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

Federal Trade Commission
Supporting Statement for Information Collection
Provisions of Regulation Z
(Truth in Lending Act)
12 C.F.R. 226; 12 C.F.R. 1026
(OMB Control Number: 3084-0088)
1.

Necessity for Collecting the Information

The Truth in Lending Act (“TILA”), 15 U.S.C. 1601 et seq., was enacted to foster comparison
credit shopping and informed credit decision making by requiring accurate disclosure of the costs and
terms of credit to consumers. Creditors and others are subject to calculation and disclosure requirements
that apply to open-end credit (e.g., revolving credit or credit lines) and closed-end credit (e.g., installment
financing) up to $54,600 plus an annual adjustment (except for private education loans and credit secured
by real property, which are covered regardless of dollar amount). The change in coverage based on the
dollar amount was made by the Dodd-Frank Wall Street Reform and Consumer Protection Act (“DoddFrank Act”), Pub. L. 111-203, 124 Stat 1376 (2010).
The TILA imposes disclosure requirements on all types of creditors in connection with consumer
credit, including mortgage companies, finance companies, retailers, credit card issuers, and private
education loan companies, to ensure that consumers are fully apprised of the terms of financing, generally
prior to consummation of the transaction or, in some instances, earlier in time and, in other instances,
during the loan term. It also imposes advertising disclosure requirements on advertisers of consumer
credit. It also requires acquirers of mortgage loans to disclose the change in the ownership of the loan to
the borrower, and requires creditors and others to report appraiser misconduct to state licensing authorities.
The TILA requires institutions of higher education to disclose their agreements regarding the marketing of
credit cards and requires credit card issuers to annual submit reports of credit card agreements. The TILA
also requires credit card issuers to post credit card agreements on their web sites. The TILA also
establishes billing error resolution procedures and limits consumer liability for the unauthorized use of
credit cards. It also requires credit card issuers to establish written policies and procedures to ensure that
an administrator of an estate of a deceased account holder can ascertain the amount of an account balance
in a timely fashion. An amendment to the TILA, the Home Ownership and Equity Protection Act
(“HOEPA”), imposes, among other things, various disclosure and other requirements on creditors offering
certain high-rate, high-fee mortgage loans to consumers; various requirements now also apply to certain
higher priced mortgages.
Subject to the discussion below, the Federal Trade Commission (“FTC” or “Commission”)
enforces the TILA as to all creditors and others and advertisers except those (such as federally chartered or
insured depository institutions) that are subject to the regulatory authority of another federal agency. The
TILA also contains a private right of action with a one-year statute of limitations for consumers; for certain
mortgage actions, TILA now provides a three-year statute of limitations.
The Board of Governors of the Federal Reserve System (“FRB”) promulgated the original
Regulation Z (12 C.F.R. Part 226) to implement the TILA, as required by the statute. Under the DoddFrank Act, however, almost all rulemaking authority for the TILA 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 TILA to the CFPB, the FRB retained rulemaking
authority for certain motor vehicle dealers.1 The CFPB’s regulations for entities under its jurisdiction for
Regulation Z appear in 12 C.F.R. Part 1026.2
As a result of the Dodd-Frank Act, the FTC and the CFPB now share the authority to enforce
Regulation Z 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 Z regarding motor
vehicle dealers predominantly engaged in the sale and servicing of motor vehicles, the leasing and
servicing of motor vehicles, or both.3
Recordkeeping
Sections 226.25(a)/1026.25(a) of Regulation Z requires creditors to retain evidence of compliance
with the regulation (other than the advertising requirements) for two years after the date disclosures are
required to be made or other action is required to be taken. Regulation Z also provides that the FTC (and
other administrative agencies responsible for enforcing the TILA) may require creditors under their
jurisdictions to retain records for a longer period if necessary to carry out their enforcement responsibilities
under the TILA. The recordkeeping requirement ensures that records that might contain evidence of
violations of the TILA remain available to the FTC and other agencies, as well as to private litigants.
Disclosure
The disclosures required by Regulation Z are derived from statutory provisions under the TILA.
See e.g., 12 C.F.R. 226.5a, 12 C.F.R. 1026.6(a), 15 U.S.C. 1637(c)-(g); 12 C.F.R. 226.5b, 12 C.F.R.
1026.40, 15 U.S.C. 1637a and 1647; 12 C.F.R. 226.6, 12 C.F.R. 1026.6, 15 U.S.C. 1637(a); 12 C.F.R.
226.7, 12 C.F.R. 1026.7, 15 U.S.C. 1637(b) (various open-end disclosures); 12 C.F.R. 226.11(c); 12
C.F.R. 1026.11(c); 15 U.S.C. 1651 (timely settlement of estate of deceased obligors); 12 C.F.R. 226.18, 12
C.F.R. 1026.18, 15 U.S.C. 1638; 12 C.F.R. 226.33, 12 C.F.R.1026.33, 15 U.S.C. 1648 (various closedend credit and reverse mortgage disclosures);4 12 C.F.R. 226.32 and 226.34, 12 C.F.R. 1026.32 and
1026.34, 15 U.S.C. 1639 (various high-rate, high-fee closed-end credit disclosures); 12 C.F.R. 1026.36
1

