[Federal Register Volume 85, Number 184 (Tuesday, September 22, 2020)]
[Proposed Rules]
[Pages 59466-59469]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-19174]


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FEDERAL TRADE COMMISSION

16 CFR Part 680

RIN 3084-AB63


Affiliate Marketing Rule

AGENCY: Federal Trade Commission.

ACTION: Notice of proposed rulemaking; request for public comment.

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SUMMARY: The Federal Trade Commission (``FTC'' or ``Commission'') 
requests public comment on its Affiliate Marketing Rule as part of the 
FTC's systematic review of all current Commission regulations and 
guides. In addition, the FTC is proposing to amend the Rule to 
correspond to changes made to the Fair Credit Reporting Act (``FCRA'') 
by the Dodd-Frank Act.

DATES: Written comments must be received on or before December 7, 2020.

ADDRESSES: Interested parties may file comments online or on paper by 
following the Request for Comment part of the SUPPLEMENTARY INFORMATION 
section below. Write ``Amendment to the Affiliate Marketing Rule, 16 
CFR part 680, Project No. P205408'' on your comment and file your 
comment online at https://www.regulations.gov by following the 
instructions on the web-based form. If you prefer to file your comment 
on paper, mail your comment 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: David Lincicum (202-326-2773), 
Division of Privacy and Identity Protection, Bureau of Consumer 
Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW, 
Washington, DC 20580.

SUPPLEMENTARY INFORMATION:

I. Background

A. The Affiliate Marketing Rule

    The Fair and Accurate Credit Transactions Act of 2003 (``FACT 
Act'') was signed into law on December 4, 2003. Public Law 108-159, 117 
Stat. 1952. Section 214 of the FACT Act added a new section 624 to the 
FCRA. This provision gives the consumer the right to restrict a person 
from using certain information obtained from an affiliate to make 
solicitations to that consumer. Section 624 generally provides that if 
a person receives certain consumer eligibility information from an 
affiliate, the person may not use that information to make 
solicitations to the consumer about its products or services, unless 
the consumer is given notice and an opportunity (via a simple method) 
to opt out of such use of the information, and the consumer does not 
opt out. The statute also provides that section 624 does not apply, for 
example, to a person using eligibility information: (1) To make 
solicitations to a consumer with whom the person has a pre-existing 
business relationship; (2) to perform services for another affiliate 
subject to certain conditions; (3) in response to a communication 
initiated by the consumer; or (4) to make a solicitation that has been 
authorized or requested by the consumer. Unlike the FCRA affiliate 
sharing opt-out (15 U.S.C. 1681a(d)(2)(A)(iii)) and the Gramm-Leach-
Bliley Act (``GLBA''), 15 U.S.C. 6801 et seq., non-affiliate sharing 
opt-out--both of which apply indefinitely--section 624 provides that a 
consumer's affiliate marketing opt-out election must

[[Page 59467]]

be effective for a period of at least five years. Upon expiration of 
the opt-out period, the consumer must be given a renewal notice and an 
opportunity to renew the opt-out before information received from an 
affiliate may be used to make solicitations to the consumer. The 
Federal Trade Commission published regulations implementing Section 
624, the Affiliate Marketing Rule, 16 CFR part 680, on October 30, 
2007.\1\
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    \1\ 72 FR 61423 (October 30, 2007).
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B. Dodd-Frank Act

