Reg. B 2015 Supptg Stmt 07-16-15 rev'd FIN

Federal Trade Commission
Supporting Statement for Information Collection
Provisions of Regulation B
(Equal Credit Opportunity Act)
12 C.F.R. 202;12 C.F.R. 1002
(OMB Control Number: 3084-0087)
1.

Necessity for Collecting the Information

The Equal Credit Opportunity Act (“ECOA”), 15 U.S.C. 1691 et seq., was enacted to
ensure that credit is made available to all creditworthy applicants without discrimination on the
basis of sex, marital status, race, color, religion, national origin, or age. The ECOA also prohibits
discrimination because an applicant’s income is derived from a public assistance program, or
because the applicant has in good faith exercised any right under the Consumer Credit Protection
Act.
The ECOA applies to anyone who regularly extends or arranges for the extension of credit
and to an assignee who participates in the decision to extend credit.1 Subject to the discussion
below, the Federal Trade Commission (“FTC” or “Commission”) enforces the ECOA as to all
creditors except those (such as federally chartered or insured depository institutions) that are
subject to the regulatory authority of another federal agency. The ECOA also contains a private
right of action with a five-year statute of limitations for aggrieved applicants.
The Board of Governors of the Federal Reserve System (“FRB”) promulgated the original
Regulation B (12 C.F.R. Part 202) to implement the ECOA, as required by the statute. Under the
Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), Pub. L.
111-203, 124 Stat. 1376 (2010), however, almost all rulemaking authority for the ECOA
transferred from the FRB to the Consumer Financial Protection Bureau (“CFPB”) on July 21, 2011
(“transfer date”). Although the Dodd-Frank Act transferred most rulemaking authority under
ECOA to the CFPB, the FRB retained rulemaking authority for certain motor vehicle dealers. 2
The CFPB’s regulations for entities under its jurisdiction for Regulation B appear in 12 C.F.R. Part
1002.3
1

The law applies to a person who, in the ordinary course of business, regularly participates in a credit decision,
including setting the terms of credit. See 12 C.F.R. 202.2(l); 12 C.F.R. 1002.2(l). It includes all persons participating
in the credit decision. It may include an assignee or potential purchaser of the obligation who influences the credit
decision by indicating whether or not it will purchase the obligation if the transaction is consummated. Section
202.2(l)-1 of the FRB Official Staff Commentary; Section 1002.2(l)-1 of the CFPB Official Staff Commentary.
2

Generally, these are dealers “predominantly engaged in the sale and servicing of motor vehicles, the leasing and
servicing of motor vehicles, or both.” See Dodd-Frank Act, § 1029(a), -(c).
3

Because both the FRB and the CFPB have certain rulemaking authority under Regulation B – as discussed further
below – citations to both aspects of the regulation are included in this document. Hence, 12 C.F.R. 202 refers to the
FRB-issued Regulation B; 12 C.F.R. 1002 refers to the CFPB-issued Regulation B. Generally, these two aspects of
Regulation B are virtually identical, other than occasional minor technical differences, and citations.

As a result of the Dodd-Frank Act, the FTC and CFPB now share the authority to enforce
Regulation B for entities for which the FTC had enforcement authority before the Act, except for
certain motor vehicle dealers. The FTC generally has sole authority to enforce Regulation B
regarding motor vehicle dealers predominantly engaged in the sale and servicing of motor vehicles,
the leasing and servicing of motor vehicles, or both.4
Recordkeeping
Sections 202.12(b)/1002.12(b) of Regulation B require creditors to retain records relating
to consumer credit applications for 25 months from the date that the applicant is notified of the
action taken on the application or, where notice is not required, for 25 months from the date of the
application. When a creditor takes adverse action on an existing account, the creditor must retain
records for 25 months after the applicant is notified of the action taken. Records of business credit
applications must be retained for comparable 12 month periods, with certain exceptions.
Regulation B also requires creditors who have been informed that they are the subject of an
investigation by the FTC (or another agency) regarding their compliance with the ECOA to retain
such records until the agency or a court informs the creditor that retention is no longer necessary.
Regulation B also requires creditors to retain certain prescreened solicitation materials for 25
months after the date on which an offer of credit is made to potential customers (12 months for
business credit, with certain exceptions).5 Moreover, Regulation B requires creditors to retain all
written or recorded information about a self-test (including corrective action), as defined in
Sections 202.15/1002.15 of Regulation B, for 25 months after a self-test has been completed (and
longer under some circumstances).
Sections 202.13/1002.13 of Regulation B requires that creditors who receive applications
for certain mortgage credit requests, as part of the application process, obtain information about
the applicant’s race/national origin, sex, marital status, and age. The applicant is asked but not
required to supply the information. If the applicant chooses not to provide the information or any
part of it, the creditor must note that fact on the form and must note the applicant’s race/national
origin and sex, to the extent that it is possible to determine these characteristics based on a visual
observation or a surname. The creditor is required to inform the applicant that the information is
sought by the federal government to help monitor compliance with federal statutes that prohibit
creditors from discriminating against applicants based on the above-noted factors.6
4

See Dodd-Frank Act, § 1029(a), -(c).

