Interim Regulations Allowing Electronic Disclosures

Equal Credit Opportunity Act - Regulation B
Docket No. R-10-40

I. Introduction

On behalf of our low-income clients, the National Consumer Law Center1, as well as Consumers Union, the Consumer Federation of America, the Consumer Law Center of the South, the National Association of Consumer Advocates, the National Consumers League, and the U.S. Public Interest Research Group,2 provide the following comments regarding the Federal Reserve Board's Interim Regulations regarding Electronic Disclosures under the Equal Credit Opportunity Act.

First, on behalf of our clients and constituents, we would like to express our serious disappointment with the Interim Final Rule. The Interim Final Rule omits important consumer protections, some of which are required by the Electronic Signatures in Global and National Commerce Act (E-Sign). Many of the problems in the Interim Rule are the same as those present in the Interim Final Rule on Electronic Disclosures under Truth in Lending, and we incorporate by reference our comments to the Board regarding the latter (Docket No. R-1043). A copy of these comments are also attached to this document (hereinafter referred to as "NCLC TILA Comments").

The Interim Rule will make electronic disclosures a burdensome and risky process for consumers. Rather then providing an even playing field for electronic disclosures, this Rule will make accessing and retaining electronic disclosures much more difficult, and considerably more risky then the use of paper disclosures. The Interim Rule allows the use of electronic disclosures in situations which will facilitate -- if not encourage -- fraud. Among others, the Interim Rule has the following serious, in not illegal, impediments:

1) The Rule fails to follow the mandates of E-Sign''s consumer consent provision, requiring that consumers ""reasonably demonstrate"" their ability to access and retain electronic information. This failure is particularly evident in face-to-face situations where the Interim Rule appears to condone a consumer''s electronic consent using computer equipment supplied by the creditor.

2) The Rule allows creditors to deliver important pre-application disclosures without consumer consent, even in face-to-face situations.

3) The Rule allows creditors to "deliver" ECOA notices to a consumer by posting them on a website and sending a paper notice notifying the consumer to access the website to obtain the disclosures. This requires a burdensome process for the consumer to actually obtain the disclosure. E-Sign specifically contemplates that electronic delivery will have the same degree of assurance of actual receipt as paper copies, not less assurance.

4) The Rule appears to allow creditors to remove disclosures from their website after 90 days without providing consumers another method of obtaining copies of the disclosures. This ignores two mandates in E-Sign: one, that consumers be permitted to request paper copies; and two, that electronic records be accessible to all parties to the transaction.

The Board knows that credit discrimination against minorities and other protected classes remains a serious problem in this nation, as evidence by recent court decisions and Department of Justice actions against various lenders.3 Yet the Interim Final Rule considerably weakens key protections in ECOA intended to prevent credit discrimination. Under the Interim Final Rule, creditors will be able to use electronic delivery to avoid providing important ECOA notices to consumer who lack access to the Internet.

Imagine an African-American woman who applies for a mortgage at the offices of a major regional or national mortgage lender. She is directed to kiosk with a monitor. The monitor flashes her an advertisement for the lender and then requires her to "click through" a consent to receive notices electronically before she can obtain a paper application. Meanwhile, the lender has posted a notice of the woman's right to a copy of the appraisal and a request for monitoring information on the lender's website. A few days later, the lender rejects this woman's application. The lender posts the notice of adverse action and notice of the right to a statement of reasons on the lender's website, then mails her an alert notice directing her to the website. However, this woman belongs to the 76.5% of African Americans who do not have a home Internet access. She never learns that she has been rejected for her loan and the reasons for rejection. Now imagine this scene occurring to hundreds of minority applicants across several states. None of these applicants ever receive actual notice of their rejection, and more importantly, the lender is never forced to give them actual notice of the reasons the lender uses to reject them. Because these applicants never see the request for monitoring information, they never provide information on their race and there is no paper trail of the potential discrimination.