    The Dodd-Frank Wall Street Reform and Consumer Protection Act 
(``Dodd-Frank Act'') was signed into law in 2010.\2\ The Dodd-Frank Act 
substantially changed the federal legal framework for financial 
services providers. Among the changes, the Dodd-Frank Act transferred 
to the Consumer Financial Protection Bureau (``CFPB'') the Commission's 
rulemaking authority under portions of the FCRA.\3\ Accordingly, in 
2012, the Commission rescinded several of its FCRA rules, which had 
been replaced by rules issued by the CFPB.\4\ The FTC retained 
rulemaking authority for other rules promulgated under the Acts to the 
extent the rules apply to motor vehicle dealers described in section 
1029(a) of the Dodd-Frank Act \5\ that are predominantly engaged in the 
sale and servicing of motor vehicles, the leasing and servicing of 
motor vehicles, or both (``motor vehicle dealers'').\6\ The rules for 
which the FTC retains rulemaking authority include the Affiliate 
Marketing Rule, which now applies only to motor vehicle dealers.\7\ 
Entities that are not motor vehicle dealers are covered by the CFPB's 
Regulation V, Subpart C, which is substantially similar to the 
Commission's Rule.\8\
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    \2\ Public Law 111-203 (2010).
    \3\ 15 U.S.C. 1681 et seq. The Dodd-Frank Act does not transfer 
to the CFPB rulemaking authority for section 615(e) of the FCRA 
(``Red Flag Guidelines and Regulations Required'') and section 628 
of the FCRA (``Disposal of Records''). See 15 U.S.C. 1681s(e).
    \4\ 77 FR 22200 (April 13, 2012).
    \5\ 12 U.S.C. 5519.
    \6\ 77 FR 22200 (April 13, 2012).
    \7\ Id.
    \8\ 12 CFR 1022.20-27. While there are no substantive 
differences between the two rules, they are organized differently 
and, in some cases, use different examples. See, e.g., 12 CFR 
1022.20(b)(4)(iii).
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II. Technical Changes To Correspond to Statutory Changes Resulting From 
the Dodd-Frank Act

    The Commission promulgated the Affiliate Marketing Rule at a time 
when it had rulemaking authority for a broader group of entities. While 
the Dodd-Frank Act did not change the Commission's enforcement 
authority for the Affiliate Marketing Rule, it did narrow the 
Commission's rulemaking authority with respect to the Rule. It now 
covers only motor vehicle dealers. The amendments in the Dodd-Frank Act 
necessitate a technical revision to the Affiliate Marketing Rule to 
ensure that the regulation is consistent with the text of the amended 
FCRA. Accordingly, the Commission proposes to modify the Affiliate 
Marketing Rule to properly reflect the Rule's scope.
    The proposed amendment to Sec.  680.1(b) narrows the scope 
description of the Affiliate Marketing Rule to the entities excluded 
from Consumer Financial Protection Bureau jurisdiction as described in 
the Dodd-Frank Act.\9\ It does so by replacing the broad term 
``person'' with the term ``motor vehicle dealer,'' as defined in 
amended Sec.  680.3.
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    \9\ 12 U.S.C. 5519.
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    The proposed amendment to Sec.  680.3 adds a definition of ``motor 
vehicle dealer'' that defines motor vehicle dealers as those entities 
excluded from Consumer Financial Protection Bureau jurisdiction as 
described in the Dodd-Frank Act.\10\ Also, the proposed amendments 
revise the term ``you'' (see 680.3(m)) to refer to a motor vehicle 
dealer.
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    \10\ Id.
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    The proposed amendments do not change the substantive provisions of 
the Rule or the examples in the Rule, even where those provisions and 
examples involve entities other than motor vehicle dealers that are 
covered by the CFPB's rule, rather than the Commission's Rule. The 
primary reason for retaining these provisions and examples is that the 
Rule addresses the relationship between covered motor vehicle dealers 
and their affiliates, which may not be motor vehicle dealers. The 
obligations and exceptions set forth by the rule are inextricably 
linked to a consumer's relationship and actions in relation to all 
affiliates, both motor vehicle dealers and non-motor vehicle dealers. 
In order for the Rule to apply meaningfully, it must address both types 
of entities, even those that are not directly covered by the rule. This 
will not create any conflict with the CFPB's corresponding rule, as the 
Commission's Affiliate Marketing Rule and the CFPB's rule are 
substantially similar and impose the same obligations and exceptions on 
entities that they cover.

III. Regulatory Review of the Affiliate Marketing Rule

    In addition to proposing the changes described above, the 
Commission seeks information about the costs and benefits of the Rule, 
and its regulatory and economic impact. Consistent with its practice of 
reviewing all of its rules and guides periodically, the Commission 
seeks to ascertain whether changes in technology, business models, or 
the law warrant modification or rescission of the Rule. As part of this 
review the Commission solicits comments on, among other things, the 
economic impact and benefits of the Affiliate Marketing Rule; possible 
conflict between the Affiliate Marketing Rule and state, local, or 
other federal laws or regulations; and the effect on the Affiliate 
Marketing Rule of any technological, economic, or other industry 
changes.

