FR Doc E6-626

[Federal Register: January 20, 2006 (Volume 71, Number 13)]
[Notices]
[Page 3295-3302]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20ja06-62]

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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 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'') (44 U.S.C.
3501-3520). The FTC is seeking public comments on its proposal to
extend through January 31, 2009 the current PRA clearances for
information collection requirements contained in four consumer
financial regulations enforced by the Commission. Those clearances
expire on January 31, 2006.

DATES: Comments must be received on or before February 21, 2006.

ADDRESSES: Interested parties are invited to submit written comments.
Comments should refer to ``Regs BEMZ: FTC File No. P054803'' 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/Office of the Secretary,
Room H-135 (Annex J), 600 Pennsylvania, 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, (in ASCII format, WordPerfect, or Microsoft Word) as
part of or as an attachment to e-mail messages directed

[[Page 3296]]

to the following e-mail box: paperworkcomment@ftc.gov. 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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All comments should additionally be submitted to: Office of
Management and Budget, Attention: Desk Officer for the Federal Trade
Commission. Comments should be submitted via facsimile to (202) 395-
6974 because U.S. Postal Mail is subject to lengthy delays due to
heightened security precautions.
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 or
copies of the proposed information requirements should be addressed to
Carole Reynolds, Attorney, Division of Financial Practices, Bureau of
Consumer Protection, Federal Trade Commission, 600 Pennsylvania Ave.,
NW., Washington, DC 20580, (202) 326-3230.

SUPPLEMENTARY INFORMATION: The four regulations covered by this notice
are:
(1) Regulations promulgated under The Equal Credit Opportunity Act,
15 U.S.C. 1691 et seq. (``ECOA'') (``Regulation B'') (Control Number:
3084-0087);
(2) Regulations promulgated under The Electronic Fund Transfer Act,
15 U.S.C. 1693 et seq. (``EFTA'') (``Regulation E'') (Control Number:
3084-0085);
(3) Regulations promulgated under The Consumer Leasing Act, 15
U.S.C. 1667 et seq. (``CLA'') (``Regulation M'') (Control Number: 3084-
0086);
(4) Regulations promulgated under The Truth-In-Lending Act, 15
U.S.C. 1601 et seq. (``TILA'') (``Regulation Z'') (Control Number:
3084-0088).
On September 28, 2005, the FTC sought comment on the information
collection requirements associated with the regulations discussed
below. See 70 FR 56696. The Commission received one comment from the
National Automobile Dealers Association (``NADA'') pertaining to
certain aspects of regulatory burden affecting Regulations B, M, and
Z.\2\ The issues raised in the NADA comment are discussed under the
applicable regulation subheadings. As required by the PRA, the FTC is
providing this second opportunity for public comment before requesting
that OMB extend the existing paperwork clearance for the regulations
discussed herein. 44 U.S.C. 3506(c)(2)(A).
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\2\ NADA represents approximately 20,000 franchised automobile
and truck dealers (``auto dealers'') who sell new and used vehicles
and engage in service, repair and parts sales. NADA's comment is
available at http://www.ftc.gov/os/comments/pra-regsbemz/index.htm.

