227.14—Unfair or deceptive practices involving cosigners.
(a) Prohibited practices.
In connection with the extension of credit to consumers, it is:
(1)
A deceptive act or practice for a bank to misrepresent the nature or extent of cosigner liability to any person; and
(2)
An unfair act or practice for a bank to obligate a cosigner unless the cosigner is informed prior to becoming obligated of the nature of the cosigner's liability.
(b) Disclosure requirement.
(1)
A clear and conspicuous disclosure statement shall be given in writing to the cosigner prior to becoming obligated. The disclosure statement shall be substantially similar to the following statement and shall either be a separate document or included in the documents evidencing the consumer credit obligation.
(2)
In the case of open-end credit, the disclosure statement shall be given to the cosigner prior to the time that the cosigner becomes obligated for fees or transactions on the account.
(3)
A bank that is in compliance with this paragraph may not be held in violation of paragraph (a)(2) of this section.