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Federal Reserve Bank of Dallas
2200 N. PEARL ST.
DALLAS, TX 75201-2272

July 20, 2004

Notice 04-45

TO: The Chief Executive Officer of each
financial institution and others concerned
in the Eleventh Federal Reserve District

Withdrawal of Proposed Rules
The Federal Reserve Board has withdrawn proposed revisions to Regulation B (Equal
Credit Opportunity), Regulation E (Electronic Fund Transfers), Regulation M (Consumer
Leasing), Regulation Z (Truth in Lending), and Regulation DD (Truth in Savings). The proposed
revisions sought to define more specifically the standard for providing “clear and conspicuous”
disclosures and to provide a more uniform standard among the Board’s regulations. The
revisions were intended to help ensure that consumers receive noticeable and understandable
information that is required by law in connection with obtaining consumer financial products and
A copy of the Board’s notice is attached.
For more information, please contact Eugene Coy, (214) 922-6201, or Diane van
Gelder, (214) 922-6282, Banking Supervision Department. Paper copies of this notice or previous Federal Reserve Bank notices can be printed from our web site at

For additional copies, bankers and others are encouraged to use one of the following toll-free numbers in contacting the Federal
Reserve Bank of Dallas: Dallas Office (800) 333-4460; El Paso Branch Intrastate (800) 592-1631, Interstate (800) 351-1012;
Houston Branch Intrastate (800) 392-4162, Interstate (800) 221-0363; San Antonio Branch Intrastate (800) 292-5810.

12 CFR Parts 202, 205, 213, 226, 230
[Regulations B, E, M, Z, DD]
[Dockets No.R-1168, R-1169, R-1170, R-1167, R-1171]
Equal Credit Opportunity, Electronic Fund Transfers, Consumer Leasing, Truth in
Lending, Truth in Savings
AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Withdrawal of Proposed Rules
SUMMARY: The Board is withdrawing proposed revisions to Regulation B (Equal Credit
Opportunity), Regulation E (Electronic Fund Transfers), Regulation M (Consumer Leasing),
Regulation Z (Truth in Lending), and Regulation DD (Truth in Savings). The proposed revisions
sought to define more specifically the standard for providing “clear and conspicuous”
disclosures, and to provide a more uniform standard among the Board’s regulations. The
revisions were intended to help ensure that consumers receive noticeable and understandable
information that is required by law in connection with obtaining consumer financial products and
services. In response to concerns raised by commenters, the Board has determined that this goal
should be achieved by developing proposals that focus on improving the effectiveness of
individual disclosures rather than the adoption of general definitions and standards applicable
across the five regulations. This effort will be undertaken in connection with the Board’s
periodic review of its regulations; an advance notice of proposed rulemaking is expected to be
issued later this year under Regulation Z, focused on disclosures for open-end credit accounts.
Although the December 2003 proposals are withdrawn, they reflect principles that institutions
may find useful in creating disclosures that are clear and conspicuous. These approaches will
help inform the Board’s review of individual disclosures.
DATES: The withdrawal is effective June 22, 2004.
FOR FURTHER INFORMATION CONTACT: Elizabeth A. Eurgubian, Attorney, and
Krista P. DeLargy, Senior Attorney, Division of Consumer and Community Affairs, Board of
Governors of the Federal Reserve System, at (202) 452-3667 or 452-2412; for users of
Telecommunications Device for the Deaf (“TDD”) only, contact (202) 263-4869.

I. Background
Disclosures generally must be “clear and conspicuous” under the consumer financial
services and fair lending laws administered by the Board.1 Currently, the laws and regulations
contain standards that are similar but not identical. “Clear and conspicuous” is generally
interpreted to require that disclosures be in a “reasonably understandable form.” The existing
interpretations do not elaborate on “conspicuousness” as a separate requirement distinct from
clarity or understandability. See 12 CFR § 202.4(d), comment 4(d)-1; § 205.4(a)(1);
§§ 213.3(a) and 213.7(b), comments 3(a)-2 and 7(b)-1; §§ 226.5(a)(1), 226.17(a)(1), and
226.31(b), and comments 5(a)(1)-1, 17(a)(1)-1, and 5a(a)(2)-1; and §§ 230.3(a) and 230.8(c),
comment 3(a)-1.
In contrast, Regulation P (Privacy of Consumer Financial Information), which
implements the financial privacy provisions of the Gramm-Leach-Bliley Act, articulates more
precisely than the other consumer regulations the standard for providing clear and conspicuous
disclosures that consumers will notice and understand. Under Regulation P, disclosures are
deemed “clear” if they are “reasonably understandable;” they are considered “conspicuous” if
they are “designed to call attention to the nature and significance of the information.”
See 12 CFR § 216.3(b). Regulation P also provides examples and guidance illustrating these
standards. Although the privacy disclosures provided by industry under this standard have not
been without criticism, they have been reasonably noticeable to consumers. In addition, Truth in
Lending disclosures that are subject to format and type size requirements and are segregated
from other information, such as those required in connection with credit card solicitations (the
“Schumer box”), tend to be more noticeable and easy to read.
In December 2003, the Board published proposed rules to establish a more specific
standard for “clear and conspicuous” disclosures that would be uniform for five consumer
regulations, Regulations B, E, M, Z and DD (68 FR 68786, 68788, 68791, 68793, and 68799,
respectively) (collectively, the “ December 2003 proposals”). The December 2003 proposals
were intended to help ensure that the information required to be given to consumers in
connection with financial products and services is provided in a noticeable and understandable
form. Accordingly, the proposals sought to give explicit meaning to the requirement for
“conspicuousness,” using the clear and conspicuous standard in Regulation P as a model.
The December 2003 proposals also include compliance guidance in the form of examples
of how institutions could satisfy the “clear and conspicuous” standard, based on guidance in
Regulation P. Thus, the December 2003 proposals provide examples of how institutions can
make disclosures clear or reasonably understandable—such as, by using “clear, concise
sentences, paragraphs, and sections” and “short explanatory sentences or bullet lists whenever

