The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
F ederal r es er v e Ban k o f D allas DALLAS. TEXAS 75222 C i r c u l a r N o . 75-1 62 O ctober 24, 1975 A m e r ic a n R e v o l u tio n B ic e n te n n ia l REGULATION B IMPLEMENTING THE EQUAL CREDIT OPPORTUNITY ACT TO ALL BANKS, OTHER CREDITORS, AND OTHERS CONCERNED IN THE ELEVENTH FEDERAL RESERVE DISTRICT: On O ctober 16, 1975, the Board of G o v e rn o rs of the Federal R e s e rv e System p u b lis h e d r e g u la tio n s implementing th e Equal C re d it O p p o rtu n ity Act, w hich fo r b id s d is c r im in a tio n by c r e d i t o r s on the b a sis of s ex o r marital s ta tu s . T he new Act, w hich makes th e Federal R e s e r v e r e s p o n s ib le for w ritin g an implementing re g u la tio n , goes into effect O ctober 28, 1975. Enforcement of th e Act is the re s p o n s ib il ity of th e Federal T r a d e Commis sion, the Federal R e s e rv e Board, the Federal Deposit I n s u ra n c e C o r p o r a tion, the C o m p tro ller of the C u r r e n c y , a n d nine o th e r federal a g e n c ie s . T h e Act c o v e r s all who r e g u l a r l y e x te n d c r e d i t , in clu ding b a n k s , finance com panies, d e p a r tm e n t s t o r e s , a nd c r e d i t c a r d i s s u e r s . Enclosed is a copy of th e Regulation for in s ertio n in y o u r R eg u lations b i n d e r . If you h a v e a n y q u e s ti o n s r e g a r d i n g Regulation B, p le a se contact Dick West of o u r R egulations D epartm ent at (214) 651-6169. Additional copies of Regulation B will be f u r n i s h e d upon r e q u e s t to the S e c r e t a r y 's Office of th is Bank. Sincerely yours, T . W. Plant First Vice President This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) BO ARD OF GOVERNORS of the F E D E R A L R E S E R V E SY ST E M EQUAL CREDIT OPPORTUNITY R E G U L A T IO N B (12 CFR 202) Effective October 28, 1975 CONTENTS Page Page S e c . 2 0 2 .1 — A u t h o r it y S e c . 2 0 2 .2 — G eneral S e c . 2 0 2 .3 — D e f in it io n s ................. 3 S e c . 2 0 2 .9 — P r e s e r v a t io n .................................. 3 Se c . 2 0 2 .1 0 — C ....................................... 3 and R ule Sc o p e e r t a in of R S p e c ia l iz e d Se c . 2 0 2 .5 — E v a l u a t io n S e c . 2 0 2 .6 — F u r n is h in g m a t io n Se c . 2 0 2 .7 — R e q u e s t Spo u se ..................................... of of A P r o v is io n s . 9 S ig n a t u r e or O ther S e c . 2 0 2 .1 3 — P e n a l t ie s t io n to ccounts in Sta t e L a w R .. 9 10 ..................... 10 8 Statutory A S e c . 2 0 2 .8 — S e p a r a t e A nforce a n d L ia b il it ie s S e c . 2 0 2 .1 4 — T r a n s it io n P e r io d s . E ............................................. m ent 6 of P erson d m in is t r a t iv e 4 C r e d it I n f o r ................................................ for is c e l l a n e o u s 5 p p l ic a t io n s 8 9 Se c . 2 0 2 .1 2 — A p p l ic a t io n s ... C r e d it Se c . 2 0 2 .1 1 — M S e c . 2 0 2 .4 — A ecords ................................................ 11 A ....................................................................... 14 p p e n d ix ela ................. 8 A p p e n d ix STATUTORY AUTHORITY This regulation is based upon and issued pursuant to provisions of section 703 of the Equal Credit Oppor tunity Act, U.S.C., Title 1 5 , sec. 1 6 9 1 et seq. REGULATION B (12 CFR 202) Effective October 28, 1975 EQUAL CREDIT OPPORTUNITY SECTION 202.1— AUTHORITY A ND SCOPE This Part comprises the regulations issued by the Board of Governors of the Federal Reserve System pursuant to the Equal Credit Opportunity Act. (Pub. L. 93-495; 88 Stat. 1521 et seq.). This Part applies to all persons who regularly extend, offer to extend, arrange for or offer to arrange for the extension of credit for any purpose what soever and in any amount. SECTION 202.2— GENERAL RULE A creditor shall not discriminate against any applicant on the basis of sex or marital status with respect to any aspect of a credit transaction. SECTION 202.3— D EFINITIONS AND RULES OF CONSTRUCTION * For purposes of this Part, unless the context indicates otherwise, the following definitions apply: (a) Act means the Equal Credit Opportunity Act (Pub. L. 93-495; 88 Stat. 1521 et seq.). (b) Account means an extension of credit; “use of an account” throughout this Part refers only to open end credit. (c) Applicant means any person who applies to a creditor directly for an extension, renewal or continuation of credit, or who applies to a creditor * Note that for some purposes some of the definitions are not identical with those found in 12 C FR 226 (Regu lation Z ). indirectly by use of an existing credit plan for an amount exceeding a previously established credit limit. With respect to any creditor the term also includes any person to whom credit is or has been extended by that creditor. (d) Application means an oral or written request by an applicant for an extension of credit which is made in accordance with procedures established by a creditor for the type of credit requested. The term does not include the use of an existing credit plan to obtain an amount of credit which does not exceeed a previously established credit limit. (e) Arrange for the extension of credit means to provide or offer to provide credit which is or will be extended by another person under a busi ness or other relationship pursuant to which the person arranging such credit participates in the decision to extend credit to an applicant. The term does not include participation in a credit transac tion which is limited to honoring a credit card. (f) Consumer credit means credit offered or extended to a natural person in which the money, property or service which is the subject of the transaction is primarily for personal, family or household purposes. (g) Contractually liable means expressly obli gated to repay all debts arising on an account by reason of having signed an agreement to that effect. (h) Credit means the right granted by a creditor to an applicant to defer payment of a debt, or to incur debt and defer its payment or to purchase property or services and defer payment