Federal Trade Commission (“FTC” or “Commission”).
The information collection requirements described below will be submitted to the Office of Manage ment and Budget (“OMB”) for review, as required by the Paperwork Reduc tion Act (“PRA”). The FTC seeks public comments on its proposal to extend through December 31, 2013 the current OMB clearance for information collection requirements contained in its Affiliate Marketing Rule (or “Rule”). That clearance expires on December 31, 2010.
Comments must be filed by December 20, 2010.
Interested parties are invited to submit written comments electronically or in paper form by following the instructions in the Request for Comments part of the SUPPLEMENTARY INFORMATION section below. Comments in electronic form should be submitted by using the following weblink: https://ftcpublic.commentworks.com/ftc/AffiliateMarketingPRA2 (and following the instructions on the Web-based form). Comments filed in paper form should be mailed or delivered to the following address: Federal Trade Commission, Office of the Secretary, Room H-113 (Annex J), 600 Pennsylvania Avenue, NW., Washington, DC 20580, in the manner detailed in the SUPPLEMENTARY INFORMATION section below.Start Further Info
FOR FURTHER INFORMATION CONTACT:
Requests for additional information should be addressed to Anthony Rodriguez, Attorney, Division of Privacy and Identity Protection, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue, NW., Washington, DC 20580, (202) 326-2757.End Further Info End Preamble Start Supplemental Information
Request for Comments
Interested parties are invited to submit written comments. Comments should refer to “Affiliate Marketing Rule: FTC File No. P105411” to facilitate the organization of comments. Please note that your comment—including your name and your State—will be placed on the public record of this proceeding, including on the publicly accessible FTC Web site, at http://www.ftc.gov/os/publiccomments.shtm.
Because comments will be made public, they should not include any sensitive personal information, such as any individual'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. Comments also should not include any sensitive health information, such as medical records or other individually identifiable health information. In addition, comments should not include “[t]rade secret or any commercial or financial information which is obtained from any person and which is privileged or confidential” as provided in Section 6(f) of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2). Comments containing matter 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).
Because paper mail addressed to the FTC is subject to delay due to heightened security screening, please consider submitting your comments in electronic form. Comments filed in electronic form should be submitted using the following weblink https://ftcpublic.commentworks.com/ftc/AffiliateMarketingPRA2 (and following the instructions on the Web-based form). To ensure that the Commission considers an electronic comment, you must file it on the Web-based form at the weblink https://ftcpublic.commentworks.com/ftc/AffiliateMarketingPRA2. If this Notice appears at http://www.regulations.gov/search/index.jsp, you may also file an electronic comment through that Web site. The Commission will consider all comments that regulations.gov forwards to it.
All comments should additionally be sent to OMB. Comments may be submitted by U.S. Postal Mail to: Office of Information and Regulatory Affairs, Office of Management and Budget, Attention: Desk Officer for Federal Trade Commission, New Executive Office Building, Docket Library, Room 10102, 725 17th Street, NW., Washington, DC 20503. Comments, however, should be submitted via facsimile to (202) 395-5167 because U.S. Postal Mail is subject to lengthy delays due to heightened security precautions.
Under the PRA, 44 U.S.C. 3501-3521, 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 Affiliate Marketing Rule, 16 CFR Part 680, was issued by the FTC under section 214 of the Fair and Accurate Credit Transactions Act (“FACT Act”), Public Law 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 and accuracy of their consumer credit information. As mandated by the FACT Act, the Rule specifies disclosure requirements for certain affiliated 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 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 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 Rule contains model disclosures and opt-out notices that may be used to satisfy the statutory requirements. The 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. In either event, the time necessary to prepare or incorporate an opt-out notice would be minimal because those entities could either use the model disclosure verbatim or base their own disclosures upon it. Moreover, verbatim adoption of the model notice does not constitute a PRA “collection of information” 
On July 28, 2010, the FTC sought comment on the information collection requirements associated with the Rule, 16 CFR Part 680. 75 FR 43526. No comments were received. Accordingly, apart from updates to its labor cost estimates tied to more recent available Department of Labor data, the FTC retains its previously published burden estimates.
Pursuant to the OMB regulations, 5 CFR Part 1320, that implement the PRA, 44 U.S.C. 3501-3521, the FTC is providing this second opportunity for public comment while seeking OMB approval to extend its existing PRA clearance for the Rule. All comments should be filed as prescribed herein, and must be received on or before December 20, 2010.
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 Rule's disclosure requirements is difficult given the highly diverse group of affected entities that may use certain eligibility information shared by their affiliates to send marketing notices to consumers.
The estimates provided in this burden statement may well overstate actual burden. As noted above, verbatim adoption of the disclosure of information provided by the Federal government is not a “collection of information” to which to assign PRA burden estimates, and an unknown number of covered entities will opt to use the model disclosure language. Second, an uncertain, but possibly significant, number of entities subject to the FTC's jurisdiction do not have affiliates and thus would not be covered by section 214 of the FACT Act or the Rule. Third, Commission staff does not know how many companies subject to the FTC's jurisdiction under the Rule actually share eligibility information among affiliates and, of those, how many affiliates use such information to make marketing solicitations to consumers. Fourth, still other entities may choose to rely on the exceptions to the Rule's notice and opt-out requirements.
As in the past, FTC staff's estimates assume a higher burden will be incurred during the first year of a prospective OMB three-year clearance, with a lesser burden for each of the subsequent two years because 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 the 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 the three-year span between expiring OMB clearances (i.e., December 31, 2010-December 31, 2013). The five-year notice period, however, will not begin until October 1, 2013 (five years removed from the Rule's effective date), very close to the end of the applicable period covered by the instant clearance request.
