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October 23, 2001


To: The Chief Executive Officer
All Farm Credit System Institutions

From: Roland E. Smith, Director
Office of Examination

Subject: Guidance for Electronic Delivery of Disclosures


This Informational Memorandum provides guidance for electronic disclosures posted on Farm Credit System (FCS) institutions’ Web sites. It also supplements guidance contained in two Informational Memorandums titled “Web Site and Internet Guidelines” issued on November 8, 1999, and “Amendments to Federal Reserve Regulations B, M, and Z Regarding Electronic Delivery of Required Disclosures” issued on September 7, 2001.

Consumers who participate in electronic commerce should be afforded transparent and effective consumer protection that is not less than the level of protection afforded in other forms of commerce. Federal regulations requiring consumer disclosures and notices, such as those under the Equal Credit Opportunity Act, Truth in Lending Act, and Fair Housing Act, are equally applicable to electronic commerce.

Delivering disclosures electronically raises possible issues with respect to the format of disclosure, manner of delivery, and ability to ensure receipt by the appropriate person(s). The discussion below highlights some of the issues FCS institutions must address to ensure appropriate posting of electronic disclosures.

All disclosures and notices, regardless of physical form, must be “clear and conspicuous.” A “clear and conspicuous” disclosure, whether in paper or electronic form, is readily understandable and designed to call attention to the nature and significance of the information presented. A customer or a visitor to an institution’s Web site should be able to easily locate a disclosure. Institutions may find it helpful to use hotlinks to a disclosure that will automatically provide the required disclosure or notice to the customer or visitor to the Web site. The font size of the disclosure should be of a size that it is reasonably easy to read. Typically, the disclosure font size should be no smaller than that used elsewhere on the Web site.

Institutions may find that the format(s) used for providing paper disclosures requires redesign for electronic communication. For example, a consumer viewing certain electronic devices, such as Web TV, may not be able to print or download a disclosure. As a result, institutions may want to ask the consumer for a non-electronic address for receiving paper disclosures. To reduce compliance risk, institutions should ensure there is evidence that the customer agreed to receive the disclosure electronically. Additionally, institutions may want to provide information to customers about their ability to discontinue receiving disclosures electronically.

Farm Credit Administration examiners will evaluate compliance with Federal consumer protection regulations for all forms of commerce used. They will also determine whether institutions’ disclosures and other notices to customers are “clear and conspicuous.”

If you have any questions about this memorandum, please call Tom Glenn, Special Examination and Supervision Division, Office of Examination, at (703) 883-4412, or write to him on the Internet at e-mail address Glennt@fca.gov.