[Federal Register Volume 75, Number 222 (Thursday, November 18, 2010)]
[Notices]
[Pages 70675-70677]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-29048]
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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''). The FTC
seeks public comments on its proposal to extend through December 31,
2013 the current OMB clearance for information collection requirements
contained in its Affiliate Marketing Rule (or ``Rule''). That clearance
expires on December 31, 2010.
DATES: Comments must be filed by December 20, 2010.
ADDRESSES: Interested parties are invited to submit written comments
electronically or in paper form by following the instructions in the
Request for Comments part of the SUPPLEMENTARY INFORMATION section
below. Comments in electronic form should be submitted by using the
following weblink: https://ftcpublic.commentworks.com/ftc/AffiliateMarketingPRA2 (and following the instructions on the Web-based
form). Comments filed in paper form should be mailed or delivered to
the following address: Federal Trade Commission, Office of the
Secretary, Room H-113 (Annex J), 600 Pennsylvania Avenue, NW.,
Washington, DC 20580, in the manner detailed in the SUPPLEMENTARY
INFORMATION section below.
FOR FURTHER INFORMATION CONTACT: Requests for additional information
should be addressed to Anthony Rodriguez, Attorney, Division of Privacy
and Identity Protection, Bureau of Consumer Protection, Federal Trade
Commission, 600 Pennsylvania Avenue, NW., Washington, DC 20580, (202)
326-2757.
SUPPLEMENTARY INFORMATION:
Request for Comments
Interested parties are invited to submit written comments. Comments
should refer to ``Affiliate Marketing Rule: FTC File No. P105411'' to
facilitate the organization of comments. Please note that your
comment--including your name and your State--will be placed on the
public record of this proceeding, including on the publicly accessible
FTC Web site, at http://www.ftc.gov/os/publiccomments.shtm.
Because comments will be made public, they should not include any
sensitive personal information, such as any individual'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. Comments also
should not include any sensitive health information, such as medical
records or other individually identifiable health information. In
addition, comments should not include ``[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 Federal Trade Commission Act (``FTC Act''), 15 U.S.C. 46(f), and
FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2). Comments containing matter for
which confidential treatment is requested must be filed in paper form,
must be clearly labeled ``Confidential,'' and must comply with FTC Rule
4.9(c).\1\
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\1\ 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 FTC Rule 4.9(c), 16 CFR
4.9(c).
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Because paper mail addressed to the FTC is subject to delay due to
heightened security screening, please consider submitting your comments
in electronic form. Comments filed in electronic form should be
submitted using the following weblink https://ftcpublic.commentworks.com/ftc/AffiliateMarketingPRA2 (and following
the instructions on the Web-based form). To ensure that the Commission
considers an electronic comment, you must file it on the Web-based form
at the weblink https://ftcpublic.commentworks.com/ftc/AffiliateMarketingPRA2. If this Notice appears at http://www.regulations.gov/search/index.jsp, you may also file an electronic
comment through that Web site. The Commission will consider all
comments that regulations.gov forwards to it.
All comments should additionally be sent to OMB. Comments may be
submitted by U.S. Postal Mail to: Office of Information and Regulatory
Affairs, Office of Management and Budget, Attention: Desk Officer for
Federal Trade Commission, New Executive Office Building, Docket
Library, Room 10102, 725 17th Street, NW., Washington, DC 20503.
Comments, however, should be submitted via facsimile to (202) 395-5167
because U.S. Postal Mail is subject to lengthy delays due to heightened
security precautions.
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, whether filed in paper or
electronic form. Comments received will be
[[Page 70676]]
available to the public on the FTC Web site, to the extent practicable,
at http://www.ftc.gov/os/publiccomments.shtm. 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.shtm.
Under the PRA, 44 U.S.C. 3501-3521, 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.
Background
The Affiliate Marketing Rule, 16 CFR Part 680, was issued by the
FTC under section 214 of the Fair and Accurate Credit Transactions Act
(``FACT Act''), Public Law 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 and accuracy of
their consumer credit information. As mandated by the FACT Act, the
Rule specifies disclosure requirements for certain affiliated 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 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 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 Rule contains model
disclosures and opt-out notices that may be used to satisfy the
statutory requirements. The 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. In either event, the time necessary to prepare or
incorporate an opt-out notice would be minimal because those entities
could either use the model disclosure verbatim or base their own
disclosures upon it. Moreover, verbatim adoption of the model notice
does not constitute 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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On July 28, 2010, the FTC sought comment on the information
collection requirements associated with the Rule, 16 CFR Part 680. 75
FR 43526. No comments were received. Accordingly, apart from updates to
its labor cost estimates tied to more recent available Department of
Labor data, the FTC retains its previously published burden estimates.
