The Federal Reserve Board on Wednesday issued an interim rule that allows banks to send savings account statements electronically to customers who request the service.
However, online disclosures for consumer loans were postponed again as the Fed opted instead to put out for public comment a proposal revised from last year.
The revised proposal attempts to "balance" concerns of banks, consumer advocates, and members of Congress, according to Fed Governor Edward M. Gramlich. The Fed received more than 200 letters commenting on the first proposal, which was issued March 18, 1998.
The new proposal clarifies several issues left vague in the original plan. For instance, banks would have to start the on-line disclosures with a standardized document for all the consumer protection regulations. The disclosure would also have to include a toll-free telephone number or an e-mail address for customers to reach institutions.
The Fed is also proposing that banks be required to find out whether a customer's computer is equipped to receive or retrieve the disclosures.
Disclosures covered by the proposal include notices of a change in interest rates or other terms, credit denial or other "adverse action," billing errors, leasing costs, credit card statements, and the information delivered when an account is opened.
As in the original proposal, an on-line disclosure could only be delivered to customers who request it.
The Fed said disclosures on transactions made in person would still have to be delivered on paper. These transactions tend to include mortgage loan closings, automobile loans and leases, and door-to-door credit sales.
Consumer advocates had expressed concern that branch customers would be pressured into shifting to electronic service, Mr. Gramlich said.
Institutions could choose whether to e-mail consumers or make the disclosures available on Web sites. Banks using Web sites would then have to notify customers when disclosures are posted and would have to post the disclosure for 90 days.
The Fed also said banks could make disclosures relating to solicitations on-line, such as bank fee schedules and credit card costs, without a consumer's consent.
"This is a very tricky issue," Mr. Gramlich said of the overall proposal. His colleagues raised a host of questions in an open meeting.
For instance, Fed Governor Roger W. Ferguson Jr. wanted to know how customer identities would be verified.
The proposal calls for signatures or "similar" authentication, which Fed staff members said could include passwords and digital signatures.
"We're going to have to let this evolve and follow what other laws provide," Mr. Ferguson said.
The staff told Fed Gov. Edward W. Kelley Jr. that customers may ask to go back to paper disclosures and advised Fed Governor Laurence H. Meyer that tampering with on-line disclosures "would be very difficult."Legislation tracking the Fed proposal was introduced in late July.
It is designed to foster on-line banking, which is developing slower than other types of electronic commerce, according to the bill's co-sponsor, Rep. Marge Roukema, R-N.J., chairwoman of House Banking's financial institutions subcommittee.
Rep. John J. LaFalce, D-N.Y., and six other House Banking Committee Democrats recently warned the Fed against diluting consumer protections. In an Aug. 6 letter to the Fed, the lawmakers said last year's proposal was "tantamount to repeal of the disclosure requirements" in consumer protection laws. A spokeswoman said the committee is reviewing the revised proposal.