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).
2

Because both the FRB and CFPB have certain rulemaking authority under Regulation Z – as discussed further
below – citations to both aspects of the regulation are included in this document. Hence, 12 C.F.R. 226 refers to the
FRB-issued Regulation Z; 12 C.F.R. 1026 refers to the CFPB-issued Regulation Z. Generally, these two aspects of
Regulation Z are similar in many respects, other than citations. However, the CFPB-issued Regulation Z includes
certain mortgage and other requirements mandated by the Dodd-Frank Act and various other statutory changes; the
FRB-issued Regulation Z does not.
3

See Dodd-Frank Act, § 1029(a), -(c).

4

Integrated mortgage disclosures for certain closed-end mortgage loans are also required. See, e.g., 12 C.F.R.
1026.19(e)-(f), based on the Dodd-Frank Act, §§ 1032(f), 1098, and 1100A. These requirements (included in the
burden estimates below) are slated to become effective Aug. 1, 2015. See CFPB, Final Rule, Integrated Mortgage
Disclosures Under the Real Estate Settlement Procedures Act (Regulation X) and the Truth in Lending Act
(Regulation Z), 78 Fed. Reg. 79,730 (Dec. 31, 2013).

2

and 1026.41, 15 U.S.C. 1638(f), 1638a, 1639f, 1639g (mortgage servicing); 12 C.F.R. 226.39; 12 C.F.R.
1026.39; 15 U.S.C. 1641(g) (disclosure of change in mortgage loan ownership); 12 C.F.R. 226.42(g); 12
C.F.R. 1026.42(g); 15 U.S.C. 1639e (appraisal independence requirements); 12 C.F.R. 1026.36, 15 U.S.C.
1639b (loan originator requirements); 12 C.F.R. 1026.36, 15 U.S.C. 1639b(a)(2) (ability to pay
requirements); 12 C.F.R. 226.57(b); 12 C.F.R. 1026.57(b); 15 USC 1650(f) (disclosure of credit card
marketing agreements by institutions of higher education); 12 C.F.R. 226.57(d); 12 C.F.R. 1026.57(d); 15
U.S.C. 1637(r)(2) (annual reporting by credit card issuers of agreements with institutions of higher
education and others);5 12 C.F.R. 226.58; 12 C.F.R. 1026.58; 15 U.S.C. 1632(d)(1) (internet posting of
credit card agreements).
The FRB and CFPB have issued model forms and clauses that can be used to comply with the
written disclosure (non-advertising) requirements of the TILA and Regulation Z. See, e.g., Appendices DH and K-L 12 to C.F.R. Part 226; Appendices D-H and K-L to 12 C.F.R. Part 1026. Correct use of these
model forms and clauses insulates creditors from liability under the TILA and Regulation Z. See FRB
Official Staff Commentary to Regulation Z (“FRB Commentary”), Appendixes G and H, Comment 1; 12
C.F.R. 226, Appendixes G and H, Supp. 1; CFPB Official Staff Commentary to Regulation Z (“CFPB
Commentary”), Appendixes G and H, Comment 1; 12 C.F.R. 226, Appendixes G and H, Supp. 1.
2.

Use of the Information

The FTC, other agencies, and private litigants use the records to ascertain whether accurate and
complete disclosures of the cost of credit have been provided to consumers prior to consummation of the
credit obligation and, in some instances, during the loan term. The information is also used to determine
whether other actions required under the TILA, including complying with billing error resolution
procedures and limitation of consumer liability for unauthorized use of credit, have been met. The
information retained provides the primary evidence of law violations in TILA enforcement actions brought
by the FTC. Without the Regulation Z recordkeeping requirement, the FTC’s ability to enforce the TILA
would be significantly impaired.
As noted above, consumers rely on the disclosures required by the TILA and Regulation Z to
comparison credit shop and to facilitate informed credit decision making. Without this information,
consumers would be severely hindered in their ability to assess the true costs and terms of financing
offered. Also, without the special billing error information and other credit card provisions, such as
limitation of consumer liability for unauthorized use of credit, consumers would be unable to detect and
correct errors on their credit card accounts and fraudulent charges. The FTC and private litigants need the
information in these disclosures and other requirements to enforce the TILA and Regulation Z. See 15
U.S.C. 1607, 1640.
3.

