[Federal Register Volume 78, Number 234 (Thursday, December 5, 2013)]
[Notices]
[Pages 73192-73195]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-29078]
[[Page 73192]]
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FEDERAL TRADE COMMISSION
Agency Information Collection Activities; Submission for OMB
Review; Comment Request
AGENCY: Federal Trade Commission (``FTC'' or ``Commission'').
ACTION: Notice.
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SUMMARY: The FTC intends to ask the Office of Management and Budget
(``OMB'') to extend through December 31, 2016, the current Paperwork
Reduction Act (``PRA'') clearance for the FTC's enforcement of the
information collection requirements in its Affiliate Marketing Rule (or
``Rule''), which applies to certain motor vehicle dealers, and its
shared enforcement with the Consumer Financial Protection Bureau
(``CFPB'') of the provisions (subpart C) of the CFPB's Regulation V
regarding other entities (``CFPB Rule''). The current clearance expires
on December 31, 2013.
DATES: Comments must be filed by January 6, 2014.
ADDRESSES: Interested parties are invited to submit written comments
electronically or in paper form by following the instructions in the
Request for Comment part of the SUPPLEMENTARY INFORMATION section
below. Write ``Affiliate Marketing Disclosure Rule, PRA Comment: FTC
File No. P0105411'' on your comment, and file your comment online at
https://public.commentworks.com/ftc/affiliatemarketingpra2, by
following the instructions on the web-based form. If you prefer to file
your comment on paper, mail or deliver your comment to the following
address: Federal Trade Commission, Office of the Secretary, Room H-113
(Annex J), 600 Pennsylvania Avenue NW., Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT: Requests for additional information
should be addressed to Steven Toporoff, Attorney, Division of Privacy
and Identity Protection, Bureau of Consumer Protection, Federal Trade
Commission, 600 Pennsylvania Avenue NW., NJ-8100, Washington, DC 20580,
(202) 326-3135.
SUPPLEMENTARY INFORMATION: On July 21, 2010, President Obama signed
into law the Dodd-Frank Wall Street Reform and Consumer Protection Act
(``Dodd-Frank Act'').\1\ The Dodd-Frank Act substantially changed the
federal legal framework for financial services providers. Among the
changes, the Dodd-Frank Act transferred to the CFPB most of the FTC's
rulemaking authority for the Affiliate Marketing provisions of the Fair
Credit Reporting Act (``FCRA''),\2\ on July 21, 2011.\3\ For certain
other portions of the FCRA, the FTC retains its full rulemaking
authority.\4\
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\1\ Public Law 111-203, 124 Stat. 1376 (2010).
\2\ 15 U.S.C. 1681 et seq.
\3\ Dodd-Frank Act, at section 1061. This date was the
``designated transfer date'' established by the Treasury Department
under the Dodd-Frank Act. See Dep't of the Treasury, Bureau of
Consumer Financial Protection; Designated Transfer Date, 75 FR
57252, 57253 (Sept. 20, 2010); see also Dodd-Frank Act, at section
1062.
\4\ The Dodd-Frank Act does not transfer to the CFPB rulemaking
authority for FCRA sections 615(e) (``Red Flag Guidelines and
Regulations Required'') and 628 (``Disposal of Records''). See 15
U.S.C. 1681s(e); Public Law 111-203, section 1088(a)(10)(E).
Accordingly, the Commission retains full rulemaking authority for
its ``Identity Theft Rules,'' 16 CFR Part 681, and its rules
governing ``Disposal of Consumer Report Information and Records,''
16 CFR Part 682. See 15 U.S.C. 1681m, 1681w.
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The FTC retains rulemaking authority for its Affiliate Marketing
Rule, 16 CFR 680, solely for motor vehicle dealers described in section
1029(a) of the Dodd-Frank Act that are predominantly engaged in the
sale and servicing of motor vehicles, the leasing and servicing of
motor vehicles, or both.\5\
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\5\ See Dodd-Frank Act, at section 1029 (a), (c).
