The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
FED ER AL RESERVE BANK
O F NEW YORK
r Circular No. 7 6 8 6"!
L
August 8, 1975
J
FAIR CREDIT BILLING PROPOSALS
— Revised Proposals To Amend Regulation Z
— Extension of Comment Period
To A ll Banks, and Others Concerned
in the Second Federal Reserve D istrict:
The following statem ent was issued July 30 by the Board of Governors of the Federal
Reserve S y stem :
The Board of Governors of the Federal Reserve System today made public revised proposals for regula
tions to implement the Fair Credit Billing Amendments to the Truth in Lending Act.
On July 22 the Board published the substance of the revised proposals and announced that it would hold
an informal hearing on August 5 and 6 . The Board’s original proposals were made public May 5. Time for
comment on the revised proposals, originally scheduled to end August 12, has been extended through August 18.
Printed below is an excerpt from the Federal Register of A ugust 1, containing the text of the
revised proposals. Except for relatively minor changes, the text consolidates the material sent
to you with our Circulars No. 7628 and No. 7678, dated May 9 and July 29, 1975, respectively.
Comment on the revised proposals should be submitted by A ugust 18 and may be sent to our
Bank Regulations Department.
Paul
A.
V o lc k e r ,
Presiden t.
FEDERAL RESERVE SYSTEM
[ 12 CFR Part 226 ]
[R e g . Z ]
TRUTH IN LENDING
Fair Credit Billing Amendments
O n M ay 5, 1975, th e B o ard o f G over
n ors publish ed fo r com m ent In th e Fed
eral Register (40 F .R . 19489) proposed
re g u la tio n s Im plem en tin g th e P a ir C red it
B illin g A ct (T itle m o f Pub. L , 03-495).
T h e co m m en t p eriod on th is p rop osal
w as in itially se t to term in ate on M ay 30
an d w as su bsequ en tly extended through
Ju n e 20, 1975 (40 F .R . 23896). Follow ing
th e receip t o f ap p ro xim ately 300 com
m e n ts th e B o a rd on Ju ly 24, 1975, a n
n oun ced In th e Federal Register (40 F .R .
30986) its In ten t to p ublish revised regu
la tio n s im plem en tin g the F a ir C redit
B illin g A ct (T itle m of Pub. L. 93-495)
fo r oom m ent a n d to hold in fo rm al h e a r
in g s A u gu st 5 a n d 6, 1975, on th ese re
vised p rop osals. T h e com m ent period on
th ese revised regulation s, in itially se t to
term in ate on A u gu st 12, h a s been e x
ten ded to A u gu st 18,1975.
T h e ch an ges m ad e In revised re g u la
tory p ro p o sals con tain ed herein a re re
spon sive to com m ents received. M an y of
th e ch an ges a re m inor a d ju stm e n ts In
d ra ftin g to elim in ate am bigu ities. T h e
m ore sign ifican t alte ra tio n s in. th e p ro
posed regu latio n s w hich re su lt in su b
sta n tiv e revisions Include:
(1) T h e definition o f a b illing error
(§ 226.2(j) (1 ) ) h a s been refined to sp e
cifically inclu de:
(a ) A m isd escription or insufficient
description o f the tra n sactio n ,
(b) A reflection of a tra n sa ctio n which
w as n ot m ad e to th e cu stom er or to
som eone auth orized to use h is accoun t
an d from which use the custom er receives
no benefit, or
(c) A m isstate m en t a s to the am ount
o f the tra n sa ctio n or a s to the date th a t
the tra n sa ctio n took place.
(2) T h e definition of billing error
(§ 226.2 (j) (3 )) h a s also been a d ju ste d to
reflect goods or services n o t accepted
because they differ from w h at w as sp eci
fied by agreem en t in th a t they were de
livered in the w rong qu an tity , to the
w rong location, or were delivered late.
However, an y dispu te with resp ect to
the qu ality of goods or services in the
p h y sical possession of the cu stom er is
exp ressly excluded from th is p articu la r
definition of billing error.
(3) S ection 226.4(1) relatin g to price
differen tials offered by sellers fo r p ay
m ent in cash h a s been am ended to in
clude su rc h a rg e s of up to five p er cent.
Su ch su rch arges u nder the am ended p ro
p osal m ay be im posed w ithout the need to
disclose them a s p a r t of the finance
ch arge.
(4) D ra ft lan gu age h a s been included
in § 2 2 6 .6 (b )(2 ) to se t fo rth proposed
ru les regard in g the tre atm en t of incon
siste n t S ta te law s under section 171(a^
of the Act.
P a rtic u lar difficulty h a s been exp eri
enced in d ra ftin g these provisions in light
o f (1) the n eed to ca rry out the Con
gressio n al direction th a t S ta te law sh all
be preem pted only to the exten t incon
siste n t with F ed eral law an d sh all be p re
served to th e exten t it gives “ greater
p rotection ” to co n sum ers; a n d (2) the
difficulty o f w ending th ro u gh the diver
sity of S ta te provisions, of a scertain in g
which Item s ca n be considered in iso la
tio n or sh ould be considered a s ste p s In
procedure and, In m an y In stan ces, of
decidin g w h at co n stitu tes “ g re a te r pro
tection . "
Comment Is Invited (especially from
persons with experience with State law)
on the sufficiency and clarity of the proposed rules, as well as on any other aspects of the implementation of section
17l<a).
(5) The statement of fair credit billing rights required to be given to new
customers initially and semiannually
thereafter ( § 226.7<a> <9) and§ 226.7<d>)
may be printed on both sides of one page
and only those rlght.s applicable to a
given creditor's plan need be included.
(6) The required disclosure on the periodic statement of the outstanding balance at the beginning and close of the
billing cycle in§ 226.7<b> (1) (!) and <ix)
has been expanded to include a specific
indication when the outstanding balance
is a credit balance.
(7) The provi5ions dealing with the
identification of transactions on a periodic statement <§ 226.7(b) <1) <ii)) have
been amended to cover cash advance
transactions. In addition, the footnoted
definition of related persons has been
adjusted to include franchised or licensed
sellers of the creditor's product, sellers
who assign or sell open end customer
sales accounts. and sellers who arrange
for open end credit. These provisions
implement section 411 of Title IV of
Pub. L. 93-495 and were Initially published in the FEDERAL REGISTER On June
24 1975 (40 F.R. 26571>.
(a> The rules regarding prompt crediting of payments<§ 226.7<g> > have been
adjusted as follows:
<a> Each creditor must specify at
least one location at which payments
received will be credited as of the date
of receipt.
(b) Payments received at such locations must be credited as of the date of
receipt, except that during a transitional
period, partial payments on accounts
where finance charges are computed on
the basis of daily balances or average
daily balances received at such address
must be credited promptly <but in no
event later than 3 business days following the date of receipt). Delayed crediting in these cases is allowed to provide
a. transition period for creditors to overcome operational problems. The length
of this transition period has yet to be
determined.
(C) If the creditor accepts payments
at locations other than that specified in
paragraph (a) above, crediting of such
payments may be delayed up to 3 business days, provided the customer is notified of the possibility of such delay .
<d> Payments need not be credited as
of the date of receipt, if a delay in
crediting does not result in the imposition of finance charges or later payment
charges. In any event, the crediting date
of payments would be disclosed on the
customer's periodic statement under the
proposed amendment to § 226.7<bl <iii).
<e> If the creditor fails to credit payments in accordance with the timing
provisions of (b), <c>, or <d>, he must
adjust the customer's account during the
next billing cycle for any finance charges
that were imposed as a result of t:h.e delay.
<9> The provisions relating to prompt
refund of overpayments f§ 226 .7fhl >
2
have been adjusted to remove the reference to standing authorizations for refunds to customers. However, overpayments must be credited in the same
manner as are regular payments, and refunds must be made within 5 business
days of receipt of a specific refund request.
(10) The provision relating to the assertion of claims and defenses against a
card issuer when the merchant fails to
satisfactorily resolve disputes as to goods
or services (§ 26.13(1)) has been adjusted
to exclude cash advance check transactions which are unrelated to any specific
purchase of goods or services. The regulation has been clarified to indicate that
the mere honoring of a credit card does
not remove the distance and dollar
amount limitations set forth in the statutory section. A new provision has been
added prohibiting the issuance of an adverse credit report merely because the
customer asserts his statutory rights.
The footnote discussing tort claims has
been deleted as unnecessary, because of
the statutory limitations on recovery to
the amount outstanding in the customer's account.
<11) The provision relating to prompt
notification of returns <§ 226.13(k)) has
been amended to require that the seller,
within 5 business days of any return,
transmit notice thereof into the normal
channels through which charges are
handled and that the customer's card
issuer credit the customer's account
within 3 business days of receipt of such
notice.
<12) The provisions prohibiting certain acts by card issuers <§ 226.13(1) >
have been amended to require card issuers to notify participating merchants
of the invalidity of any contract provisions prohibiting merchants from offering discounts for cash payments in lieu
of use of a credit card or from imposing
surcharges on credit card purchases. In
addition, the provision prohibiting tie-in
services has been clarified to the effect
that a card issuer may not require a
participating merchant to open a deposit
account or to procure any other service
not essential to the operation of a credit
card plan. The term "device" has been
omitted from this provision.
(13) The provision relating to the correction of billing errors<§ 226.14fa)) has
been amended to permit the creditor to
rely on a customer's oral agreement that
any alleged error has been resolved to his
satisfaction; the requirement of written
notification by the customer indicating
that the dispute has been resolved has
been omitted.
04) The provision relating to the adjustment of finance charges on disputed
amounts (§ 226.14(b)) has been amended
to clarify that the creditor need adjust
the customer's account only where the
investigation of a billing dispute indicates that an en-or has been made, including any error In the amount, description, or date of the transaction, failure
to mail the statement to the customer's
current address, in billing for goods or
services not delivered or accepted by the
customer in accordance \l"ith any agree-
ment, or any accounting error in the imposition of charges to the account. However, if the creditor has made no error,
then he may collect finance charges as
usual. In addition, this section has been
clarified to the effect that a creditor need
not remove from a customer's account
and place into a suspense or other account any disputed amounts as well as
finance charges on the disputed amounts
during the error resolution period. However, the creditor must clearly disclose on
the periodic statement that the customer
need not pay any amount in dispute.
A specific amount in dispute need not be
identified or disclosed on the periodic
periodic statement.
<15) The provisions dealing with prohibited offsets <§ 226.14<c)) have been
clarified to the effect that they only relate to accounts maintained by the
creditor. In addition, these provisions
have been amended to provide that the
creditor must reverse any automatic
debiting of a customer's account if he receives written notice of a billing error
within 16 days of mailing the periodic
statement.
