Consumer Regulations

B	Equal Credit Opportunity	Q	Interest on Demand Deposits, Advertising
C	Home Mortgage Disclosure	V	Fair Credit Reporting
D	Reserve Requirements	Z	Truth in Lending
E	Electronic Fund Transfers	AA	Consumer Complaint Procedures
H	Membership Requirements for State Chartered Banks	BB	Community Reinvestment
M	Consumer Leasing	CC	Availability of Funds and Collection of Checks
P	Privacy of Consumer Financial Information	DD	Truth in Savings

	Fair Credit Reporting Act		Fair Debt Collection Practices Act
	Fair Housing Act		Right to Financial Privacy Act
	Real Estate Settlement Procedures Act

Regulation B

Equal Credit Opportunity
Regulation B prohibits creditors from discriminating against credit applicants, establishes guidelines for gathering and evaluating credit information, and requires written notification when credit is denied.

The regulation prohibits creditors from discrimination against applicants on the basis of age, race, color, religion, national origin, sex, marital status, or receipt of income from public assistance programs.

Model credit application forms are provided in the regulation to facilitate compliance. By properly using these forms, creditors can be assured of being in compliance with the application requirements.

The regulation also requires creditors to give applicants a written notification of rejection of an application, a statement of the applicant's rights under the Equal Credit Opportunity Act, and a statement either of the reasons for the rejection or of the applicant's right to request the reasons. Creditors who furnish credit information, when reporting information on married borrowers, must report information in the names of each spouse.

The regulation establishes a special residential mortgage credit monitoring system for regulatory agencies by requiring that lenders ask for and note the race, national origin, sex, marital status, and age of residential mortgage applicants. The regulation covers all credit transactions (unlike other regulations that may cover only consumer credit), with some modifications applicable to certain classes of transactions.

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Regulation C

Home Mortgage Disclosure
Regulation C requires certain mortgage lenders to disclose data regarding their lending patterns.

The regulation carries out the Home Mortgage Disclosure Act of 1975, providing citizens and public officials with data to help determine whether lenders are meeting the credit needs of their communities and complying with fair lending laws.

The regulation applies to banks, savings and loans, credit unions and mortgage companies that have offices in Metropolitan Statistical Areas and that meet certain coverage criteria relating to asset size and volume of lending. These institutions must record and make available to the public data on mortgage loans that they originate or purchase and also on applications for such loans. In many instances, the race or national origin, gender, and income of the applicant must be reported as well as the location of the property and the type of loan.

The Board may exempt from Regulation C any institution complying with substantially similar state laws.

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Regulation D

Reserve Requirements
Regulation D imposes uniform reserve requirements on all depository institutions with transaction accounts or nonpersonal time deposits; defines such deposits and requires reports of deposits to the Federal Reserve.

This regulation sets uniform reserve requirements for all depository institutions. The reserve requirements are based on various deposit account classifications. The regulation is important to consumers because it defines transaction,
savings and time deposit account categories.

Transaction accounts are:

checking accounts
negotiable order of withdrawal
(NOW) accounts
share draft accounts at credit unions
automatic transfer service (ATS) accounts

Savings accounts are:

share accounts at credit unions
passbook savings accounts
statement savings accounts
money market deposit accounts

Time deposits are:

certificates of deposits (CDs)
certain "club" accounts
share certificates at credit unions

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Regulation E

Electronic Fund Transfers
Regulation E establishes the rights, liabilities, and responsibilities of parties in electronic fund transfers (EFT) and protects consumers using EFT systems.

Regulation E prescribes rules for the solicitation and issuance of EFT cards; governs consumers' liability for unauthorized electronic fund transfers (resulting, for example, from lost or stolen cards); requires institutions to disclose certain terms and conditions of EFT services; provides for documentation of electronic transfers (on periodic statements, for example)- sets up a resolution procedure for errors; and covers notice of crediting and stoppage of preauthorized payments from a customer's account.

Stored-value cards (also known as "smart cards") and home banking by personal computer would be subject to Regulation E because the act governs electronic fund transfers.

Regulation H

Membership Requirements for State Chartered Banks
This regulation is important for consumers because it requires lenders to disclose information regarding flood hazard areas which require additional insurance.

This regulation sets forth the procedures for state-chartered banks to become members of the Federal Reserve Bank System and states the privileges and requirements of membership. Of importance for consumers is the requirement that lenders disclose to borrowers if their structure is in a designated flood hazard area and that the lender require borrowers to purchase flood insurance if their improved property is in a designated flood hazard area.

