[Federal Register Volume 85, Number 184 (Tuesday, September 22, 2020)]
[Proposed Rules]
[Pages 59466-59469]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-19174]
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FEDERAL TRADE COMMISSION
16 CFR Part 680
RIN 3084-AB63
Affiliate Marketing 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 Affiliate Marketing 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 7, 2020.
ADDRESSES: Interested parties may file comments online or on paper by
following the Request for Comment part of the SUPPLEMENTARY INFORMATION
section below. Write ``Amendment to the Affiliate Marketing Rule, 16
CFR part 680, 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 Affiliate Marketing 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 214 of the FACT Act added a new section 624 to the
FCRA. This provision gives the consumer the right to restrict a person
from using certain information obtained from an affiliate to make
solicitations to that consumer. Section 624 generally provides that if
a person receives certain consumer eligibility information from an
affiliate, the person may not use that information to make
solicitations to the consumer about its products or services, unless
the consumer is given notice and an opportunity (via a simple method)
to opt out of such use of the information, and the consumer does not
opt out. The statute also provides that section 624 does not apply, for
example, to a person using eligibility information: (1) To make
solicitations to a consumer with whom the person has a pre-existing
business relationship; (2) to perform services for another affiliate
subject to certain conditions; (3) in response to a communication
initiated by the consumer; or (4) to make a solicitation that has been
authorized or requested by the consumer. Unlike the FCRA affiliate
sharing opt-out (15 U.S.C. 1681a(d)(2)(A)(iii)) and the Gramm-Leach-
Bliley Act (``GLBA''), 15 U.S.C. 6801 et seq., non-affiliate sharing
opt-out--both of which apply indefinitely--section 624 provides that a
consumer's affiliate marketing opt-out election must
[[Page 59467]]
be effective for a period of at least five years. Upon expiration of
the opt-out period, the consumer must be given a renewal notice and an
opportunity to renew the opt-out before information received from an
affiliate may be used to make solicitations to the consumer. The
Federal Trade Commission published regulations implementing Section
624, the Affiliate Marketing Rule, 16 CFR part 680, on October 30,
2007.\1\
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\1\ 72 FR 61423 (October 30, 2007).
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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.\2\ 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.\3\ Accordingly, in
2012, the Commission rescinded several of its FCRA rules, which had
been replaced by rules issued by the CFPB.\4\ The FTC retained
rulemaking authority for other rules promulgated under the Acts to the
extent the rules apply to motor vehicle dealers described in section
1029(a) of the Dodd-Frank Act \5\ that are predominantly engaged in the
sale and servicing of motor vehicles, the leasing and servicing of
motor vehicles, or both (``motor vehicle dealers'').\6\ The rules for
which the FTC retains rulemaking authority include the Affiliate
Marketing Rule, which now applies only to motor vehicle dealers.\7\
Entities that are not motor vehicle dealers are covered by the CFPB's
Regulation V, Subpart C, which is substantially similar to the
Commission's Rule.\8\
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\2\ Public Law 111-203 (2010).
\3\ 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).
\4\ 77 FR 22200 (April 13, 2012).
\5\ 12 U.S.C. 5519.
\6\ 77 FR 22200 (April 13, 2012).
\7\ Id.
\8\ 12 CFR 1022.20-27. While there are no substantive
differences between the two rules, they are organized differently
and, in some cases, use different examples. See, e.g., 12 CFR
1022.20(b)(4)(iii).
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II. Technical Changes To Correspond to Statutory Changes Resulting From
the Dodd-Frank Act
The Commission promulgated the Affiliate Marketing Rule at a time
when it had rulemaking authority for a broader group of entities. While
the Dodd-Frank Act did not change the Commission's enforcement
authority for the Affiliate Marketing Rule, it did narrow the
Commission's rulemaking authority with respect to the Rule. It now
covers only motor vehicle dealers. The amendments in the Dodd-Frank Act
necessitate a technical revision to the Affiliate Marketing Rule to
ensure that the regulation is consistent with the text of the amended
FCRA. Accordingly, the Commission proposes to modify the Affiliate
Marketing Rule to properly reflect the Rule's scope.
The proposed amendment to Sec. 680.1(b) narrows the scope
description of the Affiliate Marketing Rule to the entities excluded
from Consumer Financial Protection Bureau jurisdiction as described in
the Dodd-Frank Act.\9\ It does so by replacing the broad term
``person'' with the term ``motor vehicle dealer,'' as defined in
amended Sec. 680.3.
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\9\ 12 U.S.C. 5519.
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The proposed amendment to Sec. 680.3 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.\10\ Also, the proposed amendments
revise the term ``you'' (see 680.3(m)) to refer to a motor vehicle
dealer.
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\10\ Id.
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The proposed amendments do not change the substantive provisions of
the Rule or the examples in the Rule, even where those provisions and
examples involve entities other than motor vehicle dealers that are
covered by the CFPB's rule, rather than the Commission's Rule. The
primary reason for retaining these provisions and examples is that the
Rule addresses the relationship between covered motor vehicle dealers
and their affiliates, which may not be motor vehicle dealers. The
obligations and exceptions set forth by the rule are inextricably
linked to a consumer's relationship and actions in relation to all
affiliates, both motor vehicle dealers and non-motor vehicle dealers.