<16> The provisions relating to credit
reports on amounts in dispute <§ 226.14
<e> > have been amended to require creditors, in the case where notification of a
billing error has been received subsequent to the issuance of a delinquent
credit report, to give notice of the billing
dispute to only those parties who received the report of delinquency and who
are in the business of collecting and disseminating Information about the creditworthiness of customers. Notification to
such parties must occur within one billing cycle.
Pursuant to the authority granted in
15 U.S.C. 1604 C1970) the Board proposes
to amend Regulation Z, 12 CFR Part 226 ,
as follows:
1. To implement section 302. § 226.1
fa) would be amended as follows:
a. Section 226.lla) <1) is revised as set
forth below.
b. Section 226.1<a) (2) is amended by
inserting the following sentence immediately before the last sentence to read as
set forth below.
§ 226.1
.-\uthoria~·. ~··c.p•·, :uul tmrp<~·•·.
t' lt:.
<a> Authority, scope, and purpose. r 11
This Part comprises the regulations issued by the Board of Governors of the
Federal Reserve System pursuant to
Title I I Truth in Lending Act> and Title
V <General Provisions) of the Consumer
Credit Protection Act, as amended 115
U.S.C. 1601 et seq.). Except as otherwise
provided herein, this Part, within the
context of its related provisions, applies
to all persons who are creditors, as defined in paragraph(s) of § 226.2.
<2> • • • In addition, this part is designed to assist the customer to resolve
credit billing disputes in a fair and
timely manner, to regulate certain billIng and credit card practices, and to
strengthen the legal rights of consumers. • • •
§ § 2 26 . 2 , 2 2 6 .1 3
[A m en d ed ]
2. Certain paragraphs o f §§ 226.2 and
226.13 would be redesignated as show n
below.
Old section No.
New section No.
226.13 (a ) ( 1 ) ---------------- ------- 226.2(a)
226.13(a)(2)............................... ...226.2(c)
226.13(a)(3)--------- -------------- --226.2(1)
226.13(a)(4).........—......................226.2 (m)
226.13(a)(6).............. - ........... — 226.2(r)
226.13(a)(7)--------------------------226.2 (ii)
226.2 (a )— ------ ---------------------226.2(b)
226.2(b)--------- ------------------- --226.2(d)
226.2(C) ----------------------------- --226.2(e)
226.2(d)..........................................226.2(f)
226.2 ( e ) .------ --------------------- -- 226.2 (g)
226.2(f)------ -------- -------------- -- 226.2(h)
226.2(g)_........... - ...................... ...226.2(1)
226.2(h)............ - ............. - ............226.2(k)
226.2(1)____________________ _226.2(n)
226.2(J)................ - ...............— 226.2(0)
226.2(k )____________ _____ — 226.2(p)
226.2(1)........................................ .. 226.2(q)
226.2(m) ..................................... ...226.2(s)
226.2 (n )----------------------------- --226.2 (t)
226.2(0)— ........................ ......... ...226.2 (xi)
226.2 (p )----------------------------- --226.2(v)
226.2(q) ......................................... 226.2 (w)
226.2 (r )....................................... ...226.2 (x)
226.2(s) ........................- ............. ...226.2(y)
226.2 (t )...........—...................—- 226.2(z)
226.2 (u )....................................... .. 226.2(aa)
226.2(v) ....................................... .. 226.2(bb)
226.2(w )_______ ______ _____ _226.2(dd)
226.2 (x )----- ------------------------ --226.2(ee)
226.2 (y ).......... — ................. —_ 226.2(ff)
226.2 (z )--------------------------------226.2(gg)
226.2(aa)---------------------------- --226.2(hh)
226.2(bb).........- ........... - ...............226.2(JJ)
226.2 (cc)........................................ 226.2(kk)
226.2 (dd) ....................................... 226.2(11)
3. To im plem ent sections 103 and 161,
in § 226.2, redesignated paragraphs (h ),
(p ), (Q), (s ), (u ), and (x) would be re
vised and new paragraphs (j) and (cc)
would be added as set forth below:
§ 226.2 Definitions and rules of con
struction.
*
*
*
*
*
(2) A reflection on a periodic statem en t
of an extension of credit or indebtedness
fo r which the custom er requ ests e x p la n a
tion or clarification , including requ ests
for copies o f docum entary evidence of
the indebtedness reflected therein, or
(3) A reflection on a periodic s ta te
m ent of an extension of credit fo r p ro p
erty or services n ot accepted by the cu s
tom er or h is designee, or n ot delivered
to the custom er or h is designee in accord
ance w ith any agreem en t m ad e in con
nection with the tran sactio n ,1 or
(4) Any failu re to properly reflect on a
periodic statem en t, a p ay m en t or other
credit to the cu stom er’s account, or
(5) A com pu tation error or sim ilar
error of an accoun tin g n atu re m ad e by
the creditor on a periodic statem en t, in
cluding errors in com puting fin ance
ch arges or la te paym en t ch arges, or
(6) A fa ilu re to m ail or deliver a cu s
tom er’s periodic sta tem en t to his cu rren t
design ated add ress, if the creditor h a s
received n otification of the ch ange of
ad d ress a t le a st 10 day s prior to the
closing d ate of a billing cycle fo r which a
finance ch arge, la te p ay m en t ch arge, or
an add ition al m inim um p ay m en t is im
posed.
*
*
*
*
*
(p) “ C onsum er cred it” m eans credit
offered or extended to a n atu ra l person,
in which the m oney, property, or service
which is the su b je ct of the tran sactio n is
prim arily fo r personal, fam ily , household,
or agricu ltu ral purposes. “ C onsum er
lo a n ” is one type of “ consum er cred it.”
(q) “ C red it” m ean s the rig h t gran ted
by a creditor to a custom er to defer p a y
m ent of debt, incur debt an d defer its
paym ent, or p u rch ase property or se rv
ices and defer paym en t therefor. (See
also p a ra g ra p h ( jj) of th is section.)
*
*
*
*
*
(s) “ C red itor” m eans a perscn who in
(h)
“Arrange for th e exten sion of
the ordinary course of business regularly
credit” m eans to provide or offer to pro
extends or a rra n g es fo r the extension of
vide consum er credit w hich is or will be
consum er credit, or offers to extend or
extended by another person under a b u si
arra n g e fo r the extension of su ch credit,
n ess or other relationship pursuant to
which is payable by agreem en t in m ore
w hich the person arranging such credit th an fou r in stalm en ts, or for which the
(1) R eceives or will receive a fee, com paym en t of a finanfce ch arge is or m ay
pensation, or other consideration for be required, w hether in connection with
such service, or
loans, sale s of property or services, or
(2) Has knowledge of the credit term s otherwise. F o r p urp oses of the requ ire
and participates in th e preparation of the m ents of §§ 226.7(a) (6 ), (7 ), (8 ), an d
contract docum ents required in connec ( 9 ) ; 226.7(b) (1) (i), (ii), (iii), ( i x ) ,a n d
tion w ith the exten sion of credit.
( x ) ; 226.7(b) (2 ) ; 226.7 ( c ) , ( d ) , ( f ) , ( g ) ,
It does n o t include honoring a credit card (h ), an d ( i ) ; 226.13; an d 226.14, the
or sim ilar device where no finance charge term “ creditor” sh all also include card
is im posed at the tim e of th a t tra n s issu ers, whether or n ot the paym en t of
a finance ch arge is or m ay be required.
action.
F o r purposes of the requ irem ents of
*
*
*
*
*
§ 226.4(i) an d 226.13 ( k ) , th e term “ cred i
(j ) “B illin g error” m e a n s:
to r” sh all include any person who honors
(1)
A reflection on or w ith a periodic a credit card.
statem en t of an exten sion of credit w hich
was n ot m ade to the custom er or to a
person who had actual, im plied, or ap
1 T h e delivery of property or services differ
parent authority of the custom er to use ent f r o m that described in a n y agreement,
the delivery of the w r o n g quantity, late d e
th e account and from w hich use th e cu s livery, or delivery to the w r o n g location shall
tom er received no benefit, or, if made, be considered to be a billing error subject to
was m isidentified, insufficiently Identi this paragraph, but a n y dispute with respect
to the quality of property in the physical
fied, or was n o t in th e am ount indicated possession of the customer or services per
or on the date specified on or w ith the formed for the customer shall not be c o n
sidered a billing error under this paragraph.
periodic statem ent, or
(u)
“ C u sto m er” m ean s (1) a c a rd
holder or (2) a n atu ra l person to whom
consum er cred it is offered or to whom it
is or will be extended, an d includes a
com aker, endorser, gu aran tor, or su rety
fo r su ch n a tu ra l person who is or m ay
be obligated to repay the extension of
consum er credit.
*
*
*
*
*
(x)
“ Open end cred it” m ean s con
sum er credit extended on an accoun t
p u rsu a n t to a p lan under which (1) the
creditor m ay perm it the cu stom er to
m ake p u rch ases or obtain loans, from
tim e to tim e, directly from the creditor
or indirectly by use of a credit card ,
check, or other device, a s the p lan m ay
provide; (2) th e custom er h a s the p ri
vilege of p ay in g the balan ce in fu ll or in
in sta lm e n ts; an d (3) a finance ch arge
m ay be com puted by the creditor from
tim e to tim e on a n ou tstan d in g u npaid
b alan ce. F o r p urposes of the requ ire
m ents of §§ 226.7(a) (6 ), (7 ), (8 ), an d
( 9 ) ; 226.7(b) (1) ( i ) , ( i i ) , ( i i i) , ( i x ) , an d
( x ) ; 226.7(b) ( 2 ) ; 226.7 (c ), (d ), ( f ) , (g ),
( h ) , an d ( i ) ; 226.13 ( i ) , ( j ) , an d ( k ) ; an d
226.14, the term includes consum er credit
extended on an accoun t by use of a credit
card , w hether or n ot a fin ance ch arge
m ay be im posed. Th e term does n ot in
clude n egotiated advan ces under an open
end real estate m o rtgage or a letter of
credit.
*
*
*
*
*
(cc) “ P roper w ritten n otification of a
billing erro r” is any w ritten n otification
(other th a n notice on a p ay m en t m edium
or other m a te ria l accom p an y in g the p e
riodic sta tem en t if the creditor so stip
u lates in the disclosure required by
§ 226.7(a) (9 ), ( d ) , an d ( i ) ) , received a t
the ad d ress disclosed under § 226.7
(b )(1 ) (x) w ithin 60 d ay s of the first
m ailin g or delivering to the cu stom er’s
cu rren t d esign ated a d d ress (a s required
in § 226.7 ( b ) ) of the periodic statem en t
on w hich the dispu ted ite m (s) or
am o u n t(s) is reflected in which the cu s
tom er
(1) S e ts fo rth or otherw ise en ables the
creditor to iden tify the n am e an d a c
count num ber (if an y ) of the custom er,
(2) In d icate s th e cu stom er’s belief
th a t the periodic statem en t co n tain s a
billing error an d the suspected am ou n t
of such error, an d
(3) S e ts fo rth the reason s for such
belief, to the exten t app licab le or known
by the custom er.