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Each of these four rules impose certain recordkeeping and
disclosure requirements associated with providing credit or with other
financial transactions. As detailed below, FTC staff has calculated the
PRA burden for each rule based on the compliance costs of entities
subject to enforcement by the FTC. All of these rules require covered
entities to keep certain records. As discussed below, in most
instances, staff believes that these entities would generally retain
these records in the normal course of business even absent the
recordkeeping requirement in the rules.\3\ There is also some burden
associated with ensuring that covered entities do not prematurely
dispose of relevant records during the period of time required by the
applicable rule.
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\3\ Because most records would be retained in the ordinary
course of business, entities can use existing retention or storage
facilities for any particular records that might be maintained for
regulatory purposes. Additionally, as discussed below, paper
retention is not required under the regulations; financial entities
may use electronic or other non-paper retention formats.
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Disclosure requirements involve both set-up and monitoring costs as
well as certain transaction-specific costs. ``Set-up'' burden, incurred
by new entrants only, includes identifying the applicable disclosure
requirements, determining compliance obligations, and designing and
developing compliance systems and procedures. ``Monitoring'' burden,
incurred by all covered entities, includes reviewing and obtaining
guidance on revisions to regulatory requirements, revising compliance
systems and procedures as necessary, and monitoring the ongoing
operation of systems and procedures to ensure continued compliance.
``Transaction-related'' burden refers to the effort associated with
providing the various required disclosures in individual transactions.
While this burden varies with the number of transactions, the figures
shown for transaction-related burden in the tables that follow are
estimated averages.
The actual range of compliance burden experienced by covered
entities, and reflected in those averages, varies widely. Depending on
the extent to which covered entities have developed computer-based
systems and procedures for providing the required disclosures (and/or
the extent which such entities utilize electronic transactions,
communications, and/or electronic recordkeeping), and the efficacy of
those systems and procedures, some entities may have little burden,
while others may incur a higher burden.\4\
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\4\ For example, large retailers may use computer-based and/or
electronic means to provide required disclosures, including issuing
some disclosures en masse, e.g., notices of changes in terms.
Smaller retailers or other creditors may have less automated
compliance systems but may nonetheless rely on electronic mechanisms
for disclosures and recordkeeping. Regardless of size, some entities
may utilize compliance systems that are fully integrated into their
general business operational system; as such, they may have minimal
additional burden. Other entities, including auto dealers, may have
incorporated fewer of these approaches into their systems and may
have a higher burden.
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Calculating the burden associated with the four regulations'
disclosure requirements is very difficult because of the highly diverse
group of affected entities. The ``respondents'' included in the
following burden calculations consist of credit and lease advertisers,
creditors, financial institutions, service providers, certain
government agencies and others involved in delivering electronic fund
transfers (EFTs) of government benefits, and lessors.\5\ The burden
estimates represent staff's best assessment, based on its knowledge and
expertise relating to the financial services industry. To derive these
estimates, staff considered the wide variations in covered entities':
(1) Size and location; (2) credit or lease products offered, extended,
or advertised, and their particular terms; (3) types of EFTs used; (4)
types and occurrences of adverse actions; (5) types of appraisal
reports utilized; and (6) computer systems and electronic features of
compliance operations.
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\5\ The Commission generally does not have jurisdiction over
banks under the applicable regulations.
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The required disclosures do not impose PRA burden on some covered

[[Page 3297]]

entities because the entities make those disclosures in the ordinary
course of business. In addition, as noted above, some entities use
computer-based and/or electronic means of providing the required
disclosures, while others rely on methods requiring more manual effort.
The cost estimates shown below relate to labor costs and include
the time necessary to train employees to be in compliance with the
regulations.\6\ The applicable PRA requirements generally impose
minimal capital or other non-labor costs, as affected entities usually
have the necessary equipment and storage for other business purposes.
Similarly, staff estimates that compliance with these rules generally
entails minimal printing and copying costs beyond that associated with
documenting financial transactions in the ordinary course of
business.\7\
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\6\ Employee training for these regulations often addresses far
more than the notices and recordkeeping required for the
regulations. Regulatory compliance is one subset of employee
business training and the regulatory compliance encompasses a wide
variety of issues extending beyond those for Regulations B, E, M,
and Z (e.g., privacy and security, tax, and contract and other state
law issues).
\7\ For many industries (including auto dealers), contractual
obligations and financial disclosures are often merged into a single
document, such as the ``retail installment contract'' (for credit)
or ``lease agreement'' (for leases). This document provides
contractual terms as well as various state and federal disclosures;
in many instances, the terms meet federal and state contract and
other state law purposes. Thus, printing and copying costs are
attributable to multiple purposes, including establishing the
contractual obligation of the parties, and generally occur in the
ordinary course of business, rather than being solely attributable
to federal disclosure mandates. Moreover, streamlined model forms
are also provided for notices under the regulations, which minimizes
compliance costs, including any for printing and copying.
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1. Regulation B

