to choose between pro
viding th e date of transaction or th e date
of th e debiting. W hichever method they
choose for any particular types of tra n s
actions should be consistent. Should the
date which they choose to disclose be un
available despite procedures instituted
to capture th a t date, th e alternative to
tre a t th e absence of the inform ation as a
billing error and an erroneous billing, as
discussed earlier, would be available to
them .
9. Recognizing the difficulties of pro
curing th e prim arily required inform a
tion for transactions in foreign coun
tries, the am endm ent (a) allows the cred
itor to disclose the date on which the
am ount of th e transaction is debited to
th e custom er’s account instead of any
oth er required date and (b) use the er
ro r resolution procedure discussed in
paragraph (2) in all cases w ithout the
obligation to m aintain th e procedures
adapted to procure th e inform ation in
every instance. This provision is m eant
to be permissive and a creditor may, of
course, disregard it and fully comply
w ith th e requirem ents otherw ise imposed
by § 226.7 (k).
10. The wording in § 226.7 (k) (4) (ii)
requiring th a t the creditor m aintain
procedures reasonably adapted to ob
ta in th e prim arily required inform ation
has been changed from th e May 18 pro
posal by substituting th e words “re
ceived by” for th e words “transm itted
to .” This is m eant to clarify th a t th e al
ternatives provided in § 226.7(k) (4) (i)
are available to tw o-party as well as
three-party creditors. T he point was
raised in the comments th a t there is no
“tran sm ittal,” as such, of th e sales
voucher to th e creditor in a tw o-party
system. No change in th e m eaning of th e
Regulation is intended by this change
in th e wording.
Imposition of any finance charges or company the periodic statem ent shall be
o th er charges upon th e customer. This Identified by disclosing on or w ith th e pe
am endm ent is adopted in th e belief th a t riodic statem ent on w hich th a t credit
such a disclosure is of little of no value or transaction is first reflected a t least:
(i) For transactions In which th e cred
economic concern to th e consumer but
does Impose a substantial cost upon ito r and th e seller are the same person
creditors to m ake th e necessary change or related persons,* the am ount of th e
over for th e ir billing systems if they have transaction, the date on which the tra n s
no t provided such a d ate heretofore. action took place," and a brief identifica
The requirem ent th a t paym ents to a tio n " of any property or services p u r
custom er’s account be credited prom pt chased or an identifying num ber o r sym
ly, however, are n o t changed or sus bol reasonably unique for th a t tran sac
pended.
tion w ith th a t creditor which appears on
2. The am endm ent to § 226.7(c) (1) is th e docum ent evidencing th e transaction
intended to clarify the B oard’s inten t in given to th e custom er; provided, th a t, if
its publication of Septem ber 19, 1975. th e creditor discloses such an identifying
T he language of § 226.7(c)(1) perm its num ber o r symbol, th e absence of th e
certain inform ation to be disclosed other identification of the property or services
th a n on the face of the periodic sta te otherwise required m ust be treated as a
m ent provided th a t th e totals of the re billing error under §§ 226.2(j) and 226.14
spective debits and credits under each of and as an erroneous billing under %226.14
the paragraphs referenced therein are (b) - if the custom er subm its a proper
disclosed on th e face of th e periodic w ritten notice of a h illin g error relating
statem ent. Concern has been expressed to such absence, and th e creditor m ust
th a t th e section, as am ended by the provide docum entary evidence of th e
Septem ber 19 publication, required dis transaction to th e custom er free of
closure of the total of all purchases or charge w hether or not th e custom er re
other loan transactions and finance quests it.
charges on the face of th e periodic sta te
(ii) F or transactions in which the
ment. This was not the Board’s intent. seller and the creditor are not th e same
3. The am endm ent to § 226.13 (i) adds person or related persons, the am ount of
a footnote to paragraph 4 specifically th e transaction, th e date on which th e
perm itting a creditor to report disputed transaction took place, and th e seller’s
am ounts under § 226.13 (i) as “in dis nam e and th e address (city and S tate\or
pute” but n o t as “delinquent.” This is foreign country, using understandable
consistent w ith the treatm en t of credit and generally accepted abbreviations if
reports under § 226.14 and avoids the th e creditor desires) where the tran sac
im plication th a t creditors m ust have a tion took place.
dual credit reporting system which
(3)
N otw ithstanding th e provisions of
would have to reflect the different kinds §§ 226.7(k) (1) and 226.7(k) (2), tran sac
of disputes th a t m ay be raised.
tions involving nonsale credit, such as a
In consideration of th e foregoing and cash advance or an overdraft or other
pursuant to th e authority granted in 15 checking plan transactions, shall be
U.S.C. I 1604 (1970) th e Board amends identified on or w ith th e periodic sta te
Regulation Z, 12 C.F.R. P a rt 226 as fol
lows:
1.
