[Federal Register Volume 87, Number 100 (Tuesday, May 24, 2022)]
[Notices]
[Pages 31554-31555]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-11095]


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FEDERAL RESERVE SYSTEM


Agency Information Collection Activities: Announcement of Board 
Approval Under Delegated Authority and Submission to OMB

AGENCY: Board of Governors of the Federal Reserve System.

SUMMARY: The Board of Governors of the Federal Reserve System (Board) 
is adopting a proposal to extend for three years, without revision, the 
Recordkeeping and Disclosure Requirements Associated with Regulation II 
(FR II; OMB No. 7100-0349).

FOR FURTHER INFORMATION CONTACT: Federal Reserve Board Clearance 
Officer--Nuha Elmaghrabi--Office of the Chief Data Officer, Board of 
Governors of the Federal Reserve System, Washington, DC 20551, (202) 
452-3829.
    Office of Management and Budget (OMB) Desk Officer for the Federal 
Reserve Board, Office of Information and Regulatory Affairs, Office of 
Management and Budget, New Executive Office Building, Room 10235, 725 
17th Street NW, Washington, DC 20503, or by fax to (202) 395-6974.

SUPPLEMENTARY INFORMATION: On June 15, 1984, OMB delegated to the Board 
authority under the Paperwork Reduction Act (PRA) to approve and assign 
OMB control numbers to collections of information conducted or 
sponsored by the Board. Board-approved collections of information are 
incorporated into the official OMB inventory of currently approved 
collections of information. The OMB inventory, as well as copies of the 
PRA Submission, supporting statements, and approved collection of 
information instrument(s) are available at https://www.reginfo.gov/public/do/PRAMain. These documents are also available on the Federal 
Reserve Board's public website at https://www.federalreserve.gov/apps/reportforms/review.aspx or may be requested from the agency clearance 
officer, whose name appears above.

Final Approval Under OMB Delegated Authority of the Extension for Three 
Years, Without Revision, of the Following Information Collection

    Report title: Recordkeeping and Disclosure Requirements Associated 
with Regulation II.
    Agency form number: FR II.
    OMB control number: 7100-0349.
    Frequency: On occasion, annually.
    Respondents: Debit card issuers and payment card networks.
    Estimated number of respondents: Implement policies and procedures, 
1; Review and update policies and procedures, 527; General 
recordkeeping, 527; Annual notification and change in status, 527.
    Estimated average hours per response: Implement policies and 
procedures, 160; Review and update policies and procedures, 40; General 
recordkeeping, 1; Annual notification and change in status, 1.
    Estimated annual burden hours: Implement policies and procedures, 
160; Review and update policies and procedures, 21,080; General 
recordkeeping, 527; Annual notification and change in status, 527.
    General description of report: Regulation II--Debit Card 
Interchange Fees and Routing (12 CFR part 235) implements standards for 
assessing whether interchange transaction fees for electronic debit 
transactions are reasonable and proportional to the cost incurred by 
the issuer with respect to the transaction, and establishes rules for 
payment card transactions as required by section 920(a) of the 
Electronic Fund Transfer Act (EFTA) (15 U.S.C. 1693o-2(a)).
    Section 235.4(b)(1) requires that, in order to be eligible to 
receive or charge the fraud-prevention adjustment, an issuer that is 
subject to Regulation II's interchange fee standards (a ``covered 
issuer'') must develop and implement policies and procedures reasonably 
designed to take effective steps to reduce the occurrence of, and costs 
to all parties from, fraudulent electronic debit transactions, 
including through the development and implementation of cost-effective 
fraud-prevention technology. Section 235.4(b)(2) describes the specific 
requirements that a covered issuer's fraud-prevention policies and 
procedures must address. Section 235.4(b)(3) requires that a covered 
issuer must review its fraud-prevention policies and procedures, and 
their implementation, at least annually, and update them as necessary. 
Section 235.4(c) requires that, to be eligible to receive or charge a 
fraud-prevention adjustment, a covered issuer must annually notify its 
payment card networks that it complies with the standards under section 
235.4(b). Section 235.4(d) requires that, no later than 10 days after a 
covered issuer determines or receives a notification from the 
appropriate agency under section 235.9 that the covered issuer is 
substantially non-compliant with the standards set forth in section 
235.4(b), a covered issuer must notify its payment card networks that 
it is no longer eligible to receive or charge a fraud-prevention 
adjustment. The covered issuer must stop receiving and charging the 
fraud-prevention adjustment within 30 days after providing such 
notification to its payment card networks.
    Section 235.8(c)(1) requires that any debit card issuer subject to 
Regulation II (i.e., not just covered issuers) shall retain evidence of 
compliance with the requirements in Regulation II for a period of not 
less than five years after the end of the calendar year in which the 
electronic debit transaction occurred. In addition, section 235.8(c)(2) 
requires that, where any person subject to Regulation II (e.g., an 
issuer or payment card network) receives actual notice that it is 
subject to an investigation by an enforcement agency, such person must 
retain the records until final disposition of the matter. Compliance 
with this general recordkeeping requirement involves retaining records 
to demonstrate fulfillment of the other requirements in Regulation II.
    Legal authorization and confidentiality: The Recordkeeping and 
Disclosure Requirements Associated with Regulation II are authorized by 
section 920(a)(3) of the EFTA.\1\ The fraud-prevention and disclosure 
requirements are additionally

