Agency Information Collection Activities; Submission for OMB Review; Comment Request; Extension

Federal RegisterApr 27, 2012

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FEDERAL TRADE COMMISSION

Agency Information Collection Activities; Submission for OMB Review; Comment Request; Extension

AGENCY:

Federal Trade Commission (“FTC” or “Commission”).

ACTION:

Notice.

SUMMARY:

The FTC intends to ask the Office of Management and Budget (“OMB”) to extend through April 30, 2015, the current Paperwork Reduction Act (“PRA”) clearance for the information collection requirements in four consumer financial regulations enforced by the Commission. Those clearances expire on April 30, 2012.

DATES:

Comments must be filed by May 29, 2012.

ADDRESSES:

Interested parties may file a comment online or on paper, by following the instructions in the Request for Comment part of the

SUPPLEMENTARY INFORMATION

section below. Write “Regs BEMZ, PRA Comments, P084812” on your comment and file your comment online at

https://ftcpublic.commentworks.com/ftc/RegsBEMZpra2

by following the instructions on the web-based form. If you prefer to file your comment on paper, mail or deliver your comment to the following address: Federal Trade Commission, Office of the Secretary, Room H-113 (Annex J), 600 Pennsylvania Avenue NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT:

Requests for additional information or copies of the proposed information requirements should be addressed to Carole Reynolds or Soyong Cho, Attorneys, Division of Financial Practices, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Ave. NW., Washington, DC 20580, (202) 326-3224.

SUPPLEMENTARY INFORMATION:

The four regulations covered by this notice are:

(1) Regulations promulgated under The Equal Credit Opportunity Act, 15 U.S.C. 1691

et seq.

(“ECOA”) (“Regulation B”) (OMB Control Number: 3084-0087);

(2) Regulations promulgated under The Electronic Fund Transfer Act, 15 U.S.C. 1693

et seq.

(“EFTA”) (“Regulation E”) (OMB Control Number: 3084-0085);

(3) Regulations promulgated under The Consumer Leasing Act, 15 U.S.C. 1667

et seq.

(“CLA”) (“Regulation M”) (OMB Control Number: 3084-0086); and

(4) Regulations promulgated under The Truth-In-Lending Act, 15 U.S.C. 1601

et seq.

(“TILA”) (“Regulation Z”) (OMB Control Number: 3084-0088).

The FTC enforces these statutes as to all businesses engaged in conduct these laws cover unless these businesses (such as federally chartered or insured depository institutions) are subject to the regulatory authority of another federal agency.

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), Public Law 111-203,124 Stat. 1376 (2010), almost all rulemaking authority for the ECOA, EFTA, CLA, and TILA transferred from the Board of Governors of the Federal Reserve System (Board) to the Consumer Financial Protection Bureau (CFPB) on July 21, 2011 (“transfer date”). To implement this transferred authority, the CFPB has published for public comment interim final rules for new regulations in 12 CFR part 1002 (Regulation B), 12 CFR part 1005 (Regulation E), 12 CFR part 1013 (Regulation M), and 12 CFR part 1026 (Regulation Z) for those entities under its rulemaking jurisdiction.

Although the Dodd-Frank Act transferred most rulemaking authority under ECOA, EFTA, CLA, and TILA to the CFPB, the Board retained rulemaking authority for certain motor vehicle dealers

under all of these statutes and also for certain interchange-related requirements under EFTA.

12 CFR part 1002 (Reg. B) (76 FR 79442, Dec. 21, 2011); 12 CFR part 1005 (Reg. E) (76 FR 81020, Dec. 27, 2011) (amended, 77 FR 6194, Fed. 7, 2012); 12 CFR part 1013 (Reg. M) (76 FR 78500, Dec. 19, 2011) (corrected, 76 FR 81789, Dec. 29, 2011); 12 CFR part 1026 (Reg. Z) (76 FR 79768, Dec. 22, 2011).

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).

See

Dodd-Frank Act, § 1075 (these requirements are implemented through Board Regulation II, 12 CFR part 235, rather than EFTA's implementing Regulation E).