Consideration of the Use of Improved Information Technology

5

The CFPB has temporarily suspended card issuers’ obligations to submit credit card agreements to the CFPB for
one year, while it develops a more streamlined and automated electronic submission system. The requirements to
post current agreements on card issuers’ own Web sites, however, are unaffected. This temporary change does not
change collections of information for PRA purposes. See CFPB, Final Rule, Submission of Credit Card Agreements
Under the Truth in Lending Act (Regulation Z), 80 Fed. Reg. 21,153, 21,157-58 (Apr. 17, 2015).

3

The FRB and CFPB have issued rules to establish uniform standards for using electronic
communication to deliver disclosures required under Regulation Z, within the context of the Electronic
Signatures in Global and National Commerce Act (“ESIGN”), 15 U.S.C. 7001 et seq.; and Sections
226.5(a)/1026.5(a) and 226.17(a)/1026.17(a) of Regulation Z. 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 Z, by enabling businesses to utilize more efficient electronic media for
disclosures and compliance.
Regulation Z also permits creditors to retain records on microfilm or microfiche or any other
method that reproduces records accurately, including computer programs. Creditors need only retain
enough information to reconstruct the required disclosure or other records. Section 226.25(a)-2 of the
FRB Commentary, 12 C.F.R. 226.25(a)-2; Section 1026.25(a)-2 of the CFPB Commentary, 12 C.F.R.
1026.25(a)-2.
4.

Efforts to Identify Duplication/Availability of Similar Information

The recordkeeping requirement of Regulation Z preserves the information utilized by the creditor
in making disclosures (and underlying calculations) of the terms of consumer credit and other required
actions. The creditor is the only source of this information. No other federal law mandates these
disclosures (in a fully duplicative manner) and other required actions.6 No state law known to staff
imposes these requirements, although some states may have other rules applicable to consumer credit
transactions.
Similarly, the disclosures required by the TILA and Regulation Z are not otherwise available.
Although some credit cost information is contained in contractual documents, the information is not
standardized. As a result, consumers cannot use it efficiently to comparison shop or to fully appreciate the
credit terms. The creditor (and/or advertiser) is the only source of this information. No other federal law
mandates these disclosures. State laws do not duplicate these requirements, although some states may have
6

The TILA requirement to provide applicants with copies of written appraisals for certain higher-priced mortgage
loans, 15 U.S.C. 1639h, in part overlaps with the ECOA requirement to provide applicants with copies of written
appraisals. The Dodd-Frank Act amended both ECOA and TILA to add the appraisal rules that overlap only in part.
For example, 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 TILA and 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). 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 openend or closed-end mortgages. 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, TILA Higher-Priced Mortgage Loans (HPML)
Appraisal Rule, Small Entity Compliance Guide (Jan. 13, 2014), and CFPB, Equal Credit Opportunity Act (ECOA)
Valuations 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.

4

other rules applicable to consumer credit transactions.

5

5.

Efforts to Minimize Burdens on Small Businesses

The TILA and Regulation Z recordkeeping and disclosure requirements are imposed (in most
instances) on creditors. The recordkeeping requirement is mandated by Regulation Z. The disclosure
requirements are mandated jointly by the TILA and Regulation Z. As previously noted, the FTC’s role in
this area is limited to enforcement, because the TILA vested rulemaking authority in the FRB and CFPB.
Additionally, as noted above, Regulation Z provides model forms and clauses that may be used in
compliance with its requirements. Correct use of these forms and clauses insulates a creditor from liability
as to proper format.
6.

