[Federal Register Volume 76, Number 141 (Friday, July 22, 2011)]
[Rules and Regulations]
[Pages 43879-43890]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-17711]


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COMMODITY FUTURES TRADING COMMISSION

17 CFR Part 162

RIN 3038-AD12


Business Affiliate Marketing and Disposal of Consumer Information 
Rules

AGENCY: Commodity Futures Trading Commission.

ACTION: Final rule.

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SUMMARY: The Commodity Futures Trading Commission is adopting 
regulations to implement new statutory provisions enacted by title X of 
the Dodd-Frank Wall Street Reform and Consumer Protection Act. These 
regulations apply to futures commission merchants, retail foreign 
exchange dealers, commodity trading advisors, commodity pool operators, 
introducing brokers, swap dealers and major swap participants. The 
Dodd-Frank Act provides the Commission with authority to implement 
regulations under sections 624 and 628 of the Fair Credit Reporting 
Act. The regulations implementing section 624 of the Fair Credit 
Reporting Act require CFTC-regulated entities to provide consumers with 
the opportunity to prohibit affiliates from using certain information 
to make marketing solicitations to consumers. The regulations 
implementing section 628 of the FCRA require CFTC-regulated entities 
that possess or maintain consumer report information in connection with 
their business activities to develop and implement written policies and 
procedures for the proper disposal of such information.

DATES: Effective date: September 20, 2011.
    Compliance dates: Futures commission merchants, commodity pool 
operators, commodity trading advisors, introducing brokers, and retail 
foreign exchange dealers shall be in compliance with these rules not 
later than November 21, 2011. Swap dealers and major swap participants 
shall be in compliance with these rules not later than 60 days after 
the effective date of the final entities definition rulemaking, which 
the Commission will have published in the Federal Register at a future 
date.

FOR FURTHER INFORMATION CONTACT: Carl E. Kennedy, Counsel, (202) 418-
6625, Commodity Futures Trading Commission, Office of the General 
Counsel, Three Lafayette Centre, 1155 21st Street, NW., Washington, DC 
20581, facsimile number (202) 418-5524, e-mail: [email protected].

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background
II. Rule Amendments
A. Affiliate Marketing Rules
B. Disposal Rules
II. Cost-Benefit Analysis
III. Paperwork Reduction Act
IV. Regulatory Flexibility Act
V. Text of Final Rules

I. Background

    On October 27, 2010, the Commodity Futures Trading Commission 
(``Commission'' or ``CFTC'') proposed in the Federal Register the 
addition of a new part 162 to its Regulations (the ``Proposal'').\1\ 
New part 162 was proposed to implement section 1088 of the Dodd-Frank 
Wall Street Reform and Consumer Protection Act \2\ (``Dodd-

[[Page 43880]]

Frank Act''), which sets out two amendments to the Fair Credit 
Reporting Act (``FCRA'') \3\ and the Fair and Accurate Credit 
Transactions Act of 2003 (``FACT Act'').\4\ As amended, the FCRA 
directs the Commission to promulgate regulations that are intended to 
provide privacy protections to certain consumer information held by any 
person that is subject to the enforcement jurisdiction of the 
Commission. One provision of section 1088 of the Dodd-Frank Act amends 
section 214(b) of the FACT Act--which added section 624 to the FCRA in 
2003--and directs the Commission to implement the provisions of section 
624 of the FCRA with respect to persons that are subject to the CFTC's 
enforcement jurisdiction. Section 624 of the FCRA gives consumers the 
right to prohibit certain CFTC-regulated entities \5\ from using 
certain information obtained from an affiliate to make solicitations to 
that consumer (hereinafter referred in this preamble as the ``affiliate 
marketing rules''). Specifically, 17 CFR 162.3 establishes the basic 
rules governing the requirement to provide the consumer with notice, a 
reasonable opportunity and a simple method to opt out of a company's 
use of eligibility information that it obtains from an affiliate for 
the purpose of making solicitations to the consumer. This section and 
the affiliate marketing rule requirements are discussed in more detail 
below.
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    \1\ See 75 FR 66018, Oct. 27, 2010.
    \2\ See the Dodd-Frank Wall Street Reform and Consumer 
Protection Act, Public Law 111-203, 124 Stat. 1376 (2010). The text 
of the Dodd-Frank Act may be accessed at http://www.cftc.gov./
LawRegulation/OTCDERIVATIVES/index.htm.
    \3\ See 15 U.S.C. 1681-1681x. The FCRA, enacted in 1970, sets 
standards for the collection, communication, and use of information 
bearing on a consumer's credit worthiness, credit standing, credit 
capacity, character, general reputation, personal characteristics, 
or mode of living that is collected and communicated by consumer 
reporting agencies.
    \4\ See Public Law 108-159, Section 214, 117 Stat. 1952, 1980 
(2003). The FACT Act was signed into law on December 4, 2003. The 
FACT Act amended the FCRA to enhance the ability of consumers to 
combat identity theft, to increase the accuracy of consumer reports, 
to allow consumers to exercise greater control regarding the type 
and amount of solicitations they receive, and to restrict the use 
and disclosure of sensitive medical information. A portion of 
section 214 of the FACT Act amended the FCRA to add section 624 to 
the FCRA.
    \5\ The CFTC-regulated entities that were covered in the 
Proposal included futures commission merchants (``FCMs''), retail 
foreign exchange dealers (``RFEDs''), commodity trading advisors 
(``CTAs''), commodity pool operators (``CPOs''), introducing brokers 
(``IBs''), swap dealers (``SDs''), or major swap participants 
(``MSPs''). Title VII of the Dodd-Frank Act created two new 
entities, which are subject to the jurisdiction of the Commission: 
SDs and MSPs. Section 162.2(n) of the Commission's regulations, 17 
CFR 162.2(n), defines the term ``major swap participant'' to have 
the same meaning as in section 1a(33) of the Commodity Exchange Act, 
7 U.S.C. 1 et seq. (``CEA''), as may be further defined by the 
Commission's regulations, and includes any person registered as such 
thereunder. Section 162.2(r) of the Commission's regulations, 17 CFR 
162.2(r), defines the term ``swap dealer'' to have the same meaning 
as in section 1a(49) of the CEA, as may be further defined by the 
Commission's regulations, and includes any person registered as such 
thereunder.
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    The other provision in section 1088 of the Dodd-Frank Act amends 
section 628 of the FCRA and mandates that the Commission implement 
regulations requiring persons subject to the CFTC's jurisdiction who 
possess or maintain consumer report information in connection with 
their business activities to properly dispose of that information 
(hereinafter referred to in this preamble as the ``disposal rules'').
    Both sections 624 and 628 of the FCRA required various Federal 
agencies charged with regulating financial institutions in possession 
of consumer information to issue regulations in final form in 
consultation and coordination with each other. In particular, these 
sections required the Office of the Comptroller of the Currency 
(``OCC''), the Board of Governors of the Federal Reserve System 
(``Board''), the Federal Deposit Insurance Corporation (``FDIC''), the 
Office of Thrift Supervision (``OTS''), the National Credit Union 
Administration (``NCUA'') (collectively, the ``Banking Agencies''), the 
Securities and Exchange Commission (``SEC'') and the Federal Trade 
Commission (``FTC'') (the SEC, FTC and the Banking Agencies, are 
collectively, the ``Agencies'') in consultation and coordination with 
one another, to issue rules implementing these sections of the FCRA. 
The Agencies already have adopted final affiliate marketing rules and 
disposal rules.\6\ The Commission, after consulting with many of the 
Agencies, is acting now pursuant to the Dodd-Frank Act to finalize and 
implement the affiliate marketing rules and disposal rules.
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    \6\ For the disposal rules adopted by the various Federal 
agencies, see 69 FR 68690 (Nov. 24, 2004) (FTC); 69 FR 77610, Dec. 
28, 2004 (Banking Agencies); 73 FR 13692, Mar. 13, 2008 (SEC). For 
the affiliate marketing rules adopted by the various Federal 
agencies, see 72 FR 61424, Oct. 31, 2007 (FTC); 72 FR 62910, Nov. 7, 
2007 (Banking Agencies); 74 FR 58204, Sept. 10, 2009 (SEC).
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    The 60-day public comment period on the Proposal expired on 
December 27, 2010.\7\ In response to the Proposal, the Commission 
received a total of four comment letters.\8\ Two of the four addressed 
the merits or substance of the Proposal.\9\ Specifically, these 
comments addressed the following issues: (1) Consistency with the other 
Agencies' final regulations; (2) minor changes to the ``consumer'' 
definition; (3) correction of minor typographical errors; (4) the 
compliance date of the rules; and (5) consideration of additional 
burdens that Commission did not address in the Proposal's Paperwork 
Reduction Act and cost-benefit analyses.\10\
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    \7\ See 75 FR at 66019.
    \8\ Copies of these comment letters are available on the 
Commission's Web site at http://www.cftc.gov.
    \9\ The Securities Industry and Financial Markets Association 
(``SIFMA'') submitted a comment letter dated December 20, 2010 (the 
``SIFMA letter''). The International Swaps and Derivatives 
Association (``ISDA'') and the Financial Services Roundtable 
(``FSR'') jointly submitted a comment letter dated December 27, 2010 
(the ``ISDA/FSR letter''). As noted above, both letters are 
available on the Commission's Web site.
    \10\ The Commission also has made a few technical revisions to 
its final rules to add clarity. For example, in Sec.  
162.4(a)(2)(ii), the Commission revised two of the examples of what 
constitutes a continuing relationship with a covered affiliate. 
Specifically, the Commission revised these examples to demonstrate 
instances where an SD or MSP may have such a relationship, and where 
a swap transaction may evidence such a relationship.
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II. Rule Amendments