[[Page 31555]]

authorized by section 920(a)(5) of the EFTA.\2\ Regulation II's general 
recordkeeping requirement for issuers is mandatory. Regulation II's 
fraud-prevention recordkeeping requirements and disclosure requirements 
are required to obtain a benefit.
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    \1\ 15 U.S.C. 1693o-2(a)(3) (authorizing the Board to prescribe 
regulations regarding interchange transaction fees and require 
issuers or payment card networks to provide to the Board such 
information as deemed necessary).
    \2\ 15 U.S.C. 1693o-2(a)(5) (permitting the Board to allow for 
the fraud-prevention adjustment and condition it upon compliance 
with fraud-related standards promulgated by the Board).
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    The Recordkeeping and Disclosure Requirements Associated with 
Regulation II are generally not submitted to the Board or to any of the 
federal financial regulatory agencies. In the event that the Board 
obtains such information, it may be kept confidential under exemption 4 
of the Freedom of Information Act (FOIA) to the extent that it contains 
commercial or financial information both customarily and actually 
treated as private.\3\ If such information is obtained through the 
examination or enforcement process, it may be kept confidential under 
exemption 8 of the FOIA.\4\
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    \3\ 5 U.S.C. 552(b)(4).
    \4\ 5 U.S.C. 552(b)(8).
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    Current actions: On December 3, 2021, the Board published a notice 
in the Federal Register (86 FR 68667) requesting public comment for 60 
days on the extension, without revision, of the Recordkeeping and 
Disclosure Requirements Associated with Regulation II. The comment 
period for this notice expired on February 1, 2022. The Board received 
two comments.

Detailed Discussion of Public Comments

    The first comment letter was from trade associations representing 
debit card issuers; these commenters supported the proposal to extend 
for three years, without revision, the Recordkeeping and Disclosure 
Requirements Associated with Regulation II. The second comment letter 
was from trade associations representing merchants; these commenters 
did not provide comments related to the Recordkeeping and Disclosure 
Requirements Associated with Regulation II. Both comment letters 
addressed substantive issues pertaining to Regulation II that were 
unrelated to the regulation's information collections.

    Board of Governors of the Federal Reserve System, May 17, 2022.
Michele Taylor Fennell,
Deputy Associate Secretary of the Board.
[FR Doc. 2022-11095 Filed 5-23-22; 8:45 am]
BILLING CODE 6210-01-P