Consequences of Conducting Collection Less Frequently

The current record retention period of two years in most instances, with three years for loan
originator requirements and certain ability to pay requirements and, as slated to commence Aug. 1, 2015,
three years for integrated mortgage requirements and five years for integrated mortgage requirements
concerning completed closing disclosures,7 supports the general one-year statute of limitations and the
three-year statute of limitations (for loan originator, ability to pay, and high cost mortgages) for private
actions. In addition, because consumers can assert violations of TILA in an action to collect the debt that
was brought more than one year after the violation, as a matter of defense by recoupment or set-off in that
action unless prohibited by state law, the three-year and five-year recordkeeping requirements support the
consumer’s ability to assert violations over a longer period. The retention periods also support the FTC’s
(and other administrative agencies’) need for sufficient time to bring enforcement actions regarding credit
transactions. If the retention period were shortened, consumers who sue under the TILA or who seek to
raise violations by recoupment or set-off in collection actions, and the administrative agencies, might find
that records needed to prove violations of the TILA no longer exist.
As noted, the disclosure requirements are needed to facilitate comparison cost shopping and to
spur informed credit decision-making. Without these requirements, consumers would not have access to
this critical information. Their right to sue under the TILA would be undermined, and the FTC (and other
administrative agencies) could not fulfill their mandate to enforce the TILA.
7.

Circumstances Requiring Collection Inconsistent with Guidelines

Regulation Z’s recordkeeping and disclosure requirements are generally consistent with the
applicable guidelines in 5 C.F.R. 1320.5(d)(2). While Regulation Z has lengthened retention periods for
integrated mortgage disclosures, the longer periods derive from Regulation X, which implements the Real
Estate Settlement Procedures Act (“RESPA”). When the CFPB merged certain mortgage disclosures
required by TILA and RESPA into integrated mortgage disclosures, as required by the Dodd-Frank Act, it
applied the Regulation X extended retention period to the new record retention requirements.8 Thus, the
requirement to retain for three years many aspects of integrated mortgage disclosures, and for five years
integrated mortgage disclosures related to completed closing disclosures, derives from previously existing
7

See supra note 4.

8

The five-year recordkeeping requirement under Regulation X became effective in 1992. See 57 Fed. Reg. 49,600,
49,607 (Nov. 2, 1992).

6

periods under Regulation X.9 The documents to be retained serve as both the record of all fees associated
with the transaction and as part of the official disbursement record. In addition, the lengthened
recordkeeping requirement ensures that there will be an available record for use regarding state and local
real property laws that may depend on the information being available for five years.10
8.

Consultation Outside the Agency

The recordkeeping and disclosure requirements of Regulation Z 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 Z. 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.11
As before, NADA asserts that the FTC’s burden estimates greatly underestimate its members’12
regulatory burdens under these rules, particularly those under Regulation Z. Despite 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.13 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 Z covers not only NADA’s membership of franchised car
9

See, e.g., 78 Fed. Reg. at 79,902-3, supra note 4.

10

See 78 Fed. Reg. at 79,902, supra note 4.

11

NADA’s 2015 comment and related 2012 comment are available at https://www.ftc.gov/policy/publiccomments/2015/06/01/comment-00003. The remaining (two) commenters’ submissions were not relevant to the
statutes and regulations at issue.
12

NADA states that it represents approximately 16,000 new car and truck dealers, both domestic and import, with
over 32,500 separate franchises. Id.
13

In NADA’s 2015 comment, it misread the 60 seconds estimate the FTC accorded to disclosure time per credit
advertisement, as the time the FTC estimated for dealer monitoring of advertisements for compliance under
Regulation Z. In actuality, the FTC estimate for the latter monitoring category, and as reappearing in the Regulation
Z disclosure hour tables in this Notice, is 30 minutes for closed-end credit advertising.
14

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

7

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 Z.
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 Z, tied to a subpopulation that is small in relation to the overall affected population, would
unduly skew the estimates for Regulation Z. 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 provided, and hence, costs.
In addition, NADA’s comment states that, for Regulation Z, the estimate that assumed an average
of two advertising transactions per respondent for credit is not adequate, and that dealers advertise
hundreds, if not thousands, of vehicles per year with many ads being subject to Regulation Z. However,
the FTC’s estimates of transaction time and volume are intended as averages. For Regulation Z, given the
highly diverse entities and types of transactions covered, some respondents may have more covered ads,
and others may have fewer (if any). Moreover, the number of vehicles advertised is not the issue for
compliance with the Regulation Z requirements; rather, the question is whether specific terms used in the
advertisements trigger the disclosure responsibilities of this regulation.17 Some entities’ advertisements
may not include terms that are covered by these requirements at all, or they may be subject to exceptions
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).
17

Further, to facilitate compliance, Regulation Z permits the use of illustrative transactions to make the necessary
disclosures. That is, where a range of terms is possible or offered, the ad may use examples of typical transactions
and include the required disclosures, rather than stating a wide list of transactions and terms for multiple vehicles.
See 12 CFR 1026.24(d)(2)-5, Supp. 1, and 12 CFR 226.24(d)(2)-5, Supp. 1, CFPB and FRB Regulation Z Official
Staff Commentaries.