A. Affiliate Marketing Rules

    Section 624 of the FCRA generally provides that a consumer can 
block certain CFTC-regulated entities from soliciting the consumer \11\ 
based on eligibility information \12\ that such registrant received 
from an affiliate \13\ that has or previously had a pre-existing 
business relationship \14\ with that

[[Page 43881]]

consumer. To implement section 624 of the FCRA, Sec.  162.3(a) 
establishes three conditions that must be met before a covered 
affiliate \15\ that does not have a pre-existing business relationship 
with a consumer may use eligibility information to make a solicitation 
\16\ to that consumer.\17\ First, the rule provides that a notice must 
be clearly and conspicuously \18\ disclosed to the consumer in writing 
or, if the consumer agrees, electronically, in a concise \19\ notice 
that the covered affiliate that does not have a pre-existing business 
relationship may use shared eligibility information to make 
solicitations to the consumer.\20\ Second, the consumer must be 
provided a reasonable opportunity and a reasonable and simple method to 
opt out of the use of that eligibility information to make 
solicitations to the consumer.\21\ Third, the consumer must not have 
opted out.
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    \11\ Proposed Sec.  162.2(f) defined the term ``consumer'' to 
mean an individual person. This definition follows the statutory 
definition in section 603(c) of the FCRA. As was noted in the 
preamble to the Proposal, an individual acting through a legal 
representative qualifies as a consumer. The Commission is amending 
the definition in the final rule as described herein to address 
comments received in response to the Proposal.
    \12\ See 17 CFR 162.2(k), which defines the term ``eligibility 
information'' to mean any information that would be a consumer 
report if the exclusions from the definition of ``consumer report'' 
in section 603(d)(2)(A) of the FCRA did not apply. Examples of the 
type of information that would fall within the definition of 
``eligibility information'' includes an affiliate's own transaction 
or experience information, such as information about a consumer's 
account history with that person, and other information, such as 
information from credit bureau reports or applications. The term 
``eligibility information'' does not include aggregate or blind data 
that does not contain personal identifiers. Examples of personal 
identifiers include account numbers, names, or addresses, as well as 
Social Security numbers, driver's license numbers, telephone 
numbers, or other types of information that, depending on the 
circumstances or when used in combination, could identify the 
consumer.
    \13\ See 17 CFR 162.2(a), which defines ``affiliates'' to mean 
``any person that is related by common ownership or common corporate 
control with a covered affiliate.''
    \14\ See 17 CFR 162.2(q), which defines the term ``pre-existing 
business relationship'' to mean a relationship between a person (or 
a person's licensed agent) and a consumer based on the following: 
(1) A financial contract between the person and the consumer that is 
in force on the date on which the consumer is sent a solicitation by 
this subpart; (2) the purchase, rental, or lease by the consumer of 
a person's financial products or services, or a financial 
transaction (including holding an active account or a policy in 
force or having another continuing relationship) between the 
consumer and the person, during the 18-month period immediately 
preceding the date on which a solicitation covered by this subpart 
is sent to the consumer; or (3) an inquiry or application by the 
consumer regarding a financial product or service offered by that 
person during the three-month period immediately preceding the date 
on which the consumer is sent a solicitation covered by this 
subpart.
    \15\ See 17 CFR 162.2(h), which defines the term ``covered 
affiliate'' to mean an FCM, RFED, CTA, CPO, IB, SD, or MSP, which is 
subject to the jurisdiction of the Commission.
    \16\ See 17 CFR 162.2(r), which defines the term 
``solicitation'' to mean the marketing of a financial product or 
service initiated by a covered affiliate to a particular consumer 
that is based on eligibility information communicated to the covered 
affiliate by its affiliate and is intended to encourage the consumer 
to purchase the covered affiliate's financial product or service. A 
communication, such as a telemarketing solicitation, direct mail, or 
e-mail, is a solicitation if it is directed to a specific consumer 
based on eligibility information. The definition of solicitation 
does not, however, include communications that are directed at the 
general public without regard to eligibility information, even if 
those communications are intended to encourage consumers to purchase 
financial products and services from the person initiating the 
communications.
    \17\ Section 162.3(d) of the Commission's regulations sets forth 
when a covered affiliate makes a solicitation to a consumer.
    \18\ See 17 CFR 162.2(b), which defines the term ``clear and 
conspicuous'' to mean reasonably understandable and designed to call 
attention to the nature and significance of the information 
presented in the notice.
    \19\ See 17 CFR 162.2(h), which defines the term ``concise'' to 
mean a reasonably brief expression or statement.
    \20\ Section 162.3(b) of the Commission's regulations, 17 CFR 
162.3(b), identifies the parties who are responsible to provide the 
notice as either: (1) The affiliate with a pre-existing business 
relationship to report the initial opt-out notice directly to the 
consumer; or (2) one or more of affiliates to provide a joint notice 
to the consumer, provided that at least one of the affiliates has or 
previously had the pre-existing business relationship with the 
consumer.
    Section 162.4(b) provides that an opt-out election must be 
effective for a period of at least five years beginning when the 
consumer's opt-out election is received and implemented, unless the 
consumer subsequently revokes the opt-out election in writing or, if 
the consumer agrees, electronically.
    \21\ Section 162.6(a) of the Commission's regulations, 17 CFR 
162.6(a), sets forth the general rule prohibiting covered affiliates 
from using eligibility information about a consumer unless the 
consumer is provided a reasonable opportunity to opt out, as 
required by the proposed regulation. Section 162.7(b) sets forth 
reasonable and simple methods of opting out.
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    As noted above, the Commission received specific comments regarding 
the definition of certain terms. In particular, the Securities Industry 
Financial Markets Association (``SIFMA'') suggested that the Commission 
amend the proposed definition of the term ``affiliate'' in order to 
make it conform to the Agencies' rules.\22\ In the Proposal, the 
Commission defined ``affiliate'' as ``any company that is under common 
ownership or common corporate control.'' SIFMA suggested that the 
Commission change this definition by using the words ``related by'' 
rather than ``under.'' The Commission agrees that this change will 
further the goal of consistency with other Agencies' rules and has 
adopted this suggestion in its final rules.
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    \22\ See the SIFMA letter at 3.
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    In addition, SIFMA and, in a joint letter, the International Swaps 
and Derivatives Association (``ISDA'') and the Financial Services 
Roundtable (``FSR'') encouraged the Commission to revise the 
``consumer'' definition to indicate that individuals who provide 
identifiable information for non-consumer purposes are not 
``consumers.'' \23\ Specifically, these commenters contend that the 
proposed definition is over-inclusive and as a result would include 
individuals such as market makers, individual floor brokers, locals, 
and others whose individually identifiable information may be collected 
in furtherance of market-related transactions for non-consumer 
purposes. These commenters recommend that the Commission employ a 
definition similar to that in title V of the Gramm-Leach-Bliley 
Act.\24\ The Commission agrees that including such individuals could 
possibly be overreaching the intent of the FCRA, and has added a 
qualifying statement to the consumer definition which excludes from 
that definition persons who are ``market makers, floor brokers, locals, 
or individual persons whose information is not collected to determine 
eligibility for personal, family, or household purposes.''
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    \23\ See the SIFMA letter at 4 and the ISDA/FSR letter at 2.
    \24\ See 15 U.S.C. 6809(9).
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    With respect to several of the examples that the Commission set out 
in the Proposal's preamble and rule text for the affiliate marketing 
rules, SIFMA noted that the Commission's usage of examples in the 
Proposal were inconsistent with the usage of examples by other Agencies 
in their final rules.\25\ In particular, SIFMA pointed out that, unlike 
the other Agencies' rules, the Proposal does not contain examples of 
``solicitation,'' and does contain examples of ``eligibility 
information.'' SIFMA suggested that, to ``maximize [the final rules'] 
benefit and promote consistency,'' the Commission revise the affiliate 
marketing rules to follow the Agencies' usage of examples in their 
final affiliate marketing rules. That is, when the Agencies have 
included examples in the text of the rules, the Commission should 
incorporate examples into its final rules, and vice versa. In addition, 
SIFMA asked the Commission to indicate that the examples are merely 
illustrative of acceptable practices and are not prescriptive. Lastly, 
SIFMA asked the Commission to make clear that examples and practices 
developed in connection with the analogues rules of the Agencies should 
be considered as potential guidance for the Commission's rule.
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    \25\ See the SIFMA letter at 5.
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    Despite SIFMA's comments, the Commission does not believe that the 
inclusion or exclusion of examples warrants an interpretation of the 
Commission's final affiliate marketing rules that is different than the 
interpretation of the Agencies' final affiliate marketing rules. The 
Commission has chosen a slightly different approach than the Agencies 
in terms of its usage of examples. This approach should not be read to 
suggest that the Commission intended a different interpretation of its 
rules. Indeed, the Commission has included examples where it believes 
they will be illustrative, and does not believe that these examples 
should be read as prescriptive. Lastly, the Commission has decided not 
to include a statement to the effect that the examples in the Agencies' 
rules should be considered as guidance with respect to the Commission's 
rule. The Agencies' examples are directed at their registrants; the 
Commission's examples are directed at its registrants. Again, these 
differences should not be interpreted to suggest that the Commission's 
rule is different.
    SIFMA also pointed out two typographical errors which the 
Commission has corrected in the final