To fully im plem ent I 411, T itle IV, »» F or purposes o f p a rag ra p h 226 .7(k) a p e r
Pub. L. 93-495, 1 226.7(b)(1) (ii) will son is n o t re la te d to th e c red ito r sim ply b e
erson
c
ito h
an
provide, and a new S 226.7 (k) will be cause th e por c o na n dc tthpeu rsred n t rto avehich
agreem ent
tra
ua
w
added, as follows:
th e p erson is au th o riz ed to h o n o r th e cred i
§ 226.7 O p en E nd C redit A ccounts— to r ’s c re d it card u n d e r th e te rm s specified In
S p ecific D isclosu res.
th e ag reem en t o r c o n tra c t. F ra n c h ised o r li
censed sellers of a c red ito r’s p ro d u c t s h a ll b e
*
*
•
•
*
considered to be re la te d to th e c re d ito r fo r
(b) Periodic statem ents required p urposes of p a ra g ra p h 226.7(k ). Sellers w ho
assign or sell o pen e n d cu sto m er sales a c
(1) * * •
c o u n ts to a c red ito r o r a rran g e fo r su c h c red it
•
»
•
*
*
u n d e r a n open end c re d it p la n w hich aUows
(ii) The inform ation required by th e custom er to u se th e c re d it only In tra n s
actio n s w ith t h a t seller sh all b e considered
§ 226.7(k)
re la te d to th e cred ito r fo r p u rposes of
•
•
•
*
*
§ 2 2 6 .7 ( k ) .
(k) Identification of transactions. (1)
•• W ith resp ect to tra n sa c tio n s w hich are
Each extension of credit for which a n ac n o t billed In fu ll on any single sta te m e n t b u t
tu al copy of th e docum ent evidencing the fo r w hich precom puted in sta lm e n ts are billed
credit transaction (which does not in periodically, th e d a te th e tra n s a c tio n tak es
for purposes
pa
ra h I
clude a so-called “facsimile d ra ft”) ac place be deem ed to bof th e rag te pon w 226.7 (k)
ll
da
h ich th e
companies th e periodic statem ent on sh ao u n t is d e b ite d to eth e c u sto m e r’s Account.
M is c ell a n eo u s A m en d m en ts
am
which th e tran sactio n is first reflected
9d F or purposes o f p a rag ra p h § 226.7( k ) ,
The miscellaneous am endm ents as shall be identified by disclosing on the desig n atio n s su c h a s “m erch an d ise” o r “m is
proposed in th e May 18 publication are periodic statem ent, or on accompany cellaneous” sh a ll n o t be considered sufficient
ing statem ent(s) or docum ent(s), the Id e n tifica tio n o f p ro p erty o r services, b u t a
herein adopted.
reference to a d e p a rtm e n t in a sales e sta b
1.
The proposal amends I 226.7(b) (1)am ount of th e transaction and, a t the lish m e n t w hich accu rately conveys th e Iden
creditor’s option,
(ill) to provide th a t th e date of credit transaction o r th eeither th e date of th e tific a tio n o f th e ty p e (s) o f p ro p e rty or serv
date th e transaction ices w hich a re av ailab le in su c h d e p a rtm e n t
ing a paym ent or credit to th e custom er’s is debited to the custom er’s account.
sh a ll be sufficient u n d e r th is p arag rap h . Id e n
account need n o t be disclosed in those
(2)
Each extension of credit for which atio n m ay be m ade o n a n accom panying
tific
situations where th e failure to credit on a n actual copy of th e docum ent evidenc slip o r b y sym bol re la tin g to a n Id en tifica
any p articu lar day will n o t result in the ing the credit tran sactio n does n o t ac tio n lis t p rin te d o n th e sta te m e n t.
seller’s address where th e transaction October 28,1976. U ntil October 28, 1976,
took place for purposes of $ 226,7(k) (2) th e creditor shall disclose th e date of
(ii), the-creditor may om it th e address each extension of credit or th e date such
or provide an address or oth er suitable extension of credit is debited to th e ac
designation which, In the creditor’s opin count during the billing cycle, th e
ion, will assist th e custom er in Identify am ount of such extension of credit and,
ing th e transaction or in relating th e unless previously furnished, a brief iden
transaction, as reflected, to a docu tification " of any goods o r services pur
m ent (s) evidencing th e transaction chased or th e extension of credit.
