[Federal Register Volume 78, Number 166 (Tuesday, August 27, 2013)]
[Notices]
[Pages 52915-52918]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-20796]


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FEDERAL TRADE COMMISSION


Agency Information Collection Activities; Proposed Collection; 
Comment Request; Extension

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

ACTION: Notice.

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SUMMARY: The information collection requirements described below will 
be submitted to the Office of Management and Budget (``OMB'') for 
review, as required by the Paperwork Reduction Act (``PRA''). The FTC 
is seeking public comments on its proposal to extend through January 
31, 2017, the current PRA clearance for its shared enforcement 
authority with the Consumer Financial Protection Bureau (``CFPB'') for 
information collection requirements contained in the CFPB's Regulation 
O. That clearance expires on January 31, 2014.

DATES: Comments must be filed by October 28, 2013.

ADDRESSES: Interested parties may file a comment online or on paper, by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Write ``Regulation O PRA 
Comment, FTC File No. P134812'' on your comment and file your comment 
online at https://ftcpublic.commentworks.com/ftc/regulationopra by 
following the instructions on the web-based form. If you prefer to file 
your comment on paper, mail or deliver your comment to the following 
address: Federal Trade Commission, Office of the Secretary, Room H-113 
(Annex J), 600 Pennsylvania Avenue NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: Requests for additional information or 
copies of the proposed information requirements should be addressed to 
Rebecca Unruh, Attorney, Division of Financial Practices, Bureau of 
Consumer Protection, Federal Trade Commission, 600 Pennsylvania Ave. 
NW., Washington, DC 20580, (202) 326-3565.

SUPPLEMENTARY INFORMATION: Title X of the Dodd-Frank Wall Street Reform 
and Consumer Protection Act (``Dodd-Frank Act''), Public Law 111-203, 
124 Stat. 1376 (2010), transferred the

[[Page 52916]]

Commission's rulemaking authority under the mortgage provisions in 
section 626 of the 2009 Omnibus Appropriations Act, as amended,\1\ to 
the CFPB.\2\ On December 16, 2011, the CFPB republished the Mortgage 
Assistance Relief Services (``MARS'') Rule as Regulation O (12 CFR Part 
1015).\3\ As a result, the Commission subsequently rescinded its MARS 
Rule (16 CFR Part 322).\4\ Nonetheless, under the Dodd-Frank Act, the 
FTC retains its authority to bring law enforcement actions to enforce 
Regulation O.\5\
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    \1\ Public Law 111-8, section 626, 123 Stat. 524 (Mar. 11, 
2009).
    \2\ Dodd-Frank Act, Sec.  1061, 12 U.S.C. 5581 (2010).
    \3\ 76 FR 78130.
    \4\ 77 FR 22200 (April 13, 2012).
    \5\ Dodd-Frank Act, Sec.  1061(b)(5), 12 U.S.C. 5581(b)(5).
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    Regulation O contains information requirements that have been 
approved by OMB under the PRA, 44 U.S.C. 3501 et seq. The discussion 
immediately below details the nature of and justification for the 
information collection requirements of Regulation O for which the FTC, 
as a co-enforcer, seeks OMB clearance for its share of the estimated 
PRA burden.

Disclosure Requirements

    In commercial communications for a general audience, MARS providers 
are required to make the following disclosure:
    (1) ``(Name of company) is not associated with the government and 
our service is not approved by the government or your lender''; and
    (2) In some instances, that ``[e]ven if you accept this offer and 
use our service, your lender may not agree to change your loan.''
    In addition, MARS providers must disclose to consumers, in any 
subsequent commercial communication directed to a specific consumer, 
the following information:

    (1) That ``You may stop doing business with us at any time. You 
may accept or reject the offer of mortgage assistance we obtain from 
your lender [or servicer]. If you reject the offer, you do not have 
to pay us. If you accept the offer, you will have to pay us (insert 
amount or method for calculating the amount) for our services'';
    (2) That ``(Name of company) is not associated with the 
government and our service is not approved by the government or your 
lender''; and
    (3) In some instances, that ``[e]ven if you accept this offer 
and use our service, your lender may not agree to change your 
loan.''