[[Page 43882]]

rules.\26\ These corrections were (1) changing the word ``market'' to 
``marketing'' in Sec.  162.3(a)(2); and (2) changing the word 
``includes'' to ``include'' in Sec.  162.2(k).
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    \26\ See the SIFMA letter at 4-5.
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B. Disposal Rules

    Section 1088 of the Dodd-Frank Act also amends section 628 of the 
FCRA, which directs the Commission to adopt comparable and consistent 
rules with the Agencies regarding the disposal of sensitive consumer 
information. The purpose of these rules is to reduce the risk of 
identity theft and other consumer harm from improper disposal of a 
consumer report or any record derived from one. The Commission's 
disposal rules \27\ apply to certain Commission-regulated entities \28\ 
that, for a business purpose, maintain or otherwise possess such 
consumer information.\29\
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    \27\ See 17 CFR 162.2(i), which defines the terms ``dispose'' or 
``disposal'' to mean the discarding or abandonment of consumer 
information or the sale, donation, or transfer of any medium, 
including computer equipment, upon which consumer information is 
stored. The Proposal noted that the sale, donation, or transfer, as 
opposed to the discarding or abandonment, of consumer information 
would not be considered ``disposal'' under this definition. For 
example, an entity subject to the disposal rule that transfers 
consumer report information to a third party for marketing purposes 
would not be discarding the information for the purposes of the 
disposal rule. If the entity sells computer equipment on which 
consumer report information is stored, however, the sale would be 
considered disposal. This definition is wholly consistent with the 
definition of ``dispose'' or ``disposal'' in the Agencies' final 
disposal rules. For those reasons, the Commission adopts this 
definition as proposed.
    \28\ Like the affiliate marketing rules, the types of 
Commission-regulated entities that are subject to the disposal rules 
are FCMs, RFEDs, CTAs, CPOs, IBs, SDs, and MSPs.
    \29\ See 17 CFR 162.2(g), which defines the term ``consumer 
information'' to mean any record about an individual, whether in 
paper, electronic, or other form that is a consumer report or is 
derived from a consumer report (as defined section 603(d)(1) of the 
FCRA). Consumer information also means a compilation of such 
records. Consumer information does not include information that does 
not identify individuals, such as aggregate information or blind 
data.
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    The general disposal requirement in Sec.  162.21(a), 17 CFR 162.21, 
provides that Commission-regulated entities adopt reasonable, written 
policies and procedures that address the administrative, technical, and 
physical safeguards for the protection of consumer information.
    A commenter suggested that the Commission remove language from the 
text of the Proposal, which requires disposal to take place ``pursuant 
to a written disposal plan.'' The commenter suggested that such 
language would be duplicative and possibly confusing because the 
Proposal already required ``written policies and procedures'' for 
disposal. The commenter suggested that the removal of this language 
would further the conformity of this rule with the other Agencies' 
rules. The Commission agrees and has removed the requirement that 
disposal take place ``pursuant to a written disposal plan'' from the 
final rule text.
    The standard for disposal is flexible to allow these entities to 
determine what measures are reasonable based on the sensitivity of the 
information, the costs and benefits of different disposal methods, and 
relevant changes in technology over time.

C. Compliance Dates

    In the Proposal, the Commission proposed to adopt part 162 on July 
21, which was intended to coincide with the proposed effective date of 
the Commission's amendments to part 160 of its regulations.\30\ SIFMA 
requested that the Commission extend the effective date of the disposal 
and affiliate marketing rules from July 21, 2011 to nine months after 
the date of publication.\31\ SIFMA argued that this would allow the 
covered entities enough time to come into compliance with the rules.
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    \30\ See 75 FR 66014, Oct. 27, 2010. The effective date of the 
part 160 conforming amendments rulemaking was intended to follow the 
designated transfer date when various Federal agencies transfer 
their consumer protection authority to the Consumer Financial 
Protection Bureau pursuant to section 1100H of the Dodd-Frank Act.
    \31\ See the SIFMA letter at 6.
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    The Commission partly agrees with SIFMA's comment with respect to 
the new entities (i.e., SDs and MSPs) that must comply with the final 
rules. The effective date of the final rules will be 60 days from the 
date of publication in the Federal Register. However, with respect to 
FCMs, IBs, CTAs, CPOs, and RFEDs, the Commission has decided to 
establish a compliance date of 120 days after the date of publication 
in the Federal Register. In making its decision, the Commission 
considered the amount of time that the other Agencies' final rules gave 
to affected entities in order to comply with their respective rules. 
These Agencies gave their affected entities 120 months to comply with 
the provision of their respective rules. In addition, the Commission 
considered the fact that many of its regulated entities are currently 
required to adhere to the FTC's disposal and affiliate marketing rules 
which are substantially identical.
    With respect to SDs and MSPs, the Commission has determined that 
these new entities shall have 60 days after the date of publication in 
the Federal Register of the final entities definitional rulemaking \32\ 
to come into compliance with these rules. The Commission expects to 
approve and publish in the Federal Register the final entities 
definitional rulemaking at a date in the future.
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    \32\ See the Commission's proposed entities definitional 
rulemaking at 75 FR 80174, Dec. 21, 2010.
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II. Cost-Benefit Considerations.

    Section 15(a) of the CEA explicitly requires the Commission to 
consider the costs and benefits of its actions before issuing a rule or 
order under the CEA. By its terms, section 15(a) neither requires the 
Commission to quantify the costs and benefits of amendments to 
regulations, nor does it require the Commission to determine whether 
the benefits of the amendments outweigh its costs. Section 15(a) 
specifies that the costs and benefits shall be evaluated in light of 
five broad areas of market and public concern: (1) Protection of market 
participants and the public; (2) efficiency, competitiveness and 
financial integrity of futures markets; (3) price discovery; (4) sound 
risk management practices; and (5) other public interest 
considerations. The Commission may in its discretion give greater 
weight to any one of the five enumerated areas and could in its 
discretion determine that, notwithstanding its costs, a particular 
amendment is necessary or appropriate to protect the public interest or 
to effectuate any of the provisions or accomplish any of the purposes 
of the CEA.
    Section 1088 of the Dodd-Frank Act provides the Commission with 
authority to implement rules under sections 624 and 628 of the FCRA. In 
its Proposal, the Commission prescribed rules implementing section 624 
of the FCRA, which requires certain Commission-regulated entities to 
provide consumers with the opportunity to prohibit affiliates from 
using certain information to make marketing solicitations to consumers. 
The Commission also prescribed rules implementing section 628 of the 
FCRA, which requires certain Commission-regulated entities that possess 
or maintain consumer report information in connection with their 
business activities to develop and implement written policies and 
procedures for the proper disposal of such information. These proposed 
regulations would require CFTC registrants to do two things with 
respect to certain consumer information. The Commission proposed to (1) 
create a new part 162 of its regulations to include both the business 
affiliate rules

[[Page 43883]]

and the disposal rules and (2) require that this new part apply to the 
following Commission-regulated entities: FCMs; IBs; CTAs; CPOs; RFEDs; 
SDs; and MSPs.
    The cost-benefit discussion in the Proposal analyzed the costs and 
benefits of imposing new part 162 on these entities, most of which 
currently comply with substantially identical regulations imposed by 
the Agencies. With respect to costs, the Commission's Proposal stated 
that the costs to aforementioned entities would be de minimis because: 
(1) The Commission is providing model notices in the proposed 
regulations in order to assist these participants in complying with the 
affiliate marketing rules; (2) the affiliate marketing rules only 
require periodic notice (i.e., at a maximum, companies would have to 
provide notice to a consumer once every five years; at a minimum, 
companies would have to provide notice only once per consumer); (3) 
market participants can file consolidated and equivalent notices in 
order to comply with the affiliate marketing rules; and (4) the 
disposal rules were designed to provide market participants with the 
greatest flexibility in the development and implementation of a 
disposal program (which may vary according to a company's size and the 
complexity of its operations, the costs and benefits of available 
disposal methods, and the sensitivity of information involved).
    The Commission's Proposal also set out the following potential 
costs to the general public: (1) Absent the implementation of the 
affiliate marketing rules, consumers would have no control over both 
the use of their personal information, and the number of solicitations 
such consumers would receive from affiliates of company with which they 
have a pre-existing business relationship; and (2) absent the 
implementation of the disposal rules, there would be an increased 
chance that consumer information would be accessible to third parties 
who may use such information for identity theft or other unlawful 
purposes. With respect to benefits, the Commission's Proposal stated 
that, through the implementation of the affiliate marketing rules, 
consumers generally will be able to opt out of receiving unsolicited 
and targeted materials from businesses with which the consumers have no 
pre-existing business relationship. In addition, the Commission's 
Proposal stated that, as a result of the implementation of the disposal 
rules, the potential for the misuse of consumer information will 
greatly decrease.
    In issuing final rules, the Commission has considered the costs and 
benefits referenced above in light of the comments received in response 
to its Proposal and the specific areas of concern identified in section 
15(a). An analysis of the section 15(a) factors is set out immediately 
below, followed by a discussion of the comments received in response to 
the Commission's cost-benefit discussion in its Proposal.
    1. Protection of market participants and the public. The Commission 
believes that requiring certain Commission-regulated entities to 
provide opt-out notices and to protect customer information through 
disposal of such information will greatly benefit the general public by 
protecting the privacy of the public's personal information. Similarly, 
the Commission believes that requiring Commission-regulated entities to 
ensure the protection of nonpublic personal information will reduce the 
litigation risk that these entities face related to privacy causes of 
action. The Commission further believes that the costs, which will be 
placed on its regulated entities, will be equal to or no greater than 
those costs that the Agencies currently impose on most of these 
entities under the Agencies' similar regulations.\33\
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    \33\ The Commission acknowledges that there will likely be an 
incremental cost in the aggregate in respect of those entities who 
do not currently comply with the Agencies' similar regulations. The 
Commission believes that this incremental cost, however, is 
outweighed by the benefits that will accrue to the general public in 
terms of the privacy protections that will be afforded to their 
personal information.
---------------------------------------------------------------------------