2. Section 226.7(b) (1) (ill) is amended
previously furnished when no m eaning
fu l address Is readily available because by th e deletion of th e period a t th e end
th e transaction took place a t a location thereof and the addition of th e follow
which is no t fixed (for example, aboard ing: “, except th a t the date of crediting
a public conveyance), or in the custom to th e custom er’s account need n o t be
e r’s home (in which case "custom er’s provided if a delay in crediting does not
home” or a sim ilar description is suffi result in the imposition of any finance
cient) or because the transaction was th e charges, late paym ent charges, or other
result of a m ail o r telephone order (In charges for th a t billing cycle or a later
which case “telephone order,” "m ail billing cycle.”
order,” or sim ilar description is suffi
3. Section 226.7(c)(1) is amended to
cient) ; provided th a t any such disclosure read:
(c) • * *
made or om itted shall n o t be for the p u r
pose of circum vention or evasion of this
(1) The inform ation required to be
P art.
disclosed under p aragraph (b) (1) (ii) of
(ill) W ith regard to disclosing the this section and Item ization of the
sd le r’s nam e fo r purposes of S 226.7(k) am ounts and dates required to be dis
(2) (11), disclosure of a seller’s nam e closed under paragraph (b)(1) (Iii) of
which appears on th e docum ent evidenc th is section and of th e am ount of any
ing the transaction (or a m ore complete finance charge required to be disclosed
spelling of such a nam e If th e nam e is under paragraph (b) (1) (iv) of this sec
alphabetically abbreviated on th e docu tion m ay be m ade on the reverse side of
m ent evidencing th e transaction) is suffi th e periodic statem ent or on a separate
accom panying statem ent (s), provided
cient for purposes of § 226.7(k) (2) (ii).
(7) (i) As an alternative to th e provi th a t the totals of the respective debits
sions of {§ 226.7<k)(l) through 226.7(k) and credits under each of those p ara
(5), from O ctober 28, 197ft, u n til Octo graphs are disclosed on th e face of the
ber 28, 1977: (A) th e creditor may dis periodic statem ent.
close th e d ate of debiting th e am ount of
4. Section 226.13(1) (4) is amended to
th e transaction to th e custom er’s account add a footnote as follow s:
fo r th e date of th e transaction or th e
§ 226.13 Credit Card Transactions—
date placed on th e docum ent evidencing Special Requirements.
a credit transaction if, due to operational
*
•
•
•
*
lim itations, eith er such date is unavail
(1) R ight of cardholder to assert
able to the creditor fo r purposes of bill
ing; and th e creditor m ay disclose an claim s or defenses against card is
Identifying num ber or symbol which ap suer. • • •
pears on th e docum ent evidencing the
(4) If th e cardholder refuses to pay
credit transaction given to or used by th e am ount of credit outstanding w ith
th e custom er a t th e tim e of or in connec respect to th e property or services which
tion w ith th e credit transaction in place gave rise to th e claim (s) o r defense(s)
of th e seller’s nam e and address or de under this section, the creditor m ay not
scription of th e property o r services pur report to any person th a t particular
chased if, due to operational lim itations, am ount as delinquent u n til the dispute
*
such Inform ation is unavailable to the Is settled or judgm ent Is rendered.’1
6.
