[Federal Register Volume 83, Number 181 (Tuesday, September 18, 2018)]
[Rules and Regulations]
[Pages 47027-47042]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-20184]
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Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
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Federal Register / Vol. 83, No. 181 / Tuesday, September 18, 2018 /
Rules and Regulations
[[Page 47027]]
BUREAU OF CONSUMER FINANCIAL PROTECTION
12 CFR Part 1022
[Docket No. CFPB-2018-0025]
RIN 3170-AA82
Summaries of Rights Under the Fair Credit Reporting Act
(Regulation V)
AGENCY: Bureau of Consumer Financial Protection.
ACTION: Interim final rule with request for public comment.
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SUMMARY: The Bureau of Consumer Financial Protection (Bureau) is
issuing an interim final rule to update the Bureau's model forms for
the Summary of Consumer Identity Theft Rights and the Summary of
Consumer Rights to incorporate a notice of rights required by a new
provision of the Fair Credit Reporting Act, added by the Economic
Growth, Regulatory Relief, and Consumer Protection Act.
DATES: This interim final rule is effective on September 21, 2018.
Comments must be received on or before November 19, 2018.
ADDRESSES: You may submit comments, identified by Docket No. CFPB-2018-
0025 or RIN 3170-AA82, by any of the following methods:
Email: [email protected]. Include Docket
No. CFPB-2018-0025 or RIN 3170-AA82 in the subject line of the email.
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Mail: Comment Intake, Bureau of Consumer Financial
Protection, 1700 G Street NW, Washington, DC 20552.
Hand Delivery/Courier: Comment Intake, Bureau of Consumer
Financial Protection, 1700 G Street NW, Washington, DC 20552.
Instructions: All submissions should include the agency name and
docket number or Regulatory Information Number (RIN) for this
rulemaking. Because paper mail in the Washington, DC area and at the
Bureau is subject to delay, commenters are encouraged to submit
comments electronically. In general, all comments received will be
posted without change to http://www.regulations.gov. In addition,
comments will be available for public inspection and copying at 1700 G
Street NW, Washington, DC 20552, on official business days between the
hours of 10:00 a.m. and 5:00 p.m. Eastern Time. You can make an
appointment to inspect the documents by telephoning 202-435-7275.
All comments, including attachments and other supporting materials,
will become part of the public record and subject to public disclosure.
Sensitive personal information, such as account numbers or Social
Security numbers, should not be included. Comments will not be edited
to remove any identifying or contact information.
FOR FURTHER INFORMATION CONTACT: Seth Caffrey, David Hixson, Amanda
Quester, or Pavneet Singh, Senior Counsels, Office of Regulations, at
202-435-7700 or https://reginquiries.consumerfinance.gov/. If you
require this document in an alternative electronic format, please
contact [email protected].
SUPPLEMENTARY INFORMATION:
I. Summary of the Interim Final Rule
Effective September 21, 2018, new section 605A(i)(5) of the Fair
Credit Reporting Act (FCRA), added by the Economic Growth, Regulatory
Relief, and Consumer Protection Act (the Act), requires that a new
notice of rights be included whenever a consumer is required to receive
a summary of rights required by FCRA section 609. This new notice of
rights does not appear in the model forms currently in Appendices I and
K, which were published on November 14, 2012. The interim final rule
amends the model forms to incorporate the new required notice of
rights, amends the model form in Appendix I to reflect a statutory
change to the minimum duration of initial fraud alerts, and makes
adjustments to update contact information for certain FCRA enforcement
agencies in the model form in Appendix K. To mitigate the impact of
these changes on users of the existing model forms, the interim final
rule also provides that the Bureau will regard the use of the model
forms published in Appendices I and K on November 14, 2012, to
constitute compliance with the FCRA provisions requiring such forms, so
long as a separate page that contains the additional required
information is provided in the same transmittal. The Bureau is
soliciting comment on the interim final rule's amendments to Appendices
I and K to inform possible further revisions to the model forms that
the Bureau may consider in the future.
II. Background
A. Summaries of Rights Required by the FCRA
Section 609 of the FCRA requires the Bureau to prepare two consumer
disclosures: A model summary of rights to obtain and dispute
information in consumer reports and to obtain credit scores (Summary of
Consumer Rights); and a model summary of rights of identity theft
victims (Summary of Consumer Identity Theft Rights).\1\ The Bureau's
model forms for the Summary of Consumer Identity Theft Rights and the
Summary of Consumer Rights are found in Appendices I and K to
Regulation V, respectively.
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\1\ 15 U.S.C. 1681g(c)(1)(A), (d)(1).
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The Summary of Consumer Rights explains certain major consumer
rights under the FCRA, including the right to obtain a copy of a
consumer report, the frequency and circumstances under which a consumer
is entitled to receive a free consumer report, the right to dispute
information in a consumer's file, and the right to obtain a credit
score. A consumer reporting agency must provide a Summary of Consumer
Rights whenever it makes a written disclosure of information from a
consumer's file or a credit score to the consumer.\2\ The FCRA also
requires certain other persons to provide a Summary of Consumer Rights
to consumers under specified circumstances.\3\
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\2\ 15 U.S.C. 1681g(c)(2)(A) (requirement to provide a Summary
of Consumer Rights with any written file disclosure). A consumer
reporting agency must also provide an employer with a Summary of
Consumer Rights before furnishing a consumer report for employment
purposes. 15 U.S.C. 1681b(b)(1)(B) (requirement to provide a Summary
of Consumer Rights with a report for employment purposes if the
Summary of Consumer Rights has not been provided previously).