    2. Efficiency and competition. The Commission believes that the 
requirements to provide opt-out notices will benefit efficiency by 
reducing the number of solicitations sent to customers. The 
Commission's final rules also will benefit efficiency and competition 
by providing Commission-regulated entities with flexibility in terms of 
how best to distribute opt-out notices and to adopt disposal policies 
and procedures to protect customer information. Ultimately, this 
flexibility will allow these entities to develop procedures that are 
best suited to each entity's business and needs. As noted above, the 
Commission believes that the costs, which will be placed on these 
entities will be equal to or no greater than those costs currently 
placed on them under the Agencies' similar regulations.
    3. Price discovery and financial integrity of futures and swaps 
markets, price discovery and sound risk management practices. The final 
rules should have no effect, from the standpoint of imposing costs or 
creating benefits, on the price discovery function or financial 
integrity of the futures and swaps markets or on the risk management 
practices of the Commission-regulated entities.
    4. Other public interest considerations. As noted above, part 162 
will provide these entities with maximum flexibility in designing their 
own compliance systems in a manner consistent with the legal 
requirements under the affiliate marketing rules and disposal rules. 
Ultimately, the Commission believes that requiring its entities to 
comply with the final affiliate marketing rules and disposal rules will 
harmonize privacy protections for individual customers across all 
financial markets regardless of whether those entities are regulated by 
the Commission or the other Agencies.
    5. Response to Comments. In its Proposal, the Commission solicited 
comment on its consideration of these costs and benefits. The 
Commission received one comment with respect to the cost and benefits 
analysis in its Proposal. Specifically, SIFMA argued that the 
Commission also should consider anticipated additional costs associated 
with monitoring the privacy and opt-out notice process, addressing 
consumer issues, and adjusting records to comport with consumer 
requests. SIFMA did not provide specific cost information related to 
these additional activities. Notwithstanding SIFMA's assertion, the 
Commission notes that the additional activities and costs raised by 
SIFMA were subsumed within the considerations discussed in the 
Proposal.\34\
---------------------------------------------------------------------------

    \34\ See the Commission's cost-benefit discussion and Paperwork 
Reduction Act analysis at 75 FR at 66030-31.
---------------------------------------------------------------------------

    In line with Section 15(a) of the CEA, the Commission believes that 
prescribing final rules is in the public interest and will further 
protect market the general public, promote efficiency and competition, 
and address other public interest considerations such as the 
harmonization of regulation across financial markets, regardless of 
which Federal regulator oversees a financial entity. In the 
Commission's view, these benefits far outweigh the additional costs 
that SIFMA cited.

III. Paperwork Reduction Act

    Under the Paperwork Reduction Act of 1995 (``PRA''), 44 U.S.C. 3501 
et seq., an agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it displays 
a currently valid control

[[Page 43884]]

number. The Commission's final rule regarding the protection of 
consumer information under the Fair Credit Reporting Act results in 
information collection requirements within the meaning of the PRA. The 
Commission submitted the proposing release along with supporting 
documentation to the Office of Management and Budget (``OMB'') for 
review in accordance with 44 U.S.C. 3507(d) and 5 CFR 1320.11. The 
Commission requested that OMB approve and assign a new control number 
for the collection of information required by the proposing release.
    In response to the Commission's request in the proposing release 
for comments on any potential paperwork burden associated with both the 
proposed affiliate marketing and disposal rules, only SIFMA provided 
substantive comments addressing the merits of the Commission's proposed 
PRA calculations.\35\ In particular, SIFMA proposed that the burden 
estimate for the affiliate marketing rules should be refined to account 
for burden hours associated with: (i) Monitoring the opt-out notice 
process; (ii) addressing consumer questions and concerns about opt-out 
notices; and (iii) adjusting records where a consumer changes his or 
her mind about his or her election to opt-in or out. In addition, SIFMA 
proposed that the burden estimate for the disposal rules should be 
refined to: (i) Revise disposal plans to account for use of new 
technology, new business processes, etc.; and (ii) conduct regular 
reviews of its disposal plan to determine when revisions are necessary 
or advisable.
---------------------------------------------------------------------------

    \35\ See the SIFMA letter at 4-5.
---------------------------------------------------------------------------

    Based on these comments, the Commission estimates that 3,172 
covered entities may incur an additional 3.5 burden hours when 
complying with the affiliate marketing rules, for an aggregate of 
11,102 annual burden hours. These additional burden hours are 
attributable to monitoring the opt-out notice process, addressing 
consumer questions and concerns about opt-out notices, and adjusting 
customer records.
    In addition, the Commission estimates that 3,172 covered entities 
may incur an additional 2.4 burden hours when complying with the 
disposal rules, for an aggregate of 7,612.8 annual burden hours. These 
additional burden hours are attributable to revise and update disposal 
plans on an ongoing basis, and conduct regular reviews of its disposal 
plan as necessary or advisable. Accordingly, the Commission has 
submitted to the OMB an amended calculation of the annual burden hours 
for the final affiliate marketing and disposal rules.

IV. Regulatory Flexibility Act

    The Regulatory Flexibility Act (``RFA'') \36\ requires that Federal 
agencies consider whether the regulations they propose will have a 
significant economic impact on a substantial number of small entities 
and, if so, provide a regulatory flexibility analysis respecting the 
impact.\37\ The Commission's final regulations will affect only FCMs, 
IBs, CTAs, CPOs, SDs, and MSPs.
---------------------------------------------------------------------------

    \36\ 5 U.S.C. 601 et seq.
    \37\ 5 U.S.C. 601 et seq.
---------------------------------------------------------------------------

    The regulations implementing section 624 of the FCRA require above-
referenced CFTC-regulated entities to provide consumers with the 
opportunity to prohibit affiliates from using certain information to 
make marketing solicitations to consumers. The regulations implementing 
section 628 of the FCRA require the above-referenced CFTC-regulated 
entities that possess or maintain consumer report information in 
connection with their business activities to develop and implement a 
written program for the proper disposal of such information. The 
Commission certified in the Proposal that these rules will not have a 
significant economic impact on a substantial number of small entities. 
The Commission did not receive any substantive comments to its RFA 
analysis in relation to the Proposal. Moreover, the Commission 
previously determined that FCMs, CPOs, and IBs are not small entities 
for purposes of the RFA.\38\ Therefore, nothing alters the Commission's 
determination in the Proposal that the obligations created by these 
rules will not create a significant economic impact on a substantial 
number of small entities.
---------------------------------------------------------------------------

    \38\ Previous determinations for FCMs at 47 FR 18618, 18619, 
Apr. 30, 1982; CPOs at 47 FR 18618, 18619, Apr. 30, 1982; and IBs at 
48 FR 14933, 14955, Apr. 6, 1983.
---------------------------------------------------------------------------

V. Text of Final Rules

List of Subjects in 17 CFR Part 162

    Brokers, Dealers, Consumer protection, Privacy, Reporting and 
recordkeeping.

    For the reasons stated in the preamble, the Commodity Futures 
Trading Commission adds 17 CFR part 162 to read as follows:

PART 162--PROTECTION OF CONSUMER INFORMATION UNDER THE FAIR CREDIT 
REPORTING ACT

Sec.
162.1 Purpose and scope.
162.2 Definitions.
Subpart A--Business Affiliate Marketing Rules
162.3 Affiliate marketing opt out and exceptions.
162.4 Scope and duration of opt out.
162.5 Contents of opt-out notice; consolidated and equivalent 
notices.
162.6 Reasonable opportunity to opt out.
162.7 Reasonable and simple methods of opting out.
162.8 Acceptable delivery of opt-out notices
162.9 Renewal of opt out.
162.10-162.20 [Reserved.]
Subpart B--Disposal Rules
162.21 Proper disposal of consumer information.
Appendix A to Part 162--Sample Clauses

    Authority: Sec. 1088, Pub. L. 111-203; 124 Stat. 1376 (2010).


Sec.  162.1  Purpose and scope.