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On December 21, 2011, the CFPB issued its interim final FCRA rule,
including the affiliate marketing provisions (subpart C) of CFPB's
Regulation V.\6\ Contemporaneous with that issuance, the CFPB and FTC
submitted to OMB, and received its approval for, that agency's
respective burden estimates reflecting its overlapping enforcement
jurisdiction with the FTC. The discussion in the Burden Statement
below, following preliminary background information, continues that
analytical framework of shared enforcement authority, as supplemented
by the FTC's jurisdiction over auto motive dealers, as noted above.
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\6\ 76 FR 79308. Subpart C of the interim final rule became
effective on December 30, 2011. Subpart C is codified at 12 CFR
1022.20 et seq. Except for certain motor vehicle dealers (see supra
note 5 and accompanying text), the disclosure and opt-out provisions
described in the ``Background'' discussion below also pertain to
Subpart C of Regulation V and the FTC's associated co-enforcement
jurisdiction.
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On August 27, 2013, the FTC sought public comment on the
information collection requirements associated with the Rule (August
27, 2013 Notice \7\), its shared enforcement with the CFPB of the
provisions of the CFPB Rule, and the FTC's associated PRA burden
analysis. No comments were received. However, the FTC is correcting and
otherwise modifying certain estimates that appeared in the August 27,
2013 Notice: These adjustments are highlighted by footnotes appended to
the revised figures that appear in the ensuing Burden Statement.
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\7\ 78 FR 52918.
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Pursuant to the OMB regulations, 5 CFR Part 1320, that implement
the PRA, 44 U.S.C. 3501 et seq., the FTC is providing this second
opportunity for public comment while seeking OMB approval to renew the
pre-existing clearance for the Rule. All comments should be filed as
prescribed herein, and must be received on or before January 6, 2014.
For more background on the FTC's Affiliate Marketing Rule, see the
August 27, 2013 Notice.\8\
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\8\ 78 FR 52919.
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Burden Statement
Under the PRA, 44 U.S.C. 3501-3521, federal agencies must get OMB
approval for each collection of information they conduct or sponsor.
``Collection of information'' includes agency requests or requirements
to submit reports, keep records, or provide information to a third
party. 44 U.S.C. 3502(3); 5 CFR 1320.3(c). The FTC is seeking clearance
for its assumed share of the estimated PRA burden regarding the
disclosure requirements under the FTC and CFPB Rules.
Except where otherwise specifically noted, staff's estimates of
burden are based on its knowledge of the consumer credit industries and
knowledge of the entities over which the Commission has jurisdiction.
This said, estimating PRA burden of the Rule's disclosure requirements
is difficult given the highly diverse group of affected entities that
may use certain eligibility information shared by their affiliates to
send marketing notices to consumers.
The estimates provided in this burden statement may well overstate
actual burden. As noted above, verbatim adoption of the disclosure of
information provided by the federal government is not a ``collection of
information'' to which to assign PRA burden estimates, and an unknown
number of covered entities will opt to use the model disclosure
language. Second, an uncertain, but possibly significant, number of
entities subject to FTC jurisdiction do not have affiliates and thus
would not be covered by section 214 of the FACT Act or the Rule. Third,
Commission staff does not know how many companies subject to FTC
jurisdiction under the Rule actually share eligibility information
among affiliates and, of those, how many affiliates use such
information to make marketing solicitations to consumers. Fourth, still
other entities may choose to
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rely on the exceptions to the Rule's notice and opt-out
requirements.\9\ Finally, the population estimates below to apply
further calculations are based on industry data that, while providing
tallies of business entities within industries and industry segments,
does not identify those entities individually. Thus, there is no clear
path to ascertain how many individual businesses have newly entered and
departed within a given industry classification, from one year to the
next or from one triennial PRA clearance cycle to the next.