8

such that disclosures are inapplicable.18
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 Z, still “represent a
material portion of dealers’ regulatory obligations.” See, e.g., NADA comment, CAR Report at 2, 3, 1934. 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 Z 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 disclosures also contain private financial information about
persons who use consumer credit that 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 57b2, 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), as applicable.
12.

Estimated Hours and Labor Cost Burden
Estimated Hours Burden: 13,697,302 hours (688,850 recordkeeping hours: 613,650 + 75,200
carve-out for motor vehicles + 13,008,452 disclosure hours: 11,964,361 + 1,044,091 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 entities incur customarily in the
ordinary course of business19 and information compiled and produced in response to FTC law enforcement
investigations or prosecutions.20
18

For example, some advertisements may promote sale prices rather than credit terms, and are not subject to
Regulation Z. Other ads generally may promote the availability of financing without specific terms, such as
“welcome college graduates and military.” Some ads may offer terms that do not trigger advertising responsibilities
under Regulation Z, such as “take years to repay.” Still other ads may include terms that are subject to exceptions
under Regulation Z, and disclosures would not be required, such as “no downpayment required.”
19

See supra note 16 and accompanying text.

20

See 5 CFR 1320.4(a) (excluding information collected in response to, among other things, a federal civil action or

9

Because of their shared enforcement jurisdiction for Regulation Z, the CFPB and the FTC have
divided the FTC’s previously-cleared PRA burden between them,21 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”).22 The division of PRA burden hours not attributable to motor vehicle
dealers is reflected in the CFPB’s PRA clearance requests to OMB.23 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 Z for motor vehicle dealers.
Recordkeeping
FTC staff estimates that Regulation Z’s recordkeeping requirements affect approximately 530,080
entities subject to the Commission’s jurisdiction, at an average annual burden of 1.25 hours per entity, with
.25 additional hours per entity for 5,000 entities (ability to pay), and 5 additional hours per entity for 5,000
entities (loan originators).
Disclosure
Regulation Z disclosure requirements pertain to open-end and closed-end credit. It applies to
various types of entities, including mortgage companies; finance companies; auto dealerships; private
“during the conduct of an administrative action, investigation, or audit involving an agency against specific
individuals or entities”).
FTC enforcement initiatives are based on diverse statutory and regulatory requirements. Some actions are brought in
partnership with other federal and state agencies and encompass matters enforced by those agencies, not solely issues
related to Regulations Z. Further, even where Regulation Z matters also are involved in FTC actions, or are in the
broader initiative or enforcement sweep of automobile actions, the actions frequently include charges of unfair
and/or deceptive practices under Section 5 of the FTC Act, 15 U.S.C. 45(a), and/or may involve warranty violations
under the Magnuson Moss Warranty Act, 15 U.S.C. 2301-2312, and other issues not pertinent to this PRA
submission. See, e.g., FTC, Press Release, FTC, Multiple Law Enforcement Partners Announce Crackdown on
Deception, Fraud in Auto Sales, Financing and Leasing, Mar. 26, 2015, available at https://www.ftc.gov/newsevents/press-releases/2015/03/ftc-multiple-law-enforcement-partners-announce-crackdown. The FTC also
frequently issues business “blog” guidance with its enforcement initiatives to guide and facilitate compliance. See,
e.g., Lesley Fair, Operation Ruse Control: Six tips if cars are up your alley, FTC BUSINESS CENTER BLOG
(Mar. 26, 2015), available at https://www.ftc.gov/news-events/blogs/business-blog/2015/03/operation-ruse-control6-tips-if-cars-are-your-alley; Lesley Fair, “Advertise auto promotions car-fully,” FTC BUSINESS CENTER BLOG
(Dec. 23, 2014), available at https://www.ftc.gov/news-events/blogs/business-blog/2014/12/advertise-autopromotions-car-fully.
21

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

22

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.
23

OMB Control Number 3170-0015 (Regulation Z).

10

education loan companies; merchants who extend credit for goods or services, credit advertisers; acquirers
of mortgages; and others. New requirements have been established in the mortgage area, including for
high cost mortgages, higher-priced mortgage loans,24 ability to pay of mortgage consumers, mortgage
servicing, loan originators, and certain integrated mortgage disclosures. Below is staff’s best estimate of
burden applicable to this very spectrum of covered entities.

