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f e d e r a l R e ser ve b a n k DALLAS, TEXAS o f D a lla s 75222 C i r c u l a r No. 75-91 J u n e 26, 1975 PROPOSED AMENDMENT TO REGULATION Z D e sc rip tio n of T r a n s a c ti o n s TO ALL BANKS, OTHER CREDITORS, AND OTHERS CONCERNED IN THE ELEVENTH FEDERAL RESERVE DISTRICT: The B oard of G o v e rn o rs of th e Fe d e ra l R e s e rv e System has inv ited comment on a r e g u la to r y am end m en t th a t would p r o v id e for m in i mum d i s c l o s u r e r e q u ir e m e n ts on p e rio d ic b illin g s tatem e n ts for t r a n s a ctions made in th e a c c o u n t of an o p e n - e n d c r e d i t c u s to m e r . T h e am endm ent to the B o a r d 's R egulation Z would implement a p ro v is io n of Public Law 93-495 th a t w as e n ac te d O cto ber 28, 1974. T h e am endm ent becomes effective on O c tob er 28, 1975. In te re s te d p e r s o n s a r e inv ited to sub m it r e le v a n t d a ta , v ie w s , o r a r g u m e n ts c o n c e r n in g th is p ro p o s a l in c lu d in g p o s s ib le effects on the cost an d a v a ila b ility of c o n s u m e r c r e d i t . A d d itio n a lly , in te r e s te d p e r s o n s a r e invited to s u b m it comments p ro p o s in g solutio ns to a n y d ifficulties a n tic ip a te d with r e s p e c t to th e p r o p o s e d re g u la tio n . P a r t i c u l a r l y , comments a r e s o u g h t with r e s p e c t to a n y difficulties fo r e s e e n in p r o c u r i n g a d d r e s s information from national c h ain r e t a i l e r s , s u c h as p e trole um c om panies a n d a i r l i n e s , w h ich c e n t r a l ly p r o c e s s t h r e e - p a r t y s a le s v o u c h e r s b e fo re s e n d in g them to th e c r e d i t o r . A ny s u c h material s h o u ld be s ubm itte d in w r iti n g to th e S e c r e t a r y , Board of G o v e rn o rs of th e Federal R e s e rv e S y s tem, W ashin gton , D .C . 20551, to be re c e iv e d not la te r th a n J u l y 18, 1975. A copy of th e B o a r d 's O r d e r re la tin g to th e p r o p o s e d am endm ent is p r in t e d on th e following p a g e s . Sincerely y o u rs , T . W. Plant F irst Vice President This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) FEDERAL RESERVE SYSTEM [ Reg. Z ] [ 12 CFR PART 226 ] Truth in Lending D escription of Transactions In order to im plem ent the amendment to § 127(b)(2) of the Truth in Lending A ct (15 U. S . C . , §§ 1601-1681) contained in § 411 of T itle IV (Amendments to the Truth in Lending Act) of Public Law 93-495, the Board of G overnors of the F ed eral R eserve System (Board herein) proposes to amend § 226. 7(b)(2) and (c) of Regulation Z. While the statutory provision which the proposed amendment seek s to im plem ent is not part of the F a ir Credit Billing A ct, for which the Board published proposed regulation on May 5, 1975, in Vol. 40 of the F ed eral R eg ister, No. 87, page 19489, th ese amendm ents are related to that Act and have the sam e effective date of October 28, 1975* These changes would amend and r e v ise Regulation Z to provide m inim um d isclo su re requirem ents with resp ect to periodic credit billing statem ents in the following manner: 1. With resp ect to tran saction s reflected on a statem ent for which an actual copy of the document evidencing the transaction accom panies the statem ent ( so ca lled "country club" billing) , the creditor m ust d isc lo se (a) the amount of the tran saction and, either (b) the date of the transaction or (c) the date on which the tran saction is debited to the cu stom er's account. This change is proposed in order to c lea r up any ambiguity which m ay e x is t regarding the phrase "date of each extension of credit" which appears in § 226. 7(b)(2) of the current regulation. -2- 2. With r esp ec t to tran saction s reflected on a statem ent for which no actual copy of the document evidencing the transaction accom panies the statem ent but, rather, for which a descrip tion is provided on or with the statem ent (so called " d escrip tive11 billin g), such description m ust contain at le a s t (a) the date of the transaction, and (b) the amount of the transaction. Additionally, in tw o-party cred it sy stem s a b rief description of any goods or s e r v ic e s purchased m ust be d isc lo se d , w h ereas, in th ree-p arty credit sy s te m s, the vendor's nam e and the add ress (city, and state or foreign country) where the transaction took place m ust be d isclo se d . When the date of the transaction, a description of goods or s e r v ic e s purchased, or the vendor's nam e and add ress is not available to the creditor despite the m aintenance of procedures reasonably adapted to obtain such inform ation in each c a se , a sa le s voucher number which appears on the c u sto m er's copy of the document evidencing the transaction m ust be supplied* 3. Changes of a nonsubstantive nature are proposed with resp ect to § 226. 7(c)(1) to r eflec t the wording and numbering changes p ro posed for § 226. 7(b). 4. This notice is published pursuant to § 553(b) of T itle 5, United States Code, and § 262. 