[Federal Register Volume 75, Number 222 (Thursday, November 18, 2010)]
[Notices]
[Pages 70675-70677]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-29048]


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FEDERAL TRADE COMMISSION


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

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

ACTION: Notice.

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SUMMARY: The information collection requirements described below will 
be submitted to the Office of Management and Budget (``OMB'') for 
review, as required by the Paperwork Reduction Act (``PRA''). The FTC 
seeks public comments on its proposal to extend through December 31, 
2013 the current OMB clearance for information collection requirements 
contained in its Affiliate Marketing Rule (or ``Rule''). That clearance 
expires on December 31, 2010.

DATES: Comments must be filed by December 20, 2010.

ADDRESSES: Interested parties are invited to submit written comments 
electronically or in paper form by following the instructions in the 
Request for Comments part of the SUPPLEMENTARY INFORMATION section 
below. Comments in electronic form should be submitted by using the 
following weblink: https://ftcpublic.commentworks.com/ftc/AffiliateMarketingPRA2 (and following the instructions on the Web-based 
form). Comments filed in paper form should be mailed or delivered to 
the following address: Federal Trade Commission, Office of the 
Secretary, Room H-113 (Annex J), 600 Pennsylvania Avenue, NW., 
Washington, DC 20580, in the manner detailed in the SUPPLEMENTARY 
INFORMATION section below.

FOR FURTHER INFORMATION CONTACT: Requests for additional information 
should be addressed to Anthony Rodriguez, Attorney, Division of Privacy 
and Identity Protection, Bureau of Consumer Protection, Federal Trade 
Commission, 600 Pennsylvania Avenue, NW., Washington, DC 20580, (202) 
326-2757.

SUPPLEMENTARY INFORMATION:

Request for Comments

    Interested parties are invited to submit written comments. Comments 
should refer to ``Affiliate Marketing Rule: FTC File No. P105411'' to 
facilitate the organization of comments. Please note that your 
comment--including your name and your State--will be placed on the 
public record of this proceeding, including on the publicly accessible 
FTC Web site, at http://www.ftc.gov/os/publiccomments.shtm.
    Because comments will be made public, they should not include any 
sensitive personal information, such as any individual's Social 
Security Number; date of birth; driver's license number or other State 
identification number, or foreign country equivalent; passport number; 
financial account number; or credit or debit card number. Comments also 
should not include any sensitive health information, such as medical 
records or other individually identifiable health information. In 
addition, comments should not include ``[t]rade secret or any 
commercial or financial information which is obtained from any person 
and which is privileged or confidential'' as provided in Section 6(f) 
of the Federal Trade Commission Act (``FTC Act''), 15 U.S.C. 46(f), and 
FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2). Comments containing matter for 
which confidential treatment is requested must be filed in paper form, 
must be clearly labeled ``Confidential,'' and must comply with FTC Rule 
4.9(c).\1\
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    \1\ The comment must be accompanied by an explicit request for 
confidential treatment, including the factual and legal basis for 
the request, and must identify the specific portions of the comment 
to be withheld from the public record. The request will be granted 
or denied by the Commission's General Counsel, consistent with 
applicable law and the public interest. See FTC Rule 4.9(c), 16 CFR 
4.9(c).
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    Because paper mail addressed to the FTC is subject to delay due to 
heightened security screening, please consider submitting your comments 
in electronic form. Comments filed in electronic form should be 
submitted using the following weblink https://ftcpublic.commentworks.com/ftc/AffiliateMarketingPRA2 (and following 
the instructions on the Web-based form). To ensure that the Commission 
considers an electronic comment, you must file it on the Web-based form 
at the weblink https://ftcpublic.commentworks.com/ftc/AffiliateMarketingPRA2. If this Notice appears at http://www.regulations.gov/search/index.jsp, you may also file an electronic 
comment through that Web site. The Commission will consider all 
comments that regulations.gov forwards to it.
    All comments should additionally be sent to OMB. Comments may be 
submitted by U.S. Postal Mail to: Office of Information and Regulatory 
Affairs, Office of Management and Budget, Attention: Desk Officer for 
Federal Trade Commission, New Executive Office Building, Docket 
Library, Room 10102, 725 17th Street, NW., Washington, DC 20503. 
Comments, however, should be submitted via facsimile to (202) 395-5167 
because U.S. Postal Mail is subject to lengthy delays due to heightened 
security precautions.
    The FTC Act and other laws that the Commission administers permit 
the collection of public comments to consider and use in this 
proceeding as appropriate. The Commission will consider all timely and 
responsive public comments that it receives, whether filed in paper or 
electronic form. Comments received will be