The Board states that the issuance of the Interim Final Rule pursuant to section 703 of ECOA. That section requires that the Board issue regulations to "carry out the purposes" of ECOA, "to prevent circumvention or evasion thereof, or to facilitate compliance therewith." The purpose of the Equal Opportunity to Credit Act is articulated in section 502:

It is the purpose of this Act to require that financial institutions and other firms engaged in the extension of credit make that credit equally available to all creditworthy customers without regard to [sex, marital status, race, religion, national origin and age].

The notice provisions of ECOA are critical to this purpose, in that they provide red flags for prospective borrowers and alert them to possible discriminatory actions. In addition, Congress intended for ECOA notices have a secondary but "pervasive and valuable educational benefit": to provide consumers with an opportunity to correct errors that may have caused the rejection of their credit application and to inform consumers of the reasons they were denied so that they can try to become creditworthy for the next time the consumer applies for credit.4

The Interim Final Rule has the effect of creating barriers for consumers to access ECOA notices. On a systemic level, these barriers will undermine the fundamental purpose of ECOA to ensure fair access to credit for all individuals regardless of race, gender, marital status, color, age, or national origin. Moreover, it is discriminatory and predatory lenders who undoubtedly take advantage of any loopholes or barriers to providing ECOA notices that are created by the Interim Final Rule. In addition, these barriers will hinder ECOA's purpose of alerting consumers of the reasons for a denial of credit that are erroneous or easily remedied, so that the consumers have an opportunity to correct them and become creditworthy.

The balance of this comment is divided into two sections. Section II addresses the major systemic problems of the Interim Final Rule, which are based upon issues of lack of access to the Internet, differences between paper writing and electronic records, as well as the legal requirements of E-Sign's consumer consent, record integrity and retention provisions. Many of these problems are the same as those in the Interim Final Rule on Electronic Delivery under Truth in Lending, and we incorporate and cross-reference to the NCLC TILA Comments throughout. Section III provides specific comments on the Interim Final Rule that are not addressed in the previous section.

II. Overall Problems in the Interim Final Rule

A. Lack of Access to the Internet by Minorities and Older Americans

As the Department of Commerce's excellent report on the Digital Divide indicates, the majority of households are still not connected electronically. In general, over 55% of Americans still do not have Internet access to the Internet from their homes, and many of these individuals are low income.5 The NCLC TILA Comments discuss this issue at length, and we incorporate that section by reference.

With respect to ECOA, it is important to note that the digital divide is even greater for certain groups of color. A recent report shows that 76.5% of African American household and 76.4 of Latino households lack home access to the Internet, as compared to 46.1% of whites.6 These groups also have much lower rates of Internet usage (whether from home or another location, such as work or school) - only 29.3% of Afircan Americans and 23.7% of Latinos use the Internet at all, as compared to 50.3% of whites.7 And for older Americans, less than 30% of persons over the age of 50 use the Internet at all, regardlesss of location.8 Therefore, the very groups protected by ECOA are those most likely to fall victim to the problems created by the Interim Final Rule.

B. Failure to Recognize Differences between the Physical and Electronic World

ECOA's requirements that certain notices and disclosures be provided in writing is based on the belief that the consumer needs to receive them in a form the consumer can both access and keep. No one can dispute that the notices required under ECOA are critically important to consumers both to alert them as to potential discrimination and apprise them of credit problems that are inaccurate or easily remedied.

There are a number of critical differences between the physical world and the electronic world, which are discussed in full in the NCLC TILA Comment at Sections II.B and C. With respect to this Interim Final Rule, we would simply like to reiterate those major problems in the Interim Final Rule that arise because the Board has failed to recognize these critical differences in drafting the rule. These major problems are also discussed in greater depth in th NCLC TILA Comment, which we incorporate by reference.

1. The Board allows ECOA notices otherwise required to be in writing to be provided to consumers without any assurances that the consumer has access to a computer other than the creditor's equipment and access to the Internet.

