Full text of District Notices (Federal Reserve Bank of Dallas) : Amendments to Regulation Z, Circular No. 75-108

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FE D E R A L RESERVE B A N K O F DALLAS

DALLAS, TEXAS

75222
Circular No. 75-108
Ju ly 29, 1975

American Revolution Bicentennial

AMENDMENTS TO REGULATION Z

TO ALL BANKS, OTHER CREDITORS,
AND OTHERS CONCERNED IN THE
ELEVENTH FEDERAL RESERVE DISTRICT:
Following is the text of a statement issued July 10, 1975, by the Board of Governors of the
Federal Reserve System:
The Board of Governors of the Federal Reserve System today announced adoption
of amendments to its Regulation Z—Truth-in-Lending—to implement changes in the
Truth-in-Lending Act adopted by Congress.
The amendments to Regulation Z—to be effective August 8, 1975—are substantially
the same as those published for comment last December 27. Among the amendments
adopted are the following:
—Advertisements concerning extensions of credit to be repaid in more than
four installments, and for which no finance charge is stated, shall state that
the cost of credit is included in the price of the goods and services involved.
—Credit transactions primarily for agricultural purposes, where the amount
financed exceeds $25,000 are exempt from the disclosure requirements of
Regulation Z and the Truth-in-Lending Act.
—Any unexpired right of rescission in residential real property transactions
is limited to three years from the date of consummation of the transaction, or
the sale of the property, whichever occurs earlier.
In its order, the Board stated that, due to confusion evident in comments received
upon its proposal concerning the right of rescission, that section had been rewritten
to make it clear that the amendment does not extend the three-day right of rescission—
that is, the right to decide not to go through with the transaction—to three years, but
only limits to three years these unexpired rights which previously continued indefi­
nitely.
The enclosed amendments should be inserted in your Regulations Binder. Additional copies
will be furnished upon request to the Secretary's Office of this Bank.

Sincerely you rs,
T . W. Plant
First Vice President
Enclosure

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

TRUTH IN LENDING
AMENDMENTS TO REGULATION Zf

Effective A ugust 8, 1975, R egulation Z
am ended to read as follows:

is

1. T o im plem ent section 401, § 226.10(f) is
added as set forth below:
SEC T IO N 226.10 — A D V E R T IS IN G
C R E D IT T E R M S

Board (acting directly o r through the Federal
Savings and L oan Insurance Corporation), A d­
m inistrator of the N ational C redit U nion A dm inis­
tration, Civil Aeronautics Board, Secretary of
A g ric u ltu re , F a r m C r e d it A dm inistration, and
Board of G overnors of the F ederal Reserve
System.

4. T o im plem ent section 405, § 226.9(h) is
(f)
Credit payable in more than four instalments;
added as set forth below:
no identified finance charge. A ny advertisem ent to
aid, prom ote, or assist directly or indirectly an
S EC T IO N 226.9 — R IG H T TO R E S C IN D
extension of consum er credit repayable by agree­
C E R T A IN T R A N SA C T IO N S
m ent in m ore than four instalments shall, unless
a specific finance charge is or m ay be imposed,
state clearly and conspicuously: “T he cost of
(h) Time limit for unexpired right of rescission.
credit is included in the price quoted for the
In the event the creditor fails to deliver to the
goods and services.”
custom er the disclosures required by this section
or the other m aterial disclosures required by this
2. T o im plem ent section 402, § 226.3(e) is
Part, a custom er’s right to rescind a transaction
added as set forth below:
pursuant to this section shall expire the earlier
of (1) three years after the date of consum m ation
S EC T IO N 226.3 — E X E M P T E D
of the transaction, or (2) the date the custom er
T R A N SA C T IO N S
transfers all his interest, both equitable and legal,
in the property.
(e) A gricu ltu ral credit tran saction s. C r e d it
5. To im plem ent section 410, § 226.130) is
transactions prim arily for agricultural purposes,
added as set forth below:
including real property transactions, in w hich the
am ount financed18 exceeds $25,000 or in which
the transaction is p ursuant to an express w ritten
com m itm ent by the creditor to extend credit in
excess of $25,000.