    Furthermore, MARS providers are required to disclose to consumers 
in all communications in which the provider represents that the 
consumer should temporarily or permanently discontinue payments, in 
whole or in part, the following information:

    ``If you stop paying your mortgage, you could lose your home and 
damage your credit rating.''

    Finally, after a provider has obtained an offer of mortgage 
assistance relief from the lender or servicer and presented the 
consumer with a written agreement incorporating the offer, the MARS 
provider must disclose the following:

    (1) ``This is an offer of mortgage assistance relief service 
from your lender [or servicer]. You may accept or reject the offer. 
If you accept the offer, you will have to pay us [same amount as 
disclosed pursuant to Sec.  1015.4(b)(1)] for our services''; and
    (2) A description of all ``material differences'' between the 
terms, conditions, and limitations of the consumer's current 
mortgage and those associated with the offer for mortgage relief, 
provided in a written notice from the consumer's lender or servicer.

    Regulation O also requires that the disclosures be ``clear and 
prominent,'' as defined specific to the media used.\6\
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    \6\ See 12 CFR 1015.2, 1015.5.
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    The FTC and CFPB (``Agencies'') believe the above-noted disclosures 
are necessary for the following reasons:
     Non-affiliation with the government or lenders: Federal 
and state law enforcement officials have brought numerous law 
enforcement actions against MARS providers who have misrepresented 
their affiliation with government agencies or programs, lenders, or 
servicers, in connection with offering MARS. These providers have used 
a variety of techniques to create such misimpressions, including 
advertising under trade names that resemble the names of legitimate 
government programs. Given that the government, for-profit entities, 
and nonprofit entities assist financially distressed consumers with 
their mortgages, and the frequency of deceptive affiliation claims, the 
requirement that MARS providers disclose their nonaffiliation with the 
government or with consumers' lenders or servicers is reasonably 
related to the goal of preventing deception.
     Risk of Nonpayment of Mortgage: The FTC's rulemaking 
record for the former MARS Rule demonstrated that MARS providers 
frequently encourage consumers, often through deception, to stop paying 
their mortgages and instead pay providers. Consumers who rely on these 
deceptive statements frequently suffer grave financial harm. Requiring 
MARS providers who encourage consumers not to pay their mortgages to 
disclose the risks of following this advice is necessary to prevent 
deception.
     Total amount a consumer must pay: The total cost of MARS 
is perhaps most material to consumers in making well-informed decisions 
on whether to purchase those services. Requiring the clear and 
prominent disclosure of total cost information in every communication 
directed at a specific consumer before the consumer enters into an 
agreement would decrease the likelihood that MARS providers will 
deceive prospective customers with incomplete, inaccurate, or confusing 
cost information. Requiring MARS providers to disclose total cost 
information clearly and prominently is reasonably related to the 
prevention of deception.
     Right to accept or reject offer of mortgage assistance: To 
effectuate fully the advance fee ban under 12 CFR 1015.5, which 
prohibits providers from collecting fees until the consumer has 
accepted the results obtained by the provider, it also is necessary for 
a MARS provider to inform consumers that they may withdraw from the 
service and may accept or reject the result delivered by the provider. 
This disclosure is reasonably related to preventing unfair and 
deceptive acts and practices by MARS providers.
     No guarantee: The FTC's rulemaking record revealed that 
MARS providers often misrepresent their likelihood of success in 
obtaining a significant loan modification for consumers. These 
deceptive success claims lead consumers to overestimate MARS providers' 
abilities to obtain substantial loan modifications or other relief. 
Requiring MARS providers to inform consumers that lenders might not 
agree to change consumers' loans, even if those consumers purchase the 
services that the MARS provider offers, is reasonably related to the 
goal of preventing deception.
     Written Notice from Lender or Servicer: Based on law 
enforcement experience and the rulemaking record, the Agencies believe 
that providing the consumer with a notice from the consumer's lender or 
servicer describing all material differences between the consumer's 
current mortgage loan and the offered mortgage relief is essential to 
consumers' ability to evaluate whether they should accept the offer. 
Requiring that the lender or servicer prepare the written disclosure 
also better ensures that the information provided is consistent with 
the terms of the offer, and mitigates the risk that MARS providers 
would mislead consumers about the offer. This disclosure is

[[Page 52917]]

reasonably related to the goal of protecting consumers from deception.