*
§ 2 2 6 .3
*
*
*
*
[A m e n d ed ].
4.
Footn ote in § 226.3 would be re d e s
ign ated a s follow s: Footn ote 1 is re d e sig
n ated la , footn ote l a is red esign ated lb ,
an d new footnote 1 is added to read a s
fo llo w s:
1 T h e delivery of property or services differ
ent f r o m that described in a n y agreement,
the delivery of the w r o n g quantity, late deliv
ery, or delivery to the w r o n g location shall
be considered to be a billing error subject to
this paragraph, but a n y dispute with respect
to the quality of property in the physical
possession of the customer or services per
for m e d for the customer shall not be consid
ered a billing error u nder this paragraph.
3
5. To implement sectwn 167, § 226.4Ci>
would be added as follows:
§ 226.4 Detenninalion of finance charge.
•
•
•
•
•
li) Price differentials for payments in
cash. <1) Notwithstanding any other pro-
vision of this section, any price differential which a person offers. allows, or
otherwise makes available for the purpose of inducing payment for a purchase
by cash, check, or similar means rather
than by use of a credit card account,
whether or not a credit card is physically
used, is not a finance charge: Provided,
That:
(i) such price differential does not exceed 5 per cent when computed or expressed as a percentage of the tag, posted,
or advertised price of the property or
!Services which are the subject of the
transaction,
<li> such price differential is available
to all prospective buyel'!!, and that fact is
clearly and conspicuously disclosed by a
sign or display posted at or near each
public entrance to the place of business
wherein such price differential is offered,
and at all locations within the place of
business where a purchase may be paid
for, and
(iii> If an offer of property or services
is advertised in any medium or if offers
are invited or accepted through the mail,
over the telephone, or by means other
than personal contact between the customer and the person offering such a
price differential, and 1f customers are
allowed to pay by use of a credit card or
its underlying account and such fact is
disclosed in the advertisement, telephone
contact, or in other torrespondence, the
availability of a price differential for payments in cash must be clearly and conspicuously disclosed in any advertisement
for such offerings and, in any case, before the transaction has been completed
by use of the credit card or its underlying
account.
(2) With respect to any price differential to cash purchasers in excess of 5 per
cent, the total amount of any such price
differential shall constitute a finance
charge under § 226.4 <a> to be disclosed in
accordance with § 226.7<e>.
(3) The availability of any price differential for payments in cash may be limited by the person offering such price differentials to certain types of property or
services or to certain outlets maintained
by the person, provided that such limitations are clearly and conspicuously disclosed. as applicable, in conjunction with
any notice as prescribed by paragrapl:\5
(ii) and (iii) of this section.
6. To implement section 171 (a) and to
provide a transition period to obtain new
forms, § 226.6 would be amended by revising paragraps <b> <1> (1) and <2> (i)
thru <v> and paragraph <k>.
this Part, State law is inconsistent with
the requirements of the Act and this Part,
within the meaning of section lll(a) of
the Act to the extent that it:
(1) Requires a creditor to make disclosures or take actions different from the
requirements of this Part with respect to
form, content, terminology, or time of
delivery;
<2> (i) To the extent that any State
law with respect to credit billing practices is inconsistent with Chapter 4 of
the Act and the implementing provisions
of this Part, such State law is preempted,
but no such State law is inconsistent if
it gives greater protection to the consumer that does this Part. The fact that
a creditor must comply with a State law
which is inconsistent with this Part does
not excuse the creditor from the obligation to comply with this Part. The Board
hereby determines that certain State
laws are inconsistent and certain State
laws are not, within the meaning of sections 171 <a> and 111 (a) of the Act, as
set forth below.
<ii> Subject to the following provisions
of § 226.6(b) (2). the issue of whether a
State law is inconsistent with this Part,
as contemplated by the preceding paragraph, depends upon whether or not a
creditor can comply with the State law
without violating this Part; if the creditor can comply with the State law without violating this Part, the State law is
not inconsistent with this Part, but, 1f
the creditor cannot comply with the
State law without violating this Part, the
State law is inconsistent with this Part.
<iii) With respect to any State law
which is similar to section 161 of the Act
in specifying particular actions to be
taken by the customer and the creditor
in the process of resolving billing errors,
if compliance by the customer with such
State law as to any stage of the process
would constitute noncompliance with this
Part, and, hence, cause the customer to
lose any· rights under this Part, then the
State law as to that portion of the process is inconsistent with this Part: Provided, That a State law is not inconsistent with this Part to the extent that tt
permits a customer to set in motion the
State procedure for resolving billing
errors after the time allowed for setting
in motion the comparable procedure under this Part has expired, and in such
circumstances <when the time limit imposed by this Part has expired) the entire
State law shall have full force and effect.
(iv> With respect to any State law
which requires a creditor to notify a customer of the customer's rights or
creditor's responsibilities under State
law, similar to those under sections 161,
162, or 170 of the Act, such State law is
inconsistent with this Part to the extent
that it would require the creditor to notify the customer of a.ny provision of
§ 226.6 General
disclosure
require- State law duplicative of or inconsistent
ments.
with this Part, and the creditor shall not
notify the customer of any such pro•
•
•
•
<b> Inconsistent State requirements. vision. When a creditor gives written
<1> With respect to the requirements of notice to any customer of the customer's
4
rights under any provision of State law
which would permit a customer to set in
motion the State procedure tor resolving
billing errors after the time allowed for
setting in motion the comparable procedure under this Part has expired, the
creditor shall clearly and conspicuously
set forth in the notice that reliance upon
the longer time period available w1der
the State law may cause the customer to
lose important rights which could be preserved by acting more promptly under
the Federal law.
<v> To the extent that any State law
applies to any case not clearly covered
by the above determinations, the Board
hereby determines that the State law is
inconsistent, as contemplated by § 226.6
<b> <2) (i); but the Gi>vernor, Attorney
General or any official of the State having responsibilities under such State law
may apply to the Board for a contrary
determination.
•
•
<k> Transition period. Any creditor
who can demonstrate that he has taken
bona fide steps, prior to October 28, 1975,
to obtain printed forms which are necessary to comply with the requirements of
this Part may, until such forms are received but in no event later than April 30,
1976, utilize existing supplies of printed
forms for the purpose of complying with
the disclosure requirements of this Part:
Provided, That such forms are altered or
supplemented as necessary to assure that
all of the items of information the
creditor is required to disclose to the customer are set forth clearly and conspicuously.
•
•
7. To implement sections 127 <a> <8>,
127<b> <11>. 127<c>, 163, 164, 165, and 167,
§ 226.7 woUld be amended as follows:
a. Paragraph <a> <9> is added as set
forth below.
b. The text following the heading of
paragraph (b) is redet>ignated as paragraph <b> <1>.
c. Paragraphs <b> (1) through (9) are
redesignated as paragraphs <b> <1> (i)
through <1x>.
d. Paragraph <b> <1> <x> is added as set
forth below.
e. Redesignated paragra,phs <b> <1) (i),
<ii>. <iii), <v> , and <1x> are revised as
set forth below.
f. Paragraph b> 12) is added as set
forth below.
g. Paragraph <c> (1) and <2> are revised, paragraph <c> C3) is amended by
adding a last sentence, and <c> (4) is
added to read as set forth below.
h. Paragraphs (d) and <e> are redesignated as paragraphs <e> and (f); new
paragraphs <d> , <g> , <h>, and (1) are
added, and redesignated paragraph <e>
is revised as set forth below.
§ 226.7 Open end credi1 arcomll•-,pccific di8closures.
(a)
•
•
•
(9) The following notice: "NOTICE:
See accompanying statement for important information regarding your rights
m e n t s m a y be sent to you, a n d the disputed
(ii)
(A) In cases in w hich an actual
a m o u n t can be applied against your credit copy o f th e docum ent evidencing the
limit. Y o u cannot be threatened with d a m a g e credit tran saction accom panies th e p e
to your credit rating or sued for the a m o u n t
riodic statem en t, th e am ou n t of the
in question, nor can the disputed a m o u n t
be reported to a credit bureau or to other tran saction and either th e d a te of the
creditors as delinquent until the creditor has tran saction or th e date th e tran saction is
answered your inquiry.
debited to th e custom er’s account; or
4. If it is determined that the creditor has
(B) In cases in w hich a n actual copy
m a d e a mistake o n your bill, y o u will not of th e docum ent evidencing th e credit
have to pay a n y finance charges o n an y dis tran saction does n ot accom pany the p e
p uted am o u n t . If it turns out that the credi
tor has not m a d e a n error, yo u m a y have to riodic statem en t, is least:
(1 ) T he d ate on w hich th e tran sacpay finance charges o n the a m o u n t in dis
pute, a n d y o u will have to m a k e u p a n y action took p la c e 7 and th e am ou n t of th e
transaction; provided th at, w ith respect
missed m i n i m u m or required p a y m e n t s o n
the disputed am o u n t . T h e creditor m u s t send to tran saction s in w hich th e creditor and
y o u a statement of w h a t y o u owe, a n d y o u th e seller are n o t th e sam e person or
m u s t be given the time to pay w h i c h y o u related persons,7* th e creditor m ay rely
I n C a se o f E r r o r s o n Y o u r B il l
normally are given to pay undisputed
upon and disclose th e in form ation su p
T h e Federal T r u t h in Le nding Act requires a m o u n t s before an y m o r e finance charges or
late p a y m e n t charges can be charged to you. plied by th e seller w ith respect to th e
p r o m p t correction of billing mistakes.
