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Dreher Tomkies LLP
Attorneys at Law
2750 Huntington Center
41 South High Street
Columbus, Ohio 43215
Telephone: 614-628-8000
Fax: 614-628-1600

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The Federal Reserve Board (FRB) published proposed rules to establish more uniform standards for providing disclosures under several consumer protection regulations: Regulation B, Regulation E, Regulation M, Regulation Z and Regulation DD.

Under the consumer financial services and fair lending laws administered by the FRB, consumers must be provided with disclosures that they will notice and understand. Disclosures must be “clear and conspicuous” under Regulations B (Equal Credit Opportunity), M (Consumer Leasing), P (Privacy of Consumer Financing Information), Z (Truth in Lending) and DD (Truth in Savings), and “clear and readily understandable” under Regulation E (Electronic Fund Transfers). The “clear and conspicuous” standard is currently defined using similar but not identical language in the various regulations.

The FRB determined that the standard in Regulation P (i.e., that a disclosure is “reasonably understandable and designed to call attention to the nature and significance of the information” in the disclosure) is “articulate[d] with greater precision” than the standards set forth in the other regulations. In the proposed rules, the FRB proposed (i) conforming the general disclosure standard under Regulation E to “clear and conspicuous” and (ii) adding the Regulation P definition of “clear and conspicuous” to the other regulations to provide consistent guidance among the regulations.

In addition, the proposed rules included examples of how to meet the standard, including guidance regarding type size, which states that 12-point type generally meets the standard of being easy to read, but less than 8-point type would likely be too small. In addition, the proposed rule to Regulation Z provided that an interpretive rule of construction would be added to Regulation Z to clarify that the word “amount” represents a numerical amount and does not allow a narrative description of the “amount.”

The FRB requests comment by January 30, 2004.

Mike Tomkies and Deborah Freye