    (a) Purpose. The purpose of this part is to implement various 
provisions in the Fair Credit Reporting Act, 15 U.S.C. 1681, et seq. 
(``FCRA''), which provide certain protections to consumer information.
    (b) Scope. This part applies to certain consumer information held 
by the entities listed below. This part shall apply to futures 
commission merchants, retail foreign exchange dealers, commodity 
trading advisors, commodity pool operators, introducing brokers, major 
swap participants and swap dealers, regardless of whether they are 
required to register with the Commission. This part does not apply to 
foreign futures commission merchants, foreign retail foreign exchange 
dealers, commodity trading advisors, commodity pool operators, 
introducing brokers, major swap participants and swap dealers unless 
such entity registers with the Commission. Nothing in this part 
modifies limits or supersedes the requirements set forth in part 160 of 
this title.
    (c) Examples. The examples in this part are not exclusive. 
Compliance with an example, to the extent applicable, constitutes 
compliance with this part. Examples in a section illustrate only the 
issue described in the section and do not illustrate any other issue 
that may arise in this part.


Sec.  162.2  Definitions.

    (a) Affiliate. The term ``affiliate'' for the purposes of this part 
means any person that is related by common ownership or common 
corporate control with a covered affiliate.
    (b) Clear and conspicuous. The term ``clear and conspicuous'' means 
reasonably understandable and designed to call attention to the nature 
and significance of the information presented in the notice.

[[Page 43885]]

    (c) Common ownership or common corporate control. The term ``common 
ownership or common corporate control'' for the purposes of this part 
means the power to exercise a controlling influence over the management 
or policies of a company whether through ownership of securities, by 
contract, or otherwise. Any person who owns beneficially, either 
directly or through one or more controlled companies, more than 25 
percent of the voting securities of any company is presumed to control 
the company. Any person who does not own more than 25 percent of the 
voting securities of a company will be presumed not to control the 
company.
    (d) Company. The term ``company'' means any corporation, limited 
liability company, business trust, general or limited partnership, 
association, or similar organization.
    (e) Concise.--
    (1) In general. The term ``concise'' means a reasonably brief 
expression or statement.
    (2) Combination with other required disclosures. A notice required 
by this part may be concise even if it is combined with other 
disclosures required or authorized by Federal or state law.
    (f) Consumer. Except as otherwise provided, the term ``consumer'' 
means an individual person. The term consumer does not include market 
makers, floor brokers, locals, or individual persons whose information 
is not collected to determine eligibility for personal, family, or 
household purposes.
    (g) Consumer information. The term ``consumer information'' means 
any record about an individual, whether in paper, electronic, or other 
form, that is a consumer report or is derived from a consumer report 
(as defined in section 603(d)(2) of the FCRA). Consumer information 
also means a compilation of such records. Consumer information does not 
include information that does not identify individuals, such as 
aggregate information or blind data.
    (h) Covered affiliate. The term ``covered affiliate'' means a 
futures commission merchant, retail foreign exchange dealer, commodity 
trading advisor, commodity pool operator, introducing broker, major 
swap participant or swap dealer, which is subject to the jurisdiction 
of the Commission.
    (i) Dispose or Disposal.--
    (1) In general. The terms ``dispose'' or ``disposal'' means:
    (i) The discarding or abandonment of consumer information; or
    (ii) The sale, donation, or transfer of any medium, including 
computer equipment, upon which consumer information is stored.
    (2) Sale, donation, or transfer of consumer information. The sale, 
donation, or transfer of consumer information is not considered 
disposal for the purposes of subpart B.
    (j) Dodd-Frank Act. The term ``Dodd-Frank Act'' means the Dodd-
Frank Wall Street Reform and Consumer Protection Act (Pub. L. 111-203, 
124 Stat. 1376 (2010)).
    (k) Eligibility information. The term ``eligibility information'' 
means any information that would be a consumer report if the exclusions 
from the definition of ``consumer report'' in section 603(d)(2)(A) of 
the FCRA did not apply. Examples of the type of information that would 
fall within the definition of eligibility information include an 
affiliate's own transaction or experience information, such as 
information about a consumer's account history with that affiliate, and 
other information, such as information from credit bureau reports or 
applications. Eligibility information does not include aggregate or 
blind data that does not contain personal identifiers such as account 
numbers, names, or addresses.
    (l) FCRA. The term ``FCRA'' means the Fair Credit Reporting Act (15 
U.S.C. 1681 et seq.).
    (m) Financial product or service. The term ``financial product or 
service'' means any product or service that a futures commission 
merchant, retail foreign exchange dealer, commodity trading advisor, 
commodity pool operator, introducing broker, major swap participant or 
swap dealer could offer that is subject to the Commission's 
jurisdiction.
    (n) GLB Act. The term ``GLB Act'' means the Gramm-Leach-Bliley Act 
(Pub. L. 106-102, 113 Stat. 1338 (1999)).
    (o) Major swap participant. The term ``major swap participant'' has 
the same meaning as in section 1a(33) of the Commodity Exchange Act, 7 
U.S.C. 1 et seq., as may be further defined by this title, and includes 
any person registered as such thereunder.
    (p) Person. The term ``person'' means any individual, partnership, 
corporation, trust, estate, cooperative, association, or other entity.
    (q) Pre-existing business relationship. The term ``pre-existing 
business relationship'' means a relationship between a person, or a 
person's licensed agent, and a consumer based on--
    (1) A financial contract between the person and the consumer which 
is in force on the date on which the consumer is sent a solicitation by 
this part;
    (2) The purchase, rental, or lease by the consumer of a persons' 
services or a financial transaction (including holding an active 
account or policy in force or having another continuing relationship) 
between the consumer and the person, during the 18-month period 
immediately preceding the date on which the consumer is sent a 
solicitation covered by this part; or
    (3) An inquiry or application by the consumer regarding a financial 
product or service offered by that person during the three-month period 
immediately preceding the date on which the consumer is sent a 
solicitation covered by this part.
    (r) Solicitation--(1) In general. The term ``solicitation'' means 
the marketing of a financial product or service initiated by an 
affiliate to a particular consumer that is--
    (i) Based on eligibility information communicated to that covered 
affiliate by an affiliate that has or previously had the pre-existing 
business relationship with a consumer as described in this part; and
    (ii) Intended to encourage the consumer to purchase or obtain such 
financial product or service. A solicitation does not include marketing 
communications that are directed at the general public.
    (2) Examples. Examples of what communications constitute 
solicitations include communications such as a telemarketing 
solicitation, direct mail, or e-mail, when those communications are 
directed to a specific consumer based on eligibility information. A 
solicitation does not include communications that are directed at the 
general public without regard to eligibility information, even if those 
communications are intended to encourage consumers to purchase 
financial products and services from the affiliate initiating the 
communications.
    (s) Swap dealer. The term ``swap dealer'' has the same meaning as 
in section 1a(49) of the Commodity Exchange Act, 7 U.S.C. 1 et seq., as 
may be further defined by this title, and includes any person 
registered as such thereunder.

Subpart A--Business Affiliate Marketing Rules


Sec.  162.3  Affiliate marketing opt out and exceptions.

    (a) Initial notice and opt out. A covered affiliate may not use 
eligibility information about a consumer that the covered affiliate 
receives from an affiliate with the consumer to make a

[[Page 43886]]