5. If the creditor’
s explanation does not date and am ount of th e transaction;
1. If y o u w a n t to preserve your rights u n
and
der the Act, here’
s w h a t to do if y o u think satisfy y o u a n d y o u notify the creditor in
(2) A brief id en tific a tio n 7b of the
your bill is w r o n g or if y o u need m o r e in w ritin g within 10 days that y o u still refuse
to pay the disputed a m o u n t , the creditor m a y
formation abo u t a n item o n your bill:
property or services purchased in cases
a. D o not write o n the bill. O n a separate report y o u to credit bureaus a n d other credi in w hich th e creditor and th e seller are
sheet of paper write [A ltern a te: Write on the tors a n d m a y pursue regular collection pro th e sam e person or related persons, or
bill or other sheet of paper] (you m a y tele cedures. B u t the creditor m u s t tell t h e m
th e seller’s nam e and address (city and
p h o n e your inquiry b u t doing so w ill not that you do not think y o u o w e the money,
preserve your rights under this law) the fol a n d the creditor m u s t let y o u k n o w to w h o m sta te or foreign country, using under
such reports were m a de. O n c e the matter has standable and generally accepted abbre
lowing :
1. Y o u r n a m e a n d account n u m b e r (if a n y ) . been settled between y o u a n d the creditor, viation s if th e creditor so desires) w here
ii. Describe the error a n d w h y (to the ex the creditor m u s t send follow-up notices to th e tran saction took place in cases in
those to w h o m the creditor reported y o u as w hich th e creditor and th e seller are
tent y o u can) y o u believe it is a n error.
If y o u need only m o r e information, explain delinquent.
n o t th e sam e person or related persons.
6. If the creditor does not follow these
the item y o u are not sure about, a n d if y o u
(C) N otw ith stan d in g th e provisions
wish, ask for evidence of the charge such as rules, the creditor is not allowed to collect
of paragraphs (A) and ( B ) , in cases in
a copy of the charge slip. D o not send in your the first $50 of a disputed am o u n t , even if
w hich a tran saction involving a cash
copy of a sales slip or other d o c u m e n t unless the bill turns out to be correct.
7. If y o u have a problem with goods or advance or overdraft checking p lan is
y o u have a duplicate copy for your records.
iii. T h e dollar, a m o u n t of the suspected services purchased with a credit card, y o u reflected on th e periodic statem en t, a t
m a y have the right not to pay the remaining least:
error.
iv. A n y other information (such as your a m o u n t d u e o n them, if y o u first try in good
(1)
An actu al copy of th e docum ent
address) w h i c h y o u think will help the faith to return t h e m or give the m e r c h a n t a
evidencing th e tran saction w hich show s
chance to correct the problem. There are two
creditor to identify y o u or the reason for your
th e am ou n t of th e tran saction and
limitations o n this right:
complaint or inquiry.
a. Y o u m u s t have b o u g h t t h e m in your either th e date of the transaction, the
b. S e n d your billing error notice to the
address o n your bill wh i c h is listed after the h o m e state or within 100 miles of your cur date the tran saction was debited to the
rent mailing address (whichever is farther);
words: “S e n d Inquiries to:” \ Alternate:
custom er’s account, or th e date placed
S e n d your billing error notice to: (creditor’s a n d
on th e docum ent or in stru m en t by the
b. T h e purchase price m u s t have been
nam e and address) ].
custom er (if th e custom er signed the
m o r e than $50.
Mail it as soon as y o u can, but in any case
docum ent or in str u m e n t); or
early e n o u g h to reach the creditor within 60 However, these limitations do not apply if
days after the bill w a s mailed to you. If you
the m e r c h a n t is o w n e d or operated by the
have authorized your b a n k to automatically creditor, or if the creditor mailed y o u the
7 W i t h respect to transactions w h i c h are
p a y f r o m your checking or savings account advertisement for the goods or services.
not billed in full o n a n y single statement
a n y credit card bills f r o m that bank, you can
but for w h i c h p r e c o m p u t e d installments are
stop or reverse p a y m e n t o n a n y a m o u n t you
(b)
P eriodic s ta te m e n ts required. (1) billed periodically, the date the transaction
think is w r o n g by mailing your notice within E xcept in the case of an account w hich takes place for purposes of this paragraph
16 days after the bill w a s sent to you. Y o u do th e creditor deems to be uncollectible or shall be d e e m e d to be the date o n w h i c h the
not have to m e e t this 16 day deadline,
a m o u n t is debited to the customer’
s account.
w ith respect to w hich delinqueny co llec
though, to get your bill corrected.
7a For purposes of this paragraph, a person
tion
procedures
have
been
in
stitu
ted
,
the
is not related to the creditor simply because
2. T h e creditor m u s t acknowledge all let
creditor of any open end credit account he a n d the creditor have a n agree m e n t or
ters pointing out possible errors within 30
contract
pursuant to w h i c h he is authorized
days of receipt, unless the creditor is able to sh all m ail or deliver to the custom er’s to h o n o r the creditor’
s credit card u n d e r the
current
designated
address
(if
the
credi
correct your bill during that 30 days. Within
terms specified in the agreement or contract.
tor has received notice of the cu stom er’s Franchised or licensed sellers of a creditor’
s
90 days after receiving your letter, the
change of address 10 days prior to the product shall be considered to be related to
creditor m u s t either correct the error or s h o w
the creditor for purposes of this paragraph
w h y the creditor believes the bill w a s correct. closing date of the previous billing cycle)
Sellers w h o assign or sell op e n e n d customer
O n c e the creditor has explained the bill, the for each billing cycle a t th e end of w hich sales accounts to a creditor or arrange for
creditor has n o further obligation to you
there is an outstanding undisputed debit such credit u n d e r a n o p e n e n d credit plan
even t h o u g h y o u still believe that there is an
or credit balance in excess of $1 in th a t w h i c h allows the customer to use the credit
only in transactions with that seller shall be
error, except as provided in paragraph 5
account or w ith respect to w hich a fi considered related to the creditor for p u r
below.
nance charge is im posed, a statem en t or poses of this paragraph.
3. After the creditor has been notified,
7b For purposes of this paragraph, designa
statem en ts w hich the custom er m ay re
neither the creditor nor a n attorney nor a
tions such as “merchandise” or “miscel
tain, settin g forth in accordance w ith laneous” shall not be considered sufficient
collection agency m a y send y o u letters or
take other collection action with respect to paragraph (c) of this section each of the identification of goods or services, bu t a ref
erence to a d e partment in a sales establish
the a m o u n t in dispute; but periodic state- follow ing item s to the exten t a p p licab le:
m e n t w h i c h accurately conveys the identifi
(i)
T he outstanding balance in the cation of the type(s) of property or services
Wher e v e r the w o r d “creditor”appears or account at the beginning of th e billing w h i c h are available in such departme n t shall
is referred to in the statement, the creditor cycle, using th e term “previous balance," be sufficient u n d e r this paragraph. Identifi
m a y substitute appropriate references, such
cation m a y be m a d e o n a n a c c o m p a n y i n g
as “c o m p a n y , ” “bank,” “w e ” or a specific and in th e case of a credit balance, an slip or b y symbol relating to a n identifica
n a me.
appropriate identification as such.
tion list printe'’
. o n the statement.
to dispute billing errors” and a separate
statem en t con tainin g su b stan tially the
follow ing text,6” as applicable, w ritten
clearly and conspicuously, sh a ll accom
pany such a statem ent; or th e follow ing
text w ithout the preceding notice m ay be
included on the statem en t required by
paragraph (a) of this section if disclosed
clearly and conspicuously; or the follow
ing text m ay be included on th e reverse
side of th e statem en t required by para
graph (a) of this section w ith the follow
ing notice on th e face of the statem en t:
“N O T IC E : See reverse side for im por
ta n t inform ation regarding your rights
to dispute billing errors.” :
5
(2) A descriptio n of the tran saction ,
(ix) T h e closin g d ate of the billing fo r im p o rtan t in form ation ” or “ N O T IC E :
w hich ch aracteriz es it a s a cash advance, cycle an d the o u tstan d in g b alan ce in th e
loan , o v erd ra ft loan, or other d e sign a accoun t on th a t date, using the term S ee accom pan y sta te m e n t(s) fo r im por
tion a s a p p ro p riate , an d which includes “ new b alan ce ,” an d in th e case of a credit t a n t in fo rm atio n ” or “ N O T IC E : S e e re
th e d a te of the t r a n s a c tio n 7c or the date balan ce, ap p rop riately identified a s such, verse sid e an d accom p an y in g s t a t e
w hich a p p e a rs on th e docum ent evi accom p an ied by the statem en t of the m e n t s ) fo r im p o rtan t in fo rm atio n ,’’
dencin g the tra n sa ctio n (if the cu s date by which, or the period, if any, an d the disclosures sh all n ot be se p a
tom er sign ed the docum ent or in stru w ithin which, p ay m en t m u st be m ad e to ra te d so a s to confuse or m islead the
custom er or obscure or d e tra ct atten tion
m en t) .
avoid ad d itio n al fin an ce ch arges, except
T h is p a r a g ra p h sh all apply to any th a t the creditor m ay, a t his option an d from the in form ation required to be
disclosed.
c a se in which a tra n sa ctio n involving w ithout disclosure, im pose no such a d
(d ) Semiannual statement required.
th e u se o f a ca sh adv an ce check issued dition al fin ance ch arges if p ay m en t is
by the cred itor fo r use w ith the open end received a fte r su ch d ate or term in ation of (1) T h e creditor sh all m ail or deliver
d u rin g two b illing cycles per y ear to each
cred it acco u n t is reflected on a periodic such period.
cu stom er en titled to receive a periodic
sta te m e n t.
(x) An ad d ress to be used by th e cred i statem en t u nder § 226.7(b) fo r su ch b ill
(D ) In a ca se in which any of th e in tor, fo r the purpose of receiving billing
fo rm a tio n w ith re g a rd to the d ate of the inquiries from custom ers. S u ch ad d ress in g cycle, th e sta tem en t required by
tra n sa c tio n , the description of the goods sh all be preceded by the cap tio n : “ Sen d § 226.7(a) (9 ), w ritten clearly an d con
a n d services p u rch ased, or the seller’s In qu iries T o :” , or other sim ilar lan gau ge spicuously either on the fa ce an d reverse
n am e an d ad d ress a s required by p a r a in d icatin g t h a t the ad d ress is the p roper of a se p a ra te p age or included with the
disclosu res required by p a ra g ra p h (b> of
g ra p h (B ) is n ot availab le.to the creditor, location to send such inquiries.
th is section.
a n id en tify in g num ber or sym bol which
(2)
If the term s of the open end credit (2) T h e sem ian n u al sta tem en t sh all be
a p p e a rs on the docum ent evidencing the p lan provide a tim e period within which
c re d it tra n sa c tio n given to the custom er th e cu stom er m ay repay any portion of m ailed or delivered not less th a n 5 nor
a t th e tim e of the tra n sa ctio n m u st be the new b alan ce w ithout incurring a n m ore th a n 7 m onths a fte r th e m onth in
disclosed. T h e p rovision s of the first ad d itio n al fin ance ch arge or a la te p a y which the la st precedin g such notice w as
sen ten ce o f th is p a r a g ra p h sh a ll not m en t ch arge, no su ch ch arge m ay be im m ailed or delivered, provided th at,
(i) In any case the creditor sh all m ail
relieve th e cred itor of responsibility for posed with resp ect to any portion of such
m a in ta in in g
p rocedu res
reason ably new b alan ce unless the periodic s ta te or deliver such statem en ts a t le a st twice
a d a p te d to procu re su ch inform ation .
m e n t disclosin g such new balan ce is in an y 12 m onth calen d ar period, an d
(ii) Th e first sem ian n u al sta te m e n t to
(iii) T h e am o u n ts an d d a te s of cred it m ailed or delivered to the cu sto m er’s c u r
in g to th e acco u n t du ring th e billing cycle ren t d esign ated a d d ress (if the creditor a n y new custom er m ay be m ailed or d e
fo r p aym en ts, u sin g the term “ p a y h a s received notice of the cu stom er’s livered to th a t cu stom er du rin g the n ext
m e n ts,” an d fo r other credits including ch an ge of ad d ress 10 days prior to the regu larly scheduled m ailin g or delivery
of se m ian n u al sta tem en ts in which he is
re tu rn s, re b ate s o f fin ance ch arges, an d closin g d a te of the previous billing cycle)
a d ju stm e n ts, u sin g th e term “ cred its,” a t le a st 14 d ay s prio r to the d ate specified en titled to receive a sem ian n u al notice
a n d u n less previously fu rn ish ed a brief in the sta tem en t a s being the d ate by u nder p a ra g ra p h (d ) ( 1 ) of th is section.