The Official Staff Commentary at § 202.17(b)-5 authorizes creditors to provide ECOA notices on equipment provided by them, so long as the disclosures are also automatically printed from the creditor's equipment, sent to the consumer's e-mail address or posted on the creditor's web site. It is this last option which is most troubling, because it makes no provision for consumers who cannot access to the Internet. The Board appears to contemplate that it would be legal for important ECOA notices to be delivered to consumers standing in the creditor's place of business by posting them to a website which the consumer could access at later time, so long as the consumer electronically consents using the creditor's equipment. This is wrong, This is a complete misinterpretation of the electronic consent requirements of E-Sign. This represents a gross violation of the Board's mandate to interpret the provisions of ECOA to protect consumers.

For those consumers who are in the 59% of the population who do not have Internet access at home, they would effectively be denied copies of these notices. They would not have an email address to which the notices would be posted. Instead, these consumers would have to remember or figure out the web site address (which might involve dozens of separate characters), go to a public access computer with a printer, find the specific sub-link on which the disclosure applicable to their credit application was provided, and download it, within 90 days from the date it was first displayed.

2. The Board allows important ECOA notices to be provided to consumers in an electronic record without any assurance they will have the capacity to electronically retain them in a form they can later use.

The Board specifically permits important ECOA notices to be posted on a website for the limited period of 90 days. Many consumers will fail to access and download these notices within this period. If this is after the 90 days, as is likely, the consumer simply will not have access to these notices.9

E-Sign's section 7001(d) specifically requires that electronic records must "remain accessible to all person who are entitled to access by statute, regulation, . . . for the period required by such statute . . .." If electronic records are replacing paper writings required to be provided to consumers under ECOA, then those electronic records must remain accessible to consumers for the entire time for which the consumer is bound or affected by those records. The electronic provision of that record - posting it on the website - replaces providing the paper copy to the consumer. If the consumer has the right under ECOA to receive the record in a form the consumer can keep, then the electronic posting of that record must remain available for the entire time the consumer might need the record. Any other standard makes receiving electronic records more burdensome for the consumer, and less protective, than paper records. The purpose of E-Sign, and presumably the purpose of the Board's regulations on electronic disclosures, is to provide equivalent legal status to electronic records, not to make using electronic records more difficult then their paper equivalents.

Furthermore, Regulation B at § 202.12(b) itself requires that a creditor itself retain records of a consumer credit transaction for 25 months. The incremental cost of making those records available to the consumer for those 25 months is greatly outweighed by the benefit to consumers in increasing the availability of the notice.

3. The Board does not require electronic records to have a level of integrity similar to paper writings.

E-Sign's requirement for document integrity specifically requires that the electronic record be capable of being accurately reproduced for later reference by all parties.10 This should mean that the electronic record provided to the consumer should have the same legal viability as the electronic record retained by the creditor. Consumers must be provided a viable opportunity to keep the record, and the electronic record itself must be useful to the consumer

We must also consider the form of the electronic record which is provided. When a paper disclosure is provided, the consumer will have no trouble using that paper to prove the terms of the disclosure at a later time. The creditor however, could provide an electronic record of a disclosure which is so easy to alter that the downloaded version of the disclosure would be useless to the consumer in court. E-Sign's § 7001(e) forces the creditor to make a choice: either 1) provide the electronic record in a version which the consumer cannot inadvertently alter, or 2) retain and later use the same less secure version of the electronic record in court. The crucial point here is that the provider of the electronic record must provide to the recipient the same type of record which the provider will use to prove the terms of that record if a dispute arises later.11 The Board should specifically address this issue and mandate that the creditors follow the requirements for document integrity in E-Sign's § 7001(e).

