Federal Register, Volume 74 Issue 57 (Thursday, March 26, 2009)

[Federal Register Volume 74, Number 57 (Thursday, March 26, 2009)]
[Proposed Rules]
[Pages 13129-13139]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-6728]

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NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 707

RIN 3133-AD57

Truth in Savings Act Disclosures

AGENCY: National Credit Union Administration (NCUA).

ACTION: Proposed rule.

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SUMMARY: As required by the Truth in Savings Act (TISA), NCUA is
proposing to amend its TISA rule and official staff interpretation to
align it with the Federal Reserve Board's Regulation DD. Specifically,
the rule would amend the provisions and provide guidance on the
electronic delivery of disclosures.

[[Page 13130]]

Additionally, NCUA is proposing to amend the rule and the official
staff commentary to require all credit unions to disclose aggregate
overdraft fees on periodic statements; currently, this disclosure
requirement only applies to credit unions that promote the payment of
overdrafts. The proposed rule also addresses balance disclosures credit
unions provide to members through automated systems.

DATES: Comments must be received on or before May 26, 2009.

ADDRESSES: You may submit comments by any of the following methods
(Please send comments by one method only):
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
NCUA Web site: http://www.ncua.gov/RegulationsOpinionsLaws/proposed_regs/proposed_regs.html. Follow the
instructions for submitting comments.
E-mail: Address to regcomments@ncua.gov. Include ``[Your
name] Comments on Part 707 Truth in Savings'' in the e-mail subject
line.
Fax: (703) 518-6319. Use the subject line described above
for e-mail.
Mail: Address to Mary Rupp, Secretary of the Board,
National Credit Union Administration, 1775 Duke Street, Alexandria,
Virginia 22314-3428.
Hand Delivery/Courier: Same as mail address.
Public inspection: All public comments are available on the
agency's website at http://www.ncua.gov/RegulationsOpinionsLaws/comments as submitted, except as may not be possible for technical
reasons. Public comments will not be edited to remove any identifying
or contact information. Paper copies of comments may be inspected in
NCUA's law library at 1775 Duke Street, Alexandria, Virginia 22314, by
appointment, weekdays between 9 a.m. and 3 p.m. To make an appointment,
call (703) 518-6540 or send an e-mail to OGCMail@ncua.gov.

FOR FURTHER INFORMATION CONTACT: Moisette I. Green, Staff Attorney, at
the address above or telephone: (703) 518-6540. For information
regarding the paperwork burden, contact Michael Ryan, Risk Analysis
Officer, at the address above or telephone number (703) 518-6360.

SUPPLEMENTARY INFORMATION:

I. Statutory Background

To comply with the Truth in Savings Act (TISA), NCUA is issuing
this proposed rule with request for comments, which is substantially
similar to the Federal Reserve Board's (FRB's) October 2007 and
December 2008 final rules. See 72 FR 63477 (November 9, 2007); 74 FR
5584 (January 29, 2009). TISA requires NCUA to promulgate regulations
substantially similar to those the FRB issues within 90 days of the
effective date of an FRB rule. 12 U.S.C. 4311(b). In doing so, NCUA is
to take into account the unique nature of credit unions and limitations
under which they pay dividends on member accounts. Id.

II. Procedural and Substantive Background on Electronic Disclosure
Provisions

The Electronic Signatures in Global and National Commerce Act (E-
Sign Act), 15 U.S.C. 7001 et seq., enacted in 2000, provides that
electronic documents and electronic signatures have the same validity
as paper documents and handwritten signatures. Under the E-Sign Act,
member disclosures, which are required by other laws or regulations to
be provided or made available in writing, may be provided or made
available in electronic form if a member affirmatively consents after
receiving disclosures informing the member of: (1) The right to receive
the required information in writing; (2) the consent necessary to
receive electronic notices; (3) procedures to withdraw consent; (4) how
to receive a paper copy of an electronic record and any fees; and, (5)
the equipment needed to receive e-notices. 15 U.S.C. 7001(c).
The E-Sign Act, including the special notice and consent
provisions, became effective October 1, 2000, and did not require
implementing regulations. Thus, credit unions are currently permitted
to provide in electronic form any disclosures that are required to be
provided or made available to the member in writing under Part 707 if
the member affirmatively consents to receive electronic disclosures in
the manner required by section 101(c) of the E-Sign Act. Id.
In April 2001, the FRB published an interim final rule to establish
uniform standards for electronic delivery of disclosures under its TISA
regulation, Regulation DD, 12 CFR part 230. 66 FR 17795 (April 4,
2001). The interim final rule incorporated the requirements of the E-
Sign Act and required depository institutions to obtain consumers'
consent to provide TISA disclosures electronically. Id. NCUA adopted a
substantially similar rule in June 2001. 66 FR 33159 (June 21, 2001).
In October 2007, the FRB adopted final amendments changing some
provisions in the interim rule adopted over six years earlier. In
brief, some regulatory text was dropped and staff commentary revised in
the FRB's Regulation DD to address confusion about electronic
disclosure provisions, enhance consumers' ability to shop for deposit
account products online, and minimize burdens on consumers and on using
electronic disclosures. 72 FR 63477 (November 9, 2007). In accordance
with the E-Sign Act as applied to account-opening disclosures, periodic
statements, and change-in-terms notices, the FRB required depository
institutions to obtain the consumer's consent, to provide the
disclosures in electronic form or else provide written disclosures. The
FRB deleted certain regulatory text that restated or cross-referenced
the E-Sign Act's general rules regarding electronic disclosures,
including the consumer consent provisions because the E-Sign Act is a
self-effectuating statute. 12 CFR 230.10 (2007) (section removed by
October 2007 final rule). Finally, the FRB specified the circumstances
under which certain disclosures may be provided in electronic form
without obtaining the consumer's consent under section 101(c) of the E-
Sign Act. 15 U.S.C. 7001(c). The final rule was effective December 10,
2007, with October 1, 2008 as the compliance date.
NCUA did not issue a substantially similar rule to revise the staff
commentary and remove Sec. 707.10 in 2007 but is incorporating those
changes now along with other changes the FRB made to its Regulation DD
in December 2008. The Board believes the delayed compliance date for
credit unions and their members has not negatively affected them
because it is unaware of any significant confusion for credit unions or
their members about credit unions' obligation to obtain members'
consent to provide disclosures electronically, as required by the E-
Sign Act.

