[Federal Register Volume 80, Number 230 (Tuesday, December 1, 2015)]
[Proposed Rules]
[Pages 75018-75020]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-30359]


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FEDERAL TRADE COMMISSION

16 CFR Part 433

RIN 3084-AB16


Rules and Regulations Under the Trade Regulation Rule Concerning 
Preservation of Consumers' Claims and Defenses

AGENCY: Federal Trade Commission.

ACTION: Request for public comments.

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SUMMARY: The Federal Trade Commission (``Commission'') requests public 
comment on the overall costs and benefits, and regulatory and economic 
impact, of its Rules and Regulations under the Trade Regulation Rule 
Concerning Preservation of Consumers' Claims and Defenses, commonly 
known as the ``Holder Rule,'' as part of the agency's regular review of 
all its regulations and guides.

DATES: Written comments must be received on or before February 12, 
2016.

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 ``Holder Rule Review, 
FTC File No. P164800'' on your comment. You may file your comment 
online at https://ftcpublic.commentworks.com/ftc/holderrule by 
following the instructions on the Web-based form. If you prefer to file 
your comment on paper, mail it to the following address: Federal Trade 
Commission, Office of the Secretary, 600 Pennsylvania Avenue NW., Suite 
CC-5610 (Annex B), Washington, DC 20580, or deliver your comment to the 
following address: Federal Trade Commission, Office of the Secretary, 
Constitution Center, 400 7th Street SW., 5th Floor Suite 5610 (Annex 
B), Washington, DC 20024.

FOR FURTHER INFORMATION CONTACT: Stephanie Rosenthal (202) 326-3332, 
Bureau of Consumer Protection, Federal Trade Commission, 600 
Pennsylvania Ave. NW., Washington, DC 20580.

SUPPLEMENTARY INFORMATION: 

I. Background

    On November 14, 1975, the Commission promulgated its Trade 
Regulation Rule concerning the Preservation of Consumers' Claims and 
Defenses. The Holder Rule protects consumers who enter into credit 
contracts with a seller of goods or services by preserving their right 
to assert claims and defenses against any holder of the contract, even 
if the original seller subsequently assigns the contract to a third-
party creditor or assignee. It requires sellers that arrange for or 
offer credit to finance consumers' purchases to include the following 
Notice in their contracts:

    ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS SUBJECT TO ALL 
CLAIMS AND DEFENSES WHICH THE DEBTOR COULD ASSERT AGAINST THE SELLER 
OF GOODS OR SERVICES OBTAINED . . . WITH THE PROCEEDS HEREOF. 
RECOVERY HEREUNDER BY THE DEBTOR SHALL NOT EXCEED AMOUNTS PAID BY 
THE DEBTOR HEREUNDER.\1\
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    \1\ 16 CFR 433.2.


[[Page 75019]]


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A creditor or assignee of the contract is thus subject to any claims or 
defenses that the consumer could assert against the seller.

II. Regulatory Review Program

    The Commission periodically reviews all of its rules and guides. 
These reviews seek information about the costs and benefits of the 
agency's rules and guides, and their regulatory and economic impact. 
The information obtained assists the Commission in identifying those 
rules and guides that warrant modification or rescission. Therefore, 
the Commission now solicits comments on, among other things, the 
economic impact of and the continuing need for the Holder Rule; 
possible developments in the case law that need to be reflected in the 
Holder Rule; and the effect on the Holder Rule of any regulatory, 
technological, economic, or other industry changes.