\3\ See, e.g., 15 U.S.C. 1681b(b)(3) (generally requiring
persons using a consumer report for employment purposes to provide
the consumer with a Summary of Consumer Rights before taking any
adverse action based on the report). The Bureau must also actively
publicize the availability of the Summary of Consumer Rights,
conspicuously post its availability on the Bureau's internet
website, and promptly make it available to consumers, on request. 15
U.S.C. 1681g(c)(1)(C).
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[[Page 47028]]
The Summary of Consumer Identity Theft Rights explains the rights
consumers have under the FCRA when they seek to remedy the effects of
fraud or identity theft, including the right to place a fraud alert and
block certain information from appearing in a consumer report. A
consumer reporting agency must provide a Summary of Consumer Identity
Theft Rights that contains all of the information required by the
Bureau if a consumer contacts the consumer reporting agency and
expresses a belief that the consumer is a victim of fraud or identity
theft involving credit, an electronic fund transfer, or an account or
transaction at or with a financial institution or other creditor.\4\
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\4\ 15 U.S.C. 1681g(d)(2).
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Regulation V provides that use or distribution of the Bureau's
model forms and disclosures in Appendices I and K, or substantially
similar forms and disclosures, will constitute compliance with any FCRA
section or subsection requiring that such forms and disclosures be used
by or supplied to any person.\5\ Substantially similar means that all
information in the Bureau's prescribed model is included in the
document that is distributed, and that the document distributed is
formatted in a way consistent with the format prescribed by the
Bureau.\6\ The document that is distributed cannot include anything
that interferes with, detracts from, or otherwise undermines the
information contained in the Bureau's prescribed model.\7\
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\5\ 12 CFR 1022.1(c)(1).
\6\ 12 CFR 1022.1(c)(2).
\7\ Id.
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B. Economic Growth, Regulatory Relief, and Consumer Protection Act
On May 24, 2018, the President signed the Act into law.\8\ Section
301(a)(1) of the Act amends the FCRA to extend from 90 days to one year
the minimum time that nationwide consumer reporting agencies must
include an initial fraud alert in a consumer's file under FCRA section
605A(a)(1)(A). Section 301(a)(2) of the Act adds new FCRA section
605A(i), which requires nationwide consumer reporting agencies to
provide national security freezes free of charge to consumers. At any
time a consumer is required to receive a summary of rights required
under FCRA section 609, new FCRA section 605A(i)(5) requires inclusion
of a notice of rights regarding the right to obtain a security freeze.
Section 301(c) of the Act provides that the amendments made by section
301 of the Act take effect 120 days after the date of enactment, which
is September 21, 2018.
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\8\ Public Law 115-174, 132 Stat. 1296 (2018).
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III. Legal Authority
The Bureau is issuing this interim final rule pursuant to its
authority under the FCRA and the Dodd-Frank Wall Street Reform and
Consumer Protection Act (Dodd-Frank Act).\9\ Effective July 21, 2011,
section 1061 of the Dodd-Frank Act \10\ transferred to the Bureau the
rulemaking and certain other authorities of the Federal Trade
Commission (FTC) and the prudential regulators relating to the
enumerated consumer laws, including most rulemaking authority under the
FCRA.\11\ Likewise, section 1088 of the Dodd-Frank Act made conforming
amendments to the FCRA transferring rulemaking authority under much of
the FCRA to the Bureau,\12\ except those regulations applicable to
certain motor vehicle dealers.\13\ As amended by the Dodd-Frank Act,
the FCRA generally authorizes the Bureau to issue regulations ``as may
be necessary or appropriate to administer and carry out the purposes
and objectives of [the FCRA], and to prevent evasions thereof or to
facilitate compliance therewith.'' \14\
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\9\ Public Law 111-203, 124 Stat. 1376 (2010).
\10\ 12 U.S.C. 5581.
\11\ Section 1002(12)(F) of the Dodd-Frank Act designates most
of the FCRA as an ``enumerated consumer law.''
\12\ The Dodd-Frank Act did not, however, transfer to the Bureau
rulemaking authority for FCRA sections 615(e) (``Red Flag Guidelines
and Regulations Required'') and 628 (``Disposal of Records'').
\13\ Dodd-Frank Act section 1029.
\14\ Dodd-Frank Act section 1088(a)(10)(E) (codified at 15
U.S.C. 1681s(e)).
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IV. Administrative Procedure Act
Under the Administrative Procedure Act, notice and opportunity for
public comment are not required if the Bureau for good cause finds that
notice and public comment are impracticable, unnecessary, or contrary
to the public interest.\15\ Similarly, publication of this interim
final rule at least 30 days before its effective date is not required
if provided for by the Bureau for good cause found.\16\
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\15\ 5 U.S.C. 553(b)(B).
\16\ 5 U.S.C. 553(d)(3).