The ECOA prohibits discrimination in the extension of credit.
Regulation B, 12 CFR 202, promulgated by the Board of Governors of the
Federal Reserve System (``FRB''), establishes both recordkeeping and
disclosure requirements to assist consumers in understanding their
rights under the ECOA and to assist in detecting unlawful
discrimination. The FTC enforces the ECOA as to all creditors except
those that are subject to the regulatory authority of another federal
agency (such as federally chartered or insured depository
institutions).\8\
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\8\ Under Regulation B, for the requirements at issue,
``creditor'' means a person who ``in the ordinary course of
business, regularly participates in a credit decision, including
setting the terms of the credit.'' See 12 CFR 202.2(l).
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Estimated annual hours burden: 3,689,000 hours, rounded to the
nearest thousand (1,436,833 recordkeeping hours + 2,251,771 disclosure
hours).
Recordkeeping: In its comment, NADA states that burden estimates in
the September 2005 Federal Register Notice do not account for
recordkeeping of ``dead deals'' (i.e., customer inquiries that do not
result in a vehicle sale, for example, where the customer submits a
credit application at one dealership but purchases elsewhere) because
these records would not be retained in the ordinary course of business.
However, it is unclear that the auto dealers, or any particular auto
transaction, would be covered by the aforementioned definition of
``creditor'' under Regulation B; a factual assessment would be
necessary regarding the dealers' activities. Nonetheless, although auto
dealers may or may not be covered, depending on the facts in any given
situation, as discussed below, staff has increased its burden estimates
to account for the possibility of additional recordkeeping costs for
these items.
FTC staff estimates that Regulation B's general recordkeeping
requirements affect 1,000,000 credit firms subject to the Commission's
jurisdiction, at an average annual burden of 1.25 hours per firm, for a
total of 1,250,000 hours.\9\ Staff also estimates that the requirement
that mortgage creditors monitor information about race/national origin,
sex, age, and marital status imposes a maximum burden of one minute
each for approximately eleven million credit applications (based on
industry data regarding the approximate number of mortgage purchase and
refinance originations), for a total of 183,333 hours.\10\ Staff also
estimates that recordkeeping of self-testing subject to the regulation
would affect 2,500 firms, with an average annual burden of one hour per
firm, for a total of 2,500 hours, and that recordkeeping of any
corrective action for self-testing would affect 250 firms in a given
year, with an average annual burden of four hours per firm, for a total
of 1,000 hours. The total estimated recordkeeping burden is 1,436,833
hours.
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\9\ As aforementioned, in light of NADA's comment, staff has
increased its previous estimate.
\10\ Regulation B contains model forms that creditors may use to
gather and retain the required information.
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Disclosure: Regulation B requires that creditors (i.e., entities
that regularly participate in a credit decision, including setting the
terms of the credit) provide notices whenever they take adverse action.
NADA asserts that burden estimates are understated, in view of recent
developments, including case law, which necessitates additional
specialized compliance training. Although staff believes its estimates
encompassed these matters--and such regulatory compliance training
tends to involve multiple topics under Federal and state law--staff has
increased its adverse action disclosure estimates to account for these
issues.
Regulation B also requires entities that extend various types of
mortgage credit to provide a copy of the appraisal report to applicants
or to notify them of their right to a copy of the report (and
thereafter provide a copy of the report, upon the applicant's request).
It also requires that for accounts which spouses may use or for which
they are contractually liable, creditors who report credit history must
do so in a manner reflecting both spouses' participation. Further, it
requires creditors that collect applicant characteristics for purposes
of conducting a self-test to disclose to those applicants that
providing the information is optional, that the creditor will not take
the information into account in any aspect of the credit transactions,
and, if applicable, that the information will be noted by visual
observation or surname if the applicant chooses not to provide it.\11\
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\11\ The disclosure may be provided orally or in writing.
Regulation B provides a model form to assist creditors in providing
the disclosure. The FRB added this disclosure requirement in 2003.
See 52 FR 13144, 13163-64 (Mar. 18, 2003).
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Regulation B applies to retailers, mortgage lenders, mortgage
brokers, finance companies, Internet businesses, and others. Below is
staff's best estimate of burden applicable to this highly broad
spectrum of covered entities.