Accordingly, there is no ready way to quantify how many establishments
accounted for in the data reflect those previously accounted for in the
FTC's prior PRA analysis, i.e., entities that would already have
experienced a declining learning curve applying the Rule with the
passage of time. For simplicity, the FTC analysis will continue to
treat covered entities as newly undergoing the previously assumed
learning curve cycle, although this would effectively overstate
estimated burden for unidentified covered entities that have remained
in existence since OMB's most recent clearances for the FTC Rule.\10\
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\9\ Exceptions include, for example, having a preexisting
business relationship with a consumer, using information in response
to a communication initiated by the consumer, and solicitations
authorized or requested by the consumer.
\10\ On December 21, 2010, OMB granted three-year clearance for
the Rule through December 31, 2013 under Control No. 3084-0131. On
February 3, 2012, OMB additionally approved under that control
number FTC adjustments submitted on December 9, 2011 to reflect the
effects of the Dodd-Frank Act, but the latter approval retained the
previously accorded clearance expiration of December 31, 2013.
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As in the past, FTC staff's estimates assume a higher burden will
be incurred during the first year of a prospective OMB three-year
clearance, with a lesser burden for each of the subsequent two years
because the opt-out notice to consumers is required to be given only
once. Institutions may provide for an indefinite period for the opt-out
or they may time limit it, but for no less than five years.
Staff's labor cost estimates take into account: managerial and
professional time for reviewing internal policies and determining
compliance obligations; technical time for creating the notice and opt-
out, in either paper or electronic form; and clerical time for
disseminating the notice and opt-out.\11\ In addition, staff's cost
estimates presume that the availability of model disclosures and opt-
out notices will simplify the compliance review and implementation
processes, thereby significantly reducing the cost of compliance.
Moreover, the Rule gives entities considerable flexibility to determine
the scope and duration of the opt-out. Indeed, this flexibility permits
entities to send a single joint notice on behalf of all of its
affiliates.
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\11\ No clerical time was included in staff's burden analysis
for GLBA entities as the notice would likely be combined with
existing GLBA notices.
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A. Non-GLBA Entities
Based, in part, on industry data regarding the number of businesses
under various industry codes, staff estimates that 1,174,347 non-GLBA
entities under FTC jurisdiction have affiliates and would be affected
by the Rule.\12\ Commission staff further estimates an average of 5
businesses per family or affiliated relationship, and believes that the
affiliated entities will choose to send a joint notice, as permitted by
the Rule. Thus, an estimated 234,869 non-GLBA business families may
send the affiliate marketing notice.
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\12\ This estimate is derived from an analysis of a database of
U.S. businesses based on June 2013 SIC codes for businesses that
market goods or services to consumers, which included the following
industries: transportation services; communication; electric, gas,
and sanitary services; retail trade; finance, insurance, and real
estate; and services (excluding business services and engineering,
management services). See http://www.naics.com/search.htm. This
estimate excludes businesses not subject to FTC jurisdiction and
businesses that do not use data or information subject to the rule.
To the resulting sub-total (7,111,026), staff applies a continuing
assumed rate of affiliation of 16.75 percent, see 75 FR 43526, 43528
n. 6 (July 26, 2010), reduced by a continuing estimate of 100,000
entities subject to the Commission's GLBA privacy notice
regulations, see id., applied to the same assumed rate of
affiliation. The net total is 1,174,347.
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Staff also estimates that non-GLBA entities under the jurisdiction
of the FTC would each incur 14 hours of burden during the prospective
requested three-year PRA clearance period, comprised of a projected 7
hours of managerial time, 2 hours of technical time, and 5 hours of
clerical assistance.
Based on the above, total burden for non-GLBA entities during the
prospective three-year clearance period would be approximately
3,288,166 hours, cumulatively. Associated labor cost would total
$123,353,199.\13\ These estimates include the start-up burden and
attendant costs, such as determining compliance obligations. Non-GLBA
entities, however, will give notice only once during the clearance
period ahead. Thus, averaged over that three-year period, the estimated
annual burden for non-GLBA entities is 1,096,055 hours and $41,117,733
in labor costs.
