FACT Act Notices

Question: We are looking at FACT Act notices and trying to minimize the number of pieces of paper that we have to send to customers. One idea was to include the credit history notice (regarding reporting late payments to the credit bureau and the negative effect on the customer's credit history) in the Truth in Lending notice. Several people questioned whether we can do this without having a problem with Regulation Z. What should we do?

Answer: Whether combining these notices causes a problem with Truth in Lending depends on where you put the notice. For closed end credit, Regulation Z requires most information to be inside the federal box. Any other information that goes in the box must be directly related to the required disclosures. The credit history notice is not closely related to the TIL disclosures and therefore should not be placed in the federal box. However, information such as this could be placed on the same piece of paper as long as it is outside the box. For example, the itemization of the amount financed must be placed outside the box and the credit history notice could be placed in much the same way.

We do have one word of caution on using combined notices. If you do this, the notice would only go to customers who have closed-end loans. Other credit transactions are also subject to the notice requirement and you would have to also have a notification procedure for those types of credit.

Copyright © 2004 Compliance Action. Originally appeared in Compliance Action, Vol. 9, No. 9, 9/04