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CEO 348_ Amendment to Rule on Unfair Credit Card Account Practices

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               Office of Thrift Supervision                                                           Montrice G. Yakimov
                                                                       Managing Director, Compliance and Consumer Protection
               Department of the Treasury
               1700 G Street, N.W., Washington, DC 20552 • (202) 906-6173




                                                                       May 13, 2010


MEMORANDUM FOR:                    CHIEF EXECUTIVE OFFICERS

FROM:                              Montrice G. Yakimov, Managing Director
                                   Compliance and Consumer Protection

SUBJECT:                           Amendment to Rule on Unfair Credit Card Account Practices


On January 29, 2009, OTS used its authority under the Federal Trade Commission (FTC) Act
and the Home Owners’ Loan Act to adopt a rule on Unfair or Deceptive Acts or Practices
(UDAP Rule). 1 This rule was followed by a proposal issued May 5, 2009, to make
clarifications. 2 OTS issued the UDAP Rule jointly with the Federal Reserve Board (FRB) and
the National Credit Union Administration (NCUA), to prevent five practices that the agencies
found to be unfair. The agencies required that consumers receive a reasonable amount of time to
make their credit card payments, prohibited payment allocation methods that unfairly maximize
interest charges, double-cycle billing, and, in the subprime credit card market, limited fees that
substantially reduce the credit available to consumers. In addition, the agencies prohibited
issuers from raising the interest rate on an existing credit card balance when a consumer is
paying credit card bills on time.

On May 22, 2009, President Obama signed the Credit Card Accountability Responsibility and
Disclosure Act of 2009 (Credit CARD Act) into law. However, the consumer protections
contained in the UDAP Rule as proposed to be revised by May 2009 clarifications are subsumed
within the Credit CARD Act. In addition, the Credit CARD Act codified several amendments to
the Truth in Lending rules issued by the FRB and restricted additional practices. 3

The Credit CARD Act and amendments to Regulation Z provide the consumer protections
envisioned by the agencies’ UDAP rulemakings, but they are not identical. To avoid confusion
and duplication, OTS is amending its UDAP Rule to remove subpart C, which deals with unfair
consumer credit card account practices, and the corresponding staff commentary in the
Appendix, so that they will not go into effect.



1
  See Unfair and Deceptive Practices Rule, 74 Fed. Reg. 5498 (January 29, 2009).
2
  See 74 Fed. Reg. 20804.
3
  CEO Letter #308 summarizes the Credit CARD Act.
                                               -2-

Notably, OTS will continue to use its supervisory authority to enforce the FTC Act prohibitions
against unfair or deceptive acts or practices that relate to any product or service offered by an
institution. As explained in the attached Federal Register notice, the OTS will apply the
standards for unfairness and deception previously announced in the agencies’ UDAP
rulemakings and used by the other regulatory agencies. To assist OTS examiners in this analysis,
OTS has issued a new Examination Handbook section that addresses unfair or deceptive acts or
practices under the FTC Act. 4

For additional information, please contact April Breslaw, Director, Consumer Regulations, (202)
906-6989 or Suzanne McQueen, Compliance Program Analyst, (202) 906-6459.



Attachment: Federal Register notice




4
    CEO Letter #347
                                                                                                                                                                                                 23565

                                                  Rules and Regulations                                                                                         Federal Register
                                                                                                                                                                Vol. 75, No. 85