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\13\ The associated labor cost is based on the labor cost burden
per notice by adding the hourly mean private sector wages for
managerial, technical, and clerical work and multiplying that sum by
the estimated number of hours. The classifications used are
``Management Occupations'' for managerial employees, ``Computer and
Mathematical Science Occupations'' for technical staff, and ``Office
and Administrative Support'' for clerical workers. See OCCUPATIONAL
EMPLOYMENT AND WAGES--MAY 2012, U.S. Department of Labor released
March 29, 2013, Table 1 (``National employment and wage data from
the Occupational Employment Statistics survey by occupation, May
2012''): http://www.bls.gov/news.release/pdf/ocwage.pdf. The
respective private sector hourly wages for these classifications are
$52.20, $38.55, and $16.54. Estimated hours spent for each labor
category are 7, 2, and 5, respectively. Multiplying each
occupation's hourly wage by the associated time estimate, labor cost
burden per notice equals $525.20. This subtotal is then multiplied
by the estimated number of non-GLB business families projected to
send the affiliate marketing notice (234,869) to determine
cumulative labor cost burden for non-GLBA entities ($123,353,199).
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B. GLBA Entities
Entities that are subject to the Commission's GLBA privacy notice
regulation already provide privacy notices to their customers.\14\
Because the FACT Act and the Rule contemplate that the affiliate
marketing notice can be included in the GLBA notices, the burden on
GLBA regulated entities would be greatly reduced. Accordingly, the GLBA
entities would incur 6 hours of burden during the first year of the
clearance period, comprised of a projected 5 hours of managerial time
and 1 hour of technical time to execute the notice, given that the Rule
provides a model.\15\ Staff further estimates that 3,350 GLBA entities
under FTC jurisdiction would be affected,\16\ so that the total burden
for GLBA entities during the first year of the clearance period would
approximate 20,100 hours (3,350 x 6) and $1,003,493 in associated labor
costs.\17\
Allowing for increased familiarity with procedure, the PRA burden
in ensuing years would decline, with GLBA entities each incurring an
estimated 4 hours of annual burden (3 hours of managerial time and 1
hour of technical time) during the remaining two years of the
clearance, amounting to 13,400 hours (3,350 x 4) and $653,753 in labor
costs in each of the ensuing two
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years.\18\ Thus, averaged over the three-year clearance period, the
estimated annual burden for GLBA entities is 15,633 hours and $770,333
in labor costs.
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\14\ Financial institutions must provide a privacy notice at the
time the customer relationship is established and then annually so
long as the relationship continues. Staff's estimates assume that
the affiliate marketing opt-out will be incorporated in the
institution's initial and annual notices.
\15\ As stated above, no clerical time is included in the
estimate because the notice likely would be combined with existing
GLBA notices.
\16\ Based on the previously stated estimates of 100,000 GLBA
business entities at an assumed rate of affiliation of 16.75 percent
(16,750), divided by the presumed ratio of 5 businesses per family,
this yields a total of 3,350 GLBA business families subject to the
Rule.
\17\ 3,350 GLBA families x [$52.20 x 5 hours) + ($38.55 x 1
hour)] = $1,003,493.
\18\ 3,350 GLBA families x [($52.20 x 3 hours) + ($38.55 x 1
hours)] = $653,753.
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The cumulative average annual burden for both non-GLBA and GLBA for
the prospective three-year clearance period is 1,111,688 burden hours
and $41,888,066 in labor costs. GLBA entities are already providing
notices to their customers so there are no new capital or non-labor
costs, as this notice may be consolidated into their current notices.
For non-GLBA entities, the Rule provides for simple and concise model
forms that institutions may use to comply. Thus, any capital or non-
labor costs associated with compliance for these entities are
negligible.
C. FTC Share of Burden: 560,609 hours; $21,173,214, labor costs \19\
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\19\ Previously stated as 560,179 hours and $20,771,941 in the
August 27, 2013 Notice, based on pre-corrected inputs, as further
detailed below.
