[Federal Register Volume 86, Number 174 (Monday, September 13, 2021)]
[Rules and Regulations]
[Pages 50848-50854]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-19465]


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FEDERAL TRADE COMMISSION

16 CFR Parts 642 and 698

RIN 3084-AB63


Prescreen Opt-Out Notice Rule

AGENCY: Federal Trade Commission.

ACTION: Final rule.

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SUMMARY: The Federal Trade Commission (``FTC'' or ``Commission'') is 
issuing a final rule (``Final Rule'') to amend its Prescreen Opt-Out 
Notice Rule to correspond to changes made to the Fair Credit Reporting 
Act (``FCRA'') by the Dodd-Frank Act and to reinstate and amend a model 
prescreen opt-out notice.

DATES: This rule is effective October 13, 2021.

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 Prescreen Opt-Out Notice Rule

    Section 615(d) of the FCRA \1\ requires that any person who uses a 
consumer report in order to make an unsolicited firm offer of credit or 
insurance to the consumer (``prescreened offer'' or ``prescreened 
solicitation'') shall provide with each written solicitation a clear 
and conspicuous statement that: (A) Information contained in the 
consumer's consumer report was used in connection with the transaction; 
(B) the consumer received the offer of credit or insurance because the 
consumer satisfied the criteria for credit worthiness or insurability 
under which the consumer was selected for the offer; (C) if applicable, 
the credit or insurance may not be extended if, after the consumer 
responds to the offer, the consumer does not meet the criteria used to 
select the consumer for the offer or any applicable criteria bearing on 
credit worthiness or insurability or does not furnish any required 
collateral; (D) the consumer has a right to prohibit information 
contained in the consumer's file with any consumer reporting agency 
from being used in connection with any credit or insurance transaction 
that is not initiated by the consumer; and (E) the consumer may 
exercise the opt-out right by notifying a notification system 
established under section 604(e) of the FCRA.
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    \1\ 15 U.S.C. 1681m(d).
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    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 213(a) of the FACT Act amended FCRA section 615(d) 
to require that the statement mandated by section 615(d) ``be presented 
in such format and in such type size and manner as to be simple and 
easy to understand, as established by the Commission, by rule, in 
consultation with the Federal banking agencies and the National Credit 
Union Administration.'' On August 1, 2005, the FTC issued its Prescreen 
Opt-Out Notice Rule.\2\
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    \2\ 70 FR 5021 (Aug. 1, 2005).
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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.\3\ 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.\4\ Accordingly, in 
2012, the Commission rescinded several of its FCRA rules, which had 
been replaced by rules issued by the CFPB.\5\ 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 Dodd-Frank 
Act \6\ that are predominantly engaged in the sale and servicing of 
motor vehicles, the leasing and servicing of motor vehicles, or both 
(``motor vehicle dealers'').\7\ The retained rules include the 
Prescreen Opt-Out Notice Rule, which now applies only to motor vehicle 
dealers.\8\ Consumer report users originally covered by the Prescreen 
Opt-Out Notice Rule that are not motor vehicle dealers are covered by 
the CFPB's rule.\9\
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    \3\ Public Law 111-203 (2010).
    \4\ 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).
    \5\ 77 FR 22200 (April 13, 2012); 12 U.S.C. 5519.
    \6\ 15 U.S.C. 5519.
    \7\ 77 FR 22200 (April 13, 2012).
    \8\ Id.
    \9\ 12 CFR 1022.54.
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    On May 22, 2019, the FTC rescinded several FCRA model notices and 
forms that were no longer necessary due to the Dodd-Frank Act's change 
to its rulemaking authority.\10\ The prescreen opt-out model notice was 
included in this rescission.
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    \10\ 84 FR 23471 (May 22, 2019).
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II. Regulatory Review of the Prescreen Opt-Out Notice Rule