5

The records generally are already retained by creditors in connection with their business operations in part due to the
credit extension that will be made to responding applicants.
6

Section 1071 of the Dodd-Frank Act amends the ECOA to require financial institutions to collect and report
information concerning credit applications by women- or minority-owned businesses and small businesses, effective
on the July 21, 2011 transfer date. Both the FRB and CFPB have exempted affected entities from complying with this
requirement until a date set by the prospective final rules these agencies issue to implement the Dodd-Frank Act’s
requirements. The Commission will address PRA burden for its enforcement of these requirements after the FRB and

2

The recordkeeping requirement ensures that records that might contain evidence of
violations of the ECOA remain available to the FTC, other agencies, and private litigants.
Disclosure7
Sections 202.9/1002.9 of Regulation B requires creditors to provide notice (within
specified time periods) to applicants for credit against whom adverse action is taken.8 Generally,
the required notice must be in writing and contain: a statement of the action taken; the name and
address of the creditor; a statement describing the anti-discrimination provisions of the ECOA; the
name and address of the federal agency that administers compliance as to the creditor; and either a
statement of specific reasons for the action taken or a notice of the applicant's right to obtain such
a statement.
Sections 202.10/1002.10 of Regulation B requires creditors that furnish credit information
to consumer reporting agencies to designate accounts to reflect the participation of both spouses, if
the applicant’s spouse is permitted to use or is contractually liable on the account.
Sections 202.14/1002.14 of Regulation B requires that creditors provide applicants for a
mortgage loan with a first lien on the dwelling a copy of the appraisal report or other written
valuation prepared in connection with an application.9 The material must be furnished promptly
but no later than three business days prior to consummation of the transaction (closed-end credit)
or account opening (open-end credit), whichever is earlier. The requirement that the creditor
provide a copy of the appraisal report or other written valuation, for a loan secured by a first lien on
a dwelling, is statutorily mandated by Section 1691(e) of the ECOA.
Under Sections 202.5(b)/1002.5(b) and 202.15/1002.15 of Regulation B, creditors that
collect applicant characteristics for purposes of conducting a self-test under Regulation B must
disclose, orally or in writing, that providing the information is optional, that the creditor will not
take into account the information in any aspect of the credit transactions, and, if applicable, that the
information will be noted by visual observation or surname, if the applicant chooses not to provide
it.
CFPB have issued the associated final rules.
7

Regulation B permits many disclosures to be made orally. Any required written disclosures must be made clearly
and conspicuously and in a form the applicant can retain.
8

For incomplete applications, creditors may initially provide the adverse action notice or a notice of incompleteness.

9

While the rule also requires the creditor to provide a short written disclosure regarding the appraisal process, the
disclosure is now provided by the CFPB, and is thus not a “collection of information” for PRA purposes. See 5 CFR
1320.3(c)(2) and CFPB, Final Rule, Disclosure and Delivery Requirements for Copies of Appraisals and Other
Written Valuations Under the Equal Credit Opportunity Act (Regulation B), 78 Fed. Reg. 7216, 7247 (Jan. 31, 2013).
Accordingly, it is not included in burden estimates below.

3

The requirement that spousal credit history information on shared accounts be reported
under both spouses’ names (if it is reported at all) is intended to ensure that each spouse has the
benefit of that shared credit history from which to seek and obtain further credit. The requirement
that a notice of adverse action be provided assists applicants in detecting unlawful discrimination,
correcting errors that may have occurred in the evaluation of their applications, and learning how
to become more creditworthy. The requirement that information about the race/national origin,
sex, marital status, and age of applicants be collected helps the FTC, other enforcement agencies,
and private litigants to determine whether creditors discriminated against applicants on those bases.
The collateral requirement that applicants be notified of the purpose for collecting this information
helps to ensure that the information is provided. The applicants’ copy of the appraisal or other
written valuation allows applicants to determine the role that the appraisal played in the credit
decision. The self-testing disclosure helps applicants understand the nature of the information
collection process.
The FRB and CFPB have issued model forms that may be used to comply with the notice
requirements of the ECOA and Regulation B. See Appendices B and C to 12 C.F.R. 202/1002.
Correct use of these model forms insulates creditors from liability for the respective requirements
under the ECOA and Regulation B. Id.
2.