[[Page 3298]]

Appraisal notices...................................... 25,000 .5 12,500 7,000,000 .25 29,167 41,667
Appraisal reports...................................... 25,000 .5 12,500 7,000,000 .25 29,167 41,667
Self-test disclosures.................................. 2,500 .5 1,250 125,000 .25 521 1,771
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Total.............................................. .............. .............. ........... ............ ........... ........... 2,251,771
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\1\ With respect to appraisal notices and appraisal reports, the above figures reflect an increase in applicable mortgage entities. The figures assume
that approximately half of those entities (.5 x 50,000, or 25,000 businesses) would not otherwise provide this information and thus would be affected.
The figures also assume that all applicable entities would provide notices first and thereafter provide the reports upon request.
\2\ The above figures reflect an increase in mortgage transactions. They assume that half of applicable mortgage transactions (.5 x 14,000,000 or
7,000,000) would not otherwise provide the appraisal notices and reports and thus would be affected.
\3\ These figures include the fact that for incomplete applications, creditors may initially provide the adverse action notice or a notice of
incompleteness.

Estimated annual cost burden: $74,754,000, rounded to the nearest
thousand ($22,298,493 recordkeeping cost + $52,455,799 disclosure
cost).
Staff calculated labor costs by applying appropriate hourly cost
figures to the burden hours described above. The hourly rates used
below ($32 for managerial or professional time,\12\ $21 for skilled
time, and $14 for clerical time) are averages, based on current Bureau
of Labor Statistics cost figures.
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\12\ In view of NADA's comment, staff has utilized higher hourly
rates of $49 for ``attorney or professional time'' for specialized
training in adverse action requirements, as part of the cost of
compliance.
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Recordkeeping: Staff estimates that the general recordkeeping
responsibility of 1.25 hours per creditor would involve approximately
90 percent clerical time and 10 percent skilled technical time. Keeping
records of race/national origin, sex, age, and marital status requires
an estimated one minute of skilled technical time. Keeping records of
the self-test responsibility and of any corrective actions requires an
estimated one hour and four hours, respectively, of skilled technical
time. As shown below, the total recordkeeping cost is $22,298,493.
Disclosure: For each notice or information item listed, staff
estimates that the burden hours consist of 10 percent managerial or
professional time and 90 percent skilled technical time. As shown
below, the total disclosure cost is $52,455,799.

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Managerial Skilled technical Clerical
------------------------------------------------------------------------- Total cost
Required task Time Cost ($32/ Time Cost ($21/ Time Cost ($14/ ($)
(hours) hr.)\1\ (hours) hr.) (hours) hr.)
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General recordkeeping............................................ 0 $0 125,000 $2,625,000 1,125,000 $15,750,000 $18,375,000
Other recordkeeping.............................................. 0 0 183,333 3,849,993 0 0 3,849,993
Recordkeeping of test............................................ 0 0 2,500 52,500 0 0 52,500
Recordkeeping of corrective action............................... 0 0 1,000 21,000 0 0 21,000
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Total Recordkeeping.......................................... ........ .......... .......... ........... .......... ............ 22,298,493
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Credit history reporting......................................... 58,333 1,866,656 525,000 11,025,000 0 0 12,891,656
Adverse action notices........................................... 158,333 7,758,317 1,425,000 29,925,000 0 0 37,683,317
Appraisal notices................................................ 4,167 133,344 37,500 787,500 0 0 920,844
Appraisal reports................................................ 4,167 133,344 37,500 787,500 0 0 920,844
Self-test disclosure............................................. 177 5,664 1,594 133,474 0 0 39,138
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Total Disclosure............................................. ........ .......... .......... ........... .......... ............ 52,455,799
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Total Recordkeeping and Disclosure....................... ........ .......... .......... ........... .......... ............ 74,754,292
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\1\ The above figures reflect that for adverse action, hourly rates of $49 for attorney/professional time were used due to specialized training.

2. Regulation E

The EFTA requires accurate disclosure of the costs, terms, and
rights relating to EFT services to consumers. Regulation E, 12 CFR part
205, promulgated by the FRB, establishes both recordkeeping and
disclosure requirements applicable to entities providing EFT services
to consumers. The FTC enforces the EFTA as to all entities providing
EFT services except those that are subject to the regulatory authority
of another Federal agency (such as federally chartered or insured
depository institutions).
Estimated annual hours burden: 3,580,000 hours (500,000
recordkeeping hours + approximately 3,080,000 disclosure hours).
Recordkeeping: Staff estimates that Regulation E's recordkeeping
requirements affect 500,000 firms offering EFT services to consumers
and subject to the Commission's jurisdiction, at an average annual
burden of one hour per firm, for a total of 500,000 hours.
Disclosure: Regulation E applies to financial institutions
(including certain retailers and electronic commerce entities), service
providers, various Federal and state agencies offering EFTs, and
others. Below is staff's best estimate of burden applicable to this
highly broad spectrum of covered entities.