    On September 21, 2020, the Commission solicited comments on the 
Prescreen Opt-Out Notice Rule. The Commission sought information about 
the costs and benefits of the Rule, and its regulatory and economic 
impact. In addition, the Commission proposed amending sections 642.1 
and 642.2 to narrow the scope of the Rule to motor vehicle dealers 
excluded from CFPB jurisdiction as described in the Dodd-Frank Act and 
reinstating the Prescreen Opt-Out Notice Rule model notice. The 
Commission received two comments concerning the Rule.\11\
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    \11\ The comments can be found at www.regulations.gov/document/FTC-2020-0066-0001/comment.
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III. Overview of Final Rule

    The Commission promulgated the Prescreen Opt-Out Notice 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 Prescreen Opt-Out Notice 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 Prescreen Opt-Out 
Notice Rule to ensure that the regulation is consistent with the text 
of the amended FCRA. Accordingly, the Commission amends the Prescreen 
Opt-Out Notice Rule to properly 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 amendment to section 642.1 narrows the scope of the Prescreen 
Opt-Out Notice 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 replacing the general term 
``person'' with the term ``motor vehicle dealers,'' as defined in 
amended section 642.2. One commenter argued the Rule should use the 
term ``MVD'' in the place of ``motor vehicle dealers'' in order to 
reduce the word count of the Rule.\14\ The Commission believes the term

[[Page 50849]]

``motor vehicle dealers'' is more easily understood than an 
abbreviation and declines to make this change.
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    \13\ 12 U.S.C. 5519.
    \14\ Devin Davis (Comment 2).
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    The amendment to section 642.2 adds a definition of ``motor vehicle 
dealer'' that defines motor vehicle dealers as entities excluded from 
CFPB jurisdiction as described in the Dodd-Frank Act.\15\
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    \15\ 12 U.S.C. 5519.
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    The amendments also reinstate the model prescreen opt-out notice 
that was rescinded in 2019 on the basis that motor vehicle dealers 
could use the CFPB-provided model form.\16\ The model notice, Appendix 
C to Part 698, remains largely unchanged from the one previously 
provided except, as noted below, the model now includes a reference to 
the consumer reporting agencies' opt-out website. The amendments also 
revise section 698.2 to include Appendix C in the list of model 
notices. The amendments make no substantive changes to the Rule.
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    \16\ 84 FR 23471 (May 22, 2019).
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    The South Carolina Department of Consumer Affairs (the 
``Department'') stated that there is a continuing need for the 
Prescreen Opt-Out Notice Rule and it benefits consumers by informing 
them their information has been shared for a prescreen offer and 
educating them of their rights to opt out of such offers.\17\ The 
Department also suggested that the Commission amend the Rule to require 
companies to provide the URL for the consumer reporting agencies' opt-
out website, www.optoutprescreen.com. Although the Commission agrees 
that the opt-out website is a valuable resource for consumers, it 
declines to change the Rule to require dealers to include it. Changing 
the Rule in this way would cause the Commission's Rule to differ 
substantively from the CFPB's rule, which applies much more broadly. 
The Commission believes that consumers and businesses are better served 
by uniformity in the rules. However, because the Commission agrees that 
including the address for the optoutprescreen.com site would be helpful 
to consumers who choose to opt out, the Commission has revised the 
model notice to include a reference to the optoutprescreen.com website. 
While motor vehicle dealers are not required to use the model notice, 
the Commission believes that many will choose to do so.\18\ The 
Commission has consulted with the CFPB concerning this change to the 
Commission's model notice.
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    \17\ The Department also argued the Commission should issue 
regulations that would modify prescreened offers of credit under the 
FCRA by: (1) Limiting the information motor vehicle dealers can 
obtain for prescreened offers to that which is necessary for 
determining eligibility for the prescreened offer, (2) requiring 
motor vehicle dealers to extend the prescreened offer within a 
specified time frame after they receive the information from the 
consumer reporting agency; and (3) requiring all information related 
to a prescreened offer be deleted after the offer has expired. We 
welcome the Department's suggestions on these issues. As the 
Department recognized in its comment, however, these changes would 
require changes to statutory provisions not at issue in this 
rulemaking.
    \18\ The South Carolina Department of Consumer Affairs also 
suggests that the Commission revise the model notice so that the 
fictional offer of credit in the notice is being sent from a motor 
vehicle dealer rather than a credit card company. The Commission 
understands this change would further the goal of making clear that 
the Commission's Rule applies only to motor vehicle dealers. 
However, as much of the notice's content is dummy text, it is clear 
the model notice is meant to illustrate the formatting and content 
of the Rule's required disclosures, and there is value in 
maintaining consistency with the CFPB's Rule. Accordingly, the 
Commission declines to make this change.
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IV. Paperwork Reduction Act

