[Federal Register Volume 71, Number 250 (Friday, December 29, 2006)]
[Notices]
[Pages 78438-78440]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-22406]


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FEDERAL TRADE COMMISSION


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

AGENCY: Federal Trade Commission.

ACTION: Notice and request for comment.

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SUMMARY: The information collection requirements described below will 
be submitted to the Office of Management and Budget (``OMB'') for 
review, as required by the Paperwork Reduction Act (``PRA''). The 
Federal Trade Commission (``FTC'' or ``Commission'') is seeking public 
comments on its proposal to extend through April 30, 2010 the current 
OMB clearance for its Free Annual File Disclosures Rule (``Rule''). 
That clearance expires on April 30, 2007.

DATES: Comments must be filed by February 27, 2007.

ADDRESSES: Interested parties are invited to submit written comments. 
Comments should refer to ``Free Annual File Disclosures Rule: FTC 
Matter No. P054816,'' to facilitate the organization of comments. A 
comment filed in paper form should include this reference both in the 
text and on the envelope and should be mailed or delivered, with two 
complete copies, to the following address: Federal Trade Commission, 
Room H-135 (Annex J), 600 Pennsylvania Ave., NW., Washington, DC 20580. 
Because paper mail in the Washington area and at the Commission is 
subject to delay, please consider submitting your comments in 
electronic form, as prescribed below. However, if the comment contains 
any material for which confidential treatment is requested, it must be 
filed in paper form, and the first page of the document must be clearly 
labeled ``Confidential.'' \1\
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    \1\ Commission Rule 4.2(d), 16 CFR 4.2(d). The comment must be 
accompanied by an explicit request for confidential treatment, 
including the factual and legal basis for the request, and must 
identify the specific portions of the comment to be withheld from 
the public record. The request will be granted or denied by the 
Commission's General Counsel, consistent with applicable law and the 
public interest. See Commission Rule 4.9(c), 16 CFR 4.9(c).
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    Comments filed in electronic form should be submitted by following 
the instructions on the web-based form at https://secure.commentworks.com/freereports. To ensure that the Commission 
considers an electronic comment, you must file it on the web-based form 
at the https://secure.commentworks.com/freereports weblink. If this 
notice appears at http://www.regulations.gov, you may also file an 
electronic comment through that Web site. The Commission will consider 
all comments that regulations.gov forwards to it.
    The FTC Act and other laws the Commission administers permit the 
collection of public comments to consider and use in this proceeding as 
appropriate. All timely and responsive public comments will be 
considered by the Commission and will be available to the public on the 
FTC Web site, to the extent practicable, at  http://www.ftc.gov. As a 
matter of discretion, the FTC makes every effort to remove home contact 
information for individuals from the public comments it receives before 
placing those comments on the FTC Web site. More information, including 
routine uses permitted by the Privacy Act, may be found in the FTC's 
privacy policy at http://www.ftc.gov/ftc/privacy.htm.

FOR FURTHER INFORMATION CONTACT: Requests for additional information 
should be addressed to Sandra Farrington, Attorney, Division of Privacy 
and Identity Protection, Bureau of Consumer Protection, Federal Trade 
Commission, 600 Pennsylvania Avenue, NW., NJ-3158, Washington, DC 
20580, (202) 326-2252.

SUPPLEMENTARY INFORMATION: Under the Paperwork Reduction Act (``PRA''), 
44 U.S.C. 3501-3520, federal agencies must obtain approval from OMB for 
each collection of information they conduct or sponsor. ``Collection of 
information'' means agency requests or requirements that members of the 
public submit reports, keep records, or provide information to a third 
party. 44 U.S.C. 3502(3); 5 CFR 1320.3(c). As required by section 
3506(c)(2)(A) of the PRA, the FTC is providing this opportunity for 
public comment before requesting that OMB extend the existing paperwork 
clearance for the regulations noted herein.
    The FTC invites comments on: (1) Whether the proposed collection of 
information is necessary for the proper performance of the functions of 
the agency, including whether the information will have practical 
utility; (2) the accuracy of the agency's estimate of the burden of the 
proposed collection of information, including the validity of the 
methodology and assumptions used; (3) ways to enhance the quality, 
utility, and clarity of the information to be collected; and (4) ways 
to minimize the burden of the collection of information on those who 
are to respond, including through the use of appropriate automated, 
electronic, mechanical, or other technological collection techniques or 
other forms of information technology, e.g., permitting electronic 
submission of responses.
    All comments should be filed as prescribed in the ADDRESSES section 
above, and must be received on or before February 27, 2007.
    The Rule, 16 CFR Parts 610 and 698, was promulgated pursuant to the 
Free and Accurate Credit Transactions Act of 2003 (``FACT Act''), Pub. 
L. 108-159 (Dec. 4, 2003), and the Fair Credit Reporting Act 
(``FCRA''), 16 U.S.C. 1681 et seq. As mandated by the FACT Act, the 
Rule requires nationwide and nationwide consumer specialty reporting 
agencies to provide to consumers, upon request, one free file 
disclosure within any 12-month period.
    Generally, the Rule requires the nationwide consumer reporting 
agencies, as defined in Section 603(p) of the FCRA, 15 U.S.C. 1681a(p), 
to create and operate a centralized source that provides consumers with 
the ability to request their free annual file disclosures