As a result of the Dodd-Frank Act, the FTC and the CFPB now share the authority to enforce Regulations B, E, M, and Z for entities for which the FTC had enforcement authority before the Act, except for certain motor vehicle dealers. Because of this shared enforcement jurisdiction, the two agencies have divided the FTC's previously-cleared PRA burden between them,

except that the FTC retained all of the part of that burden associated with certain motor vehicle dealers (for brevity, referred to in the burden summaries below as a “carve-out”).

The division of PRA burden hours not attributable to certain motor vehicle dealers is reflected in the CFPB's recent PRA clearance requests to OMB,

as well as in the FTC's burden estimates below.

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

These are 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 offered 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.

OMB Control Numbers 3170-0013 (Regulation B), 3170-0014 (Regulation E), 3170-0008 (Regulation M), and 3170-0015 (Regulation Z).

As a result of the Dodd-Frank Act, the FTC generally has sole authority to enforce Regulations B, E, M, and Z regarding motor vehicle dealers predominantly engaged in the sale and servicing of motor vehicles, the leasing and servicing of motor vehicles, or both.

Because the FTC has exclusive jurisdiction to enforce these rules for such motor vehicle dealers, it is including the entire PRA burden for them in the burden estimates below.

See

Dodd-Frank Act, § 1029(a), -(c).

Under the PRA, 44 U.S.C. 3501-3521, Federal agencies must get OMB approval for each collection of

information they conduct or sponsor. “Collection of information” includes agency requests or requirements to keep records or provide information to a third party.

See

44 U.S.C. 3502(3); 5 CFR 1320.3(c). The regulations impose certain recordkeeping and disclosure requirements associated with providing credit or with other financial transactions.

On February 7, 2012, the Commission sought comment on the information collection requirements associated with these four regulations. 77 FR 6114.

The Commission received one comment from the National Automobile Dealers Association (“NADA”) pertaining to regulatory burden affecting Regulations B, M, and Z.

The Commission published a follow-up notice in the

Federal Register

on March 5, 2012 (77 FR 13127) to correct certain formatting errors in the Regulation M burden hours table that had initially resulted in misaligned and missing columnar information in that table.

NADA's comment is available at

http://www.ftc.gov/os/comments/regsbemzpra/index.shtm

NADA stated, as a general matter, that the FTC staff estimates greatly underestimate the recordkeeping, disclosure, and other related compliance requirements for NADA members

for the rules at issue, particularly Regulations B, M, and Z. NADA provided two illustrations of this point for Regulations M and Z (discussed and analyzed below under their applicable sub-headings), but did not provide sufficient specific information from which staff could revisit and revise its estimates. Pursuant to the OMB rules, 5 CFR part 1320, that implement the PRA, 44 U.S.C. 3501

et seq.,

the FTC is providing this second opportunity for NADA and the general public to comment while the FTC seeks OMB approval to renew the pre-existing clearance for these rules.

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

Id.

Although all four of the regulations require covered entities to keep certain records, FTC staff believes these records are kept in the normal course of business even absent the particular recordkeeping requirements.

Covered entities, however, may incur some burden associated with ensuring that they do not prematurely dispose of relevant records (i.e., during the time span they must retain records under the applicable regulation).

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

The regulations also require covered entities to make disclosures to third-parties. Related compliance involves set-up/monitoring and transaction-specific costs. “Set-up” burden, incurred only by covered new entrants, includes their identifying the applicable required disclosures, determining how best to comply, and designing and developing compliance systems and procedures. “Monitoring” burden, incurred by all covered entities, includes their 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 refers to the time and cost associated with providing the various required disclosures in individual transactions. While this burden varies with the number of transactions, the figures shown for transaction-related burden in the tables that follow are estimated averages.

The required disclosures do not impose PRA burden on some covered entities because they make those disclosures in their normal course of activities. For other covered entities that do not, their compliance burden will vary widely depending on the extent to which they have developed effective computer-based or electronic systems and procedures to communicate and document required disclosures.

