Supporting Statement
Affiliate Marketing/Consumer Opt-Out Notices
Introduction
The Federal Deposit Insurance Corporation (FDIC) requests OMB approval to extend the above-captioned collection of information for three years. This collection is contained in an interagency rule implementing section 214 of the FACT Act, a 2003 amendment to the Fair Credit Reporting Act. Section 214 generally provides that, if a person shares certain information about a consumer with an affiliate, the affiliate may not use that information to make or send solicitations to the consumer about its products or services, unless the consumer is given notice and a reasonable opportunity to opt out of such use of the information and the consumer does not opt out. Thus, the elements of this collection are: (1) disclosures to consumers of the opportunity to opt-out of solicitations from affiliates, and (2) consumer responses to the opt-out notices. This collection was first approved by OMB in 2004. The collection is scheduled to expire on March 31, 2014.
A. Justification
1. Circumstances that Make the Collection Necessary
Section 214 of the FACT Act requires the FDIC, the Board of Governors of the Federal Reserve System (FRB), the Office of the Comptroller of the Currency (OCC), the Office of Thrift Supervision (OTS), the National Credit Union Administration (NCUA), the Federal Trade Commission (FTC), and the Securities and Exchange Commission (SEC), in consultation and coordination with each other, to issue regulations in final form implementing section 214. The FDIC complied with this provision of law by revising its regulations at 12 CFR 334; the collection is contained in that regulation.
2. Use of the Information
Consumers will use the information in the disclosures to decide whether to opt out of their institutions’ affiliate marketing practices. Respondent banks will use the opt out notices to manage their affiliate marketing practices appropriately.
3. Consideration of the Use of Improved Information Technology
Financial institutions and consumers are free to utilize any technology they wish to reduce the burden associated with this collection.
4. Efforts to Identify Duplication
The information is not available from any other source.
5. Methods Used to Minimize Burden on Small Entities
The collection applies to all institutions with affiliates, regardless of size, and all consumers associated with those institutions. However, in an effort to minimize the burden for financial institutions, particularly small banks (i.e., those with assets of less than $250 million), the Agencies, including FDIC, have published model disclosures and opt out notices that may be used for this collection. In addition, the collection allows institutions to minimize disclosure burden by incorporating the affiliate marketing notices into privacy notices that are already required by Title V of the Gramm-Leach-Bliley Act (approved under OMB control number 3064-0136). Financial institutions also have the option of choosing not to engage in the sharing of certain information with their affiliates for marketing purposes.
6. Consequences to the Federal program if the Collection were Conducted Less Frequently
Section 214 of the FACT Act requires that consumer opt-outs be effective for a minimum of five years. Financial institutions have the option of adopting for themselves a less frequent disclosure requirement by making consumer opt-outs effective for longer than the minimum five-year period, or by making consumer opt-outs effective in perpetuity, unless revoked by the consumer.
7. Special Circumstances Necessitating Collection Inconsistent with 5 CFR Part 1320
None.
8. Efforts to Consult with Persons Outside the Agency
Extensive interagency collaboration was involved in creating this collection. A “first” Federal Register notice seeking comment for the renewal of this collection was published on January 16, 2014 (79 FR 17152). No comments were received.
9. Payment to Respondents
There is no payment to respondents.
10. Assurance of Confidentiality
Financial institutions would treat these disclosure requirements with the same degree of confidentiality as other disclosures of sensitive consumer information.
11. Justification for Questions of a Sensitive Nature
There are no questions of a sensitive nature.
12. Burden Estimate
The Agencies estimate that the amount of time to prepare an initial notice to consumers will average 18 hours per institution. For consumers who elect to opt-out of having certain information about them shared with an affiliate for marketing purposes, the Agencies estimate that the average consumer will take approximately five minutes to respond to the notice. For purposes of this analysis, it is estimated that the average number of consumers for large state nonmember banks is 25,000, the average number of consumers for small state nonmember banks is 5,000, and approximately 3.5 percent of all bank consumers will elect to opt-out of having information about them shared with affiliates. The FDIC estimates that 990 of the banks it supervises will be affected by this collection because they have affiliates.
Therefore the burden associated with this collection is calculated as follows:
Burden on Institutions
990 x 18 hours = 17,820 hours.
Burden on Consumers
201,950 x 5 minutes = 16829 hours.
Total Estimated Burden = 17,820 hours + 16,829 hours = 34,649 hours.
13. Capital/Start-up and Operation/Maintenance Costs
Institutions should be able to use readily available equipment to comply with the information collection requirements in the proposed rulemaking. Some software costs may be incurred to add the affiliate marketing disclosures and the processing of opt-out responses to the existing documents and procedures for privacy notices. Most institution documents of this nature are revised on a continuing basis. Therefore, whether the revisions are made in-house or through a servicer, the cost would be a part of usual and customary business practice.
14. Estimate of Annualized Cost to the Federal Government
None.
15. Reason for Change in Burden
There is no change in burden.
16. Publication
The information will not be published.
17. Display of Expiration Date
No exception is requested.
18. Exceptions to Certification Statement
None.
Not applicable.
| File Type | application/msword |
| File Title | Supporting Statement |
| Author | Administrator |
| Last Modified By | Kuiper, Gary |
| File Modified | 2014-03-27 |
| File Created | 2014-03-27 |