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Agency Information Collection Activities; Submission for OMB Review; Comment Request

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Federal Trade Commission.




The information collection requirements described below will be submitted to the Office of Management and Budget (“OMB”) for review, as required by the Paperwork Reduction Act (“PRA”). The Federal Trade Commission (“FTC” or “Commission”) is seeking public comments on its proposal to extend through July 31, Start Printed Page 90032010 the current OMB clearance for information collection requirements contained in its proposed Affiliate Marketing Rule (or “proposed Rule”). That clearance expires on July 31, 2007.


Comments must be filed by April 30, 2007.


Interested parties are invited to submit written comments. Comments should refer to “Affiliate Marketing Rule: FTC File No. R411006” to facilitate the organization of comments. A comment filed in paper form should include this reference both in the text and on the envelope and should be mailed or delivered, with two complete copies, to the following address: Federal Trade Commission, Room H-135 (Annex J), 600 Pennsylvania Ave., NW., Washington, DC 20580. Because paper mail in the Washington area and at the Commission is subject to delay, please consider submitting your comments in electronic form, as prescribed below. However, if the comment contains any material for which confidential treatment is requested, it must be filed in paper form, and the first page of the document must be clearly labeled “Confidential.” [1]

Comments filed in electronic form should be submitted by following the instructions on the Web-based form at​AffiliateMarketingRule. To ensure that the Commission considers an electronic comment, you must file it on the Web-based form at the​AffiliateMarketingRule weblink. If this notice appears at, you may also file an electronic comment through that Web site. The Commission will consider all comments that forwards to it.

The FTC Act and other laws the Commission administers permit the collection of public comments to consider and use in this proceeding as appropriate. All timely and responsive public comments will be considered by the Commission and will be available to the public on the FTC Web site, to the extent practicable, at As a matter of discretion, the FTC makes every effort to remove home contact information for individuals from the public comments it receives before placing those comments on the FTC Web site. More information, including routine uses permitted by the Privacy Act, may be found in the FTC's privacy policy at​ftc/​privacy.htm.

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Requests for additional information should be addressed to Anthony Rodriguez or Loretta Garrison, Attorneys, Division of Privacy and Identity Protection, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue, NW., Washington, DC 20580, (202) 326-2252.

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Under the Paperwork Reduction Act (“PRA”), 44 U.S.C. 3501-3520, federal agencies must obtain approval from OMB for each collection of information they conduct or sponsor. “Collection of information” means agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. 44 U.S.C. 3502(3); 5 CFR 1320.3(c). As required by section 3506(c)(2)(A) of the PRA, the FTC is providing this opportunity for public comment before requesting that OMB extend the existing paperwork clearance for the regulations noted herein.

The FTC invites comments on: (1) Whether the required collection of information is necessary for the proper performance of the functions of the agency, including whether the information has practical utility; (2) the accuracy of the agency's estimate of the burden of the required collection of information, including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission of responses. All comments should be filed as prescribed in the ADDRESSES section above, and must be received on or before April 30, 2007.

The Affiliate Marketing Rule, 16 CFR part 680, was proposed by the FTC under section 214 of the Fair and Accurate Credit Transactions Act (“FACT Act”), Pub. L. No. 108-159 (December 6, 2003). The FACT Act amended the Fair Credit Reporting Act, 15 U.S.C. 1681 et seq., which was enacted to enable consumers to protect the privacy of their consumer credit information. As mandated by the FACT Act, the proposed Rule specifies disclosure requirements for certain affiliate companies subject to the Commission's jurisdiction. Except as discussed below, these requirements constitute “collections of information” for purposes of the PRA. Specifically, the FACT Act and the proposed Rule require covered entities to provide consumers with notice and an opportunity to opt out of the use of certain information before sending marketing solicitations. The proposed Rule generally provides that, if a company communicates certain information about a consumer (“eligibility information”) to an affiliate, the affiliate may not use that information to make or send solicitations to the consumer unless the consumer is given notice and a reasonable opportunity to opt out of such use of the information and the consumer does not opt out.