For example, large companies may use computer-based and/or electronic means to provide required disclosures, including issuing some disclosures en masse, e.g., notices of changes in terms. Smaller companies may have less automated compliance systems but may nonetheless rely on electronic mechanisms for disclosures and recordkeeping. Regardless of size, some entities may utilize compliance systems that are fully integrated into their general business operational system; if so, they may have minimal additional burden. Other entities may have incorporated fewer of these approaches into their systems and thus may have a higher burden.

Calculating the burden associated with the four regulations' disclosure requirements is very difficult because of the highly diverse group of affected entities. The “respondents” included in the following burden calculations consist of, among others, credit and lease advertisers, creditors, owners (such as purchasers and assignees) of credit obligations, financial institutions, service providers, certain government agencies and others involved in delivering electronic fund transfers (“EFTs”) of government benefits, and lessors.

The burden estimates represent FTC staff's best assessment, based on its knowledge and expertise relating to the financial services industry. Staff considered the wide variations in covered entities' (1) Size and location; (2) credit or lease products offered, extended, or advertised, and their particular terms; (3) EFT types used; (4) types and frequency of adverse actions taken; (5) types of appraisal reports utilized; and (6) computer systems and electronic features of compliance operations.

The Commission generally does not have jurisdiction over banks, thrifts, and federal credit unions under the applicable regulations.

The cost estimates that follow relate solely to labor costs, and they include the time necessary to train employees how to comply with the regulations. Staff calculated labor costs by multiplying appropriate hourly wage rates by the burden hours described above. The hourly rates used were $49 for managerial oversight, $30 for skilled technical services, and $16 for clerical work. These figures are averages drawn from Bureau of Labor Statistics data.

Further, the FTC cost estimates assume the following labor category apportionments, except where otherwise indicated below: recordkeeping—10% skilled technical, 90% clerical; disclosure—10% managerial, 90% skilled technical.

These inputs are based broadly on mean hourly data found within the National Compensation Survey: Occupational Earnings in the United States, 2010, Bulletin 2753 (May 2011), Table 3 (

http://www.bls.gov/ncs/ocs/sp/nctb1477.pdf

The applicable PRA requirements impose minimal capital or other non-labor costs. Affected entities generally already have the necessary equipment for other business purposes. Similarly, FTC staff estimates that compliance with these rules entails minimal printing and copying costs beyond that associated with documenting financial transactions in the ordinary course of business.

1. Regulation B

The ECOA prohibits discrimination in the extension of credit. Regulation B implements the ECOA, establishing disclosure requirements to assist customers in understanding their rights under the ECOA and recordkeeping requirements to assist agencies in enforcement. Regulation B applies to retailers, mortgage lenders, mortgage brokers, finance companies, and others.

Recordkeeping

FTC staff estimates that Regulation B's general recordkeeping requirements affect 530,479 credit firms subject to the Commission's jurisdiction, at an average annual burden of 1.25 hours per

firm

for a total of 663,099 hours.

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 2.25 million credit applications (based on industry data regarding the approximate number of mortgage purchase and refinance originations), for a total of 37,500 hours.

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.

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.

This is an increase from past estimates of one hour per respondent in view of more complex transactions and their associated impact on recordkeeping.

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.

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

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.

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 various types of mortgage credit to provide a copy of the appraisal report to applicants or to notify them of their right to a copy of the report (and thereafter provide a copy of the report, upon the applicant's request). 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.

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

Burden Totals

Recordkeeping:

702,526 hours (625,977 + 76,549 carve-out for motor vehicles); $12,720,734 ($11,384,370 + $1,336,364 carve-out for motor vehicles), associated labor costs.

Disclosures:

1,164,458 hours (1,032,206 + 132,252 carve-out for motor vehicles); $37,146,214 ($32,927,360 + $4,218,854 carve-out for motor vehicles), associated labor costs.