                                                                                                                                                                Tuesday, May 4, 2010



                                                  This section of the FEDERAL REGISTER                    Alexandria, VA 22302. E-mail:                         amending its rule at 12 CFR part 535
                                                  contains regulatory documents having general            Angela.Kline@FNS.USDA.GOV.                            titled ‘‘Prohibited Consumer Credit
                                                  applicability and legal effect, most of which                                                                 Practices.’’ The rule was published in
                                                  are keyed to and codified in the Code of                SUPPLEMENTARY INFORMATION:      This
                                                                                                          document announces approval by OMB                    the Federal Register on January 29,
                                                  Federal Regulations, which is published under                                                                 2009 (January 2009 UDAP rule). 74 FR
                                                  50 titles pursuant to 44 U.S.C. 1510.                   of the information collection
                                                                                                          requirements contained in the final rule              5498. OTS issued its rule jointly with
                                                  The Code of Federal Regulations is sold by              entitled, Food Stamp Program:                         rules issued by the Board of Governors
                                                  the Superintendent of Documents. Prices of              Eligibility and Certification Provisions              of the Federal Reserve (Board) and the
                                                  new books are listed in the first FEDERAL               of the Farm Security and Rural                        National Credit Union Administration
                                                  REGISTER issue of each week.                                                                                  (NCUA). The rule was scheduled to go
                                                                                                          Investment Act of 2002, which was
                                                                                                          published on January 29, 2010 (75 FR                  into effect on July 1, 2010.
                                                                                                          4912).                                                   The January 2009 UDAP rule
                                                  DEPARTMENT OF AGRICULTURE                                                                                     contained three subparts to part 535 and
                                                                                                            Dated: April 27, 2010.
                                                  Food and Nutrition Service                                                                                    an Appendix to part 535 containing an
                                                                                                          Julia Paradis,
                                                                                                                                                                Official Staff Commentary. Subparts A
                                                                                                          Administrator, Food and Nutrition Service.            and B addressed general provisions and
                                                  7 CFR Parts 272 and 273                                 [FR Doc. 2010–10391 Filed 5–3–10; 8:45 am]            credit practices respectively. Subpart C
                                                  RIN 0584–AD30                                           BILLING CODE 3410–30–P                                addressed unfair consumer credit card
                                                                                                                                                                account practices. The Supplementary
                                                  Food Stamp Program: Eligibility and
                                                                                                                                                                Information to the January 2009 UDAP
                                                  Certification Provisions of the Farm
                                                                                                          DEPARTMENT OF THE TREASURY                            rule described all these changes in
                                                  Security and Rural Investment Act of
                                                                                                                                                                detail.
                                                  2002; Approval of Information                           Office of Thrift Supervision
                                                  Collection Request                                                                                               On May 5, 2009, OTS published
                                                                                                                                                                proposed amendments to the January
                                                  AGENCY: Food and Nutrition Service                      12 CFR Part 535                                       2009 UDAP rule (May 2009 proposed
                                                  (FNS), USDA.                                            [Docket ID OTS–2010–0009]                             amendments). See 74 FR 20804.
                                                  ACTION: Final rule, notice of approval of
                                                                                                          RIN 1550–AC38                                            On May 22, 2009, the President
                                                  Information Collection Request (ICR).                                                                         signed into law the Credit Card
                                                  SUMMARY: The final rule entitled, Food                  Unfair or Deceptive Acts or Practices;                Accountability Responsibility and
                                                  Stamp Program: Eligibility and                          Amendment                                             Disclosure Act of 2009 (Credit CARD
                                                  Certification Provisions of the Farm                                                                          Act). Public Law 111–24, 123 Stat. 1734
                                                                                                          AGENCY: Office of Thrift Supervision,                 (2009). The Credit CARD Act primarily
                                                  Security and Rural Investment Act of
                                                                                                          Treasury (OTS).                                       amended the Truth in Lending Act (15
                                                  2002, was published on January 29,
                                                  2010. This final rule implemented 11                    ACTION: Final rule.                                   U.S.C. 1601 et seq.) and established a
                                                  provisions of the Farm Security and                                                                           number of new substantive and
                                                                                                          SUMMARY: OTS is amending its                          disclosure requires to establish fair and
                                                  Rural Investment Act of 2002 (FSRIA),
                                                                                                          regulations at 12 CFR part 535 titled                 transparent practices pertaining to open-
                                                  which established new eligibility and
                                                                                                          ‘‘Prohibited Consumer Credit Practices’’              end consumer credit plans, including
                                                  certification requirements for the receipt
                                                                                                          to avoid duplication and inconsistency                credit card accounts. On July 22, 2009,
                                                  of food stamps. Those provisions
                                                                                                          with the Credit Card Accountability                   the Board published an interim final
                                                  simplified program administration,
                                                                                                          Responsibility and Disclosure Act of                  rule amending Regulation Z (12 CFR pt.
                                                  allowed States greater flexibility, and
                                                                                                          2009 and the rules of the Board of                    226) and the staff commentary to
                                                  provided enhanced access to eligible
                                                                                                          Governors of the Federal Reserve                      implement those provisions of the
                                                  populations. The Food, Conservation,
                                                  and Energy Act of 2008 changed the                      implementing that statute.                            Credit CARD Act that became effective
                                                  program name from Food Stamp                            DATES: This rule is effective on July 1,              on August 20, 2009. See 74 FR 36077.
                                                  Program to Supplemental Nutrition                       2010.                                                 On February 22, 2010, the Board
                                                  Assistance Program (SNAP). The Office                   FOR FURTHER INFORMATION CONTACT:                      published a new final rule amending
                                                  of Management and Budget (OMB)                          Richard Bennett, Senior Compliance                    Regulation Z and the staff commentary
                                                  cleared the associated information                      Counsel, Regulations and Legislation                  in order to implement the Credit CARD
                                                  collection requirements on March 26,                    Division, (202) 906–7409; or April                    Act. See 75 FR 7658.
                                                  2010. This document announces                           Breslaw, Director, Consumer                              The Credit CARD Act and the Board’s
                                                  approval of the ICR.                                    Regulations, (202) 906–6989, at Office of             implementing rule do not affect the
                                                  DATES: The ICR associated with the final                Thrift Supervision, 1700 G Street, NW.,               provisions of subparts A and B and the
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                                                  rule was approved by OMB on March                       Washington, DC 20552.                                 corresponding portion of the Appendix
                                                  26, 2010, under OMB Control Number                      SUPPLEMENTARY INFORMATION:                            in the January 2009 UDAP rule.
                                                  0584–0064.                                                 On December 18, 2008, OTS used its                 Accordingly, today’s final rule
                                                  FOR FURTHER INFORMATION CONTACT:                        authority under the Federal Trade                     repromulgates those provisions, subject
                                                  Angela Kline, Chief, Certification Policy               Commission Act (15 U.S.C. 41–58) and                  only to necessary conforming
                                                  Branch, Program Development Division,                   the Home Owners’ Loan Act (12 U.S.C.                  amendments. These provisions will take
                                                  FNS, U.S. Department of Agriculture,                    1461 et seq.) to adopt a final rule titled            effect on July 1, 2010 as previously
                                                  3101 Park Center Drive, Room 812,                       ‘‘Unfair or Deceptive Acts or Practices’’             scheduled.