thereafter. (i) Credit card means any card, plate, coupon book or other single credit device existing for the purpose of being used from time to time upon § 202.4 presentation to obtain money, property or services on credit. (j) Creditor means any person who regularly extends, renews or continues credit or arranges for the extension, renewal or continuation of credit. The term includes assignees, transferees or subrogees of an original creditor if they partici pate in the decision to extend credit, but does not include a person whose only participation in a credit transaction is to honor a credit card. (k) Credit transaction means every aspect of an applicant’s dealings with a creditor including, but not limited to, solicitation of prospective appli cants by advertising or other means; information requirements; investigatory procedures; standards of creditworthiness; terms of credit; furnishing of credit information and collection procedures. R EG ULATION B SECTION 202.4— APPLICATIONS (a) Discouraging applications. A creditor shall not make any statements to applicants or prospec tive applicants which would, on the basis of sex or marital status, discourage a reasonable person from applying for credit or pursuing an applica tion for credit. (b) Separate accounts. A creditor shall not re fuse, on the basis of sex or marital status, to grant a separate account to a creditworthy appli cant. (c) Inquiries as to marital status. (1) A creditor shall not ask the applicant’s marital status if the applicant applies for an unsecured separate ac count, except in a community property State or as required to comply with State law governing (1) Discriminate against an applicant on the permissible finance charges or loan ceilings. basis of sex or marital status means to treat an (2) If the creditor asks the applicant’s marital applicant less favorably than other applicants on status, only the terms “married,” “unmarried” or the basis of sex or marital status. “separated” shall be used. (m) Extension o f credit means the granting of (3) Notwithstanding any other provisions of credit in any form and includes, but is not limited this subsection, a creditor may inquire as to the to, credit granted in addition to any existing credit liability to pay alimony, child support or mainte or credit limit; credit granted in the form of a nance. Further, if a creditor first discloses to an credit card, whether or not the card has been applicant that income from alimony, child support used; the refinancing of any credit; the consolida or maintenance payments need not be revealed tion of two or more obligations; the issuance of a if the applicant does not choose to disclose such new credit card in place of an expiring credit card income in applying for credit, a creditor may or in substitution for an existing credit card; the inquire whether any income stated in an applica continuing in force of a previously issued credit tion is derived from such a source. card; or the continuance of existing credit without (4) Where an applicant is requested to desig any special effort to collect at or after maturity. nate a title (such as Mr., Mrs., Ms. or Miss), the (n) Marital status means the state of being un creditor shall state conspicuously that the designa married, married or separated, as defined by tion of such title is optional. An application form applicable State law. For purposes of this Part, shall otherwise use only terms that are neutral as the term “unmarried” includes a person who is to sex unless other terms are required by an divorced or widowed. enforcement agency to monitor compliance with (o) Open end credit means credit extended pur this Part. suant to a plan under which the creditor may (d) Equal Credit Opportunity Act notice. (1) Ex permit the applicant to make purchases or obtain cept where application is made by telephone, or loans, from time to time, directly from the cred orally for an amount of credit to exceed an exist itor or indirectly by use of a credit card, check or ing limit on an applicant’s open end account, the other device, as the plan may provide. The term creditor shall provide each applicant with the does not include negotiated advances under an following notice in writing: open end real estate mortgage or a letter of credit. T h e F ed eral Equal C red it O ppo rtun ity A ct prohibits (p) Person means a natural person, a corpora creditors fro m discrim inating against credit applicants tion, government or governmental subdivision or on the basis o f sex o r m arital status. T h e F ederal agency w hich adm inisters com pliance with this law agency, trust, estate, partnership, cooperative or concerning this (insert a p p ro p ria te description— bank, association. store, e tc .) is (n a m e a n d address o f the ap p ro p riate (q) State means any State, the District of agency ). (2) Such notice shall be provided in a form Columbia, the Commonwealth of Puerto Rico or that the applicant may retain, either: any territory or possession of the United States. R EG U LA T IO N B (i) on a copy of the application form; or (ii) on a separate sheet of paper delivered to the applicant at the time application is made, or delivered or mailed to the applicant as soon as practicable thereafter. (e) Designation of name. A creditor shall not prohibit an applicant from opening or maintain ing an account in a birth-given first name and surname or a birth-given first name and a com bined surname. SECTION 202.5— EVALUATION OF APPLICATIONS (a) Continued ability to repay. Except as other wise provided in this section, a creditor may re quest and consider any information concerning the probable continuity of an applicant’s ability to repay if such information is requested and con sidered without regard to sex or marital status. (b) Information about a spouse or former spouse. (1) A creditor may request and consider any in formation concerning an applicant’s spouse (or former spouse under (iv) below) which may be considered about the applicant if: (i) the spouse will be permitted to use the account; or (ii) the spouse will be contractually liable upon the account; or (iii) the applicant is relying on