Regulation Z: Disclosures – Burden Hours

Disclosures1

--------------- Setup/Monitoring ------------------------ Transaction-related ----------Average
Total Setup/
Average
Total
Burden per
Monitoring
Number of Burden per Transaction
Total
Respondents Respondent2
Burden
Transactions Transaction3
Burden
Burden
(hours)
(hours)
(minutes)
(hours)
(hours)

Open-end credit:
Initial terms
45,000
Rescission notices4
1,500
Subsequent disclosures
10,000
Periodic statements
45,000
Error resolution
45,000
Credit and charge card accounts
25,000
Settlement of estate debts
45,000
Special credit card requirements
25,000
Home equity lines of credit5
1,500
Home equity lines of credit-high
cost mortgages6
500
College student credit card
marketing – ed. institutions
2,500
College student credit card
marketing – card issuer reports
300
Posting and reporting of
credit card agreements
25,000
Advertising
100,000
Sale, transfer, or assignment
of mortgages7
1,500
Appraiser misconduct
reporting
625,000
Mortgage servicing8
2,500
Loan originators9
2,500
Closed-end credit:
Credit disclosures10
Rescission notices11
Redisclosures
Integrated mortgage disclosures12
Variable rate mortgages13
High cost mortgages14
Higher priced mortgages15
Reverse mortgages16
Advertising17
Private education loans

380,080
5,000
200,000
5,000
5,000
3,000
3,000
7,500
248,360
100

.75
.5
.75
.75
.75
.75
.75
.75
.5

33,750
750
7,500
33,750
33,750
18,750
33,750
18,750
750

20,000,000
8,000
62,500,000
1,750,000,000
4,000,000
12,500,000
1,000,000
12,500,000
10,000

.375
.25
.188
.0938
6
.375
.375
.375
.25

125,000
33
195,833
2,735,833
400,000
78,125
6,250
78,125
42

158,750
783
203,333
2,769,583
433,750
96,875
40,000
96,875
792

2

1,000

5,000

2

167

1,167

.5

1,250

250,000

.25

1,042

2,292

.75

225

18,000

.75

225

450

.75
.75

18,750
75,000

12,500,000
300,000

.375
.75

78,125
3,750

96,875
78,750

.5

750

1,750,000

.25

7,292

8,042

.75
.5
2

468,750
1,250
5,000

12,500,000
500,000
25,000

.375
.5
5

78,125
4,167
2,083

546,875
5,417
7,083

.75
.5
.5
10
1
1
1
.5
.5
.5

285,060
2,500
100,000
50,000
5,000
3,000
3,000
3,750
124,180
50

163,054,320
7,500,000
1,000,000
15,000,000
500,000
75,000
25,000
35,000
2,483,600
50,000

2.25
1
2.25
3.5
1.75
2
2
1
1
1.5

6,114,537
125,000
37,500
875,000
14,583
2,500
833
583
41,393
1,250

6,399,597
127,500
137,500
925,000
19,583
5,500
3,833
4,333
165,573
1,300

24

While Regulation Z also requires the creditor to provide a short written disclosure regarding the appraisal process
for higher-priced mortgage loans, the disclosure is now provided by the CFPB, and may be classified as a label
supplied by the Federal government. As a result, it is not a “collection of information” for PRA purposes; it is not,
therefore, included in burden estimates below. See 5 CFR 1320.3(c)(2), and CFPB, Final Rule, Appraisals for
Higher-Priced Mortgage Loans, 78 FR 10,368, 10,430 (Feb. 13, 2013), and Supplemental Final Rule, Appraisals for
Higher-Priced Mortgage Loans, 78 FR 78,520, 78,575 (Dec. 26, 2013).