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                                                  23566                Federal Register / Vol. 75, No. 85 / Tuesday, May 4, 2010 / Rules and Regulations

                                                     In contrast, the practices addressed in              though OTS is removing subpart C and                  Paperwork Reduction Act of 1995
                                                  subpart C and the corresponding portion                 the corresponding portion of the                         Office of Management and Budget
                                                  of the Appendix in the January 2009                     Appendix.                                             (OMB) regulations require OMB to
                                                  UDAP rule, as proposed to be revised by                    OTS issued its January 2009 UDAP                   review and approve information
                                                  the May 2009 proposed amendments are                    rule and the May 2009 proposed                        collection requirements imposed by
                                                  subsumed within, though not identical                   amendments jointly with rules issued                  agency rule. OTS is submitting
                                                  to, the practices addressed by Credit                                                                         notification to OMB of revisions to an
                                                                                                          by the Board and the NCUA. Today’s
                                                  CARD Act and the Board’s                                                                                      approved paperwork section. In this
                                                                                                          final rule, however, applies only to the
                                                  implementing rule. In some respects,                                                                          final rule, OTS has removed the
                                                                                                          OTS rule and does not affect the rules
                                                  the Credit CARD Act and the Board’s                                                                           paperwork requirements for subpart C,
                                                  implementing rule address the same                      issued by the Board and NCUA. OTS
                                                                                                          notes that on February 22, 2010, the                  which were contained in section
                                                  practices addressed in the January 2009                                                                       535.24(a).
                                                  UDAP rule, but in somewhat different                    Board issued a corresponding final rule
                                                  ways that afford greater consumer                       (75 FR 7925) and on February 10, 2010,                Executive Order 12866
                                                  protection. In order to avoid duplication               the NCUA issued a corresponding final
                                                                                                                                                                  OTS previously provided a regulatory
                                                  and inconsistency, OTS is removing                      rule (75 FR 6558).                                    impact analysis under Executive Order
                                                  subpart C and the corresponding portion                 Administrative Procedure Act                          12866. 74 FR at 5551–5558. The
                                                  of the Appendix. For procedural                                                                               analysis addressed the impact of the
                                                  reasons, OTS is making these changes                      Under 5 U.S.C. 553(b)(B) of the                     consumer credit card practices in
                                                  effective July 1, 2010. Consequently,                   Administrative Procedure Act (APA), an                subpart C to part 535. Since this final
                                                  subpart C and the corresponding portion                 agency may, for good cause, find (and                 rule removes subpart C, its impact will
                                                  of the Appendix will not take effect.                   incorporate the finding and brief                     be eliminated.
                                                  Likewise, OTS does not intend to                        statement of reasons therefore in the
                                                  finalize the May 2009 proposed                                                                                Unfunded Mandates Reform Act of
                                                                                                          rule issued) that notice and public                   1995
                                                  amendments.                                             procedure thereon are impracticable,
                                                     The Credit CARD Act and the Board’s                  unnecessary, or contrary to the public                  OTS has determined that the
                                                  implementing rule do not affect the                     interest. The conforming amendments to                requirements of this final rule will not
                                                  standards for unfairness or deception                   subparts A and B and the corresponding                result in expenditures by State, local,
                                                  under the FTC Act. Accordingly, in                      portion of the Appendix are technical in              and tribal governments, or by the
                                                  analyzing whether an act or practice is                                                                       private sector, of $100 million or more
                                                                                                          nature. The substance of subparts A and
                                                  unfair, OTS will continue to apply the                                                                        in any one year. Accordingly, a
                                                                                                          B was previously subject to notice and
                                                  standards described in the                                                                                    budgetary impact statement is not
                                                                                                          comment, as described in detail in the