Section 226.7(b) (1) (11), as adopted
creditor for purposes of billing; o r (B)
th e creditor m ay identify th e transaction by the Board on Septem ber 15, 1970, and
by disclosing such inform ation as is rea published in th e F ederal R egister on
sonably available and treatin g th e ab September 19, 1975 (40 FR 43200) Is
sence of th e Inform ation required by hereby rescinded. T he suspension of th e
§8 226.7(k) (1), (2), or (3), as applicable,
as a billing error, as provided In S9 226.2 effective date of the tran sitio n period as
(j) and 226.14. If a custom er subm its a adopted by th e B oard on May 7, 1976,
proper w ritten notification of a billing and published In th e F ederal R egister
erro r relating to th e absence of such in on May 18,1976 (41 FR 20395) Is hereby
form ation an d th e Inform ation was, In rescinded.
fact, n o t disclosed as required by {( 226.7
By order of th e Board of Governors,
(k) (1), (2), o r (3), as applicable, th e
transaction shall be treated as an er August 27,1976.
roneous billing under {226.14(b) and
T h eo d o re e . A llis o n ,
docum entary evidence of th e tran sac
Secretary of the Board
tio n m ust be furnished w hether or n o t
[PR Doc.76-25704 Filed 8-80-76; 12:19 pm]
th e custom er requests It (despite th e
provisions of g8 226.2(j) and 226.14(a)
“ Identification may be made on an a<y>
•• In cases in which an amount is debited (2 )), w ithin th e tim e period allowed in companylng slip or by symbol relating to
to a customer’s open end credit account un { 226.14 fo r resolution of a bluing error, an Identification list printed on the state
der an overdraft checking plan, the date of
ment.
debiting th e open end credit account A «B w ithout charge to th e custom er.
* ■ nothing In th is paragraph prohibits a
(11) T he effective d ate of H 226.7(k) creditor from reporting the disputed am ount
be oonsldend th e date of th e transaction Tor
purposes of this paragraph.
(1) through 226.7(k) <7> <i), Inclusive, Is or account as being In dispute.
m ent upon which th e transaction Is first
reflected by providing a t least:
(1) An actual copy of th e document
evidencing th e transaction which shows
th e am ount of th e transaction and either
th e date of th e transaction, the date th e
transaction was debited to th e custom er’s
account, or th e date placed on the docu
m ent o r instrum ent by th e custom er (if
th e custom er signed th e docum ent or in
strum ent) ; or
(ii) A description of the transaction,
which characterizes it as a cash advance,
loan, overdraft loan, or other desgination
as appropriate, and which includes the
am ount of th e transaction and th e date
of th e transaction** or th e date which
appears on th e docum ent or Instrum ent
evidencing th e transaction (if th e cus
tom er signed th e docum ent o r in stru
m en t).
(4) If, despite th e m aintenance of
procedures reasonably ^adapted to pro
cure th e inform ation required by g§ 226.7
(k) (1), (2) and (3) such inform ation
Is unavailable to the creditor, th e date
of debitlgn th e am ount to th e account
shall be substituted for th e date oth er
wise required (except th a t th e date of
debiting need n ot be provided if an ac
tu al copy of th e docum ent evidencing the
transaction is provided w ith th e periodic
statem ent) and th e creditor shall dis
close as m uch of th e other required in
form ation as is available and om it any
Inform ation which is not available, pro
vided, th a t, If th e custom er subm its a
proper w ritten notification of a billing
erro r relating to th e absence of th e p ri
m arily required d ate or other inform a
tion, such absence sh all be treated as a
billing error under SS 228.2<j) and 226.14
and as an erroneous billing under § 226.
14(b) and, unless previously furnished
w ith a periodic statem ent, docum entary
evidence of th e transaction m ust be fu r
nished w hether o r n o t th e custom er re
quests it, w ith In th e tim e period allowed
in f 226.14 for resolution of a billing
error, w ithout charge to th e custom er.
(5) In any case in which a transaction
occurs other th a n In a S tate:
(I) T he creditor may disclose th e date
of debiting th e am ount of th e tran sac
tion to th e open end credit account In
place of any other d ate required else
where In § 226.7( k ) ; and
(II) The provisions of 3 226.7(k) (4)
shall apply and th e creditor need not
m aintain procedures reasonably adapted
to procure th e Inform ation otherwise
required by f 226.7 (k ).
(6) In complying w ith th e disclosure
requirem ents S 226.7 (k) (1), (2), (3),
or (4 ):
(I) T he creditor m ay rely upon and
disclose th e Inform ation supplied by th e
seller w ith respect to th e date and
am ount of transactions fo r w hich th e
creditor and th e seller a re n o t th e same
person or related persons.
(II) W ith regard to disclosing the
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
TRUTH IN LENDING
AM ENDM ENTS TO R EG U LA T IO N Z f
Effective August 27, 1976, the Board amends
Regulation Z as follows:
shall be identified by disclosing on or with the
periodic statement on which that credit transaction
is first reflected at least:
1.
