[Federal Register Volume 85, Number 190 (Wednesday, September 30, 2020)]
[Proposed Rules]
[Pages 61659-61662]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-19523]


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FEDERAL TRADE COMMISSION

16 CFR Part 660

RIN 3084-AB63


Duties of Furnishers of Information to Consumer Reporting 
Agencies 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 Duties of Furnishers of Information to 
Consumer Reporting Agencies Rule (``Furnisher 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 14, 
2020.

ADDRESSES: Interested parties may file a comment online or on paper by 
following the Request for Comment part of the SUPPLEMENTARY INFORMATION 
section below. Write ``Furnisher Rule, 16 CFR part 660, 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 Furnisher 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 312 of the FACT Act amended section 623 \1\ of the 
FCRA by requiring the FTC, with other agencies, to issue guidelines for 
use by furnishers regarding the accuracy and integrity of the 
information about consumers that they furnish to consumer reporting 
agencies (``CRAs'') and to prescribe regulations requiring furnishers 
to establish reasonable policies and procedures for implementing the 
guidelines. Section 312 also required the Commission and the other 
agencies to issue regulations identifying the circumstances under which 
a furnisher must reinvestigate direct consumer disputes concerning the 
accuracy of information provided by the furnisher to a CRA. On July 1, 
2009, the Commission issued the Furnisher Rule and the accompanying 
guidelines that became effective July 1, 2010.\2\
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    \1\ 15 U.S.C. 1681s-2.
    \2\ 74 FR 31484.
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    The Rule requires furnishers to establish and implement reasonable 
written policies and procedures regarding the accuracy and integrity of 
the information relating to consumers that they furnish to a CRA.\3\ 
The Rule also requires that furnishers respond to direct disputes from 
consumers.\4\
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    \3\ 16 CFR 660.3.
    \4\ 16 CFR 660.4
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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.\5\ 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.\6\ Accordingly, in 
2012, the Commission rescinded several of its FCRA rules that had been 
replaced by rules issued by the CFPB.\7\ The FTC retained rulemaking 
authority for other rules to the extent the rules apply to motor 
vehicle dealers described in section 1029(a) of the

[[Page 61660]]

Dodd-Frank Act \8\ that are predominantly engaged in the sale and 
servicing of motor vehicles, the leasing and servicing of motor 
vehicles, or both (``motor vehicle dealers'').\9\ The retained rules 
include the Furnisher Rule, which now applies only to motor vehicle 
dealers.\10\ Furnishers that were originally covered by the Furnisher 
Rule that are not motor vehicle dealers are covered by the CFPB's 
rule.\11\
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    \5\ Public Law 111-203 (2010).
    \6\ 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).
    \7\ 77 FR 22200 (April 13, 2012); 12 U.S.C. 5519.
    \8\ 15 U.S.C. 5519.
    \9\ 77 FR 22200 (April 13, 2012).
    \10\ Id.
    \11\ 12 CFR 1022.40-43.
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II. Technical Changes To Correspond to Statutory Changes Resulting From 
the Dodd-Frank Act

    The Commission adopted the Furnisher Rule at a time when it had 
rulemaking authority for a broader group of consumer report users. 
While the Dodd-Frank Act did not change the Commission's enforcement 
authority for the Furnisher Rule, it did narrow the Commission's 
rulemaking authority with respect to the Rule. It now covers only motor 
vehicle dealers.\12\ The amendments in the Dodd-Frank Act necessitate 
technical revisions to the Furnisher Rule to ensure that the regulation 
is consistent with the text of the amended FCRA. Accordingly, the 
Commission proposes to modify the Furnisher Rule to reflect the Rule's 
scope.
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    \12\ 15 U.S.C. 1681s(e)(1); 12 U.S.C. 5519.
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    The proposed amendment to Sec.  660.1 narrows the scope of the 
Furnisher Rule to those entities set forth in the Dodd-Frank Act that 
are predominantly engaged in the sale and servicing of motor vehicles, 
excluding those dealers that directly extend credit to consumers and do 
not routinely assign the extensions of credit to an unaffiliated third 
party.\13\ It does so by limiting the furnishers to which it applies 
from all furnishers within the FTC's enforcement authority to ``motor 
vehicle dealers,'' as defined in amended Sec.  660.2. The amendments 
make no other substantive changes to the Rule.
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    \13\ 12 U.S.C. 5519.
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    The proposed amendment to Sec.  660.2 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.\14\ The proposed amendment also 
changes the definition of ``identity theft'' by replacing the Rule's 
reference to 16 CFR 603.2(a), which is an FTC rule that has been 
rescinded,\15\ with a reference to 12 CFR 1022.3(h), the equivalent 
provision in the CFPB's rule.
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    \14\ Id.
    \15\ 77 FR 22200 (April 13, 2012).
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III. Regulatory Review of the Furnisher Rule