solicitation for marketing purposes to such consumer unless--
    (1) It is clearly and conspicuously disclosed to the consumer in 
writing or if the consumer agrees, electronically, in a concise notice 
that the person may use shared eligibility information about that 
consumer received from an affiliate to make solicitations for marketing 
purposes to such consumer;
    (2) The consumer is provided a reasonable opportunity and a 
reasonable and simple method to opt out, or prohibit the covered 
affiliate from using eligibility information to make solicitations for 
marketing purposes to the consumer; and
    (3) The consumer has not opted out.
    (b) Persons responsible for satisfying the notice requirement. The 
notice required by this section must be provided:
    (1) By an affiliate that has or previously had a pre-existing 
business relationship with a consumer; or
    (2) As part of a joint notice from two or more members of an 
affiliated group of companies, provided that at least one of the 
affiliates on the joint notice has or previously had a pre-existing 
business relationship with the consumer.
    (c) Exceptions. These proposed regulations would not apply to the 
following covered affiliate:
    (1) A covered affiliate that has a pre-existing business 
relationship with a consumer;
    (2) Communications between an employer and employee-consumer (or 
his or her beneficiary) in connection with an employee benefit plan;
    (3) A covered affiliate that is currently providing services to the 
consumer;
    (4) If the consumer initiated the communication with the covered 
affiliate by oral, electronic, or written means;
    (5) If the consumer authorized or requested the covered affiliate's 
solicitation; or
    (6) If compliance by a person with these regulations would prevent 
that person's compliance with state insurance laws pertaining to unfair 
discrimination.
    (d) Making solicitations.
    (1) When a solicitation occurs. A covered affiliate makes a 
solicitation for marketing purposes if the person--
    (i) Receives eligibility information from an affiliate;
    (ii) Uses that eligibility information to do one or more of the 
following:
    (A) Identify the consumer or type of consumer to receive a 
solicitation;
    (B) Establish criteria used to select the consumer to receive a 
solicitation about the covered affiliate's financial products or 
services; or
    (C) Decide which of the services or contracts to market to the 
consumer or tailor the solicitation to that consumer; and
    (iii) As a result of the covered affiliate's use of the eligibility 
information, the consumer is provided a solicitation.
    (2) Receipt of eligibility information. A covered affiliate may 
receive eligibility information from an affiliate in various ways, 
including when the affiliate places that information into a common 
database that the covered affiliate may access.
    (3) Service Providers. Except as provided in paragraph (d)(5) of 
this section, a covered affiliate receives or uses an affiliate's 
eligibility information if a service provider acting on the covered 
affiliate's behalf (regardless of whether such service provider is a 
third party or an affiliate of the covered affiliate) receives or uses 
that information in the manner described in paragraph (d)(1)(i) or 
(d)(1)(ii) of this section. All relevant facts and circumstances will 
determine whether a service provider is acting on behalf of a covered 
affiliate when it receives or uses an affiliate's eligibility 
information in connection with marketing the covered affiliate's 
financial products or services.
    (4) Use by an affiliate of its own eligibility information. Unless 
a covered affiliate uses eligibility information that the covered 
affiliate receives from an affiliate in the manner described in 
paragraph (d)(2) of this section, the covered affiliate does not make a 
solicitation subject to this subpart:
    (i) Uses its own eligibility information that it obtained in 
connection with a pre-existing business relationship it has or 
previously had with the consumer to market the covered affiliate's 
financial products or services to the consumer; or
    (ii) Directs its service provider to use the affiliate's own 
eligibility information that it obtained in connection with a pre-
existing business relationship it has or previously had with the 
consumer to market the covered affiliate's financial products or 
services to the consumer, and the covered affiliate does not 
communicate directly with the service provider regarding that use.
    (5) Use of eligibility information by a service provider. (i) In 
general. A covered affiliate does not make a solicitation subject to 
this subpart if a service provider (including an affiliated or third-
party service provider that maintains or accesses a common database 
that the covered affiliate may access) receives eligibility information 
from an affiliate that has or previously had a pre-existing business 
relationship with the consumer and uses that eligibility information to 
market the covered affiliate's financial products or services to the 
consumer, so long as--
    (A) The affiliate controls access to and use of its eligibility 
information by the service provider (including the right to establish 
the specific terms and conditions under which the service provider may 
use such information to market the covered affiliate's financial 
products or services);
    (B) The affiliate establishes specific terms and conditions under 
which the service provider may access and use such affiliate's 
eligibility information to market the covered affiliate's financial 
products and services (or those of affiliates generally) to the 
consumer, such as the identity of the affiliated companies whose 
financial products or services may be marketed to the consumer by the 
service provider, the types of financial products or services of 
affiliated companies that may be marketed, and the number of times the 
consumer may receive marketing materials, and periodically evaluates 
the service provider's compliance with those terms and conditions;
    (C) The affiliate requires the service provider to implement 
reasonable policies and procedures designed to ensure that the service 
provider uses such affiliate's eligibility information in accordance 
with the terms and conditions established by such affiliate relating to 
the marketing of the covered affiliate's financial products or 
services;
    (D) The affiliate is identified on or with the marketing materials 
provided to the consumer; and
    (E) The covered affiliate does not directly use its affiliate's 
eligibility information in the manner described in paragraph (b)(1)(ii) 
of this section.
    (ii) Writing requirements. (A) The requirements of paragraphs 
(b)(5)(i)(A) and (C) of this section must be set forth in a written 
agreement between the affiliate that has or previously had a pre-
existing business relationship with the consumer and the service 
provider; and
    (B) The specific terms and conditions established by the affiliate 
as provided in paragraph (b)(5)(i)(B) of this section must be set forth 
in writing.
    (e) Relation to affiliate-sharing notice and opt out. Nothing in 
this rulemaking will limit the responsibility of a covered affiliate to 
comply with the notice and opt-out provisions under other privacy rules 
under the FCRA, the GLB Act or the CEA.


Sec.  162.4  Scope and duration of opt out.

    (a) Scope of opt-out election-(1) In general. The consumer's 
election to opt out prohibits any covered affiliate subject to the 
scope of the opt-out notice

[[Page 43887]]

from using eligibility information received from another affiliate to 
make solicitations to the consumer.
    (2) Continuing relationship-(i) In general. If the consumer 
establishes a continuing relationship with a covered affiliate or its 
affiliate, an opt-out notice may apply to eligibility information 
obtained in connection with--
    (A) A single continuing relationship or multiple continuing 
relationships that the consumer establishes with a covered affiliate or 
its affiliates, including continuing relationships established 
subsequent to delivery of the opt-out notice, so long as the notice 
adequately describes the continuing relationships covered by the opt 
out; or
    (B) Any other transaction between the consumer and the covered 
affiliate or its affiliates as described in the notice.
    (ii) Examples of a continuing relationship. A consumer has a 
continuing relationship with a covered affiliate or its affiliate if:
    (A) The covered affiliate is a futures commission merchant through 
whom a consumer has opened an account, or that carries the consumer's 
account on a fully-disclosed basis, or that effects or engages in 
commodity interest transactions with or for a consumer, even if the 
covered affiliate does not hold any assets of the consumer;
    (B) The covered affiliate is an introducing broker that solicits or 
accepts specific orders for trades;
    (C) The covered affiliate is a commodity trading advisor with whom 
a consumer has a contract or subscription, either written or oral, 
regardless of whether the advice is standardized, or is based on, or 
tailored to, the commodity interest or cash market positions or other 
circumstances or characteristics of the particular consumer;
    (D) The covered affiliate is a commodity pool operator, and accepts 
or receives from the consumer, funds, securities, or property for the 
purpose of purchasing an interest in a commodity pool;
    (E) The covered affiliate is a major swap participant that holds 
securities or other assets as collateral for a loan made to the 
consumer, even if the covered affiliate did not make the loan or do not 
affect any transactions on behalf of the consumer; or
    (F) The covered affiliate is a swap dealer that regularly effects 
or engages in swap transactions with or for a consumer even if the 
covered affiliate does not hold any assets of the consumer.
    (3) No continuing relationship. (i) In general. If there is no 
continuing relationship between a consumer and the covered affiliate or 
its affiliate, and the covered affiliate or its affiliate obtain 
eligibility information about a consumer in connection with a 
transaction with the consumer, such as an isolated transaction or a 
credit application that is denied, an opt-out notice provided to the 
consumer only applies to eligibility information obtained in connection 
with that transaction.
    (ii) Examples of no continuing relationship. A consumer does not 
have a continuing relationship with a covered affiliate or its 
affiliate if:
    (A) The covered affiliate has acted solely as a ``finder'' for a 
futures commission merchant, and the covered affiliate does not solicit 
or accept specific orders for trades; or
    (B) The covered affiliate has solicited the consumer to participate 
in a pool or to direct his or her account and he or she has not 
provided the covered affiliate with funds to participate in a pool or 
entered into any agreement with the covered affiliate to direct his or 
her account.
    (4) Menu of alternatives. A consumer may be given the opportunity 
to choose from a menu of alternatives when electing to prohibit 
solicitations, such as by electing to prohibit solicitations from 
certain types of affiliates covered by the opt-out notice but not other 
types of affiliates covered by the notice, electing to prohibit 
solicitations based on certain types of eligibility information but not 
other types of eligibility information, or electing to prohibit 
solicitations by certain methods of delivery but not other methods of 
delivery. However, one of the alternatives must allow the consumer to 
prohibit all solicitations from all of the affiliates that are covered 
by the notice.
    (5) Special rule for a notice following termination of all 
continuing relationships. A consumer must be given a new opt-out notice 
if, after all continuing relationships with the covered affiliate or 
its affiliate(s) are terminated, the consumer subsequently establishes 
another continuing relationship with the covered affiliate or its 
affiliate(s) and the consumer's eligibility information is to be used 
to make a solicitation. The new opt-out notice must apply, at a 
minimum, to eligibility information obtained in connection with the new 
continuing relationship. Consistent with paragraph b of this section, 
the consumer's decision not to opt out after receiving the new opt-out 
notice would not override a prior opt-out election by the consumer that 
applies to eligibility information obtained in connection with a 
terminated relationship, regardless of whether the new opt-out notice 
applies to eligibility information obtained in connection with the 
terminated relationship.
    (b) Duration of opt-out election. An opt-out election must be 
effective for a period of at least five years beginning when the 
consumer's opt-out election is received and implemented, unless the 
consumer subsequently revokes the opt-out election in writing or, if 
the consumer agrees, electronically. An opt-out election may be 
established for a period of more than five years or for an indefinite 
period unless revoked.
    (c) Time period in which a consumer can opt out. A consumer may opt 
out at any time.
    (d) No effect on opt-out period. An opt-out period may not be 
shortened by sending a renewal notice to the consumer before expiration 
of the opt-out period, even if the consumer does not renew the opt out.


Sec.  162.5  Contents of opt-out notice; consolidated and equivalent 
notices.

