[Federal Register Volume 71, Number 13 (Friday, January 20, 2006)]
[Notices]
[Pages 3295-3302]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-626]


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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: [email protected]. 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.

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                                                                     Setup/Monitoring \1\                     Transaction-related \2\
                                                        -------------------------------------------------------------------------------------
                       Disclosure                                        Average Burden  Total Setup/                 Average       Total        Total
                                                           Respondents         per        Monitoring    Number of    Burden per  Transaction    Burden
                                                                           Respondent       Burden    Transactions  Transaction     Burden
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Credit history reporting...............................         250,000             .25       62,500   125,000,000          .25      520,833     583,333
Adverse action notices \3\.............................       1,000,000             .75      750,000   200,000,000          .25      833,333   1,583,333

[[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
                                                        -----------------
    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
                                                                  -----------
    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
                                                                  -----------
    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]]



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                                                                   Setup/monitoring                           Transaction-related
                                                    -----------------------------------------------------------------------------------------
                     Disclosure                                                      Total setup/                     Average       Total        Total
                                                       Respondents   Average burden   monitoring     Number of      burden per   transaction    burden
                                                                     per respondent     burden      transactions    transaction     burden
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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
Error resolution...................................         100,000             .5        50,000        1,000,000          5          83,333     133,333
Transaction receipts...............................         100,000             .5        50,000    5,000,000,000           .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........................................             500             .25          125          250,000           .25        1,041       1,166
                                                    -----------------
    Total..........................................  ..............  ..............  ...........  ...............  ............  ...........   3,080,000
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    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.

----------------------------------------------------------------------------------------------------------------
                                    Managerial          Skilled technical            Clerical
                              ----------------------------------------------------------------------  Total cost
        Required task            Time    Cost ($32/     Time      Cost ($21/    Time     Cost ($14/      ($)
                                (hours)     hr.)       (hours)       hr.)      (hours)      hr.)
----------------------------------------------------------------------------------------------------------------
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
                              -----------
    Total Disclosure.........  ........  ..........  ..........  ...........  ........  ...........   68,068,000
                              ===========
      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.

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                                                                          Setup/monitoring                      Transaction-related
                                                               ------------------------------------------------------------------------------
                          Disclosure                                           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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Auto Leases \1\...............................................       50,000           1       50,000     2,500,000          .50       20,833      70,833
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.....................................................  ...........  ..........  ...........  ............  ...........  ...........    141,667
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\1\ This category focuses on consumer vehicle leases. 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
  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: $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.
---------------------------------------------------------------------------

    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.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Managerial          Skilled technical             Clerical
                                                                  -------------------------------------------------------------------------  Total cost
                          Required task                              Time    Cost ($32/     Time      Cost ($21/     Time      Cost ($14/        ($)
                                                                    (hours)   hr.) \1\     (hours)       hr.)       (hours)       hr.)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Recordkeeping....................................................         0          $0      15,000     $315,000     135,000    $1,890,000    $2,205,000
Disclosures:
    Auto Leases..................................................     7,083     347,067      63,750    1,338,750           0             0     1,685,817
    Other Leases.................................................     5,417     173,344      48,750    1,023,750           0             0     1,197,094
    Advertising..................................................     1,667      53,344      15,000      315,000           0             0       368,344
                                                                  -----------
        Total Disclosures........................................  ........  ..........  ..........  ...........  ..........  ............     3,251,255
                                                                  ===========
            Total Recordkeeping and Disclosures..................  ........  ..........  ..........  ...........  ..........  ............    5,456,255
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ The above figures reflect that for auto leases, hourly rates of $49 for attorney/professional time were used due to specialized training.

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.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Setup/Monitoring                       Transaction-related
                                                           ---------------------------------------------------------------------------------
                      Disclosure \1\                                       Average   Total setup/                    Average       Total        Total
                                                            Respondents  burden per   monitoring     Number of      burden per  transaction     burden
                                                                         respondent     burden      transactions   transaction     burden
--------------------------------------------------------------------------------------------------------------------------------------------------------
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
                                                           --------------
        Total open-end credit.............................  ...........  ..........  ...........  ...............  ...........  ...........    6,847,081
                                                           --------------
        Total closed-end credit...........................  ...........  ..........  ...........  ...............  ...........  ...........    9,792,084
                                                           ==============
            Total credit..................................  ...........  ..........  ...........  ...............  ...........  ...........  16,639,165
--------------------------------------------------------------------------------------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Managerial          Skilled technical             Clerical
                                                                  -------------------------------------------------------------------------  Total cost
                          Required task                              Time    Cost ($32/     Time      Cost ($21/     Time      Cost ($14/        ($)
                                                                    (hours)   hr.) \1\     (hours)       hr.)       (hours)       hr.)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Recordkeeping....................................................         0          $0     100,000  $2,1000,000     900,000   $12,600,000   $14,700,000
Open-end credit Disclosures:
    Initial terms................................................    25,833     826,656     232,500    4,882,500           0             0     5,709,156
    Rescission notices...........................................       708      22,656       6,375      133,875           0             0       156,531
    Change in terms..............................................    29,583     946,656     266,250    5,591,250           0             0     6,537,906
    Periodic statements..........................................   505,000  16,160,000   4,545,000   95,445,000           0             0   111,605,000
    Error resolution.............................................    88,333   2,826,656     795,000   16,695,000           0             0    19,521,656
    Credit and charge card accounts..............................    25,833     826,656     232,500    4,882,500           0             0     5,709,156
    Home equity lines of credit..................................     2,583      82,656      23,250      488,250           0             0       570,906
    Advertising..................................................     6,833     218,656      61,500    1,291,500           0             0     1,510,156
                                                                  -----------
        Total open-end credit....................................  ........  ..........  ..........  ...........  ..........  ............   151,320,467
                                                                  ===========

[[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
                                                                  -----------
        Total closed-end credit..................................  ........  ..........  ..........  ...........  ..........  ............   231,450,063
                                                                  ===========
        Total Disclosures........................................  ........  ..........  ..........  ...........  ..........  ............   382,770,530
                                                                  -----------
            Total Recordkeeping and Disclosures..................  ........  ..........  ..........  ...........  ..........  ............  397,470,530
--------------------------------------------------------------------------------------------------------------------------------------------------------
\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