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To calculate the total burden attributed to the FTC, staff first
deducted from the total annual burden hours those hours attributed to
motor vehicle dealers, which are in the exclusive jurisdiction of the
FTC. Staff estimates that there are 60,959 motor vehicle dealerships
subject to the Rule.\20\ Of these, staff estimates that 10% are non-
GLBA entities (6,096), and 90% are GLBA entities (54,863). Applying an
assumed rate of affiliation of 16.75%, staff estimates that there are
1,021 \21\ non-GLBA and 9,190 GLBA motor vehicle dealerships in
affiliated families. Staff further assumes there are an average of 5
businesses per family or affiliated relationship, leaving approximately
204 \22\ non-GLBA and 1,838 GLBA motor vehicle dealership families,
respectively.
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\20\ This figure consists, in part, of 55,417 car dealers per
NADA (franchise/new cars) (http://www.nada.org/Publications/NADADATA/2011/default) and NIADA data (independents/used cars)
(http://www.usedcarnews.com/news/2963-niada-survey-shows-more-action-online), respectively, for 2011, multiplied by an added
factor of 1.10 to cover for an unknown quantity of additional motor
vehicle dealer types (motorcycles, boats, other recreational
vehicles) also covered within the definition of motor vehicle dealer
under section 1029(a) of the Dodd-Frank Act. This leaves a total of
60,959 motor vehicle dealers subject to the Rule.
\21\ Erroneously stated as 102 non-GLBA entities in the August
27, 2013 Notice.
\22\ Erroneously stated as 20 in the August 27, 2013 Notice.
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Staff further estimates that non-GLBA business families will spend
14 hours in the first year and 0 hours thereafter to comply with the
Rule, while GLBA business families will spend 6 hours in the first
year, and 4 hours in each of the following two years. The cumulative
average annual burden for the non-GLBA and GLBA motor vehicle
dealership families is 9,529 hours.\23\
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\23\ 204 non-GLBA families x 4.666667 average hours = 952 hours;
1,838 GLBA families x 4.666667 average hours = 8,577 hours. The
total is thus 9,529 hours. In the August 27, 2013 Notice the
estimated total was 8,670 hours, but that reflected the pre-
corrected input for the estimated number of non-GLBA motor vehicle
dealership families.
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To calculate the FTC's total shared burden hours, staff deducted
from the total burden hours (1,111,688 hours) those attributed to motor
vehicle dealerships (9,529), leaving a total of 1,102,159 hours to
split between the CFPB and the FTC. The resulting shared burden for the
CFPB is half that amount, or 551,080 hours. To calculate the total
burden hours for the FTC, staff added the burden hours associated with
motor vehicle dealers (9,529 hours), resulting in a total burden of
560,609 hours.
Staff used the same approach to estimate the shared costs for the
FTC. Staff estimated the costs attributed to motor vehicle dealers as
follows: non-GLBA business families have $35,714 in annualized labor
costs,\24\ and GLBA business families have $422,648 annualized labor
costs,\25\ for cumulative annualized costs of $458,362.\26\
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\24\ (204 non-GLBA families x $525.20) / 3 = $35,714. Previously
stated as $3,501 in the August 27, 2013 Notice, but that reflected
the pre-corrected input for the estimated number of non-GLBA motor
vehicle dealership families.
\25\ In the first year, GLBA families have $550,573 costs: 1,838
x [($52.20 x 5 hours) + ($38.55 x 1 hour)] = $550,573. In each of
the second and third years, GLBA families have $358,686 in costs:
1,838 x [($52.20 x 3 hours) + ($38.55 x 1 hour)] = $358,686.
\26\ Previously stated as $426,149 in the August 27, 2013
Notice, but that reflected the pre-corrected input for the estimated
number of non-GLBA motor vehicle dealership families.
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To calculate, on an annualized basis, the FTC's cumulative share of
labor cost burden, staff deducted from the overall total ($41,888,066)
\27\ the labor costs attributed to motor vehicle dealerships
($458,362), leaving a net amount of $41,429,704 to split between the
CFPB and the FTC. The resulting shared burden for the CFPB is half that
amount, or $20,714,852. To calculate the total burden hours for the
FTC, staff added the costs associated with motor vehicle dealers
($458,362), resulting in a total cost burden for the FTC of
$21,173,214.
