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Federal Register / Vol. 86, No. 30 / Wednesday, February 17, 2021 / Notices
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Street SW, suite 3E218, Washington, DC 20219.
SUPPLEMENTARY INFORMATION: Under the PRA 44 U.S.C. 35013520, Federal agencies must obtain approval from OMB for each collection of information they conduct or sponsor. Collection of information is defined in 44 U.S.C.
35023 and 5 CFR 1320.3c to include agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506c2A of title 44 44 U.S.C. 3506c2A
requires Federal agencies to provide a 60-day notice in the Federal Register concerning each proposed collection of information, including each proposed extension of an existing collection of information, before submitting the collection to OMB for approval. To comply with this requirement, the OCC
is publishing notice of the renewal of the information collection set forth in this document.
Title: Debt Cancellation Contracts and Debt Suspension Agreements.
OMB Control No.: 15570224.
Description: Twelve U.S.C.
24Seventh authorizes a national bank bank to enter into Debt Cancellation Contracts DCCs and Debt Suspension Agreements DSAs. Twelve CFR part 37
requires banks to disclose information about a DCC or DSA using either a short or long form disclosure. The short form disclosure usually is made orally and issued at the time a bank first solicits the purchase of a contract. The long form disclosure usually is made in writing and issued before the customer completes the purchase of the contract.
There are special rules for transactions by telephone, solicitations using written mail inserts or take one applications, and electronic transactions. Part 37
provides two model forms of disclosure for satisfying the requirements of the rule. Use of the forms is not mandatory, and the regulation permits a bank to adjust the form and wording of its disclosures so long as it meets the applicable requirements. The requirements of part 37 enhance consumer protections for customers who purchase DCCs and DSAs from banks and ensure that banks offer these products in a safe and sound manner by requiring them to effectively manage their risk exposure.
Section 37.6
Section 37.6 requires the disclosures to be readily understandable and meaningful. The content of the short and long form may vary, depending on whether a bank elects to provide a summary of the conditions and exclusions in the long form disclosures
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or refer the customer to the pertinent paragraphs in the contract. For example, the short form disclosure requires a bank to instruct the customer to read carefully both the long form disclosures and the contract for a full explanation of the contract terms, while the long form gives a bank the option of either:
i Summarizing the limitations; or ii advising the customer that a complete explanation of the Eligibility requirements, conditions, and exclusions is available in the contract and identifying the paragraphs where the customer may find that information.
Section 37.6 and appendices A and B
to part 37 require a bank to provide the following disclosures summarized below, as appropriate:
Anti-tying short and long form A bank must inform the customer that purchase of the product is optional and that neither the banks decision whether to approve the loan nor the terms and conditions of the loan are conditioned on the purchase of a DCC or DSA.
Explanation of debt suspension agreement long formA bank must disclose that if a customer activates the agreement, the customers duty to pay the loan principal and interest is only suspended and the customer must fully repay the loan after the period of suspension has expired.
Amount of the fee long formA
bank must make disclosures regarding the amount of the fee. The content of the disclosure depends on whether the credit is open-end or closed-end. In the case of closed-end credit, the bank must disclose the total fee. In the case of open-end credit, the bank must either:
i Disclose that the periodic fee is based on the account balance multiplied by a unit cost and provide the unit cost; or ii disclose the formula used to compute the fee.
Lump sum payment of fee short and long formA bank must disclose, where appropriate, that a customer has the option to pay the fee in a single payment or in periodic payments and that adding the fee to the amount borrowed will increase the cost of the contract. This disclosure is not appropriate in the case of a DCC or DSA
provided in connection with a home mortgage loan where the option to pay the fee in a single payment is not available.
Lump sum payment of fee with no refund short and long formA bank must disclose that the customer has the option to choose a contract with or without a refund provision. This disclosure must also state that the prices of refund and no-refund products are likely to differ.

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Refund of fee paid in lump sum short and long formIf a bank permits a customer to pay the fee in a single payment and add the fee to the amount borrowed, the bank must disclose its cancellation policy. The disclosure informs the customer of the banks refund policy, as applicable, i.e., that the DCC or DSA may be: i Cancelled at any time for a refund; ii cancelled within a specified number of days for a full refund; or iii cancelled at any time with no refund.
Whether use of a card or credit line is restricted long formA bank must inform a customer if the customers activation of the contract would prohibit the customer from incurring additional charges on the credit card or using the credit line.
Termination of a DCC or DSA long formIf termination is permitted during the life of the loan, a bank must include an explanation of the circumstances under which a customer or the bank may terminate the contract.
Additional disclosures short formA bank must inform customers that it will provide additional information before the customer is required to pay for the product.
Eligibility requirements, conditions, and exclusions short and long form A bank must describe any material limitations relating to the DCC or DSA.
Section 37.7
Section 37.7 requires a bank to obtain a customers written affirmative election to purchase a contract and written acknowledgment of receipt of the disclosures required by 37.6. The section further provides that the election and acknowledgment must be conspicuous, simple, direct, readily understandable, and designed to call attention to their significance. Pursuant to 37.7b, if the sale of the contract occurs by telephone, the customers affirmative election to purchase and acknowledgment of receipt of the required short form may be made orally, provided the bank: i Maintains sufficient documentation to show that the customer received the short form disclosures and then affirmatively elected to purchase the contract; ii mails the affirmative written election and written acknowledgment, together with the long form disclosures required by 37.6, to the customer within 3
business days after the telephone solicitation and maintains sufficient documentation to show it made reasonable efforts to obtain the documents from the customer; and iii permits the customer to cancel the purchase of the contract without penalty within 30 days after the bank has mailed
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