Regulation B: Disclosures—Burden Hours

Disclosures

Setup/Monitoring

Respondents

Average burden per respondent

(hours)

Total setup/monitoring burden

(hours)

Transaction-related

Number of transactions

Average

burden per

transaction

(minutes)

Total

transaction

burden

(hours)

Total burden

(hours)

Credit history reporting

133,000

.25

33,250

66,309,750

.25

276,291

309,541

Adverse action notices

530,000

.75

397,500

106,096,000

.25

442,067

839,567

Appraisal notices

5,000

2,500

1,125,000

.25

4,688

7,188

Appraisal reports

5,000

2,500

1,125,000

.25

4,688

7,188

Self-test disclosures

1,375

688

68,750

.25

286

974

Total

1,164,458

The estimates shown reflect a decrease in applicable mortgage entities regarding appraisal notices and appraisal reports. The figures assume that approximately half of mortgage entities (.5 × 10,000, or 5,000 businesses) would not otherwise provide this information and thus would be affected. The figures also assume that all applicable entities would provide notices first and thereafter provide the reports upon request.

The above figures reflect a decrease in mortgage transactions, compared to prior FTC estimates. They also assume that half of applicable mortgage transactions (.5 × 2,250,000, or 1,125,000) would not otherwise provide the appraisal notices and reports and thus would be affected.

Regulation B: Recordkeeping and Disclosures—Cost

Required task

Managerial

Time

(hours)

Cost

($49/hr.)

Skilled technical

Time

(hours)

Cost

($30/hr.)

Clerical

Time

(hours)

Cost

($16/hr.)

Total cost

($)

General recordkeeping

66,310

1,989,300

596,789

9,548,624

11,537,924

Other recordkeeping

37,500

1,125,000

Recordkeeping of test

1,375

41,250

Recordkeeping of corrective action

552

16,560

16,650

Total Recordkeeping

12,720,734

Disclosures:

Credit history reporting

30,954

1,516,746

278,587

8,357,610

9,874,356

Adverse action notices

83,957

4,113,893

755,610

22,668,300

26,782,193

Appraisal notices

719

35,231

6,469

194,070

229,301

Appraisal reports

719

35,231

6,469

194,070

229,301

Self-test disclosure

4,753

877

26,310

31,063

Total Disclosures

37,146,214

Total Recordkeeping and Disclosures

49,866,948

2. Regulation E

The EFTA requires that covered entities provide consumers with accurate disclosure of the costs, terms, and rights relating to EFT and certain other services. Regulation E implements the EFTA, establishing disclosure and other requirements to aid consumers and recordkeeping requirements to assist agencies with enforcement. It applies to financial institutions, retailers, gift card issuers and others that provide gift cards, service providers, various federal and state agencies offering EFTs, remittance transfer providers, etc. Staff estimates that Regulation E's recordkeeping requirements affect 391,120 firms offering EFT services to consumers and that are subject to the Commission's jurisdiction, at an average annual burden of one hour per firm, for a total of 391,120 hours. This is further detailed below.

Burden Totals

Recordkeeping:

391,120 hours (375,881 + 15,239 carve-out); $6,805,488 ($6,540,328 + $265,160 carve-out), associated labor costs.

Disclosures:

4,019,797 hours (4,002,868 + 16,929 carve-out); $128,236,961 ($127,696,924 + $540,037 carve-out), associated labor costs.

Regulation E: Disclosures—Burden Hours

Disclosures

Setup/monitoring

Respondents

Average

burden per

respondent

(hours)

Total setup

monitoring

burden

(hours)

Transaction-related

Number of

transactions

Average

burden per

transaction

(minutes)

Total

transaction

burden

(hours)

Total burden

(hours)