community property or the spouse’s income as a basis for repayment of the credit requested; or (iv) the applicant is relying on alimony, child support or maintenance payments from a spouse or former spouse as a basis for repayment of the credit requested. (2) A creditor may request the name in which an account is carried if the applicant discloses the account in applying for credit. (3) Except as permitted in this subsection, a creditor may not request any information concern ing the spouse or former spouse of an applicant. (c) Alimony, child support and maintenance obligations. A creditor may ask and consider whether and to what extent an applicant is obli gated to make alimony, child support or mainte nance payments. (d) Alimony, child support and maintenance in come. (1) If a creditor first discloses to an appli cant that income from alimony, child support or maintenance payments need not be revealed if the § 202.5 applicant does not choose to disclose such income in applying for credit, a creditor may inquire whether any income stated in an application is derived from such a source. (2) Where an applicant chooses to disclose alimony, child support or maintenance payments under section 2 02 .4 (c)(3 ), a creditor shall con sider such payments as income to the extent that such payments are likely to be consistently made. Factors which a creditor may consider in deter mining the likelihood of consistent payments include, but are not limited to, whether the pay ments are received pursuant to a written agree ment or court decree; the length of time the payments have been received; the regularity of receipt; the availability of procedures to compel payment; and the creditworthiness of the payor, including the credit history of the payor where available to the creditor under the Fair Credit Reporting Act or other applicable laws. (e) Discounting income. A creditor shall not discount the income of an applicant or an appli cant’s spouse on the basis of sex or marital status. A creditor shall not discount income solely be cause it is derived from part-time employment, but may consider the probable continuity of such income in evaluating the creditworthiness of an applicant. (f) Credit scoring. A creditor shall not take sex or marital status into account in a credit scoring system or other method of evaluating applications. (g) Telephone listing in applicant’s name. A creditor shall not take into account the existence of a telephone listing in the name of an applicant in a credit scoring system or other method of evaluating applications. A creditor may take into account the existence of a telephone in the appli cant’s home. (h) Childbearing. A creditor shall not request information about birth control practices or child bearing intentions or capability. Nor shall a credi tor consider in evaluating the creditworthiness of an applicant aggregate statistics or assumptions relating to the likelihood of any group of persons bearing or rearing children, or for that reason receiving diminished or interrupted income in the future. (i) Change of name or marital status. (1) Except as set forth in subsection (2) below, in the ab sence of evidence of inability or unwillingness to repay, a creditor shall not take any of the follow ing actions with respect to a person who is con R EG U LA T IO N B § 202.6 tractually liable on an existing open end account on the basis of a change of name or marital status: (i) require a reapplication; or (ii) require a change in the terms of the account; or (iii) terminate the account. (2) Where open end credit has been granted to an applicant based on income which is earned solely by the applicant’s spouse, a creditor may require a reapplication on the basis of a change in marital status. (j) Credit history. To the extent that a creditor considers credit history in evaluating applicants of similar qualifications for a similar type and amount of credit, a creditor shall include, in evaluating creditworthiness: (1) the credit history of accounts designated under the requirements of section 202.6 as ac counts which the applicant and a spouse are permitted to use or for which both are contrac tually liable, and, on the applicant’s request, any information the applicant may present tending to indicate that such history does not accurately reflect the applicant’s willingness or ability to re pay; and (2) on the applicant’s request, the credit his tory, when available, of any account reported in the name of the applicant’s spouse or former spouse which an applicant can demonstrate re flects accurately the applicant’s willingness or ability to repay. (k) U se and retention of prohibited information. A creditor may not use any information pro hibited by the Act or this Part in evaluating appli cations. Retention of such information in the creditor’s files does not violate the Act or this Part where such information was obtained: (i) from any source prior to June 30, 1976; or (ii) at any time from credit reporting agen cies; or (iii) at any time from the applicant or others, without the specific request of the creditor. (1) State property laws. Consideration or appli cation of State property laws directly or indirectly affecting creditworthiness shall not constitute dis crimination for purposes of this Part. (m) Notification of action taken and reasons for denial. (1) A creditor shall, within a reasonable time after receiving an application, notify the applicant of action taken upon the application. (2) A creditor shall provide each applicant who is denied credit or whose account is termi nated the reasons for such action, if the applicant so requests. (3) A creditor may design its own form or methods to satisfy this requirement. An example of a possible form is set forth below. STATEMENT OF REASONS FOR DENIAL OR TERMINATION OF CREDIT 1. Credit application: _____ not completed _____ lack of credit references _____ credit reference too new to check 2____ Information furnished by: _ X Y Z Credit Bureau 10 Main Street A ny town, A ny state 00000 Phone no. 000-000-0000 3____Employment: _____ unemployed _____ temporary or irregular _____ unable to verify _____ length of employment 4____Income: _____ insufficient _____unable to confirm _____ information refused 5____ Residence: _____ too short a period _____ tem porary 6____ Other (specify) SECTION 202.6— FURNISHING OF CREDIT INFORM ATION (a) Accounts established on or after November For every account established on or after November 1, 1976, a creditor shall: (i) determine whether the account is one which an applicant’s spouse, if any, will be per mitted to use or upon which both spouses will be contractually liable, if such accounts are offered by the creditor; and (ii) designate any such account to reflect the fact of participation of both spouses. (2) When furnishing information to consumer reporting agencies or others concerning an account 1, 1 9 7 6 . (1) R EG U LA T IO N B § 2 0 2 .6 designated under this section, a creditor shall re port the designation and furnish any information concerning the account: (i) to consumer reporting agencies, in a man ner which will enable the agencies to provide access to information about the account in the name of each spouse; and (ii) to recipients other than such agencies, in the name of each spouse. (b) Accounts established prior to November 1, 1 9 7 6 . (1) With respect to any account established prior to and in existence on November 1, 1976, a creditor shall either: (i) not later than November 1, 1976, deter mine whether the account is one which an appli cant’s spouse, if any, is permitted to use or upon which both spouses are contractually liable; desig nate any such account to reflect the fact of parti cipation of both spouses; and comply with the requirements of subsection (a)(2) above; or (ii) mail or deliver to all applicants, or all married applicants, in whose name the account is carried on the creditor’s records the notice set forth below. Such notice may be mailed with a statement or other mailing. All such notices shall be mailed by February 1, 1977. With respect to open end accounts, this requirement may be satis fied by mailing a notice to all accounts for which any statement is sent between November 1, 1976 and February 1, 1977. A creditor may supplement the notice as necessary to permit identification of the account. less of who has been paying the bills or whose income was used to obtain the account. As a result, many married women do not have a credit history in their own names, although their hus bands do. If a woman ever needs to obtain credit on her own, for example, when divorced or widowed, a credit history is usually necessary. If your account(s) with us is a joint account which you share with your spouse or an account(s) in the name of one spouse which the other spouse is authorized to use, you have the right to have credit information concerning it reported in both your name and your spouse’s name. If you choose to have credit information concerning your ac count (s) with us reported in both your name and the name of your spouse, please fill in the state ment below and return it to us. Please note that the Federal regulation provides that your signature below will not make either you or your spouse legally liable for any different or greater debts. It will only request that credit information be reported in both your names. When you furnish credit information on this account, please report all information concerning it in both our names as follows: (print or type) Account Number (if any) (print or type) NOTICE Signature of either spouse CREDIT HISTORY FOR M ARRIED PERSONS The Federal Equal Credit Opportunity Act for bids all creditors from discriminating against any applicant on the basis of sex or marital status in any aspect of a credit transaction. Regulations adopted under the Act give married persons the right to have credit information concerning those credit accounts that they hold or use jointly with a spouse reported to consumer reporting agencies and creditors in the names of both the wife and husband. Accounts of married persons opened before November 1976— even those opened in the names of both spouses— are often reported in only the husband’s name. This is generally true regard (2) After November 1, 1976, a creditor shall, within 90 days of receipt of a request to change the manner in which information is reported to consumer reporting agencies and others, when fur nishing information concerning any such account, designate the account to reflect the fact of parti cipation of both spouses. The creditor shall report the designation and furnish any information con cerning the account to any recipient other than a consumer reporting agency in the name of each spouse and, when reporting to consumer reporting agencies, in a manner which will enable such agen cies to provide access to information about the account in the name of each spouse. § 202.7 REG U LA TIO N B (b) Finance charges and loan ceilings. When (3) A spouse’s signature on a request to change the manner in which information concerning an each spouse separately and voluntarily applies for account is furnished shall not change the legal and obtains a separate account with the same liability of either spouse upon the account. creditor, the accounts shall not be aggregated or otherwise combined for purposes of determining permissible finance charges or permissible loan SECTION 202.7— REQUEST FOR ceilings under the laws of any State or of the SIGNATURE OF SPOUSE OR United States. Permissible loan ceilings under the OTHER PERSON laws of any State or of the United States shall be construed to permit each spouse to be separately (a) General. Except as provided in subsections and individually liable up to the amount of the (b) and (c) below, a creditor may not require the loan ceiling less the amount for which both signature of a spouse or other person on a credit spouses are jointly liable. For example, in a State instrument unless such a requirement is imposed with a permissible loan ceiling of $1,000, if a without regard to sex or marital status on all married couple were jointly liable for $250, each similarly qualified applicants who apply for a spouse could subsequently become individually similar type and amount of credit. liable for $750. (b) Unsecured credit in community property