III. Background on Overdraft Services and Regulatory Action

In recent years, many credit unions have largely automated the
overdraft payment process,\1\ and use automation to set the criteria
for determining whether to honor overdrafts and the limits on overdraft
coverage provided. Overdraft services vary among credit unions but
often share certain common characteristics. While credit unions
generally do not initially underwrite on an individual account basis
when enrolling a member in the service, most

[[Page 13131]]

credit unions will review individual accounts periodically to determine
if a member continues to qualify for the service, and the amounts that
may be covered.
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\1\ NCUA's general lending rule specifically permits a federal
credit union to provide overdraft protection to members if it has a
written policy addressing certain requirements, such as individual
and aggregate limits. 12 CFR 701.21(c)(3).
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Most credit unions disclose that the payment of overdrafts is
discretionary and that the credit union has no legal obligation to pay
any overdraft. In the past, credit unions generally provided overdraft
coverage only for check transactions; however, in recent years, the
service has been extended to cover overdrafts resulting from non-check
transactions, including withdrawals at automated teller machines
(ATMs), automated clearinghouse (ACH) transactions, point-of-sale debit
card transactions, pre-authorized automatic debits from a member's
account, telephone-initiated funds transfers, and online banking
transactions. A flat fee is charged when an overdraft is paid,
regardless of the overdraft amount. Credit unions commonly charge the
same amount for paying an overdraft as they would if they returned the
item unpaid. A daily fee also may apply for each day the account
remains overdrawn.
In February 2005, NCUA, along with the FRB, Federal Deposit
Insurance Corporation, and Office of the Comptroller of the Currency,
published guidance on overdraft protection programs in response to
concerns about aspects of the growing marketing, disclosure, and
implementation of overdraft services. 70 FR 9127 (February 24, 2005)
(Joint Guidance). The Joint Guidance addressed three primary areas: (1)
Safety and soundness considerations; (2) legal risks; and, (3) best
practices.\2\ The best practices in the Joint Guidance focused on the
marketing of overdraft services and the disclosure and operation of
program features, including distinguishing actual available account
balances from account balances that include overdraft protection
amounts.
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\2\ The Office of Thrift Supervision published similar guidance
focusing on safety and soundness considerations and best practices.
See 70 FR 8428 (February 18, 2005).
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In May 2005, the FRB published revisions to Regulation DD and the
official staff commentary to address concerns about the uniformity and
adequacy of disclosure of overdraft fees generally, and the
advertisement of overdraft services in particular. 70 FR 29582 (May 24,
2005). Under the May 2005 final rule, which became effective July 1,
2006, all depository institutions were required to specify in their
account disclosures the categories of transactions for which an
overdraft fee may be imposed. Depository institutions that promote the
payment of overdrafts in an advertisement were required to include in
the advertisements certain information about the costs associated with
the service and the circumstances under which the credit union would
not pay an overdraft.
Depository institutions were also required to disclose separately
on their periodic statements the total amount of fees or charges
imposed on the account for paying overdrafts and the total amount of
fees charged for returning items unpaid. The disclosures were required
to be provided for the statement period and for the calendar year-to-
date. NCUA adopted a substantially similar rule for credit unions in
April 2006. 71 FR 24568 (April 26, 2006).
In May 2008, under its TISA authority,\3\ the FRB issued a proposed
rule on new disclosure requirements under Regulation DD, which were
adopted in final in December 2008. 73 FR 28739 (May 19, 2008); 74 FR
5584 (January 29, 2009). The final rule amended Regulation DD and the
official staff commentary to expand the requirement to disclose
overdraft fees on periodic statements to apply to all depository
institutions, and not just those that promote the payment of
overdrafts. The final rule includes format requirements to help make
the aggregate fee disclosures more effective and noticeable to
consumers. Additionally, the final rule requires an account balance,
which is disclosed to consumers by an automated system such as an ATM,
Web site, or telephone response system, to exclude additional amounts
institutions may provide or which institutions may transfer from
another account to cover an item where there are insufficient funds in
an account. The rule is designed to ensure consumers are not confused
or misled about the available funds in their accounts when they request
account balances. The final rule permits an institution to disclose an
additional balance that includes funds provided by a discretionary
overdraft service or a line of credit, or funds that could be
transferred from a consumer's linked individual or joint account, so
long as the institution prominently states the balance includes these
additional amounts.\4\
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\3\ In May 2008, NCUA, the FRB, and the Office of Thrift
Supervision (OTS) jointly proposed substantive consumer protections
under the Federal Trade Commission Act, the so-called unfair and
deceptive acts and practices (UDAP) rule that, among other matters,
addressed concerns that consumers may not adequately understand the
costs of overdraft services or how overdraft services operate
generally. 73 FR 28904 (May 19, 2008). Among other provisions, the
proposed rule would have required consumers to have the right to opt
out of the payment of overdrafts but the provision was dropped from
UDAP when it was finalized in December based on the agencies'
decision to address disclosures on overdraft services through TISA
regulations. NCUA adopted the UDAP provisions in its Credit Practice
Rule in Part 706.
\4\ The FRB has proposed opt-out requirements for overdraft
programs using its authority under the Electronic Fund Transfer Act
and Regulation E. 74 FR 5212 (January 29, 2009). As an alternative,
the Regulation E proposal would also require financial institutions
to provide customers an opt-in to payment of overdrafts for ATM and
debit transactions, and includes a proposed model opt-in notice. The
Regulation E proposal would apply to all financial institutions,
including credit unions.
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The Proposed Rule

The Board is proposing to revise NCUA's TISA rule to adopt the
FRB's recent changes to Regulation DD and its accompanying staff
commentary. NCUA is required to issue rules substantively similar to
those of the FRB within 90 days of the effective date of the FRB's
rules. 12 U.S.C. 4311(b). The FRB's most recent final rule will not be
effective until January 1, 2010, and the Board wants to permit credit
unions to comment on the proposed changes to the TISA rule and allow
sufficient time for necessary operational adjustments. To ensure
uniformity in disclosure requirements for financial institutions, the
Board intends for the provisions dealing with electronic disclosure to
be effective within 30 days of a final rule but, for the provisions
changing disclosure requirements for overdraft programs, to issue
provide the same effective date as the FRB's recent final amendments to
Regulation DD, namely, January 1, 2010. The Board encourages interested
parties to submit comments on this proposal but commenters should keep
in mind that NCUA's TISA regulation must be substantially similar to
the FRB's rule and vary only to the extent necessary to address unique
credit union differences. A section-by-section discussion of the
proposed revisions follows below.

IV. Section-by-Section Analysis

Section 707.3 General Disclosure Requirements

Section 707.3(a) prescribes the form of disclosures required for
member accounts and generally requires credit unions to provide the
disclosures in writing and in a form a member or potential member may
keep. The proposed rule would revise Sec. 707.3(a) to clarify that
credit unions may provide disclosures to members or potential members
in electronic form, subject to compliance with the consent and other
applicable provisions of the E-Sign Act.

[[Page 13132]]

Some credit unions may provide disclosures to members or potential
members both in paper and electronic form and rely on the paper form of
the disclosures to satisfy their compliance obligations. For those
credit unions, the proposal would permit the duplicate electronic form
of the disclosures to members or potential members without regard to
the consent or other provisions of the E-Sign Act because the
electronic form of the disclosure would not be used to satisfy the
regulation's disclosure requirements. The proposed revisions to Sec.
707.3(a) would also permit credit unions to provide the disclosures
required by Sec. Sec. 707.4(a)(2) (disclosures provided upon request)
and 707.8 (advertising) in electronic form, under the circumstances in
those sections, without regard to the consent or other provisions of
the E-Sign Act.
Section 707.8 currently requires that, if certain information is
stated in an advertisement, or if an advertisement promotes the payment
of overdrafts, the advertisement must also include specified
disclosures. The Board believes that, for an advertisement accessed by
a member or potential member in electronic form, permitting credit
unions to provide the required disclosures in electronic form without
regard to the consent and other provisions of the E-Sign Act will
eliminate a potential, significant burden on electronic commerce
without increasing the risk of harm to members or potential members.
This approach will facilitate shopping for deposit products by enabling
members or potential members to receive important disclosures at the
same time they access an advertisement without first having to provide
consent in accordance with the requirements of the E-Sign Act.
Requiring members or potential members to follow the consent procedures
in the E-Sign Act in order to access an online advertisement is
potentially burdensome and could discourage members from shopping for
deposit products online. Moreover, because the members or potential
members are viewing the advertisement online, there appears to be
little, if any, risk that a member or potential member will be unable
to view the disclosures online as well.
Similarly, the current Sec. 707.4(a)(2) requires credit unions to
provide disclosures with account terms and conditions upon request. If
a member or potential member is not present at the credit union and
requests the account disclosures, it appears unnecessary and burdensome
to require the member or potential member to go through the E-Sign
consent procedures before the request could be satisfied, as long as
the member or potential member agrees the disclosures can be provided
electronically. Applying the E-Sign consent procedures in this context
could actually discourage members or potential members from requesting
the disclosures.
Currently, Sec. 707.3(g) contains a cross-reference to Sec.
707.10 for rules governing the delivery of electronic disclosures. NCUA
is proposing to delete Sec. 707.3(g) for the same reasons it proposes
to delete Sec. 707.10, as discussed below.

