Affiliate Marketing Rule, 59466-59469 [2020-19174]

Download as PDF 59466 Federal Register / Vol. 85, No. 184 / Tuesday, September 22, 2020 / Proposed Rules dated July 21, 2020, and effective September 15, 2020, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designations listed in this document will be published subsequently in the Order. FAA Order 7400.11, Airspace Designations and Reporting Points, is published yearly and effective on September 15. Regulatory Notices and Analyses The FAA has determined that this proposed regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore: (1) is not a ‘‘significant regulatory action’’ under Executive Order 12866; (2) is not a ‘‘significant rule’’ under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and, (3) does not warrant preparation of a Regulatory Evaluation as the anticipated impact is minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this proposed rule, when promulgated, will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. Environmental Review This proposal will be subject to an environmental analysis in accordance with FAA Order 1050.1F, ‘‘Environmental Impacts: Policies and Procedures’’ prior to any FAA final regulatory action. PART 71—DESIGNATION OF CLASS A, B, C, D, AND E AIRSPACE AREAS; AIR TRAFFIC SERVICE ROUTES; AND REPORTING POINTS 1. The authority citation for part 71 continues to read as follows: ■ Authority: 49 U.S.C. 106(f), 106(g); 40103, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959–1963 Comp., p. 389. [Amended] 2. The incorporation by reference in 14 CFR 71.1 of Federal Aviation Administration Order 7400.11E, Airspace Designations, and Reporting Points, dated July 21, 2020, and VerDate Sep<11>2014 17:17 Sep 21, 2020 Jkt 250001 Class E Surface Airspace. * * * * * AEA PA E2 DuBois, PA [Amended] DuBois Regional Airport, PA (Lat. 41°10′42″ N, long. 78°53′55″ W) That airspace extending upward from the surface within a 4.8-mile radius of DuBois Regional Airport. This Class E airspace is effective during the dates and times established in advance by a Notice to Airmen. The effective date and time will thereafter be continuously published in the Chart Supplement. Paragraph 6005. Class E Airspace Areas Extending Upward from 700 feet or More Above the Surface of the Earth. * * * * * AEA PA E5 DuBois, PA [Amended] DuBois Regional Airport, PA (Lat. 41°10′42″ N, long. 78°53′55″ W) Penn Highland Healthcare-Dubois Heliport Point In Space Coordinates (Lat. 41°6′52″ N, long. 78°46′26″ W) That airspace extending upward from 700 feet or more above the surface within a 9.2mile radius of DuBois Regional Airport and within a 6-mile radius of the Point In Space Coordinates serving Penn Highland Healthcare-Dubois Heliport Issued in College Park, Georgia, on September 15, 2020. Matthew N. Cathcart, Manager, Airspace & Procedures Team North, Eastern Service Center, Air Traffic Organization. BILLING CODE 4910–13–P The Proposed Amendment In consideration of the foregoing, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows: ■ Paragraph 6002 [FR Doc. 2020–20739 Filed 9–21–20; 8:45 am] Lists of Subjects in 14 CFR Part 71 Airspace, Incorporation by reference, Navigation (air). § 71.1 effective September 15, 2020, is amended as follows: FEDERAL TRADE COMMISSION 16 CFR Part 680 RIN 3084–AB63 Affiliate Marketing Rule Federal Trade Commission. Notice of proposed rulemaking; request for public comment. AGENCY: ACTION: 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 SUMMARY: PO 00000 Frm 00020 Fmt 4702 Sfmt 4702 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 webbased 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 GrammLeach-Bliley Act (‘‘GLBA’’), 15 U.S.C. 6801 et seq., non-affiliate sharing optout—both of which apply indefinitely— section 624 provides that a consumer’s affiliate marketing opt-out election must E:\FR\FM\22SEP1.SGM 22SEP1 Federal Register / Vol. 85, No. 184 / Tuesday, September 22, 2020 / Proposed Rules 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 B. Dodd-Frank Act The Dodd-Frank Wall Street Reform and Consumer Protection Act (‘‘DoddFrank 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 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 1 72 FR 61423 (October 30, 2007). 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). 2 Public VerDate Sep<11>2014 17:17 Sep 21, 2020 Jkt 250001 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 § 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 § 680.3. The proposed amendment to § 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 DoddFrank Act.10 Also, the proposed amendments revise the term ‘‘you’’ (see 680.3(m)) to refer to a motor vehicle dealer. 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. 9 12 U.S.C. 5519. 10 Id. PO 00000 Frm 00021 Fmt 4702 Sfmt 4702 59467 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 E:\FR\FM\22SEP1.SGM 22SEP1 59468 Federal Register / Vol. 85, No. 184 / Tuesday, September 22, 2020 / Proposed Rules 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 VerDate Sep<11>2014 17:17 Sep 21, 2020 Jkt 250001 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 webbased 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 PO 00000 Frm 00022 Fmt 4702 Sfmt 4702 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 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 11 16 E:\FR\FM\22SEP1.SGM CFR 1.26(b)(5). 22SEP1 Federal Register / Vol. 85, No. 184 / Tuesday, September 22, 2020 / Proposed Rules 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. 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: 12 5 U.S.C. 603–605. VerDate Sep<11>2014 17:17 Sep 21, 2020 Jkt 250001 59469 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. 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. 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. 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. 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. 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 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-sizestandards. PO 00000 Frm 00023 Fmt 4702 Sfmt 9990 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 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). 2. Revise § 680.1 paragraph (b) to read as follows: ■ § 680.1 Purpose and scope. * * * * * (b) Scope. This part applies to any motor vehicle dealer as defined in § 680.3 that uses information from its affiliates for the purpose of marketing solicitations, or provides information to its affiliates for that purpose. ■ 3. In § 680.3, redesignate paragraphs (i) through(l) as paragraphs (j) through(m) and add a new paragraph (i) to read as follows: § 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 E:\FR\FM\22SEP1.SGM 22SEP1

Agencies

[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.
---------------------------------------------------------------------------

    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