In order for the Rule to apply meaningfully, it must address both types
of entities, even those that are not directly covered by the rule. This
will not create any conflict with the CFPB's corresponding rule, as the
Commission's Affiliate Marketing Rule and the CFPB's rule are
substantially similar and impose the same obligations and exceptions on
entities that they cover.
III. Regulatory Review of the Affiliate Marketing Rule
In addition to proposing the changes described above, the
Commission seeks information about the costs and benefits of the Rule,
and its regulatory and economic impact. 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 Affiliate Marketing Rule; possible
conflict between the Affiliate Marketing Rule and state, local, or
other federal laws or regulations; and the effect on the Affiliate
Marketing 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
Affiliate Marketing Rule? Why or why not?
2. What benefits has the Affiliate Marketing Rule provided to
consumers? What evidence supports the asserted benefits?
3. What modifications, if any, should be made to the Affiliate
Marketing 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
Affiliate Marketing Rule?
4. What significant costs, if any, has the Affiliate Marketing Rule
imposed on consumers? What evidence supports the asserted costs?
5. What modifications, if any, should be made to the Affiliate
Marketing 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 Affiliate Marketing Rule?
6. What benefits, if any, has the Affiliate Marketing Rule provided
to
[[Page 59468]]
businesses, including small businesses? What evidence supports the
asserted benefits?
7. What modifications, if any, should be made to the Affiliate
Marketing 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 Affiliate
Marketing Rule 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 Affiliate Marketing Rule imposed on businesses, including small
businesses? What evidence supports the asserted costs?
9. What modifications, if any, should be made to the Affiliate
Marketing 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 Affiliate Marketing Rule?
10. What evidence is available concerning the degree of industry
compliance with the Affiliate Marketing Rule?
11. What modifications, if any, should be made to the Affiliate
Marketing Rule to account for changes in relevant technology or
economic conditions? What evidence supports the proposed modifications?
12. Does the Affiliate Marketing 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 Affiliate
Marketing Rule be modified? If so, why, and how? If not, why not?
13. Should the Affiliate Marketing Rule be amended to remove
provisions addressing circumstances that do not apply, or typically do
not apply, to motor vehicle dealers?
14. Can the examples set forth in the Affiliate Marketing Rule be
further amended to make them more helpful and informative to motor
vehicle dealers? Would additional examples be helpful, and if so, what
examples? Should examples that relate to types of transactions that are
not typical in the motor vehicle context be removed?
15. The Commission proposes to amend the Rule to reflect statutory
changes to the Rule's scope. 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?
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 7,
2020. Write ``Affiliate Marketing Rule, 16 CFR part 680, 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.
Because of 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 comment online through the https://www.regulations.gov website. To ensure the Commission considers your
online comment, please follow the instructions on the web-based form
provided by regulations.gov.
If you file your comment on paper, write ``Affiliate Marketing
Rule, 16 CFR part 680, 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 the publicly accessible
website, 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 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 any 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 7, 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.\11\
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\11\ 16 CFR 1.26(b)(5).
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VII. Paperwork Reduction Act
The Affiliate Marketing 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''). OMB has approved the
Rule's existing information collection requirements
[[Page 59469]]
through February 28, 2023 (OMB Control No. 3084-0131). Under the
existing clearance, the FTC has attributed to itself the estimated
burden regarding all motor vehicle dealers, and it shares the remaining
estimated PRA burden equally with the CFPB for other persons for which
both agencies have enforcement authority.
This proposal would amend 16 CFR part 680. The proposed amendments
do not modify or add to information collection requirements that were
previously approved by OMB. The amendments make no substantive changes
to the Rule, other than to clarify that the scope of the Rule is
limited to motor vehicle dealers. The Rule's OMB clearance already
reflects that scope. Therefore, the Commission does not believe that
the proposed amendments would substantially or materially modify 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 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.\12\ The
Commission does not expect that 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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\12\ 5 U.S.C. 603-605.
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Therefore, based on available information, the Commission certifies
that amending the Affiliate Marketing Rule as proposed will not have a
significant 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. Succinct 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-3.
C. Description of Small Entities to Which the Proposed Rule Will Apply
Determining a precise estimate of the number of small entities \13\
to which the Rule applies 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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\13\ 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 and
Professional Skills Needed To Comply
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 Rule.
E. Identification of 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
information may duplicate and/or satisfy or possibly conflict with the
Rule's requirements for any covered financial institutions.
F. Description of Any 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 680
Consumer protection, Credit, Trade practices.
For the reasons stated above, the Federal Trade Commission proposes
to amend part 680 of title 16 of the Code of Federal Regulations as
follows:
PART 680--AFFILIATE MARKETING
0
1. Revise the authority section for part 680 to read as follows:
Authority: Pub. L. 108-159, sec. 311; 15 U.S.C.A. 1681s-3; 12
U.S.C. 5519(d).
0
2. Revise Sec. 680.1 paragraph (b) to read as follows:
Sec. 680.1 Purpose and scope.
* * * * *
(b) Scope. This part applies to any motor vehicle dealer as defined
in Sec. 680.3 that uses information from its affiliates for the
purpose of marketing solicitations, or provides information to its
affiliates for that purpose.
0
3. In Sec. 680.3, redesignate paragraphs (i) through(l) as paragraphs
(j) through(m) and add a new paragraph (i) to read as follows:
Sec. 680.3 Definitions.
* * * * *
(i) Motor vehicle dealer. The term ``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. 2020-19174 Filed 9-21-20; 8:45 am]
BILLING CODE 6750-01-P