[[Page 3299]]

Estimated annual cost burden: $75,418,000, rounded to the nearest
thousand ($7,350,000 recordkeeping cost + $68,068,000 disclosure cost).
Staff calculated labor costs by applying appropriate hourly cost
figures to the burden hours described above. The hourly rates used
below ($32 for managerial time, $21 for skilled technical time, and $14
for clerical time) are averages, based on current Bureau of Labor
Statistics cost figures.
Recordkeeping: For the 500,000 recordkeeping hours, staff estimates
that 10 percent of the burden hours require skilled technical time and
90 percent require clerical time. As shown below, the total
recordkeeping cost is $7,350,000.
Disclosure: For each notice or information item listed, staff
estimates that 10 percent of the burden hours require managerial time
and 90 percent require skilled technical time. As shown below, the
total disclosure cost is $68,068,000.

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Managerial Skilled technical Clerical
---------------------------------------------------------------------- Total cost
Required task Time Cost ($32/ Time Cost ($21/ Time Cost ($14/ ($)
(hours) hr.) (hours) hr.) (hours) hr.)
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Recordkeeping................ 0 $0 50,000 $1,050,000 450,000 $6,300,000 $7,350,000
Disclosure:
Initial terms................ 5,033 161,056 45,300 951,300 0 0 1,112,356
Change in terms.............. 2,350 75,200 21,150 444,150 0 0 519,350
Periodic statements.......... 45,000 1,440,000 405,000 8,505,000 0 0 9,945,000
Error resolution............. 13,333 426,650 120,000 2,520,000 0 0 2,946,656
Transaction receipts......... 171,667 5,493,344 1,545,000 32,445,000 0 0 37,938,344
Preauthorized transfers...... 25,417 813,344 228,750 4,803,750 0 0 5,617,094
Service provider notices..... 2,917 93,344 26,250 551,250 0 0 644,594
Govt. benefit notices........ 42,167 1,349,344 379,500 7,969,500 0 0 9,318,844
ATM Notices.................. 116 3,712 1,050 22,050 0 0 25,762
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Total Disclosure......... ........ .......... .......... ........... ........ ........... 68,068,000
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Total Recordkeeping and ........ .......... .......... ........... ........ ........... 75,418,000
Disclosures...........
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3. Regulation M

The CLA requires accurate disclosure of the costs and terms of
leases to consumers. Regulation M, 12 CFR part 213, promulgated by the
FRB, establishes disclosure requirements that assist consumers in
comparison shopping and in understanding the terms of leases and
recordkeeping requirements that assist enforcement of the CLA. The FTC
enforces the CLA as to all lessors and advertisers except those that
are subject to the regulatory authority of another federal agency (such
as federally chartered or insured depository institutions).
Estimated annual hours burden: 292,000 hours, rounded to the
nearest thousand (150,000 recordkeeping hours + 141,667 disclosure
hours).
Recordkeeping: Staff estimates that Regulation M's recordkeeping
requirements affect approximately 150,000 firms leasing products to
consumers and subject to the Commission's jurisdiction, at an average
annual burden of one hour per firm, for a total of 150,000 hours.
Disclosure: Regulation M applies to automobile lessors (such as
auto dealers, independent leasing companies, and manufacturers' captive
finance companies), computer lessors (such as computer dealers and
other retailers), furniture lessors, various electronic commerce
lessors, and diverse types of lease advertisers, and others.
As aforementioned, NADA asserts that burden estimates are
understated, in view of recent developments, including case law, which
necessitates additional specialized compliance training. Although staff
believes its estimates encompassed these matters--and, as noted above,
such regulatory compliance training tends to involve multiple topics
under Federal and state law--staff has increased its burden estimates
pertaining to auto leases to account for these issues. Additionally,
NADA asserts that estimates are understated due to printing and copying
costs associated with providing Regulation M disclosures on lease
agreements and retention of paper records. However, these contracts,
and the specific lease terms, serve a dual purpose of providing
contractual provisions as well as regulatory information; the material
is generally part of the agreement under state law. Moreover,
Regulation M does not

