(a) Form of disclosures.
(1) General.
(i) The creditor shall make the disclosures
required by this subpart clearly and conspicuously.
(ii) The creditor shall make the disclosures
required by this subpart in writing,
7 in a form that the consumer may keep,
8 except that:
(A) The following disclosures need not be
written: Disclosures under section 226.6(b)(3) of charges that are
imposed as part of an open-end (not home-secured) plan that are not
required to be disclosed under section 226.6(b)(2) and related disclosures
of charges under section 226.9(c)(2)(iii)(B); disclosures under section 226.9(c)(2)(vi);
disclosures under section 226.9(d) when a finance charge is imposed
at the time of the transaction; and disclosures under section 226.56(b)(1)(i).
(B) The following disclosures
need not be in a retainable form: Disclosures that need not be written
under paragraph (a)(1)(ii)(A) of this section; disclosures for credit
and charge card applications and solicitations under section 226.5a;
home-equity disclosures under section 226.5b(d); the alternative summary
billing-rights statement under section 226.9(a)(2); the credit and
charge card renewal disclosures required under section 226.9(e); and
the payment requirements under section 226.10(b), except as provided
in section 226.7(b)(13).
(iii) The disclosures required by this
subpart may be provided to the consumer in electronic form, subject
to compliance with the consumer 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.). The disclosures required by sections
226.5a, 226.5b, and 226.16 may be provided to the consumer in electronic
form without regard to the consumer consent or other provisions of
the E-Sign Act in the circumstances set forth in those sections.
(2) Terminology.
(i) Terminology used
in providing the disclosures required by this subpart shall be consistent.
(ii) For home-equity
plans subject to section 226.5b, the terms
finance charge and
annual percentage rate, when required to be disclosed with a
corresponding amount or percentage rate, shall be more conspicuous
than any other required disclosure.
9 The terms need not be more conspicuous when used for periodic
statement disclosures under section
226.7(a)(4) and for advertisements
under section 226.16.
(iii) If disclosures are required to be presented in a tabular format
pursuant to paragraph (a)(3) of this section, the term penalty
APR shall be used, as applicable. The term penalty APR need
not be used in reference to the annual percentage rate that applies
with the loss of a promotional rate, assuming the annual percentage
rate that applies is not greater than the annual percentage rate that
would have applied at the end of the promotional period; or if the
annual percentage rate that applies with the loss of a promotional
rate is a variable rate, the annual percentage rate is calculated
using the same index and margin as would have been used to calculate
the annual percentage rate that would have applied at the end of the
promotional period. If credit insurance or debt cancellation or debt
suspension coverage is required as part of the plan, the term required shall be used and the program shall be identified by its name. If
an annual percentage rate is required to be presented in a tabular
format pursuant to paragraph (a)(3)(i) or (a)(3)(iii) of this section,
the term fixed, or a similar term, may not be used to describe
such rate unless the creditor also specifies a time period that the
rate will be fixed and the rate will not increase during that period,
or if no such time period is provided, the rate will not increase
while the plan is open.
(3) Specific
formats.
(i) Certain disclosures for credit and
charge card applications and solicitations must be provided in a tabular
format in accordance with the requirements of section 226.5a(a)(2).
(ii) Certain disclosures
for home-equity plans must precede other disclosures and must be given
in accordance with the requirements of section 226.5b(a).
(iii) Certain account-opening
disclosures must be provided in a tabular format in accordance with
the requirements of section 226.6(b)(1).
(iv) Certain disclosures provided on
periodic statements must be grouped together in accordance with the requirements
of section 226.7(b)(6) and (b)(13).
(v) Certain disclosures provided on
periodic statements must be given in accordance with the requirements
of section 226.7(b)(12).
(vi) Certain disclosures accompanying
checks that access a credit card account must be provided in a tabular
format in accordance with the requirements of section 226.9(b)(3).
(vii) Certain disclosures
provided in a change-in-terms notice must be provided in a tabular
format in accordance with the requirements of section 226.9(c)(2)(iv)(D).
(viii) Certain disclosures
provided when a rate is increased due to delinquency, default or as
a penalty must be provided in a tabular format in accordance with
the requirements of section 226.9(g)(3)(ii).
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(b) Time of disclosures.
(1) Account-opening disclosures.
(i) General rule. The creditor shall furnish account-opening disclosures
required by section 226.6 before the first transaction is made under
the plan.
(ii) Charges imposed as part of an open-end (not
home-secured) plan. Charges that are imposed as part of an open-end
(not home-secured) plan and are not required to be disclosed under
section 226.6(b)(2) may be disclosed after account opening but before
the consumer agrees to pay or becomes obligated to pay for the charge,
provided they are disclosed at a time and in a manner that a consumer
would be likely to notice them. This provision does not apply to charges
imposed as part of a home-equity plan subject to the requirements
of section 226.5b.
