[Federal Register Volume 67, Number 228 (Tuesday, November 26, 2002)]
[Notices]
[Pages 70733-70740]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-29980]


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FEDERAL TRADE COMMISSION


Agency Information Collection Activities; Submission for OMB 
Review; Comment Request

AGENCY: Federal Trade Commission (FTC).

ACTION: Notice.

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SUMMARY: The FTC has submitted to the Office of Management and Budget 
(OMB) for review under the Paperwork Reduction Act (PRA) information 
collection requirements contained in four regulations enforced by the 
Commission. The FTC is seeking public comments on the proposal to 
extend through December 31, 2005 the current PRA clearance for 
information collection requirements contained in the regulations. That 
clearance expires on December 31, 2002.

DATES: Comments must be filed by December 26, 2002.

ADDRESSES: Send written comments to the Office of Information and 
Regulatory Affairs, Office of Management and Budget, New Executive 
Office Building, Room 10202, Washington, DC 20503, ATTN.: Desk Officer 
for the Federal Trade Commission (comments in electronic form should be 
sent to [email protected]), and to the Secretary, Federal Trade 
Commission, Room H-159, 600 Pennsylvania Ave., NW., Washington, DC 
20580 (comments in electronic form should be sent to 
[email protected]). All comments should be captioned ``Regs BEMZ: 
Paperwork Comment.''

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: Under the PRA (44 U.S.C. 3501-3520), Federal 
agencies must obtain approval from OMB for each collection of 
information they conduct or sponsor. On August 20, 2002, the FTC sought 
comment on the information collection requirements associated with the 
regulations discussed below. See 67 FR 53936.
    The Commission received one comment pertaining to certain aspects 
of regulatory burden affecting Regulations B, E, and Z that the 
commenter believed understated applicable burden.\1\ These

[[Page 70734]]

issues are discussed more specifically below under the applicable 
regulations. In summary, much of the comment's analysis of the PRA 
mistakenly includes as a measure of burden procedural activities (e.g., 
individual credit decisions, investigating account errors) that are 
inherent in an entity's business, as opposed to disclosures and 
recordkeeping that are required by these regulations. Moreover, the 
comment overlooks the fact that the systems entities establish and 
maintain are commonly used for purposes extending well beyond the 
disclosure or recordkeeping requirements that these regulations 
entail.\2\ Nonetheless, staff has revised its burden estimates in 
several areas to address the issues raised in the comment. Pursuant to 
the OMB regulations that implement the PRA (5 CFR Part 1320), the FTC 
is providing this second opportunity for public comment while seeking 
OMB approval to extend the existing paperwork clearance for the Rule.
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    \1\ The comment was submitted on behalf of Visa U.S.A. 
(``Visa''), a membership organization comprised of certain domestic 
financial institutions licensed to offer Visa cards. Visa's comment 
is centered on open-end credit and EFT services. Furthermore, the 
focus of Visa's comment generally concerns banks and other 
depository institutions. For these regulations, however, except for 
nonfederally insured and noninsured credit unions (less than five 
thousand entities) and a limited number of securities-type entities 
engaged in financial activities covered by these regulations, the 
Commission, generally, lacks jurisdiction over depository 
institutions. And, most entities under the FTC's jurisdiction that 
offer open-end credit and EFT services are specialized regarding 
their plans and terms. Disclosures and recordkeeping for them would 
yield different, and lesser, burden than, for example, banks. 
Finally, regarding Regulation Z in particular, some entities no 
longer offer open-end credit directly (with banks now offering it 
instead).
    \2\ PRA ``burden'' does not include effort expended in the 
ordinary course of business, regardless of any regulatory 
requirement. 5 CFR 1320.3(b)(2).
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    If a comment contains nonpublic information, it must be filed in 
paper form, and the first page of the document must be clearly labeled 
``confidential.'' Comments that do not contain any nonpublic 
information may instead be filed in electronic form (in ASCII format, 
Wordperfect, or Microsoft Word) as part of or as an attachment to email 
messages directed to the following email box: [email protected]. 
Such comments will be considered by the Commission and will be 
available for inspection and copying at its principal office in 
accordance with Section 4.9(b)(6)(ii) of the Commission's Rules of 
Practice, 16 CFR section 4.9(b)(6)(ii)).
    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).
    Each of these four rules impose certain PRA recordkeeping and 
disclosure requirements associated with providing credit or with other 
financial transactions. All of these rules require covered entities to 
keep certain records. Staff believes that these entities would likely 
retain these records in the normal course of business even absent the 
recordkeeping requirement in the rules. There is, however, 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.
    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 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.\3\
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    \3\ 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 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. 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.
    In some instances, where covered entities may make certain required 
disclosures in the ordinary course of business, the Regulation imposes 
no PRA burden. 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 estimated PRA burden associated with these rules, attributable 
to the Commission, is somewhat less today than in the past. Staff 
believes that as computer-based and/or electronic procedures rise, and 
as quality control procedures are increasingly integrated into business 
operating systems, financial services entities also increase compliance 
efficiency.
    The cost estimates shown below relate solely to labor costs. The 
applicable PRA requirements impose minimal capital or other non-labor 
costs, as affected entities generally have the necessary equipment for 
other business purposes. Similarly, staff estimates that compliance 
with these rules entails minimal printing and copying costs beyond that 
associated with documenting financial transactions in the ordinary 
course of business. The burden estimates shown below include the time 
necessary to train staff to be in compliance with the regulations.\4\
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    \4\ Employee training for these regulations may and often does 
address far more than the particular notices and recordkeeping 
required by these regulations. Regulatory compliance is just one 
subset of employee business training, and the regulatory compliance 
facet, for that matter, commonly encompasses a wide variety of 
issues and topics extending widely beyond those posed by Regulations 
B, E, M, and Z (e.g., privacy and security, tax, and contract 
issues). They also address state and local requirements, not merely 
those imposed or enforced by federal agencies. Moreover, this 
training commonly incorporates internal business issues as well 
(e.g., accounting concerns and secondary market or other investors 
issues).

