| (B) Explanation of debt suspension agreement (applicable
if the contract has a debt suspension feature). "If (product name)
is activated, your duty to pay the loan principal and interest to
the bank is only suspended. You must fully repay the loan after the
period of suspension has expired." If applicable: "This includes interest
accumulated during the period of suspension."
(C) Amount of fee.
(i) For closed-end credit: "The total fee for (product
name) is _____________."
(ii) For open-end credit, either:
(I) "The monthly fee for (product name) is based on
your account balance each month multiplied by the unit-cost, which
is _______;" or
(II) "The formula used to compute the fee is ______________."
(D) Lump sum payment of fee (applicable if a bank offers
the option to pay the fee in a single payment, prohibited where the
debt subject to the contract is a residential mortgage loan). "You
may choose to pay the fee in a single lump sum or in monthly or quarterly
payments. Adding the lump sum of the fee to the amount you borrow
will increase the cost of (product name)."
(E) Lump sum payment of fee with no refund (applicable
if a bank offers the option to pay the fee in a single payment for
a no-refund debt cancellation contract, prohibited where the debt
subject to the contract is a residential mortgage loan.) "You have
the option to purchase (product name) that includes a refund of the
unearned portion of the fee if you terminate the contract or prepay
the loan in full prior to the scheduled termination date. Prices of
refund and no-refund products may differ."
(F) Refund of fee paid in lump sum (applicable where
customer pays the fee in a single payment and the fee is added to
the amount borrowed, prohibited where the debt subject to the contract
is a residential mortgage loan). Either:
(i) "You may cancel (product name) at any time and
receive a refund;"
(ii) "You may cancel (product name) within ______ days
and receive a full refund;" or
(iii) "if you cancel (product name) you will not receive
a refund."
(G) Use of card or credit line restricted (applicable
if the contract restricts the use of card or credit line when customer
activates protection). "If (product name) is activated, you will be
unable to incur additional charges on the credit card or use the credit
line."
(H) Termination of (product name). Either:
(i) "You have no right to cancel (product name)"; or
(ii) "You have the right to cancel (product name) in
the following circumstances _____________:" and
(I) "The bank has no right to cancel (product name);"
or
(II) "The bank has the right to cancel (product name)
in the following circumstances ___________________."
(I) Eligibility requirements, conditions, and exclusions.
"There are eligibility requirements, conditions, and exclusions that
could prevent you from receiving benefits under (product name)." Either:
(i) "The following is a summary of the eligibility
requirements, conditions, and exclusions (summary provided by bank);"
or
(ii) "You may find a complete explanation of the eligibility
requirements, conditions, and exclusions in paragraphs _________ of
the (product name) agreement."
(3) Disclosure requirements; timing and method of disclosures.
(A) Short form disclosures. The bank shall make the
short form disclosures orally at the time the bank first solicits
the purchase of a contract.
(B) Long form disclosures. The bank shall make the
long form disclosures in writing before the customer completes the
purchase of the contract. If the initial solicitation occurs in person,
then the bank shall provide the long form disclosures in writing at
that time.
(C) Special rule for transactions by telephone. If
the contract is solicited by telephone, the bank shall provide the
short form disclosures orally and shall mail the long form disclosures
and, if appropriate, a copy of the contract to the customer within
3 business days, beginning on the first business day after the telephone
solicitation.
(D) Special rule for solicitations using written mail
inserts or "take one" applications. If the contract is solicited through
written materials such as mail inserts or "take one" applications,
the bank may provide only the short form disclosures in the written
materials if the bank mails the long form disclosures to the customer
within 3 business days, beginning on the first business day after
the customer contacts the bank to respond to the solicitation, subject
to the requirements of subsection (g)(3) of this section.
(E) Special rule for electronic transactions. The disclosure
described in this section may be provided electronically in a manner
consistent with the requirements of the Uniform Electronic Transactions
Act, Texas Business and Commerce Code Chapter 322, and the Electronic
Signatures in Global and National Commerce Act, 15 U.S.C. §7001
et seq.
(4) Form of disclosures.
(A) Disclosures must be understandable. The disclosures
required by this subsection must be in plain language, i.e., conspicuous,
simple, direct, readily understandable, and designed to call attention
to the nature and significance of the information provided.
(B) Disclosures must be meaningful. The disclosures
required by this subsection must be in a meaningful form. Examples
of methods that could call attention to the nature and significance
of the information provided include:
(i) a plain-language heading to call attention to the
disclosures;
(ii) a typeface and type size that are easy to read;
(iii) wide margins and ample line spacing;
(iv) boldface or italics for key words; and
(v) distinctive type style and graphic devices, such
as shading or sidebars, when the disclosures are combined with other
information.
(5) Advertisements and other promotional material.
The short form disclosures are required in advertisements and promotional
material for contracts unless the advertisements and promotional materials
are of a general nature describing or listing the services or products
offered by the bank.
(g) Affirmative election to purchase and acknowledgment
of receipt of disclosures required.
(1) Affirmative election and acknowledgment of receipt
of disclosures. Before entering into a contract the bank must obtain
a customer's written affirmative election to purchase a contract and
written acknowledgment of receipt of the disclosures required by subsection
(f) of this section. The election and acknowledgment information must
be in plain language, i.e., conspicuous, simple, direct, readily understandable,
and designed to call attention to their significance. The election
and acknowledgment satisfy these standards if they conform with the
requirements in subsection (f)(2) of this section.
(2) Special rule for telephone solicitations. If the
sale of a contract occurs by telephone, the customer's affirmative
election to purchase may be made orally, provided the bank:
(A) maintains sufficient documentation to show that
the customer received the short form disclosures and then affirmatively
elected to purchase the contract;
(B) mails the affirmative written election and written
acknowledgment, together with the long form disclosures required by
subsection (f)(2) of this section, to the customer within 3 business
days after the telephone solicitation, and maintains sufficient documentation
to show it made reasonable efforts to obtain the documents from the
customer; and
(C) permits the customer to cancel the purchase of
the contract without penalty not later than 30 days after the date
the bank has mailed the long form disclosures to the customer.
(3) Special rule for solicitations using written mail
inserts or "take one" applications. If the contract is solicited through
written materials such as mail inserts or "take one" applications
and the bank provides only the short form disclosures in the written
materials, then the bank shall mail the acknowledgment of receipt
of disclosures, together with the long form disclosures required by
subsection (f) of this section, to the customer within 3 business
days, beginning on the first business day after the customer contacts
the bank or otherwise responds to the solicitation. The bank may not
obligate the customer to pay for the contract until after the bank
has received the customer's written acknowledgment of receipt of disclosures
unless the bank:
(A) maintains sufficient documentation to show that
the bank provided the acknowledgment of receipt of disclosures to
the customer as required by this section;
(B) maintains sufficient documentation to show that
the bank made reasonable efforts to obtain from the customer a written
acknowledgment of receipt of long form disclosures; and
Cont'd... |
