[Federal Register Volume 81, Number 222 (Thursday, November 17, 2016)]
[Notices]
[Pages 81140-81143]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-27701]


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FEDERAL TRADE COMMISSION


Agency Information Collection Activities; Proposed Collection; 
Comment Request

AGENCY: Federal Trade Commission (FTC or Commission).

ACTION: Notice.

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SUMMARY: The information collection requirements described below will 
be submitted to the Office of Management and Budget (OMB) for review, 
as required by the Paperwork Reduction Act (PRA). The FTC seeks public 
comments on its proposal to extend, for three years, the current PRA 
clearance for its portion of the information collection requirements 
contained in the Consumer Financial Protection Bureau's Regulation O 
(the Mortgage Assistance Relief Services Rule). The FTC shares 
enforcement of Regulation O with the Consumer Financial Protection 
Bureau (CFPB). This clearance expires on January 31, 2017.

DATES: Comments must be received on or before January 17, 2017.

ADDRESSES: Interested parties may file a comment online or on paper by 
following the instructions in the Request for Comments 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, 600 
Pennsylvania Avenue NW., Suite CC-5610 (Annex J), 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 J), Washington, DC 20024.

FOR FURTHER INFORMATION CONTACT: Requests for copies of the collection 
of information and supporting documentation should be addressed to 
Rebecca Unruh, Attorney, Division of Financial Practices, Bureau of 
Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue 
NW., CC-10232, Washington, DC 20580, (202) 326-3365.

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 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

[[Page 81141]]

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 
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 renewal for its share of the estimated 
PRA burden.\6\
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    \6\ The OMB Control Number for the FTC's existing PRA clearance 
associated with Regulation O is 3084-0157.
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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.\7\
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    \7\ See 12 CFR 1015.2, 1015.5.
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    These 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: Law enforcement experience 
and the FTC's rulemaking record for the former MARS Rule demonstrates 
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 
about 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: Law enforcement experience and the FTC's 
rulemaking record reveals 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, 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 reasonably 
related to the goal of protecting consumers from deception.

Recordkeeping Requirements

    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

[[Page 81142]]

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.\8\
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    \8\ 5 CFR 1320.3(b)(2).
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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. However, based on 
law enforcement experience and the CFPB's recent analysis conducted 
after the MARS Rule was restated as Regulation O, the FTC estimates 
that Regulation O affects roughly 107 MARS providers.\9\ This estimate 
informs the additional estimates detailed below.
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    \9\ See Bureau of Consumer Financial Protection, Agency 
Information Collection Activities: Submission for OMB Review; 
Supporting Statement (Jul. 23, 2015), available at http://www.reginfo.gov/public/do/PRAViewDocument?ref_nbr=201507-3170-002; 
OMB Control No: 3170-0007, clearance expires on Sept. 30, 2018.
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    Estimated annual hours burden: 321 (for the FTC).
    The above hours estimate is based on the assumption that compliance 
with all MARS disclosures requires 6 hours of labor annually.\10\ 
Multiplying this figure by 107 entities yields a total burden of 642 
hours, of which 321 hours are attributed to the FTC.\11\
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    \10\ Id.
    \11\ Id. Both the FTC and CFPB attribute the significant drop in 
burden hours from prior estimates to several factors, including the 
lack of one-time startup costs associated with new entrants into the 
market (since there are not expected to be any new market entrants 
in the next three years), the lack of rule modification, and a 
reduction in the estimated number of MARS providers. The decrease in 
the estimated number of MARS providers is consistent with Regulation 
O's causing a reduction in purported providers of mortgage relief 
services who were not in fact providing legitimate relief services, 
causing overestimation.
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    Estimated associated labor cost: $10,677 (for the FTC).
    Commission staff assumes that a compliance officer or equivalent 
will prepare the required disclosures for 6 hours annually at an hourly 
rate of $33.26.\12\ Thus, the estimated labor cost is $21,353 (107 
providers x 6 hours x $33.26) of which the FTC assumes half, or 
$10,677.
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    \12\ This estimate is based on the mean hourly wage for a 
Compliance Officer provided by the Bureau of Labor Statistics in its 
Table entitled ``National employment and wage data from the 
Occupational Employment Statistics survey by occupation, May 2015.''
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    Estimated non-labor cost: $29,425 (for the FTC).
    Based on the CFPB's analysis, the FTC assumes that each of the 
estimated 107 MARS providers bears an additional $550 in material fees 
for acquiring relevant legal and technical compliance information, for 
a total additional burden of $58,850, of which the FTC assumes half, or 
$29,425.\13\ Based on law enforcement experience, the FTC assumes that 
any disclosures will likely be made electronically and thus will not 
generate additional non-labor costs such as printing and distribution.
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    \13\ See supra note 9.
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Request for Comments

    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 January 17, 2017.
    You can file a comment online or on paper. 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 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, such as a 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). Your comment will be kept confidential 
only if the FTC General Counsel 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, the Commission encourages 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, 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 it to the following address: Federal Trade Commission, Office 
of the Secretary, 600 Pennsylvania Avenue NW., Suite CC-5610, (Annex 
J), 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,

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(Annex J), Washington, DC 20024. If possible, submit your paper comment 
to the Commission by courier or overnight service.
    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 January 17, 
2017. 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,
Acting General Counsel.
[FR Doc. 2016-27701 Filed 11-16-16; 8:45 am]
 BILLING CODE 6750-01-P