Agency Information Collection Activities; Proposed Collection; Comment Request, 62530-62533 [2015-26362]

Agencies

• FEDERAL TRADE COMMISSION

[Federal Register Volume 80, Number 200 (Friday, October 16, 2015)]
[Notices]
[Pages 62530-62533]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-26362]


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FEDERAL TRADE COMMISSION


Agency Information Collection Activities; Proposed Collection; 
Comment Request

AGENCY: Federal Trade Commission (FTC or Commission).

ACTION: Notice.

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SUMMARY: 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 FTC seeks public 
comments on its proposal to extend, for three years, the current PRA 
clearance for information collection requirements contained in the 
rules and regulations under the Health Breach Notification Rule. This 
clearance expires on March 31, 2016.

DATES: Comments must be received on or before December 15, 2015.

ADDRESSES: Interested parties may file a comment online or on paper by 
following the instructions in the Request for Comments part of the 
SUPPLEMENTARY INFORMATION section below. Write ``Health Breach 
Notification Rule, PRA Comments, P-125402'' on your comment, and file 
your comment online at https://ftcpublic.commentworks.com/ftc/healthbreachnotificationpra by following the instructions on the web-
based form. If you prefer to file your comment on paper, mail or 
deliver your comment to the following address: Federal Trade 
Commission, Office of the Secretary, 600 Pennsylvania Avenue NW., Suite 
CC-5610 (Annex J), 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 
J), Washington, DC 20024.

FOR FURTHER INFORMATION CONTACT: Requests for copies of the collection 
of information and supporting documentation should be addressed to Cora 
Tung Han, 202-326-2441, Attorney, Privacy & Identity Protection, Bureau 
of Consumer Protection, 600 Pennsylvania Ave. NW., Washington, DC 
20580.

SUPPLEMENTARY INFORMATION: On February 17, 2009, President Obama signed 
the American Recovery and Reinvestment Act of 2009 (the Recovery Act or 
the Act) into law. The Act included provisions to advance the use of 
health information technology and, at the same time, strengthen privacy 
and security protections for health information. The Act required the 
FTC to adopt a rule implementing the breach notification requirements 
applicable to vendors of personal health records, ``PHR related 
entities,'' \1\ and third party service providers, and the Commission 
issued a final rule on August 25, 2009. 74 FR 42962.
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    \1\ ``PHR related entity'' means an entity, other than a HIPAA-
covered entity or an entity to the extent that it engages in 
activities as a business associate of a HIPAA-covered entity, that: 
(1) Offers products or services through the Web site of a vendor of 
personal health records; (2) offers products or services through the 
Web sites of HIPAA-covered entities that offer individuals personal 
health records; or (3) accesses information in a personal health 
record or sends information to a personal health record. 16 CFR 
318.2(f).
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    The Health Breach Notification Rule (Rule), 16 CFR part 318, 
requires vendors of personal health records and PHR related entities to 
provide: (1) Notice to consumers whose unsecured personally 
identifiable health information has been breached; and (2) notice to 
the Commission. The Rule only applies to electronic health records and 
does not include recordkeeping requirements. The Rule requires third 
party service providers (i.e., those companies that provide services 
such as billing or data storage) to vendors of personal health records 
and PHR related entities to provide notification to such vendors and 
PHR related entities following the discovery of a breach. To notify the 
FTC of a breach, the Commission developed a form, which is posted at 
www.ftc.gov/healthbreach, for entities subject to the rule to complete 
and return to the agency.
    These notification requirements are subject to the provisions of 
the PRA, 44 U.S.C. Chapter 35. Under the PRA, federal agencies must get 
OMB approval for each collection of information they conduct, sponsor, 
or require. ``Collection of information'' means agency requests or 
requirements to 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 PRA 
clearance for the information collection requirements associated with 
the Commission's rules and regulations under the Health Breach 
Notification Rule (or Rule), 16 CFR part 318 (OMB Control Number 3084-
0150).
    The FTC invites comments on: (1) Whether the proposed collection of 
information is necessary for the proper performance of the functions of 
the agency, including whether the information will have practical 
utility; (2) the accuracy of the agency's estimate of the burden of the 
proposed 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. All