    Under the Paperwork Reduction Act of 1995 (PRA),\19\ federal 
agencies are generally required to seek Office of Management and Budget 
(``OMB'') approval for information collection requirements prior to 
implementation.
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    \19\ 44 U.S.C. 3501 et seq.
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    The Final Rule amends 16 CFR part 642 and 698. The Rule does not 
contain information collection requirements as defined by the PRA. The 
rule requires certain motor vehicle dealers using consumer report to 
provide consumers with opt-out notices and the amendments include a 
model notice that motor vehicle dealers may use. The public disclosure 
of information originally supplied by the Federal Government for the 
purpose of disclosure to the public is not included within the 
definition of the collection of information.\20\ Therefore, the 
Commission does not believe that the amendments will add any 
``collections of information'' as defined by the PRA.
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    \20\ See 5 CFR 1320.3(c)(2).
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V. 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.\21\ The Commission published an Initial Regulatory 
Flexibility Analysis in order to inquire into the impact of the 
proposed Rule on small entities.\22\ The Commission received no 
responsive comments.
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    \21\ 5 U.S.C. 603-605.
    \22\ 85 FR 59226, 59228 (Sept. 21, 2020).
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    The Commission does not believe that these amendments have the 
threshold impact on small entities. The amendments effectuate changes 
to the Dodd-Frank Act and will not impose costs on small motor vehicle 
dealers because the amendments are for clarification purposes and will 
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 under the Final Rule. Although the Final Rule 
adopts a slightly revised model notice, motor vehicle dealers are not 
obligated to use the model notice. Therefore, the Commission certifies 
that amending the Prescreen Opt-Out Notice Rule will not have a 
significant economic impact on a substantial number of small 
businesses.
    Although the Commission certifies under the RFA that the Final Rule 
will not have a significant impact on a substantial number of small 
entities, and hereby provides notice of that certification to the Small 
Business Administration, the Commission nonetheless has determined that 
publishing a final regulatory flexibility analysis (``FRFA'') is 
appropriate to ensure that the impact of the rule is fully addressed. 
Therefore, the Commission has prepared the following analysis:

A. Need for and Objectives of the Final Rule

    To address the Dodd-Frank Act's changes to the Commission's 
rulemaking authority, the amendments clarify that the Rule applies only 
to motor vehicle dealers and reinstate a model form.

B. Significant Issues Raised in Public Comments in Response to the IRFA

    The Commission did not receive any comments that addressed the 
burden on small entities. In addition, the Commission did not receive 
any comments filed by the Chief Counsel for Advocacy of the Small 
Business Administration (``SBA'').

C. Estimate of Number of Small Entities to Which the Final Rule Will 
Apply

    The Commission anticipates that many covered motor vehicle dealers 
may qualify as small businesses according to the applicable SBA size 
standards. As explained in the IRFA, however, determining a precise 
estimate of the number of small entities is not readily feasible. No 
commenters addressed this issue. Nonetheless, as discussed above, these 
amendments do not add any additional burdens on any covered small 
businesses.

[[Page 50850]]

D. Projected Reporting, Recordkeeping, and Other Compliance 
Requirements, Including Classes of Covered Small Entities and 
Professional Skills Needed To Comply

    The amendments impose no new reporting, recordkeeping, or other 
compliance requirements.