To minimize compliance costs and burdens for entities, particularly any small businesses that may be affected, the proposed Rule contains model disclosures and opt-out notices that may be used to satisfy the statutory requirements. The proposed Rule also gives covered entities flexibility to satisfy the notice and opt-out requirement by sending the consumer a free-standing opt-out notice or by adding the opt-out notice to the privacy notices already provided to consumers, such as those provided in accordance with the provisions of Title V, subtitle A of the GLBA. For covered entities that choose to prepare a free-standing opt-out notice, the time necessary to prepare it would be minimal because those entities could simply use the model disclosure. For covered entities that choose to incorporate the model opt-out notice into their GLBA privacy notices the time necessary to do so also would be minimal. Arguably, verbatim adoption of the model notice would not even be a PRA “collection of information.” [2]

Burden Statement

Except where otherwise specifically noted, staff's estimates of burden are based on its knowledge of the consumer credit industries and knowledge of the entities over which the Commission has jurisdiction. This said, estimating PRA burden of the proposed Rule's disclosure requirements is difficult given the highly diverse group of affected entities that includes affiliated companies which may use certain eligibility information shared by their Start Printed Page 9004affiliates to send marketing notices to consumers who are not regulated by a federal financial regulatory agency.

The estimates provided in this burden statement may well overstate actual burden. First, an uncertain but possibly significant number of entities subject to the FTC's jurisdiction do not have affiliates and would thus not be covered by section 214 of the FACT Act or the proposed Rule. Second, the Commission's staff does not know how many companies subject to the FTC's jurisdiction under the proposed rule actually share eligibility information among affiliates and, of those, how many affiliates use such information to make marketing solicitations to consumers. The staff considered the wide variations in covered entities and the fact that, in some instances, covered entities may make the required disclosures in the ordinary course of business, apart from the FACT Act Rule, voluntarily as a service to their customers, while still other entities may choose to rely on the exceptions to the proposed Rule's notice and opt-out requirements.[3]

Staff's estimates assume a higher burden will be incurred during the first year of the OMB clearance period with a lesser burden for each of the subsequent two years, since the opt-out notice to consumers is required to be given only once. Institutions may provide for an indefinite period for the opt-out or they may time limit it, but for no less than five years. Given this minimum time period, Commission staff did not estimate burden for preparing and distributing extension notices by entities that limit the duration of the opt-out time period. The relevant PRA time frame for burden calculation is three years from renewed OMB clearance, and the five-year notice period will not begin until this proposed Rule becomes final.

Staff's labor cost estimates take into account: Managerial and professional time for reviewing internal policies and determining compliance obligations; technical time for creating the notice and opt-out, in either paper or electronic form; and clerical time for disseminating the notice and opt-out.[4] In addition, staff's cost estimates presume that the availability of model disclosures and opt-out notices will simplify the compliance review and implementation processes, thereby significantly reducing the cost of compliance. Moreover, the proposed Rule gives entities considerable flexibility to determine the scope and duration of the opt-out. Indeed, this flexibility permits entities to send a single joint notice on behalf of all of its affiliates.

Estimated total annual hours burden: 2,662,000 hours, rounded.

Staff estimates that approximately 1.17 million (rounded) non-GLBA entities under the jurisdiction of the FTC have affiliates and would be affected by the proposed Rule.[5] Staff further estimates that there are an average of 5 businesses per family or affiliated relationship, and that the affiliated entities will choose to send a joint notice, as permitted by the proposed Rule. Thus an estimated 233,400 (rounded) non-GLBA entities may send the new affiliate marketing notice. Staff also estimates that non-GLBA entities under the jurisdiction of the FTC would each incur 14 hours of burden during the first year of the clearance period, comprised of a projected 7 hours of managerial time, 2 hours of technical time, and 5 hours of clerical assistance.

Based on the above, total annual burden for non-GLBA entities during the first year of the clearance period would be approximately 2,646,000 hours and the total annual labor cost would be approximately $86,676,000, rounded.[6] These estimates include the start-up burden and attendant costs, such as determining compliance obligations. Paperwork burden in later years would be significantly lower, with non-GLBA entities each incurring 10 hours of annual burden during the remaining two years of the clearance.[7] Thus, the estimated annual burden for non-GLBA entities, averaged over the three-year clearance period, would be 2,646,000 hours and $66,065,000 in labor costs.