11

Sale, transfer, or assignment
of mortgages
100,000
Ability to pay/qualified mortgage18 5,000
Appraiser misconduct reporting
625,000
Mortgage servicing19
5,000
20
Loan originators
2,500

.5
.75
.75
1
2

50,000
3,750
468,750
5,000
5,000

5,000,000
0
12,500,000
1,000,000
25,000

Total open-end credit
Total closed-end credit

.25
0
.375
2.25
5

20,833
0
78,125
37,500
2,083

70,833
3,750
546,875
42,500
7,083
4,547,692
8,460,760

Total credit

13,008,452

1

Regulation Z requires disclosures for closed-end and open-end credit. TILA and Regulation Z now cover credit up to $54,600 plus an annual
adjustment (except that real estate credit and private education loans are covered regardless of amount), generally causing an increase in
transactions. In some instances noted below, market changes have reduced estimated PRA burden. In other instances noted below, changes to
Regulation Z have increased estimated PRA burden. The overall effect of these competing factors, combined with the FTC sharing with the CFPB
estimated PRA burden (for all but motor vehicle dealers) yields a net increase from the FTC’s prior reported estimate for open-end credit and for
closed-end credit.
2
Burden per respondent in some categories has increased compared to prior FTC estimates, due to changes in rules.
3
Burden per transaction in some categories has increased compared to prior FTC estimates, due to changes in rules.
4
Respondents for mortgages involving rescission have decreased, as have transactions.
5
Respondents for home equity lines of credit have decreased, as have transactions.
6
Regulation Z high cost mortgage rules now cover certain open-end mortgages, and a new counseling rule also applies.
7
Respondents for sale, transfer or assignment of mortgages have decreased.
8
Regulation Z has expanded various mortgage servicing requirements for prompt crediting and payoff responses.
9
Regulation Z includes new loan originator compensation requirements.
10
Respondents for credit disclosures have decreased, as have transactions.
11
Respondents for mortgages involving rescission have decreased.
12
Regulation Z now has integrated mortgage disclosure requirements for loan estimates and loan closing documents, with other requirements.
13
Respondents for variable rate mortgages have decreased but Regulation Z has expanded mortgage disclosure requirements affecting subsequent
disclosures, increasing burden.
14
Regulation Z high rate/high fee mortgages are now called “high cost” mortgages. Respondents in high cost mortgages have decreased, but the
rules cover more types of mortgages and include a counseling requirement, increasing burden. However, these types of transactions have decreased,
reducing total burden.
15
Respondents for higher priced mortgages have decreased. However, Regulation Z now has certain appraisal requirements for higher-priced
mortgages, increasing burden. However, these types of transactions have decreased, reducing total burden.
16
Reverse mortgage respondents and transactions have decreased.
17
Advertising respondents have increased, as have transactions, causing an increased total burden.
18
Regulation Z now includes ability to pay rules that affect setup costs.
19
Regulation Z has expanded various mortgage servicing requirements for prompt crediting and payoff responses. It also requires periodic
statements (or a coupon book, for fixed-rate mortgages).
20
Regulation Z includes new loan originator compensation requirements.

Associated labor costs: $566,996,336 ($13,432,575 recordkeeping costs: $11,966,175 +
$1,466,400 carve-out for motor vehicles + $553,563,761 disclosure costs: $508,250,213 + $45,313,548
carve-out)
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 drawn from Bureau of Labor Statistics data.25
Recordkeeping

25

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

For the 688,850 recordkeeping hours, staff estimates that 10 percent of the burden hours require
skilled technical time and 90 percent require clerical time. As shown below, the total recordkeeping cost is
$13,432,575.

13

Disclosure
For each notice or information item listed, staff estimates that 10 percent of the burden hours
require managerial or professional time and 90 percent require skilled technical time. As shown below, the
total disclosure cost is $553,563,761.

Regulation Z: Recordkeeping and Disclosures – Cost
Required Task
Recordkeeping
Open-end credit Disclosures:
Initial terms
Rescission notices
Subsequent disclosures
Periodic statements
Error resolution
Credit and charge card accounts
Settlement of estate debts
Special credit card requirements
Home equity lines of credit
Home equity lines of credit –high
cost mortgages
College student credit card
marketing – ed institutions
College student credit card
marketing – card issuer reports
Posting and reporting of
credit card agreements
Advertising
Sale, transfer, or assignment
of mortgages
Appraiser misconduct reporting
Mortgage servicing
Loan originators

------Managerial-----Time
Cost
(hours)
($56/hr.)
0
0
15,875
$889,000
78
$4,368
20,333 $1,138,648
276,958 $15,509,648
43,375 $2,429,000
9,688
$474,712
4,000
$196,000
9,688
$474,712
458
$22,442

-----Skilled Technical------------Clerical-------Total
Time
Cost
Time
Cost
Cost
(hours)
($42/hr.)
(hours)
($17/hr.)
($)
68,885
2,893,170
619,965
10,539,405 $13,432,575
142,875
$6,000,750
705
$29,610
183,000
$7,686,000
2,492,625 $104,690,250
390,375 $16,395,750
87,187
$2,615,610
36,000
$1,080,000
87,187
$2,615,610
4,126
$123,780