To fully implement §411, Title IV, Pub. L.
(i) F o r transaction in which the creditor and
93-495, §226.7(b) (1) (ii) will provide, and a new
the seller are the same person or related persons,9b
§226.7(k) will be added, as follows:
the amount of the transaction, the date on which
SECTION 226.7 — OPEN EN D CREDIT
the transaction took place,6e and a brief identifica
ACCOUNTS — SPECIFIC DISCLOSURES
tion 9d of any property or services puchased or an
* * * * *
identifying number or symbol reasonably unique
for that transaction with that creditor which ap
(b) Periodic statements required, ( l)* * *
pears on the document evidencing the transaction
given to the customer; provided, that, if the creditor
* * * * *
discloses such an identifying number or symbol, the
(ii) The information required by §226.7(k)
absence of the identification of the property or
services otherwise required m ust be treated as a
* * * * *
billing error under §§226.2(j) and 226.14 and as
(k) Identification of transactions. (1) Each ex
an erroneous billing under §226.14(b) if the cus
tension of credit for which an actual copy of the
tomer submits a proper written notice of a billing
document evidencing the credit transaction (which
error relating to such absence, and the creditor
must provide documentary evidence of the trans
does not include a so-called “facsimile draft” ) ac
companies the periodic statement on which the
action to the customer free of charge whether or
transaction is first reflected shall be identified by
not the customer requests it.
disclosing on the periodic statement, or on accom
(ii) F or transactions in which the seller and
panying statement(s) or docum ent(s), the amount
the creditor are not the same person or related
of the transaction and, at the creditor’s option,
persons, the amount of the transaction, the date
either the date of the transaction or the date the
on which the transaction took place, and the seller’s
transaction is debited to the customer’s account.
name and address (city and state or foreign coun
(2)
Each extension of credit for which an actual try, using understandable and generally accepted
copy of the document evidencing the credit trans
abbreviations if the creditor desires) where the
action does not accompany the periodic statement
transaction took place.
f F o r this R egulation to be co m p lete as am end ed effective A ug u st 27, 1976, re ta in th e follow ing:
1) P rin ted p am p h let as am end ed effective O cto b er 28, 1975;
2) A m en d m ent effective Ja n u a ry 21, 1976, Section 2 2 6 .8 (a ) ;
3) A m en d m en ts effective Ju ly 30, 1976, S ection 2 2 6 .1 (c ) a n d ad d ing new p a ra g ra p h 2 2 6 .1 (d ) ;
4 ) A m en d m en ts effective A ugust 6, 1976, Sections 2 2 6 .8 ( c ) ( 8 ) ( i) a n d 2 2 6 .8 ( d ) ( 3 ) ; a n d
5 ) T his slip sheet.
9b F o r p u rp o ses o f p a ra g ra p h 2 2 6 .7 (k ) a p e rso n is n o t re la ted to th e c re d ito r sim ply because th e p e rso n and
th e c red ito r have a n a g reem en t o r c o n tra ct p u rsu a n t to w hich th e p e rso n is au th o riz ed to h o n o r th e
c red ito r’s c red it c ard u n d e r th e term s specified in th e a g reem en t o r c o n tra ct. F ra n c h ised o r licensed sellers
o f a c red ito r’s p ro d u c t shall be con sid ered to be re la ted to th e c re d ito r fo r p u rp o ses o f p a rag ra p h
226.7 ( k ) . Sellers w h o assign o r sell o p en e n d c u sto m e r sales accou n ts t o a c red ito r o r a rra n g e fo r such
c red it u n d e r a n open end c red it p la n w hich allow s th e c u sto m er to use th e c red it only in tran sac tio n s w ith
th a t seller shall be con sid ered re la ted to th e c red ito r fo r p u rp o ses o f § 2 2 6 .7 (k ).
9c W ith resp ect to tran sac tio n s w hich are n o t billed in full o n a n y single sta te m en t b u t fo r w h ic h p re co m p u ted
in stalm en ts are billed perio dically, th e d a te th e tra n sa c tio n tak es p lace fo r p u rp o ses o f p a ra g ra p h § 2 2 6 .7 (k )
shall be d eem ed to be th e date on w hich th e a m o u n t is d eb ited to th e c u sto m e r’s account.