                                                  Supplementary Information to the                                                                              required under section 202 of the
                                                                                                          SUPPLEMENTARY INFORMATION contained
                                                  January 2009 UDAP rule. See 74 FR at                                                                          Unfunded Mandates Reform Act of
                                                  5502–04. Under these standards, an act                  in January 2009 UDAP rule.
                                                                                                                                                                1995. OTS previously certified that the
                                                  or practice is unfair where: (1) It causes                The consumer protections contained                  January 2009 UDAP rule would not
                                                  or is likely to cause substantial injury to             in subpart C to part 535 as proposed to               result in expenditures by State, local,
                                                  consumers; (2) the injury cannot be                     be revised by the May 2009 proposed                   and tribal governments, of $100 million
                                                  reasonably avoided by consumers                         amendments are subsumed within,                       or more in any one year, but may result
                                                  themselves; and (3) the injury is not                   though not identical to, the protections              in expenditures by the private sector in
                                                  outweighed by countervailing benefits                   of the Credit CARD Act and the Board’s                excess of that threshold. See 74 FR at
                                                  to consumers or to competition.                         implementing rule. Accordingly, the                   5558. Since this final rule removes
                                                  Established public policy may also be                   removal of subpart C is necessary to                  subpart C, any impact of the January
                                                  considered in the analysis of whether a                 avoid duplication and inconsistency.                  2009 UDAP rule will be even further
                                                  particular act or practice is unfair, but               Therefore, OTS has determined that                    reduced. Accordingly, this final rule
                                                  public policy may not serve as the                      publishing a notice of proposed                       will not result in expenditures by State,
                                                  primary basis for a determination that                  rulemaking and providing opportunity                  local, and tribal governments, or by the
                                                  an act or practice is unfair. An act or                 for public comment are unnecessary.                   private sector, of $100 million or more
                                                  practice is deceptive where: (1) there is                                                                     in any one year.
                                                  a representation or omission of                         Regulatory Flexibility Act
                                                  information that is likely to mislead                                                                         Executive Order 13132 Determination
                                                  consumers acting reasonably under the                     Pursuant to section 605(b) of the                     OTS previously certified that the
                                                  circumstances; and (2) that information                 Regulatory Flexibility Act (Pub. L. 96–               January 2009 UDAP rule does not have
                                                  is material to consumers.                               354, 5 U.S.C. 601), the OTS Director                  any federalism implications for
                                                     Further, as noted in the                             certifies that these amendments to 12                 purposes of Executive Order 13132. See
                                                  Supplementary Information to the                        CFR part 535 will not have a significant              74 FR at 5558. That determination
                                                  January 2009 UDAP rule, the fact that a                 economic impact on a substantial                      continues to apply.
                                                  particular act or practice is not                       number of small entities. OTS
                                                  addressed in a rule on unfair or                        previously certified that the January                 List of Subjects in 12 CFR Part 535
                                                  deceptive acts or practices, does not                   2009 UDAP rule would not have a                         Consumer credit, Consumer
                                                  limit the ability of an agency to make a                significant economic impact on a                      protection, Credit, Credit cards,
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                                                  determination that the practice is unfair               substantial number of small entities. See             Deception, Intergovernmental relations,
                                                  or deceptive. 74 FR at 5504.                            74 FR at 5549–50. Since this final rule               Savings associations, Trade practices,
                                                  Accordingly, OTS will continue to                       removes subpart C, any impact of the                  Unfairness.
                                                  consider the analysis of consumer credit                January 2009 UDAP rule will be even
                                                                                                                                                                Authority and Issuance
                                                  card account practices contained in the                 further reduced. Accordingly, this final
                                                  Supplementary Information to the                        rule will not have a significant                      ■ For the reasons discussed in the
                                                  January 2009 UDAP rule and the May                      economic impact on a substantial                      preamble, OTS revises 12 CFR part 535
                                                  2009 proposed amendments, even                          number of small entities.                             to read as follows:


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                                                                       Federal Register / Vol. 75, No. 85 / Tuesday, May 4, 2010 / Rules and Regulations                                               23567

                                                  PART 535—UNFAIR OR DECEPTIVE                            real property; overdraft loans; and credit            in household goods other than a
                                                  ACTS OR PRACTICES                                       cards. It also includes loans secured by              purchase-money security interest. For
                                                                                                          liens on real estate and chattel liens                purposes of this paragraph, household
                                                  Subpart A—General Provisions                            secured by mobile homes and leases of                 goods:
                                                  Sec.                                                    personal property to consumers that                      (1) Means clothing, furniture,
                                                  535.1 Authority, purpose, and scope.                    may be considered the functional                      appliances, linens, china, crockery,
                                                  Subpart B—Consumer Credit Practices                     equivalent of loans on personal security              kitchenware, and personal effects of the
                                                  535.11 Definitions.                                     but only if you rely substantially upon               consumer and the consumer’s
                                                  535.12 Unfair credit contract provisions.               other factors, such as the general credit             dependents.
                                                  535.13 Unfair or deceptive cosigner                     standing of the borrower, guaranties, or                 (2) Does not include:
                                                      practices.                                          security other than the real estate or                   (i) Works of art;
                                                  535.14 Unfair late charges.                             mobile home, as the primary security for                 (ii) Electronic entertainment
                                                  Appendix to Part 535—Official Staff                     the loan.                                             equipment (except one television and
                                                  Commentary                                                 (c) Earnings means compensation                    one radio);
                                                                                                          paid or payable to an individual or for                  (iii) Antiques (any item over one
                                                    Authority: 12 U.S.C. 1462a, 1463, 1464; 15            the individual’s account for personal                 hundred years of age, including such
                                                  U.S.C. 57a.                                             services rendered or to be rendered by                items that have been repaired or
                                                                                                          the individual, whether denominated as                renovated without changing their
                                                  Subpart A—General Provisions
                                                                                                          wages, salary, commission, bonus, or                  original form or character); or
                                                  § 535.1    Authority, purpose and scope.                otherwise, including periodic payments                   (iv) Jewelry (other than wedding
                                                     (a) Authority. This part is issued by                pursuant to a pension, retirement, or                 rings).
                                                  OTS under section 18(f) of the Federal                  disability program.                                   § 535.13 Unfair or deceptive cosigner
                                                  Trade Commission Act, 15 U.S.C. 57a(f)                     (d) Obligation means an agreement                  practices.
                                                  (section 202(a) of the Magnuson-Moss                    between you and a consumer.
                                                                                                             (e) Person means an individual,                      (a) Prohibited deception. It is a
                                                  Warranty—Federal Trade Commission                                                                             deceptive act or practice for you,
                                                  Improvement Act, Pub. L. 93–637) and                    corporation, or other business
                                                                                                          organization.                                         directly or indirectly in connection with
                                                  the Home Owners’ Loan Act, 12 U.S.C.                                                                          the extension of credit to consumers, to
                                                  1461 et seq.                                            § 535.12   Unfair credit contract provisions.         misrepresent the nature or extent of
                                                     (b) Purpose. The purpose of this part
                                                                                                             It is an unfair act or practice for you,           cosigner liability to any person.
                                                  is to prohibit unfair or deceptive acts or                                                                      (b) Prohibited unfairness. It is an
                                                  practices in violation of section 5(a)(1)               directly or indirectly, to enter into a
                                                                                                          consumer credit obligation that                       unfair act or practice for you, directly or
                                                  of the Federal Trade Commission Act,                                                                          indirectly in connection with the
                                                  15 U.S.C. 45(a)(1). Subpart B defines                   constitutes or contains, or to enforce in
                                                                                                          a consumer credit obligation you                      extension of credit to consumers, to
                                                  and contains requirements prescribed                                                                          obligate a cosigner unless the cosigner is
                                                  for the purpose of preventing specific                  purchased, any of the following
                                                                                                          provisions:                                           informed, before becoming obligated, of
                                                  unfair or deceptive acts or practices of                                                                      the nature of the cosigner’s liability.
                                                                                                             (a) Confession of judgment. A