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The Bureau finds that prior notice and public comment are
unnecessary because the revisions involve technical changes necessary
for the regulation to contain model forms that comply with section 301
of the Act. The revisions merely incorporate a new notice of rights
required by the Act into the model forms, update the description of
initial fraud alerts in the Summary of Consumer Identity Theft Rights
to reflect the new minimum duration of initial fraud alerts specified
in the Act, and make adjustments to update contact information for
certain FCRA enforcement agencies in the Summary of Consumer Rights.
The revisions also include in both model forms optional language
clarifying that the security freeze right applies only to nationwide
consumer reporting agencies. Entities that do not wish to use the new
model forms may use substantially similar forms. They may also continue
using the existing model forms (or substantially similar forms) to
comply with the provisions in the FCRA that require such forms if they
provide the notice of rights required by new FCRA section 605A(i)(5) on
a separate page in the same transmittal and, for the Summary of
Consumer Identity Theft Rights, a short explanation of the changed
minimum duration of initial fraud alerts.
The Bureau also finds that prior notice and public comment are
impractical because notice and comment would afford insufficient time
to finalize the revisions to the model forms necessary for them to
comply with section 301 of the Act before the effective date of that
section. If revisions to the model forms were not finalized prior to
the effective date of the statutory changes, legal uncertainty and risk
could arise as to how entities could comply with both the regulation
and section 301 of the Act at the same time.
The Bureau also finds that there is good cause for this interim
final rule to be effective less than 30 days after publication to
ensure that these necessary technical revisions to the model forms are
in effect by the effective date of section 301 of the Act to avoid the
legal uncertainty and risk that could arise as to how entities could
comply with both the regulation and section 301 of the Act at the same
time.
For these reasons, the Bureau has determined that publishing a
notice of proposed rulemaking and providing opportunity for prior
public comment are unnecessary and impractical and that there is good
cause for this interim final rule to be effective less than 30 days
after publication.
[[Page 47029]]
V. Section-by-Section Analysis
Appendix I to Part 1022--Summary of Consumer Identity Theft Rights
Effective September 21, 2018, FCRA section 605A(i)(5) requires that
whenever a consumer is required to receive a summary of rights required
under FCRA section 609, a notice of rights regarding the new security
freeze right must be included. This notice of rights does not appear in
the model form for the Summary of Consumer Identity Theft Rights
currently in Appendix I. To conform to this statutory change, the
Bureau is amending the model form in Appendix I to include the new
required notice of rights.
Under section 301 of the Act, a security freeze prohibits consumer
reporting agencies that are described in FCRA section 603(p)
(nationwide consumer reporting agencies) from releasing information
subject to various exceptions. To clarify the scope of the new security
freeze right under the FCRA, the Bureau has added a sentence before the
new notice of rights in the model form in Appendix I stating that the
following FCRA right applies with respect to nationwide consumer
reporting agencies. The Bureau will regard the model form in Appendix I
without this sentence as substantially similar to the model form in
Appendix I and will regard use of the model form without this sentence
to constitute compliance with the FCRA provisions requiring such forms.
The model form for the Summary of Consumer Identity Theft Rights
currently in Appendix I provides that ``[a]n initial fraud alert stays
in your file for at least 90 days'' (emphasis in original). Effective
September 21, 2018, section 301(a)(1) of the Act amends the FCRA to
extend the minimum time from 90 days to one year that nationwide
consumer reporting agencies must include fraud alerts in a consumer's
file under FCRA section 605A(a)(1)(A). To conform to this statutory
change, the Bureau is amending the model form in Appendix I to provide
that ``[a]n initial fraud alert stays in your file for at least one
year.''
The Bureau recognizes that some entities may have already begun
preparing to implement the Act and may be preparing Summaries of
Consumer Identity Theft Rights that include the notice of rights
required by FCRA section 605A(i)(5) in a different location on the form
than shown on the new model form published today. The Bureau will
regard use of forms that are the same as the model form published today
but that include the notice of rights required by FCRA section
605A(i)(5) in a different location on the form to constitute compliance
with the FCRA provisions requiring the Summary of Consumer Identity
Theft Rights and will regard such forms as substantially similar to the
model form for the Summary of Consumer Identity Theft Rights published
today.\17\
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\17\ The Bureau will also regard use of forms that deviate in
other ways from the model form published today but that are still
substantially similar to the model form published today to
constitute compliance with the FCRA provisions requiring the Summary
of Consumer Identity Theft Rights.
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The Bureau recognizes that some entities may find it less
burdensome to include the notice of rights required by FCRA section
605A(i)(5) on a separate page in the same transmittal with the Summary
of Consumer Identity Theft Rights published on November 14, 2012, and
to clarify in the separate page that the Act changed the minimum
duration of initial fraud alerts from 90 days to one year. To mitigate
the impact of the model form changes on users of the existing model
forms, the Bureau will regard the use of the model form for the Summary
of Consumer Identity Theft Rights published on November 14, 2012 (or a
substantially similar form), with a separate page provided in the same
transmittal that includes the notice of rights required by FCRA section
605A(i)(5) and that states on the separate page, before or after the
notice of rights required by FCRA section 605A(i)(5), that ``The
minimum duration of initial fraud alerts changed from 90 days to one
year effective September 21, 2018,'' to constitute compliance with the
FCRA provisions requiring the Summary of Consumer Identity Theft
Rights.\18\ The Bureau will regard the model form for the Summary of
Consumer Identity Theft Rights published on November 14, 2012 (or a
substantially similar form), provided with such a separate page, as
substantially similar to the model form for the Summary of Consumer
Identity Theft Rights published in this document.\19\
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\18\ An entity using this approach need not include the sentence
about the minimum duration of initial fraud alerts on the separate
page if it changes ``90 days'' to ``one year'' in the model form for
the Summary of Consumer Identity Theft Rights published on November
14, 2012. Entities may also, at their option, add the following
statement on the separate page before the notice of rights required
by FCRA section 605A(i)(5): ``The following FCRA right applies with
respect to nationwide consumer reporting agencies.''