Recordkeeping Requirements

    In some instances, Regulation O's recordkeeping requirements 
pertain to records that are customarily kept in the ordinary course of 
business, such as copies of contracts and consumer files containing the 
name and address of the borrower and materially different versions of 
sales scripts and related promotional materials. Thus, the retention of 
these documents does not constitute a ``collection of information,'' as 
defined by OMB's regulations that implement the PRA.\7\
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    \7\ 5 CFR 1320.3(b)(2).
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    In other instances, Regulation O requires providers to create and 
retain documents demonstrating their compliance with specific rule 
requirements. These include the requirement that providers document the 
following activities:
    (1) Performing MARS and retaining documentation provided to the 
consumer;
    (2) Monitoring sales presentations by recording and testing oral 
representations if engaged in telemarketing of services;
    (3) Establishing a procedure for receiving and responding to 
consumer complaints;
    (4) Ascertaining, in some instances, the number and nature of 
consumer complaints; and
    (5) Taking corrective action if sales persons fail to comply with 
Regulation O, including training and disciplining sales persons.
    At the time it submitted the FTC Final Rule for OMB review, the FTC 
determined that the information obtained from the rulemaking record 
established the need for these recordkeeping requirements. The FTC 
concluded that there appeared to be widespread deception and unfair 
practices in the MARS industry, targeting financially vulnerable 
consumers. Accordingly, the Agencies believe that strong recordkeeping 
requirements are needed to ensure effective and efficient enforcement 
of Regulation O and to identify injured consumers.

Burden Statement

    Because the FTC and CFPB share enforcement authority for this rule, 
the FTC is seeking clearance for one-half of the following estimated 
PRA burden that the FTC attributes to the disclosure and recordkeeping 
requirements under Regulation O. The potential entities providing MARS 
services are varied, and there are no ways to formally track them. By 
extension, there is no clear path to track how many affected individual 
entities have newly entered and departed from one year to the next or 
from one triennial PRA clearance cycle to the next. For simplicity, the 
FTC analysis will continue to treat covered entities as newly 
undergoing the previously assumed learning curve cycle, although this 
would effectively overstate estimated burden for unidentified covered 
entities that have remained in existence since OMB's most recently 
issued PRA clearance for the FTC Rule. Based on law enforcement 
experiences and information in the rulemaking record, the FTC estimates 
that Regulation O affects roughly 500 MARS providers.\8\ This estimate 
and the corollary assumption stated above inform the additional 
estimates detailed below.
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    \8\ 75 FR 75091, 75095 (Dec. 1, 2010) (FTC final rule).
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    Estimated annual hours burden: 65,000 hours, pre-split.
    The above hours estimate is based on the following assumptions:
    (1) Disclosures required incremental to Government-supplied 
language: 500 MARS providers x 2 hours each (1,000 hours).
    (2) Initial setup: creating procedures to monitor compliance: 500 
MARS providers x 25 hours each (12,500 hours).
    (3) Documenting compliance, monitoring sales presentations, related 
training: 500 MARS providers x 100 hours each (50,000 hours).
    (4) Retaining and filing records of compliance: 500 MARS providers 
x 3 hours each (1,500 hours).
    Estimated associated labor cost: $3,733,950, pre-split.
    Commission staff assumes that management personnel will prepare the 
required disclosures and implement and monitor compliance procedures at 
an hourly rate of $58.47.\9\ Thus, the estimated labor cost to prepare 
the required disclosures is $58,470 (1,000 hours x $58.47) and to 
institute and document compliance procedures (tasks (2) and (3) listed 
above) is $3,654,375 (62,500 hours x $58.47). Additionally, FTC staff 
estimates that related recordkeeping will be performed by office 
support file clerks at an hourly rate of $14.07 \10\ Thus, labor costs 
for recordkeeping will be $21,105 (1,500 hours x $14.07), for a total 
estimated labor cost (pre-split) of $3,733,950.
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    \9\ This estimate is based on an averaging of the mean hourly 
wages for sales and financial managers provided by the Bureau of 
Labor Statistics. OCCUPATIONAL EMPLOYMENT AND WAGES--MAY 2012, Table 
1 (National employment and wage data from the Occupational 
Employment Statistics survey by occupation, May 2012).
    \10\ Id. (for office clerks).
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    Estimated non-labor cost: $500,000.
    The FTC assumes that each of the estimated 500 MARS providers will 
make required disclosures in writing to approximately 1,000 consumers 
annually. Under these assumptions, non-labor costs will be limited 
mostly to printing and distribution costs. At an estimated $1 per 
disclosure, total non-labor costs would be $1,000 per provider or, 
cumulatively for all providers, $500,000. Associated costs would be 
reduced if the disclosures are made electronically.
    Accounting for half of the above totals, the FTC's share of burden 
hours is 32,500 hours, $1,866,975 for labor costs, and $250,000 for 
non-labor costs.