(3) I f the creditor chooses to a lte r the
id en tification o f each of the item s in w hich p ay m en t of the new b alan ce m u st
cluded in su ch other credits.
be m ad e in order to avoid th e im position cycle of m ailin g or delivering sem ian n u al
of th a t fin ance ch arge or la te p ay m en t statem en ts, the creditor m ay m ail or de
*
*
*
*
*
ch
arge, excep t th a t su ch tim e lim itatio n liver the sem ian n u al sta tem en t less th an
* ( v ) E a c h periodic ra te, u sin g the
sh
a
ll n o t app ly in any ca se where the 5 m onths a fte r the la st precedin g such
term “ periodic r a t e ” (or “ r a te s ” ) , th a t
cred
itor h a s been prevented, delayed, sta te m e n t w as m ailed or delivered, p ro
m ay be used to com pute the fin ance
or
h
in
dered in m ailin g or delivering such vided th a t the creditor m ails or delivers
ch a rg e (w heth er or n ot app lied du rin g
periodic
sta te m e n t w ithin such tim e lim it a t le a st 3 su ch sta te m e n ts in the n ext
th e billin g c y c le ), th e ran g e o f b alan ces
b
ecause
o
f an a c t o f God, w ar, civil d is twelve m onths com puted from th e m onth
to w hich it is app licab le, an d the co r
in which the la st precedin g sem ian n u al
order,
n
a
tu
ra l d isaster, or strike.
resp on d in g a n n u al p ercen tage ra te d e
sta tem en t w as m ailed or delivered.
(c) * * *
term in ed by m u ltip ly in g the periodic
(4) N othing in this section sh all be
(1)
T
h
e
in
form
ation
required
to
be
r a te by the n um ber o f periods in a year.
con strued to prohibit a creditor from
T h e w ords “ co rrespon d in g an n u al p er disclosed u nder p a ra g ra p h (b )(1 ) (ii) of m ailin g or delivering the statem en t re
ce n tage ra te ,” “ correspon d in g n om inal th is section an d item ization of the quired by th is section m ore frequen tly
a n n u al p ercen tage ra te ,” “ n om inal a n am ou n t of “ cre d its” disclosed under th a n sem iann ually.
n u a l p ercen tage ra te ,” or “ a n n u al p e r p a r a g ra p h (b ) (1 ) (iii) o f th is section
(e) Finance charge imposed at the
ce n ta g e r a t e ” (o r “ r a t e s ” ) m ay be used a n d of th e am ou n t of an y fin ance ch arge time of transaction. (1) Any creditor,
required
to
be
disclosed
under
p
a
ra
g
ra
p
h
to describe the correspon d in g an n u al
oth er th a n th e creditor o f th e open end
p erc en ta g e ra te. T h e requ irem en ts of (b) (1) (iv) of th is section, m ay be m ade cred it accoun t, who im poses a finance
§ 226.6(a) of th is P a r t w ith resp ect to on the reverse side o f the periodic s ta te ch arge not excepted by § 226.4 (i) Price
disclosin g the term “ an n u al p ercen tage m en t or on a se p a ra te accom p an yin g differentials for payments in cash, a t the
r a t e ” m ore conspicuously th a n oth er re s t a t e m e n t( s ), provided th a t the to ta ls of tim e o f honoring a cu stom er’s credit
qu ired term in ology sh a ll not be a p p li such respective am ou n ts are disclosed on card , sh all m ake the disclosu res required
cable to the disclosu re m ad e u n d er th is th e fa c e of th e periodic sta te m e n t; an d u nder p a ra g ra p h s (b )(2 ) an d (d) of
(2) T h e disclosures required u nder
p a r a g ra p h , alth ou gh su ch term (or words
§ 226.8 Credit other than open end —
in co rp o ratin g su ch term ) m ay, a t the p a ra g ra p h (b) (1) (v) an d (b) (1) (viii) of specific disclosures, a t the tim e o f th a t
th
is
section,
except
the
b
alan
ce
on
which
cred ito r’s option, be show n a s con
tran sactio n , an d the an n u al percen tage
sp icuously a s the term inology required th e fin ance ch arge w as com puted, m ay ra te to be disclosed sh all be determ ined
be
m
ad
e
on
the
reverse
sid
e
of
th
e
p
e
ri
u n d er (b )(1 ) (vi) o f th is p a ra g ra p h .
by dividing the am ou n t of the finance
W here a m in im um ch arge m ay be a p odic statem en t or on the face of a single ch arge by the am ou n t fin an ced an d m u l
su
p
plem
en
tal
statem
en
t
which
sh
all
a
c
p licab le to th e accoun t, the am ou n t of
tiplying the quotient (expressed a s a p er
com pan y the periodic statem en t.
su ch m inim um ch arge sh all be d is
(3) Th e disclosure required by p a r a cen tage) by 12.
closed.9*
(2) T h e creditor of the open end credit
g ra p h (b) (1) (x) of th is section m ay
*
*
*
*
*
be m ad e on the reverse side o f the p e ri accoun t sh all d isregard any ch arge im
odic statem en t.
posed under th is p a ra g ra p h fo r purposes
70 In cases in w h i c h a n a m o u n t is debited
(4) I f the creditor exercises an y o f the of the disclosure requirem ents of p a r a
to a cu s t o m e r ’
s o p e n e n d credit account u n op tion s provided under th is p arag ra p h ,
g rap h s (a ) an d (b) of this section.
der a n overdraft checking plan, the date
the fa c e of the periodic statem en t sh all
*
*
*
*
*
of debiting the o p e n e n d credit account shall
be considered the date of the transaction co n tain one o f the follow ing notices, a s
(g) Prompt crediting of payments. R e
a p p lic ab le : “ N O T IC E : S ee reverse side g a rd less of the d ate o f a c tu a l p ostin g of
for purposes of this paragraph.
6
a payment to an account, such payment
shall be credited to the customer's account as of the date such payment is
received by the creditor and no finance
charge or late payment charge shall be
imposed with respect to the amoun~ of
such payment which is properly rece1yed
0y the creditor on or before the time
indicated by the creditor as necessai_"Y to
avoid imposition thereof: Provtded,
That:
.
t th_e cus(1) If a creditor falls to pos
tomer's payment in time to avo1d the
imposition of finance charges or late
ayment charges (except those ~harges
~esulting from the delays a!lO\yed m parphs <gl (3) and (5) of this sectiOn),
~~;acreditor shall adjust the customer's
count so that the finance charges or
~~te payment charges are cre~ited to ~he
account during the customers next billing cycle.
.
h
( 2 ) For the purpose of this paragrap .
the creditor maY specify reasonable reirements with respect to the form,
qu
t manner, location, and time for
~:eo~editing of payments, except that:
n1 If no particular hour of the day
h
been clearlY indicated to the cust~er on the periodic statement as. the
time by which payment must b~ received
b the creditor in order to obtam credit! Y to the customer's account on such
;~ payments made prior to the close
;~siness on that day must be credited
0as~ of
that date, and
("") If no location<s> has been clearly
ind~~ated on the periodic state_ment or on
a return envelope accompanymg the periodic statement as the location<sl a~
which payment may be made, then ~Y
ment at any location where th~ creditor
nducts business shall be credited as of
~~e date such payment is presented. and
(iii) If no particular manner of payment has been clearly indicated on the
eriodic statement, then payment by
~heck, cash. money order .. bank draft, or
ther similar instrument m properly ne~otiable form shall constitute proper
manner of payment.
(3) If the creditor accepts pa~ment at
1 cations other than those specified un~ paragraph (g\ (2) <iil of this section,
t~~ creditor shall credit the customer's
account promptly (in. no case later tha_n
3 business days), prov~ded that th~ possibilitY of such delay 1s clear~y ~l.!sclosed
to the customer on the penod1c state-
in excess of the new balance <as provided in § 226.7<bl (1) <ix)) to which the
payment is to be applied, the creditor
shall:
(i) Credit the customer's account with
the total amount of the payment as of
the date of receipt as specified in paragraph <gl of this section, or
<iil Credit the customer's account
with an amount equal to the total new
balance in the manner prescribed by
paragraph (g) of this section and
promptly <in no case more than 5 business days from the creditor's receipt of
the payment> refund the excess amount.
<2> Notwithstanding the provisions of
paragraph <g) (1) of this section, a
creditor shall refund any excess payments of $1 or more promptly <in no case
more than 5 business days from receipt
of the customer's request> if the customer requests such a refund in writing.
<3> A creditor may refund any excess
payment of any amount, whether or not
requested by the customer.
• (O)
•
* • •
•
•
(6) If a transaction subject to § 226.8
ro) is debited to an open end credit account, disclosures shall be made as specified in paragraph (1) of this section and
also as specified in § 226.7. The full
amount of the obligation including the
amount of the discount may be debited
to the open end credit account, under
§ 226.7 <b l 0 l <iil , and the amount of any
finance charge representing the discount
need not be added to any other finance
charge for the purpose of computing and
(i) Open and credit accounts existing
on October 28, 1975. In the case of any disclosing the total amount of finance
rate
open end credit account in existence and charge and the annual percentage
134
in which a balance of more than $1 re- under § 226.5(a) and § 226.7.