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[[Page 70735]]

    The following paragraphs discuss each of these rules, their 
particular PRA requirements, and staff's best estimates of the related 
hour and cost burdens.

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, 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).
    Estimated annual hours burden: 3,146,000 hours, rounded to the 
nearest thousand (1,153,500 recordkeeping hours + 1,992,832 disclosure 
hours).\5\
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    \5\ Visa stated that burden estimates had not been included for 
credit history reporting; staff has now factored that into its 
burden estimates for disclosures. Visa also noted the absence of 
staff estimates for self-testing Staff has increased its burden 
estimates by including recordkeeping for self-testing. However, it 
is unclear to what extent entities subject to the Commission's 
jurisdiction are performing these tests, as defined by the 
Regulation. Unlike banks, for example, entities under FTC 
jurisdiction are not subject to regular audits for financial 
regulatory compliance with Regulations B, E, M, and Z. Rather they 
may be subject to investigations and enforcement actions that are 
fact- and issue-focused, rather than conducted in regular, periodic 
manner as are audits. This difference may account for relatively 
higher levels in self-testing, as defined under Regulation B, for 
depository entities under the jurisdiction of other federal 
agencies. As discussed further below, staff has retained certain 
other burden estimates.
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    Recordkeeping: 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 one hour per 
firm, for a total of 1,000,000 hours. 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\6\ for approximately nine million credit 
applications (based on industry data regarding the approximate number 
of mortgage purchase and refinance originations), for a total of 
150,000 hours. 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 1,153,500 hours.
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    \6\ 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 the decision whether to extend credit 
under Regulation B) provide notices whenever they take adverse action. 
It 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). Finally, Regulation 
B 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.
    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.\7\
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    \7\ Visa asserted that burden estimates for adverse action were 
understated. However, staff believes that its adverse action notice 
estimates are a reasonable projection for those entities under the 
Commission's jurisdiction. Again, only incremental time and costs, 
beyond what would be incurred by an entity in its ordinary course of 
business apart from these FTC-enforced rules, are factored into 
staff's PRA burden estimates. Also, where multiple entities are 
involved in the adverse action decision (some within, and some 
outside, of Commission jurisdiction), it is only those entities 
under Commission jurisdiction--and only to the extent they are 
involved--that staff has attempted to account for in its PRA burden 
estimates.