(iii) Telephone purchases. Disclosures
required by section 226.6 may be provided as soon as reasonably practicable
after the first transaction if:
(A) The first transaction occurs
when a consumer contacts a merchant by telephone to purchase goods
and at the same time the consumer accepts an offer to finance the
purchase by establishing an open-end plan with the merchant or third-party
creditor;
(B) The merchant
or third-party creditor permits consumers to return any goods financed
under the plan and provides consumers with a sufficient time to reject
the plan and return the goods free of cost after the merchant or third-party
creditor has provided the written disclosures required by section
226.6; and
(C) The consumer’s
right to reject the plan and return the goods is disclosed to the
consumer as a part of the offer to finance the purchase.
(iv) Membership fees.
(A) General. In general, a creditor may not
collect any fee before account-opening disclosures are provided. A
creditor may collect, or obtain the consumer’s agreement to pay, membership
fees, including application fees excludable from the finance charge
under section 226.4(c)(1), before providing account-opening disclosures
if, after receiving the disclosures, the consumer may reject the plan
and have no obligation to pay these fees (including application fees)
or any other fee or charge. A membership fee for purposes of this
paragraph has the same meaning as a fee for the issuance or availability
of credit described in section 226.5a(b)(2). If the consumer rejects
the plan, the creditor must promptly refund the membership fee if
it has been paid, or take other action necessary to ensure the consumer
is not obligated to pay that fee or any other fee or charge.
(B) Home-equity plans. Creditors offering home-equity plans subject
to the requirements of section 226.5b are not subject to the requirements
of paragraph (b)(1)(iv)(A) of this section.
(v) Application fees. A creditor may collect an application fee
excludable from the finance charge under section 226.4(c)(1) before
providing account opening disclosures. However, if a consumer rejects the plan
after receiving account-opening disclosures, the consumer must have
no obligation to pay such an application fee, or if the fee was paid,
it must be refunded. See section 226.5(b)(1)(iv)(A).
(2) Periodic statements.
(i) Statement required. The creditor shall
mail or deliver a periodic statement as required by section 226.7
for each billing cycle at the end of which an account has a debit
or credit balance of more than $1 or on which a finance charge has
been imposed. A periodic statement need not be sent for an account
if the creditor deems it uncollectible, if delinquency collection
proceedings have been instituted, if the creditor has charged off
the account in accordance with loan-loss provisions and will not charge
any additional fees or interest on the account, or if furnishing the
statement would violate federal law.
(ii) Timing
requirements.
(A) Credit card
accounts under an open-end (not home-secured) consumer credit plan. For credit card accounts under an open-end (not home-secured) consumer
credit plan, a card issuer must adopt reasonable procedures designed
to ensure that:
(1) Periodic statements are mailed or delivered at least 21
days prior to the payment due date disclosed on the statement pursuant
to section 226.7(b)(11)(i)(A); and
(2) The card issuer does not treat
as late for any purpose a required minimum periodic payment received
by the card issuer within 21 days after mailing or delivery of the
periodic statement disclosing the due date for that payment.
(B) Open-end consumer credit plans. For accounts under an open-end
consumer credit plan, a creditor must adopt reasonable procedures
designed to ensure that:
(1) If a grace period applies to the account:
(i) Periodic statements are mailed
or delivered at least 21 days prior to the date on which the grace
period expires; and
(ii) The creditor does not impose finance charges as a result
of the loss of the grace period if a payment that satisfies the terms
of the grace period is received by the creditor within 21 days after
mailing or delivery of the periodic statement.
(2) Regardless of whether
a grace period applies to the account:
(i) Periodic statements are mailed or delivered at least 14
days prior to the date on which the required minimum periodic payment
must be received in order to avoid being treated as late for any purpose;
and
(ii) The creditor
does not treat as late for any purpose a required minimum periodic
payment received by the creditor within 14 days after mailing or delivery
of the periodic statement.
(
3) For purposes of paragraph
(b)(2)(ii)(B)
of this section, “grace period” means a period within which any credit
extended may be repaid without incurring a finance charge due to a
periodic interest rate.
10(3) Credit and charge card application and solicitation
disclosures. The card issuer shall furnish the disclosures for
credit and charge card applications and solicitations in accordance
with the timing requirements of section 226.5a.
(4) Home-equity
plans. Disclosures for home-equity plans shall be made in accordance
with the timing requirements of section 226.5b(b).
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(c) Basis of disclosures and use of estimates. Disclosures shall reflect the terms of the legal obligation between
the parties. If any information necessary for accurate disclosure is unknown
to the creditor, it shall make the disclosure based on the best information
reasonably available and shall state clearly that the disclosure is
an estimate.
(d) Multiple
creditors; multiple consumers. If the credit plan involves more
than one creditor, only one set of disclosures shall be given, and
the creditors shall agree among themselves which creditor must comply
with the requirements that this regulation imposes on any or all of
them. If there is more than one consumer, the disclosures may be made
to any consumer who is primarily liable on the account. If the right
of rescission under section 226.15 is applicable, however, the disclosures
required by sections. 226.6 and 226.15(b) shall be made to each consumer
having the right to rescind.
(e) Effect of subsequent events. If a disclosure
becomes inaccurate because of an event that occurs after the creditor
mails or delivers the disclosures, the resulting inaccuracy is not
a violation of this regulation, although new disclosures may be required
under section 226.9(c).