Request for Comment

    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.
    Pursuant to Section 3506(c)(2)(A) of the PRA, the FTC invites 
comments on: (1) Whether the disclosure and recordkeeping requirements 
are necessary, including whether the information will be practically 
useful; (2) the accuracy of our burden estimates, including whether the 
methodology and assumptions used are valid; (3) ways to enhance the 
quality, utility, and clarity of the information to be collected; and 
(4) ways to minimize the burden of the collection of information. All 
comments should be filed as prescribed in the ADDRESSES section above, 
and must be received on or before October 28, 2013.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before October 28, 
2013. Write ``Regulation O PRA Comment, FTC File No. P134812'' on your 
comment. Your comment--including your name and your state--will be 
placed on the public record of this proceeding, including, to the 
extent practicable, on the public Commission Web site, at http://www.ftc.gov/os/publiccomments.shtm. As a matter of discretion, the 
Commission tries to remove individuals' home contact information from

[[Page 52918]]

comments before placing them on the Commission Web site.
    Because your comment will be made public, you are solely 
responsible for making sure that your comment does not include any 
sensitive personal information, like anyone'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. You are also solely 
responsible for making sure that your comment does not include any 
sensitive health information, like medical records or other 
individually identifiable health information. In addition, do not 
include any ``[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 FTC Act, 15 U.S.C. 
46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2). In particular, do 
not include competitively sensitive information such as costs, sales 
statistics, inventories, formulas, patterns, devices, manufacturing 
processes, or customer names.
    If you want the Commission to give your comment confidential 
treatment, you must file it in paper form, with a request for 
confidential treatment, and you have to follow the procedure explained 
in FTC Rule 4.9(c), 16 CFR 4.9(c).\11\ Your comment will be kept 
confidential only if the FTC General Counsel, in his or her sole 
discretion, grants your request in accordance with the law and the 
public interest.
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    \11\ In particular, the written request for confidential 
treatment that accompanies the comment must include the factual and 
legal basis for the request, and must identify the specific portions 
of the comment to be withheld from the public record. See FTC Rule 
4.9(c), 16 CFR 4.9(c).
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    Postal mail addressed to the Commission is subject to delay due to 
heightened security screening. As a result, we encourage you to submit 
your comments online. To make sure that the Commission considers your 
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/regulationopra, by following the instructions on the web-based 
form. If this Notice appears at http://www.regulations.gov/#!home, you 
also may file a comment through that Web site.
    If you file your comment on paper, write ``Regulation O PRA 
Comment, FTC File No. P134812'' on your comment and on the envelope, 
and mail or deliver it to the following address: Federal Trade 
Commission, Office of the Secretary, Room H-113 (Annex J), 600 
Pennsylvania Avenue NW., Washington, DC 20580. If possible, submit your 
paper comment to the Commission by courier or overnight service.
    Visit the Commission Web site at http://www.ftc.gov to read this 
Notice and the news release describing it. 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 on or before September 26, 2013. You can find more 
information, including routine uses permitted by the Privacy Act, in 
the Commission's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.

David C. Shonka,
Principal Deputy General Counsel.
[FR Doc. 2013-20796 Filed 8-26-13; 8:45 am]
BILLING CODE 6750-01-P