[[Page 62531]]

comments must be received on or before December 15, 2015.
    In the Commission's view, it has maximized the practical utility of 
the breach notification requirements in the Rule, consistent with the 
requirements of the Recovery Act. Under the Rule, consumers whose 
information has been affected by a breach of security receive notice of 
it ``without unreasonable delay and in no case later than 60 calendar 
days'' after discovery of the breach. Among other information, the 
notices must provide consumers with steps they can take to protect 
themselves from harm. Moreover, the breach notice requirements 
encourage entities to safeguard the information of their customers, 
thereby potentially reducing the incidence of harm.
    The form entities must use to inform the Commission of a security 
breach requests minimal information, mostly as replies to check boxes; 
thus, entities do not require extensive time to complete it. For 
breaches involving the health information of 500 or more individuals, 
entities must notify the Commission as soon as possible, and in any 
event no later than ten business days after discovering the breach. 
Breaches involving the information of fewer than 500 individuals may be 
reported in an annual submission that includes all breaches within the 
calendar year that fall within this category. The form serves the 
Commission by providing the agency with information about breaches 
occurring in the PHR industry.
    The Commission inputs the information it receives from entities 
into a database that the Commission updates periodically. The 
Commission makes certain information about these breaches available to 
the public. This publicly-available information serves businesses and 
the public. It provides businesses with information about potential 
causes of data breaches, which is particularly helpful to those setting 
up data security procedures. It also provides the public with 
information about the extent of data breaches. Thus, in the 
Commission's view, the Rule and form have significant practical 
utility.
    Pursuant to Sec.  318.5 of the Rule, entities must notify the FTC 
``according to instructions at the Federal Trade Commission's Web 
site.'' In 2009, the Commission indicated that ``[d]ue to security 
concerns associated with email transmission, the Commission will not 
accept emailed forms at this time.'' \2\ The Commission now offers a 
secure online method for receiving these notices, and instructions are 
on the form entities should use for notification, which is available on 
the FTC's Web site. Alternatively entities may continue to print and 
send the form to a designated FTC official by courier or overnight 
mail.
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    \2\ 74 FR at 42975.
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Burden Estimates

    The PRA burden of the Rule's requirements depends on a variety of 
factors, including the number of covered firms; the percentage of such 
firms that will experience a breach requiring further investigation 
and, if necessary, the sending of breach notices; and the number of 
consumers notified. The annual hours and cost estimates below likely 
overstate the burden because, among other things, they assume, though 
it is not necessarily so, that all breaches subject to the Rule's 
notification requirements will be required to take all of the steps 
described below.
    At the time the Rule was issued, insufficient data was available 
about the incidence of breaches in the PHR industry. Accordingly, staff 
based its burden estimate on data pertaining to private sector breaches 
across multiple industries. Staff estimated that there would be 11 
breaches per year requiring notification of 232,000 consumers.\3\
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    \3\ 74 FR at 42977.
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    As described above, the Rule requires covered entities that have 
suffered a breach to notify the Commission. Since the Rule has now been 
in effect for over five years,\4\ staff is now able to base the burden 
estimate on the actual notifications received from covered entities, 
which include the number of consumers notified. Accordingly, staff has 
used this information to update its burden estimate.
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    \4\ The rule became effective on September 24, 2009. Full 
compliance was required by February 22, 2010.
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    On average, about 2,500 consumers per year received notifications 
over the years 2010 and 2011. In 2012 and 2013, between 4,000 and 5,000 
consumers received notifications each year. In 2014, approximately 
17,993 consumers received notifications. In light of this upwards 
trend, staff bases its current burden estimate on an assumed two breach 
incidents per year that, together, require the notification of 
approximately 40,000 consumers. This estimate will likely overstate the 
burden; however, as consumers increasingly download their information 
into personal health records,\5\ staff anticipates that the number of 
affected consumers will increase.
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    \5\ See e.g., https://www.va.gov/bluebutton/.
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    Estimated Annual Hours Burden: 3,267.
    As explained in more detail within the next section, FTC staff 
projects that covered firms will require on average, per breach, 100 
hours of employee labor to determine what information has been 
breached, identify the affected customers, prepare the breach notice, 
and make the required report to the Commission. Based on an estimated 2 
breaches per year, yearly hourly burden would be 200 hours. 
Additionally, staff expects covered firms will require 3,067 annual 
hours (1,067 hours of telephone operator time + 2000 hours of 
information processor time) to process calls they may receive in the 
event of a data breach. See footnote 8 infra.
    Estimated Annual Labor Costs: $61,764.
    FTC staff projects that covered firms will require on average, per 
breach, 100 hours of employee labor to determine what information has 
been breached, identify the affected customers, prepare the breach 
notice, and make the required report to the Commission, at an estimated 
cost of $5,732 \6\ (staff assumes that outside services of a forensic 
expert will also be required and those services are separately 
accounted for under ``Estimated Annual Non-Labor Costs'' below). Based 
on an estimated 2 breaches per year, the annual employee labor cost 
burden for affected entities to perform these tasks is $11,464.\7\
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    \6\ Hourly wages throughout this document are based on mean 
hourly wages found at https://www.bls.gov/news.release/ocwage.htm 
(``Occupational Employment and Wages-May 2014,'' U.S. Department of 
Labor, released March 2015, Table 1 (``National employment and wage 
data from the Occupational Employment Statistics survey by 
occupation, May 2014'').
    The breakdown of labor hours and costs is as follows: 50 hours 
of computer and information systems managerial time at approximately 
$66 per hour; 12 hours of marketing manager time at $66 per hour; 33 
hours of computer programmer time at $40 per hour; and 5 hours of 
legal staff time at $64 per hour.
    \7\ Labor hours and costs pertaining to reporting to the 
Commission are subsumed within this total. Specifically, staff 
estimates that covered firms will require per breach, on average, 1 
hour of employee labor at an approximate cost of $65 to complete the 
required form. This is composed of 30 minutes of marketing 
managerial time at $66 per hour, and 30 minutes of legal staff time 
at $64 per hour, with the hourly rates based on the above-referenced 
Department of Labor table. See note 6, supra. Thus, based on 2 
breaches per year for which notification may be required, the 
cumulative annual-hours burden for covered entities to complete the 
notification to the Commission is 2 hours and the annual labor cost 
is approximately $130.00.
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    Additionally, covered entities will incur labor costs associated 
with processing calls they may receive in the event of a data breach. 
The rule requires that covered entities that fail to contact 10 or more 
consumers because of insufficient or out-of-date contact information 
must provide substitute