[[Page 78439]]

from each of the nationwide consumer reporting agencies through a 
centralized Internet Web site, toll-free telephone number, and postal 
address. The Rule also requires the nationwide consumer reporting 
agencies to establish a standardized form for Internet and mail 
requests for annual file disclosures, and provides a model standardized 
form that may be used to comply with that requirement.
    The Rule also requires nationwide specialty consumer reporting 
agencies, as defined in Section 603(w) of the FCRA, 15 U.S.C. 1681a(w), 
to establish a streamlined process for consumers to request annual file 
disclosures. This streamlined process must include a toll-free 
telephone number for consumers to make such requests.

Burden Statement

    Estimated total annual hours burden: 311,000 hours (rounded to the 
nearest thousand).
    In its 2004 PRA-related Federal Register Notices \2\ and 
corresponding submission to OMB, FTC staff estimated that consumer 
reporting agencies would receive an average of 16.6 million new annual 
file disclosure requests per year during the three-year period from May 
1, 2004 through April 30, 2007.\3\ Thus, estimated average annual 
disclosure burden for those three years was approximately 199,000 
hours.\4\
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    \2\ 69 FR 13192 (Mar. 19, 2004); 69 FR 35468 (Jun. 24, 2004).
    \3\ Staff predicted that nationwide consumer reporting agencies 
and nationwide specialty consumer reporting agencies would receive 
19.9 million new annual file disclosure requests per year. However, 
the nationwide and nationwide specialty consumer reporting agencies 
were not required to provide annual file disclosures under the Rule 
until December 2004, 6 months after the Rule was published. On that 
basis, staff predicted there would be 9.45 million new requests for 
annual file disclosures for the first year of the clearance. [19.9 
million/2] Thus, staff projected that consumer reporting agencies 
would receive an average of 16.6 million new requests per year 
during the requested clearance period. [(9.45 million + 19.9 million 
+ 19.9 million)/3 = 16.6 million]
    \4\ This total included estimated time to increase call center 
and internet capacity to handle heightened request volume, alternate 
use of live operators in limited instances, and processing mail 
requests.
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    No provisions in the Rule have been amended since staff's prior 
submission to OMB. However, the Consumer Data Industry Association 
recently stated that since December 1, 2004, the nationwide consumer 
reporting agencies have provided over 52 million free annual file 
disclosures through the centralized Internet Web site, toll-free 
telephone number, and postal address required to be established by the 
FACT Act and the Rule.\5\ Applying this data, staff estimates that the 
average annual disclosure burden for the three-year period for which 
the Commission seeks OMB clearance is approximately 311,000 hours, as 
detailed below, and that the nationwide consumer reporting agencies and 
the nationwide specialty consumer reporting agencies will receive 26.69 
million requests per year from consumers for free annual file 
disclosures.\6\
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    \5\ Letter from Stuart K. Pratt, President & CEO, Consumer Data 
Industry Association, to Rep. Barney Frank, Committee on Financial 
Services, U.S. House of Representatives (Dec. 1, 2006).
    \6\ This figure annualizes the Consumer Data Industry 
Association's estimate of 52 million new requests for the two-year 
period from December 1, 2004 to December 1, 2006 and revises it 
upward over the next three years based on population growth 
projections issued by the U.S. Census Bureau. See U.S. Census Bureau 
Interim Projections by Age, Sex, Race, and Hispanic Origin, 
available at http://www.census.gov/ipc/www/usinterimproj/.
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Annual File Disclosures Provided Through the Internet