Regulation B, which implements the Equal Credit Opportunity Act, 12 CFR part 202, 15 U.S.C. 1691 – 1691f;
Regulation E, which implements the Electronic Fund Transfers Act, 12 CFR part 205, 15 U.S.C. 1693 et seq.;
Regulation M, which implements the Consumer Leasing Act, 12 CFR part 213, 15 U.S.C. 1667 – 1667e;
Regulation Z, which implements the Truth in Lending Act, 12 CFR part 226, 15 U.S.C. 1601 et seq.; and
Regulation DD, which implements the Truth in Savings Act, 12 CFR part 230, 12 U.S.C. 4301 et seq.

possible,” and by avoiding “legal or highly technical business terminology whenever possible.”
The guidance also provides advice on making disclosures conspicuous. For example, in a
document that combines required disclosures with other information, the guidance suggests using
“distinctive type size, style, and graphic devices to call attention to the disclosures.” The
guidance also advises that disclosures are conspicuous when they “use a typeface and type size
that are easy to read,” and confirms that 12-point type generally meets this standard. The
guidance notes that disclosures printed in type smaller than 12 points do not automatically
violate the standard, but that disclosures printed in type smaller than 8 points would likely be too
small to satisfy the standard. In 2000, the Board applied this standard and other format
requirements to the Schumer box.
II. Comments on the December 2003 Proposals
Almost all industry commenters strongly oppose the Board’s December 2003 proposals.
Industry’s opposition stems largely from its concern that the proposed rules would cast doubt on
whether their existing disclosures meet the “clear and conspicuous” standard. In particular,
industry commenters are concerned that it would be significantly more difficult to integrate
federal disclosures with other account-related information. They assert that this would be a
departure from the Board’s long-standing practice of permitting the integration of required
disclosures with other account information, except in certain clearly-articulated cases, such as the
Truth in Lending disclosure table required for certain credit or charge card applications and
solicitations and disclosures for closed-end loans. See § 226.5a(a)(2), § 226.17(a)(1). Industry
commenters assert that the December 2003 proposed revisions would result in costly compliance
reviews and forms changes by institutions, and would expose institutions to heightened litigation
risk under arguably subjective standards. Consumer advocates generally support the proposals’
goals, but they believe the December 2003 proposals do not set high enough standards.
Specific Industry Concerns
Effectiveness of using the Regulation P standard in other regulations. The Board’s
Regulation P (Privacy of Consumer Financial Information) requires institutions to provide
conspicuous disclosures that “call attention to the nature and significance of the information.”
12 CFR § 216.3(b). Institutions acknowledge that this standard, in the context of disclosing an
institution’s privacy policy, is workable since the privacy disclosure can be kept separate from
other information in the same document. Consequently, using a heading to set off the privacy
disclosures from other information satisfies the Regulation P conspicuous disclosure
Most industry commenters assert, however, that Regulation P is not an effective model
for a uniform “clear and conspicuous” standard under the Board’s consumer regulations that
expressly permit institutions to integrate certain federal disclosures with contract terms and state
law disclosures. For example, integrated disclosures are permitted for costs and terms required
by federal law to be disclosed at account opening for deposit accounts and for open-end credit
plans such as a credit card account. See 12 CFR § 230.3(a), comment 3(a)-1;
§ 226.5(a)(1), comment 5(a)(1)-1. Industry commenters believe that if the Regulation P
“conspicuous” standard were adopted for these regulations, institutions generally would have to