Section 707.4 Account Disclosures

Credit unions generally must provide account-opening disclosures to
members or potential members before an account is opened or a service
is provided. Credit unions may delay delivering disclosures if a member
or potential member is not present at the credit union when the account
is opened or service is provided. Section 707.4(a)(1) provides that, in
such cases, account-opening disclosures must be mailed or delivered
within ten business days. The rationale underlying the ten-day grace
period is credit unions cannot provide written disclosures immediately
when, for example, an account is opened by telephone. The proposed rule
would clarify credit unions opening accounts by electronic
communication, for example, on the internet, may not delay providing
disclosures under Sec. 707.4(a)(1). The difficulties in providing
disclosures for accounts opened by mail or telephone do not exist for
requests to open accounts received by electronic communication using
visual text; disclosures can be provided at the same time. Thus, the
proposed rule would amend paragraph (ii) to Sec. 707.4(a)(1) and
require disclosures must be provided before accounts are opened using
electronic communication.
Section 707.4(a)(2)(i) provides that, if a member or potential
member is not present at the credit union when a request for account
disclosures is made, the credit union must mail or deliver the
disclosures within a reasonable time after the credit union receives
the request. The Board believes ten days is a reasonable time. The rule
in Sec. 707.4(a)(2)(i) allows credit unions to mail or deliver
disclosures either in paper form or electronically to members or
potential members who are not present at the credit union when they
make their request. Under the proposal, to provide the requested
disclosures electronically, the credit union must send the disclosures
to the member or potential member's e-mail address, or send a notice
alerting the member or potential member to the location of the
disclosures, such as on the credit union's internet Web site.

Staff Interpretation--Section 707.8 Advertising

The current Sec. 707.8 addresses requirements for advertisements
for member accounts, including the requirement that, if an
advertisement includes certain ``trigger terms'' such as a bonus or the
annual percentage yield, the advertisement must also include certain
disclosures. Section 707.8 requires that, if an advertisement includes
trigger terms, the advertisement itself must ``state'' the required
disclosures ``clearly and conspicuously.'' Therefore, under the
existing regulation, providing paper disclosures for an advertisement
in electronic form, or vice versa, would not comply because the
disclosures would not be stated in the advertisement itself.
Comment 8(a)-9 provides that in an electronic advertisement, the
required disclosures need not be shown on each page where a ``trigger
term'' appears, as long as each page includes a cross-reference to the
page where the required disclosures appear. For example, if a ``trigger
term'' appears on a particular web page, the additional disclosures may
appear on another Web page if there is a clear reference to that page,
which may be accomplished, for example, by including a link.
The proposed rule would add a new comment 8(a)-11 to clarify that
rules regarding advertising disclosures provided in electronic form
would also apply to the disclosures described in Sec. 707.11(b), which
are incorporated by reference in Sec. 707.8(f). Section 707.8(b)
permits credit unions to state a rate of return in addition to an
annual percentage yield (APY), as long as the rate is stated in
conjunction with, but not more conspicuously than, the APY.
Comment 8(b)-4 states that, in an advertisement using electronic
communication, a member must be able to view both rates simultaneously
and this requirement is not satisfied if the member can view the APY
only by use of a link that takes the member to another web location.
The proposed rule would delete Comment 8(b)-4. The regulatory
requirement is to state the rate of return in conjunction with, but not
more conspicuously than, the APY, and this rule applies in the
electronic context as well. The Board believes the rule can be applied
with some flexibility to account for variations in devices members may
use to view electronic advertisements. Therefore, using scrolling or
links would not necessarily fail to comply with the regulation;

[[Page 13133]]

however, credit unions should ensure electronic advertisements comply
with the equal conspicuousness requirement. As for the electronic
devices members might use to conduct financial transactions, for
example, personal digital assistants, Internet-enabled cell phones, and
other small hand-held devices, the Board believes disclosures would
comply with the ``clear and conspicuous'' requirement as long as they
are provided in a manner that would be clear and conspicuous if viewed
on a typical home personal computer monitor.
Section 707.8(e) exempts from some disclosure requirements
advertisements made through broadcast or electronic media, such as
television and radio or outdoor billboards. Proposed Comment
8(e)(1)(i)-1 would provide this exemption would not apply to
advertisements using electronic communication, such as internet
advertisements, which do not have the same time and space constraints
as radio or television advertisements.

Section 707.10 Electronic Communication

The proposed rule would delete Sec. 707.10 that addresses the
general requirements for electronic communications. The proposed
deletion does not change applicable legal requirements under the E-Sign
Act and has no impact on the general applicability of the E-Sign Act to
TISA disclosures. The E-Sign Act is a self-effectuating statute and
permits any person to use electronic records subject to the conditions
it sets.
Sections 707.10(d) and (e) have addressed specific timing and
delivery requirements for electronic disclosures, such as the
requirement to send disclosures to a member's e-mail address or post
the disclosures on a Web site and send a notice alerting the member to
the disclosures. Section 707.10(e) has required credit unions to take
reasonable steps to attempt to redeliver returned electronic
disclosures. Tracking the FRB's rule, the Board believes these
provisions are no longer necessary or appropriate. Electronic
disclosures have evolved as credit unions and members have gained
experience with them. The Board notes, however, increased risks to
members with the use of electronic mail related to data security,
identity theft, and phishing. Accordingly, the Board believes it is
preferable not to mandate use of any particular means of electronic
delivery of disclosures, but instead to allow credit unions to use
whatever method may be best suited to particular types of disclosure,
for example, account-opening, periodic statements, or change in terms.
Regarding the general disclosure requirement in Sec. 707.3(a),
credit unions would satisfy the requirement for providing electronic
disclosures in a form a member can retain if they are provided in a
standard electronic format that can be downloaded and saved or printed
on a home personal computer. Typically, any document that can be
downloaded by a member can also be printed. In a situation where the
member is provided electronic disclosures through equipment under the
credit union's control, such as a terminal or kiosk in the credit
union's offices, the credit union could, for example, provide a printer
that automatically prints the disclosures.
While the Board is not requiring disclosures to be maintained on an
internet Web site for any specific time period, the general
requirements of the rule continue to apply to electronic disclosures,
such as the requirement to provide disclosures to members at certain
specified times and in a form a member may keep. The Board expects
credit unions to maintain disclosures on Web sites for a reasonable
period of time, which may vary depending upon the particular
disclosure, so that members have an opportunity to access, view, and
retain the disclosures.