4. The Board eliminates the consumer consent requirements for important notices, even when the consumer is in a face to face transaction

The Board allows for important notices to be considered to be electronically provided to a consumer without fulfilling the consumer consent requirements of E-Sign.12 This includes the notice of the right to a copy of the appraisal, the request for monitoring information, and the notice of the right to a statement of reasons for adverse actions for small business applicants. This is a serious deviation from the requirements of the E-Sign law, yet the Board fails to provide reasonable explanation or justification for these exceptions. Specifically, the FRB failed to demonstrate that they met the E-Sign Act's requirements for exempting a category of documents from the consumer consent requirements, i.e., that "such exemption is necessary to eliminate a substantial burden on electronic commerce and will not increase the material risk of harm to consumers."13

Clearly the above notices "relate to a transaction" as is required for E-Sign's consumer consent to apply. All consumer notices and disclosures required to be in writing are covered by the consumer consent requirement. The exclusion of the above notices is an illegal interpretation of E-Sign's consent provisions.

We are especially concerned about the exclusion in the context of face to face transactions. If the exclusion were limited to the situation where consumers were actually completing and submitting a credit application on-lime, it certainly makes some sense. However, by allowing the above notices to be visually displayed on a computer screen to a consumer standing in a store applying for credit, we are inviting problems. Even worse, an unscrupulous creditor could conceivably have a consumer submit a paper application in a face to face transaction, but provide the above disclosures electronically (via posting to a web site) without ensuring that the consumer actually sees them or is capable of accessing them later on.

Furthermore, the Official Staff Commentary at § 202.17(b)-3(i) includes an additional and important protection for on-line applications, requiring the creditor to provide required disclosures by having them either automatically appear on the screen or be provided via a link that consumers cannot bypass before submitting an application. This protection does not apply to the situation in which the consumer submits a paper application in a face to face transaction, but the creditor provides the exempted disclosures electronically.

5. The Board does not require simple and inexpensive methods to confirm that a consumer has received and opened an ECOA notice

Despite the availability of numerous computer programs which ascertain that an email has been opened, and the fact that this electronic check actually ensures a consumer protection, the Board goes out of its way to emphasize that the creditor has no obligation to ensure that the consumer has received and opened the disclosure. The Board justifies omitting this requirement on the basis of creditors' complaints that a program to verify receipt and opening an email is "too costly and burdensome." Yet there is a program built into the ubiquitous Microsoft Outlook which allows senders to ascertain that emails have appeared on the recipient's screen. This is just one of a multitude of similar technologies; for an extensive list of programs that verify the receipt of an email, see the NCLC TILA Comments at Section III. Surely a feature built into software used by millions, if not more, individual consumers is not too burdensome for creditors to use.

6. The Board allows essential ECOA notices to be posted on a website and the consumer notified about that posting by physical world postal mail. 14

Allowing a creditor to send an alert notice by postal mail is both indefensible and ridiculous. First, it erects substantial barriers for consumer to access the ECOA notices. The consumer who receives a postal alert notice has to find a computer with Internet access and a working printer. He or she then needs to plug in the correct address for the web page containing the information regarding the consumer's particular transaction (which is likely to involve 50 to 100 separate characters which must be placed in perfect order) to access a ECOA disclosure that is currently just mailed to the consumer. Further, this disclosure need only stay on the website for 90 days. So if the consumer is not able to jump through these hoops in time, the consumer will never have a copy of crucial information that affects important rights.

It is likely that creditors will be using postal mail to send these notices to consumers whose email has bounced back to the creditor. If their email has bounced back, that is a good indication that the consumer no longer has Internet access. That situation should automatically trigger a reversion to physical world delivery (with the concomitant, but reasonable costs associated with this change in delivery systems). It would be grossly unfair, and clearly in violation of the consumer protection purposes of ECOA, to allow creditors to continue to post notices electronically when there was good reason to believe that the consumers no longer have Internet access.

As the discussion in Section II.A of the NCLC TILA Comments point out, over 10% of the households connected to the Internet in one year will no longer be connected the following year. We cannot assume that electronic communication is as ubiquitous in U.S. households around the nation as it is in the halls of government in the nation's capital.