segregate required federal disclosures from contract terms and other information, as they
currently do for privacy notices under Regulation P, in their credit card solicitation disclosures,
and certain TILA closed-end credit disclosures and Consumer Leasing Act disclosures.
Industry commenters assert that in some cases, such as credit card account opening
disclosures, consumers can better understand how an account operates when required disclosures
are interspersed among other contract terms. The commenters also assert that certain methods
for making federal disclosures more conspicuousfor example, increased font sizes and
marginswould lengthen documents and could make consumers less inclined to read them in
some cases. Because credit card and deposit account agreements can be lengthy and complex,
and in small type size, some members of the Board’s Consumer Advisory Council urged the
Board to consider different approaches to making disclosures more useful to consumers, such as
requiring “executive summaries” of more important terms to ensure that the key terms are
Compliance Burden. Industry commenters believe that examples contained in the
December 2003 proposed guidance about how disclosures can be made clear and conspicuous,
although not intended to be mandatory, would effectively be viewed as legal requirements,
necessitating the review and redesign of all disclosure documents. Most industry commenters
claim that the cost to review, revise, and mail disclosure documents to comply with each
example would be substantial.
Industry commenters are particularly concerned about the potential cost of complying
with the typeface and type size example in the proposed staff commentary which states that, as to
type size: “12-point type generally meets the conspicuous standard, but disclosures printed in
less than 12-point type do not automatically violate the standard.” The commenters generally
assert that under this guidance 12-point type would become a de facto minimum requirement and
that meeting it would be costly because federal consumer disclosures often use smaller type.
The December 2003 proposed guidance also states that disclosures printed in type less
than 8 points would likely be too small to satisfy the clear and conspicuous standard. Industry
commenters noted that this guidance could result in costly changes because it is common for
some disclosures to be printed in type smaller than 8 points, such as credit card agreements and
the notice of billing rights that often appears on the reverse side of monthly statements of
account activity. See 12 CFR § 205.8(b), § 226.9(a)(2).
Industry concerns about litigation risks. The December 2003 proposed staff commentary
provides examples of clear and conspicuous disclosures, such as the use of “short explanatory
sentences” and “everyday words” whenever possible, “wide margins and ample line spacing,”
and “distinctive type size, style, or graphic devices.” Industry commenters assert that these
examples create vague standards subject to differing interpretations, and that institutions would
potentially be liable in private lawsuits filed by consumers who allege violations under
Regulations B, E, M, and Z. Although these examples are used in Regulation P, as commenters
note, violations of Regulation P do not give rise to claims by consumers in private litigation.
Some industry commenters urged the Board to review individual disclosures and address any

specific problems identified with the particular disclosures instead of establishing standards and
guidance of general applicability.
Specific Concerns of Consumer Advocates
Comment letters received from individual consumers and consumer groups generally
supported the December 2003 proposed “clear and conspicuous” standard. Consumer
representatives believe, however, that the Board’s proposed interpretation of “clear” is not
sufficient and they suggest that the Board clarify that a disclosure is not clear if it is “capable of
more than one plausible interpretation.” Consumer representatives also suggest that the Board
amend the proposed example in the staff commentary to state that 10 points, instead of 8 points,
should be the threshold below which type is likely to be deemed too small under the standard.
III. Withdrawal of the Proposals and Plan for Reviewing Individual Disclosures
The Board is withdrawing the December 2003 proposals to establish a uniform standard
for “clear and conspicuous” disclosures under Regulations B, E, M, Z, and DD, in response to
the concerns summarized above. Instead of adopting general definitions or standards that would
apply across the five regulations, the Board intends to focus on individual disclosures and to
consider ways to make specific improvements to the effectiveness of each disclosure. As noted
above, some commenters supported this approach. In reviewing individual disclosures, the
Board could consider both the content and format of the disclosures, and the Board could elect to
make changes to the regulatory requirements as well as to the regulation’s model forms.
The effort to review individual disclosures will be undertaken in connection with the
Board’s periodic review of its regulations, commencing with the issuance later this year of an
advance notice of proposed rulemaking to review the rules for open-end credit accounts under
the Truth in Lending Act and Regulation Z. The notice will seek comment on ways to make
disclosures required to be provided at account-opening and on periodic statements more
understandable and noticeable. Improved TILA disclosures and the standards used to develop
them could serve as models for improving disclosures required under the other regulations. The
Board’s review of individual disclosures would continue with reviews of Regulation DD and
Regulation E, which are scheduled to commence in 2005 and 2006 respectively.
Although the December 2003 proposals are withdrawn, they reflect principles that
institutions may find useful in developing disclosures that are clear and conspicuous. Similarly,
the proposals reflect approaches that will help inform the Board's review of individual
disclosures in connection with its periodic review of its regulations. Clear, concise sentences
that use definite, concrete, everyday words and active voice and avoid legal and highly technical
business terminology foster consumer understanding of disclosures. Disclosures are more
noticeable when printed in a typeface and type size that are easy to read. Particularly in lengthy
disclosure documents, the use of plain-language headings that call attention to the substance of

particular provisions improves customers' ability to navigate through the document or later
review particular provisions. Readily understandable disclosures also reduce costs associated
with frequent customer inquiries, customer complaints and litigation.
By order of the Board of Governors of the Federal Reserve System, June 22, 2004.
Jennifer J. Johnson (signed)
Jennifer J. Johnson,
Secretary of the Board