    In addition to proposing the changes described above, the 
Commission seeks information about costs and benefits of the Rule, and 
its regulatory and economic impact. It has been ten years since the 
Rule was enacted. 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 Furnisher Rule; possible conflict between 
the Furnisher Rule and state, local, or other federal laws or 
regulations; and the effect on the Furnisher 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 
Furnisher Rule? Why or why not?
    2. What benefits has the Furnisher Rule provided to consumers? What 
evidence supports the asserted benefits?
    3. What modifications, if any, should be made to the Furnisher 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 
Furnisher Rule?
    4. What significant costs, if any, has the Furnisher Rule imposed 
on consumers? What evidence supports the asserted costs?
    5. What modifications, if any, should be made to the Furnisher 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 Furnisher Rule?
    6. What benefits, if any, has the Furnisher Rule provided to 
businesses, including small businesses? What evidence supports the 
asserted benefits?
    7. What modifications, if any, should be made to the Furnisher 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 Furnisher 
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 Furnisher Rule imposed on businesses, including small 
businesses? What evidence supports the asserted costs?
    9. What modifications, if any, should be made to the Furnisher 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 Furnisher Rule?
    10. What evidence is available concerning the degree of industry 
compliance with the Furnisher Rule?
    11. What modification, if any, should be made to the Furnisher Rule 
to account for changes in relevant technology or economic conditions? 
What evidence supports the proposed modifications?
    12. Does the Furnisher 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 Furnisher 
Rule be modified? If so, why, and how? If not, why not?
    13. The Commission proposes to amend the Rule to reflect that the 
Commission's rulemaking authority has been revised by statute to apply 
exclusively to motor vehicle dealers. 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?
    14. In 2018, the FCRA was amended to require CRAs to allow 
consumers to freeze their consumer reports, which restricts access to 
the reports in order to reduce the risk of identity theft, free of 
charge. Should Sec.  660.4 be amended to exclude credit freezes from 
the mandatory investigation requirements of the Furnisher Rule, in the 
same manner

[[Page 61661]]

as fraud alerts and active duty alerts under the current rule?
    15. The Furnisher Rule is intentionally flexible, referring only to 
reasonable procedures, because it applies to many different types of 
entities. In light of the narrowing of the Rule's scope to only motor 
vehicle dealers, should the Rule be amended to include requirements 
that are specifically tailored to motor vehicle dealers? For example, 
should the Rule include provisions that require motor vehicle dealers 
to furnish specific pieces of information concerning an automobile loan 
to CRAs? If so, what provisions should be amended or added to more 
directly address motor vehicle dealers?

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 14, 
2020. Write ``Furnisher Rule, 16 CFR part 660, 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.
    Due to 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 comments online through the https://www.regulations.gov website. To make sure that the Commission considers 
your online comment, follow the instructions on the web-based form.
    If you file your comment on paper, write ``Furnisher Rule, 16 CFR 
part 660, 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 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 any 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 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 14, 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.\16\
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    \16\ 16 CFR 1.26(b)(5).
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VII. Paperwork Reduction Act

    The Furnisher 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''). 44 U.S.C. 3501 et seq. OMB has 
approved the Rule's existing information collection requirements 
through July 31, 2022 (OMB Control No. 3084-0144). Under the existing 
clearance, the FTC has attributed to itself the estimated burden 
regarding all motor vehicle dealers and then shares equally the 
remaining estimated PRA burden with the CFPB for other persons for 
which both agencies have enforcement authority regarding the Furnisher 
Rule. This proposal would amend 16 CFR part 660.
    The proposed amendments do not modify or add to information 
collection requirements previously approved by OMB. The amendments 
narrow the scope to motor vehicle dealers. The Rule's OMB clearance 
already reflects that change in scope. Therefore, the Commission does 
not believe the proposed amendments would modify substantially or 
materially 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 either 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.\17\ The Commission does not expect that the proposed changes 
to 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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    \17\ 5 U.S.C. 603-605.
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    Therefore, based on available information, the Commission certifies 
that amending the Furnisher Rule as proposed will not have a 
significant

[[Page 61662]]

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. 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-2(e).

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

    Determining a precise estimate of the number of small entities \18\ 
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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    \18\ 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

    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 Rules.

E. 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 
reports may duplicate, satisfy, or possibly conflict with the Rule's 
requirements for any covered financial institutions.

F. 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 660

    Consumer protection, Credit, Trade practices.

    For the reasons stated above, the Federal Trade Commission proposes 
to amend part 660 of title 16 of the Code of Federal Regulations as 
follows:

0
1. Revise the authority citation for part 660 to read as follows:

    Authority: 15 U.S.C. 1681s-2; 12 U.S.C. 5519(d); Sec. 311, Pub. 
L. 108-159.

0
2. Revise Sec.  660.1 to read as follows:


Sec.  660.1   Scope.

    This part applies to furnishers of information to consumer 
reporting agencies that are motor vehicle dealers as defined by Sec.  
660.2 (referred to as ``furnishers'').
0
3. Amend Sec.  660.2 by revising paragraph (d) and adding paragraph (f) 
to read as follows:


Sec.  660.2  Definitions.

* * * * *
    (d) Identity theft has the same meaning as in 12 CFR 1022.3(h)
* * * * *
    (f) 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. 2020-19523 Filed 9-29-20; 8:45 am]
BILLING CODE 6750-01-P