\19\ The use of the versions of the model forms in Appendices I,
K, M, and N as published on December 21, 2011, should be
discontinued no later than September 21, 2018. See 76 FR 79308 (Dec.
21, 2011); 77 FR 67744 (Nov. 14, 2012); 81 FR 25323 (Apr. 28, 2016).
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Appendix K to Part 1022--Summary of Consumer Rights
Effective September 21, 2018, FCRA section 605A(i)(5) requires that
whenever a consumer is required to receive a summary of rights required
under FCRA section 609, a notice of rights regarding the new security
freeze right must be included. This notice does not appear in the model
form for the Summary of Consumer Rights currently in Appendix K. To
conform to this statutory change, the Bureau is amending the model form
in Appendix K to include the new required notice of rights.
Under section 301 of the Act, a security freeze prohibits consumer
reporting agencies that are described in FCRA section 603(p)
(nationwide consumer reporting agencies) from releasing information
subject to various exceptions. To clarify the scope of the new security
freeze right under the FCRA, the Bureau has added a sentence before the
new notice of rights in the model form in Appendix K stating that the
following FCRA right applies with respect to nationwide consumer
reporting agencies. The Bureau will regard the model form in Appendix K
without this sentence as substantially similar to the model form in
Appendix K and will regard use of the model form without this sentence
to constitute compliance with the FCRA provisions requiring such forms.
The Bureau has also amended the model form in Appendix K to update
contact information provided for certain FCRA enforcement agencies.
The Bureau recognizes that some entities may have already begun
preparing to implement the Act and may be preparing Summaries of
Consumer Rights that include the notice of rights required by FCRA
section 605A(i)(5) in a different location on the form than shown on
the new model form published today. The Bureau will regard use of forms
that are the same as the model form published today but that include
the notice of rights required by FCRA section 605A(i)(5) in a different
location on the form to constitute compliance with the FCRA provisions
requiring the Summary of Consumer Rights and will regard such forms as
substantially similar to the model form for the Summary of Consumer
Rights published today.\20\
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\20\ The Bureau will also regard use of forms that deviate in
other ways from the model form published today but that are still
substantially similar to the model form published today to
constitute compliance with the FCRA provisions requiring the Summary
of Consumer Rights.
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The Bureau recognizes that some entities may find it less
burdensome to
[[Page 47030]]
include the notice of rights required by FCRA section 605A(i)(5) on a
separate page in the same transmittal with the Summary of Consumer
Rights published on November 14, 2012. To mitigate the impact of these
changes on users of the existing model forms, the Bureau will regard
the use of the model form for the Summary of Consumer Rights published
on November 14, 2012 (or a substantially similar form), with a separate
page provided in the same transmittal that includes the notice of
rights required by FCRA section 605A(i)(5), to constitute compliance
with the FCRA provisions requiring the Summary of Consumer Rights.\21\
The Bureau will regard the model form for the Summary of Consumer
Rights published on November 14, 2012 (or a substantially similar
form), provided with such a separate page as substantially similar to
the model form for the Summary of Consumer Rights published in this
document.\22\
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\21\ Entities may also, at their option, add the following
statement on the separate page before the notice of rights required
by FCRA section 605A(i)(5): ``The following FCRA right applies with
respect to nationwide consumer reporting agencies.''
\22\ See supra note 18.
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VI. Request for Comment
The Bureau may consider possible further revisions to the model
forms in Appendices I and K to Regulation V in the future. Although
notice-and-comment rulemaking procedures are not required for the
revisions made in this interim final rule, the Bureau invites comment
on this interim final rule, implementation of the Act in the model
forms, and any other changes that may be necessary or appropriate to
the model forms in Appendices I and K to Regulation V.\23\
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\23\ We note that, in 2010, the FTC proposed revisions to these
and other model forms, but the rulemaking was not finalized. See
Summary of Rights and Notices of Duties under the Fair Credit
Reporting Act, 75 FR 52655 (Aug. 27, 2010).
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VII. Effective Date
This interim final rule is effective on September 21, 2018.
VIII. Dodd-Frank Act Section 1022(b) Analysis
A. Overview
In developing the interim final rule, the Bureau has considered the
potential benefits, costs, and impacts required by section 1022(b)(2)
of the Dodd-Frank Act. Specifically, section 1022(b)(2) calls for the
Bureau to consider the potential benefits and costs of a regulation to
consumers and covered persons, including the potential reduction of
access by consumers to consumer financial products or services, the
impact on depository institutions and credit unions with $10 billion or
less in total assets as described in section 1026 of the Dodd-Frank
Act, and the impact on consumers in rural areas. In addition, section
1022(b)(2)(B) directs the Bureau to consult, before and during the
rulemaking, with appropriate prudential regulators or other Federal
agencies, regarding consistency with objectives those agencies
administer. The Bureau has consulted, or offered to consult, with the
prudential regulators and the FTC regarding consistency with any
prudential, market, or systemic objectives administered by those
agencies.