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notice through either a clear and conspicuous posting on their Web site 
or media notice. Such substitute notice must include a toll-free number 
for the purpose of allowing a consumer to learn whether or not his/her 
information was affected by the breach.
    Individuals contacted directly will have already received this 
information. Staff estimates that no more than 10 percent of affected 
consumers will utilize the offered toll-free number. Thus, of the 
40,000 consumers affected by a breach annually, staff estimates that 
4,000 may call the companies over the 90 days they are required to 
provide such access. Staff additionally projects that 4,000 additional 
consumers who are not affected by the breach will also call the 
companies during this period. Staff estimates that processing all 8,000 
calls will require an average of 3,067 hours of employee labor at a 
cost of $50,300.\8\
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    \8\ This assumes telephone operator time of 8 minutes per call 
and information processor time of 15 minutes per call. The cost 
estimate above is arrived at as follows: 1,067 hours of telephone 
operator time (8 minutes per call x 8,000 calls) at $19 per hour, 
and 2000 hours of information processor time (15 minutes per call x 
8,000 calls) at $15 per hour.
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    Accordingly, estimated cumulative annual labor costs, excluding 
outside forensic services, is $62,000.
    Estimated Annual Capital and other Non-Labor Costs: $49,960.
    Commission staff anticipates that capital and other non-labor costs 
associated with the Rule will consist of the following:
    1. The services of a forensic expert in investigating the breach;
    2. notification of consumers via email, mail, web posting, or 
media; and
    3. the cost of setting up a toll-free number, if needed.
    Staff estimates that covered firms (breached entities) will require 
30 hours of a forensic expert's time, at a cumulative cost of $3,960 
for each breach. This is the product of hourly wages of an information 
security analyst ($44), tripled to reflect profits and overhead for an 
outside consultant ($132), and multiplied by 30 hours. Based on the 
estimate that there will be 2 breaches per year, the annual cost 
associated with the services of an outside forensic expert is $7,920.
    As explained above, staff estimates that an average of 40,000 
consumers per year will receive a breach notification. Given the online 
relationship between consumers and vendors of personal health records 
and PHR related entities, most notifications will be made by email and 
the cost of such notifications will be minimal.\9\
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    \9\ See National Do Not Email Registry, A Report to Congress, 
June 2004 n.93, available at www.ftc.gov/reports/dneregistry/report.pdf.
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    In some cases, however, vendors of personal health records and PHR 
related entities will need to notify individuals by postal mail, either 
because these individuals have asked for such notification, or because 
the email addresses of these individuals are not current or not 
working. Staff estimates that the cost of a mailed notice is $0.06 for 
the paper and envelope, and $0.49 for a first class stamp. Assuming 
that vendors of personal health records and PHR related entities will 
need to notify by postal mail 10 percent of the 40,000 customers whose 
information is breached, the estimated cost of this notification will 
be $2,200 per year.\10\
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    \10\ As mentioned above, covered entities will also need to 
notify the Commission either through an online process or via mail. 
Staff estimates the non-labor costs for this notification to be 
negligible.
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    In addition, vendors of personal health records and PHR related 
entities sometimes may need to notify consumers by posting a message on 
their home page, or by providing media notice. Based on a recent study 
on data breach costs, staff estimates the cost of providing notice via 
Web site posting to be $0.06 per breached record, and the cost of 
providing notice via published media to be $0.03 per breached 
record.\11\ Applied to the above-stated estimate of 40,000 affected 
consumers, the estimated total annual cost of Web site notice will be 
$2,400, and the estimated total annual cost of media notice will be 
$1,200, yielding an estimated total annual cost for all forms of notice 
to consumers of $5,800.
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    \11\ Ponemon Institute, 2006 Annual Study: Cost of a Data 
Breach, Understanding Financial Impact, Customer Turnover, and 
Preventative Solutions, Table 2. In studies conducted for subsequent 
years, the Ponemon Institute does not report this level of detail.
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    Finally, staff estimates that the cost of providing a toll-free 
number will depend on the costs associated with T1 lines sufficient to 
handle the projected call volume and the cost of obtaining a toll-free 
telephone number.\12\ Based on industry research, staff projects that 
affected entities may need two T1 lines at a cost of $9,000 for the 90 
day period.\13\ In addition, staff estimates the cost of obtaining a 
dedicated toll-free line to be $4,540 per month. Accordingly, staff 
projects that the cost of obtaining two toll-free lines for 90 days 
will be $27,240,\14\ and the total annual cost for providing a toll-
free number will be $36,240.
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    \12\ Staff included costs associated with obtaining a T1 line (a 
specific type of telephone line that can carry more data than 
traditional telephone lines) in its initial estimate in 2009, but 
did not include these costs in its most recent estimate based on the 
low number of consumers notified pursuant to the Rule in 2010 and 
2011. Since staff's current estimate includes larger projected call 
volumes, however, staff has again included these costs. Staff 
recognizes that this likely overstates the burden because entities 
may already have these services in place and/or they may not all be 
necessary depending on how many consumers are affected.
    \13\ According to industry research, the cost of a single T1 
line is $1,500 per month.
    \14\ Staff estimates a monthly charge of $15 along with an 
activation charge of $15 for each toll-free line, as well as a per 
minute charge of $.07. Since staff estimates each breach will 
require 1067 hours of telephone operator time (see note 10, infra), 
staff estimates the cost/month of each toll-free line to be $4,540.
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    In sum, the total estimate for non-labor costs is $49,960: $7,920 
(services of a forensic expert) + $5,800 (costs of notifying consumers) 
+ $36,240 (cost of providing a toll-free number).
    The total estimated PRA annual cost burden is $61,764 (labor costs) 
+ $49,960 (non-labor costs) = approximately $112,000 (rounded to the 
nearest thousand).

