Federal Register - September 17, 2021
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Source: Federal Register
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Federal Register / Vol. 86, No. 178 / Friday, September 17, 2021 / Rules and Regulations
whole or in part on a consumer report, may comply with the requirements of paragraph a of this section by providing a risk-based pricing notice to each consumer who is not placed within the top pricing tier or tiers, as described below.
ii Four or fewer pricing tiers. If a motor vehicle dealer using the tiered pricing method has four or fewer pricing tiers, the motor vehicle dealer complies with the requirements of paragraph a of this section by providing a risk-based pricing notice to each consumer to whom it grants, extends, or provides credit who does not qualify for the top tier that is, the lowest-priced tier. For example, a motor vehicle dealer that uses a tiered pricing structure with annual percentage rates of 8, 10, 12, and 14 percent would provide the risk-based pricing notice to each consumer to whom it grants, extends, or provides credit at annual percentage rates of 10, 12, and 14 percent.
iii Five or more pricing tiers. If a motor vehicle dealer using the tiered pricing method has five or more pricing tiers, the motor vehicle dealer complies with the requirements of paragraph a of this section by providing a risk-based pricing notice to each consumer to whom it grants, extends, or provides credit who does not qualify for the top two tiers that is, the two lowest-priced tiers and any other tier that, together with the top tiers, comprise no less than the top 30 percent but no more than the top 40 percent of the total number of tiers. Each consumer placed within the remaining tiers must receive a riskbased pricing notice. For example, if a motor vehicle dealer has nine pricing tiers, the top three tiers that is, the three lowest-priced tiers comprise no less than the top 30 percent but no more than the top 40 percent of the tiers.
Therefore, a motor vehicle dealer using this method would provide a risk-based pricing notice to each consumer to whom it grants, extends, or provides credit who is placed within the bottom six tiers.
c Application to credit card issuers1 In general. A credit card issuer subject to the requirements of paragraph a of this section may use one of the methods set forth in paragraph b of this section to identify consumers to whom it must provide a risk-based pricing notice. Alternatively, a credit card issuer may satisfy its obligations under paragraph a of this section by providing a risk-based pricing notice to a consumer when i A consumer applies for a credit card either in connection with an application program, such as a directmail offer or a take-one application, or
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in response to a solicitation under 12
CFR 226.5a, and more than a single possible purchase annual percentage rate may apply under the program or solicitation; and ii Based in whole or in part on a consumer report, the credit card issuer provides a credit card to the consumer with an annual percentage rate referenced in 640.2n1ii that is greater than the lowest annual percentage rate referenced in 640.2n1ii available in connection with the application or solicitation.
2 No requirement to compare different offers. A credit card issuer is not subject to the requirements of paragraph a of this section and is not required to provide a risk-based pricing notice to a consumer if i The consumer applies for a credit card for which the card issuer provides a single annual percentage rate referenced in 640.2n1ii, excluding a temporary initial rate lower than the rate that will apply after the temporary rate expires and a penalty rate that will apply upon the occurrence of one or more specific events, such as a late payment or an extension of credit that exceeds the credit limit; or ii The credit card issuer offers the consumer the lowest annual percentage rate referenced in 640.2n1ii available under the credit card offer for which the consumer applied, even if a lower annual percentage rate referenced in 640.2n1ii is available under a different credit card offer issued by the card issuer.
3 Examples. i A credit card issuer sends a solicitation to the consumer that discloses several possible purchase annual percentage rates that may apply, such as 10, 12, or 14 percent, or a range of purchase annual percentage rates from 10 to 14 percent. The consumer applies for a credit card in response to the solicitation. The card issuer provides a credit card to the consumer with a purchase annual percentage rate of 12 percent based in whole or in part on a consumer report. Unless an exception applies under 640.5, the card issuer may satisfy its obligations under paragraph a of this section by providing a risk-based pricing notice to the consumer because the consumer received credit at a purchase annual percentage rate greater than the lowest purchase annual percentage rate available under that solicitation.
ii The same facts as in the example in paragraph c3i of this section, except that the card issuer provides a credit card to the consumer at a purchase annual percentage rate of 10
percent. The card issuer is not required to provide a risk-based pricing notice to
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the consumer even if, under a different credit card solicitation, that consumer or other consumers might qualify for a purchase annual percentage rate of 8
percent.
d Account review1 In general.
Except as otherwise provided in this part, a motor vehicle dealer is subject to the requirements of paragraph a of this section and must provide a risk-based pricing notice to a consumer in the form and manner required by this part if the motor vehicle dealer i Uses a consumer report in connection with a review of credit that has been extended to the consumer; and ii Based in whole or in part on the consumer report, increases the annual percentage rate the annual percentage rate referenced in 640.2n1ii in the case of a credit card.
2 Example. A credit card issuer periodically obtains consumer reports for the purpose of reviewing the terms of credit it has extended to consumers in connection with credit cards. As a result of this review, the credit card issuer increases the purchase annual percentage rate applicable to a consumers credit card based in whole or in part on information in a consumer report. The credit card issuer is subject to the requirements of paragraph a of this section and must provide a riskbased pricing notice to the consumer.
640.4 Content, form, and timing of riskbased pricing notices.
a Content of the notice1 In general. The risk-based pricing notice required by 640.3a or c must include:
i A statement that a consumer report or credit report includes information about the consumers credit history and the type of information included in that history;
ii A statement that the terms offered, such as the annual percentage rate, have been set based on information from a consumer report;
iii A statement that the terms offered may be less favorable than the terms offered to consumers with better credit histories;
iv A statement that the consumer is encouraged to verify the accuracy of the information contained in the consumer report and has the right to dispute any inaccurate information in the report;
v The identity of each consumer reporting agency that furnished a consumer report used in the credit decision;
vi A statement that federal law gives the consumer the right to obtain a copy of a consumer report from the consumer reporting agency or agencies identified
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