[Federal Register: February 28, 2007 (Volume 72, Number 39)]
[Notices]
[Page 9002-9005]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28fe07-65]
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FEDERAL TRADE COMMISSION
Agency Information Collection Activities; Submission for OMB
Review; Comment Request
AGENCY: Federal Trade Commission.
ACTION: Notice.
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SUMMARY: The information collection requirements described below will
be submitted to the Office of Management and Budget (``OMB'') for
review, as required by the Paperwork Reduction Act (``PRA''). The
Federal Trade Commission (``FTC'' or ``Commission'') is seeking public
comments on its proposal to extend through July 31,
[[Page 9003]]
2010 the current OMB clearance for information collection requirements
contained in its proposed Affiliate Marketing Rule (or ``proposed
Rule''). That clearance expires on July 31, 2007.
DATES: Comments must be filed by April 30, 2007.
ADDRESSES: Interested parties are invited to submit written comments.
Comments should refer to ``Affiliate Marketing Rule: FTC File No.
R411006'' to facilitate the organization of comments. A comment filed
in paper form should include this reference both in the text and on the
envelope and should be mailed or delivered, with two complete copies,
to the following address: Federal Trade Commission, Room H-135 (Annex
J), 600 Pennsylvania Ave., NW., Washington, DC 20580. Because paper
mail in the Washington area and at the Commission is subject to delay,
please consider submitting your comments in electronic form, as
prescribed below. However, if the comment contains any material for
which confidential treatment is requested, it must be filed in paper
form, and the first page of the document must be clearly labeled
``Confidential.'' \1\
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\1\ Commission Rule 4.2(d), 16 CFR 4.2(d). The comment must be
accompanied by an explicit request for confidential treatment,
including the factual and legal basis for the request, and must
identify the specific portions of the comment to be withheld from
the public record. The request will be granted or denied by the
Commission's General Counsel, consistent with applicable law and the
public interest. See Commission Rule 4.9(c), 16 CFR 4.9(c).
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Comments filed in electronic form should be submitted by following
the instructions on the Web-based form at https://secure.commentworks.com/AffiliateMarketingRule.
To ensure that the
Commission considers an electronic comment, you must file it on the
Web-based form at the https://secure.commentworks.com/AffiliateMarketingRule
weblink. If this notice appears at
http://www.regulations.gov, you may also file an electronic comment through
that Web site. The Commission will consider all comments that
regulations.gov forwards to it.
The FTC Act and other laws the Commission administers permit the
collection of public comments to consider and use in this proceeding as
appropriate. All timely and responsive public comments will be
considered by the Commission and will be available to the public on the
FTC Web site, to the extent practicable, at http://www.ftc.gov. As a matter of
discretion, the FTC makes every effort to remove home contact
information for individuals from the public comments it receives before
placing those comments on the FTC Web site. More information, including
routine uses permitted by the Privacy Act, may be found in the FTC's
privacy policy at http://www.ftc.gov/ftc/privacy.htm.
FOR FURTHER INFORMATION CONTACT: Requests for additional information
should be addressed to Anthony Rodriguez or Loretta Garrison,
Attorneys, Division of Privacy and Identity Protection, Bureau of
Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue,
NW., Washington, DC 20580, (202) 326-2252.
SUPPLEMENTARY INFORMATION: Under the Paperwork Reduction Act (``PRA''),
44 U.S.C. 3501-3520, federal agencies must obtain approval from OMB for
each collection of information they conduct or sponsor. ``Collection of
information'' means agency requests or requirements that members of the
public submit reports, keep records, or provide information to a third
party. 44 U.S.C. 3502(3); 5 CFR 1320.3(c). As required by section
3506(c)(2)(A) of the PRA, the FTC is providing this opportunity for
public comment before requesting that OMB extend the existing paperwork
clearance for the regulations noted herein.