Section 707.11 Additional Disclosure Requirements Regarding Overdraft
Services

11(a) Disclosure of Total Fees on Periodic Statements
Applicability of Aggregate Fee Disclosures
Although periodic statements are not required under TISA, credit
unions that provide periodic statements must disclose fees or charges
imposed on a member account during the statement period. 12 CFR
707.6(a)(3). Currently, Sec. 707.11(a) requires credit unions that
promote the payment of overdrafts in an advertisement to provide on
periodic statements the aggregate dollar amount totals for overdraft
fees and, for returned item fees, the aggregate totals for both the
statement period and the calendar year-to-date.
To inform members about the fees charged for using discretionary
overdraft services and to help them better understand the costs
associated with their accounts, this proposed rule would expand Sec.
707.11(a) to require all credit unions, regardless of whether they
promote the payment of overdrafts, to disclose the aggregate fee
information for the statement period and calendar year-to-date. The
rule would also add format requirements to help make the aggregate fee
disclosures more effective and noticeable to members. The proposed rule
would delete examples of communications that would not trigger the
aggregate fee disclosure requirement in existing Sec. 707.11(a)(2).
Additionally, the proposed commentary would clarify that the aggregate
fee total does not include fees for transferring funds from another
member account to avoid an overdraft, or fees charged under a service
subject to 12 CFR part 226 (Regulation Z).
The intent of the proposed rule is to provide members who use
discretionary overdraft services information to help them better
understand the overdraft and returned item costs associated with their
accounts. The aggregate fee disclosures would benefit members who
overdraw their accounts with some frequency, but do not currently
receive aggregate fee disclosures because their credit union does not
promote its overdraft service. The Board believes the proposed rule
would promote greater transparency about the terms and costs of
overdraft services for all credit unions. Under the current rule,
credit unions that do not promote their overdraft service may be
reluctant to provide information about the service out of concern that
these disclosures might trigger the aggregate fee disclosure
requirements. The Board believes the rule will create consistency in
disclosures and will eliminate compliance challenges inherent in a
regulatory scheme based on a ``promoting'' or ``marketing''
distinction.
Additionally, the Board believes this requirement is appropriate
because overdraft and returned item fees are not as predictable as many
other types of account fees.
Members cannot always know when settlement on any one item will
occur, particularly relative to other transactions, where a credit
union processes items using different methods. Therefore, and balance
inquiries may not always contain real-time balance information.
Therefore, members may not realize that one overdrawn item could
trigger overdrafts on other transactions and, thus, may not be able to
predict the total fees that will be charged for any one overdraft
occurrence. When there are multiple overdrafts, fee amounts may be
significant, even though each item may represent a relatively small
dollar amount. The aggregate fee disclosures would benefit members by
showing the total expenditures on overdraft fees for the statement
period and year, which may encourage members to explore alternatives
that might be less costly.

[[Page 13134]]

The Board further notes some members are already receiving year-to-date
totals from credit unions currently subject to the rule; thus,
requiring year-to-date disclosures for all credit unions will promote
consistency of disclosure across credit unions. Because the proposed
rule would expand the applicability of the aggregate fee disclosures to
all credit unions, the existing comment 11(a)(3)-1 would be revised,
and comment 11(a)(5)-1 would be deleted.
Format of Aggregate Fee Disclosures
The proposed final rule would add proximity and format requirements
to enhance the effectiveness of the disclosures and make them more
noticeable. Aggregate fee disclosures must be provided in close
proximity to the fees identified under Sec. 707.6(a)(3). The Board
believes uniform proximity requirements are necessary to enable members
to find fee information easily so they better understand the costs of
using the service. Aggregate fee disclosures would be provided using a
format substantially similar to proposed Sample Form B-10.
The proposed rule would revise comment 11(a)(1)-3 to clarify that
credit unions may use terminology such as ``returned item fee'' or
``NSF fee'' to describe the fees for returning items unpaid. It also
would redesignate comment 11(a)(1)-6 as comment 11(a)(1)-4 and address
the issue where a credit union provides a statement for the current
period reflecting that fees imposed during a previous period were
waived and credited to the account. The comment would provide that, in
these circumstances, credit unions may, but are not required to,
reflect the adjustment in the total for the calendar year-to-date and
in the applicable statement period. For example, if a credit union
assesses a fee in January and refunds the fee in February, the credit
union could disclose a year-to-date total reflecting the amount
credited, but it should not affect the total disclosed for the February
statement period, because the fee was not assessed in the February
statement period. However, because some credit unions may assess and
then waive and credit a fee within the same statement cycle, the
comment is revised to clarify that, in such a case, the credit union
may reflect the adjustment in the total disclosed for fees imposed
during the current statement period and for the total for the calendar
year-to-date. If the credit union assesses and waives the fee in
February, the February fee total could reflect a total net of the
waived fee.
11(b) Advertising Disclosures for Overdraft Services
Section 707.11(b)(2) lists the types of communications about the
payment of overdrafts not subject to additional advertising disclosures
under Sec. 707.11(b)(1). The proposed rule would expand the list in
Sec. 707.11(b)(2) to include an opt-out or opt-in notice regarding the
credit union's payment of overdrafts or provision of discretionary
overdraft services.
11(c) Disclosure of Account Balances
Section 707.11(b)(1) currently requires credit unions that promote
the payment of overdrafts to include certain disclosures in their
advertisements about the service to avoid confusion between overdraft
services and traditional lines of credit. In particular, the commentary
stated that a credit union must include the additional advertising
disclosures if it ``discloses an overdraft limit or includes the dollar
amount of an overdraft limit in a balance disclosed on an automated
system, such as a telephone response machine, ATM screen or the credit
union's internet site.'' 70 FR 72895, 72901 (December 8, 2005) (adopted
without change at 71 FR 24568 (April 26, 2006)).
To facilitate responsible use of overdraft services and ensure that
members receive accurate information about their account balances, the
proposed rule would provide that the balance credit unions disclose may
not include: Any funds it may provide to cover an overdraft; funds that
will be paid by the credit union under a service subject to Regulation
Z; or funds transferred from another member account. The proposed rule
would permit a credit union to disclose another balance that includes
these additional funds, so long as the credit union prominently states
the balance includes them.
Under Sec. 707.11(c) of the proposed rule, if a credit union
discloses balance information through an automated system, it would be
required to disclose an account balance that excludes funds the credit
union may provide to cover an overdraft in its discretion, funds that
will be paid by the credit union under a service subject to Regulation
Z, or funds transferred from another member account. For example,
although a credit union may add a $500 cushion to the member's account
balance when determining whether to pay an overdrawn item, under the
proposed rule, the additional $500 would not be included in the balance
provided to the member through an automated system. The Board believes
the requirement to provide a balance not supplemented by overdraft
funds should apply equally in these circumstances to ensure members are
given an accurate account balance. Thus, the proposed rule would delete
the reference to the member's inquiry.
Funds Included in and Excluded From Balance
The rule is not intended to define what funds are available under
12 CFR Part 229 (Regulation CC). Accordingly, to avoid ambiguity, the
proposed rule would add Sec. 707.11(c). As discussed below, the
proposed rule would not require disclosures of real-time balances nor
otherwise affect what funds a credit union considers to be available.
Additionally, the proposed rule would not permit credit unions to
include amounts available under a member's overdraft line of credit
with the credit union or funds from a linked account, such as a share
savings account, in the balance disclosure. The Board is concerned that
permitting a balance to include funds available under a member's
overdraft line of credit or through a transfer from a member's share
savings or other linked account would cause confusion regarding the
amount a member may withdraw or spend without incurring an overdraft.
Thus, the proposal would revise Sec. 707.11(c) to clarify that a
credit union must disclose a balance that does not include: additional
amounts the credit union may provide in its discretion to cover an
overdraft; funds that will be paid by the credit union under a service
subject to Regulation Z; or funds transferred from another member
account.
Proposed Comment 11(c)-1 would clarify a credit union may, but need
not, include in the balance funds deposited in the member's account,
such as from a check, but that are not yet made available for
withdrawal in accordance with the funds availability rules under
Regulation CC. Similarly, the comment states the balance may, but need
not, include any funds a credit union holds to satisfy a prior
obligation of the member, for example, to cover a hold for an ATM or
debit card transaction that has been authorized but not settled.
Section 707.11(c) would not require credit unions to provide a ``real-
time'' balance, but would only prohibit credit unions from including
additional overdraft funds such as a discretionary overdraft cushion in
the disclosed balance.
Additional Balances
The Joint Guidance stated that, if more than one balance is
provided, a