Entities that are subject to the Commission's GLBA privacy notice regulation already provide privacy notices to their customers. Because the FACT Act and the proposed Rule contemplate that the new affiliate marketing notice can be included in the GLBA notices, the burden on GLBA regulated entities would be greatly reduced. Accordingly, the GLBA entities would incur 6 hours of burden during the first year of the clearance period, comprised of a projected 5 hours of managerial time and 1 hour of technical time to execute the notice, given that the proposed Rule provides a model.[8] Staff also estimates that 3,350 GLBA entities under the FTC's jurisdiction would be affected, so that the total annual burden for GLBA entities during the first year of the clearance period would approximate 20,000 hours and total annual labor cost would approximate $673,000.[9] The paperwork burden in subsequent years would be significantly lower, with GLBA entities each incurring 4 hours of annual burden (3 hours of managerial time and 1 hour of technical time) during the remaining two years of the clearance, which amounts to 13,400 hours and $443,540 in labor costs in each of the ensuing two years. Thus, averaged over the three-year clearance period, the estimated annual burden for GLBA entities is 15,600 hours and $520,000 in labor costs.

Cumulatively for both GLBA and non-GLBA entities, the average annual burden over the prospective three-year clearance period, rounded, is approximately 2,662,000 burden hours and $87,349,000 in labor costs. GLB entities are already providing notices to their customers so there are no new capital or non-labor costs, as this notice may be consolidated into their current notices. For non-GLB entities, the rule provides for simple and concise model forms that institutions may use to comply. Thus, any capital or non-labor Start Printed Page 9005costs associated with compliance for these entities are negligible.

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William Blumenthal,

General Counsel.

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1.  Commission Rule 4.2(d), 16 CFR 4.2(d). The comment must be accompanied by an explicit request for confidential treatment, including the factual and legal basis for the request, and must identify the specific portions of the comment to be withheld from the public record. The request will be granted or denied by the Commission's General Counsel, consistent with applicable law and the public interest. See Commission Rule 4.9(c), 16 CFR 4.9(c).

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2.  “The public disclosure of information originally supplied by the Federal government to the recipient for purpose of disclosure to the public is not included within [the definition of collection of information].” 5 CFR 1320.3(c)(2).

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3.  Exceptions include, for example, having a preexisting business relationship with a consumer, using information in response to a communication initiated by the consumer or to solicitations authorized or requested by the consumer.

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4.  No clerical time was included in staff's burden analysis for GLBA entities as the notice would likely be combined with existing GLBA notices.

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5.  This estimate is derived from an analysis of a database of U.S. businesses based on SIC codes for businesses that market goods or services to consumers, which included the following industries: transportation services; communication; electric, gas, and sanitary services; retail trade; finance, insurance, and real estate; and services (excluding business services and engineering, management services). This estimate excludes businesses not subject to the FTC's jurisdiction as well as businesses that do not use data or information subject to the rule.

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6.  The figure is derived from the estimated 7 hours of managerial labor at $34.21 per hour; 2 hours of technical labor at $29.80 per hour; and 5 hours of clerical labor at $14.44 per hour (a combined $371.27) for the estimated 233,400+ non-GLBA business families subject to the proposed Rule. The hourly rates are based on average annual Bureau of Labor Statistics National Compensation Survey data, June 2005 (with 2005 as the most recent whole year information available at the BLS Web site).​ncs/​ocs/​sp/​ncbl0832.pdf (Table 1.1).

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7.  This estimate assumes that in subsequent years, non-GLBA entities would spend 4 hours of managerial time, 1 hour of technical time, and 5 hours of clerical time each year. Thus, the resulting estimated burden for each of the remaining two years of the clearance period would be 2,334,590 hours and approximately $55,759,000 in labor costs.

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8.  As stated above, no clerical time is included in the estimate because the notice likely would be combined with existing GLBA notices.

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9.  3,350 GLBA entities × [($34.20 × 5 hours) + ($29.80 × 1 hour)].

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[FR Doc. E7-3397 Filed 2-27-07; 8:45 am]