The FTC invites comments on: (1) Whether the required collection of
information is necessary for the proper performance of the functions of
the agency, including whether the information has practical utility;
(2) the accuracy of the agency's estimate of the burden of the required
collection of information, including the validity of the methodology
and assumptions used; (3) ways to enhance the quality, utility, and
clarity of the information to be collected; and (4) ways to minimize
the burden of the collection of information on those who are to
respond, including through the use of appropriate automated,
electronic, mechanical, or other technological collection techniques or
other forms of information technology, e.g., permitting electronic
submission of responses. All comments should be filed as prescribed in
the ADDRESSES section above, and must be received on or before April
30, 2007.
The Affiliate Marketing Rule, 16 CFR part 680, was proposed by the
FTC under section 214 of the Fair and Accurate Credit Transactions Act
(``FACT Act''), Pub. L. No. 108-159 (December 6, 2003). The FACT Act
amended the Fair Credit Reporting Act, 15 U.S.C. 1681 et seq., which
was enacted to enable consumers to protect the privacy of their
consumer credit information. As mandated by the FACT Act, the proposed
Rule specifies disclosure requirements for certain affiliate companies
subject to the Commission's jurisdiction. Except as discussed below,
these requirements constitute ``collections of information'' for
purposes of the PRA. Specifically, the FACT Act and the proposed Rule
require covered entities to provide consumers with notice and an
opportunity to opt out of the use of certain information before sending
marketing solicitations. The proposed Rule generally provides that, if
a company communicates certain information about a consumer
(``eligibility information'') to an affiliate, the affiliate may not
use that information to make or send solicitations to the consumer
unless the consumer is given notice and a reasonable opportunity to opt
out of such use of the information and the consumer does not opt out.
To minimize compliance costs and burdens for entities, particularly
any small businesses that may be affected, the proposed Rule contains
model disclosures and opt-out notices that may be used to satisfy the
statutory requirements. The proposed Rule also gives covered entities
flexibility to satisfy the notice and opt-out requirement by sending
the consumer a free-standing opt-out notice or by adding the opt-out
notice to the privacy notices already provided to consumers, such as
those provided in accordance with the provisions of Title V, subtitle A
of the GLBA. For covered entities that choose to prepare a free-
standing opt-out notice, the time necessary to prepare it would be
minimal because those entities could simply use the model disclosure.
For covered entities that choose to incorporate the model opt-out
notice into their GLBA privacy notices the time necessary to do so also
would be minimal. Arguably, verbatim adoption of the model notice would
not even be a PRA ``collection of information.'' \2\
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\2\ ``The public disclosure of information originally supplied
by the Federal government to the recipient for purpose of disclosure
to the public is not included within [the definition of collection
of information].'' 5 CFR 1320.3(c)(2).
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Burden Statement
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 proposed Rule's disclosure
requirements is difficult given the highly diverse group of affected
entities that includes affiliated companies which may use certain
eligibility information shared by their
[[Page 9004]]
affiliates to send marketing notices to consumers who are not regulated
by a federal financial regulatory agency.
The estimates provided in this burden statement may well overstate
actual burden. First, an uncertain but possibly significant number of
entities subject to the FTC's jurisdiction do not have affiliates and
would thus not be covered by section 214 of the FACT Act or the
proposed Rule. Second, the Commission's staff does not know how many
companies subject to the FTC's jurisdiction under the proposed rule
actually share eligibility information among affiliates and, of those,
how many affiliates use such information to make marketing
solicitations to consumers. The staff considered the wide variations in
covered entities and the fact that, in some instances, covered entities
may make the required disclosures in the ordinary course of business,
apart from the FACT Act Rule, voluntarily as a service to their
customers, while still other entities may choose to rely on the
exceptions to the proposed Rule's notice and opt-out requirements.\3\
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\3\ Exceptions include, for example, having a preexisting
business relationship with a consumer, using information in response
to a communication initiated by the consumer or to solicitations
authorized or requested by the consumer.
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Staff's estimates assume a higher burden will be incurred during
the first year of the OMB clearance period with a lesser burden for
each of the subsequent two years, since 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. Given this minimum time period, Commission staff
did not estimate burden for preparing and distributing extension
notices by entities that limit the duration of the opt-out time period.
The relevant PRA time frame for burden calculation is three years from
renewed OMB clearance, and the five-year notice period will not begin
until this proposed Rule becomes final.