IV. Issues for Comment

    The Commission requests written comment on any or all of the 
following questions. These questions are designed to assist the public 
and should not be construed as a limitation on the issues about which 
public comments may be submitted. The Commission requests that 
responses to its questions be as specific as possible, including a 
reference to the question being answered, and refer to empirical data 
or other evidence upon which the comment is based whenever available 
and appropriate.
    1. Is there a continuing need for specific provisions of the 
Affiliate Marketing Rule? Why or why not?
    2. What benefits has the Affiliate Marketing Rule provided to 
consumers? What evidence supports the asserted benefits?
    3. What modifications, if any, should be made to the Affiliate 
Marketing Rule to increase the benefits to consumers?
    a. What evidence supports the proposed modifications?
    b. How would these modifications affect the costs imposed by the 
Affiliate Marketing Rule?
    4. What significant costs, if any, has the Affiliate Marketing Rule 
imposed on consumers? What evidence supports the asserted costs?
    5. What modifications, if any, should be made to the Affiliate 
Marketing Rule to reduce any costs imposed on consumers?
    a. What evidence supports the proposed modifications?
    b. How would these modifications affect the benefits provided by 
the Affiliate Marketing Rule?
    6. What benefits, if any, has the Affiliate Marketing Rule provided 
to

[[Page 59468]]

businesses, including small businesses? What evidence supports the 
asserted benefits?
    7. What modifications, if any, should be made to the Affiliate 
Marketing Rule to increase its benefits to businesses, including small 
businesses?
    a. What evidence supports the proposed modifications?
    b. How would these modifications affect the costs the Affiliate 
Marketing Rule imposes on businesses, including small businesses?
    c. How would these modifications affect the benefits to consumers?
    8. What significant costs, if any, including costs of compliance, 
has the Affiliate Marketing Rule imposed on businesses, including small 
businesses? What evidence supports the asserted costs?
    9. What modifications, if any, should be made to the Affiliate 
Marketing Rule to reduce the costs imposed on businesses, including 
small businesses?
    a. What evidence supports the proposed modifications?
    b. How would these modifications affect the benefits provided by 
the Affiliate Marketing Rule?
    10. What evidence is available concerning the degree of industry 
compliance with the Affiliate Marketing Rule?
    11. What modifications, if any, should be made to the Affiliate 
Marketing Rule to account for changes in relevant technology or 
economic conditions? What evidence supports the proposed modifications?
    12. Does the Affiliate Marketing 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 Affiliate 
Marketing Rule be modified? If so, why, and how? If not, why not?
    13. Should the Affiliate Marketing Rule be amended to remove 
provisions addressing circumstances that do not apply, or typically do 
not apply, to motor vehicle dealers?
    14. Can the examples set forth in the Affiliate Marketing Rule be 
further amended to make them more helpful and informative to motor 
vehicle dealers? Would additional examples be helpful, and if so, what 
examples? Should examples that relate to types of transactions that are 
not typical in the motor vehicle context be removed?
    15. The Commission proposes to amend the Rule to reflect statutory 
changes to the Rule's scope. Are the proposed modifications 
appropriate? Should additional amendments be made? Would these 
amendments create conflicts with any other federal, state, or local 
regulations or laws?