    (a) Contents of the opt-out notice. (1) In general. An opt-out 
notice must be in writing, be clear and conspicuous, as well as 
concise, and must accurately disclose the following:
    (i) (A) The name of the affiliate that has or previously had a pre-
existing business relationship with a consumer, which is providing the 
notice; or
    (B) If jointly provided jointly by multiple affiliates and each 
affiliate shares a common name, then the notice may indicate that it is 
being provided by multiple companies with the same name or multiple 
companies in the same group or family of companies. If the affiliates 
providing the notice do not share a common name, then the notice must 
either separately identify each affiliate by name or identify each of 
the common names used by those affiliates;
    (ii) The list of affiliates or types of affiliates whose use of 
eligibility information is covered by the notice, which may include 
companies that become affiliates after the notice is provided to the 
consumer;
    (iii) A general description of the types of eligibility information 
that may be used to make solicitations to the consumer;
    (iv) A statement that the consumer may elect to limit the use of 
eligibility information to make solicitations to the consumer;
    (v) A statement that the consumer's election will apply for the 
specified period of time and, if applicable, that the consumer will be 
allowed to renew the election once that period expires;
    (vi) If the notice is provided to consumers who have previously 
elected to opt out, that such consumer does not

[[Page 43888]]

need to act again until the consumer receives a renewal notice; and
    (vii) A reasonable and simple method for the consumer to opt out.
    (2) Specifying length of time period. If consumer is granted an 
opt-out period longer than a five-year duration, the opt-out notice 
must specify the length of the opt-out period.
    (3) No revised notice for extension of opt-out period. The duration 
of an opt-out period may be increased for a period longer than the 
period specified in the opt-out notice without having to provide a 
revised notice of the increase to the consumer.
    (b) Joint relationships. (1) If two or more consumers jointly 
obtain a financial product or service, a single opt-out notice may be 
provided to joint consumers.
    (2) Any of the joint consumers may exercise the right to opt out on 
behalf of each joint consumer.
    (3) The opt-out election notice must explain how an opt-out 
election by a joint consumer will be treated. That is, the notice 
should specify whether an opt-out election by a joint consumer will be 
treated as applying to all of the associated joint consumers, or as 
applying to each joint consumer separately.
    (4) If the opt-out election notice provides that each joint 
consumer is permitted to opt out separately, one of the joint consumers 
must be permitted to opt out on behalf of all of the joint consumers 
and the joint consumer must be permitted to exercise his or her 
separate rights to opt out in a single response.
    (5) A covered affiliate cannot require all joint consumers to opt 
out before implementing any opt-out election.
    (c) Alternative contents. If the consumer is afforded a broader 
right to opt out of receiving marketing than is required by this 
subpart, the requirements of this section may be satisfied by providing 
the consumer with a clear, conspicuous, and concise notice that 
accurately discloses the consumer's opt-out rights.
    (d) Coordinated and consolidated consumer notices. A notice 
required by this subpart may be coordinated and consolidated with any 
other notice or disclosure required to be issued under any other 
provision of law by the covered affiliate providing the notice, 
including but not limited to notices in the FCRA or the GLB Act privacy 
notices.
    (e) Equivalent notices. A notice or disclosure that is equivalent 
to the notice required by this part in terms of content, and that is 
provided to a consumer together with a notice required by any other 
provision of law, satisfies the requirements of this section.
    (f) Model notices. Model notices are provided in Appendix A of this 
part. These notices were meant to facilitate compliance with this 
subpart; provided, however, that nothing herein shall be interpreted to 
require persons subject to this part to use the model notices.


Sec.  162.6  Reasonable opportunity to opt out.

    (a) In general. A covered affiliate must not use eligibility 
information about a consumer that the covered affiliate receives from 
an affiliate to make a solicitation to such consumer about the covered 
affiliate's financial products or services, unless the consumer is 
provided a reasonable opportunity to opt out, as required by this 
subpart.
    (b) Examples. A reasonable opportunity to opt out under this 
subpart is:
    (1) If the opt-out notice is mailed to the consumer, the consumer 
has 30 days from the date the notice is mailed to opt out.
    (2) If the opt-out notice is sent via electronic means to the 
consumer, the consumer has 30 days from the date the consumer 
acknowledges receipt to elect to opt out by any reasonable method.
    (3) If the opt-out notice is sent via e-mail (where the consumer 
has agreed to receive disclosures by e-mail), the consumer is given 30 
days after the e-mail is sent to elect to opt out by any reasonable 
method.
    (4) If the opt-out notice provided to the consumer at the time of 
an electronic transaction, the consumer is required to decide, as a 
necessary part of proceeding with the transaction, whether to opt out 
before completing the transaction.
    (5) If the opt-out notice is provided during an in-person 
transaction, the consumer is required to decide, as a necessary part of 
completing the transaction, whether to opt out through a simple 
process.
    (6) If the opt-out notice is provided in conjunction with other 
privacy notices required by law, the consumer is allowed to exercise 
the opt-out election within a reasonable period of time and in the same 
manner as the opt out under that privacy notice.


Sec.  162.7  Reasonable and simple methods of opting out.

    (a) In general. A covered affiliate shall be prohibited from using 
eligibility information about a consumer received from an affiliate to 
make a solicitation to the consumer about the covered affiliate's 
financial products or services, unless the consumer is provided a 
reasonable and simple method to opt out, as required by this subpart.
    (b) Examples. Reasonable and simple methods of opting out include:
    (1) Designating a check-off box in a prominent position on an opt-
out election form;
    (2) Including a reply form and a self-addressed envelope (in a 
mailing);
    (3) Providing an electronic means, if the consumer agrees, that can 
be electronically mailed or processed through an Internet Web site;
    (4) Providing a toll-free telephone number; or
    (5) Exercising an opt-out election through whatever means are 
acceptable under a consolidated privacy notice required under other 
laws.
    (c) Specific opt-out method. Each consumer may be required to opt 
out through a specific method, as long as that method is acceptable 
under this subpart.


Sec.  162.8  Acceptable delivery methods of opt-out notices.

    (a) In general. The opt-out notice must be provided so that each 
consumer can reasonably be expected to receive actual notice.
    (b) Electronic notices. For opt-out notices provided 
electronically, the notice may be provided in compliance with either 
the electronic disclosure provisions in Sec.  1.4 of this title or the 
provisions in section 101 of the Electronic Signatures in Global and 
National Commerce Act, 15 U.S.C. 7001 et seq.


Sec.  162.9  Renewal of opt out.

    (a) Renewal notice and opt-out requirement. (1) In general. Since 
the FCRA provides that opt-out elections can expire in a period of no 
less than five years, an affiliate that has or previously had a pre-
existing business relationship with a consumer must provide a renewal 
notice to the consumer after such time in order to allow its affiliates 
to make solicitations. After the opt-out election period expires, its 
affiliates may make solicitations unless:
    (i) The consumer has been given a renewal notice that complies with 
the requirements of this section and Sec. Sec.  162.6 through 162.8 of 
this subpart, and a reasonable opportunity and a reasonable and simple 
method to renew the opt-out election, and the consumer does not renew 
the opt out; or
    (ii) An exception in Sec. 162.3(c) of this subpart applies.
    (2) Renewal period. Each opt-out renewal must be effective for a 
period of at least five years as provided in Sec.  162.4(b) of this 
subpart.

[[Page 43889]]

    (3) Affiliates who may provide the renewal notice. The notice 
required by this paragraph must be provided:
    (i) By the affiliate that provided the previous opt-out notice, or 
its successor; or
    (ii) As part of a joint renewal notice from two or more members of 
an affiliated group of companies, or their successors, that jointly 
provided the previous opt-out notice.
    (b) Contents of renewal or extension notice. The contents of the 
renewal notice must include all of the same contents of the initial 
notices, but also must include:
    (1) A statement that the consumer previously elected to limit the 
use of certain information to make solicitations to the consumer;
    (2) A statement that the consumer may elect to renew the consumer's 
previous election; and
    (3) If applicable, a statement that the consumer's election to 
renew will apply for a specified period of time stated in the notice 
and that the consumer will be allowed to renew the election once that 
period expires.
    (c) Timing of renewal notice. Renewal notices must be provided in a 
reasonable period of time before the expiration of the opt-out election 
period or any time after the expiration of the opt-out period, but 
before solicitations that would have been prohibited by the expired 
opt-out election are made to the consumer.
    (d) No effect on opt-out period. An opt-out period may not be 
shortened by sending a renewal notice to the consumer before the 
expiration of the opt-out period, even if the consumer does not renew 
the opt-out election.


Sec. Sec.  162.10-162.20  [Reserved.]

Subpart B--Disposal Rules


Sec.  162.21  Proper disposal of consumer information.

    (a) In general. Any covered affiliate must adopt must adopt 
reasonable, written policies and procedures that address 
administrative, technical, and physical safeguards for the protection 
of consumer information. These written policies and procedures must be 
reasonably designed to:
    (1) Insure the security and confidentiality of consumer 
information;
    (2) Protect against any anticipated threats or hazards to the 
security or integrity of consumer information; and
    (3) Protect against unauthorized access to or use of consumer 
information that could result in substantial harm or inconvenience to 
any consumer.
    (b) Standard. Any covered affiliate under this part who maintains 
or otherwise possesses consumer information for a business purpose must 
properly dispose of such information by taking reasonable measures to 
protect against unauthorized access to or use of the information in 
connection with its disposal.
    (c) Examples. The following examples are ``reasonable'' disposal 
measures for the purposes of this subpart--
    (1) Implementing and monitoring compliance with policies and 
procedures that require the burning, pulverizing, or shredding of 
papers containing consumer information so that the information cannot 
practicably be read or reconstructed;
    (2) Implementing and monitoring compliance with policies and 
procedures that require the destruction or erasure of electronic media 
containing consumer information so that the information cannot 
practically be read or reconstructed; and
    (3) After due diligence, entering into and monitoring compliance 
with a written contract with another party engaged in the business of 
record destruction to dispose of consumer information in a manner that 
is consistent with this rule.
    (d) Relation to other laws. Nothing in this section shall be 
construed:
    (1) To require a person to maintain or destroy any record 
pertaining to a consumer that is imposed under Sec. 1.31 or any other 
provision of law; or
    (2) To alter or affect any requirement imposed under any other 
provision of law to maintain or destroy such a record.