0
0
0
0
0
0
0
0
0

$0
$0
$0
$0
$0
$0
$0
$0
$0

$6,889,750
$33,978
$8,824,648
$120,199,898
$18,824,750
$3,090,322
$1,276,000
$3,090,322
$146,222

117

$6,552

1050

$44,100

0

$0

$50,662

229

$11,221

2,063

$61,890

0

$0

$73,111

45

$2,205

405

$12,150

0

$0

$14,355

9,688
7,875

$474,712
$385,875

87,187
70,875

$2,615,610
$2,126,250

0
0

$0
$0

$3,090,322
$2,512,125

823
54,687
542
708

$40,327
$2,679,663
$30,352
$39,648

7,407
492,188
4,875
6,375

$222,210
$14,765,640
$204,750
$267,750

0
0
0
0

$0
$0
$0
$0

$262,537
$17,445,303
$235,102
$307,398

Total open-end credit
Closed-end credit Disclosures:
Credit disclosures
Rescission notices
Redisclosures
Integrated mortgage disclosures
Variable rate mortgages
High cost mortgages
Higher priced mortgages
Reverse mortgages
Advertising
Private education loans
Sale, transfer, or assignment
of mortgages
Ability to pay/qualified mortgage
Appraiser misconduct reporting
Mortgage servicing
Loan originators

$186,366,805
639,960 $35,837,760
12,750
$714,000
13,750
$770,000
92,500 $5,180,000
1,958
$109,648
550
$30,800
383
$21,448
433
$24,248
16,557
$927,192
130
$7,280
7,083
375
54,687
4,250
708

$396,648
$21,000
$3,062,472
$238,000
39,648

5,759,637 $241,904,754
114,750
$4,819,500
123,750
$5,197,500
832,500 $34,965,000
17,625
$740,250
4,950
$207,900
3,450
$144,900
3,900
$163,800
149,016
$6,258,672
1,170
$49,140
63,750
3,375
492,188
38,250
6,375

$2,677,500
$141,750
$20,671,896
$1,606,500
$267,750

0
0
0
0
0
0
0
0
0
0

$0
$0
$0
$0
$0
$0
$0
$0
$0
$0

$277,742,514
$5,533,500
$5,967,500
$40,145,000
$849,898
$238,700
$166,348
$188,048
$7,185,864
$56,420

0
0
0
0
0

$0
$0
$0
$0
$0

$3,074,148
$162,750
$23,734,368
$1,844,500
$307,398

Total closed-end credit

$367,196,956

Total Disclosures

$553,563,761

Total Recordkeeping and Disclosures

$566,996,336

14

13.

Estimated Capital and Other Non-Labor Costs

The applicable requirements impose minimal start-up costs, as creditors and/or advertisers
generally have or obtain necessary equipment for other business purposes. For the same reason, staff
believes that the cost of printing and copying to comply with Regulation Z is minimal. Staff anticipates
that the above requirements necessitate ongoing, regular training so that covered entities 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 Z.
14.

Estimated Cost to Federal Government

The FRB and CFPB issued the recordkeeping requirement of Regulation Z, so there is no cost to
the FTC for that purpose. Enforcement of the recordkeeping requirements of Regulation Z is incidental to
overall enforcement of the TILA. Staff estimates that enforcing the recordkeeping requirement will cost
the FTC Bureau of Consumer Protection approximately $162,603, which is a representative year’s cost of
enforcing Regulation Z’s requirements during the three-year clearance period sought. This estimate is
based on the assumption that one attorney work year will be expended. Clerical and other support services
are included in this estimate.
The FRB and CFPB issued the disclosure requirements of Regulation Z, so there is no cost to the
FTC for that purpose. Regarding enforcement of the disclosure requirements, staff estimates that the cost
to the FTC Bureau of Consumer Protection of administering all TILA requirements will approximate $1.46
million. This estimate is based on the assumption that nine full 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

FTC staff has adjusted upward the prior overall burden estimate by 1,033,929 hours (from
12,663,373 to 13,697,302). This reflects the continued burden splitting noted above regarding shared
enforcement authority with the CFPB, albeit offset by countervailing increases due to the breadth of
amendments to Regulation Z and their impact on recordkeeping and disclosure through expanded coverage
and more complex transactions. 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 Certifications for PRA Submissions

15

Not applicable.

16