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Regulation M

Consumer Leasing
Regulation M implements the consumer leasing provisions of the Truth in Lending Act.

Regulation M applies to leases of personal property for more than 4 months for personal, family, or household use. It requires leasing companies to disclose in writing the cost of a lease, including a security deposit, monthly payments, license, registration, taxes and maintenance fees and, in the case of an open-end lease, whether a 'balloon payment' may be applied. It also requires written disclosure of the terms of a lease, including insurance, guarantees, responsibility for servicing the property, standards for wear and tear, and any option to buy.

Regulation P

Regulation P requires a financial institution to provide notice to its customers about its privacy policies and practices. The regulation provides consumers with the right to prevent a financial institution from disclosing nonpublic personal information about the consumer to nonaffiliated third parties, by providing a means to "opt out" of the disclosure.

Regulation Q

Interest on Demand Deposits, Advertising
Regulation Q prohibits member banks from paying interest on demand deposits.

Federal law prohibits the payment of interest on demand deposits, as defined by section 204.2(b) of Regulation D. The prohibition of payment of interest on demand deposits is designed to address the lack of uniformity that contributed to bank failures during the depression. The prohibition prevents either strong institutions or troubled institutions from creating a bidding war for funds.

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Regulation V

Regulation V improves the procedures by which consumers access their credit files or credit scores that are maintained by reporting agencies. The regulation also requires financial institutions to identify patterns, practices, or other activities regarding a consumer's account that may indicate the existence of fraudulent activity or identity theft.

Regulation Z

Truth in Lending
Regulation Z prescribes uniform methods of computing the cost of credit, disclosure of credit terms, and procedures for resolving errors on certain credit accounts. It also gives consumers the right to cancel certain transactions involving their principal residence.

The credit provisions of the regulation apply to all persons who extend consumer credit more than 25 times a year or, in the case of consumer credit secured by real estate, more than 5 times a year. Consumer credit is generally defined as credit offered or extended to individuals for personal, family, or household purposes, where the credit is repayable in more than four installments or for which a finance charge is imposed.

The major provisions of the regulation require lenders to:

provide borrowers with meaningful, written information on essential credit terms, including the cost of credit expressed as an annual percentage rate (APR).
respond to consumer complaints of billing errors on certain credit accounts within a specific period.
identify credit transactions on periodic statements of open-end credit accounts.
provide certain rights regarding credit cards.
provide good faith estimations of disclosure information before consummation of certain residential mortgage transactions.
provide "early" disclosure of credit terms to consumers interested in adjustable rate mortgages (ARMS) and home equity lines of credit.
comply with special requirements when advertising credit.

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Regulation AA

Consumer Complaint Procedures
Regulation AA establishes consumer complaint procedures and defines unfair or deceptive acts or practices of banks in connection with extensions of credit to consumers.

Under the regulation, a consumer complaint concerning either an alleged unfair or deceptive practice, or an alleged violation of law or regulation by a state member bank, will be investigated by the Federal Reserve. Complaints regarding institutions other than state member banks will be referred to the appropriate Federal Agency.

To file a consumer complaint concerning a national bank contact the local Office of the Comptroller of the Currency.
To file a consumer complaint concerning a state member bank (a bank that is a member of the Federal Reserve System) contact the Federal Reserve Consumer Help Center.
To file a consumer complaint concerning a nonmember bank or a savings bank (a bank that is not a member of the Federal Reserve System) contact the local Federal Deposit Insurance Corporation ('FDIC') office.
To file a consumer complaint concerning a savings and loan contact the local Office of Thrift Supervision ('OTS').
To file a consumer complaint concerning a credit union contact the local National Credit Union Administration ('NCUA').

Regulation AA also prohibits the use of certain consumer contract provisions, an accounting practice known as 'pyramiding' (charging a late fee on an unpaid late fee) and misrepresentation of cosigners liability.

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Regulation BB

Community Reinvestment
Regulation BB implements the Community Reinvestment Act (CRA) and is designed to encourage banks to help meet the credit needs of their communities.

Under Regulation BB, each bank office must make available a statement for public inspection indicating, on a map, the communities served by that office and the type of credit the bank is prepared to extend within the communities served. The regulation requires each bank to maintain a file of public comments relating to its CRA statement. The Federal Reserve, in examining a bank, must assess its record in meeting the credit needs of the entire community, including low- and moderate-income neighborhoods, and must take account of the record in considering certain bank applications. In addition, the act requires public disclosure of a bank's CRA rating and CRA performance evaluations.