Use of the Information

The FTC, other agencies, and private litigants use recordkeeping information to compare
accepted and rejected applicants in order to determine whether applicants are treated less favorably
on the basis of race, sex, age, or other prohibited bases under the ECOA. Information derived from
these records has been the primary evidence of law violations in most of the ECOA enforcement
actions brought by the FTC. Self-testing records (including for corrective action) are used by
creditors to identify potential violations and reflect their efforts to correct the problem. Absent the
Regulation B requirement that creditors retain monitoring information, the FTC’s ability to detect
unlawful discrimination and enforce the ECOA would be significantly impaired.
The FTC, other agencies, and private litigants use adverse action notices, appraisal reports,
and other information in the application file to compare accepted and rejected applicants in order
to determine whether any applicants are discriminated against on the basis of race/national origin,
sex, marital status, age, or other prohibited bases under the ECOA. Information derived from these
records has been the primary evidence of law violations in most of the ECOA enforcement actions
brought by the FTC. The adverse action notice requirement apprises applicants of their rights
under the ECOA and of the basis for a creditor’s decision. Applicants use their copy of the
appraisal to review (and possibly challenge) the accuracy and/or fairness of the information
contained within, and to determine the role that the appraisal played in the credit decision.
Applicants use the self-testing disclosure to facilitate understanding of creditors’ information
collection, including its optionality.

4

3.

Consideration of the Use of Improved Information Technology

The FRB and CFPB have issued rules to establish uniform standards for using electronic
communication to deliver disclosures required under Regulation B, within the context of the
Electronic Signatures in Global and National Commerce Act (“ESIGN”), 15 U.S.C. 7001 et seq.,
and Sections 202.4(d)/1002.4(d) of Regulation B. These rules enable businesses to utilize
electronic disclosures and compliance, consistent with the requirements of ESIGN. Use of such
electronic communications is also consistent with the Government Paperwork Elimination Act
(“GPEA”), codified at 44 U.S.C. 3504, note. ESIGN and GPEA serve to reduce businesses’
compliance burden related to federal requirements, including Regulation B, by enabling creditors
to utilize more efficient electronic media for disclosures and compliance.
Regulation B also permits a creditor to retain records as “carbon copies, photocopies,
microfilm or microfiche copies, or copies produced by any other accurate retrieval system, such as
documents stored and reproduced by computer.” Section 202.12(b)-1 of the FRB Commentary;
Section 1002.12(b)-1 of the CFPB Commentary. In addition, Regulation B permits a creditor to
record the information required for monitoring purposes “by recording on paper or by means of
computer . . . .” Section 202.13(b)-2 of the FRB Commentary; Section 1002.13(b)-2 of the CFPB
Commentary.
4.

Efforts to Identify Duplication/Availability of Similar Information

The recordkeeping requirement of Regulation B preserves the information considered by
the creditor in deciding whether to extend credit or terminate an existing credit account. The
creditor is the only source of this information, and no other federal law mandates its retention.
State laws do not duplicate these requirements.10 Similarly, the creditor is the only source of the
information provided by appraisal reports, adverse action notices, and self-testing information, and
no other federal law mandates provision of the report (in a fully duplicative manner) or the
disclosure nor is staff aware of any state law mandating this information.11
10

Regarding prescreened solicitations, Section 615(d) of the Fair Credit Reporting Act (“FCRA”) requires retention
of some, but not identical, information required by the ECOA. Among other things, the FCRA requires persons who
use information in consumer reports to select consumers to receive certain offers of credit to maintain the criteria used
to select the consumer, for three years from the date the credit offer is made. The ECOA focuses on creditors, includes
certain business applicants, and also addresses the solicitation including the text and any related complaints. The FRB
and CFPB issued these rules to ensure that creditors would retain all necessary information for enforcement and
avoidance of circumvention of the ECOA.
11

The requirement in ECOA to provide applicants with copies of written appraisals, in part, duplicates a requirement
in the Truth in Lending Act (“TILA”) to provide copies of written appraisals for certain higher-priced mortgage loans,
15 U.S.C. 1639h. The Dodd-Frank Act amended both ECOA and TILA to add the appraisal rules that overlap only in
part. For example, the ECOA appraisal rule applies to those transactions that meet all of the following conditions:
(1) first liens; (2) involving business or consumer transactions; and (3) that are open-end or closed-end mortgages.
The TILA appraisal rule applies to those loans that meet all of the following conditions: (1) any lien; (2) involving
consumer transactions; and 3) that are higher-priced mortgage loans (HPMLs) (a type of closed-end credit) under