States. Where a married applicant applies for un SECTION 202.9— PRESERVATION secured credit in a community property State, a OF RECORDS creditor may request or require the signature of a non-applicant spouse if: (a) For a period ending 15 months after the (i) the applicable State law denies the appli date a creditor gives the applicant notice of action cant power to manage or control sufficient com on an application, the creditor shall retain as to munity property to qualify for the amount of each applicant, in original form or a copy thereof: credit requested under the creditor’s standards of (1) any application form and all other creditworthiness; and written or recorded information used in evaluating (ii) the applicant does not have sufficient an application; and separate property to qualify for the amount of (2) any written statement submitted by the credit requested without regard to any community applicant alleging discrimination prohibited by property. the Act or this Part. (c) Signatures on certain instruments. Where a (b) For a period ending 15 months after the married or separated applicant applies for secured date a creditor adversely changes the terms or credit, the creditor may require the signature of conditions of credit for an account, the creditor the applicant’s spouse on such instruments as are shall retain as to each account, in original form or necessary, under the applicable statutory or deci a copy thereof: sional law of the State, or are reasonably believed (1) any written or recorded information by the creditor to be so necessary, to create a concerning such change in the terms and condi valid lien, pass clear title, waive inchoate rights to tions; and property or assign earnings. (2) any written statement submitted by the applicant alleging discrimination prohibited by the SECTION 202.8— SEPARATE ACCOUNTS Act or this Part. IN RELATION TO STATE LAW (c) Any creditor which has actual notice that it is under investigation for violation of this Part by an enforcement agency charged with monitor (a) Separate extension o f consumer credit. Any ing that creditor’s compliance with the Act and provision of State law which prohibits the separate this Part, or which has been served with notice extension of consumer credit to each spouse shall of an action filed pursuant to section 202.13 of not apply in any case where each spouse volun this Part, shall retain the information required in tarily applies for separate credit from the same subsections (a) and (b) above until final disposi creditor. In any case where such a State law is tion of the matter or such earlier time as may be pre-empted, each spouse shall be solely respon ordered by the agency or court. sible for the debt so contracted. REG U LA TIO N B SECTION 202.10— CERTAIN SPECIALIZED CREDIT (a) General. Each type of credit referred to in subsections (b), (c), (d), and (e) below shall be subject only to section 202.1, the General Rule stated in section 202.2, to sections 202.3, 202.4(a), 202.4(b), 202.4(e), 202.11, 202.12, 202.13 and 202.14, and to the other provisions, if any, spe cified in the applicable subsections of this section. If a credit falls within more than one subsection of this section, all sections of this Part referred to in any such subsections shall apply unless the credit falls within subsection (d), in which case only the provisions specified in that subsection and this subsection (a) shall apply. (b) Incidental credit. Incidental credit shall be subject to the provisions specified in sections 202.10(a) and 202.5(h). As used in this Part, incidental credit is credit which meets all of the following requirements: (1) the credit is not represented by and does not arise from the use of a credit card; and (2) no finance charge as defined in section 226.4 of this Title (12 CFR 226.4 of Regulation Z), late payment or other fee is or may be im posed other than statutory interest or other costs recoverable in legal proceedings for the collection of the credit; and (3) there is no agreement by which the credit may be payable in more than four instal ments. (c) Business credit. Business credit shall be sub ject to the provisions specified in sections 202.10(a), 202.5 and 202.7. Section 202.9 shall only apply in those transactions involving an application for credit in the amount of $100,000 or less where the applicant requests in writing that the creditor retain such records. A creditor shall not, on the basis of sex or marital status, fail to act on, or unreasonably delay a decision on, an application for business credit. As used in this Part, business credit is credit granted for business, commercial or agricultural purposes. (d) Securities credit. Securities credit shall be subject to the provisions specified in section 202.10(a), sections 202.5(a), 202.5(c) through 202.5(h), 202.5(j), 202.5(1), 202.5(m), 202.6(a) and 202.9. Section 202.4(e) shall not apply to a securities dealer insofar as the action described is taken to prevent violation of rules regarding an account in which a broker or dealer has an inter est, or rules necessitating the aggregating of § 202.10 accounts of spouses for the purpose of determining controlling interests, beneficial ownership or pur chase limitations and restrictions. As used in this Part, securities credit is credit subject to regula tion under section 7 of the Securities Exchange Act of 1934 or credit extended by a broker or dealer who is subject to regulation as a broker or dealer under the Securities Exchange Act of 1934. (e) Public utilities credit. Public utilities credit shall be subject to the provisions specified in sec tion 202.10(a) and to sections 202.5 and 202.7. As used in this Part, public utilities credit is credit extended pursuant to transactions under public utility tariffs involving services provided through pipe, wire or other connected facilities, if the charges for such public utility services, the charges for delayed payment and any discount allowed for early payment are filed with, reviewed by or regulated by an agency of the Federal Gov ernment, a State or a political subdivision thereof. SECTION 202.11— MISCELLANEOUS PROVISIONS (a) Mechanical