    Both nationwide consumer reporting agencies and nationwide 
specialty consumer reporting agencies will likely handle the 
overwhelming majority of consumer requests through internet Web 
sites.\7\ The annual file disclosures requests processed through the 
internet will not impose any hours burden per request on the nationwide 
and nationwide specialty consumer reporting agencies, even though there 
will be some periodically recurring time and investment required to 
adjust the internet capacity needed to handle the new changing request 
volume. Consumer reporting agencies likely will make such adjustments 
by negotiating or renegotiating outsourcing service contracts annually 
or as conditions change. Negotiating and renegotiating such contracts 
requires the time of trained personnel. Staff estimates that 
negotiating such contracts will require a cumulative total of 8,320 
hours and $425,152 in setup and/or maintenance costs.\8\ Such activity 
is treated as an annual burden of maintaining and adjusting the 
changing internet capacity requirements.
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    \7\ According to a HarrisInteractive poll, the percentage of 
households that have access to the internet is currently over 60% 
and increasing. See The Harris Poll 8, February 5, 2003, 
available at http://www.harrisinteractive.com/harris_poll/index.asp?PID=356. In addition, internet users are probably more 
likely to request an annual file disclosure. Accordingly, staff 
estimates that annually, 75% of the 26.69 million new requests (or 
approximately 20 million) will be made online.
    \8\ Based on the time necessary for similar activity in the 
federal government (including at the FTC), staff estimates that such 
contracting and administration will require approximately 4 full-
time equivalent employees (``FTE'') for the web service contract. 
Thus, staff estimates that administering the contract will require 4 
FTE, which is 8,320 hours per year (4 FTE x 2080 hrs/yr). The cost 
is based on the reported Bureau of Labor Statistics (BLS) rate 
($48.03) for computer programmers for 2005 (most recently available 
BLS data) multiplied by 6.286% (approximate wage inflation for 2005 
and 2006 based on the BLS Employment Cost Index), resulting in a 
wage of $51.10 per hour. Thus, the estimated setup and maintenance 
cost for an internet system is $425,152 per year (8,320 hours x 
$51.10/hour).
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Annual File Disclosures Requested over the Telephone

    Most of the telephone requests for annual file disclosures will 
also be handled in an automated fashion, without any additional 
personnel needed to process the requests. As with the internet, 
additional time and investment will be needed to increase and 
administer the automated telephone capacity for the expected increase 
in request volume. The nationwide and nationwide specialty consumer 
reporting agencies will likely make such adjustments by negotiating or 
renegotiating outsourcing service contracts annually or as conditions 
change. Staff estimates that this will require a total of 6,240 hours 
at a cost of $301,142 in setup and/or maintenance costs.\9\ This also 
is treated as an annual recurring burden necessary to obtain, maintain, 
and adjust automated call center capacity.
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    \9\ Staff estimates that recurrent contracting for automated 
telephone capacity will require approximately 3 FTE, a total of 
6,240 hours (3 x 2,080 hours). Applying a wage rate of $48.26 based 
on the 2005 BLS rate for marketing managers ($45.36/hr), the 
estimate for setup and maintenance cost is $301,142 (6,240 x $48.26) 
per year.
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    A small percentage of those consumers who telephone the centralized 
source or the nationwide speciality consumer reporting agencies will 
not have telephone equipment compatible with an automated system and 
may need to be processed by a live operator.\10\ Based on their 
knowledge of the industry, staff estimates that each of these requests 
will take 5 minutes to process, for a total of 5,334 additional hours 
of operator time. [(64,008 x 5 minutes)/60 minutes = 5,334 hours]
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    \10\ Based on their knowledge of the industry, staff estimates 
that consumers will submit 24% (6.4 million) of the average 26.69 
million new requests for annual file disclosures by telephone. Of 
those, an estimated 1% (or 64,056) will not have telephone equipment 
compatible with an automated system and may need to be serviced by 
live personnel.
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Annual File Disclosures that Require Processing by Mail

    Based on their knowledge of the industry, staff believes that no 
more than 1% of consumers (1% x 26.69 million, or 266,900) will request 
an annual file disclosure through U.S. postal service mail. Staff 
estimates that

[[Page 78440]]

10 minutes per request is required to handle these requests, thereby 
totaling 44,483 hours of time by clerical personnel. [(266,900 x 10 
minutes)/60 minutes = 44,483 hours] In addition, whenever the 
requesting consumer cannot be identified using an automated method (a 
Web site or automated telephone service), it will be necessary to 
redirect that consumer to send identifying material along with the 
request by mail. Staff estimates that this will occur in about 5% of 
the new requests (or 1,321,155) that were originally placed over the 
internet or telephone. Staff estimates that inputting and processing 
those redirected requests will consume approximately 10 minutes apiece 
at a cumulative total of 220,193 clerical hours. [(1,321,155 x 10 
minutes)/60 minutes = 220,193 hours]