5

Regulation C under the Home Mortgage Disclosure Act (“HMDA”) requires mortgage
lenders subject to that Act to collect and report information about the race or national origin and
sex of applicants. The data collection requirements of HMDA are similar, but not identical to,
those of the ECOA. However, the FTC has no enforcement authority for HMDA, and ordinarily
has no right to obtain this information except to the extent that it becomes publicly available.
Moreover, the HMDA information released publicly does not include identifying information
about individual applicants. Thus, the HDMA monitoring information is less useful to FTC staff
in its enforcement efforts than is the ECOA monitoring information. The creditor is also the only
source of the credit history reporting information regarding the applicant’s spouse.
5.

Efforts to Minimize Burdens on Small Businesses

The ECOA and Regulation B accord special treatment to creditors that receive fewer than
150 applications each year. Sections 202.9(d)/1002.9(d) of the Regulation states that such
creditors may provide required notices to rejected applicants orally rather than in writing. Where
fewer written records are required to be created, the recordkeeping burden is correspondingly
reduced. In addition, Sections 202.3(c)/1002.3(c) of the Regulation exempts providers of
incidental credit, such as a doctor or lawyer who allows a patient or client to defer payment of a bill,
from many requirements including notifications under Sections 202.9/1002.9 of the Regulation
and recordkeeping. The requirements to collect monitoring information and to provide a copy of
the appraisal report apply to all creditors who extend applicable mortgage credit. There is no
exception based on creditor size.
Additionally, as noted above, Regulation B provides model forms that may be used in
compliance with its requirements. Correct use of these forms insulates creditors from liability
from the respective requirements.
6.

Consequences of Conducting Collection Less Frequently

The current record retention period of 25 months supports the five-year statute of
limitations for private actions, and the FTC’s (and other administrative agencies’) need for
sufficient time to bring enforcement actions regarding ECOA issues. If the retention period were
shortened, applicants who sue under the ECOA, and administrative agencies that enforce the
ECOA, might find that the records needed to prove ECOA violations no longer exist.
TILA and that are not exempt under those rules (such as bridge loans, reverse mortgages, loans for $25,000 or less as
indexed each year for inflation, and any mortgage that constitutes a qualified mortgage under TILA or that meets rules
on qualified mortgages issued by the U.S. Dept. of Housing and Urban Development, U.S. Dept. of Agriculture, or
U.S. Dept. of Veterans Affairs). However, where duplicative requirements apply (e.g., for consumer credit that
involves first lien, closed-end HPMLs that are also non-exempt under the TILA appraisal rules), creditors can provide
one appraisal, based upon the applicable rules. See CFPB, Equal Credit Opportunity Act (ECOA) Valuations Rule,
Small Entity Compliance Guide (Jan. 13, 2014), and CFPB, TILA Higher-Priced Mortgage Loans (HPML) Appraisal
Rule, Small Entity Compliance Guide (Jan. 13, 2014). This approach ensures that applicants will receive a copy of the
required appraisal, and it also limits burden to creditors.

6

Were the requirement that creditors provide notice of adverse action eliminated, applicants
could be deprived of the right to receive timely notice of the creditor’s decision, the reasons for any
adverse action by the creditor, and the applicants' rights under the ECOA. Eliminating the
requirement that creditors provide a copy of the appraisal report or notice of its availability would
greatly impair applicants’ ability to assess the report’s impact on the creditor’s decision and to
challenge it in timely fashion. Were the requirement that creditors collect information about an
applicant's race or national origin eliminated or changed, the creditor would still have access to this
information when obtained through a face-to-face interview with the applicant and could use the
information to discriminate. However, the FTC and others seeking to enforce compliance with the
ECOA would not have that information and would thereby be disadvantaged. Eliminating the
self-test disclosure (which can be made orally or in writing) could disadvantage consumers who
may then not understand the purpose of the information being collected, or their option not to
provide it. Finally, eliminating the credit history reporting requirement regarding spouses with
shared accounts would undermine the goal of affording both spouses the benefit of that shared
credit history in seeking further credit.
7.

Circumstances Requiring Collection Inconsistent with Guidelines

Regulation B’s recordkeeping and disclosure requirements are consistent with the
guidelines contained in 5 C.F.R. 1320.5(d)(2).
8.