errors. If a failure to comply with sections 202.4(d), 202.5(j), 202.5(m) or 202.6 results from a mechanical, electronic or clerical error made in good faith, it shall not be a violation of the section if the creditor shows by a preponderance of the evidence that at the time of the noncompliance the creditor had estab lished and was maintaining suitable procedures to assure compliance with the section. (b) Inconsistent State laws. Except as provided in section 202.8, this Part alters, affects or pre empts only those State laws which are incon sistent with this Part, and then only to the extent of the inconsistency. Such a State law is not in consistent with this Part if the creditor can com ply with the State law without violating this Part. SECTION 202.12— ADMINISTRATIVE ENFORCEM ENT (a) As set forth more fully in Section 704 of the Act, administrative enforcement of the Act and this Part with respect to certain creditors is assigned to the Comptroller of the Currency, Board of Governors of the Federal Reserve Sys tem, Board of Directors of the Federal Deposit Insurance Corporation, Federal Home Loan Bank § 202.13 Board acting directly or through the Federal Sav ings and Loan Insurance Corporation, Adminis trator of the National Credit Union Administra tion, Interstate Commerce Commission, Civil Aeronautics Board, Secretary of Agriculture, Farm Credit Administration, Securities and Exchange Commission and the Small Business Administra tion. (b) Except to the extent that administrative en forcement is specifically committed to other authorities, Section 704 of the Act assigns enforment of the Act and this Part to the Federal Trade Commission. SECTION 202.13— PENALTIES AND LIABILITIES (a) Sections 706(a) through (e) of the Act pro vide for civil liability for actual and punitive damages against any creditor who fails to comply with the Act and this Part. Section 706(b) places a $10,000 limitation on the amount of punitive damages an aggrieved applicant may seek in an individual capacity and Section 706(c) limits a creditor’s class action liability for punitive dam ages to the lesser of $100,000 or 1% of the creditor’s net worth at the time the action is brought. Section 706(d) provides that an aggrieved applicant may seek equitable relief in the nature of a permanent or temporary injunction, restrain ing order or other action. Section 706(e) further provides for the awarding of costs and reasonable attorney’s fees to an aggrieved applicant who REG U LA TIO N B brings a successful action under Sections 706(a) through (d). (b) Section 706(f) relieves a creditor from civil liability resulting from any act done or omitted in good faith in conformity with any rule, regulation or interpretation by the Board of Gov ernors of the Federal Reserve System notwith standing that after such act or omission has oc curred, such rule, regulation or interpretation is amended, rescinded or otherwise determined to be invalid for any reason. (c) Without regard to the amount in contro versy, any action under this Title may be brought in any United States district court or in any other court of competent jurisdiction, within one year from the date of the occurrence of the violation. SECTION 202.14— TRANSITION PERIODS Except as provided in section 202.6 with re spect to that section, the provisions of this Part shall take effect as follows: (a) Sections 202.1, 202.2, 202.3, 202.4(a), 202.5 (a), 202.5(c), 202.5(h), 202.5(j), 202.5(k), 202.5(1), 202.7(c), 202.8, 202.9(c), 202.10, 202.11, 202.12, 202.13 and 202.14 shall take effect on October 28, 1975. (b) Sections 202.4(b), 202.4(e), 202.5(d), 202.5 (e), 202.5(f), 202.5(g), 202.9(a) and 202.9(b) shall take effect on November 30, 1975. (c) Sections 202.5(i), 202.5(m), 202.7(a) and 202.7(b) shall take effect on January 31, 1976. (d) Sections 202.4(c), 202.4(d) and 202.5(b) shall take effect on June 30, 1976. STATUTORY APPEN D IX STATUTORY A PPE N D IX §501 704. 705. Titles V and VII of Equal Credit Opportunity Act, effective October 28, 1975 706. 707. Administrative enforcement. Relation to State laws. Civil liability. Effective date. § 701. Prohibited discrim ination TITLE V— EQUAL CREDIT OPPORTUNITY § 501. Short title (a) It shall be unlawful for any creditor to dis criminate against any applicant on the basis of sex or marital status with respect to any aspect of a credit transaction. (b) An inquiry of marital status shall not con stitute discrimination for purposes of this title if such inquiry is for the purpose of ascertaining the creditor’s rights and remedies applicable to the particular extension of credit, and not to discrimi nate in a determination of creditworthiness. This title may be cited as the “Equal Credit Opportunity Act”. § 70 2. Definitions Sec. 501. Short title. 502. Findings and purpose. 503. Amendment to the Consumer Credit Pro tection Act. § 502. Findings and purpose The Congress finds that there is a need to insure that the various financial institutions and other firms engaged in the extensions of credit exercise their responsibility to make credit available with fairness, impartiality, and without discrimination on the basis of sex or marital status. Economic stabilization would be enhanced and competition among the various financial institutions and other firms engaged in the extension of credit would be strengthened by an absence of discrimination on the basis of sex or marital status, as well as by the informed use of credit which Congress has heretofore sought to promote. It is the purpose of this Act to require that financial institutions and other firms engaged in the extension of credit make that credit equally available to all credit worthy customers without regard to sex or marital status. § 503. Amendment to the Consumer Credit Pro tection Act The Consumer Credit Protection Act (Public Law 90-321), is amended by adding at the end thereof a new title VII: TITLE V n — EQUAL CREDIT OPPORTUNITY Sec. 701. Prohibited discrimination. 702. Definitions. 