[[Page 13135]]

credit union should ``separately (and prominently) identify the balance
without the inclusion of overdraft protection.'' 70 FR at 9132. The
proposed rule would permit, but does not require, disclosure of an
additional balance that includes these additional overdraft funds,
which may be useful to some members. For example, members may wish to
receive a balance disclosure indicating how much overdraft coverage
they have available, so they can make an informed decision regarding a
transaction. The proposed rule would permit an additional balance to be
disclosed, so long as the credit union prominently states the balance
contains additional overdraft funds.
To address concerns that members would be confused if multiple
balances are disclosed to them on an automated system, new comment
11(c)-2 would provide guidance on how credit unions can appropriately
identify that an additional balance includes overdraft funds. Comment
11(c)-2 would explain the credit union may not simply state, for
instance, that the second balance is the member's ``available
balance,'' or contains ``available funds.'' Rather, the credit union
would provide enough information to convey that the second balance
includes the overdraft amounts. For example, the credit union may state
that the balance includes ``overdraft funds.''
Further, the Board notes proposed Sec. 707.11(c) would not affect
the existing application of the advertising disclosure rules of Sec.
707.11(b). Thus, to the extent a credit union includes the dollar
amount of a discretionary overdraft limit in a disclosed balance on an
automated system, the disclosure would continue to be considered an
advertisement promoting the payment of overdrafts. Therefore, credit
unions would provide the disclosures required by the current Sec.
707.11(b)(1), including the amount of overdraft fees. The existing
exemption in Sec. 707.11(b)(2) from these disclosures for ATM receipts
would also continue to apply. Any receipt containing a second balance
including overdraft funds, however, would be required to prominently
state that those funds are included and may not simply label the second
balance as the member's ``available balance'' or ``available funds.''
Many credit unions currently provide members the ability to opt out
of or opt into their overdraft service. Where a member has opted out of
the credit union's overdraft service, or where a credit union offers an
opt-in and the member has not opted in, proposed comment 11(c)-2 would
also clarify that any additional balance disclosed may not include
funds provided under a credit union's overdraft service because,
presumably, the member would not have access to those funds. For
example, if a member has $200 in his or her account and has opted out
of the credit union's overdraft service, a second balance could not
reflect the additional $100 the credit union might otherwise have
provided under the service. If the member is not enrolled in the credit
union's overdraft service, but has a line of credit or other overdraft
alternative, the additional balance could continue to include funds
available pursuant to that other alternative.
Similarly, some credit unions may provide members the ability to
opt out of overdraft services for ATM and debit card transactions. In
this instance, a credit union would continue to offer the overdraft
service for other transactions, such as check transactions. Because the
credit union's overdraft service would be available for some, but not
all transactions, proposed comment 11(c)-2 states that, if a credit
union discloses an additional balance where a member has opted out of
some but not all of the credit union's overdraft services, the credit
union may choose whether to include the overdraft funds in the balance.
If the credit union chooses to include the overdraft funds in the
additional balance, however, it would be required to indicate the
additional overdraft funds are not available for all transactions.
Automated Systems
Proposed comment 11(c)-3 explains the balance disclosure
requirement would apply to any automated system through which the
member requests a balance, including but not limited to, a telephone
response machine, such as an interactive voice response system, at an
ATM, both on the ATM screen and on receipts, or on a credit union's
internet site, other than live chats with an account representative.
The balance disclosure requirements would apply to account balances a
credit union discloses through any ATM. Because account-holding credit
unions have discretion with respect to the balances they provide to an
ATM network, they ultimately determine what additional funds, whether
from the credit union's discretionary overdraft service, an overdraft
line of credit, or a linked account, are included in those balances. In
other words, the credit union has the discretion to provide to the
network only balances that exclude overdraft funds. Thus, the Board
believes it is appropriate to include the information that account-
holding credit unions disclose through foreign ATMs within the scope of
the rule.
The proposed rule would apply only when a credit union chooses to
provide balance information, or when an ATM or other electronic
terminal has the capability to provide a balance only to the extent
balance information is offered on an automated system. It would not
require credit unions or other automated systems owners to provide
balance information on automated systems available to members. The
Board believes the compliance burden and enforcement challenges
associated with monitoring individual conversations and responses would
outweigh the benefits provided by such a rule. Therefore, the proposed
rule would apply only to balance information disclosed through an
automated system.

V. Regulatory Procedures

Regulatory Flexibility Analysis

The Board has prepared a regulatory flexibility analysis as
required by the Regulatory Flexibility Act, 5 U.S.C. 601 et seq. TISA
was enacted, in part, for the purpose of requiring clear and uniform
disclosures regarding deposit account terms and fees assessable against
these accounts. These disclosures allow consumers to make meaningful
comparisons between different financial institutions and also allow
consumers to make informed judgments about the use of their accounts.
12 U.S.C. 4301. TISA requires the Board to prescribe regulations to
carry out the purpose and provisions of the statute. 12 U.S.C.
4308(a)(1), 4311(b). The Board is proposing revisions to part 707 to
address the uniformity and adequacy of credit union disclosure of fees
associated with overdraft services.
There are other laws credit unions must consider when administering
an overdraft protection program. Although other laws and regulations
may apply to credit union payment of overdrafts, the proposed revisions
to part 707 do not duplicate or conflict with the requirements imposed
by these laws. The Board has also considered the interagency guidance
on overdraft protection programs issued in February 2005, and has
determined that issuance of the proposed revisions to part 707 is
consistent with the interagency guidance. 70 FR 9127 (February 24,
2005).
Approximately 3,318 of the credit unions in the United States that
must comply with TISA have assets of $10 million or less and, thus, are
considered small entities for purposes of the Regulatory Flexibility
Act, based on 2008 call report data. The Board