Consultation Outside the Agency

Both the recordkeeping and the notice requirements of Regulation B were issued by the
FRB and CFPB. Before the regulation was initially issued and prior to each amendment, the
amendments were published for public comment in the Federal Register.
More recently, the Commission sought public comment in connection with its latest PRA
clearance request for these regulations, in accordance with 5 C.F.R. 1320.8(d). See 80 Fed. Reg.
17,749 (April 2, 2015). The Commission received a comment from the National Automobile
Dealers Association (“NADA”) pertaining to regulatory burden affecting Regulation B. The
comment repeats many of the points NADA made in its comments submitted in 2012 when the
FTC last sought renewed OMB clearance regarding the FTC’s enforcement oversight of the
recordkeeping and disclosure provisions of these regulations issued by the FRB and CFPB. 12
As before, NADA asserts that the FTC’s burden estimates greatly underestimate its
members’13 regulatory burdens under these rules, particularly those under Regulation B. Despite
12

NADA’s 2015 comment and related 2012 comment are available at
https://www.ftc.gov/policy/public-comments/2015/06/01/comment-00003. The remaining (two) commenters’
submissions were not relevant to the statutes and regulations at issue.
13

NADA states that it represents approximately 16,000 new car and truck dealers, both domestic and import, with
over 32,500 separate franchises. Id.

7

the FTC’s prior and continuing explanation in its Federal Register Notices regarding the terms
“setup,” “monitoring,” and “transaction-related,” NADA has misinterpreted FTC estimates of
disclosure time per transaction as the estimated time the FTC accords to monitoring to review
compliance. Rather, FTC estimates of “monitoring” burden address covered entities’ time and
costs to review changes to regulatory requirements, make necessary revisions to compliance
systems and procedures, and to monitor the ongoing operation of systems and procedures to ensure
continued compliance. “Transaction-related” burden, by contrast, refers to the disclosure time and
cost per individual transaction, thus, generally, of much lesser magnitude than “monitoring” (or
“setup”) burden. And, as stated in the FTC’s April 27, 2012 Federal Register Notice – and as still
applicable here – the population of affected motor vehicle dealers is one component of a much
larger universe of such entities.14 Regulation B covers not only NADA’s membership of
franchised car and truck dealers, but also independent motor vehicle dealers and non-motor
vehicle dealers. Still more significant, NADA’s constituency comprises a small proportion of the
overall affected population under Regulation B.
NADA additionally asserts in its 2015 comment that “daily compliance burdens at a
dealership often must be handled by managerial, not clerical staff.”15 NADA also asserts that
“[m]any dealers are small businesses that do not benefit from sophisticated records retention or
computer systems, and cannot leverage robust compliance structures. Even larger dealer groups
often do not have the economy of scale necessary to justify in-house legal counsel, compliance
staff, or other expert or technical resources. As a result, they rely heavily on outside counsel,
consultants, and computer and other experts to help them to comply with their regulatory
obligations – and pay the concomitant fees associated with those third party services.”
It is not practicable to make projections about and provide estimates regarding the
additional or alternative use of such outside sources to maintain regulatory compliance (neither has
NADA attempted to do so in its comment). Moreover, in FTC staff’s view, to make adjustments to
its burden estimates for Regulation B, tied to a subpopulation that is small in relation to the overall
affected population, would unduly skew the estimates for Regulation B. This regulation applies to
a wide variety of entities and transactions. Some entities provide disclosures in the ordinary
course of business – which is not included in PRA burden;16 others have minimal setup burden and
few transactions covered by the requirements, while other entities may have more setup and
transaction-related burden. The FTC’s estimates reflect these complex considerations. Moreover,
based on the FTC’s administrative experience in this enforcement area, some dealers use the same
or similar advertisements for many of their franchises or locations– an approach that can facilitate
compliance by limiting the number of applicable advertisements for which disclosures are
14

See 77 Fed. Reg. 25,170, 25,174.

15

However, the only apportioning in the FTC’s estimates to clerical staff was for recordkeeping. The remaining
attributions, for disclosure, are to managerial and skilled technical staff.
16

PRA “burden” does not include “time, effort, and financial resources” expended in the ordinary course of business,
regardless of any regulatory requirement. See 5 CFR 1320.3(b)(2).