703. Regulations. (a) The definitions and rules of construction set forth in this section are applicable for the pur poses of this title. (b) The term “applicant” means any person who applies to a creditor directly for an extension, re newal, or continuation of credit, or applies to a creditor indirectly by use of an existing credit plan for an amount exceeding a previously established credit limit. (c) The term “Board” refers to the Board of Governors of the Federal Reserve System. (d) The term “credit” means the right granted by a creditor to a debtor to defer payment of debt or to incur debts and defer its payment or to pur chase property or services and defer payment therefor. (e) The term “creditor” means any person who regularly extends, renews, or continues credit; any person who regularly arranges for the extension, renewal, or continuation of credit; or any assignee of an original creditor who participates in the deci sion to extend, renew, or continue credit. (f) The term “person” means a natural person, a corporation, government or governmental sub division or agency, trust, estate, partnership, co operative, or association. (g) Any reference to any requirement imposed under this title or any provision thereof includes reference to the regulations of the Board under this title or the provision thereof in question. § 7 0 3 . Regulations The Board shall prescribe regulations to carry out the purposes of this title. These regulations §704 may contain but are not limited to such classifica tions, differentiation, or other provision, and may provide for such adjustments and exceptions for any class of transactions, as in the judgment of the Board are necessary or proper to effectuate the purposes of this title, to prevent circumvention or evasion thereof, or to facilitate or substantiate compliance therewith. Such regulations shall be prescribed as soon as possible after the date of enactment of this Act, but in no event later than the effective date of this Act. STATUTORY APPENDIX (8) The Securities Exchange Act of 1934, by the Securities and Exchange Commission with re spect to brokers and dealers; and (9) The Small Business Investment Act of 1958, by the Small Business Administration, with respect to small buiness investment companies. (b) For the purpose of the exercise by any agency referred to in subsection (a) of its powers under any Act referred to in that subsection, a violation of any requirement imposed under this title shall be deemed to be a violation of a require ment imposed under that Act. In addition to its § 704. Administrative enforcement powers under any provision of law specifically (а) Compliance with the requirements imposed referred to in subsection (a), each of the agencies under this title shall be enforced under: referred to in that subsection may exercise for (1) Section 8 of the Federal Deposit Insurance the purpose of enforcing compliance with any re Act, in the case of— quirement imposed under this title, any other authority conferred on it by law. The exercise of (A) national banks, by the Comptroller of the the authorities of any of the agencies referred to Currency. in subsection (a) for the purpose of enforcing (B) member banks of the Federal Reserve Sys compliance with any requirement imposed under tem (other than national banks), by the Board. this title shall in no way preclude the exercise of (C) banks insured by the Federal Deposit Insur such authorities for the purpose of enforcing com ance Corporation (other than members of the pliance with any other provision of law not relat Federal Reserve System), by the Board of Direc ing to the prohibition of discrimination on the tors of the Federal Deposit Insurance Corporation. basis of sex or marital status with respect to any (2) Section 5(d) of the Home Owners’ Loan aspect of a credit transaction. Act of 1933, section 407 of the National Housing (c) Except to the extent that enforcement of Act, and sections 6(i) and 17 of the Federal Home the requirements imposed under this title is spe Loan Bank Act, by the Federal Home Loan Bank cifically committed to some other Government Board (acting directly or through the Federal Sav agency under subsection (a), the Federal Trade ings and Loan Insurance Corporation), in the case Commission shall enforce such requirements. For of any institution subject to any of those provi the purpose of the exercise by the Federal Trade sions. Commission of its functions and powers under (3) The Federal Credit Union Act, by the Ad the Federal Trade Commission Act, a violation ministrator of the National Credit Union Admin of any requirement imposed under this title shall istration with respect to any Federal Credit be deemed a violation of a requirement imposed Union. under that Act. All of the functions and powers (4) The Acts to regulate commerce, by the In of the Federal Trade Commission under the Fed terstate Commerce Commission with respect to eral Trade Commission Act are available to the any common carrier subject to those Acts. Commission to enforce compliance by any person (5) The Federal Aviation Act of 1958, by the Civil Aeronautics Board with respect to any air with the requirements imposed under this title, carrier or foreign air carrier subject to that Act. irrespective of whether that person is engaged in (б) The Packers and Stockyards Act, 1921 (ex commerce or meets any other jurisdictional tests cept as provided in section 406 of that Act), by in the Federal Trade Commission Act. the Secretary of Agriculture with respect to any (d) The authority of the Board to issue regula activities subject to that Act. (7) The Farm Credit Act of 1971, by the Farm tions under this title does not impair the authority of any other agency designated in this section to Credit Administration with respect to any Federal make rules respecting its own procedures in en land bank, Federal land bank association, Federal forcing compliance with requirements imposed intermediate credit bank, and production credit association; under this title. STATUTORY APPE N D IX § 705. Relation to State laws (a) A request for the signature of both parties to a marriage for the purpose of creating a valid lien, passing clear title, waiving inchoate rights to property, or assigning earnings, shall not con stitute discrimination under this title: Provided, however, That