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                                                              Setup/                                          Transaction-related \2\
                                                          monitoring \1\                 ---------------------------------------------------------------
                                                         ----------------  Total Setup/
               Disclosure                   Respondents   Average burden    Monitoring                    Average burden       Total
                                                                per       burden (hours)     Number of          per         Transaction    Total  burden
                                                            respondent                     transactions     transaction   burden (hours)      (hours)
                                                              (hours)                                        (minutes)
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Credit history reporting................         250,000             .25          62,500     125,000,000             .25         520,833         583,333
Adverse action notices..................       1,000,000              .5          500,00     200,000,000             .25         833,333       1,333,333
Appraisal notices.......................          22,000              .5          11,000       6,500,000             .25          27,083          38,083
Appraisal reports.......................          22,000              .5          11,000       6,500,000             .25          27,083          38,083
                                         -----------------
    Total...............................  ..............  ..............  ..............  ..............  ..............  ..............      1,992,832
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\1\ With respect to appraisal notices and appraisal reports, the above figures assume that approximately half of applicable mortgage entities (.5 x
  44,000, or 22,000 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 assume that half of applicable mortgage transactions (.5 x 13,000,000 or 6,500,000) would not otherwise provide the appraisal
  notices and reports and thus would be affected.

    Estimated annual cost burden: $59,905,000, rounded to the nearest 
thousand. Staff calculated labor costs by applying appropriate hourly 
cost figures to the burden hours described above. The hourly rates used 
below ($50 for managerial or professional time, $20 for skilled 
technical time, and $10 for clerical time) are averages.
    Recordkeeping: Staff estimates that the general recordkeeping 
responsibility of one hour 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 on 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

[[Page 70736]]

technical time. As shown below, the total recordkeeping cost is 
$14,070,000.
    Disclosure: For each notice or information item listed, staff 
estimates that the burden hours consist of 10 percent managerial time 
and 90 percent skilled technical time. As shown below, the total 
disclosure cost is $45,835,100.

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                                                    Managerial                   Skilled Technical                   Clerical
                                         ------------------------------------------------------------------------------------------------   Total  Cost
              Required Task                                 Cost  ($50/                     Cost  ($20/                     Cost  ($10/         ($)
                                           Time  (hours)       hr.)        Time  (hours)       hr.)        Time  (hours)       hr.)
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General recordkeeping...................               0              $0         100,000      $2,000,000         900,000      $9,000,000     $11,000,000
 
Other recordkeeping.....................               0               0         150,000       3,000,000               0               0       3,000,000
Recordkeeping of test...................               0               0           2,500          50,000               0               0          50,000
Recordkeeping of corrective action......               0               0           1,000          20,000               0               0          20,000
                                         -----------------
    Total Recordkeeping.................  ..............  ..............  ..............  ..............  ..............  ..............      14,070,000
                                         =================
    Credit history reporting............          58,333       2,916,650         525,000      10,500,000               0               0      13,416,650
    Adverse action notices..............         133,333       6,666,650       1,200,000      24,000,000               0               0      30,666,650
    Appraisal notices...................           3,808         190,400          34,275         685,500               0               0         875,900
    Appraisal reports...................           3,808         190,400          34,275         685,500               0               0         875,900
                                         -----------------
    Total Disclosure....................  ..............  ..............  ..............  ..............  ..............  ..............      45,835,100
                                         =================
    Total Recordkeeping and Disclosure..  ..............  ..............  ..............  ..............  ..............  ..............      59,905,100
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2. Regulation E

    The EFTA requires accurate disclosure of the ocsts, terms, and 
rights relating to EFT services to consumers. Regulation E, 12 CFR 205, 
promulgated by the Board of Governors of the Federal Reserve System, 
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.\8\
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    \8\ Visa believes that staff's burden estimates were understated 
for the initial terms and periodic statements disclosures and for 
error resolution. Generally, however, under Regulation E, the 
Commission lacks jurisdiction over traditional depository-type 
entities, other than nonfederally-insured or noninsured credit 
unions and certain securities-type entities that may offer EFT 
services to consumers. While staff's analysis does not overlook the 
depository-type entities under the Commission's jurisdiction, their 
relative weighting is more than counterbalanced by the fact that 
many other entities under Commission jurisdiction subject to these 
requirements engage in limited types of EFTs, with more specialized 
terms and charges. The nature of entities subject to this 
jurisdiction impacts, among other things, initial and periodic 
disclosures. Moreover, regarding error resolution, staff notes that 
the procedural aspects that may be associated with investigation and 
account adjustments are not, per se PRA collected[s] of 
information.'' See note 2. Staff has retained its projected 
estimates in view of these considerations.