III. Request For Comment

    The Commission solicits comment on the following specific questions 
related to the Holder Rule:
    (1) Is there a continuing need for the Holder Rule as currently 
promulgated? Why or why not?
    (2) What benefits has the Holder Rule provided to consumers? What 
evidence supports the asserted benefits?
    (3) What modifications, if any, should the Commission make to the 
Holder Rule to increase its benefits to consumers?
    (a) What evidence supports the proposed modifications?
    (b) How would these modifications affect the costs and benefits of 
the Holder Rule for consumers?
    (c) How would these modifications impact businesses, particularly 
small businesses?
    (4) What impact has the Holder Rule had on the flow of truthful 
information to consumers and on the flow of deceptive information to 
consumers?
    (5) What significant costs, if any, has the Holder Rule imposed on 
consumers? What evidence supports the asserted costs?
    (6) What modifications, if any, should be made to the Holder Rule 
to reduce any costs imposed on consumers?
    (a) What evidence supports your proposed modifications?
    (b) How would these modifications affect the costs and benefits of 
the Holder Rule for consumers?
    (c) How would these modifications affect the costs and benefits of 
the Holder Rule for businesses, particularly small businesses?
    (7) What benefits, if any, has the Holder Rule provided to 
businesses, and in particular to small businesses? What evidence 
supports the asserted benefits?
    (8) What modifications, if any, should be made to the Holder Rule 
to increase the benefits to businesses, and particularly to small 
businesses?
    (a) What evidence supports your proposed modifications?
    (b) How would these modifications affect the costs and benefits of 
the Holder Rule for consumers?
    (c) How would these modifications affect the costs and benefits of 
the Holder Rule for businesses?
    (9) What significant costs, if any, including costs of compliance, 
has the Holder Rule imposed on businesses, particularly small 
businesses? What evidence supports the asserted costs?
    (10) What modifications, if any, should be made to the Holder Rule 
to reduce the costs imposed on businesses, and particularly on small 
businesses?
    (a) What evidence supports your proposed modifications?
    (b) How would these modifications affect the costs and benefits of 
the Rule for consumers?
    (c) How would these modifications affect the costs and benefits of 
the Holder Rule for businesses?
    (11) What evidence is available concerning the degree of industry 
compliance with the Holder Rule? Does this evidence indicate that the 
Rule should be modified? If so, why, and how? If not, why not?
    (12) Are any of the Holder Rule's requirements no longer needed? If 
so, explain. Please provide supporting evidence.
    (13) What modifications, if any, should be made to the Holder Rule 
to account for changes in relevant technology or economic conditions?
    (a) What evidence supports the proposed modifications?
    (b) How would these modifications affect the costs and benefits of 
the Holder Rule for consumers and businesses, particularly small 
businesses?
    (14) Does the Holder Rule overlap or conflict with other federal, 
state, or local laws or regulations? If so, how?
    (a) What evidence supports the asserted conflicts?
    (b) With reference to the asserted conflicts, should the Holder 
Rule be modified? If so, why, and how? If not, why not?
    (15) Are there foreign or international laws, regulations, or 
standards with respect to the products or services covered by the 
Holder Rule that the Commission should consider as it reviews the 
Holder Rule? If so, what are they?
    (a) Should the Holder Rule be modified in order to harmonize with 
these foreign or international laws, regulations, or standards? If so, 
why, and how? If not, why not?
    (b) How would such harmonization affect the costs and benefits of 
the Holder Rule for consumers and businesses, particularly small 
businesses?

IV. Instructions for Submitting Comments

    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before February 12, 
2016. Write ``Holder Rule Review, FTC File No. P164800'' 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 
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, such as 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 . . . privileged or confidential,'' as discussed 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 must follow the procedure explained in 
FTC Rule 4.9(c), 16 CFR 4.9(c). 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 comments to be withheld from the public record. Your 
comment will be kept confidential only if the FTC

[[Page 75020]]

General Counsel, in his or her sole discretion, grants your request in 
accordance with the law and the public interest.
    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/holderrule, 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 ``Holder Rule Review, FTC 
File No. P164800'' on your comment and on the envelope, and mail it to 
the following address: Federal Trade Commission, Office of the 
Secretary, 600 Pennsylvania Avenue NW., Suite CC-5610 (Annex B), 
Washington, DC 20580, or deliver your comment to the following address: 
Federal Trade Commission, Office of the Secretary, Constitution Center, 
400 7th Street SW., 5th Floor Suite 5610 (Annex B), Washington, DC 
20024. 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 February 12, 2016. For information on the 
Commission's privacy policy, including routine uses permitted by the 
Privacy Act, see http://www.ftc.gov/ftc/privacy.htm.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2015-30359 Filed 11-30-15; 8:45 am]
BILLING CODE 6750-01-P