[[Page 3300]]

mandate paper record retention: it permits companies to use electronic
and other nonpaper forms of record retention. As more dealers shift to
such other formats, any such costs should decrease or be eliminated.
Staff believes, therefore, that additional increases based on this
consideration are not appropriate. Accordingly, below is staff's best
estimate of burden applicable to this highly broad spectrum of covered
entities.

Estimated annual cost burden: $5,456,000, rounded to the nearest
thousand ($2,205,000 recordkeeping cost + $3,251,255 disclosure cost).
Staff calculated labor costs by applying appropriate hourly cost
figures to the burden hours described above. The hourly rates used
below ($32 for managerial or professional time,\13\ $21 for skilled
technical time, and $14 for clerical time) are averages, based on
current Bureau of Labor Statistics cost figures.
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\13\ In view of NADA's comment, staff has utilized higher hourly
rates of $49 for ``attorney or professional time'' to reflect the
need for specialized training in lease requirements, as part of the
cost of compliance.
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Recordkeeping: For the 150,000 recordkeeping hours, staff estimates
that 10 percent of the burden hours require skilled technical time and
90 percent require clerical time. As shown below, the total
recordkeeping cost is $2,205,000.
Disclosure: For each notice or information item listed, staff
estimates that 10 percent of the burden hours require managerial or
professional time and 90 percent require skilled technical time. As
shown below, the total disclosure cost is $3,251,255.

4. Regulation Z

The TILA was enacted to foster comparison credit shopping and
informed credit decision making by requiring accurate disclosure of the
costs and terms of credit to consumers. Regulation Z, 12 CFR part 226,
promulgated by the FRB, establishes both recordkeeping and disclosure
requirements to assist consumers and the enforcement of the TILA. The
FTC enforces the TILA as to all creditors and advertisers except those
that are subject to the regulatory authority of another Federal agency
(such as federally chartered or insured depository institutions).
Estimated annual hours burden: 17,639,000 hours, rounded to the
nearest thousand (1,000,000 recordkeeping hours + 16,639,165 disclosure
hours).
Recordkeeping: FTC staff estimates that Regulation Z's
recordkeeping requirements affect approximately 1,000,000 firms
offering credit and subject to the Commission's jurisdiction, at an
average annual burden of one hour per firm, for a total of 1,000,000
hours.
Disclosure: Regulation Z disclosure requirements pertain to open-
end and closed-end credit. The Regulation applies to retailers (such as
department stores, appliance stores, discount retailers, medical-dental
service providers, home improvement sellers, and electronic commerce
retail operators); mortgage companies; finance companies; credit
advertisers; auto dealerships; student loan companies; home fuel or
power services (for furnaces, stoves, microwaves, and other heating,
cooling or residential power equipment); credit advertisers; and
others.
NADA asserts that the burden estimates for closed end credit
disclosures are understated in view of recent developments including
case law, which necessitates additional

[[Page 3301]]

specialized compliance training. As noted, although staff believes its
estimates encompassed these matters--and such regulatory compliance
training tends to involve multiple topics under federal and state law--
staff has increased its estimates pertaining to closed-end credit
disclosures to account for these issues. Additionally, NADA asserts
that estimates are understated due to printing and copying costs
associated with providing Regulation Z disclosures on retail
installment contracts. However, these contracts, and the specific
credit terms, serve a dual purpose of providing contractual provisions
as well as regulatory information; the material is generally part of
the agreement under state law. Staff believes, therefore, that
additional increases based on this consideration are, therefore, not
appropriate. Accordingly, below is staff's best estimate of burden
applicable to this highly broad spectrum of covered entities.