                                                  savings associations. The prohibitions                                                                          (c) Disclosure requirement—(1)
                                                                                                          cognovit or confession of judgment (for
                                                  in subpart B do not limit OTS’s                                                                               Disclosure statement. A clear and
                                                                                                          purposes other than executory process
                                                  authority to enforce the FTC Act with                                                                         conspicuous statement must be given in
                                                                                                          in the State of Louisiana), warrant of
                                                  respect to any other unfair or deceptive                                                                      writing to the cosigner before becoming
                                                                                                          attorney, or other waiver of the right to
                                                  acts or practices. The purpose of this                                                                        obligated. In the case of open-end credit,
                                                                                                          notice and the opportunity to be heard
                                                  part is also to prohibit unsafe and                                                                           the disclosure statement must be given
                                                                                                          in the event of suit or process thereon.
                                                  unsound practices and protect                                                                                 to the cosigner before the time that the
                                                                                                             (b) Waiver of exemption. An
                                                  consumers under the Home Owners’                                                                              cosigner becomes obligated for any fees
                                                                                                          executory waiver or a limitation of
                                                  Loan Act, 12 U.S.C. 1461 et seq.                                                                              or transactions on the account. The
                                                     (c) Scope. This part applies to savings              exemption from attachment, execution,
                                                                                                          or other process on real or personal                  disclosure statement must contain the
                                                  associations and subsidiaries owned in
                                                                                                          property held, owned by, or due to the                following statement or one that is
                                                  whole or in part by a savings association
                                                                                                          consumer, unless the waiver applies                   substantially similar:
                                                  (‘‘you’’).
                                                                                                          solely to property subject to a security              Notice of Cosigner
                                                  Subpart B—Consumer Credit Practices                     interest executed in connection with the
                                                                                                                                                                  You are being asked to guarantee this debt.
                                                                                                          obligation.                                           Think carefully before you do. If the
                                                  § 535.11    Definitions.                                   (c) Assignment of wages. An                        borrower doesn’t pay the debt, you will have
                                                    For purposes of this subpart, the                     assignment of wages or other earnings                 to. Be sure you can afford to pay if you have
                                                  following definitions apply:                            unless:                                               to, and that you want to accept this
                                                    (a) Consumer means a natural person                      (1) The assignment by its terms is                 responsibility.
                                                  who seeks or acquires goods, services,                  revocable at the will of the debtor;                    You may have to pay up to the full amount
                                                  or money for personal, family, or                          (2) The assignment is a payroll                    of the debt if the borrower does not pay. You
                                                  household purposes, other than for the                  deduction plan or preauthorized                       may also have to pay late fees or collection
                                                  purchase of real property, and who                      payment plan, commencing at the time                  costs, which increase this amount.
                                                  applies for or is extended consumer                     of the transaction, in which the                        The creditor can collect this debt from you
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                                                                                                                                                                without first trying to collect from the
                                                  credit.                                                 consumer authorizes a series of wage                  borrower. The creditor can use the same
                                                    (b) Consumer credit means credit                      deductions as a method of making each                 collection methods against you that can be
                                                  extended to a natural person for                        payment; or                                           used against the borrower, such as suing you,
                                                  personal, family, or household                             (3) The assignment applies only to                 garnishing your wages, etc. If this debt is ever
                                                  purposes. It includes consumer loans;                   wages or other earnings already earned                in default, that fact may become a part of
                                                  educational loans; unsecured loans for                  at the time of the assignment.                        your credit record.
                                                  real property alteration, repair or                        (d) Security interest in household                   (2) Compliance. Compliance with
                                                  improvement, or for the equipping of                    goods. A nonpossessory security interest              paragraph (d)(1) of this section


