Question & Answer

Question: Can we put applications for credit on the Internet?

Answer: Federal law does not prohibit taking applications over the Internet, however, there are several steps you should take before you begin doing this. Certain disclosures, such as the ARM program disclosures and home equity plan disclosures, must be provided before the application is taken. If all your communication with the applicant is on the Internet, then you need to find a way to provide the applicant with disclosures over the Internet before you take the application.

There are not yet any standards for providing disclosures electronically. The FRB is reviewing all of its regulations in the context of electronic banking and plans to take consistent positions throughout its regulations. However, nothing is due out in the immediate future. In the meantime, ComplianceAction recommends that you put your disclosures on the Internet together with the application. We think that - at least for the time being - it is safe to assume that someone who has the computer skills to apply for credit electronically also has the skills to download the disclosures.

Copyright © 1997 Compliance Action. Originally appeared in Compliance Action, Vol. 2, No. 4, 3/97