•
mains unpaid at or after the closing date
•
•
•
of the creditor's first full billing cycle
(q) Credit card accounts. In addition
after October 28, 1975, and which balance to the requirements of this section, conis deemed to be collectible and with re- sumer credit other than open end which
spect to which delinquency collection is extended on an account by use of a
procedures have not been instituted, the credit card shall also be subject to the
items described in paragraph (al of this requirements of §§ 226.7(a) (6), <7>, (8),
section, to the extent applicable and not and <9>; 226.7(J:f) (1) m, (11), (ii1), (ix>,
previously required to be disclosed to the and ex>; 226.7<cl, (d), (g), <h>, and m;
customer, shall be disclosed in the form 226.13 (i), (j l, and <kl ; and 226.14, to the
prescribed in paragraph (a) of this sec- extent not required by other portions of
tion, and mailed or delivered to the cus- this section.
9. Section 226.1l<a) (2) and <3> would
tomer not later than the time of mailing
or delivery of the periodic statement re- be revised as follows:
quired under paragraph (bl of this sec- § 226.11 Comparative index of cr<:-dit
tion for that billing cycle.
cost for open end credit.
8. To implement section 103 (f) and to
(a)
clarify certain disclosure requirements
with respect to credit other than open
end which is extended on an account by
<2> Shall recompute the Comparative
use of a credit card, § 226.8Cnl and <o> Index of Credit Cost in accordance with
<6> would be revised and (q) would be paragraph <b) of this section based upon
added as follows:
any new open end credit account terms
§ 226.8 Credit other than op('ll t'nd- to be adopted and shall disclose the new
spt'c:i fie di,clo~ure~.
Comparative Index of Credit Cost in accordance with paragraph <c> <2> of this
<n l Periodic statements. (1 l If a section concurrently with the notice recreditor transmits a periodic billing quired under paragraph (f) of § 226.7.
statement u other than a delinquency
C3J Shall, when making such disclonotice, payment coupon book, or payment
passbook, or a statement, billing, or ad- sure under the provisions of paragraphs
vice relating exclusively to amounts to (a) (5) and (b) 0) <vii) of § 226.7, make
be paid by the customer as escrows for the disclosure to all open end credit acpayment of taxes, insurance, and water, count customers; and
sewer, and land rents, it shall be in a
form which the customer may retain and
10. To implement section 171, § 226.12
shall set forth:
(i) The annual percentage rate or
<a> and <bl would be revised as follows:
rates unless exempted by § 226.8(bl (2); § 226.12 Exemption of e<:-rlain Stale
and
rt'gulated transactions.
. ..
m~~~- Payments need not be credited as
of the date of receipt <but _in any ca?e
must be credited promptl~l If a ~elay m
crediting does not result m the Imposiof anY finance charges or late payt·
~~~t charges for that billing cycle or a
later billing cycle.
.
. ·
( 5 ) If. because of operatwnal hm~tat" s the creditor is unable to credit a
d~~i~l payment made on an average
d 1"ly balance or dally balance account
a: of the date of receipt, a credito~ may
"Any statement, notice, or reminder or
credit such payment promptly <m n? payment
due on a.ny transaction payable in
c~se more than 3 business days) until instalments which is mailed or delivered
pertod.lca.lly to the customer in advance or
-- (h)- crediting and refunding excess the due date ot the instalment shall be a
ayrnents. (1) Whenever a customer periodic billing sta.tement for the purpose or
71
mails or delivers payment to the creditor this para.gra.ph.
(ii) The date by which, or the period,
if any, within which payment must be
made in order to avoid late payment or
delinqency charges.
(2) If the creditor is required to send
a periodic statement under paragraph(q)
of this section, the requirements of
§§ 226.7<b) (1) (i), <iil, <iii), <ix) and (xl,
and § 226.7(b) (2l shall be met, as applicable, in addition to the disclosures
required by this paragraph.
<a> Exemption tor State regulated
transactions. In accordance with the
provisions of Supplements II, IV, and V
to Regulation Z, any State may make application to the Board for exemption of
any class of transactions within the State
7
required fo r
tran sm issio n ,
from the requ irem en ts of C h ap ters 2 and two y ears precedin g th e u nau th orized d in arily
w hichever is earlier.
4 o f the A ct an d the correspondin g p rovi u se; an d
(4)
T h e card issu er h a s provided the (f) A c tio n to e n fo rce lia b ility. In any
sion s of th is P a r t : Provided, T h a t :
(1) T h e B o ard determ in es th a t, under card h old er with a n ad d ressed n o tifica action by a c a rd issu er to enforce liability
th e law of th a t S ta te , t h a t cla ss o f tr a n s tion requirin g no p o stage to be p aid by fo r the use of a cred it card , the burden
actio n s is su b je c t to requ irem ents su b the card h old er which m ay be m ailed o f p roof is upon th e c a rd issu er to show
sta n tia lly sim ila r to those im posed under by the card h old er in the event of the th a t the use w as auth orized or, if the use
C h a p ter 2 or C h a p ter 4 o f the A ct or loss, th eft, or possible u nau th orized use w as unauthorized, th en the burden of
proof is upon the c a rd issu er to show
both an d the co rrespon d in g provisions of o f th e credit card .
(c) O th $ r co n d itio n s o f lia b ility . In a d th a t the conditions of liab ility fo r the u n
th is P a r t ; or in the ca se of C h a p ter 4,
the consum er is afford ed g re a ter p ro tec dition to the conditions of liab ility in auth orized u se of a credit card , a s se t
tion th a n is afford ed u n d er C h ap ter 4 of p a r a g ra p h (b) o f th is section, no c a rd fo rth in p a r a g ra p h s (b) an d (c) of this
holder sh all be liable fo r the u n au th o r section, h ave been m et.
the A ct, an d
(g) E ffe c t on o th e r a p plicable law or
(2) T h ere is ad eq u ate provision for ized use of an y credit c a rd which w as
issu ed a fte r J a n u a r y 24, 1971, an d , re a g ree m e n t. N othing in th is section im
en forcem ent.
(b)
Procedures and criteria. T h e p ro gard less of the d ate of its issu an ce, a fte r poses liab ility upon a cardh older fo r the
cedu res an d crite ria u nder which any Ja n u a r y 24, 1972, no card h old er sh all be u nauth orized u se o f a credit card in ex
S t a te m ay app ly fo r the determ in ation liable fo r the unauth orized use of any cess of his liability fo r such use under
provided for in p a ra g ra p h (a) of th is cred it card , u nless the card issu er h a s oth er app licab le law or under any a g re e
section a re se t fo rth in S u p p lem en t II provided a m ethod whereby the u ser of m ent with the c a rd issuer.
(h ) B u sin ess use o f c re d it cards. I f 10
to R e g u la tio n Z with resp ect to disclosure su ch card can be identified a s the person
an d rescissio n requ irem en ts (section s auth orized to use it, su ch a s by sig n a or m ore credit card s are issu ed by one
121-131 o f C h ap ter 2 ) , S u pp lem en t IV ture, p h otograp h , or fin gerprin t on the c a rd issu er fo r u se by the em ployees of
w ith re sp ect to the proh ib ition of the is credit card or by electronic or m ech an ical a sin gle bu sin ess or other organization ,
n othing in th is section proh ibits the card
su an c e o f u n solicited cred it c a rd s an d confirm ation.
(d) N o tice to ca rd h o ld er. T h e notice issu er from agreein g by co n tra ct with
th e liab ility of the card h old er fo r u n
auth orized u se of a cred it card (section to card h old er p u rsu a n t to p a r a g ra p h (b) such b u siness or oth er organ ization a s to
132-133 of C h ap ter 2 ), an d in S u p p le (3) of th is section m ay be given by p rin t liab ility fo r u nauth orized use of any such
m en t V w hich will be issu ed on or before ing the n otice on the credit card , or by credit card s w ithout re g a rd to the provi
O ctober 28, 1975, w ith resp ect to fa ir an y other m ean s reason ab ly assu rin g the sion s o f th is section, b u t in no case m ay
credit billing requ irem en ts (section s 161- receipt th ereof by the cardh older. An a c an y b u siness or other organ ization or
ceptab le form of notice m u st sta te th a t c a rd issu er im pose liab ility on any em
171 of C h ap ter 4 ).
liab ility sh a ll not exceed $50 (or any le s ployee of su ch business or other o rg a n iz a
*
*
*
*
*
ser a m o u n t), th a t notice of loss, th e ft, or tion w ith resp ect to u nau th orized u se of
11.
T o im plem en t section s 166, 167, possible u nau th orized u se m ay be given
such credit card except in accordan ce
168, 169, an d 170, § 226.13 would be orally or in w riting, an d th e n am e and w ith an d su b je ct to th e other liability
am en d ed a s follow s:
a d d ress o f the p arty to receive the notice. lim itatio n s of th is section.
a. P a ra g ra p h s (a ) (1) th ro u gh (4 ), I t m a y include an y ad d itio n al in fo rm a
(i) R ig h t o f ca rd h o ld er to assert
an d (a ) (6) an d (7 ), are in co rp o rated tion which is n ot in con sisten t with the cla im s or d efen ses a g a in st card issuer.
in to § 226.2 a s show n in the red esign ation provision s of th is section. An exam ple (1) W hen a creditor who provides p rop
tab le of p a r a g ra p h 2 above.
o f a n accep tab le n otice is a s follow s:
erty or services fa ils to sa tisfa c to rily re
b. P a r a g r a p h (a ) (5) is deleted.
“ Y ou m ay be liable fo r the u n au th o r solve a dispute a s to property or services
c. P a ra g ra p h s (b) through (i) are re ized u se of your credit card lor o th e r te r m p u rch ased by use of a credit card in
d e sig n a te d a s p a r a g ra p h s (a ) th rough w h ic h d escribes th e c re d it d e v ic e 1. Y ou connection with a consum er credit tr a n s
(h ).
will not be liable fo r u nau th orized use action, th e card h old er m ay a ss e r t all
d. P a ra g ra p h s (a ) th ro u gh (h ) are which occurs a fte r you n otify [n a m e o f claim s (oth er th a n to rt claim s) an d d e
revised an d p a r a g ra p h s ( i ) , ( j ) , ( k ) , and ca rd issu er or h is d e sig n e e1 a t [a d d re ss1 fen se s a risin g out of the tra n sa ctio n an d
(1) a re ad d ed a s se t fo rth below.
orally or in w riting of loss, th e ft, or p o s re latin g to such fa ilu re a g a in st the card
§ 2 26.13 Credit card transactions— spe sible u nau th orized use. In any case lia b il issu er an d the card h old er m ay w ithhold
ity sh a ll n ot exceed [in s e rt $50 or a n y p aym en t up to the am ou n t of credit ou t
cial requirem ents.