[[Page 13136]]

believes almost all small credit unions that offer accounts where
overdraft or returned-item fees are imposed currently send periodic
statements on those accounts, although the number of small credit
unions that promote their overdraft services is unknown. For those
credit unions that do not promote the payment of overdrafts in an
advertisement, periodic statement disclosures would need to be revised
to display aggregate overdraft and aggregate returned-item fees for the
statement period and year to date. All small credit unions will have to
review and perhaps revise account-opening disclosures and marketing
materials.
NCUA's Office of Small Credit Union Initiatives (OSCUI) reviewed
the proposed rule and concluded the rule will have minimal impact on
small credit unions. OSCUI stated small credit unions have adequate
vendor processing assistance to comply with the proposed delivery,
disclosure, and notice requirements in the rule. It also stated the
proposed rule would result in greater efficiencies and ensure members
and potential members are not confused or misled by account
disclosures.
The proposed revisions to part 707 would require all credit unions
to provide more complete information to members regarding overdraft
services. Account-opening disclosures and marketing materials would
describe more completely how fees may be triggered. Credit unions that
provide overdraft services would be required to separately disclose on
periodic statements the total dollar amount of fees and charges imposed
on the account for paying overdrafts and the total dollar amount for
returning items unpaid. These disclosures would be required for the
statement period and for the calendar year to date for each account to
which the service is provided. Certain advertising practices would be
prohibited, and additional disclosures on advertisements of overdraft
services would be required.
The Board is soliciting comment on how the burden of disclosures on
credit unions could be minimized. The proposed rule would limit the
requirement to disclose aggregate totals for overdraft and returned-
item fees for the statement period and the calendar year to date to
credit unions that provide ad hoc payments of overdrafts or promote the
payment of overdrafts in an advertisement, thereby encouraging the
routine use of the service. It would also specify certain practices
that would not trigger the new overdraft disclosures. The safe harbors
would provide additional certainty to credit unions in determining
whether compliance with the rule is required in particular
circumstances. Consistent with the rule requiring periodic statement
disclosures, the proposed rule would also provide safe harbors to
specify circumstances when a credit union would not be required to
provide additional advertising disclosures.
Under the proposed rule, credit unions would be permitted to
provide an illustrative list of categories by which overdrafts may be
created to generally eliminate the need to provide a change-in-terms
notice each time a new channel for creating overdrafts is added. The
proposed rule would also provide additional guidance regarding the
types of fees that should be included in the total dollar amount of
fees and charges imposed on the account for paying overdrafts and in
the total dollar amount for returning items unpaid.

Paperwork Reduction Act

In accordance with the Paperwork Reduction Act of 1995, 44 U.S.C.
3501 et seq., the Board has submitted the information collection
requirements in this proposed rule to the Office of Management and
Budget (OMB). The NCUA may not conduct or sponsor, and an organization
is not required to respond to, this information collection unless it
displays a currently valid OMB control number. The current OMB control
number for the Truth in Savings program is 3133-0134. This information
collection will be revised to address the requirements of this proposed
rule.
The collection of information that would be revised by this
rulemaking is found in 12 CFR part 707 and Appendix C. This collection
is mandatory to evidence compliance with the requirements of part 707
and TISA. 15 U.S.C. 4301 et seq. Credit unions must retain records for
twenty-four months. This regulation applies to all types of credit
unions, not just federally-insured credit unions.
Under the proposed rule, credit unions offering certain overdraft
payment services would be required to provide more complete information
regarding those services. Account-opening disclosures and other
marketing materials would describe more completely how fees may be
triggered. Credit unions that offer the payment of overdrafts would be
required to separately disclose on periodic statements the total dollar
amount of fees and charges imposed on the account for paying overdrafts
and the total dollar amount of fees charged to the account for
returning items unpaid. Credit unions would provide these disclosures
for the statement period and for the calendar year to date for each
account to which an overdraft payment is applied. Certain advertising
practices would be prohibited, and additional disclosures in
advertisements for the payment of overdrafts would be required.
Although the proposed rule would add these requirements, it is expected
these revisions would not significantly increase the ongoing paperwork
burden of credit unions. Respondents would have a one-time burden to
reprogram and update their systems to include these new notice
requirements.
There are an estimated 7,990 credit unions.\5\ NCUA estimates it
will take the respondents, on average, 8 hours or one business day to
make these one-time system changes. NCUA estimates respondents will
incur a burden of 63,920 hours meeting the requirements of this
proposed rule. NCUA estimates that the total, continuing annual burden
for the Truth in Savings program to be 12,064,677 hours. Before this
proposed rule, NCUA estimated the annual burden to be 12,076,057 hours.
The annual burden under this proposed rule would decrease 11,380 burden
hours due to the decrease in the number of credit unions.
---------------------------------------------------------------------------

\5\ As of December 31, 2008, there are 7,860 federally-insured
credit unions. Privately-insured credit unions must also comply with
Part 707, and NCUA estimates there are approximately 130 of them.
---------------------------------------------------------------------------

NCUA invites comment on:
(1) The accuracy of NCUA's estimate of the burden of the
information collection;
(2) Ways to minimize the burden of the information collection on
credit unions, including the use of automated collection techniques or
other forms of information technology; and
(3) Estimates of capital or start-up costs and costs of operation,
maintenance, and purchase of services to provide information.
Interested parties may submit comments regarding the information
collection requirements in this proposed rule. Comments should be
mailed to Jeryl Fish, Paperwork Clearance Officer, National Credit
Union Administration, 1775 Duke Street, Alexandria, VA 22314-3428;
faxed to (703) 518-6319; or sent by e-mail to regcomments@ncua.gov.
Please include ``Comments on Part 707 Truth in Savings Act
Disclosures'' in the comments header and send them to NCUA using one of
the methods described above and to:
NCUA Desk Officer, Office of Management and Budget, New Executive
Office Building, Washington, DC 20503, Fax number: (202) 395-6974.

[[Page 13137]]

NCUA will post comments on its Web site at http://www.ncua.gov/RegulationsOpinionsLaws/proposedregs/proposedregs.html. Interested
persons may inspect the comments at NCUA, 1775 Duke Street, Alexandria,
Virginia 22314, by appointment. To make an appointment, call (703) 518-
6540, send an e-mail to ogcmail@ncua.gov, or send a facsimile
transmission to (703) 518-6667.

Executive Order 13132

Executive Order 13132 encourages independent regulatory agencies to
consider the impact of their actions on state and local interests. In
adherence to fundamental federalism principles, NCUA, an independent
regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily complies
with the executive order. The proposed rule would not have substantial
direct effect on the states, on the connection between the national
government and the states, or on the distribution of power and
responsibilities among the various levels of government. NCUA has
determined this proposed rule does not constitute a policy that has
federalism implications for purposes of the executive order.

The Treasury and General Government Appropriations Act, 1999--
Assessment of Federal Regulations and Policies on Families

NCUA has determined that this proposed rule would not affect family
well-being within the meaning of section 654 of the Treasury and
General Government Appropriations Act, 1999, Public Law 105-277, 112
Stat. 2681 (1998).