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                                                                 Setup/monitoring                               Transaction-related
                                                         -----------------------------------------------------------------------------------------------
                                                              average                                         Average
               Disclosure                   Respondents     burden per     Total setup/      Number of      burden per         Total       Total  burden
                                                            respondent      monitoring     transactions     transaction     transaction       (hours)
                                                              (hours)     burden (hours)                     (minutes)    burden (hours)
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Initial terms...........................         100,000              .5          50,000       1,000,000             .02             333          50,333
Change in terms.........................          25,000              .5          12,500      33,000,000             .02          11,000          23,500
Periodic statements.....................         100,000              .5          50,000   1,200,000,000             .02         400,000         450,000

[[Page 70737]]

 
Error resolution........................         100,000              .5          50,000       1,000,000               5          83,333         133,333
Transaction receipts....................         100,000              .5          50.000       5,000,000             .02       1,666,667       1,716,667
Preauthorized transfers.................         500,000              .5         250,000       1,000,000             .25           4,167         254,167
Service provider notices................         100,000             .25          25,000       1,000,000             .25           4,167          29,167
Govt. benefit notices...................          10,000              .5           5,000     100,000,000             .25         416,667         421,667
ATM notices \1\.........................             500             .25             125         250,000             .25           1,041           1,166
                                         -----------------
    Total...............................  ..............  ..............  ..............  ..............  ..............  ..............       3,080,000
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\1\ Starting in 2001, ATM operators were required to provide certain notices to consumers regarding ATM fees. Generally, these notices must be provided
  on or at ATM machines and/or on paper before the consumer is committed to paying a fee.

    Estimated annual cost burden: $76,240,000, rounded to the nearest 
thousand.
    Staff calculated labor costs by applying appropriate hourly cost 
figures to the burden hours described above. The hourly rates used 
below ($50 for managerial or professional time, $20 for skilled 
technical time, and $10 for clerical time) are averages.
    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 $5,500,000.
    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 $70,740,000.

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                                                    Managerial                   Skilled technical                   Clerical
                                         ------------------------------------------------------------------------------------------------   Total Cost
              Required Task                                 Cost  ($50/                     Cost  ($20/                     Cost  ($10/         ($)
                                           Time  (hours)       hr.)        Time  (hours)       hr.)        Time  (hours)       hr.)
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Recordkeeping...........................               0              $0          50,000      $1,000,000         450,000      $4,500,000      $5,500,000
Disclosure:
Initial terms...........................           5,033         251,650          45,300         906,000               0               0       1,157,650
Change in terms.........................           2,350         117,500          21,150         423,000               0               0         540,500
Periodic statements.....................          45,000       2,250,000         405,000       8,100,000               0               0      10,350,000
Error resolution........................          13,333         666,650         120,000       2,400,000               0               0       3,066,650
Transaction receipts....................         171,667       8,583,350       1,540,000      30,800,000               0               0      39,383,350
Preauthorized transers..................          25,417       1,270,850         228,750       4,575,000               0               0       5,845,850
Service provider notices................           2,917         145,850          26,250         525,000               0               0         670,850
Govt. benefit notices...................          42,167       2,108,350         379,500       7,590,000               0               0       9,698,350
ATM Notices.............................             116           5,800           1,050          21,000               0               0          26,800
                                         -----------------
    Total Disclosure....................  ..............  ..............  ..............  ..............  ..............  ..............      70,740,000
                                         =================
    Total Recordkeeping and Disclosures.  ..............  ..............  ..............  ..............  ..............  ..............      76,240,000
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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 213, promulgated by the Board 
of Governors of the Federal Reserve System, 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: 279,000 hours, rounded to the 
nearest thousand (150,000 recordkeeping hours + 129,167 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. Below is 
staff's best estimate of burden applicable to this highly broad 
spectrum of covered entities.