this provision shall not be con strued to permit a creditor to take sex or marital status into account in connection with the evalua tion of creditworthiness of any applicant. (b) Consideration or application of State prop erty laws directly or indirectly affecting credit worthiness shall not constitute discrimination for purposes of this title. (c) Any provision of State law which prohibits the separate extension of consumer credit to each party to a marriage shall not apply in any case where each party to a marriage voluntarily applies for separate credit from the same creditor: Pro vided, That in any case where such a State law is so peempted, each party to the marriage shall be solely responsible for the debt so contracted. (d) When each party to a marriage separately and voluntarily applies for and obtains separate credit accounts with the same creditor, those ac counts shall not be aggregated or otherwise com bined for purposes of determining permissible finance charges or permissible loan ceilings under the laws of any State or of the United States. (e) Except as otherwise provided in this title, the applicant shall have the option of pursuing remedies under the provisions of this title in lieu of, but not in addition to, the remedies provided by the laws of any State or governmental subdivi sion relating to the prohibition of discrimination on the basis of sex or marital status with respect to any aspect of a credit transaction. § 706. Civil liability (a) Any creditor who fails to comply with any requirement imposed under this title shall be liable to the aggrieved applicant in an amount equal to the sum of any actual damages sustained by such applicant acting either in an individual capacity or as a representative of a class. (a) Any creditor who fails to comply with any requirement imposed under this title shall be liable to the aggrieved applicant for punitive damages in an amount not greater than $10,000, as deter mined by the court, in addition to any actual dam ages provided in section 706(a): Provided, how § 705 ever, That in pursuing the recovery allowed under this subsection, the applicant may proceed only in an individual capacity and not as a representative of a class. (c) Section 706(b) notwithstanding, any creditor who fails to comply with any requirement im posed under this title may be liable for punitive damages in the case of a class action in such amount as the court may allow, except that as to each member of the class no minimum recovery shall be applicable, and the total recovery in such action shall not exceed the lesser of $100,000 or 1 percent of the net worth of the creditor. In determining the amount of award in any class action, the court shall consider, among other relevant factors, the amount of any actual dam ages awarded, the frequency and persistence of failures of compliance by the creditor, the re sources of the creditor, the number of persons ad versely affected, and the extent to which the creditor’s failure of compliance was intentional. (d) When a creditor fails to comply with any requirement imposed under this title, an aggrieved applicant may institute a civil action for preven tive relief, including an application for a perman ent or temporary injunction, restraining order, or other action. (e) In the case of any successful action to en force the foregoing liability, the costs of the action, together with a reasonable attorney’s fee as determined by the court shall be added to any damages awarded by the court under the pro visions of subsections (a), (b), and (c) of this section. (f) No provision of this title imposing any liability shall apply to any act done or omitted in good faith in conformity with any rule, regulation, or interpretation thereof by the Board, notwith standing that after such act or omission has oc curred, such rule, regulation, or interpretation is amended, rescinded, or determined by judicial or other authority to be invalid for any reason. (g) Without regard to the amount in contro versy, any action under this title may be brought in any United States district court, or in any other court of competent jurisdiction, within one year from the date of the occurrence of the violation. § 707. Effective date This title takes effect upon the expiration of one year after the date of its enactment. APPENDIX A FEDERAL ENFORCEMENT AGENCIES From the list that follows, you will be able to tell which Federal Agency enforces Regulation B for your particular business. Any questions you have should be directed to that agency. National Banks Comptroller of the Currency Washington, D.C. 20219 State Member Banks Federal Reserve Bank serving the area in which the State member bank is located. Nonmember Insured Banks Federal Deposit Insurance Corporation Supervising Examiner for the District in which the nonmember insured bank is located. Savings Institutions Insured by the FSLIC and Members of the FHLB System (except for Savings Banks insured by FDIC) The FHLBB’s Supervisory Agent in the Federal Home Loan Bank District in which the institution is located. Federal Credit Unions Regional Office of the National Credit Union Administration, serving the area in which the Federal Credit Union is located. Creditors subject to Civil Aeronautics Board Director, Bureau of Enforcement Civil Aeronautics Board 1825 Connecticut Avenue, N.W. Washington, D.C. 20428 Creditors Subject to Interstate Commerce Commission Office of Proceedings Interstate Commerce Commission Washington, D.C. 20523 Creditors Subject to Packers and Stockyards Act Nearest Packers and Stockyards Administration area supervisor. Retail, Department Stores, Consumer Finance Companies, All Other Creditors, and All Nonbank Credit Card Issuers Federal Trade Commission Washington, D.C. 20580 Small Business Investment Companies U.S. Small Business Administration 1441 L Street, N.W. Washington, D.C. 20416 Brokers and Dealers Securities and Exchange Commission Washington, D.C. 20549 Federal Land Banks, Federal Land Bank Associations, Federal Intermediate Credit Banks and Production Credit Associations Farm Credit Administration 490 L’Enfant Plaza S.W. Washington, D.C. 20578
@FedFRASER