Agency Regulatory Goal

NCUA's goal is to promulgate clear and understandable regulations
that impose minimal regulatory burden. The Board requests your comments
on whether the rule is understandable and minimally intrusive if
implemented as proposed.

List of Subjects in 12 CFR Part 707

Advertising, Consumer protection, Credit Unions, Reporting and
recordkeeping requirements, Truth in Savings.

For the reasons set forth in the preamble, NCUA amends 12 CFR Part
707 and the Official Staff Commentary as set forth below:

PART 707--TRUTH IN SAVINGS

1. The authority citation for part 707 continues to read as
follows:

Authority: 12 U.S.C. 4311.

2. Section 707.1 is amended by revising paragraph (a) to read as
follows:

Sec. 707.1 Authority, purpose, coverage, and effect on state laws.

(a) Authority. This regulation is issued by the National Credit
Union Administration to implement the Truth in Savings Act of 1991
(TISA), contained in the Federal Deposit Insurance Corporation
Improvement Act of 1991, 12 U.S.C. 3201 et seq., Public Law 102-242,
105 Stat. 2236. Information collection requirements in this regulation
have been approved by the Office of Management and Budget under the
provisions of 44 U.S.C. 3501 et seq. and have been assigned OMB No.
3133-0134.
* * * * *
3. Section 707.3 is amended by revising paragraph (a), to read as
follows, and removing paragraph (g):

Sec. 707.3 General disclosure requirements.

(a) Form. Credit unions must make the disclosures required by
Sec. Sec. 707.4 through 707.6 of this part, as applicable, clearly and
conspicuously, in writing, and in a form the member or potential member
may keep. Credit unions may provide the disclosures required by this
part to a member or potential member in electronic form, subject to
compliance with the consent and other applicable provisions of the
Electronic Signatures in Global and National Commerce Act (E-Sign Act),
15 U.S.C. 7001 et seq. Credit unions may provide the disclosures
required by Sec. Sec. 707.4(a)(2) and 707.8 to a member or potential
member in electronic form without regard to the consent or other
provisions of the E-Sign Act in the circumstances set forth in those
sections. Disclosures for each account offered by a credit union may be
presented separately or combined with disclosures for the credit
union's other accounts, as long as it is clear which disclosures are
applicable to the member or potential member's account.
* * * * *
4. Section 707.4 is amended by republishing paragraph (a)(1)(i) and
revising paragraphs (a)(1)(ii) and (a)(2)(i), to read as follows:

Sec. 707.4 Account disclosures.

(a) Delivery of account disclosures--
(1) Account opening--(i) General. A credit union must provide
account disclosures to a member or potential member before an account
is opened or a service is provided, whichever is earlier. A credit
union is deemed to have provided a service when a fee required to be
disclosed is assessed. Except as provided in paragraph (a)(1)(ii) of
this section, if a member or potential member is not present at the
credit union when the account is opened or the service is provided and
has not already received the disclosures, the credit union must mail or
deliver the disclosures no later than 10 business days after the
account is opened or the service is provided, whichever is earlier.
(ii) Timing of electronic disclosures. If a member or potential
member who is not present at the credit union uses electronic means,
for example, an Internet Web site, to open an account or request a
service, the disclosures required under paragraph (a)(1) of this
section must be provided before the account is opened or the service is
provided.
(2) Requests. (i) A credit union must provide account disclosures
to a member or potential member upon request. If a member or potential
member who is not present at the credit union makes a request, the
credit union must mail or deliver the disclosures within a reasonable
time after it receives the request and may provide the disclosures in
paper form or electronically if the member or potential member agrees.
* * * * *

Sec. 707.10 [Removed and Reserved]

4. Section 707.10 is removed and reserved.
5. Section 707.11 is amended by revising the heading, paragraphs
(a), (b)(2)(x) and (b)(2)(xi), and adding paragraphs (b)(2)(xii) and
(c) to read as follows:

Sec. 707.11 Additional disclosure requirements for overdraft
services.

(a) Disclosure of total fees on periodic statements--(1) General. A
credit union must separately disclose on each periodic statement, as
applicable:
(i) The total dollar amount for all fees or charges imposed on the
account for paying checks or other items when there are insufficient or
unavailable funds and the account becomes overdrawn; and
(ii) The total dollar amount for all fees or charges imposed on the
account for returning items unpaid.
(2) Totals required. The disclosures required by paragraph (a)(1)
of this section must be provided for the statement period and for the
calendar year-to-date.
(3) Format requirements. The aggregate fee disclosures required by
paragraph (a) of this section must be disclosed in close proximity to
fees identified under Sec. 707.6(a)(3), using a format substantially
similar to Sample Form B-10 in appendix B.

[[Page 13138]]

(b) Advertising disclosures for overdraft services. * * *
(2) * * *
(x) A notice provided to a member, such as at an ATM, that
completing a requested transaction may trigger a fee for overdrawing an
account, or a general notice that items overdrawing an account may
trigger a fee;
(xi) Informational or educational materials concerning the payment
of overdrafts if the materials do not specifically describe the credit
union's overdraft service; or
(xii) An opt-out or opt-in notice regarding the credit union's
payment of overdrafts or provision of discretionary overdraft services.
* * * * *
(c) Disclosure of account balances. If a credit union discloses
balance information to a member through an automated system, the
balance may not include additional amounts that the credit union may
provide to cover an item when there are insufficient or unavailable
funds in the member's account, whether under a service provided in its
discretion, a service subject to part 226 of this title (Regulation Z),
or a service to transfer funds from another member account. The credit
union may, at its option, disclose additional account balances that
include such additional amounts, if the credit union prominently states
that any such balance includes such additional amounts and, if
applicable, that additional amounts are not available for all
transactions.
6. Amend Appendix B to part 707, by adding B-12 to read as follows:

Appendix B to Part 707--Model Clauses and Sample Forms

* * * * *

B-12--Aggregate Overdraft and Returned Item Fees Sample Form
------------------------------------------------------------------------
Total for Total year-
this period to-date
------------------------------------------------------------------------
Total Overdraft Fees.......................... $60.00 $150.00
Total Returned Item Fees...................... 0.00 30.00
------------------------------------------------------------------------

7. In Appendix C to Part 707, the following amendments are made:
a. In Section 707.4--Account disclosures, under (a)(2)(i),
paragraphs 3. and 4. are revised.
b. In Section 707.8--Advertising, under (a) Misleading or
inaccurate advertisements, paragraph 9. is revised and new paragraph
11. is added.
c. In Section 707.8--Advertising, under (b) Permissible rates,
paragraph 4. is removed.
d. In Section 707.8--Advertising, under (e)(1)(i), paragraph 1. is
revised.
e. Section 707.10--Electronic Communication is removed and
reserved.
f. In Section 707.11, the heading is revised, (a) heading and
(a)(1) heading are revised, and paragraphs (a)(1)-1. and (a)(1)-2. are
removed.
g. In Section 707.11, paragraphs (a)(1)-3. through (a)(1)-8. are
redesignated as paragraphs (a)(1)-1. through (a)(1)-6, respectively.
h. In Section 707.11, new paragraphs (a)(1)-2. through (a)(1)-4 are
revised.
i. In Section 707.11, paragraph (a)(3)-1. is revised.
j. In Section 707.11, paragraph (a)(5)-1. is removed.
k. In Section 707.11, new paragraphs (c)-1. through (c)-3. are
added.
The amendments read as follows:

Appendix C to Part 707--Official Staff Interpretations

* * * * *

Section 707.4--Account Disclosures

(a) Delivery of Account Disclosures

* * * * *

(a)(2) Requests

(a)(2)(i)

* * * * *
3. Timing for response. Ten business days is a reasonable time
for responding to requests for account information that members or
potential members do not make in person, including requests made by
electronic means, such as by electronic mail.
4. Use of electronic means. If a member or potential member who
is not present at the credit union makes a request for account
disclosures, including a request made by telephone, e-mail, or via
the credit union's Web site, the credit union may send the
disclosures in paper form or, if the member or potential member
agrees, may provide the disclosures electronically, such as to an e-
mail address that the member or potential member provides for that
purpose, or on the credit union's Web site, without regard to the
consent or other provisions of the E-Sign Act. The regulation does
not require a credit union to provide, nor a member or potential
member to agree to receive, the disclosures required by Sec.
707.4(a)(2) in electronic form.
* * * * *

Section 707.8--Advertising

(a) Misleading or Inaccurate Advertisements

* * * * *
9. Electronic advertising. If an electronic advertisement, such
as an advertisement appearing on an Internet Web site, displays a
triggering term, such as a bonus or annual percentage yield, the
advertisement must clearly refer the member to the location where
the additional required information begins. For example, an
advertisement that includes a bonus or annual percentage yield may
be accompanied by a link that directly takes the member to the
additional information.
* * * * *
11. Additional disclosures in connection with the payment of
overdrafts. The rule in Sec. 707.3(a), providing that disclosures
required by Sec. 707.8 may be provided to the member in electronic
form without regard to E-Sign Act requirements, applies to the
disclosures described in Sec. 707.11(b), which are incorporated by
reference in Sec. 707.8(f).
* * * * *

(e) Exemption for Certain Advertisements

(e)(1) Certain Media

(e)(1)(i)

1. Internet advertisements. The exemption for advertisements
made through broadcast or electronic media does not extend to
advertisements posted on the Internet or sent by e-mail.
* * * * *

Section 707.11 Additional Disclosures Regarding the Payment of
Overdrafts

(a) Disclosure of Total Fees on Periodic Statements

(a)(1) General

* * * * *
2. Fees for paying overdrafts. Credit unions must disclose on
periodic statements a total dollar amount for all fees or charges
imposed on the account for paying overdrafts. The credit union must
disclose separate totals for the statement period and for the
calendar year-to-date. The total dollar amount includes per-item
fees as well as interest charges, daily or other periodic fees, or
fees charged for maintaining an account in overdraft status, whether
the overdraft is by check or by other means. It also includes fees
charged when there are insufficient funds because previously
deposited funds are subject to a hold or are uncollected. It does
not include fees for transferring funds from another member account
to avoid an overdraft, or fees charged under a service subject to
part 226 of this title (Regulation Z).
3. Fees for returning items unpaid. The total dollar amount for
all fees for returning items unpaid must include all fees charged to
the account for dishonoring or returning checks or other items drawn
on the account. The credit union must disclose separate totals for
the statement period and for the calendar year-to-date. Fees imposed
when deposited items are returned are not included. Credit unions
may use terminology such as ``returned item fee'' or ``NSF fee'' to
describe fees for returning items unpaid.
4. Waived fees. In some cases, a credit union may provide a
statement for the current period reflecting that fees imposed during
a previous period were waived and credited to the account. Credit
unions may, but are not required to, reflect the adjustment in the
total for the calendar year-to-date and in the applicable statement
period. For example, if a credit union assesses a fee in January and
refunds the fee in February, the credit union could disclose a year-
to-date total reflecting the amount credited, but it should not
affect the total disclosed for the

[[Page 13139]]

February statement period, because the fee was not assessed in the
February statement period. If a credit union assesses and then
waives and credits a fee within the same cycle, the credit union
may, at its option, reflect the adjustment in the total disclosed
for fees imposed during the current statement period and for the
total for the calendar year-to-date. Thus, if the credit union
assesses and waives the fee in the February statement period, the
February fee total could reflect a total net of the waived fee.
* * * * *

(a)(3) Time Period Covered by Disclosures

1. Periodic statement disclosures. The disclosures under Sec.
707.11(a) must be included on periodic statements provided by a
credit union starting with the first statement period that begins
after January 1, 2010. For example, if a member's statement period
typically closes on the 15th of each month, a credit union must
provide the disclosures required by Sec. 707.11(a)(1) on subsequent
periodic statements for that member beginning with the statement
reflecting the period from January 16, 2010 to February 15, 2010.
* * * * *

1. Balance that does not include additional amounts. For
purposes of the balance disclosure requirement in Sec. 707.11(c),
if a credit union discloses balance information to a member through
an automated system, it must disclose a balance that excludes any
funds the credit union may provide to cover an overdraft pursuant to
a discretionary overdraft service that will be paid by the credit
union under a service subject to part 226 of this title (Regulation
Z) or that will be transferred from another account held
individually or jointly by a member. The balance may, but need not,
include funds that are deposited in the member's account, such as
from a check, that are not yet made available for withdrawal in
accordance with the funds availability rules under part 229 of the
title (Regulation CC). In addition, the balance may, but need not,
include funds that are held by the credit union to satisfy a prior
obligation of the member, for example, to cover a hold for an ATM or
debit card transaction that has been authorized but for which the
credit union has not settled.
2. Additional balance. The credit union may disclose additional
balances supplemented by funds that may be provided by the credit
union to cover an overdraft, whether pursuant to a discretionary
overdraft service, a service subject to part 226 of this title
(Regulation Z), or a service that transfers funds from another
account held individually or jointly by the member, so long as the
credit union prominently states that any additional balance includes
these additional overdraft amounts. The credit union may not simply
state, for instance, that the second balance is the member's
``available balance,'' or contains ``available funds.'' Rather, the
credit union should provide enough information to convey that the
second balance includes these amounts. For example, the credit union
may state that the balance includes ``overdraft funds.'' Where a
member has opted out of the credit union's discretionary overdraft
service, any additional balance disclosed should not include funds
credit unions provide under that service. Where a member has opted
out of the credit union's discretionary overdraft service for some,
but not all transactions, e.g., the member has opted out of
overdraft services for ATM and debit card transactions, a credit
union that includes funds from its discretionary overdraft service
in the balance should convey that the overdraft funds are not
available for all transactions. For example, the credit union could
state that overdraft funds are not available for ATM and debit card
transactions.
3. Automated systems. The balance disclosure requirement in
Sec. 707.11(c) applies to any automated system through which the
member requests a balance, including, but not limited to, a
telephone response system, the credit union's internet site, or an
ATM. The requirement applies whether the credit union discloses a
balance through an ATM owned or operated by the credit union or
through an ATM not owned or operated by the credit union, including
an ATM operated by an entity that is not a financial institution. If
the balance is obtained at an ATM, the requirement also applies
whether the balance is disclosed on the ATM screen or on a paper
receipt.
* * * * *

By the National Credit Union Administration Board, on March 19,
2009.
Mary F. Rupp,
Secretary of the Board.
[FR Doc. E9-6728 Filed 3-25-09; 8:45 am]
BILLING CODE 7535-01-P