8

provided, and hence, costs.
NADA’s comment additionally refers to dealer burden related to credit reports and the
provision of credit score disclosures, which fall under the Fair Credit Reporting Act, 15 U.S.C.
1681 et seq., and the Risk-Based Pricing Rule, 16 CFR Part 640. They are not the subject of this
PRA submission.
Finally, we note that the report developed for NADA and attached to NADA’s comment by
the Center for Automotive Research (“CAR Report”) addresses the impact on franchised
automobile dealerships related to many federal statutes, regulations, and requirements. NADA
stated these requirements cover diverse issues but that certain regulations, including Regulation B,
still “represent a material portion of dealers’ regulatory obligations.” See, e.g., NADA comment,
CAR Report at 2, 3, 19-34. However, NADA’s specific points refer to a generalized concern about
regulatory burden for automobile dealers. Because franchised automobile dealers are a component
of a broad, highly diverse population of credit entities and transactions, we believe that the
estimates for Regulation B remains reasonable, bearing in mind the complexity of this assessment
for such a wide-ranging group.
For the above-noted reasons, the FTC has retained its prior analysis and estimates
regarding this regulation. Consistent with 5 C.F.R. 1320.12(c), the FTC is again seeking public
comment contemporaneously with this submission.
9.

Payments or Gifts to Respondents
Not applicable.

10. & 11.

Assurances of Confidentiality/Matters of a Sensitive Nature

The required recordkeeping and written disclosures contain private financial information
about applicants for consumer credit. This information is protected by the Right to Financial
Privacy Act, 12 U.S.C. 3401 et seq. Such records may also constitute confidential customer lists.
Any of these records provided to the FTC would be covered by the protections of Sections 6(f) and
21 of the FTC Act, 15 U.S.C. 46(f) and 57b-2, by Section 4.10 of the Commission’s Rules of
Practice, 16 C.F.R. 4.10, and by the applicable exemptions of the Freedom of Information Act, 5
U.S.C. 552(b).
12.

Estimated Hours and Labor Cost Burden
Estimated Hours Burden: 1,879,423 (712,860 recordkeeping hours: 637,310 + 75,550
carve-out for motor vehicles + 1,166,563 disclosure hours: 1,036,040 + 130,523 carve-out
for motor vehicles)

The following discussion and tables present FTC estimates under the PRA of
recordkeeping and disclosure average time and labor costs, excluding that which the FTC believes
9

entities incur customarily in the ordinary course of business17 and information compiled and
produced in response to FTC law enforcement investigations or prosecutions.18
Because of their shared enforcement jurisdiction for Regulation B, the CFPB and the FTC
have divided the FTC’s previously-cleared PRA burden between them,19 except that the FTC
wholly assumed the part of that burden associated with motor vehicle dealers (for brevity, referred
to in the burden summaries below as a “carve-out”).20 The division of PRA burden hours not
attributable to motor vehicle dealers is reflected in the CFPB’s PRA clearance requests to OMB.21
The FTC’s burden estimates below reflect both the shared enforcement jurisdiction and the FTC’s
separate accounting under the PRA for its jurisdiction to enforce Regulation B for motor vehicle
dealers.
Recordkeeping
FTC staff estimates that Regulation B’s general recordkeeping requirements affect
530,080 credit firms subject to the Commission’s jurisdiction, at an average annual burden of 1.25
hours per firm for a total of 662,600 hours.22 Staff also estimates that the requirement that
mortgage creditors monitor information about race/national origin, sex, age, and marital status
imposes a maximum burden of one minute each (of skilled technical time) for approximately 2.9
million credit applications (based on industry data regarding the approximate number of mortgage
17

See supra note 16 and accompanying text.

18

See 5 CFR 1320.4(a) (excluding information collected in response to, among other things, a federal civil action or
“during the conduct of an administrative action, investigation, or audit involving an agency against specific
individuals or entities”) pertinent to this PRA submission.
19

The CFPB also factored into its burden estimates respondents over which it has jurisdiction but the FTC does not.

20

This includes dealers specified by the Dodd-Frank Act under § 1029 (a), but as limited by subsection (b).
Subsection (b) does not preclude CFPB regulatory oversight regarding, among others, businesses that extend retail
credit or retail leases for motor vehicles in which the credit or lease offer is provided directly from those businesses,
rather than unaffiliated third parties, to consumers. It is not practicable, however, for PRA purposes, to estimate the
portion of dealers that engage in one form of financing versus another (and that would or would not be subject to
CFPB oversight). Thus, FTC staff’s “carve-out” for this PRA burden analysis reflects a general estimated volume of
motor vehicle dealers. This attribution does not change actual enforcement authority.
21

OMB Control Number 3170-0013 (Regulation B).