Request for Comments

    You can file a comment online or on paper. Write ``Health Breach 
Notification Rule, PRA Comments, P-125402'' on your comment. Your 
comment--including your name and your state--will be placed on the 
public record of this proceeding, including, to the extent practicable, 
on the public Commission Web site, at https://www.ftc.gov/os/publiccomments.shtm. As a matter of discretion, the Commission tries to 
remove individuals' home contact information from comments before 
placing them on the Commission Web site.
    Because your comment will be made public, you are solely 
responsible for making sure that your comment does not include any 
sensitive personal information, such as a 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, do not include any ``[t]rade secret or 
any commercial or financial information which is . . . privileged or 
confidential,'' as discussed in 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). In particular, do 
not include competitively sensitive information such as costs, sales 
statistics,

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inventories, formulas, patterns, devices, manufacturing processes, or 
customer names.
    If you want the Commission to give your comment confidential 
treatment, you must file it in paper form, with a request for 
confidential treatment, and you must follow the procedure explained in 
FTC Rule 4.9(c), 16 CFR 4.9(c). Your comment will be kept confidential 
only if the FTC General Counsel, in his or her sole discretion, grants 
your request in accordance with the law and the public interest. Postal 
mail addressed to the Commission is subject to delay due to heightened 
security screening. As a result, the Commission encourages you to 
submit your comments online. To make sure that the Commission considers 
your online comment, you must file it at https://ftcpublic.commentworks.com/ftc/healthbreachnotificationpra by following 
the instructions on the web-based form. If this Notice appears at 
https://www.regulations.gov, you also may file a comment through that 
Web site.
    If you file your comment on paper, write ``Health Breach 
Notification Rule, PRA Comments, P-125402'' on your comment and on the 
envelope, and mail it to the following address: Federal Trade 
Commission, Office of the Secretary, 600 Pennsylvania Avenue NW., Suite 
CC-5610, (Annex J), 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 J), Washington, DC 20024. If possible, submit your paper 
comment to the Commission by courier or overnight service.
    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 15, 
2015. You can find more information, including routine uses permitted 
by the Privacy Act, in the Commission's privacy policy, at https://www.ftc.gov/ftc/privacy.htm.

David C. Shonka,
Principal Deputy General Counsel.
[FR Doc. 2015-26362 Filed 10-15-15; 8:45 am]
BILLING CODE 6750-01-P