[[Page 70676]]

available to the public on the FTC Web site, to the extent practicable, 
at http://www.ftc.gov/os/publiccomments.shtm. As a matter of 
discretion, the FTC makes every effort to remove home contact 
information for individuals from the public comments it receives before 
placing those comments on the FTC Web site. More information, including 
routine uses permitted by the Privacy Act, may be found in the FTC's 
privacy policy, at http://www.ftc.gov/ftc/privacy.shtm.
    Under the PRA, 44 U.S.C. 3501-3521, Federal agencies must obtain 
approval from OMB for each collection of information they conduct or 
sponsor. ``Collection of information'' means agency requests or 
requirements that members of the public submit reports, keep records, 
or provide information to a third party. 44 U.S.C. 3502(3); 5 CFR 
1320.3(c). As required by section 3506(c)(2)(A) of the PRA, the FTC is 
providing this opportunity for public comment before requesting that 
OMB extend the existing paperwork clearance for the regulations noted 
herein.

Background

    The Affiliate Marketing Rule, 16 CFR Part 680, was issued by the 
FTC under section 214 of the Fair and Accurate Credit Transactions Act 
(``FACT Act''), Public Law 108-159 (December 6, 2003). The FACT Act 
amended the Fair Credit Reporting Act, 15 U.S.C. 1681 et seq., which 
was enacted to enable consumers to protect the privacy and accuracy of 
their consumer credit information. As mandated by the FACT Act, the 
Rule specifies disclosure requirements for certain affiliated companies 
subject to the Commission's jurisdiction. Except as discussed below, 
these requirements constitute ``collections of information'' for 
purposes of the PRA. Specifically, the FACT Act and the Rule require 
covered entities to provide consumers with notice and an opportunity to 
opt out of the use of certain information before sending marketing 
solicitations. The Rule generally provides that, if a company 
communicates certain information about a consumer (``eligibility 
information'') to an affiliate, the affiliate may not use that 
information to make or send solicitations to the consumer unless the 
consumer is given notice and a reasonable opportunity to opt out of 
such use of the information and the consumer does not opt out.
    To minimize compliance costs and burdens for entities, particularly 
any small businesses that may be affected, the Rule contains model 
disclosures and opt-out notices that may be used to satisfy the 
statutory requirements. The Rule also gives covered entities 
flexibility to satisfy the notice and opt-out requirement by sending 
the consumer a free-standing opt-out notice or by adding the opt-out 
notice to the privacy notices already provided to consumers, such as 
those provided in accordance with the provisions of Title V, subtitle A 
of the GLBA. In either event, the time necessary to prepare or 
incorporate an opt-out notice would be minimal because those entities 
could either use the model disclosure verbatim or base their own 
disclosures upon it. Moreover, verbatim adoption of the model notice 
does not constitute a PRA ``collection of information'' \2\
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    \2\ ``The public disclosure of information originally supplied 
by the Federal government to the recipient for purpose of disclosure 
to the public is not included within [the definition of collection 
of information].'' 5 CFR 1320.3(c)(2).
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    On July 28, 2010, the FTC sought comment on the information 
collection requirements associated with the Rule, 16 CFR Part 680. 75 
FR 43526. No comments were received. Accordingly, apart from updates to 
its labor cost estimates tied to more recent available Department of 
Labor data, the FTC retains its previously published burden estimates.
    Pursuant to the OMB regulations, 5 CFR Part 1320, that implement 
the PRA, 44 U.S.C. 3501-3521, the FTC is providing this second 
opportunity for public comment while seeking OMB approval to extend its 
existing PRA clearance for the Rule. All comments should be filed as 
prescribed herein, and must be received on or before December 20, 2010.