94 F o r p urpo ses o f p a ra g ra p h §226.7 ( k ) , designations such as “m erch an d ise” o r “ m iscellaneous” shall n ot
be con sid ered sufficient identification o f p ro p e rty o r services, b u t a re fere n ce to a d e p a rtm e n t in a sales
establishm ent w hich acc u rate ly conveys the identification o f th e ty p e (s ) o f p ro p e rty o r services w hich a re
available in such d e p artm en t shall be sufficient u n d e r this p a ra g ra p h . Identification m ay be m ad e o n an
a ccom p an ying slip o r b y sym bol re la tin g to a n identification list p rin te d on th e statem ent.
(3) Notwithstanding the provisions of §§226.7
( k ) ( l ) and 2 2 6 .7 (k )(2 ), transactions involving
nonsale credit, such as a cash advance or an over
draft or other checking plan transactions, shall be
identified on or with the periodic statement upon
which the transaction is first reflected by providing
at least:
(i) A n actual copy of the document evidenc
ing the transaction which shows the amount of the
transaction and either the date of the transaction,
the date the transaction was debited to the cus
tomer’s account, or the date placed on the docu
ment or instrument by the customer (if the custo
mer signed the document or instrum ent); or
(ii) A description of the transaction, which
characterizes it as a cash advance, loan, overdraft
loan, or other designation as appropriate, and
which includes the amount of the transaction and
the date of the transaction96 or the date which
appears on the document or instrument evidencing
the transaction (if the customer signed the docu
ment or instrum ent).
(4) If, despite the maintenance of procedures
reasonably adapted to procure the information
required by §§226.7(k) (1 ), (2 ), and (3) such in
formation is unavailable to the creditor, the date
of debiting the amount to the account shall be
substituted for the date otherwise required (except
that the date of debiting need not be provided if
an actual copy of the document evidencing the
transaction is provided with the periodic state
ment) and the creditor shall disclose as much of
the other required information as is available and
omit any information which is not available, pro
vided, that, if the customer submits a proper writ
ten notification of a billing error relating to the
absence of the primarily required date or other
information, such absence shall be treated as a
billing error under §§226.2(j) and 226.14 and as
an erroneous billing under §226.14(b) and, unless
previously furnished with a periodic statement,
documentary evidence of the transaction must be
furnished whether or not the customer requests it,
within the time period allowed in §226.14 for
resolution of a billing error, without charge to the
customer.
(ii)
The provisions of §§226.7(k) (4) shall
apply and the creditor need not maintain proced
ures reasonably adapted to procure the informa
tion otherwise required by §226.7(k).
(6) In complying with the disclosure require
ments of §§226.7(k)(l), (2), (3), or (4):
(i)T he creditor may rely upon and disclose
the information supplied by the seller with respect
to the date and amount of transactions for which
the creditor and the seller are not the same per
son or related persons.
(ii)
With regard to disclosing the seller’s
address where the transaction took place for pur
poses of §226.7(k) (2) (ii), the creditor may omit
the address or provide an address or other suitable
designation which, in the creditor’s opinion, will
assist the customer in identifying the transaction or
in relating the transaction, as reflected, to a docu
ment (s) evidencing the transaction previously
furnished when no meaningful address is readily
available because the transaction took place at a
location which is not fixed (for example, aboard a
public conveyance), or in the customer’s home (in
which case “customer’s home” or a similar de
scription is sufficient) or because the transaction
was the result of a mail or telephone order (in
which case “telephone order,” “mail order,” or
similar description is sufficient); provided that any
such disclosure made or omitted shall not be for
the purpose of circumvention or evasion of this
Part.
(iii) With regard to disclosing the seller’s
name for purposes of §226.7(k) (2 )(ii), disclosure
of a seller’s name which appears on the document
evidencing the transaction (or a more complete
spelling of such a name if the name is alphabetic
ally abbreviated on the document evidencing the
t r a n s a c t i o n ) is s u f f i c i e n t f o r p u r p o s e s of
§226.7(k) (2) (ii).