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\27\ The August 27, 2013 Notice used $41,117,733 as the total
labor cost estimate from which to apportion between the FTC and
CFPB, but that amount represented only the non-GLBA labor cost
estimate while inadvertently excluding the estimate for GLBA-related
labor cost.
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Request for Comment
You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before January 6, 2014.
Write ``Affiliate Marketing Disclosure Rule, PRA Comment: FTC File No.
P0105411'' on your comment. Your comment--including your name and your
state--will be placed on the public record of this proceeding,
including, to the extent practicable, on the public Commission Web
site, at http://www.ftc.gov/os/publiccomments.shtm. As a matter of
discretion, the Commission tries to remove individuals' home contact
information from comments before placing them on the Commission Web
site.
Because your comment will be made public, you are solely
responsible for making sure that your comment doesn't include any
sensitive personal information, like anyone's Social Security number,
date of birth, driver's license number or other state identification
number or foreign country equivalent, passport number, financial
account number, or credit or debit card number. You are also solely
responsible for making sure that your comment doesn't include any
sensitive health information, like medical records or other
individually identifiable health information. In addition, don't
include any ``[t]rade secret or any commercial or financial information
which is obtained from any person and which is privileged or
confidential,'' as provided in Section 6(f) of the FTC Act, 15 U.S.C.
46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2). In particular, don't
include competitively sensitive information such as costs, sales
statistics, inventories, formulas, patterns, devices, manufacturing
processes, or customer names
If you want the Commission to give your comment confidential
treatment, you must file it in paper form, with a request for
confidential treatment, and you have to follow the procedure explained
in FTC Rule 4.9(c), 16 CFR 4.9(c).\28\ Your comment will be kept
confidential only if the FTC General Counsel grants your request in
accordance with the law and the public interest.
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\28\ In particular, the written request for confidential
treatment that accompanies the comment must include the factual and
legal basis for the request, and must identify the specific portions
of the comment to be withheld from the public record. See FTC Rule
4.9(c), 16 CFR 4.9(c).
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Postal mail addressed to the Commission is subject to delay due to
heightened security screening. As a result, we encourage you to submit
your comments online. To make sure that the Commission considers your
online comment, you must file it at https://public.commentworks.com/ftc/affiliatemarketingpra2 by following the
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instructions on the web-based form. If this Notice appears at http://www.regulations.gov/# !home, you also may file a comment through that
Web site.
If you file your comment on paper, write ``Affiliate Marketing
Disclosure Rule, PRA Comment: FTC File No. P0105411'' on your comment,
and on the envelope, and mail or deliver it to the following address:
Federal Trade Commission, Office of the Secretary, Room H-113 (Annex
J), 600 Pennsylvania Avenue NW., Washington, DC 20580. If possible,
submit your paper comment to the Commission by courier or overnight
service.
The FTC Act and other laws that the Commission administers permit
the collection of public comments to consider and use in this
proceeding as appropriate. The Commission will consider all timely and
responsive public comments that it receives on or before January 6,
2014. You can find more information, including routine uses permitted
by the Privacy Act, in the Commission's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.
Comments on the information collection requirements subject to
review under the PRA should additionally be submitted to OMB. If sent
by U.S. mail, they should be addressed to Office of Information and
Regulatory Affairs, Office of Management and Budget, Attention: Desk
Officer for the Federal Trade Commission, New Executive Office
Building, Docket Library, Room 10102, 725 17th Street NW., Washington,
DC 20503. Comments sent to OMB by U.S. postal mail, however, are
subject to delays due to heightened security precautions. Thus,
comments instead should be sent by facsimile to (202) 395-5167.
David C. Shonka,
Principal Deputy General Counsel.
[FR Doc. 2013-29078 Filed 12-4-13; 8:45 am]
BILLING CODE 6750-01-P