We receive credit card applications that the customers print out from our website and mail in to us. We would like to send an e-mail to the customer notifying him/her that the application has been approved and that the credit card will be mailed to them shortly (eventhough we don't go through the E-Sign procedures to get consent for electronic disclosure.) Would this violate E-Sign and the electronic disclosure section of Reg B? In my view the customer still receives formal approval when the card is mailed out so the e-mail is more of a customer service to let them know sooner. Reg B addresses when notification is considered to occur in 202.9 Comment #3 as follows:

3. When notification occurs.
Notification occurs when a creditor delivers or mails a notice to the applicant's last known address or, in the case of an oral notification, when the creditor communicates the credit decision to the applicant.

However, 202.9(a)(1) Comment #2 states:

2. Notification of approval.
Notification of approval may be express or by implication. For example, the creditor will satisfy the notification requirement when it gives the applicant the credit card, money, property, or services requested.

We would only do this for approvals. All adverse action notices would be sent on paper via regular mail. Thanks for your help.

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Terry Fitz, CRP
All statements & opinions are my own and not necessarily those of my employer.

Terry, I think you're OK with transmitting approvals via e-mail, unless you have a state law issue. Here's why:
1. E-SIGN is only an issue if you want to use an electronic document to replace on required to be in writing.
2. Nothing in Reg B requires that a notice of approval be in writing.

I think the proper interpretation of the combination of comments you provide in relation to what you propose is this:

By virtue of your first cited comment, your notification takes place when you send the e-mail. Since you only have 30 days from the date of completed application to provide a notice of action taken, you could send the e-mail on the 30th day after the completed application and still wait another week to send the credit card and would not have a Reg B violation. Without the e-mail, you would either have to provide an oral notice or send the card by the 30th day. In your proposal, sending the e-mail would be explicit notice of approval.

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Jim Bedsole, CRCM, CBA, CFSA

Opinions expressed are my own, and do not necessarily reflect those of my employer.

Thanks Jim. So eventhough the e-mail would be considered the formal notice it would be permissible under E-Sign because Reg B does not require notice of approval to be in writing. I think we will need to establish a procedure to retain documentation of the e-mail messages since more emphasis will be placed on their timing as opposed to the date of issuance of the card for purposes of Reg B notification timeframes.

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Terry Fitz, CRP
All statements & opinions are my own and not necessarily those of my employer.

E-sign doesn't really have to apply to this because you are still sending out the "approval" in the form of a card and disclosures. You haven't relied on E-sign to receive the application or make disclosures. They print and mail in an application. (They should have some disclosures with the app, but it is reasonable that if they get the app, they got the disclosures.)

E-sign could apply if you first received their consent to notify them that way and they demonstrated the ability to communicate in that manner.

Case in point, you customer who is a Luddite goes to a neighbors house. The neighbor boasts about all that can be done on the Net and your customer decides to see for himself. He gets an application from you, but doesn't anticipate continued use of this medium. Should he be notified? Not in this manner.

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Andy Zavoina
Opinions stated are not necessarily that of my employer.

Andy, let me see if I understand. Does this mean that you disagree with Jim's statement that the e-mail message would be considered the actual approval notice under Reg B since it goes out to the consumer before the card?

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Terry Fitz, CRP
All statements & opinions are my own and not necessarily those of my employer.

If you communicate an approval in that manner and the consumer has consented to use of the medium I'd agree that you communicated your approval.

But the example would not conform to the spirit or technical requirements of E-sign because, among other requirements, E-sign requires that "the consumer has affirmatively consented to such use and has not withdrawn such consent;".

You must have an agreement in place to use the Net in place of traditional written communications and in the example, that wasn't in place. Without preexisting consent it wouldn't be a valid notification.

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Andy Zavoina
Opinions stated are not necessarily that of my employer.

[This message has been edited by Andy Z (edited 01-22-2002).]

You'd only be able to communicate the approval to the applicant by e-mail if he had provided you with that e-mail address in the application process. Because there is no requirement that approval notification be "in writing" sending the notice via e-mail should not require E-SIGN compliance (i.e., explicit acceptance, demonstration of ability to receive, etc.). If nothing else, the customer ultimately will receive notification when he receives the card. While I agree with Andy that the example cited would not conform with E-SIGN, I contend that it doesn't have to conform with E-SIGN because you are not replacing a notice required to be "in writing" with a notice electronically. You are replacing a notice that can be oral, written, or even only implied because the card is sent.

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Jim Bedsole, CRCM, CBA, CFSA

Opinions expressed are my own, and do not necessarily reflect those of my employer.

Jim and I are in agreement on the big picture, but the details are fuzzy. I believe that if you have to communicate the approval within a 30 day time period, sending an e-mail on day 30 would not be an effective means of communication if the consumer hasn't agreed to receive it that way.

That said, the example I provided of using a neighbors access is a bit extreme and if the consumer didn't want to be reached in that medium they shouldn't have added an e-mail address in that blank.

Perhaps the lesson learned here is that the box should say "e-mail address where you can be reached" and there is an implied consent for this purpose. If they are using an Internet Cafe or some temporary connection they wouldn't fill in a temporary address.

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Andy Zavoina
Opinions stated are not necessarily that of my employer.

[This message has been edited by Andy Z (edited 01-23-2002).]