It simply makes no sense to allow a creditor mail a notice of a notice to a consumer! Why not just include the ECOA notice itself in the mail?

C. Proposals to Ensure Real Electronic Delivery of ECOA Notices

1. The Board must only permit consent in face-to-face transactions when the consumer supplies the computer equipment used to electronically consent.

The Board should only permit electronic consent to be effectively accomplished in face to face transactions when the consumer uses equipment supplied by the consumer. This is the only way the Board can be assured that consumers

1) are not being coerced into accepting electronic disclosures,
2) have actually consented "in a manner which reasonably demonstrates that the consumer can access information,15" and
3) have the ability to retain the electronic disclosures provided them.16

In face to face transactions, this means that if the consumer uses the computer equipment provided by the business seeking consent, the consumer has not established the ability to access electronic disclosures. Only by using the consumer's own equipment to electronically can the actual capacity of the consumer to access and retain be assured.

2. The Board should articulate the consequences of a failure of consumer consent

If the consumer has not properly consented to the receipt of that writing electronically - by electronically consenting pursuant to section 101(c)(1)(C)(ii) - the document cannot be considered to have been provided to the consumer. (For a fuller discussion of the reasons for this, see the NCLC TILA Comments at Section II.E.2.) The consequences for not providing the document to the consumer are those that are specified in the underlying law. In ECOA, this means that the creditor did not provide the required ECOA notices, and is liable for actual and punitive damages, equitable relief, and attorneys fees.

3. The Board should limit the exemption from consumer consent in § 202.17(c) to only those situations where the consumer completes and submits an application on-line.

4. The Board should require creditors to include the request for monitoring information on applications completed and submitted on-line.

Currently, the Official Staff Commentary essentially exempts electronic applications from the need to request monitoring information. The Commentary at § 202.13(b)-4 states that a creditor may treat an application taken through an electronic medium without video capability (which would include the Internet) as a telephone application. Telephone applications do not require the creditor to request monitoring information.17 We believe, as the Board itself proposed in the 1999 proposed revisions to Reg. B, that electronic applications without video capability should be treated as taken by mail, i.e., the application form itself should include a request for monitoring information.18

III. Specific Comments on the Interim Final Rule

Need for Exemptions

The Interim rules request comment on whether there is a need for the Board to exercise its exemption authority under section 104(d) of E-Sign. No exemptions are necessary at this time. E-Sign requires that exemptions can only be provided only if the exemption "will not increase the material risk of harm to consumers. As the FTC is about to announce their findings that the consumer consent provisions provide more benefit then burdens, there would be no justification to exempt any notices required to be in writing under ECOA from the consumer consent requirement. Indeed, the exemptions allowed by the Board for "pre-transaction notices" to be delivered electronically without previous consumer consent are entirely illegal and without justification.

§ 202.4(b) Language of disclosures

It is helpful to consumers that the interim rule permits creditors to provide notices in languages other than English, as long as notices in English are available to consumers who request them. However, it would be even better to require that if the notices are given in a language other than English, they must also be provided in English. This would especially help elderly, monolingual consumers who may get advice from relatives, friends, or children who are far more literate in English than the senior's native language, In addition, the regulation should clearly state that this can only occur when the non-English notices are requested by the consumer or the transaction is negotiated in the language in which the disclosure is given. It would be a shame to see creditors use the right to give non-English language notices as a way to hide the substance of the notices from English language consumers.