In considering the relevant potential benefits, costs, and impacts,
the Bureau consulted the available data and applied its knowledge and
expertise concerning consumer financial markets. Where available, the
Bureau used the economic analyses that it regards as most reliable and
helpful to consider the relevant potential benefits, costs, and impacts
of the interim final rule. However, the Bureau notes that, in some
instances, there are limited data available to inform the
quantification of the potential benefits, costs, and impacts. Where
possible, the Bureau makes quantitative estimates based on economic
principles as well as available data. However, where data are limited,
the Bureau generally provides a qualitative discussion of the interim
final rule's potential benefits, costs, and impacts.
The Bureau is using a post-statute baseline to assess the impact of
this interim final rule. Using a post-statute baseline, the analysis
evaluates the benefits, costs, and impacts of the interim final rule as
compared to enactment of the statute alone. A post-statute baseline
focuses the consideration of the benefits, costs, and impacts on the
amendments in this interim final rule, which are technical and do not
impose any new substantive obligations on regulated entities.\24\
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\24\ The Bureau has discretion in future rulemakings to choose
the relevant provisions to discuss and the most appropriate baseline
for that particular rulemaking. The Bureau also considers the
benefits, costs, and impacts of certain other requirements in new
FCRA section 605A(i) related to the new disclosure requirements
where doing so provides a more complete understanding of the impacts
of these requirements on consumers and covered persons.
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As discussed above, the interim final rule amends Regulation V,
which implements the FCRA, to reflect new FCRA section 605A(i), added
by the Act. Under the interim final rule, the Bureau is amending two
model forms in Regulation V to conform to new FCRA section 605A(i)(5).
The amended model form in Regulation V, Appendix K, the Summary of
Consumer Rights, reflects two changes relative to the current model
form: The addition of a notice of rights that details the consumer's
right to a security freeze; and an update to the contact information
listed for certain FCRA enforcement agencies. The amended model form in
Regulation V, Appendix I, the Summary of Consumer Identity Theft
Rights, reflects two changes relative to the current model form: The
addition of the same notice of rights detailing the consumer's right to
a security freeze that has been added to the Summary of Consumer
Rights; and an update to the disclosed minimum amount of time that an
initial fraud alert stays in a consumer's file. The rule also includes
in both model forms optional language clarifying that the security
freeze right applies only to nationwide consumer reporting agencies.
Rather than requiring entities subject to the interim final rule to
use the new model forms, the interim final rule allows entities to
comply in a variety of ways. These include, for example: (1) Allowing
entities to continue to use the current forms while also including a
separate page that includes the new statutorily prescribed notice of
rights and, with respect to the disclosure in Appendix I, either
highlighting in the separate page the change from 90 days to one year
for the minimum duration of initial fraud alerts or updating the
current forms to include the change in the minimum duration of initial
fraud alerts; or (2) allowing entities flexibility as to the placement
of the new notice of rights on the forms. For the purpose of this
analysis, the Bureau does not differentiate between which of these
methods of compliance an entity chooses, and these methods are
collectively referred to as the ``alternative approach.''
Regarding baseline behavior and practices, the Bureau assumes that
if the interim final rule were not adopted, entities subject to the
rule would comply with both new FCRA section 605A(i)(5) and current
Regulation V. For the purpose of this analysis, the Bureau assumes that
if the interim final rule were not adopted, to convey the information
required by new FCRA section 605A(i)(5) along with the information
contained in either of the current model forms under current Regulation
V, entities subject to the rule would comply in a manner that is
substantially similar to the alternative approach described above,
using two
[[Page 47031]]
double-sided sheets of standard printer paper.\25\
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\25\ The Summary of Consumer Rights model form in current
Regulation V can be printed on three sides of standard printer
paper. Since the new information required by new FCRA section
605A(i)(5) can be printed on a single side, the combination of these
disclosures should take no more than four sides of paper, or two
double-sided sheets of paper. The Summary of Consumer Identity Theft
Rights model form in current Regulation V can be printed on two
sides of standard printer paper. Therefore, the combination of this
disclosure and the information required by new FCRA section
605A(i)(5) should take no more than three sides of paper, or the
equivalent of two double-sided sheets of paper.
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As this analysis details below, the similarity between the
alternative approach and the assumed behavior and practices under the
baseline result in the Bureau estimating minimal additional costs under
the interim final rule. Where illuminating, the Bureau also considers
the costs to entities of adopting the amended model forms. These
analyses demonstrate that the Bureau's estimate of costs is not
affected by whether entities adopt the model form or use the
alternative approach.