V. Request for Comment

    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before December 7, 
2020. Write ``Affiliate Marketing Rule, 16 CFR part 680, Project No. 
P205408'' on the comment. Your comment, including your name and your 
state, will be placed on the public record of this proceeding, 
including the https://www.regulations.gov website.
    Because of the public health emergency in response to the COVID-19 
outbreak and the agency's heightened security screening, postal mail 
addressed to the Commission will be subject to delay. We strongly 
encourage you to submit your comment online through the https://www.regulations.gov website. To ensure the Commission considers your 
online comment, please follow the instructions on the web-based form 
provided by regulations.gov.
    If you file your comment on paper, write ``Affiliate Marketing 
Rule, 16 CFR part 680, Project No. P205408'' on your comment and on the 
envelope, and mail your comment 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, please submit your paper comment 
to the Commission by courier or overnight service.
    Because your comment will be placed on the publicly accessible 
website, https://www.regulations.gov, you are solely responsible for 
making sure that your comment does not include any sensitive or 
confidential information. In particular, your comment should not 
include sensitive personal information, such as your or anyone else'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, your 
comment should not include any ``trade secret or any commercial or 
financial information which . . . is privileged or confidential,'' as 
provided by 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), including in particular, competitively 
sensitive information such as costs, sales statistics, inventories, 
formulas, patterns, devices, manufacturing processes, or customer 
names.
    Comments containing material for which confidential treatment is 
requested must be filed in paper form, must be clearly labeled 
``Confidential,'' and must comply with FTC Rule 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 comment to be withheld from 
the public record. Your comment will be kept confidential only if the 
FTC General Counsel grants your request in accordance with the law and 
the public interest. Once your comment has been posted on https://www.regulations.gov, we cannot redact or remove your comment from that 
website, unless you submit a confidentiality request that meets the 
requirements for such treatment under FTC Rule 4.9(c), and the General 
Counsel grants that request.
    Visit the Commission website at https://www.ftc.gov to read this 
document 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 December 7, 2020. For information on the 
Commission's privacy policy, including routine uses permitted by the 
Privacy Act, see https://www.ftc.gov/site-information/privacy-policy.

VI. Communications by Outside Parties to the Commissioners or Their 
Advisors

    Written communications and summaries or transcripts of oral 
communications respecting the merits of this proceeding, from any 
outside party to any Commissioner or Commissioner's advisor, will be 
placed on the public record.\11\
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    \11\ 16 CFR 1.26(b)(5).
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VII. Paperwork Reduction Act

    The Affiliate Marketing Rule contains information collection 
requirements as defined by 5 CFR 1320.3(c), the definitional provision 
within the Office of Management and Budget (``OMB'') regulations that 
implement the Paperwork Reduction Act (``PRA''). OMB has approved the 
Rule's existing information collection requirements

[[Page 59469]]

through February 28, 2023 (OMB Control No. 3084-0131). Under the 
existing clearance, the FTC has attributed to itself the estimated 
burden regarding all motor vehicle dealers, and it shares the remaining 
estimated PRA burden equally with the CFPB for other persons for which 
both agencies have enforcement authority.
    This proposal would amend 16 CFR part 680. The proposed amendments 
do not modify or add to information collection requirements that were 
previously approved by OMB. The amendments make no substantive changes 
to the Rule, other than to clarify that the scope of the Rule is 
limited to motor vehicle dealers. The Rule's OMB clearance already 
reflects that scope. Therefore, the Commission does not believe that 
the proposed amendments would substantially or materially modify any 
``collections of information'' as defined by the PRA.

VIII. Regulatory Flexibility Act

    The Regulatory Flexibility Act (``RFA''), as amended by the Small 
Business Regulatory Enforcement Fairness Act of 1996, requires an 
agency to provide an Initial Regulatory Flexibility Analysis (``IRFA'') 
with a proposed rule, or certify that the proposed rule will not have a 
significant impact on a substantial number of small entities.\12\ The 
Commission does not expect that this Rule, if adopted, would have the 
threshold impact on small entities. The Commission does not expect the 
proposal to impose costs on small motor vehicle dealers because the 
amendments are primarily for clarification purposes and should not 
result in any increased burden on any motor vehicle dealer. Thus, a 
small entity that complies with current law need not take any different 
or additional action if the proposal is adopted.
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    \12\ 5 U.S.C. 603-605.
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    Therefore, based on available information, the Commission certifies 
that amending the Affiliate Marketing Rule as proposed will not have a 
significant economic impact on a substantial number of small 
businesses. Although the Commission certifies under the RFA that the 
proposed amendment would not, if promulgated, have a significant impact 
on a substantial number of small entities, the Commission has 
determined, nonetheless, that it is appropriate to publish an IRFA to 
inquire into the impact of the proposed amendment on small entities. 
Therefore, the Commission has prepared the following analysis:

A. Description of the Reasons for the Proposed Rule

    To address the Dodd-Frank Act's changes to the Commission's 
rulemaking authority, the Commission proposes to clarify that the Rule 
applies only to motor vehicle dealers.