E. Description of Steps Taken To Minimize Significant Economic Impact, 
if Any, on Small Entities, Including Alternatives

    The Commission did not propose any specific small entity exemption 
or other significant alternatives because the amendments will not 
increase reporting requirements and will not impose any new 
requirements or compliance costs.

VI. Other Matters

    Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), 
the Office of Information and Regulatory Affairs designated this rule 
as not a ``major rule,'' as defined by 5 U.S.C. 804(2).

Final Rule Language

List of Subjects in 16 CFR Parts 642 and 698

    Consumer protection, Credit, Trade practices.

    For the reasons stated above, the Federal Trade Commission amends 
title 16 of the Code of Federal Regulations as follows:

PART 642--PRESCREEN OPT-OUT NOTICE

0
1. Revise the authority section for part 642 to read as follows:

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

0
2. In Sec.  642.1, revise paragraph (b) to read as follows:


Sec.  642.1   Purpose and scope.

* * * * *
    (b) Scope. This part applies to any motor vehicle dealer as defined 
in Sec.  642.2 of this part that uses a consumer report on any consumer 
in connection with any credit or insurance transaction that is not 
initiated by the consumer, and that is provided to that motor vehicle 
dealer under section 604(c)(1)(B) of the FCRA (15 U.S.C. 
1681b(c)(1)(B)).

0
3. In Sec.  642.2, redesignate paragraph (b) as paragraph (c) and add a 
new paragraph (b) to read as follows:


Sec.  642.2   Definitions.

* * * * *
    (b) Motor vehicle dealer means any person excluded from Consumer 
Financial Protection Bureau jurisdiction as described in 12 U.S.C. 
5519.
* * * * *

0
4. In Sec.  642.3, revise the introductory text to read as follows:


Sec.  642.3  Prescreen opt-out notice.

    Any motor vehicle dealer that uses a consumer report on any 
consumer in connection with any credit or insurance transaction that is 
not initiated by the consumer, and that is provided to that person 
under section 604(c)(1)(B) of the FCRA (15 U.S.C. 1681b(c)(1)(B)), 
shall, with each written solicitation made to the consumer about the 
transaction, provide the consumer with the following statement, 
consisting of a short portion and a long portion, which shall be in the 
same language as the offer of credit or insurance:
* * * * *

PART 698--MODEL FORMS AND DISCLOSURES

0
5. The authority citation continues to read as follows:

    Authority: 12 U.S.C. 5519; 15 U.S.C. 1681m(h); 15 U.S.C. 1681s-
3; Sec. 214(b), Pub. L. 108-159.

0
6. Revise Sec.  698.2 to read as follows:


Sec.  698.2  Legal effect.

    The model forms and disclosures prescribed by the FTC in this part 
do not constitute a trade regulation rule. The issuance of the model 
forms and disclosures set forth in appendices A, B, and C of this part 
carry out the directive in the statute that the FTC prescribe these 
forms and disclosures. Use or distribution of the model forms and 
disclosures in this part will constitute compliance with any section or 
subsection of the FCRA requiring that such forms and disclosures be 
used by any motor vehicle dealer subject to the FTC's rulemaking 
authority.

0
7. Add appendix C to part 698 to read as follows:

Appendix C to Part 698--Model Prescreen Opt-Out Notices

    In order to comply with 16 CFR part 642, the following model 
notices may be used:
    (a) English language model notice--(1) Short notice.
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[GRAPHIC] [TIFF OMITTED] TR13SE21.001


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    (2) Long notice.
    [GRAPHIC] [TIFF OMITTED] TR13SE21.002
    

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    (b) Spanish language model notice--(1) Short notice.
    [GRAPHIC] [TIFF OMITTED] TR13SE21.003
    

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    (2) Long notice.
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    By direction of the Commission.
April J. Tabor,
Secretary.
[FR Doc. 2021-19465 Filed 9-10-21; 8:45 am]
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