B. Potential Benefits and Costs to Consumers and Covered Persons
Benefits
The impact on consumers of the interim final rule depends on
whether a particular consumer prefers, or would otherwise benefit from,
receiving the amended disclosures.\26\ As described above, this
analysis assumes that entities subject to the rule would provide the
information required by both new FCRA section 605A(i)(5) and current
Regulation V, even if this rule were not adopted. However, this rule
provides entities with the option to provide the information from these
two sources under the unified disclosure designs of the amended model
forms. The Bureau expects that these unified designs will make finding
and comprehending information easier for consumers relative to the
baseline by lowering the cost to consumers of information search and
processing. The precise magnitude of this benefit to consumers is
difficult to quantify because the Bureau does not have data regarding
how much individual consumers value it. However, the Bureau can
estimate, broadly, the scope of consumers who may benefit. Prior to the
Act, of the consumers who experienced one or more attempted or
successful incidents of identity theft and who also contacted a
consumer reporting agency, approximately 70 percent requested a fraud
alert be placed on their file.\27\ This large proportion reflects a
substantial consumer demand for this service.\28\ Similarly, prior to
the Act, about 40 percent of consumers who experienced one or more
attempted or successful incidents of identity theft, and who also
contacted a consumer reporting agency, requested a security freeze.\29\
After the Act, the Bureau expects demand for fraud alerts and security
freezes will increase; \30\ and, of the consumers who demand these
services, some will become informed through the disclosures required by
Regulation V and new FCRA section 605A(i)(5). These consumers are
likely to benefit from this rule through lower information search and
processing costs relative to the baseline, as described above.
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\26\ Benefits will also depend on the extent to which entities
adopt the model forms or substantially similar forms (rather than
using the alternative approach). Since each rule is unique, the
Bureau does not have data that would allow it to reliably estimate
adoption rates. However, in general, greater adoption of the model
forms or substantially similar disclosures will lead to a greater
benefit of this rule.
\27\ U.S. Dep't. of Justice, Victims of Identity Theft, 2014 at
1, 18 (Sept. 27, 2015), available at https://www.bjs.gov/index.cfm?ty=pbdetail&iid=5408.
\28\ The Bureau assumes about one million consumers contact
consumer reporting agencies requesting fraud alerts annually. This
estimate is based on survey data from the U.S. Department of
Justice. Approximately 17.6 million people were victims of identity
theft in 2014, and an estimated 8.1 percent contacted a consumer
reporting agency. See id.
\29\ See id.
\30\ The Act provides, and prescribes the disclosure of, new
rights to consumers. The Bureau expects that these new rights will
be of value to consumers, and that these new disclosures will help
to inform consumers of their rights.
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Regarding benefits to industry, this interim final rule harmonizes
Regulation V with the FCRA, as amended by the Act. The Bureau intends
to reduce legal uncertainty and risk in the industry regarding
responsibilities and liabilities among market participants about how
they may comply with both the statute and Regulation V at the same
time. There may be a general benefit from the certainty and risk
reduction provided through this harmonization. However, without data on
how entities would comply with the statute and Regulation V absent this
interim final rule, the Bureau cannot quantify the benefit of this
additional certainty.
Costs
The Bureau estimates minimal additional costs under the interim
final rule. The Bureau does not anticipate any additional one-time
costs due to this rule, relative to the baseline. Regarding ongoing
costs, this interim final rule does not alter the circumstances under
which disclosures under the FCRA are required. Nor does the Bureau
estimate any additional costs to providing disclosures due to this
rule, relative to the baseline. Nonetheless, this analysis considers
each of the potential sources of cost for each of the disclosures that
are updated by this interim final rule, given the baseline, including:
Development of new disclosure templates, destruction or disposal of
out-of-date materials, changes to production of disclosures, and
changes to delivery of disclosures.
Summary of Consumer Rights
The Bureau believes that the costs of this interim final rule of
development of a new Summary of Consumer Rights disclosure template, or
destruction or disposal of out-of-date materials, will be minimal. As
stated above, the Bureau believes that the alternative approach allowed
by this rule is substantially similar to how entities would comply with
both new FCRA section 605A(i)(5) and current Regulation V if this
interim final rule were not adopted. The Bureau therefore expects that
to come into compliance with this rule, relative to the baseline,
entities subject to the rule will not incur additional costs to update
disclosure templates or to destroy, or dispose of, out-of-date
materials.\31\
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\31\ If entities were to choose to adopt the model form, or if
this analysis were to adopt a pre-statute baseline, the Bureau would
continue to estimate these costs to be small. Because the Bureau is
providing model forms, it believes the cost of developing new
disclosure templates would be small. Because the Bureau is allowing
the alternative approach, it believes that entities could use their
old stock rather than destroying or disposing of it.
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Regarding production and delivery of the Summary of Consumer Rights
disclosure, there are two relevant classes of recipients: Consumers and
employers. The Bureau estimates additional costs under the interim
final rule to be very small for production and delivery to either
class. Each is considered separately below.
For production and delivery to consumers, the Bureau estimates
minimal additional costs under the interim final rule. The Bureau
expects that the alternative approach will take two double-sided sheets
to be printed, which is the same number of sheets as under the approach
the Bureau assumes entities will take under the baseline.\32\ Since the
printing needs are the same, there are no additional costs.\33\ It is
[[Page 47032]]
possible that use of the alternative approach could result in an entity
using a third sheet of paper to produce the disclosure; however, the
Bureau believes that any entity choosing to use an extra sheet of paper
under the interim final rule would also choose to do so under the
baseline.\34\
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\32\ The Bureau typically accounts for printing costs in terms
of the cost of double-sided printing on standard 8.5 inch by 11 inch
printer paper. However, this interim final rule does not specify how
entities print or the size of the paper they use. Indeed, the Bureau
expects that each entity will use the method of printing that is
least costly to it.