B. Succinct Statement of the Objectives, and Legal Basis For, the 
Proposed Rule

    The objectives of the proposed Rule are discussed above. The legal 
basis for the proposed Rule is 15 U.S.C. 1681s-3.

C. Description of Small Entities to Which the Proposed Rule Will Apply

    Determining a precise estimate of the number of small entities \13\ 
to which the Rule applies is not readily feasible. Financial 
institutions covered by the Rule include certain motor vehicle dealers. 
A substantial number of these entities likely qualify as small 
businesses. The Commission estimates that the proposed amendment will 
not have a significant impact on small businesses because it imposes no 
new obligations.
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    \13\ The U.S. Small Business Administration Table of Small 
Business Size Standards Matched to North American Industry 
Classification System Codes (NAICS) are generally expressed in 
either millions of dollars or number of employees. A size standard 
is the largest that a business can be and still qualify as a small 
business for Federal Government programs. For the most part, size 
standards are the annual receipts or the average employment of a 
firm. New car dealers (NAICS code 441100) are classified as small if 
they have fewer than 200 employees. Used car dealers (NAICS code 
441120) are classified as small if their annual receipts are $27 
million or less. Recreational vehicle dealers, boat dealers, 
motorcycle, ATV and all other motor vehicle dealers (NAICS codes 
441210, 441222 and 441228) are classified as small if their annual 
receipts are $35 million or less. The 2019 Table of Small Business 
Size Standards is available at https://www.sba.gov/document/
support--table-size-standards.
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D. Projected Reporting, Recordkeeping, and Other Compliance 
Requirements, Including Classes of Covered Small Entities and 
Professional Skills Needed To Comply

    The proposed amendments would impose no new reporting, 
recordkeeping, or other compliance requirements. The small entities 
potentially covered by the proposed amendment will include all such 
entities subject to the Rule.

E. Identification of Duplicative, Overlapping, or Conflicting Federal 
Rules

    The Commission has not identified any other federal statutes, 
rules, or policies that would duplicate, overlap, or conflict with the 
proposed amendment. Nonetheless, the Commission is requesting comment 
on the extent to which other federal standards involving consumer 
information may duplicate and/or satisfy or possibly conflict with the 
Rule's requirements for any covered financial institutions.

F. Description of Any Significant Alternatives to the Proposed Rule

    The Commission has not proposed any specific small entity exemption 
or other significant alternatives because the proposed amendment would 
not impose any new requirements or compliance costs. Nonetheless, the 
Commission welcomes comment on any significant alternative consistent 
with the FCRA that would minimize the impact of the proposed Rule on 
small entities.

IX. Proposed Rule Language

List of Subjects in 16 CFR Part 680

    Consumer protection, Credit, Trade practices.

    For the reasons stated above, the Federal Trade Commission proposes 
to amend part 680 of title 16 of the Code of Federal Regulations as 
follows:

PART 680--AFFILIATE MARKETING

0
1. Revise the authority section for part 680 to read as follows:

    Authority:  Pub. L. 108-159, sec. 311; 15 U.S.C.A. 1681s-3; 12 
U.S.C. 5519(d).

0
2. Revise Sec.  680.1 paragraph (b) to read as follows:


Sec.  680.1   Purpose and scope.

* * * * *
    (b) Scope. This part applies to any motor vehicle dealer as defined 
in Sec.  680.3 that uses information from its affiliates for the 
purpose of marketing solicitations, or provides information to its 
affiliates for that purpose.

0
3. In Sec.  680.3, redesignate paragraphs (i) through(l) as paragraphs 
(j) through(m) and add a new paragraph (i) to read as follows:


Sec.  680.3   Definitions.

* * * * *
    (i) Motor vehicle dealer. The term ``motor vehicle dealer'' means 
any person excluded from Consumer Financial Protection Bureau 
jurisdiction as described in 12 U.S.C. 5519.
* * * * *

    By direction of the Commission, Commissioner Slaughter and 
Commissioner Wilson not participating.
April J. Tabor,
Acting Secretary.
[FR Doc. 2020-19174 Filed 9-21-20; 8:45 am]
BILLING CODE 6750-01-P