Instructions to Consumers

    The Rule also requires that certain instructions be provided to 
consumers. See Rule sections 610.2(b)(2)(iv)(A,B), 
610.3(a)(2)(iii)(A,B). Minimal associated time or cost is involved, 
however. Internet instructions to consumers are embedded in the 
centralized source Web site and do not require additional time or cost 
for the nationwide consumer reporting agencies. Similarly, regarding 
telephone requests, the automated phone systems provide the requisite 
instructions when consumers select certain options. Some consumers who 
request their credit reports by mail may additionally request printed 
instructions from the nationwide and nationwide specialty consumer 
reporting agencies. Staff estimates that there will be a total of 
1,588,055 requests each year for free annual file disclosures by 
mail.\11\ Based on their knowledge of the industry, staff estimates 
that of the predicted 1,588,055 mail requests 10% (or 158,806) will 
request instructions by mail. If printed instructions are sent to each 
of these consumers by mail, requiring 10 minutes of clerical time per 
consumer, this will require 26,468 hours. [(158,806 instructions x 10 
minutes)/60 minutes per hour]
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    \11\ This figure includes both the estimated 1% of 26.69 million 
requests that will be made by mail each year (266,900), and the 
estimated 5% of the requests initially made over the Internet or 
telephone that will be redirected to the mail process (5% of 99% of 
26.69 million = 1,321,155).
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    Labor costs: $5.18 million.
    Labor costs are derived by applying hourly cost figures to the 
burden hours described above. Accordingly, staff estimates that it will 
cost $70,195 to provide annual file disclosures for requests that 
require a telephone service representative. [5,338 hours x $13.15 per 
hour].\12\ The remaining processing of requests for annual file 
disclosures and instructions will be performed by clerical personnel, 
which will require 291,144 hours at a cost of $4,387,540. [(44,483 
hours for handling initial mail request + 220,193 hours for handling 
requests redirected to mail + 26,468 hours for handling instructions 
mailed to consumers) x $15.07 per hour.\13\] As elaborated on above, 
staff estimates that a total of 14,560 labor hours (8,320 internet 
contract hours + 6,240 telephone capacity contract hours) will be 
needed to obtain, maintain, and adjust the new capacity requirements 
for the automated telephone call center and the internet web services. 
This will result in approximately $726,294 per year in labor costs. 
[(8,320 hours x $51.10 per hour for automated phone service) + (6,240 
hours x $48.26 per hour for Web services)] \14\ Thus, staff estimates 
that all non-contract labor will cost $5.18 million each year.
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    \12\ The 2005 BLS wage rate for telephone operators, $12.36, 
increased by 6.385% for compounded wage inflation, is $13.15.
    \13\ The 2005 BLS wage rate for employees in administrative 
support, clerical (level 4 of 9), $14.17, multiplied by 6.385% for 
compounded wage inflation, is $15.07.
    \14\ The 2005 BLS wage rate for top-level computer programmers, 
$48.03, multiplied by 6.385% for compounded wage inflation, is 
$51.10. The 2005 BLS wage rate for marketing managers, averaged 
overall, is $45.36; compounded for wage inflation at 6.385% it 
becomes $48.26.
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    Capital/other non-labor costs: $8.39 million.
    Staff believes it is likely that the consumer reporting agencies 
will use third-party contractors (instead of their own employees) to 
increase the capacity of their systems. Because of the way these 
contracts are typically established, these costs will likely be 
incurred on a continuing basis, and will be calculated based on the 
number of requests handled by the systems. Staff estimates that the 
total annual amount to be paid for services delivered under these 
contracts is $8.39 million.\15\
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    \15\ This consists of an estimated $7.69 million for automated 
telephone cost ($1.20 per request x 6.41 million requests) and an 
estimated $700,000 ($0.035 per request x 20 million requests) for 
internet web service cost. Per unit cost estimates are based on 
staff's knowledge of the industry.
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    Thus, combined, estimated annual labor and non-labor costs are 
approximately $13.57 million per year.\16\
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    \16\ The consumer reporting industry is a multi-billion dollar 
market. As of 2002, it is estimated to have more than $4 billion 
dollars in sales of file disclosures. One study indicates that the 
nationwide consumer reporting agencies had approximately $1.2 
billion in earnings in 2002. See Michael Turner, Daniel Balis, 
Joseph Duncan, and Robin Varghese, ``Free Consumer Credit Reports: 
At What Cost? The Economic Impact of a Free Credit Report Law to the 
National Credit Reporting Infrastructure,'' Washington, DC: 
Information Policy Institute, September, 2003. Thus, the total labor 
and non-labor cost burden estimate of $13.57 million represents a 
small percentage--approximately 1% of the overall market ($13.57 
million divided by $1.2 billion). This comparison is conservative, 
as it does not include the earnings of the nationwide specialty 
consumer reporting agencies.

William Blumenthal,
General Counsel.
[FR Doc. E6-22406 Filed 12-28-06; 8:45 am]
BILLING CODE 6750-01-P