\33\ The Bureau also assumes there to be no substantial cost of
electronic distribution, and therefore that there is no change in
costs, regardless of the chosen method of delivery.
\34\ If entities were to adopt the model form, then the Bureau
would continue to estimate these costs to be small because the
amended Summary of Consumer Rights model form disclosure takes two
double-sided sheets to be printed, which is the same number of
sheets as under the approach the Bureau assumes entities will take
under the baseline.
If this analysis were to adopt a pre-statute baseline, then this
analysis would still estimate minimal additional costs due to this
part of the rule. When printed on double-sided sheets, the
disclosure under current Regulation V takes two sheets of standard
printer paper, which is the same number of sheets as under both the
amended model form and the alternative approach under this interim
final rule. Although this rule does technically imply that
additional ink would be used relative to printing the current
disclosure, the Bureau typically estimates a total cost per sheet of
printing inclusive of paper costs, depreciation of printing
hardware, and the ink required for a double-sided, completely
printed, sheet. Therefore, the implied cost of additional ink would
already have been counted in the cost of previous rules.
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For production and delivery to employers, the Bureau estimates
minimal additional costs under the interim final rule. Under the FCRA,
employers must be provided a copy of the Summary of Consumer Rights
disclosure by a consumer reporting agency before the consumer reporting
agency furnishes a consumer report for employment purposes, unless the
consumer reporting agency already provided a copy of the disclosure to
that employer. The Bureau believes that, under the baseline, consumer
reporting agencies will provide an updated copy of the Summary of
Consumer Rights to employers once the Act takes effect. However,
because the Bureau assumes that consumer reporting agencies' baseline
approach will be substantially similar to the alternative approach
under this interim final rule, the Bureau estimates the cost to sending
an updated copy to employers to be the same under the rule as under the
baseline.\35\
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\35\ If entities were to adopt the model form, then the Bureau
would continue to estimate additional costs to be small because the
amended Summary of Consumer Rights model form disclosure takes two
double-sided sheets to be printed, which is the same number of
sheets as under the approach the Bureau assumes entities will take
under the baseline.
If this analysis were to adopt a pre-statute baseline, the
Bureau would estimate a one-time cost to consumer reporting agencies
of between $0 and $435,000, depending on the method by which the
disclosures are delivered. This estimate assumes printing costs of
$0.20 per disclosure (two sheets * $0.10 per sheet), and postage
cost of $0.375 per disclosure. See U.S. Postal Serv., Postal
Explorer--Price List, https://pe.usps.com/text/dmm300/Notice123.htm#_c096. It further assumes that there are approximately
757,310 employers in the United States that use consumer reports for
employment purposes, and that each employer requests consumer
reports from at most one consumer reporting agency. This estimated
number of employers comes from the fact that there are approximately
5,726,160 firms in the United States that have employees (2014) and
a survey which reported that 13 percent of employers use credit
reports to screen candidates for all positions. The reported range
of potential cost depends on the proportion of disclosures assumed
to be sent electronically. If all disclosures were sent
electronically, the estimated cost would be approximately $0.
However, if all disclosures were sent via U.S. mail, the estimated
cost would be approximately $435,000 (($0.20 + $0.375)*757,310). See
U.S. Small Bus. Admin., Firm Size Data, available at https://www.sba.gov/advocacy/firm-size-data and Society for Human Res.
Mgmt., Background Checking--The Use of Credit Background Checks in
Hiring Decisions (July 19, 2012), available at https://www.shrm.org/hr-today/trends-and-forecasting/research-and-surveys/Pages/creditbackgroundchecks.aspx.
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Summary of Consumer Identity Theft Rights
For the same reasons described in the previous part, the Bureau
believes that the additional costs under this interim final rule of
development of a new Summary of Consumer Identity Theft Rights
disclosure template, or destruction or disposal of out-of-date
materials, will be minimal.
Regarding production and delivery of the Summary of Consumer
Identity Theft Rights disclosure, the Bureau estimates the total change
in costs will be very small. The Bureau expects that the alternative
approach will take no more than two double-sided sheets to be printed,
which is the same number of sheets as under the approach the Bureau
assumes entities will take under the baseline. Since the printing needs
are the same, there are no new costs.\36\
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\36\ This analysis assumes there to be no substantial cost of
electronic distribution, and therefore no change in costs,
regardless of the chosen method of delivery.
If entities were to choose to adopt the model form, the Bureau
would continue to estimate the costs to be very small because the
amended Summary of Consumer Identity Theft Rights model form
disclosure takes two double-sided sheets to be printed, which is the
same number of sheets as under the approach the Bureau assumes
entities will take under the baseline.