Regulation CC

Availability of Funds and Collection of Checks
Regulation CC implements the Expedited Funds Availability Act (EFA) and governs the availability of funds and the collection and return of checks.

Regulation CC establishes availability schedules, as provided in the EFA, under which depository institutions must make funds deposited into transaction accounts available for withdrawal. The regulation also provides that depository institutions must disclose their funds availability policies to their customers. In addition, Regulation CC establishes rules designed to speed the collection and return of checks and imposes a responsibility on banks to return unpaid checks expeditiously. The provisions of Regulation CC govern all checks, not just those collected through the Federal Reserve System.

Regulation DD

Truth in Savings
Regulation DD requires depository institutions to disclose the terms of deposit accounts to consumers.

The regulation applies to consumer deposit accounts offered by depository institutions (except credit unions, which are governed by rules of the National Credit Union Administration).

The major provisions of the regulation require institutions to:

provide consumer account holders with written information about important terms of an account, including the annual percentage yield.
provide fee and other information on any periodic statement sent to consumers.
use certain methods to determine the balance on which interest is calculated.
comply with special requirements when advertising deposit accounts.

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Fair Credit Reporting Act

This act defines a credit reporting agency and adopts procedures for meeting the needs of lenders while maintaining fair and equitable use of consumer credit information.

This act establishes procedures for correcting mistakes on a consumer's credit report and requires that a consumer's record only be provided for legitimate business purposes. It also requires that the record be kept confidential. A credit record may be retained seven years for judgements, liens, suits, and other adverse information except for bankruptcies, which may be retained for ten years. If a consumer is denied credit, a free credit report may be requested within 30 days of denial.

Fair Debt Collection Practices Act

This act defines which financial institutions are subject to the act and prohibits abusive debt collection practices.

The purpose of this act is to eliminate abusive, deceptive, and unfair debt collection practices. It applies to third party debt collectors or to those who use a name other than their own in collecting debts. Most all financial institutions collect debts in their own name and therefore the act applies to only a few of them. Complaints regarding debt collection practices should generally be filed with the Federal Trade Commission.

Fair Housing Act

This act prohibits discrimination on the basis of race, color, sex, religion, handicap, familial status or national origin in the financing, sale or rental of housing.

The Fair Housing Act (FHA) was implemented as part of the Civil Rights Act, Title VIII, in 1968. FHA applies to the sale and rental of housing in addition to residential real estate-related transactions such as lending.

The FHA provides that it is unlawful for any person or entity whose business includes engaging in residential real estate-related transactions to discriminate against any person in making available such a transaction, or in the terms or conditions of such a transaction. Such discrimination cannot be based on race, color, religion, sex, handicap, familial status, or national origin.

The FHA and the Equal Credit Opportunity Act (ECOA) prohibit pre-screening or discouraging loan applicants. Individuals should be encouraged to apply, regardless of whether an individual lender believes the loan will or will not be approved. Under the prohibition, banks should ensure their advertising policies and underwriting policies and procedures do not have the effect of inadvertently discouraging or pre-screening potential applicants. Additionally, loan officers are prohibited from discriminating against persons who exercise their right under the Consumer Credit Protection Act.

Use of excessive and burdensome credit qualifying standards for certain groups of persons is prohibited under FHA. Also prohibited are the imposition on minority loan applicants of: less favorable interest rates; less favorable terms, conditions, or requirements; or more arduous administration of foreclosure, late charges, or penalties.

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Right to Financial Privacy Act

This act establishes procedures for the release financial records of consumers to government authorities.

This act provides customers of financial institutions have a right to expect that their financial activities will have a reasonable amount of privacy from federal government scrutiny. The act establishes specific procedures and exceptions concerning the release of customer financial records to the federal government.

Real Estate Settlement Procedures Act

This act requires lenders to provide consumers with information concerning the costs involved in residential mortgages before they obtain their loan.

One of the provisions of this act requires that consumers be provided with pertinent and timely disclosures regarding the nature and costs of the real estate settlement process. The act also protects consumers against certain abusive practices, such as kickbacks, and sets limitations on the use of escrow accounts. The act requires disclosures for mortgage escrow accounts at closing and annually thereafter. Disclosures are required to itemized charges paid by the borrower and what is paid by the servicer from escrow account.

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