S EC T IO N 226.13 — C R E D IT C A R D S —
ISSU A N C E A N D L IA B IL IT Y

3. T o im plem ent section 403, § 226.1(b)(1) is
revised as set forth below:

(i) Business use of credit cards. If 10 or m ore
credit cards are issued by one card issuer to a
single business or other organization for use by
its employees, nothing in this section prohibits
the card issuer from agreeing by contract with
such business or other organization as to liability
for unauthorized use of any such credit cards
without regard to the provisions of this section,
but in no case may any business or other organi­
zation or card issuer impose liability on any
employee of such business or other organization
with respect to unauthorized use of such credit
card except in accordance with, and subject to,
the other liability limitations of this section.

S EC T IO N 226.1 — A U T H O R IT Y , SCOPE,
PU R PO SE, E T C .
*

He

*

He

s|«

(b)
Administrative enforcement. (1) As set forth
m ore fully in section 108 of the Act, adm inis­
trative enforcem ent of the A ct and this P art with
respect to certain creditors and credit card issuers
is assigned to the C om ptroller of the Currency,
Board of D irectors of the Federal D eposit Insur­
ance Corporation, Federal H om e L oan Bank

t For this Regulation to be complete as amended retain the following:
1) Printed pamphlet as amended dated September 30, 1974; and
2) This slip sheet effective on the date as shown herein.
laFor this purpose, the amount financed is the amount which is required to be disclosed under § 226.8(c)(7),
or (d )(1 ), as applicable, or would be so required if the transaction were subject to this Part.

6. T o im plem ent section 412, § 226.9(g)(5) is
added as set forth below:
S EC T IO N 226.9 — R IG H T TO R E S C IN D
C E R T A IN T R A N SA C T IO N S

th at the creditor may, at his option and w ithout
disclosure, refrain from imposing such additional
finance charges even though paym ent is received
after such date or term ination of such period.
jfc

8.
T o im plem ent sections 406, 407, 408, 413,
and 414, § 226.1(c) is revised as set forth below:
(5)
A ny transaction in w hich an agency of a
State is the creditor.
^

^

:f:

7. T o im plem ent section 415, § 226.7(a)(1) and
§ 226.7(b)(9) are revised as set fo rth below:

SEC T IO N 226.1 — A U T H O R IT Y , SCOPE,
PU R PO SE, ETC.

(c) Penalties and liabilities. Section 112 of the
A
ct
provides criminal liability for willful and
SEC T IO N 226.7 — O P E N E N D C R E D IT
knowing failure to comply with any requirem ent
A C C O U N T S — S P E C IF IC D ISCLO SU R ES
imposed under the A ct and this Part. Section 134
(a) * * *
provides for crim inal liability for certain fraud u­
lent activities related to credit cards. Section 130
(1)
T he conditions under w hich a finance charge provides for civil liability in individual or class
may be imposed, including an explanation of the
actions for any creditor who fails to comply with
time period, if any, w ithin which any credit ex­
any requirem ent imposed under C hapter 2 or
tended m ay be paid w ithout incurring a finance
C hapter 4 of the A ct and the corresponding p ro ­
charge, except th a t the creditor m ay, at his
visions of this Part, provides a defense for cred­
option and w ithout disclosure, refrain from im ­
itors complying in good faith with the provisions
posing such finance charge even though paym ent
of the P art or any interpretation thereof by the
is received after the term ination of such time
Board, and provides that a multiple failure to
period.
disclose in connection with a single account shall
* * * * *
perm it but a single recovery. Section 115 provides
for civil liability for an assignee of an original
(b) * * *
creditor w here the original creditor has violated
(9) T h e closing d ate of the billing cycle and
the disclosure requirem ents and such violation is
the outstanding balance in the account on that
apparent on the face of the instrum ent assigned,
date, using the term “new balance,” accom panied
unless the assignment is involuntary. P ursuant to
by the statem ent of the date by which, or the
Section 108 of the Act, violations of the A ct or
period, if any, w ithin w hich paym ent m ust be
this P art constitute violations of other Federal
m ade to avoid additional finance charges, except
laws which may provide further penalties.