[[Page 70738]]



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                                                         Setup/monitoring                                       Transaction-related
                                         ---------------------------------------------------------------------------------------------------------------
                                                                                                              Average
               Disclosure                                 Average Burden   Total Setup/      Number of      Burden per         Total       Total  Burden
                                            Respondents   per Respondent    Monitoring     Transactions     Transaction     Transaction       (hours)
                                                              (hours)     Burden (hours)                     (minutes)    Burden (hours)
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Auto Leases \1\.........................          50,000             .75          37,500       2,500,000             .50          20,833          58,333
Other Leases \2\........................         100,000             .50          50,000       1,000,000             .25           4,167          54,167
Advertising.............................          25,000             .50          12,500       1,000,000             .25           4,167          16,667
                                         -----------------
    Total...............................  ..............  ..............  ..............  ..............  ..............  ..............        129,167
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\1\ This category focuses on consumer vehicle leases. Vehicle leasing has decreased in the past two years. Vehicle leases are subject to more lease
  disclosure requirements (pertaining to computation of payment obligations) than other lease transactions. (Only consumer leases for more than four
  months are covered.) See 15 U.S.C. 1667(1); 12 CFR Sec.   213.2(e)(1).
\2\ This category focuses on all types of consumer leases other than vehicle leases. It includes leases for computers, other electronics, small
  appliances, furniture, and other transactions. (Only consumers leases for more than four months are covered.) See 15 U.S.C. 1667(1); 12 CFR
  213.2(e)(1).

    Estimated annual cost burden: $4,621,000, rounded to the nearest 
thousand.
    Staff calculated labor costs by applying appropriate hourly cost 
figures to the burden hours described above. The hourly rates used 
below ($50 for managerial or professional time, $20 for skilled 
technical time, and $10 for clerical time) are averages.
    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 $1,650,000.
    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 $2,970,850.

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                                                    Managerial                   Skilled Technical                   Clerical
              Required Task              ------------------------------------------------------------------------------------------------   Total Cost
                                           Time (hours)   Cost ($50/hr.)   Time (hours)   Cost ($20/hr.)   Time (hours)   Cost ($10/hr.)        ($)
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Recordkeeping...........................               0              $0          15,000        $300,000         135,000      $1,350,000      $1,650,000
Disclosures:
Auto Leases.............................           5,833         291,650          52,500       1,050,000               0               0       1,341,650
Other Leases............................           5,417         270,850          48,750         975,000               0               0       1,245,850
Advertising.............................           1,667          83,350          15,000         300,000               0               0         383,350
                                         -----------------
    Total Disclosures...................  ..............  ..............  ..............  ..............  ..............  ..............       2,970,850
                                         =================
    Total Recordkeeping and Disclosures.  ..............  ..............  ..............  ..............  ..............  ..............      $4,620,850
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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 226, 
promulgated by the Board of Governors of the Federal Reserve System, 
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: 20, 179,000 hours, rounded to the 
nearest thousand (1,000,000 recordkeeping hours + 19,178,749 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. Below is staff's best estimate of burden applicable to this 
highly broad spectrum of covered entities.\9\
---------------------------------------------------------------------------

    \9\ Visa asserted that the burden estimates were understated for 
the initial terms and periodic statements disclosures and for 
billing error resolution. As noted above regarding these 
regulations, generally, the Commission lacks jurisdiction over 
traditional depository-type entities (including banks), other than 
nonfederally-insured or noninsured credit unions and certain 
securities-type entities that offer credit services to consumers. 
The Commission has jurisdiction over certain nondepository financial 
services entities that offer open-end credit, as well as certain 
health care providers, and other retailers that still issue credit 
under their own names. Staff has accounted for these entities in its 
estimates. However, although some entities under the Commission's 
jurisdiction offer varying forms of and terms within open-ended 
credit to consumers, many have a more limited offering, including 
some retailers, health care providers, and others. Moreover, some 
entities no longer offer open-end credit directly (with banks 
offering it instead), including, for example, many oil companies, 
department stores, and other retailers. The nature of entities 
subject to this jurisdiction impacts initial and periodic 
disclosures. In addition, regarding billing error resolution, staff 
notes that the time associated with investigation and account 
adjustments is not burden imposed by these regulations and is thus 
not covered by the PRA. Staff has retained its projected estimates 
in view of these considerations.