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.\4\ 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 proposed 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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\4\ 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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Estimated total annual hours burden: 2,662,000 hours, rounded.
Staff estimates that approximately 1.17 million (rounded) non-GLBA
entities under the jurisdiction of the FTC have affiliates and would be
affected by the proposed Rule.\5\ Staff further estimates that there
are an average of 5 businesses per family or affiliated relationship,
and that the affiliated entities will choose to send a joint notice, as
permitted by the proposed Rule. Thus an estimated 233,400 (rounded)
non-GLBA entities may send the new affiliate marketing notice. Staff
also estimates that non-GLBA entities under the jurisdiction of the FTC
would each incur 14 hours of burden during the first year of the
clearance period, comprised of a projected 7 hours of managerial time,
2 hours of technical time, and 5 hours of clerical assistance.
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\5\ This estimate is derived from an analysis of a database of
U.S. businesses based on 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). This estimate excludes businesses not subject to the
FTC's jurisdiction as well as businesses that do not use data or
information subject to the rule.
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Based on the above, total annual burden for non-GLBA entities
during the first year of the clearance period would be approximately
2,646,000 hours and the total annual labor cost would be approximately
$86,676,000, rounded.\6\ These estimates include the start-up burden
and attendant costs, such as determining compliance obligations.
Paperwork burden in later years would be significantly lower, with non-
GLBA entities each incurring 10 hours of annual burden during the
remaining two years of the clearance.\7\ Thus, the estimated annual
burden for non-GLBA entities, averaged over the three-year clearance
period, would be 2,646,000 hours and $66,065,000 in labor costs.
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\6\ The figure is derived from the estimated 7 hours of
managerial labor at $34.21 per hour; 2 hours of technical labor at
$29.80 per hour; and 5 hours of clerical labor at $14.44 per hour (a
combined $371.27) for the estimated 233,400+ non-GLBA business
families subject to the proposed Rule. The hourly rates are based on
average annual Bureau of Labor Statistics National Compensation
Survey data, June 2005 (with 2005 as the most recent whole year
information available at the BLS Web site). http://www.bls.gov/ncs/ocs/sp/ncbl0832.pdf
(Table 1.1).
\7\ This estimate assumes that in subsequent years, non-GLBA
entities would spend 4 hours of managerial time, 1 hour of technical
time, and 5 hours of clerical time each year. Thus, the resulting
estimated burden for each of the remaining two years of the
clearance period would be 2,334,590 hours and approximately
$55,759,000 in labor costs.
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Entities that are subject to the Commission's GLBA privacy notice
regulation already provide privacy notices to their customers. Because
the FACT Act and the proposed Rule contemplate that the new 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
proposed Rule provides a model.\8\ Staff also estimates that 3,350 GLBA
entities under the FTC's jurisdiction would be affected, so that the
total annual burden for GLBA entities during the first year of the
clearance period would approximate 20,000 hours and total annual labor
cost would approximate $673,000.\9\ The paperwork burden in subsequent
years would be significantly lower, with GLBA entities each incurring 4
hours of annual burden (3 hours of managerial time and 1 hour of
technical time) during the remaining two years of the clearance, which
amounts to 13,400 hours and $443,540 in labor costs in each of the
ensuing two years. Thus, averaged over the three-year clearance period,
the estimated annual burden for GLBA entities is 15,600 hours and
$520,000 in labor costs.
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\8\ As stated above, no clerical time is included in the
estimate because the notice likely would be combined with existing
GLBA notices.
\9\ 3,350 GLBA entities x [($34.20 x 5 hours) + ($29.80 x 1
hour)].
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Cumulatively for both GLBA and non-GLBA entities, the average
annual burden over the prospective three-year clearance period,
rounded, is approximately 2,662,000 burden hours and $87,349,000 in
labor costs. GLB 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-GLB
entities, the rule provides for simple and concise model forms that
institutions may use to comply. Thus, any capital or non-labor
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costs associated with compliance for these entities are negligible.
William Blumenthal,
General Counsel.
[FR Doc. E7-3397 Filed 2-27-07; 8:45 am]
BILLING CODE 6750-01-P