(7) (i) As an alternative to the provisions of
§§226.7 (k ) (1) through 2 2 6 .7 (k )(5 ), from Oc
tober 28, 1976, until October 28, 1977:
(A)
The creditor may disclose the date of
debiting the amount of the transaction to the cus
tomer’s account for the date of the transaction or
(5) In any case in which a transaction occurs
the date placed on the document evidencing a
other than in a state:
credit transaction if, due to operational limitations,
(i)
The creditor may disclose the date of
either such date is unavailable to the creditor for
debiting the amount of the transaction to the open
purposes of billing; and the creditor may disclose
end credit account in place of any other date re
an identifying number or symbol which appears
quired elsewhere in §226.7(k); and
on the document evidencing the credit transaction
8e I n cases in w hich a n a m o u n t is d ebited to a c u sto m e r’s op en e n d credit acco u n t u n d e r a n o v e rd raft
ch ecking p lan , th e d a te o f d ebiting th e o pen end credit acco u n t shall be con sid ered th e d a te o f the
tran sac tio n f o r p u rp oses o f this p a rag ra p h .
given to or used by the customer at the time of or
in connection with the credit transaction in place
of the seller’s name and address or description of
the property or services purchased if, due to opera
tional limitations, such information is unavailable
to the creditor for purposes of billing; or
3. Section 226.7(c) (1) is amended to read:
(c) ***
(1) The information required to be disclosed
under paragraph (b )(1 )(H ) of this section and
itemization of the amounts and dates required to
(B)
The creditor may identify the transaction be disclosed under paragraph ( b ) ( 1 ) (iii) of this
section and of the amount of any finance charge
by disclosing such information as is reasonably
required to be disclosed under paragraph (b) (1)
available and treating the absence of the informa
(iv) of this section may be made on the reverse
tion required by §§226.7(k) (1 ), (2 ), or (3 ), as
side of the periodic statement or on a separate ac
applicable, as a billing error, as provided in
companying statem ent(s), provided that the totals
§§226.2(j) and 226.14. If a customer submits a
of the respective debits and credits under each of
proper written notification of a billing error relat
those paragraphs are disclosed on the face of the
ing to the absence of such information and the
periodic statement.
information was, in fact, not disclosed as required
by §§226.7(k) (1 ), (2 ), or (3 ), as applicable, the
4. Section 2 2 6 .1 3 (i)(4 ) is amended to add a
transaction shall be treated as an erroneous billing
footnote as follows:
under §226.14(b) and documentary evidence of
the transaction must be furnished whether or not
SECTION 226.13 — CR ED IT CARD TRANS
the customer requests it (despite the provisions of
ACTIONS — SPECIAL REQUIREM ENTS
§§226.2(j) and 2 2 6 .1 4 (a )(2 )), within the time
period allowed in §226.14 for resolution of a bill
* * * * *
ing error, without charge to the customer.
(i) Right of cardholder to assert claims or
(ii)
The effective date of §§226.7 ( k ) (1)defenses against card issuer. * * *
through 226.7(k)(7) (i), inclusive, is October 28,
1976. Until October 28, 1976, the creditor shall
(4) If the cardholder refuses to pay the amount
disclose the date of each extension of credit or the
of credit outstanding with respect to the property
date such extension of credit is debited to the
or services which gave rise to the claim(s) or
account during the billing cycle, the amount of
defense(s) under this section, the creditor may not
report to any person that particular amount as
such extension of credit and, unless previously
furnished, a brief identification^ of any goods or
delinquent until the dispute is settled or judgment
services purchased or the extension of credit.
is rendered.15®
2.
Section 226.7(b) (1) (iii) is amended by the
deletion of the period at the end thereof and the
addition of the following: “, except that the date of
crediting to the customer’s account need not be
provided if a delay in crediting does not result in
the imposition of any finance charges, late pay
ment charges, or other charges for that billing
cycle or a later billing cycle.”
5. Section 226.7(b) (1) (ii), as adopted by the
Board on September 15, 1975, and published in the
Federal Register on September 19, 1975, (40 FR
43200) is hereby rescinded. The suspension of the
effective date of the transition period as adopted
by the Board on May 7, 1976, and published in
the Federal Register on May 18, 1976 (41 FR
20395) is hereby rescinded.
91 Identification m ay be m ad e o n an acco m p an yin g slip o r by sym bol relatin g to a n identification list p rin te d
o n th e statem ent.
i5a N o th in g in th is p a ra g ra p h p roh ib its a c red ito r fro m re p o rtin g th e disp u ted a m o u n t o r acco u n t as
being in dispute.
@FedFRASER