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                                                  23568                Federal Register / Vol. 75, No. 85 / Tuesday, May 4, 2010 / Rules and Regulations

                                                  constitutes compliance with the                         Appendix to Part 535—Official Staff                   modification HCM00851C BAe 146 series
                                                  consumer disclosure requirement in                      Commentary                                            aircraft in accordance with British Aerospace
                                                  paragraph (b) of this section.                                                                                Service Bulletin (SB) 57–41 dated 26 July
                                                                                                          Subpart A—General Provisions                          1991. Recently, BAE Systems (Operations)
                                                     (3) Additional content limitations. If                                                                     Ltd has determined that a revised inspection
                                                                                                          Section 535.1 Authority, Purpose, and
                                                  the notice is a separate document,                                                                            programme for the wing top skin and joint
                                                                                                          Scope.                                                strap at rib ‘0’ on all BAe 146 and AVRO
                                                  nothing other than the following items
                                                  may appear with the notice:                             1(c) Scope                                            146–RJ aircraft is necessary to assure the
                                                                                                                                                                continued structural integrity of this area.
                                                     (i) Your name and address;                             1. Penalties for noncompliance.                     Cracking of the wing centre section top skin,
                                                     (ii) An identification of the debt to be             Administrative enforcement of the rule                if undetected, could lead to structural failure
                                                  cosigned (e.g., a loan identification                   for savings associations may involve                  and consequent loss of the aircraft.
                                                                                                          actions under section 8 of the Federal                *        *       *    *   *
                                                  number);
                                                                                                          Deposit Insurance Act (12 U.S.C. 1818),
                                                     (iii) The date (of the transaction); and             including cease-and-desist orders                     We are issuing this AD to require
                                                                                                          requiring that actions be taken to                    actions to correct the unsafe condition
                                                     (iv) The statement, ‘‘This notice is not
                                                                                                          remedy violations and civil money                     on these products.
                                                  the contract that makes you liable for
                                                                                                          penalties.                                            DATES: This AD becomes effective June
                                                  the debt.’’
                                                                                                            2. Application to subsidiaries. The                 8, 2010.
                                                     (d) Cosigner defined. (1) Cosigner                                                                            The Director of the Federal Register
                                                                                                          term ‘‘savings association’’ as used in
                                                  means a natural person who assumes                      this Appendix also includes                           approved the incorporation by reference
                                                  liability for the obligation of a consumer              subsidiaries owned in whole or in part                of a certain publication listed in this AD
                                                  without receiving goods, services, or                   by a savings association.                             as of June 8, 2010.
                                                  money in return for the obligation, or,                                                                          On March 2, 1993 (58 FR 6081,
                                                                                                            Dated: April 27, 2010.
                                                  in the case of an open-end credit                                                                             January 26, 1993), the Director of the
                                                  obligation, without receiving the                         By the Office of Thrift Supervision.                Federal Register approved the
                                                  contractual right to obtain extensions of               John E. Bowman,                                       incorporation by reference of a certain
                                                  credit under the account.                               Acting Director.                                      other publication listed in this AD.
                                                                                                          [FR Doc. 2010–10196 Filed 5–3–10; 8:45 am]            ADDRESSES: You may examine the AD
                                                     (2) Cosigner includes any person
                                                  whose signature is requested as a                       BILLING CODE P                                        docket on the Internet at http://
                                                  condition to granting credit to a                                                                             www.regulations.gov or in person at the
                                                  consumer, or as a condition for                                                                               U.S. Department of Transportation,
                                                  forbearance on collection of a                          DEPARTMENT OF TRANSPORTATION                          Docket Operations, M–30, West
                                                  consumer’s obligation that is in default.                                                                     Building Ground Floor, Room W12–140,
                                                                                                          Federal Aviation Administration                       1200 New Jersey Avenue SE.,
                                                  The term does not include a spouse or