Burden Statement

    Except where otherwise specifically noted, staff's estimates of 
burden are based on its knowledge of the consumer credit industries and 
knowledge of the entities over which the Commission has jurisdiction. 
This said, estimating PRA burden of the Rule's disclosure requirements 
is difficult given the highly diverse group of affected entities that 
may use certain eligibility information shared by their affiliates to 
send marketing notices to consumers.
    The estimates provided in this burden statement may well overstate 
actual burden. As noted above, verbatim adoption of the disclosure of 
information provided by the Federal government is not a ``collection of 
information'' to which to assign PRA burden estimates, and an unknown 
number of covered entities will opt to use the model disclosure 
language. Second, an uncertain, but possibly significant, number of 
entities subject to the FTC's jurisdiction do not have affiliates and 
thus would not be covered by section 214 of the FACT Act or the Rule. 
Third, Commission staff does not know how many companies subject to the 
FTC's jurisdiction under the Rule actually share eligibility 
information among affiliates and, of those, how many affiliates use 
such information to make marketing solicitations to consumers. Fourth, 
still other entities may choose to rely on the exceptions to the Rule's 
notice and opt-out requirements.\3\
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    \3\ Exceptions include, for example, having a preexisting 
business relationship with a consumer, using information in response 
to a communication initiated by the consumer, and solicitations 
authorized or requested by the consumer.
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    As in the past, FTC staff's estimates assume a higher burden will 
be incurred during the first year of a prospective OMB three-year 
clearance, with a lesser burden for each of the subsequent two years 
because the opt-out notice to consumers is required to be given only 
once. Institutions may provide for an indefinite period for the opt-out 
or they may time limit it, but for no less than five years. Given this 
minimum time period, Commission staff did not estimate the burden for 
preparing and distributing extension notices by entities that limit the 
duration of the opt-out time period. The relevant PRA time frame for 
burden calculation is the three-year span between expiring OMB 
clearances (i.e., December 31, 2010-December 31, 2013). The five-year 
notice period, however, will not begin until October 1, 2013 (five 
years removed from the Rule's effective date), very close to the end of 
the applicable period covered by the instant clearance request.
    Staff's labor cost estimates take into account: Managerial and 
professional time for reviewing internal policies and determining 
compliance obligations; technical time for creating the notice and opt-
out, in either paper or electronic form; and clerical time for 
disseminating the notice and opt-out.\4\ In addition, staff's cost 
estimates presume that the availability of model disclosures and opt-
out notices will simplify the compliance review and implementation 
processes, thereby significantly reducing the cost of compliance. 
Moreover, the Rule gives entities considerable flexibility to determine 
the scope and duration of the opt-out. Indeed, this flexibility permits 
entities to send a single joint notice on behalf of all of its 
affiliates.
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    \4\ No clerical time was included in staff's burden analysis for 
GLBA entities as the notice would likely be combined with existing 
GLBA notices.

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[[Page 70677]]