Pursuant to the OMB regulations, 5 CFR Part 1320, that implement
the PRA, 44 U.S.C. 3501-3521, the FTC is providing this second
opportunity for public comment while seeking OMB approval to extend its
existing PRA clearance for the Rule. All comments should be filed as
prescribed herein, and must be received on or before December 20, 2010.
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 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 the FTC's 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 the
FTC's 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 rely on the exceptions to the 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, and solicitations
authorized or requested by the consumer.
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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. Given this
minimum time period, Commission staff did not estimate the 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 the three-year span between expiring OMB
clearances (i.e., December 31, 2010-December 31, 2013). The five-year
notice period, however, will not begin until October 1, 2013 (five
years removed from the Rule's effective date), very close to the end of
the applicable period covered by the instant clearance request.
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 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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[[Page 70677]]
Estimated total average annual hours burden: 1,043,961 hours.
Based, in part, on industry data regarding the number of businesses
under various industry codes, staff estimates that 1,101,780 non-GLBA
entities under FTC jurisdiction have affiliates and would be affected
by the 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 Rule. Thus, an estimated 220,356 non-GLBA business families may
send the 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 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.
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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). See http://www.naics.com/search.htm. This estimate
excludes businesses not subject to the FTC's jurisdiction and
businesses that do not use data or information subject to the rule.
To the resulting sub-total (6,677,796), staff applies a continuing
assumed rate of affiliation of 16.75 percent, see 69 FR 33324, 33334
(June 15, 2004), 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 1,101,780.
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Based on the above, total burden for non-GLBA entities during the
prospective three-year clearance period would be approximately
3,084,984 hours. Associated labor cost would total $101,874,986.\6\
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 1,028,328 hours and $33,958,329 in labor costs.\7\
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\6\ 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 National
Compensation Survey: Occupational Earnings in the United States
2009, U.S. Department of Labor, released August 2010, Bulletin 2738,
Table 3 (``Summary: Full-time civilian workers: Mean and median
hourly, weekly, and annual earnings and mean weekly and annual
hours'') http://www.bls.gov/ncs/ocs/sp/nctb1346.pdf. The respective
private sector hourly wages for these classifications are $43.99,
$36.07, and $16.45. 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 $462.32. This subtotal is then multiplied by the estimated
number of non-GLB business families projected to send the affiliate
marketing notice (220,356) to determine cumulative labor cost burden
for non-GLBA entities ($101,874,986).
\7\ 3,084,984 hours / 3 = 1,028,328; $101,874,986 / 3 =
$33,958,329.
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Entities that are subject to the Commission's GLBA privacy notice
regulation already provide privacy notices to their customers.\8\
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.\9\ Staff further estimates that 3,350 GLBA entities
under the FTC's jurisdiction would be affected,\10\ so that the total
burden for GLBA entities during the first year of the clearance period
would approximate 20,100 hours and $857,667 in associated labor
costs.\11\ 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 and $562,934 in labor costs in
each of the ensuing two years.\12\ Thus, averaged over the three-year
clearance period, the estimated annual burden for GLBA entities is
15,633 hours and $661,178 in labor costs.
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\8\ 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.
\9\ As stated above, no clerical time is included in the
estimate because the notice likely would be combined with existing
GLBA notices.
\10\ Based on the previously stated estimates of 100,000 GLBA
business entities (see supra note 5) 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. For simplicity, staff assumes
that all of these entities are new establishments and/or newly
integrating the affiliated opt-out notice with the GLBA notice in
the first year of the prospective three-year clearance period; thus,
the higher estimate of hours assigned to the first year. This, too,
then, would effectively overstate actual burden.
\11\ 3,350 GLBA entities x [($43.99 x 5 hours) + ($36.07 x 1
hour)] = $857,667.
\12\ 3,350 GLBA entities x [($43.99 x 3 hours) + ($36.07 x 1
hour)] = $562,934.
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Cumulatively for both GLBA and non-GLBA entities, the average
annual burden over the prospective three-year clearance period is
1,043,961 burden hours and $34,619,507 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.
Entities that already have on-line capabilities will offer consumers
the choice to receive notices via electronic format (e.g., computer
equipment and software), and covered entities are already equipped to
provide disclosures (e.g., computers with word processing programs,
copying machines, mailing capabilities). Thus, any capital or non-labor
costs associated with compliance for these entities are negligible.
Willard K. Tom,
General Counsel.
[FR Doc. 2010-29048 Filed 11-17-10; 8:45 am]
BILLING CODE 6750-01-P