§ 202.17(a) Requirements for electronic communications

(a) Definition. We commend the Board for limiting electronic communications to visual text messages. This corresponds with the requirement in E-Sign disqualifying oral communications or recordings from electronic records for consumers.19

(b) General rule. We commend the Board for imposing a new clear and conspicuous standard for electronic disclosures. However, we are concerned that the Board in the preamble states that it is permissible to place other text, including advertisements, on the same screen as the ECOA disclosures, so long as the clear and conspicuous standard is met. While the preamble does somewhat attempt to discourage this practice, even half-heartedly allowing creditors to do so raises the potential problem of creditors attempting to distract consumers from ECOA disclosures using the various graphic features very common to websites. The Board should make clear in the Official Staff Commentary that use of distracting features for advertisements, such as flashing text or banner boxes, on the same screen as the ECOA disclosures is likely to offend the clear and conspicuous standard.

(c) When consent is required. As we articulated above, we believe the exclusions for the notices required by Regulation B at § 202.5a(a)(2)(i), § 202.9(a)(3)(i)(B), and § 202.13(a) is not permitted under E-Sign's consent provisions.

(d) Address or location to receive electronic communication.

(1) Email address. The Board correctly notes in its Official Staff Commentary that the email address to which the creditor sends notices must be established for general purposes and not just for the purpose of receiving communications from the creditor. However, for the reasons articulated in the NCLC TILA Comments at Section II.E.1, when electronic disclosures are agreed to in face to face transactions, the creditor should also be prohibited from establishing the email address.

(2)(i) Notice of disclosure posted on a web site may be sent to the consumer at a postal address

For the reasons stated above and in the NCLC TILA Comments at III, we believe this provision should be eliminated.

(ii) Disclosure must be available for 90 days. For the reasons stated above in Section II.B.2. and in the NCLC TILA Comments at Section III, the ECOA notices should be made available for a minimum of 25 months if they are delivered by posting on a website.

(e) Redelivery. The Board has bent over backwards to make it easy for creditors to satisfy their obligations under ECOA, without adding new requirements to ensure that consumers actually receive electronic disclosures. The Board proposes a minimal standard for redelivery of bounced back email. For the reasons stated in II.B.5 above and in the NCLC TILA Comments at Section III, we propose that the following be added to the redelivery requirement in § 226.36(e).

Disclosures shall be considered delivered to the consumer only when the email to the consumer including the notice (or the weblink to the notice) is acknowledged, or automatically acknowledged by a flag that tells the sender it has been opened.

The recommended language gives two ways to trigger effectiveness of a notice: 1) manual acknowledgment or 2) a technological automatic acknowledgment received by the sender.20 This is technological possible, easy, and fair. It would go a long to ensure that electronic communications benefit consumers as much as they benefit creditors.

IV. Conclusion

We are disappointed with the Board's Interim regulations on electronic disclosures. The Board appears to have substantially ignored the consumer protection purposes of E-Sign and to have disregarded Congressional intent to protect consumers evidenced in E-Sign.

We request the Board to immediately withdraw these Interim regulations and rewrite them with the following changes:

1) In face to face transactions, consumers cannot "reasonably demonstrate" their ability to access information in the electronic form unless they are using hardware under their own control.

2) All notices required to be provided to consumers in writing under ECOA, including the notice of the right to appraisal, can only be considered provided electronically if the consumer has consented electronically to receiving them.

3) All notices required to be provided to consumers must be emailed to the consumer or posted on a website, after the consumer has received an email which includes a weblink to the disclosure.
4) Notices which are provided on a website, rather than emailed to the consumer, must be left on the website a minimum of 25 months.

5) Notices electronically delivered to a consumer should only be considered delivered a) when the creditor can determine that the consumer has accessed the weblink containing the disclosure, or b) the consumer acknowledges receipt of an email, or c) an automatic acknowledgement notifies the creditor that the consumer has opened the email.

6) On-line applications should be required to include the request for monitoring information.