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Setup/Monitoring Transaction-related
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Disclosure \1\ Average Total setup/ Average Total Total
Respondents burden per monitoring Number of burden per transaction burden
respondent burden transactions transaction burden
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Open-end credit:
Initial terms......................................... 100,000 .5 50,000 50,000,000 .25 208,333 258,333
Rescission notices.................................... 10,000 .5 5,000 500,000 .25 2,083 7,083
Change in terms....................................... 25,000 .5 12,500 136,000,000 .125 283,333 295,833
Periodic statements................................... 100,000 .5 50,000 4,800,000,000 .0625 5,000,000 5,050,000
Error resolution...................................... 100,000 .5 50,000 10,000,000 .5 833,333 883,333
Credit and charge card accounts....................... 100,000 .5 50,000 50,000,000 .25 208,333 258,333
Home equity lines of credit........................... 10,000 .5 5,000 5,000,000 .25 20,833 25,833
Advertising........................................... 250,000 .25 62,500 700,000 .5 5,833 68,333
Closed-end credit:
Credit disclosures.................................... 800,000 .75 600,000 330,000,000 1.5 8,250,000 8,850,000
Rescission notices.................................... 100,000 .50 50,000 34,000,000 1 566,667 616,667
Variable rate mortgages............................... 75,000 .50 37,500 3,000,000 1.5 75,000 112,500
High rate/high-fee mortgages.......................... 50,000 .50 25,000 750,000 1.5 18,750 43,750
Reverse mortgages..................................... 50,000 .50 25,000 150,000 1 2,500 27,500
Advertising........................................... 500,000 .25 125,000 1,000,000 1 16,667 141,667
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Total open-end credit............................. ........... .......... ........... ............... ........... ........... 6,847,081
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Total closed-end credit........................... ........... .......... ........... ............... ........... ........... 9,792,084
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Total credit.................................. ........... .......... ........... ............... ........... ........... 16,639,165
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\1\ Open-end transactions with rescission notices (where the notices may not be otherwise provided) have increased. Closed-end variable rate mortgages
have increased. Computer technology use has expanded in some closed-end areas with lengthy disclosures that previously involved more manual efforts,
i.e., credit, variable rate, and high rate/high fee disclosures.

Estimated annual cost burden: $397,471,000, rounded to the nearest
thousand ($14,700,000 recordkeeping cost + $382,770,530 disclosure
cost).
Staff calculated labor costs by applying appropriate hourly cost
figures to the burden hours described above. The hourly rates used
below ($32 for managerial or professional time,\14\ $21 for skilled
technical time, and $14 for clerical time) are averages, based on
current Bureau of Labor Statistics cost figures.
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\14\ In view of NADA's comment, staff has utilized higher hourly
rates of $49 for ``attorney or professional time'' to reflect the
need for specialized training in closed-end credit requirements, as
part of the cost of compliance.
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Recordkeeping: For the 1,000,000 recordkeeping hours, staff
estimates that 10 percent of the burden hours require skilled technical
time and 90 percent require clerical time. As shown below, the total
recordkeeping cost is $14,700,000.
Disclosure: For each notice or information item listed, staff
estimates that 10 percent of the burden hours require managerial or
professional time and 90 percent require skilled technical time. As
shown below, the total disclosure cost is $382,770,530.

[[Page 3302]]

Closed-end credit Disclosures:
Credit disclosures........................................... 885,000 43,365,000 7,965,000 167,265,000 0 0 210,630,000
Rescission notices........................................... 61,667 1,973,344 555,000 11,655,000 0 0 13,628,344
Variable rate mortgages...................................... 11,250 360,000 101,250 2,126,250 0 0 2,486,250
High-rate/high-fee mortgages................................. 4,375 140,000 39,375 826,875 0 0 966,875
Reverse mortgages............................................ 2,750 88,000 24,750 519,750 0 0 607,750
Advertising.................................................. 14,167 453,344 127,500 2,677,500 0 0 3,130,844
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Total closed-end credit.................................. ........ .......... .......... ........... .......... ............ 231,450,063
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Total Disclosures........................................ ........ .......... .......... ........... .......... ............ 382,770,530
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Total Recordkeeping and Disclosures.................. ........ .......... .......... ........... .......... ............ 397,470,530
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\1\ The above figures reflect that for credit disclosures, hourly rates of $49 for attorney/professional time were used due to specialized training.

John D. Graubert,
Acting General Counsel.
[FR Doc. E6-626 Filed 1-19-06; 8:45 am]

BILLING CODE 6750-01-P