If this analysis were to adopt a pre-statute baseline, printing
the amended Summary of Consumer Identity Theft Rights model form
would use one additional sheet of paper relative to the current
model form, and the total change in costs would be between $0 and
approximately $140,000 annually, depending on the methods by which
consumer reporting agencies distribute their disclosures. These
estimates assume additional printing costs of $0.10 per disclosure
(one sheet * $0.10 per sheet), but no additional postage cost (the
cost to send a business class letter via the USPS is the same
whether it contains one or two sheets of paper). In addition, these
estimates assume that about 1.4 million consumers contact consumer
reporting agencies regarding identity theft. See supra note 26.
An estimated 42 percent of consumers submit disputes to consumer
reporting agencies online, 44 percent by mail, 13 percent by phone,
and the remainder by fax, walk-ins, or other methods (which the
Bureau assumes result in burden resembling disputes submitted by
mail). Under the assumptions that these methods of contact are
representative of consumer behavior across products, and that
consumer reporting agencies respond in-kind to electronic disputes
but respond to all other methods of consumer contact via U.S. mail,
42 percent of these disclosures would be sent electronically, and 58
percent would be sent via U.S. mail. This would result in an
expected cost to consumer reporting agencies of approximately
$81,200 annually. See Bureau of Consumer Fin. Protection, Key
Dimensions and Processes in the U.S. Credit Reporting System 27
(Dec. 2012), available at http://files.consumerfinance.gov/f/201212_cfpb_credit-reporting-white-paper.pdf.
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The Bureau does not anticipate that the interim final rule will
generate costs for consumers, given the baseline.
C. Potential Specific Impacts of the Rule
This analysis estimates minimal additional costs under the interim
final rule, and therefore the Bureau does not believe that the rule
would reduce consumers' access to consumer financial products or
services.
The Bureau does not expect the interim final rule to have distinct
impacts on depository institutions and credit unions with $10 billion
or less in total assets or on consumers in rural areas, relative to
other entities or consumers.
IX. Regulatory Flexibility Act Analysis
The Regulatory Flexibility Act (RFA) does not apply to a rulemaking
where general notice of proposed rulemaking is not required.\37\ As
noted previously, the Bureau has determined that it is unnecessary to
publish a general notice of proposed rulemaking for this interim final
rule. Accordingly the RFA's requirements relating to an initial and
final regulatory flexibility analysis do not apply.
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\37\ 5 U.S.C. 603(a), 604(a).
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X. Paperwork Reduction Act
The Bureau has determined that the interim final rule does not
impose any new or revise any existing recordkeeping, reporting, or
disclosure requirements on covered entities or members of the public
that would be collections of information requiring approval by the
Office of Management and Budget under the Paperwork Reduction Act, 44
U.S.C. 3501 et seq.
XI. Congressional Review Act
Pursuant to the Congressional Review Act,\38\ the Bureau will
submit a report containing this rule and other required information to
the U.S. Senate, the U.S. House of Representatives, and the
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Comptroller General of the United States prior to the rule's published
effective date. The Office of Information and Regulatory Affairs has
designated this rule as not a ``major rule'' as defined by 5 U.S.C.
804(2).
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\38\ 5 U.S.C. 801 et seq.
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List of Subjects
Banks, Banking, Consumer protection, Credit unions, Fair Credit
Reporting Act, Holding companies, National banks, Privacy, Reporting
and recordkeeping requirements, Savings associations, State member
banks.
Authority and Issuance
For the reasons set forth above, the Bureau amends Regulation V, 12
CFR part 1022, as set forth below:
PART 1022--FAIR CREDIT REPORTING (REGULATION V)
0
1. The authority citation for part 1022 continues to read as follows:
Authority: 12 U.S.C. 5512, 5581; 15 U.S.C. 1681a, 1681b, 1681c,
1681c-1, 1681e, 1681g, 1681i, 1681j, 1681m, 1681s, 1681s-2, 1681s-3,
and 1681t; Sec. 214, Public Law 108-159, 117 Stat. 1952.
0
2. Revise Appendix I to read as follows:
Appendix I to Part 1022--Summary of Consumer Identity Theft Rights
The prescribed form for this summary is a disclosure that is
substantially similar to the Bureau's model summary with all
information clearly and prominently displayed. A summary should
accurately reflect changes to those items that may change over time
(such as telephone numbers) to remain in compliance. Translations of
this summary will be in compliance with the Bureau's prescribed
model, provided that the translation is accurate and that it is
provided in a language used by the recipient consumer.
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3. Revise Appendix K to read as follows:
Appendix K to Part 1022--Summary of Consumer Rights
The prescribed form for this summary is a disclosure that is
substantially similar to the Bureau's model summary with all
information clearly and prominently displayed. The list of Federal
regulators that is included in the Bureau's prescribed summary may
be provided separately so long as this is done in a clear and
conspicuous way. A summary should accurately reflect changes to
those items that may change over time (e.g., dollar amounts, or
telephone numbers and addresses of Federal agencies) to remain in
compliance. Translations of this summary will be in compliance with
the Bureau's prescribed model, provided that the translation is
accurate and that it is provided in a language used by the recipient
consumer.
BILLING CODE 4810-AM-P
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Dated: September 11, 2018.
Mick Mulvaney,
Acting Director, Bureau of Consumer Financial Protection.
[FR Doc. 2018-20184 Filed 9-17-18; 8:45 am]
BILLING CODE 4810-AM-C