[Federal Register Volume 72, Number 59 (Wednesday, March 28, 2007)]
[Notices]
[Pages 14575-14577]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-5677]


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FEDERAL TRADE COMMISSION


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

AGENCY: Federal Trade Commission (``FTC'' or ``Commission'').

ACTION: Notice.

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

DATES: Comments must be filed by April 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 that web-based 
form. If this notice appears at 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.
    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 
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: On December 29, 2006, the FTC sought comment 
on the information collection requirements associated with the Rule, 16 
CFR Parts 610 and 698 (Control Number: 3084-0128). See 71 FR 78438. No 
comments were received. Pursuant to the OMB regulations, 5 CFR Part 
1320, that implement the PRA, 44 U.S.C. 3501-3520, the FTC is providing 
this second opportunity for public comment while seeking OMB approval 
to extend the existing paperwork clearance for the Rule. All comments 
should be filed as prescribed in the ADDRESSES section above, and must 
be received on or before April 27, 2007.
    The Rule 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 consumer 
reporting agencies 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 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

[[Page 14576]]

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\ 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 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 and nationwide specialty consumer reporting 
agencies will likely handle the overwhelming majority of consumer 
requests through internet Web sites.\7\ The annual file disclosure 
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 $425,318 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 6.426% (approximate wage inflation for 2005 
and 2006 based on the BLS Employment Cost Index), resulting in a 
wage of $51.12 per hour. Thus, the estimated setup and maintenance 
cost for an internet system is $425,318 per year (8,320 hours x 
$51.12/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 $301,205 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 $48.27 based 
on the 2005 BLS rate for marketing managers ($45.36/hr), the 
estimate for setup and maintenance cost is $301,205 (6,240 x $48.27) 
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 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

[[Page 14577]]

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 total 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: $5.19 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 $4,390,452. [(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 $15.08 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 $726,523 per year in labor costs. 
[(8,320 hours x $51.12 per hour for automated phone service) + (6,240 
hours x $48.27 per hour for Web services) \14\] Thus, staff estimates 
that all non-contract labor will cost $5.19 million each year.
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    \12\ The 2005 BLS wage rate for telephone operators, $12.36, 
increased by 6.426% 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 6.426% for 
compounded wage inflation, is $15.08.
    \14\ The 2005 BLS wage rate for top-level computer programmers, 
$48.03, multiplied by 6.426% for compounded wage inflation, is 
$51.12. The 2005 BLS wage rate for marketing managers, averaged 
overall, is $45.36; compounded for wage inflation at 6.426% it 
becomes $48.27.
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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 $13.58 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. E7-5677 Filed 3-27-07; 8:45 am]
BILLING CODE 6750-01-P