    Estimated total average annual hours burden: 1,043,961 hours.
    Based, in part, on industry data regarding the number of businesses 
under various industry codes, staff estimates that 1,101,780 non-GLBA 
entities under FTC jurisdiction have affiliates and would be affected 
by the Rule.\5\ Staff further estimates that there are an average of 5 
businesses per family or affiliated relationship, and that the 
affiliated entities will choose to send a joint notice, as permitted by 
the Rule. Thus, an estimated 220,356 non-GLBA business families may 
send the affiliate marketing notice. Staff also estimates that non-GLBA 
entities under the jurisdiction of the FTC would each incur 14 hours of 
burden during the prospective requested three-year PRA clearance 
period, comprised of a projected 7 hours of managerial time, 2 hours of 
technical time, and 5 hours of clerical assistance.
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    \5\ This estimate is derived from an analysis of a database of 
U.S. businesses based on SIC codes for businesses that market goods 
or services to consumers, which included the following industries: 
Transportation services; communication; electric, gas, and sanitary 
services; retail trade; finance, insurance, and real estate; and 
services (excluding business services and engineering, management 
services). See http://www.naics.com/search.htm. This estimate 
excludes businesses not subject to the FTC's jurisdiction and 
businesses that do not use data or information subject to the rule. 
To the resulting sub-total (6,677,796), staff applies a continuing 
assumed rate of affiliation of 16.75 percent, see 69 FR 33324, 33334 
(June 15, 2004), reduced by a continuing estimate of 100,000 
entities subject to the Commission's GLBA privacy notice 
regulations, see id., applied to the same assumed rate of 
affiliation. The net total is 1,101,780.
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    Based on the above, total burden for non-GLBA entities during the 
prospective three-year clearance period would be approximately 
3,084,984 hours. Associated labor cost would total $101,874,986.\6\ 
These estimates include the start-up burden and attendant costs, such 
as determining compliance obligations. Non-GLBA entities, however, will 
give notice only once during the clearance period ahead. Thus, averaged 
over that three-year period, the estimated annual burden for non-GLBA 
entities is 1,028,328 hours and $33,958,329 in labor costs.\7\
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    \6\ The associated labor cost is based on the labor cost burden 
per notice by adding the hourly mean private sector wages for 
managerial, technical, and clerical work and multiplying that sum by 
the estimated number of hours. The classifications used are 
``Management Occupations'' for managerial employees, ``Computer and 
Mathematical Science Occupations'' for technical staff, and ``Office 
and Administrative Support'' for clerical workers. See National 
Compensation Survey: Occupational Earnings in the United States 
2009, U.S. Department of Labor, released August 2010, Bulletin 2738, 
Table 3 (``Summary: Full-time civilian workers: Mean and median 
hourly, weekly, and annual earnings and mean weekly and annual 
hours'') http://www.bls.gov/ncs/ocs/sp/nctb1346.pdf. The respective 
private sector hourly wages for these classifications are $43.99, 
$36.07, and $16.45. Estimated hours spent for each labor category 
are 7, 2, and 5, respectively. Multiplying each occupation's hourly 
wage by the associated time estimate, labor cost burden per notice 
equals $462.32. This subtotal is then multiplied by the estimated 
number of non-GLB business families projected to send the affiliate 
marketing notice (220,356) to determine cumulative labor cost burden 
for non-GLBA entities ($101,874,986).
    \7\ 3,084,984 hours / 3 = 1,028,328; $101,874,986 / 3 = 
$33,958,329.
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    Entities that are subject to the Commission's GLBA privacy notice 
regulation already provide privacy notices to their customers.\8\ 
Because the FACT Act and the Rule contemplate that the affiliate 
marketing notice can be included in the GLBA notices, the burden on 
GLBA regulated entities would be greatly reduced. Accordingly, the GLBA 
entities would incur 6 hours of burden during the first year of the 
clearance period, comprised of a projected 5 hours of managerial time 
and 1 hour of technical time to execute the notice, given that the Rule 
provides a model.\9\ Staff further estimates that 3,350 GLBA entities 
under the FTC's jurisdiction would be affected,\10\ so that the total 
burden for GLBA entities during the first year of the clearance period 
would approximate 20,100 hours and $857,667 in associated labor 
costs.\11\ Allowing for increased familiarity with procedure, the PRA 
burden in ensuing years would decline, with GLBA entities each 
incurring an estimated 4 hours of annual burden (3 hours of managerial 
time and 1 hour of technical time) during the remaining two years of 
the clearance, amounting to 13,400 hours and $562,934 in labor costs in 
each of the ensuing two years.\12\ Thus, averaged over the three-year 
clearance period, the estimated annual burden for GLBA entities is 
15,633 hours and $661,178 in labor costs.
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    \8\ Financial institutions must provide a privacy notice at the 
time the customer relationship is established and then annually so 
long as the relationship continues. Staff's estimates assume that 
the affiliate marketing opt-out will be incorporated in the 
institution's initial and annual notices.
    \9\ As stated above, no clerical time is included in the 
estimate because the notice likely would be combined with existing 
GLBA notices.
    \10\ Based on the previously stated estimates of 100,000 GLBA 
business entities (see supra note 5) at an assumed rate of 
affiliation of 16.75 percent (16,750), divided by the presumed ratio 
of 5 businesses per family, this yields a total of 3,350 GLBA 
business families subject to the Rule. For simplicity, staff assumes 
that all of these entities are new establishments and/or newly 
integrating the affiliated opt-out notice with the GLBA notice in 
the first year of the prospective three-year clearance period; thus, 
the higher estimate of hours assigned to the first year. This, too, 
then, would effectively overstate actual burden.
    \11\ 3,350 GLBA entities x [($43.99 x 5 hours) + ($36.07 x 1 
hour)] = $857,667.
    \12\ 3,350 GLBA entities x [($43.99 x 3 hours) + ($36.07 x 1 
hour)] = $562,934.
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    Cumulatively for both GLBA and non-GLBA entities, the average 
annual burden over the prospective three-year clearance period is 
1,043,961 burden hours and $34,619,507 in labor costs. GLBA entities 
are already providing notices to their customers so there are no new 
capital or non-labor costs, as this notice may be consolidated into 
their current notices. For non-GLBA entities, the Rule provides for 
simple and concise model forms that institutions may use to comply. 
Entities that already have on-line capabilities will offer consumers 
the choice to receive notices via electronic format (e.g., computer 
equipment and software), and covered entities are already equipped to 
provide disclosures (e.g., computers with word processing programs, 
copying machines, mailing capabilities). Thus, any capital or non-labor 
costs associated with compliance for these entities are negligible.

Willard K. Tom,
General Counsel.
[FR Doc. 2010-29048 Filed 11-17-10; 8:45 am]
BILLING CODE 6750-01-P