Appendix A to Part 162--Sample Clauses

    A. Although use of the model forms is not required, use of the 
model forms in this Appendix (as applicable) complies with the 
requirement in section 624 of the FCRA for clear, conspicuous, and 
concise notices.
    B. Certain changes may be made to the language or format of the 
model forms without losing the protection from liability afforded by 
use of the model forms. These changes may not be so extensive as to 
affect the substance, clarity, or meaningful sequence of the 
language in the model forms. Persons making such extensive revisions 
will lose the safe harbor that this Appendix provides. Acceptable 
changes include, for example:
    1. Rearranging the order of the references to ``your income'', 
``your account history'', and ``your credit score''.
    2. Substituting other types of information for ``income'', 
``account history'', or ``credit score'' for accuracy, such as 
``payment history'', ``credit history'', or ``claims history''.
    3. Substituting a clearer and more accurate description of the 
affiliates providing or covered by the notice for phrases such as 
``the [ABC] group of companies,'' including without limitation a 
statement that the entity providing the notice recently purchased 
the consumer's account.
    4. Substituting other types of affiliates covered by the notice 
for ``commodity advisor'', ``futures clearing merchant'', or ``swap 
dealer'' affiliates.
    5. Omitting items that are not accurate or applicable. For 
example, if a person does not limit the duration of the opt-out 
period, the notice may omit information about the renewal notice.
    6. Adding a statement informing consumers how much time they 
have to opt out before shared eligibility information may be used to 
make solicitations to them.
    7. Adding a statement that the consumer may exercise the right 
to opt out at any time.
    8. Adding the following statement, if accurate: ``If you 
previously opted out, you do not need to do so again.''
    9. Providing a place on the form for the consumer to fill in 
identifying information, such as his or her name and address.
     A-1 Model Form for Initial Opt-out notice (Single-
Affiliate Notice)
     A-2 Model Form for Initial Opt-out notice (Joint 
Notice)
     A-3 Model Form for Renewal Notice (Single-Affiliate 
Notice)
     A-4 Model Form for Renewal Notice (Joint Notice)
     A-5 Model Form for Voluntary ``No Marketing'' Notice

A-1 Model Form for Initial Opt-Out Notice (Single-Affiliate Notice)

[Your Choice To Limit Marketing]/[Marketing Opt Out]

--[Name of Affiliate] is providing this notice.
--[Optional: Federal law gives you the right to limit some but not 
all marketing from our affiliates. Federal law also requires us to 
give you this notice to tell you about your choice to limit 
marketing from our affiliates.]
--You may limit our affiliates in the [ABC] group of companies, such 
as our [commodity advisor, futures clearing merchant, and swap 
dealer] affiliates, from marketing their financial products or 
services to you based on your personal information that we collect 
and share with them. This information includes your [income], your 
[account history with us], and your [credit score].
--Your choice to limit marketing offers from our affiliates will 
apply [until you tell us to change your choice]/[for x years from 
when you tell us your choice]/[for at least 5 years from when you 
tell us your choice]. [Include if the opt-out period expires.] Once 
that period expires, you will receive a renewal notice that will 
allow you to continue to limit marketing offers from our affiliates 
for [another x years]/[at least another 5 years].
--[Include, if applicable, in a subsequent notice, including an 
annual notice, for consumers who may have previously opted out.] If 
you have already made a choice to limit marketing offers from our 
affiliates, you do not need to act again until you receive the 
renewal notice.


[[Page 43890]]


    To limit marketing offers, contact us [include all that apply]:

--By telephone: 1-877--

--On the Web: www.-.com
--By mail: check the box and complete the form below, and send the 
form to:
--[Company name]
--[Company address]
----Do not allow your affiliates to use my personal information to 
market to me.

A-2 Model Form for Initial Opt-Out Notice (Joint Notice)

[Your Choice to Limit Marketing]/[Marketing Opt Out]

--The [ABC group of companies] is providing this notice.
--[Optional: Federal law gives you the right to limit some but not 
all marketing from the [ABC] companies. Federal law also requires us 
to give you this notice to tell you about your choice to limit 
marketing from the [ABC] companies.]
--You may limit the [ABC companies], such as the [ABC commodity 
advisor, futures clearing merchant, and swap dealer] affiliates, 
from marketing their financial products or services to you based on 
your personal information that they receive from other [ABC] 
companies. This information includes your [income], your [account 
history], and your [credit score].
--Your choice to limit marketing offers from the [ABC] companies 
will apply [until you tell us to change your choice]/[for x years 
from when you tell us your choice]/[for at least 5 years from when 
you tell us your choice]. [Include if the opt-out period expires.] 
Once that period expires, you will receive a renewal notice that 
will allow you to continue to limit marketing offers from the [ABC] 
companies for [another x years]/[at least another 5 years].
-[Include, if applicable, in a subsequent notice, including an 
annual notice, for consumers who may have previously opted out.] If 
you have already made a choice to limit marketing offers from the 
[ABC] companies, you do not need to act again until you receive the 
renewal notice.

To limit marketing offers, contact us
[include all that apply]:

By telephone: 1-877--

On the Web: www.-.com
By mail: check the box and complete the form below, and send the 
form to:
[Company name]
[Company address]
---- Do not allow any company [in the ABC group of companies] to use 
my personal information to market to me.

A-3 Model Form for Renewal Notice (Single-Affiliate Notice)

[Renewing Your Choice To Limit Marketing]/[Renewing Your Marketing Opt 
Out]

-[Name of Affiliate] is providing this notice.
-[Optional: Federal law gives you the right to limit some but not 
all marketing from our affiliates. Federal law also requires us to 
give you this notice to tell you about your choice to limit 
marketing from our affiliates.]
-You previously chose to limit our affiliates in the [ABC] group of 
companies, such as our [commodity advisor, futures clearing 
merchant, and swap dealer] affiliates, from marketing their 
financial products or services to you based on your personal 
information that we share with them. This information includes your 
[income], your [account history with us], and your [credit score].
-Your choice has expired or is about to expire.

To renew your choice to limit marketing for [x] more years, contact 
us [include all that apply]:

By telephone: 1-877--

On the Web: www.-.com
By mail: check the box and complete the form below, and send the 
form to:
[Company name]
[Company address]
----Renew my choice to limit marketing for [x] more years.

A-4 Model Form for Renewal Notice (Joint Notice)

[Renewing Your Choice To Limit Marketing]/[Renewing Your Marketing Opt 
Out]

-The [ABC group of companies] is providing this notice.
-[Optional: Federal law gives you the right to limit some but not 
all marketing from the [ABC] companies. Federal law also requires us 
to give you this notice to tell you about your choice to limit 
marketing from the [ABC] companies.]
-You previously chose to limit the [ABC companies], such as the [ABC 
commodity advisor, futures clearing merchant, and swap dealer] 
affiliates, from marketing their financial products or services to 
you based on your personal information that they receive from other 
[ABC] companies. This information includes your [income], your 
[account history], and your [credit score].
-Your choice has expired or is about to expire.

To renew your choice to limit marketing for [x] more years, contact 
us [include all that apply]:

By telephone: 1-877--

On the Web: www.-.com
By mail: check the box and complete the form below, and send the 
form to:
[Company name]
[Company address]
---- Renew my choice to limit marketing for [x] more years.

A-5 Model Form for Voluntary ``No Marketing'' Notice

[Your Choice To Stop Marketing]

-[Name of Affiliate] is providing this notice.
You may choose to stop all marketing from us and our affiliates.

To stop all marketing offers, contact us [include all that apply]:

By telephone: 1-877--

On the Web: www.-.com
By mail: check the box and complete the form below, and send the 
form to:
[Company name]
[Company address]
---- Do not market to me.

    Issued in Washington, DC, on July 7, 2011 by the Commission.
David A. Stawick,
Secretary of the Commission.

Appendices to Business Affiliate Marketing and Disposal of Consumer 
Information Rules--Commission Voting Summary and Statements of 
Commissioners

    Note: The following appendices will not appear in the Code of 
Federal Regulations.

Appendix 1--Commission Voting Summary

    On this matter, Chairman Gensler and Commissioners Dunn, 
Sommers, O'Malia and Chilton voted in the affirmative; no 
Commissioner voted in the negative.

Appendix 2--Statement of Chairman Gary Gensler

    I support the final rulemaking to extend to customers of CFTC-
regulated entities protections preventing certain business 
affiliated marketing and establishing other consumer information 
protections under the Fair Credit Reporting Act (FCRA). The 
rulemaking protects consumers by providing privacy protections to 
nonpublic consumer information held by entities that are subject to 
the jurisdiction of the Commission. The final rulemaking provides 
customers of CFTC-regulated entities with the same privacy 
protections now enjoyed by the customers of entities regulated by 
other Federal agencies.
    The rulemaking has two important features. First, it allows 
customers to prohibit Commission-regulated entities from using 
certain consumer information obtained from an affiliate to make 
solicitations to that customer for marketing purposes. This will be 
done by means of a customer opt out. Second, it requires Commission-
regulated entities to develop and implement a written program and 
procedures for the proper disposal of consumer information. The 
rulemaking will help prevent the unauthorized use and disclosure of 
nonpublic, consumer information.

[FR Doc. 2011-17711 Filed 7-21-11; 8:45 am]
BILLING CODE 6351-01-P