22

Section 1071 of the Dodd-Frank Act amends the ECOA to require financial institutions to collect and report
information concerning credit applications by women- or minority-owned businesses and small businesses, effective
on the July 21, 2011 transfer date. Both the CFPB and the Board have exempted affected entities from complying with
this requirement until a date set by the prospective final rules these agencies issue to implement the Dodd-Frank Act’s
requirements. The Commission will address PRA burden for its enforcement of these requirements after the CFPB
and the Board have issued the associated final rules.

10

purchase and refinance originations), for a total of 48,333 hours.23 Staff also estimates that
recordkeeping of self-testing subject to the regulation would affect 1,375 firms, with an average
annual burden of one hour (of skilled technical time) per firm, for a total of 1,375 hours, and that
recordkeeping of any corrective action as a result of self-testing would affect 10% of them, i.e.,
138 firms, with an average annual burden of four hours (of skilled technical time) per firm, for a
total of 552 hours.24 Keeping records of race/national origin, sex, age, and marital status requires
an estimated one minute of skilled technical time. Recordkeeping for the self-test responsibility
and of any corrective actions requires an estimated one hour and four hours, respectively, of skilled
technical time. The total estimated recordkeeping burden is 712,860 hours.
Disclosure
Regulation B requires that creditors (i.e., entities that regularly participate in the decision
whether to extend credit under Regulation B) provide notices whenever they take adverse action,
such as denial of a credit application. It requires entities that extend mortgage credit with first liens
to provide a copy of the appraisal report or other written valuation to applicants.25 Finally,
Regulation B also requires that for accounts which spouses may use or for which they are
contractually liable, creditors who report credit history must do so in a manner reflecting both
spouses’ participation. Further, it requires creditors that collect applicant characteristics for
purposes of conducting a self-test to disclose to those applicants that: (1) providing the
information is optional; (2) the creditor will not take the information into account in any aspect of
the credit transactions; and (3) if applicable, the information will be noted by visual observation or
surname if the applicant chooses not to provide it.26
Regulation B applies to retailers, mortgage lenders, mortgage brokers, finance companies,
and others. Below is staff’s best estimate of burden applicable to this very broad spectrum of
covered entities.

23

Regulation B contains model forms that creditors may use to gather and retain the required information.

24

In contrast to banks, for example, entities under FTC jurisdiction are not subject to audits for compliance with

Regulation B; rather they may be subject to FTC investigations and enforcement actions. This may impact the level of
self-testing (as specifically defined by Regulation B) in a given year, and staff has sought to address such factors in its
burden estimates.
25

While the rule also requires the creditor to provide a short written disclosure regarding the appraisal process, the
disclosure is now provided by the CFPB, and is thus not a “collection of information” for PRA purposes. See supra
note 9.
26

The disclosure may be provided orally or in writing. The model form provided by Regulation B assists creditors in
providing the written disclosure.

11

Regulation B: Disclosures – Burden Hours

Disclosures

--------------- Setup/Monitoring1 ----------------------- Transaction-related2----------Average
Total Setup/
Average
Total
Burden per
Monitoring
Number of Burden per Transaction
Total
Respondents Respondent
Burden
Transactions Transaction
Burden
Burden
(hours)
(hours)
(minutes)
(hours)
(hours)

Credit history reporting
132,520
Adverse action notices
530,080
Appraisal reports/written valuations 5,000
Self-test disclosures
1,375

.25
.75
1
.5

33,130
397,560
5,000
688

66,260,000
106,016,000
1,450,000
68,750

Total

.25
.25
.50
.25

276,083
441,733
12,083
286

309,213
839,293
17,083
974
1,166,563

1

The estimates assume that all applicable entities would be affected, with respect to appraisal reports and other written valuations (with the FTC
having approximately one-half of that amount). An increase in burden is noted due to changed rules requiring provision of appraisals reports as well
as other written valuations, for first lien mortgages. The former “Appraisal disclosure” item was deleted; the information is now supplied by the
rule.
2
The transaction-related figures reflect a decrease in mortgage transactions, compared to prior FTC estimates. The figures assume that
approximately three-quarters of applicable mortgage transactions (.75 x 2,900,000, or 2,175,000) would not otherwise provide this information, and
that another 725,000 transactions (not closed, etc.) would be affected; the FTC would have one-half of the total, or 1,450,000.