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. 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 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.Start Printed Page 70677
Estimated total average annual hours burden: 1,043,961 hours.
Based, in part, on industry data regarding the number of businesses under various industry codes, staff estimates that 1,101,780 non-GLBA entities under FTC jurisdiction have affiliates and would be affected by the Rule. 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 Rule. Thus, an estimated 220,356 non-GLBA business families may send the 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 prospective requested three-year PRA 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 burden for non-GLBA entities during the prospective three-year clearance period would be approximately 3,084,984 hours. Associated labor cost would total $101,874,986. These estimates include the start-up burden and attendant costs, such as determining compliance obligations. Non-GLBA entities, however, will give notice only once during the clearance period ahead. Thus, averaged over that three-year period, the estimated annual burden for non-GLBA entities is 1,028,328 hours and $33,958,329 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 Rule contemplate that the 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 Rule provides a model. Staff further estimates that 3,350 GLBA entities under the FTC's jurisdiction would be affected, so that the total burden for GLBA entities during the first year of the clearance period would approximate 20,100 hours and $857,667 in associated labor costs. Allowing for increased familiarity with procedure, the PRA burden in ensuing years would decline, with GLBA entities each incurring an estimated 4 hours of annual burden (3 hours of managerial time and 1 hour of technical time) during the remaining two years of the clearance, amounting to 13,400 hours and $562,934 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 15,633 hours and $661,178 in labor costs.
Cumulatively for both GLBA and non-GLBA entities, the average annual burden over the prospective three-year clearance period is 1,043,961 burden hours and $34,619,507 in labor costs. GLBA 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-GLBA entities, the Rule provides for simple and concise model forms that institutions may use to comply. Entities that already have on-line capabilities will offer consumers the choice to receive notices via electronic format (e.g., computer equipment and software), and covered entities are already equipped to provide disclosures (e.g., computers with word processing programs, copying machines, mailing capabilities). Thus, any capital or non-labor costs associated with compliance for these entities are negligible.Start Signature
Willard K. Tom,
1. 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 FTC Rule 4.9(c), 16 CFR 4.9(c).Back to Citation
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).Back to Citation
3. Exceptions include, for example, having a preexisting business relationship with a consumer, using information in response to a communication initiated by the consumer, and solicitations authorized or requested by the consumer.Back to Citation
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.Back to Citation
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). See http://www.naics.com/search.htm. This estimate excludes businesses not subject to the FTC's jurisdiction and businesses that do not use data or information subject to the rule. To the resulting sub-total (6,677,796), staff applies a continuing assumed rate of affiliation of 16.75 percent, see 69 FR 33324, 33334 (June 15, 2004), reduced by a continuing estimate of 100,000 entities subject to the Commission's GLBA privacy notice regulations, see id., applied to the same assumed rate of affiliation. The net total is 1,101,780.Back to Citation
6. The associated labor cost is based on the labor cost burden per notice by adding the hourly mean private sector wages for managerial, technical, and clerical work and multiplying that sum by the estimated number of hours. The classifications used are “Management Occupations” for managerial employees, “Computer and Mathematical Science Occupations” for technical staff, and “Office and Administrative Support” for clerical workers. See National Compensation Survey: Occupational Earnings in the United States 2009, U.S. Department of Labor, released August 2010, Bulletin 2738, Table 3 (“Summary: Full-time civilian workers: Mean and median hourly, weekly, and annual earnings and mean weekly and annual hours”) http://www.bls.gov/ncs/ocs/sp/nctb1346.pdf. The respective private sector hourly wages for these classifications are $43.99, $36.07, and $16.45. Estimated hours spent for each labor category are 7, 2, and 5, respectively. Multiplying each occupation's hourly wage by the associated time estimate, labor cost burden per notice equals $462.32. This subtotal is then multiplied by the estimated number of non-GLB business families projected to send the affiliate marketing notice (220,356) to determine cumulative labor cost burden for non-GLBA entities ($101,874,986).Back to Citation
7. 3,084,984 hours ÷ 3 = 1,028,328; $101,874,986 ÷ 3 = $33,958,329.Back to Citation
8. Financial institutions must provide a privacy notice at the time the customer relationship is established and then annually so long as the relationship continues. Staff's estimates assume that the affiliate marketing opt-out will be incorporated in the institution's initial and annual notices.Back to Citation
9. As stated above, no clerical time is included in the estimate because the notice likely would be combined with existing GLBA notices.Back to Citation
10. Based on the previously stated estimates of 100,000 GLBA business entities (see supra note 5) at an assumed rate of affiliation of 16.75 percent (16,750), divided by the presumed ratio of 5 businesses per family, this yields a total of 3,350 GLBA business families subject to the Rule. For simplicity, staff assumes that all of these entities are new establishments and/or newly integrating the affiliated opt-out notice with the GLBA notice in the first year of the prospective three-year clearance period; thus, the higher estimate of hours assigned to the first year. This, too, then, would effectively overstate actual burden.Back to Citation
11. 3,350 GLBA entities × [($43.99 × 5 hours) + ($36.07 × 1 hour)] = $857,667.Back to Citation
12. 3,350 GLBA entities × [($43.99 × 3 hours) + ($36.07 × 1 hour)] = $562,934.Back to Citation
[FR Doc. 2010-29048 Filed 11-17-10; 8:45 am]
BILLING CODE 6750-01-P