(a ) Issuance of credit cards. R e g a rd lesser a m o u n t u n d e r o th e r applica b le law sta n d in g w ith resp ect to the property
less of w hether a credit ca rd is to be or u n d e r a n y a g re e m e n t w ith th e c a rd or services which gave rise to the dispute
an d any finance ch arges or la te paym en t
u sed fo r p erson al, fam ily , household, h o ld e r ].”
(e) N o tice to ca rd issuer. F o r the p u r ch arges im posed on th a t am ou n t i f :
a g ricu ltu ra l, b u sin ess or com m ercial p u r
(i) Th e card h old er h a s m ad e a good
poses, no credit c a rd sh all be issu ed to poses of this section, a card h old er n o ti
fies a ca rd issu er by tak in g such steps as fa ith a tte m p t to ob tain sa tisfa c to ry re s
any p erson excep t:
(1) In resp on se to a requ est or a p m ay be reason ab ly required in th e ord i olution of the d isagreem en t or problem
n ary course of busin ess to provide the relative to th e tra n sa ctio n from th e p er
p licatio n th erefor, or
(2) As a renew al of, or in su b stitu tion card issu er w ith the p ertin en t in fo rm a son honoring the credit card ,
(ii) T h e am ou n t o f credit extended by
fo r, a n accepted credit card w hether such tion w ith respect to loss, th eft, or possible
c a rd is issu ed by th e sa m e or a su ccessor un au th orized use of any credit card, th e card issu er to the custom er to obtain
w hether or not any p a rtic u la r officer, em the property or services which resu lted
card issuer.
(b) Conditions of liability of card ployee, or a g e n t of the card issu er does, in the assertion of the claim or defense
the card h old er exceeds $50, and
holder. A card h old er sh a ll be liab le for in fa c t, receive su ch notice or in fo rm a by (iii)
Th e in itial tra n sa ctio n which
tion.
Irrespective
of
the
form
of
notice
u n au th o rized use o f each credit c a rd is
provided under p a ra g ra p h (b) (4) of th is gave rise to the assertio n of the claim or
sued only if,
defen se by the custom er occurred in the
(1) T h e cred it c a rd is a n accepted section, a t the option o f the cardh older, sam e S ta te a s th e card h old er’s cu rren t
notice m ay be given to the card issu er or
credit card ;
design ated a d d ress or w ithin 100 m iles
(2) S u ch liab ility does n ot exceed the h is designee in person o r by telephone or from such ad d ress (w hichever is g r e a t e r ),
lesse r of $50 or the am ou n t of money, by letter, telegram , rad io g ram , ca b le except th a t th e lim itatio n s sta te d in
prop erty, labor, or services ob tain ed by gram , or, oth er w ritten com m unication p a ra g ra p h s (ii) an d (iii) of th is section
su ch use p rio r to n otificatio n of the card which se ts fo rth the pertin en t in fo rm a sh a ll not apply when the person h o n or
issu er p u rsu a n t to p a r a g r a p h (e) o f th is tion. N otice by m ail, telegram , ra d io ing the credit ca rd :
gram , cab legram , or other w ritten com
section ;
(A ) Is the sam e person a s the card is
(3) T h e c a rd issu er h a s given a d e q u ate m u n ication sh all be considered given a t suer, or
(B ) Is controlled, directly or in d i
n otice to the card h old er o f h is p oten the tim e of receipt or, w hether or n ot re
tia l liability on the credit card or w ithin ceived, a t the exp iration of the tim e o r rectly, by the ca rd issuer, or
8
(C) Is under th e direct or indirect
control of a th ird person who also di
rectly or indirectly controls the c a rd is
suer, or
(D ) C ontrols, directly or indirectly, the
c a rd issu er, or
(E ) Is a fran ch ise d dealer in the card
issu e r’s p rodu cts or services, or
(P ) H as obtained the order fo r the
tra n sa ctio n relative to which th e
cla im (s)
or <Jefense(s) is asserted
th ro u gh a m ail so licitation m ad e by or
p articip ate d in by th e ca rd issuer, in
w hich th e card h old er is solicited to en ter
into such tra n sa ctio n by u sing the credit
card issued by th e card issuer.
Sim ply honoring or in d icatin g th a t a
person honors a p artic u la r credit card
sh all not be deem ed to be any of th e re
lation sh ip s or connections described in
p a ra g ra p h s (A) th ro u gh (F ) fo r th e
purpose o f rem oving the d o llar an d d is
tan ce lim itation s.
(2) T h e am ou n t of the claim s or d e
fen ses a sserta b le by the card h old er under
th is section m ay n ot exceed the am ou n t
o f credit ou tstan d in g with resp ect to the
tra n sa ctio n which gave rise to th e a ss e r
tion of the claim (s) or d e fen se (s) a t the
tim e the card h old er first notifies th e card
issu er or the person honoring the credit
card fo r such tra n sa ctio n of the e x ist
ence of such cla im (s) or d e fe n se (s). F o r
p urposes of determ in ing the am o u n t of
credit ou tstan d in g w ith re sp ect to su ch
tra n sa ctio n s a s provided in th e p reced
ing sentence, p aym en ts an d other credits
to the card h old er’s accou n t will be
deem ed to h ave been applied, in the order
indicated, to th e p ay m en t o f :
(i) L a te ch arges in the order of entry
to the accou n t;
(ii) F in an ce ch arges in the order of
entry to the accoun t;
(iii) Any other debits in the order in
which each debit entry w as m ade to the
accou n t; an d
(iv) W hen m ore th an one item is in
cluded in a sin gle extension o f credit,
credits are to be distrib u ted pro r a t a a c
cording to p rices an d app licab le taxes.
(3) T h is section does not app ly to cash
advan ces obtained with a credit card
when the adv an ce is u nrelated to an y
specific credit sale item.
(4) I f the custom er refu ses to p ay the
am ou n t of credit o u tstan d in g with re
sp ect to the property or services which
gave rise to the claim or defen se under
th is section, the creditor m ay n ot report
to any person th a t p articu la r am ou n t a s
delinquent.
(j) Prohibition of offsets by card is
suer. ( 1 ) A card issu er m ay not take any
action to offset a card h old er’s in debted
n ess a risin g in connection with a con
sum er credit tran sa ctio n u nder the rel
ev an t credit ca rd p la n a g a in st fu n d s of
th e cardholder held on deposit w ith the
(ii)
R equire an y p erson who honors
ca rd issu er unless a court order ’* is
the card issu er’s credit ca rd to open or
obtained.
(2)
T h e prohibition in p a ra g ra p h (j) m ain tain a deposit accoun t or procure
(1) of th is section does n ot apply to credit any other service* n ot e sse n tial to the
card p lan s whereby the cardh older a u operation of the credit card p lan from
thorizes the ca rd issu er a s a m ethod of the card issuer, its su bsidiary, agen t, or
p ay m en t to periodically deduct all or a any other person, a s a condition of p a r
portion of the card h old er’s credit card ticip ation in a credit card plan.
"(2) W ithin 30 d ay s of the effective
debt from his deposit accoun t w ith the
ca rd issu er (su b ject to the lim itatio n s in date o f these regulation s, any card is
su er with existin g co n tracts which in
§ 2 2 6 .1 4 (c )): P rovided, T h a t:
(1) Su ch au to m atic debit w as previ clude eith er one or b oth of the re stric
ously auth orized in w riting by the c a rd tive clau ses prohibited in p a r a g ra p h (1)
holder, or
sh all in form all p artie s to the co n tract
(ii)
W ith resp ect to such au to m atic th a t su ch provision s are in applicable an d
debit accoun ts in existence on O ctober 28, no longer enforceable.
1975, the ca rd issu er h a s given notice of
12.
T o im plem ent sections 161, 162,
the provisions of p a ra g ra p h (j) of this an d 170, § 226.14 would be add ed a s
section to su ch accoun ts prior to renew al fo llo w s:
of the au th orization (in no case la te r
§ 226 .1 4 B illin g errors— resolution p ro
th an O ctober 28, 1976).
cedure.
(k) P ro m p t n o tific a tio n o f re tu rn s. (1)
W hen any creditor other th a n the card
(a)
C orrection o f billing errors. A fter
issu er accep ts the retu rn of property or the creditor receives proper w ritten n o
forgives a debt fo r services which is to tification of a billing error reflected on
be reflected a s a credit to the cu stom er’s a periodic sta tem en t from a custom er,
open end credit ca rd accoun t, he sh all u nless the cu stom er h a s subsequently
prom ptly (in no case la te r th a n 5 b u si agreed th a t th e periodic statem en t is
n ess d ay s from the d ate the retu rn is correct, the creditor sh a ll:
accepted) tra n sm it a statem en t w ith re
(1) N ot la te r th a n 30 d ay s a fte r re
sp ect thereto to the card issu er through ceipt of su ch n otification, m ail or deliver
the n orm al ch ann els establish ed by the w ritten acknow ledgm ent th ereof to the
ca rd issu er fo r the tra n sm itta l of such cu stom er’s cu rren t design ated add ress,
statem en ts.
unless the a p p ro p riate action s in p a r a
(2) U pon receipt of a credit statem en t, grap h (2) of th is section are taken w ithin
the card issu er sh all credit the cu stom er’s such 30 day p eriod ; an d
accoun t prom ptly (in no case la te r th an
(2) R esolve the dispu te not la te r th an
3 b u siness days from receipt of the re 2 com plete billing cycles (in no event
fun d statem en t) with the am ou n t of the m ore th an 90 d ay s) from the d ate of r e
refund.
ceipt of the n otice of billing error an d
(3) If it is a cred itor’s policy to give prior to any action by th e creditor to
cash refu n d s to ca sh custom ers, he m u st c o lle c t17 any portion of the a m o u n t(s)
also give credit or cash refu n d s to credit in d icated by th e custom er a s bein g in
card custom ers, u n less he clearly and dispute or any fin an ce ch arges or la te
conspicuously discloses th a t he does not paym en t ch arges com puted on su ch d is
give credit or ca sh refu n d s for return s a t puted a m o u n t(s) by
(i) C orrectin g the cu stom er’s accou n t
the tim e the tra n sa ctio n is consum
m ated . N othing in th is section sh all be in accordan ce w ith p a ra g ra p h (b) (2) of
construed to require th a t a seller give th is section an d m ailin g or delivering to
refu n d s fo r retu rn s nor sh all it be con the custom er a w ritten n otification of
stru ed to require the in stitu tion of any correction s; “ or
(ii) C orrectin g the cu stom er’s accoun t
p articu la r refun d policy.
by a differin g am ou n t from th a t in d i
(1) P ro h ib ited a cts o f card issuers. (1)
cated by the cu stom er a s being erron e
No c a rd issu er m ay, by co n tract or ously billed in accordan ce w ith p a r a
otherwise,
grap h (b) (2) of th is section an d m ailin g
(i)
Prohibit any p erson from offering
any price differentials to all custom ers
17 If, despite reasonable procedures estab
of such person, including cardholder cu s lished by the creditor to assure compliance
tom ers, to induce such custom ers to p ay with this paragraph, the creditor or his agent,
within 2 business days after receiving proper
by cash, check, or other sim ila r m eans written notification of a billing error p u r
rath e r th an by use of a credit card or suant to this section, inadvertently takes
its underlying accoun t fo r the p urch ase action to collect in contravention of this
paragraph, such inadvertent action to collect
of property or services; or
1# This paragraph does not alter or affect
the right of a card Issuer acting u n d e r State
law to attach or otherwise levy u p o n fund3
of a cardholder held o n deposit with the card
issuer if that r e m e d y is constitutionally
available to creditors generally.
will not be considered in violation of this
paragraph.