Associated labor cost: $65,660,436 ($15,031,620 recordkeeping costs: $13,550,520 +
$1,481,100 carve-out for motor vehicles + $50,628,816 disclosure costs: ($44,964,122 +
$5,664,694 carve-out for motor vehicles)
Staff calculated labor costs by applying appropriate hourly cost figures to the burden hours
described above. The hourly rates used below ($56 for managerial or professional time, $42 for
skilled technical time, and $17 for clerical time) are averages.27
Recordkeeping
Staff estimates that the general recordkeeping responsibility of one hour per creditor would
involve approximately 90 percent clerical time and 10 percent skilled technical time. Keeping
records of race/national origin, sex, age, and marital status requires an estimated one minute of
skilled technical time. Keeping records of the self-test responsibility and of any corrective actions
requires an estimated one hour and four hours, respectively, of skilled technical time. As shown
below, the total recordkeeping cost is $15,031,620.

27

These inputs are based broadly on mean hourly data found within the “Bureau of Labor Statistics, Economic News
Release,” March 25, 2015, Table 1, “National employment and wage data from the Occupational Employment
Statistics survey by occupation, May 2014.” http://www.bls.gov/news.release/ocwage.t01.htm.

12

Disclosure
For each notice or information item listed, staff estimates that the burden hours consist of
10 percent managerial or professional time and 90 percent skilled technical time. As shown below,
the total disclosure cost is $50,628,816.
Regulation B: Recordkeeping and Disclosures – Cost
Required Task

------Managerial-----Time
Cost
(hours)
($56/hr.)

General recordkeeping
Other recordkeeping
Recordkeeping of self-test
Recordkeeping of corrective action

0
0
0
0

$0
$0
$0
$0

-----Skilled Technical----- --------Clerical-------Time
Cost
Time
Cost
(hours)
($42/hr.)
(hours)
($17/hr.)
66,260
48,333
1,375
552

$2,782,920
$2,029,986
$57,750
$23,184

596,340 $10,137,780
0
$0
0
$0
0
$0

Total Recordkeeping
Disclosures:
Credit history reporting
Adverse action notices
Appraisal reports
Self-test disclosure

Total
Cost
($)
$12,920,700
$2,029,986
$57,750
$23,184
$15,031,620

30,921
83,929
1708
97

$1,731,576
$4,700,024
$95,648
$5,432

278,292 $11,688,264
755,364 $31,725,288
15,375
$645,750
877
$36,834

0
0
0
0

$0
$0
$0
$0

$13,419,840
$36,425,312
$741,398
$42,266

Total Disclosures

$50,628,816

Total Recordkeeping and Disclosures

$65,660,436

13.

Estimated Capital and Other Non-Labor Costs

The applicable requirements impose minimal start-up costs, as lenders generally have or
obtain necessary equipment for other business purposes. For the same reason, staff believes that
the cost of printing and copying needed to comply with Regulation B is minimal. Staff anticipates
that the above requirements necessitate ongoing, regular training so that lenders stay current and
have a clear understanding of federal mandates. This training, however, would be a small portion
of and subsumed within the ordinary training that employees receive apart from that associated
with collecting information to comply with Regulation B.
14.

Estimated Cost to the Federal Government

The FRB and CFPB issued the recordkeeping requirement of Regulation B, so there is no
cost to the FTC for that purpose. Enforcement of the recordkeeping requirements of Regulation B
is incidental to overall enforcement of the ECOA. In the course of compliance investigations, staff
routinely requests records of credit applications. If the records requested are not available, it
indicates that records are not being retained as required. Staff estimates that enforcing this
requirement will cost the FTC Bureau of Consumer Protection no more than $81,303, which is a
representative year’s cost of enforcing Regulation B’s requirements during the three-year
clearance period sought. This estimate is based on the assumption that one-half of one attorney
work year will be expended. Clerical and other support services are included in this estimate.
13

The FRB and CFPB issued the Regulation B disclosure requirements, so there is no cost to
the FTC for that purpose. Regarding enforcement, staff estimates that the cost to the FTC Bureau
of Consumer Protection for this requirement will approximate $243,906. This estimate is based on
the assumption that 1.5 attorney work years will be expended to enforce various aspects of these
rules. Clerical and other support services are also included in this estimate.
15.

Program Changes or Adjustments

Staff has modestly increased the prior annual burden estimate by 12,439 hours (from
1,866,984 to 1,879,423). This reflects the continued burden splitting noted above regarding shared
enforcement authority with the CFPB, paired with minor increased estimates for amendments to
Regulation B and various rounding differences. In turn, associated labor costs have risen as
applied to the increased estimate of burden hours, paired with updated mean hourly wages.
16.

Publishing Results of the Collection of Information
Not applicable.

17.

Display of Expiration Date for OMB Approval
Not applicable.

18.

Exceptions to the Certification for PRA Submissions
Not applicable.

14