______________________________

1 The National Consumer Law Center is a nonprofit organization specializing in consumer issues on behalf of low-income people. We work with thousands of legal services, government and private attorneys, as well as community groups and organizations, from all states who represent low-income and elderly individuals on consumer issues. As a result of our daily contact with these advocates, we have seen examples of predatory practices against low-income people in almost every state in the union. It is from this vantage point - many years of dealing with the abusive transactions thrust upon the less sophisticated and less powerful in our communities - that we supply these comments. We have led the effort to ensure that electronic transactions subject to both federal and state laws provide an appropriate level of consumer protections. We publish and annually supplement twelve practice treatises which describe the law currently applicable to all types of consumer transactions. These comments are written by Margot Saunders, Managing Attorney of the D.C. Office, and Chi Chi Wu, Staff Attorney in the Boston office.

2 Consumers Union is the publisher of Consumer Reports.
The Consumer Federation of America is a nonprofit association of over 280 pro-consumer groups, with a combined membership of 50 million people. CFA was founded in 1968 to advance consumers' interests through advocacy and education.
The Consumer Law Center of the South is a non-profit, public interest organization, incorporated in Georgia in 1995. The Center's mission is to advocate for consumer protection through consumer education, legislative reform, involvement in the regulatory process and litigation and support. Professor Mark Budnitz of Georgia State College of Law is the Chairman of the Board.
The National Association of Consumer Advocates (NACA) is a non-profit corporation whose members are private and public sector attorneys, legal services attorneys, law professors, and law students, whose primary focus involves the protection and representation of consumers. NACA's mission is to promote justice for all consumers.
The National Consumers League, is America's pioneer consumer organization. NCL is a private, non-profit membership organization dedicated to representing consumers.
The U.S. Public Interest Research Group is the national lobbying office for state PIRGs, which are non-profit, non-partisan consumer advocacy groups with half a million citizen members around the country.

3 Cason v. Nissan Motor Acceptance Corp., Civ. No. 3-98-0223 (M.D. Tenn. 2000); Coleman v. General Motors Acceptance Corp.,196 F.R.D. 315 (M.D. Tenn. 2000); United States v. Albank (Civ. # 97-1206) (N.D.N.Y. 1997); United States. v. Associates National Bank (D.Del. 1999); and United States v. Deposit Guaranty National Bank, (S.D.Miss. 1999). The settlement agreements in the latter three actions are available at www.usdoj.gov.

4 S. Rep. No. 589, 94th Cong., 2d Sess. (1976) reprinted in 1976 U.S.C.C.A.N. 403, 406.

5 U.S. Department of Commerce, Economic and Statistics Administration & National Telecommunications and Information Administration, "Falling Through the Net: Toward Digital Inclusion" A Report on Americans' Access to Technology Tools," October, 2000. Figure II-13.

6 Id. at I-10.

7Id. at II-4.

8 Id. at II-2

9 §202.17(d)(2)(ii).

10 E-Sign § 7001(e).

11 This requirement should be articulated in 202.17(b).

12 §202.17(c)

13 15 U.S.C. § 7004(d)(1)(emphasis added).

14 § 202.17(d)(2)(i).

15 As is required by E-Sign's § 7001(c)(1)(C)(ii).

16 As is required for any electronic disclosures provided to consumers which replace writings. E-Sign requires that consumers must be able to retain electronic records replacing written records provided to them. See § 7001(c)(1)(C)(i) and § 7001(c)(1)(D) requiring a new electronic consumer consent if a change in the hardware or software requirements needed to access or retain electronic records creates a material risk that the consumer will not be able to access or retain a subsequent electronic record that the was the subject of the consent. (Emphasis added.)

It certainly makes no sense to interpret E-Sign's requirement for consumer consent to test the consumer's capacity to retain documents only in the event of a second consent, but not in the first consent. Clearly, the first consent process must ensure that the consumer has the capacity to retain the electronic records as well.

17 Official Staff Commentary § 202.13(b)-3.

18 64 Fed. Reg. 44,581.

19 § 7001(c)(6).

20 We recommend that, as an additional question to be addressed, the FTC and the Department of Commerce seek information about the cost, availability, and effectiveness of technological automatic acknowledgment systems.