[[Page 70739]]



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                                                         Setup/Monitoring                               Transaction-related
                                         ------------------------------------------------------------------------------------------------
                                                                                                          Average burden                   Total  burden
             Disclosure \1\                               Average burden   Total setup/      Number of          per            Total          (hours)
                                            Respondents   per respondent    monitoring     transactions     transaction     transaction
                                                              (hours)     burden (hours)                     (minutes)    burden (hours)
--------------------------------------------------------------------------------------------------------------------------------------------------------
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         100,000             .25             417           5,417
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             .50         400,000     330,000,000               2      11,000,000      11,400,000
Rescission notices......................         100,000             .50          50,000      34,000,000               1         566,667         616,667
Variable rate mortgages.................          75,000             .50          37,500       1,800,000               2          60,000          97,500
High rate/high-fee mortgages............          50,000             .50          25,000         750,000               2          25,000          50,000
Reserve 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
                                         -----------------
    Total open-end credit...............  ..............  ..............  ..............  ..............  ..............  ..............       6,845,415
                                         =================
    Total closed-end credit.............  ..............  ..............  ..............  ..............  ..............  ..............      12,333,334
                                         -----------------
        Total credit....................  ..............  ..............  ..............  ..............  ..............  ..............     19,178,749
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ In some areas, e.g., home equity lines of credit, companies have merged, changed their business focus, and/or have shifted that focus into areas not
  under the FTC's jurisdiction. Accordingly, staff's estimates account for a reduced number of respondents in these areas. For high-rate, high-fee
  loans, some respondents in this area have merged and/or changed their business focus. However, revisions to these rules by the FRB became effective 10/
  1/02; as a result, certain additional mortgages may be covered by these rules.

    Estimated annual cost burden: $452,111,000 rounded to the nearest 
thousand.
    Staff calculated labor costs by applying appropriate hourly cost 
figures to the burden hours described above. The hourly rates used 
below ($50 for managerial or professional time, $20 for skilled 
technical time, and $10 for clerical time) are averages.
    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 $11,000,000.
    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 $441,111,200.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                    Managerial                   Skilled Technical                   Clerical
                                         ------------------------------------------------------------------------------------------------
              Required Task                                                                                                 Cost  ($10/   Total Cost ($)
                                           Time (hours)   Cost ($50/hr.)   Time (hours)   Cost ($20/hr.)   Time (hours)        hr.)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Recordkeeping...........................               0              $0         100,000      $2,000,000         900,000      $9,000,000     $11,000,000
Open-end Disclosure:
Initial terms...........................          25,833       1,291,650         232,500       4,650,000               0               0       5,941,650
Rescission notices......................             542          27,100           4,875          97,500               0               0         124,600
Change in terms.........................          29,583       1,479,150         266,250       5,325,000               0               0       6,804,150
Periodic statements.....................         505,000      25,250,000       4,545,000      90,900,000               0               0     116,150,000
Error resolution........................          88,333       4,416,650         795,000      15,900,000               0               0      20,316,650
Credit and charge card accounts.........          25,833       1,291,650         232,500       4,650,000               0               0       5,941,650
Home equity lines of credit.............           2,583         129,150          23,250         465,000               0               0         594,150
Advertising.............................           6,833         341,650          61,500       1,230,000               0               0       1,571,650
                                         -----------------
    Total open-end credit...............  ..............  ..............  ..............  ..............  ..............  ..............     157,444,500
                                         =================
Closed-end credit Disclosures:
Credit disclosures......................       1,140,000      57,000,000      10,260,000     205,200,000               0               0     262,200,000
Rescission notices......................          61,667       3,083,350         555,000      11,100,000               0               0      14,183,350

[[Page 70740]]

 
Variable rate mortgages.................           9,750         487,500          87,750       1,755,000               0               0       2,242,500
High-rate/high-fee mortgages............           5,000         250,000          45,000         900,000               0               0       1,150,000
Reverse mortgages.......................           2,750         137,500          24,750         495,000               0               0         632,500
Advertising.............................          14,167         708,350         127,500       2,550,000               0               0       3,258,350
                                         -----------------
    Total closed-end credit.............  ..............  ..............  ..............  ..............  ..............  ..............     283,666,700
                                         =================
    Total Disclosures...................  ..............  ..............  ..............  ..............  ..............  ..............     441,111,200
                                         =================
        Total Recordkeeping and           ..............  ..............  ..............  ..............  ..............  ..............     452,111,200
         disclosures:...................
--------------------------------------------------------------------------------------------------------------------------------------------------------


John D. Graubert,
Acting General Counsel.
[FR Doc. 02-29980 Filed 11-25-02; 8:45 am]
BILLING CODE 6750-01-M