                                                                                                                                                                Washington, DC.
                                                  other person whose signature is                         14 CFR Part 39
                                                  required on a credit obligation to perfect                                                                    FOR FURTHER INFORMATION CONTACT:
                                                  a security interest pursuant to state law.              [Docket No. FAA–2009–1250; Directorate                Todd Thompson, Aerospace Engineer,
                                                                                                          Identifier 2008–NM–169–AD; Amendment                  International Branch, ANM–116,
                                                     (3) A person who meets the definition                39–16276; AD 2010–09–11]                              Transport Airplane Directorate, FAA,
                                                  in this paragraph is a cosigner, whether                                                                      1601 Lind Avenue, SW., Renton,
                                                                                                          RIN 2120–AA64
                                                  or not the person is designated as such                                                                       Washington 98057–3356; telephone
                                                  on a credit obligation.                                 Airworthiness Directives; BAE                         (425) 227–1175; fax (425) 227–1149.
                                                                                                          Systems (Operations) Limited Model                    SUPPLEMENTARY INFORMATION:
                                                  § 535.14   Unfair late charges.
                                                                                                          BAe 146–100A, –200A, and –300A
                                                     (a) Prohibition. In connection with                  Series Airplanes, and Model Avro 146–                 Discussion
                                                  collecting a debt arising out of an                     RJ70A, 146–RJ85A, and 146–RJ100A                        We issued a notice of proposed
                                                  extension of credit to a consumer, it is                Airplanes                                             rulemaking (NPRM) to amend 14 CFR
                                                  an unfair act or practice for you, directly                                                                   part 39 to include an AD that would
                                                                                                          AGENCY: Federal Aviation
                                                  or indirectly, to levy or collect any                                                                         apply to the specified products. That
                                                                                                          Administration (FAA), Department of
                                                  delinquency charge on a payment, when                                                                         NPRM was published in the Federal
                                                                                                          Transportation (DOT).
                                                  the only delinquency is attributable to                                                                       Register on January 12, 2010 (75 FR
                                                                                                          ACTION: Final rule.                                   1563), and proposed to supersede AD
                                                  late fees or ydelinquency charges
                                                  assessed on earlier installments and the                SUMMARY: We are superseding an
                                                                                                                                                                93–01–11, Amendment 39–8465 (58 FR
                                                  payment is otherwise a full payment for                 existing airworthiness directive (AD) for             6081, January 26, 1993). That NPRM
                                                  the applicable period and is paid on its                the products listed above. This AD                    proposed to correct an unsafe condition
                                                  due date or within an applicable grace                  results from mandatory continuing                     for the specified products. The MCAI
                                                  period.                                                 airworthiness information (MCAI)                      states:
                                                                                                          originated by an aviation authority of                  In 1991, the UK Civil Aviation Authority
                                                     (b) Collecting a debt defined—
                                                                                                          another country to identify and correct               (CAA) issued AD 015–08–91 [which
                                                  Collecting a debt means, for the                                                                              corresponds to FAA AD 93–01–11], requiring
                                                  purposes of this section, any activity,                 an unsafe condition on an aviation
WReier-Aviles on DSKGBLS3C1PROD with RULES




                                                                                                          product. The MCAI describes the unsafe                the accomplishment of inspections of, and in
                                                  other than the use of judicial process,                                                                       case of crack findings, corrective actions on,
                                                                                                          condition as:                                         the wing top skin at rib ‘0’ of pre-
                                                  that is intended to bring about or does
                                                  bring about repayment of all or part of                   In 1991, the UK Civil Aviation Authority            modification HCM00851C BAe 146 series
                                                  money due (or alleged to be due) from                   (CAA) issued AD 015–08–91 [which                      aircraft in accordance with British Aerospace
                                                                                                          corresponds to FAA AD 93–01–11], requiring            Service Bulletin (SB) 57–41 dated 26 July
                                                  a consumer.                                             the accomplishment of inspections of, and in          1991. Recently, BAE Systems (Operations)
                                                                                                          case of crack findings, corrective actions on,        Ltd has determined that a revised inspection
                                                                                                          the wing top skin at rib ‘0’ of pre-                  programme for the wing top skin and joint



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