More than six years after enactment of the Fair and Accurate Credit Transactions Act of 2003 (FACTA), the Federal Reserve Board and the Federal Trade Commission have finally completed their required rulemaking. The agencies yesterday announced the issuance of final rules implementing Section 311, which will require creditors to provide a risk-based pricing notice to consumers when the creditor uses consumer reports to grant or extend credit to the consumers on material terms that are materially less favorable than the most favorable terms available to a substantial proportion of consumers from or through that creditor. Proposed risk-based pricing rules were issued in May 2008 (see Alert dated May 12, 2008) and those were the only FACTA rules left to be finalized.

    The final rules for the most part adopt the rules as proposed, with some changes for clarity and to address concerns raised by commenters. For example, the agencies have added a special timing provision for certain instant credit scenarios. Under the final rules, when credit under an open-end credit plan is extended to a consumer in person or by telephone for the purpose of financing the contemporaneous purchase of goods or services, any required risk-based pricing notice may be provided at the earlier of (i) the first mailing to the consumer after the credit decision is made, such as a mailing containing the account agreement or a credit card, or (ii) within 30 days after the credit decision.

    The rules are effective on January 1, 2011.

    • Elizabeth Anstaett