“A notice o n a subsequent billing state
m e n t clearly identifying a n y a m o u n t credited
to the customer’
s account pursuant to a
billing error notice is o n e type of a proper
transmittal of a written notification of
corrections.
9
or delivering to the customer an explanation of the change(s), accompanied by
copies of documentary evidence of the
customer's indebtedness as to the amount
in dispute, if such evidence is requested
by the customer; or
(iii) Mailing or delivering a written
explanation or clarification to the customer, after having conducted a reasonable investigation setting forth, to the
extent applicable, the reasons why the
creditor believes the amount<s> was correctly shown on the periodic statement
and if the customer so requests, furnishing' copies of documentary evidence of
the customer's indebtedness with respect
to a disputed amount. In any case where
the customer alleges that the periodic
statement reflects property or services
not delivered to the customer or his designee in accordance with any agreement
made in connection with the transaction
giving rise to the disputed amount, a
creditor may not construe such amount
to be correctly shown on the billing
statement unless the creditor determines,
upon reasonable investigation, that such
property or services were actually delivered, mailed, or otherwise sent to the
customer or his designee and provides the
customer with a written statement explaining such determination. In any case
where the customer alleges that an
amount of a transaction reflected on the
periodic statement is improper because
the person honoring the credit card has
made an incorrect report to the card
issuer of the amount which should have
been charged, the card issuer may not
construe such amount to be correctly reflected on the periodic statement unless
the creditor determines, upon reasonable
investigation, that the proper amount is
shown on the periodic statement and
provides the customer with a written
statement explaining such determination.
After complying with the provisions
of paragraph (a) of this section with
respect to an alleged billing error, a creditor has no further responsibility under
this section if the obligor continues to
make substantially the same allegation
with respect to such error, except as provided under paragraph (e) of this
section.
erate the customer's entire debt solely
because the customer has exercised rights
provided by the Act or this Part.
<2> With respect to an erroneous billing, the creditor must credit the customer's account in any amount erroneously bllled plus any finance charges or
late payment charges imposed as a result
of the erroneous billing. An erroneous
billing by a creditor includes, but is not
limited to, a misidentification, insumcient identification, or incorrect date of
a transaction; a mailing of the periodic
statement to the wrong address; improper crediting of payments or other
credits; computation errors; or a billing
for property or services not accepted or
delivered in accordance with any agreement; as well as mistakes in dollar
amounts.
(3) After completion of the dispute
resolution procedure in § 226.14<a>, the
creditor shall promptlY mail or deliver
to the CtiiStomer a statement of -any
amount owned by the customer according
to the requirement of§ 226.7<b> <2>.
(4) Nothing in this section shall be
construed to prohibit the mailing or delivery of periodic statements which include disputed amounts to the customer,
provided that the creditor indicates to
the customer on the face of the periodic
statement that payment of the amount
in dispute is not required pending the
creditor's compliance with the provisions
of this section.
(5) Nothing in this section shall prohibit any action by a creditor to collect
any amount which has not been indicated by the customer to contain a billing
error.
(c) Automatic
debit
of
disputed
amounts. (1) In the case of credit plans
with respect to which the customer has
indicated a belief that such account contains a billing error solely because of the
customer's refusal or failure to pay the
amount indicated to be in error. This
paragraph does not prohibit the creditor
from applying any such amount to the
customer's credit limitation.
<e> Credit reports on amounts in dispute. (1) After receiving a proper written notification of a billing error pursuant to this section, neither the creditor
nor his agent may directly or indirectly
threaten to report adversely to any person on the customer's credit standing or
credit rating because of the customer's
failure to pay the amount specified in
such notification as being in error or any
finance charge imposed on the disputed
amount, nor shall such amount be reported as delinquent'" to any third person unless such amount remains unpaid
after the creditor has complied with all
the requirements of this section and has
allowed that customer the same number
of days thereafter as he customarily or
by credit agreement allows, whichever
is longer (in no case less than 10 days),
for the customer to pay undisputed
amounts so as to avoid the imposition of
additional finance charges or late payment charges. If, despite reasonable procedures established by the creditor to assure compliance with this paragraph, the
creditor or his agent, within 2 business
days after receiving proper written notification of a billing error pursuant to this
section, inadvertently takes action in
contravention of this paragraph, such
inadvertent action will not be considered
in violation of this paragraph.
<2> If, within the time limit allowed
for payment in paragraph <e> (1) of this
section, the creditor receives a further
written notification from the customer
that any portion of a previously disputed
amount is still in dispute, the creditor
may not report to any third party that
such amount is delinquent, unless the
creditor also reports that the amount or
account Is in dispute and, at the same
time, notifies the customer in writing of
the name and address of each party to
whom the creditor is reporting information concerning the disputed amount. If.
pursuant to this section, a creditor has
reported a disputed amount as being
delinquent to any third person, the erectiter shall report promptly in writing to
any person to whom such report was
made any subsequent resolution of th<!
reported delinquency.
<3l If a creditor has reported ~>n
amount as being delinquent to a third
party which is in the business of collecting and disseminating information
relating to the credit worthiness of customers, and such amount is subsequently
disputed by the customer in accordance
with the requirements of paragraph <al
of this section, the creditor shall, within
where the cardholder has agreed to permit the card issuer to periodically pay
the cardholder's indebtedness by deducting the appropriate amount from the
cardholder's deposit account, and if the
card issuer receives a proper written
notification of a billing error within 16
days from the date of mailing or delivery
of the periodic statement on which the
suspected billing error first appears, the
card issuer shall:
(i) Prevent the automatic debiting of
any disputed amounts if receipt of such
notification precedes the automatic
(b) Minimum payments and finance
debiting of the cardholder's account, or
charges on disputed amounts. (1) When
(ii) Promptly <in no case no more
a customer is permitted to make a mini- than one btiiSiness day after receipt of the
mum payment, he need only make a notice> restore to the cardholder's deminimum payment calculated on the posit account any portion of the disputed
basis of amounts not in dispute. When amount which was previously deducted,
the disputed amount is only a part of the if receipt of such 'lotification follows the
total amount of an item, the customer automatic debiting of the cardholder's
remains obligated to pay the amount not account for any disputed amounts.
in di5pute, and any minimum payment
<2> Nothing in this subsection shall
and finance charges or late payment limit the cardholder's right to dispute an
charges may be collected on the undis- amount he believes to be in error within
puted amount. If, at the compl_eti_on of 60 days of the mailing or delivery of the
the error resolution procedure, 1t lS de- erroneous periodic statement, as othertermined that the customer owes some wise provided in this section.
or all of the disputed amount, the cred(d) Closing of accounts. A creditor
itor may require payment of any minimum payment amounts which the cus- may not, prior to complying with the re' 0 Nothing In this paragraph prohibits a
tomer did not pay because of the dispute. quirements of paragraphs <a> and (b) of creditor from reporting the disputed amount
The creditor may not, however, accel- this section, restrict or close an account or account as being ln dispute.
10
one billing cycle a fte r receipt by the pute, nor sh all a creditor suffer any fo r the F ed eral R eserve Sy stem (12 C F R
creditor of proper w ritten n otification of feit m ore th a n once fo r an y item or 2 6 2 .2 (a )).
the billing error, m ail or deliver a w rit tran sactio n which m ay a p p e a r on a p e
In terested p ersons are invited to su b
ten notice to each su ch th ird p arty to riodic statem en t.
m it relevan t d a ta , views, or argu m en ts
(2)
N othing in th is subsection sh all be concerning th is proposal, including p o s
whom the delinquency w as reported th a t
construed to lim it a cu stom er’s righ t to sible effects on the cost an d the a v a il
the am ount is in dispute.
(f)
Forfeiture penalty. (1) Anyrecover under section 130 of the Act.
ab ility of consum er credit. Any such
creditor who fa ils to com ply with the
(g)
Exceptions to general rule. T h ism a te ria l sh ould be su bm itted in w riting
requirem ents of th is section fo rfe its any section does n ot app ly to credit other to the S ecretary , B o ard of G overnors of
righ t to collect from the custom er the th a n open end, w hether o r n ot a periodic the F ed era l R eserve System , W ash in g
am ou n t indicated by the cu stom er a s b e statem en t is m ailed or delivered, unless ton, D.C. 20551, to be received not la te r
ing in error, w hether or n ot such am ou n t it is consum er credit extended on an a c th an A ugu st 18, 1975. S u ch m ateria l will
is in fa c t in error, an d an y corresponding count by use of a credit card.
be m ad e av ailab le fo r inspection an d
fin ance ch arges, provided th a t the
13. D ra ft regulation s to im plem ent
am oun t so forfeited under this section section 409 of T itle IV of Pub. L. 93-495 copying upon request, except a s provided
sh a ll n ot exceed $50 fo r each item or will be issued by the B o ard a t a la te r in § 261.6(a) of the B o a r d ’s R u les R e
gard in g A vailability of In form ation .
tran sactio n on a periodic statem en t in date.
dicated by the cu stom er a s bein g in error.
14. T h e effective d ate of these re g u la
B y order of the B o ard of Governoz-s,
In no case sh all a creditor fo rfe it any tions sh all be O ctober 28, 1975.
Ju ly 30, 1975.
am oun t fo r an error in a to ta l figure or
15. T h is notice is published p u rsu an t
[s e a l ]
T h e o d o r e E. A l l i s o n ,
su b to tal figure reflected on a statem en t to section 553 (b) o f T itle 5, U nited S ta te s
Secretary of the Board.
which is caused solely by a n error in a n Code, an d § 262.2(a) of the R u les of
[ F R Doc.75-20254 Filed 7-31-75;8:45 a m ]
other item which is the su b je ct of a d is Procedure of the B o ard of G overnors of
@FedFRASER