2(a) of the Rules of P rocedure of the Board of G overnors of the F ed era l R eserv e System (12 C .F . R. 262.2(a)). Interested p erso n s are invited to subm it relevant data, v iew s, or argum ents concerning this proposal including p o ssib le effects on the c o st and availab ility of consum er cred it. Additionally, in terested p erso n s a re invited to subm it com m ents proposing solutions to any d ifficu lties fo re se e n with r esp ect to the proposed regulation. -3- P articu la rly, com m ents are sought with resp ect to any difficu lties foreseen in procuring address inform ation from national chain r e ta ile r s, such as petroleum com panies and a ir lin e s, which centrally p r o c e ss th ree-p arty sa le s vouchers before sending them to the creditor. Any such m a teria l should be subm itted in w riting to the S ecretary, Board of G overnors of the F ed eral R eserve System , Washington, D .C . 20551, to be received not later than July 18, 1975. Such m a teria l w ill be made available for inspection and copying on request, except as provided in § 261.6(a) of the Board's Rules Regarding A vailability of Information. Pursuant to the authority granted in 15 U .S .C . 1604 (1968), the Board proposes to amend Regulation Z, 12 C .F .R . P art 226, as follow s: 1. To accom m odate changes in § 226. 7(b) previou sly proposed, by order of the Board dated A pril 28, 1975, and published in Vol. 40 of the F ed eral R egister, No. 87, page 19489, on May 5, 1975, § 226.7(b)(2) would be redesignated § 226. 7(b)(l )(ii). 2. To im plem ent the amended § 127(b)(2), the redesignated § 226. 7(b)(l)(ii) would be rev ised and § 226. 7(c)(1) amended as set forth below. § 226. 7 - - OPEN END CREDIT ACCOUNTS--SPECIFIC DISCLOSURES Sjc Sjc # 03) P eriodic Statem ents required ( 1) * * * * * -4 - (ii)(A) In c a s e 8 in which an actual copy of the document evidencing the cred it transaction accom panies the periodic statem ent, the amount of the transaction and either the date of the transaction or the date the transaction is debited to the cu sto m er's account; and (B) In c a s e s in which an actual copy of the document evidencing the cred it transaction does not accompany the periodic statem ent, at lea st: (1_) the date on which the transaction took p la ce, V and the amount of the transaction; provided, that, with resp ect to transactions in which the creditor and the vendor are not the sam e person or related 7a/ p e r so n s, the creditor m ay rely upon and d isc lo se the inform ation supplied by the vendor with r esp ect to the date and amount of the transaction; and . 7b / ( Z ) a b rief identification of the goods or s e r v ic e s purchased With resp ect to Vran&actions which are not b illed in full on any sin g le statem ent but for which precom puted instalm ents are b illed p eriod ically, the date the transaction takes place for purposes of this subparagraph shall be deem ed to be the date on which the amount is debited to the cu stom er's account. 7/ 7 a / F or purposes of this subparagraph, a person is not related to tKe creditor sim ply because he and the creditor have an agreem ent or contract pursuant to which he is authorized to honor the cred itor's credit card under the term s sp ecified in the agreem en t or contract. 7b/ For purposes of this subparagraph, designations such as "m er chandise" or "m iscellaneous" shall not be consid ered sufficient identification of goods or s e r v ic e s , but a referen ce to a departm ent in a sa le s establish m ent which accu rately conveys the identification of the type(s) of goods or s e r v ic e s which are available in such depart m ent sh all be sufficient under this subparagraph. Identification m ay be made on an accompanying slip or by sym bol relating to an identification l is t printed on the statem ent. * sje sfe * * -5 - in c a s e s in which the creditor and ihe Veil dor are the sam e person or related p erso n s, or the vendor's name and the add ress (city and state or foreign country) where the transaction took place (using understandable and generally accepted abbreviations if the creditor so d e sir e s ) in c a s e s in which the cred itor and the vendor are not the sam e person or related p erson s. (C) In a c a se in which any of the inform ation with regard to the date of the transaction, the descrip tion of the goods and se r v ic e s purchased, or the vendor's nam e and ad d ress as required by subparagraph (B) is not available to the creditor, an identifying number or sym bol which appears on the document evidencing the credit transaction given to the custom er at the tim e of the transaction m ust be d isc lo se d instead of such inform ation. The provisions of the fir s t sentence of this subparagraph sh all not r eliev e the creditor from resp on sib ility for m aintaining procedures reasonably adapted to procure such inform ation in each c a se . ❖ sjc * * * (c) Location of d isclo su re s * * * (1) The inform ation required to be d isclo se d under paragraph (k)(l)(ii) of this section and item ization of the amount of the "credits" d isclo se d under paragraph (b)(l)(iii) of this section , and of the amount of any finance charge required to be d isc lo se d under paragraph 0J)(l)(iv) of this section , m ay be m ade on the r e v e r se sid e of the -6 - period ic statem ent or on a separate accom panying statem en t(s), provided that the totals of such resp ectiv e amounts are d isclo se d on the face of the periodic statem ent; and ♦ * * * By o rd er of the Board of G overnors, June 16, 1975, (signed)Theodore E» A llison Theodore E. A llison S ecretary to the Board [SEAL] *
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