Initial terms

50,000

25,000

500,000

.02

167

25,167

Change in terms

12,500

6,250

16,500,000

.02

5,500

11,750

Periodic statements

50,000

25,000

600,000,000

.02

200,000

225,000

Error resolution

50,000

25,000

500,000

41,667

66,667

Transaction receipts

50,000

25,000

2,500,000,000

.02

833,333

858,333

Preauthorized transfers

257,620

128,810

6,440,500

.25

26,835

155,645

Service provider notices

50,000

.25

12,500

500,000

.25

2,083

14,583

Govt. benefit notices

5,000

2,500

50,000,000

.25

208,333

210,833

ATM notices

250

.25

50,000,000

.25

208,333

208,396

Electronic check conversion

57,620

28,810

1,152,400

.02

384

29,194

Payroll cards

125

500,000

25,000

25,063

Overdraft services

50,000

25,000

2,500,000

.02

833

25,833

Gift cards

50,000

25,000

2,500,000,000

.02

833,333

858,333

Remittance transfers:

Disclosures

35,000

18,000,000

300,000

335,000

Error resolution

35,000

36,000,000

600,000

635,000

Agent compliance

35,000

18,000,000

300,000

335,000

Total

4,019,797

Estimated preauthorized transfers have increased from the FTC's previously cleared estimate.

Estimated ATM transactions have increased from the FTC's previously cleared estimate.

Estimated electronic check conversion has decreased from the FTC's previously cleared estimate.

Payroll card entities and transactions have increased greatly over the years, in large part due to the evolving economy as well as companies seeking ways to cut costs and reduce the amount of paper used in daily operations.

Regulation E now covers overdraft services.

Regulation E now, in part, covers gift cards.

Regulation E now covers remittance transfers.

Regulation E: Recordkeeping and Disclosures—Cost

Required task

Managerial

Time

(hours)

Cost

($49/hr.)

Skilled technical

Time

(hours)

Cost

($30/hr.)

Clerical

Time

(hours)

Cost

($16/hr.)

Total cost

($)

Recordkeeping

39,112

1,173,360

352,008

5,632,128

6,805,488

Disclosures:

Initial terms

2,517

123,333

22,650

679,500

802,833

Change in terms

1,175

57,575

10,750

322,500

380,075

Periodic statements

22,500

1,102,500

202,500

6,075,000

7,177,500

Error resolution

6,667

326,883

60,000

1,800,000

2,126,883

Transaction receipts

85,833

4,205,817

772,500

23,175,000

27,380,817

Preauthorized transfers

15,565

762,685

140,080

4,202,400

4,965,085

Service provider notices

1,458

71,442

13,125

393,750

465,192

Govt. benefit notices

21,083

1,033,067

189,750

5,692,500

6,725,567

ATM notices

20,840

1,021,160

187,556

5,626,680

6,647,840

Electronic check conversion

2,919

143,031

26,275

788,250

931,281

Payroll cards

2,506

122,794

22,557

676,710

799,504

Overdraft services

2,583

126,567

23,250

697,500

824,067

Gift cards

85,833

4,205,817

772,500

23,175,000

27,380,817

Remittance transfers:

Disclosures

33,500

1,641,500

301,500

9,045,000

10,686,500

Error resolution

63,500

3,111,500

571,500

17,145,000

20,256,500

Agent compliance

33,500

1,641,500

301,500

9,045,000

10,686,500

Total Disclosures

128,236,961

Total Record-keeping and Disclosures

135,042,449

3. Regulation M

The CLA requires that covered entities provide consumers with accurate disclosure of the costs and terms of leases. Regulation M implements the CLA, establishing disclosure requirements to help consumers comparison shop and understand the terms of leases and recordkeeping requirements. It applies to vehicle lessors (such as auto dealers, independent leasing companies, and manufacturers' captive finance companies), computer lessors (such as computer dealers and other retailers), furniture lessors, various electronic commerce lessors, diverse types of lease advertisers, and others.

Staff estimates that Regulation M's recordkeeping requirements affect approximately 54,442 firms within the FTC's jurisdiction leasing products to consumers at an average annual burden of one hour per firm, for a total of 54,442 hours.

In its comment NADA observed that preliminary reports from dealers suggest that the FTC estimate for Regulation M advertising compliance, as applied to lease advertisements for motor vehicle dealers, is understated. NADA, however, focused on the FTC estimate of 15 seconds for required disclosures in individual transactions, here, for advertisements. It is “set-up/monitoring” burden, defined above, though, that addresses the time (and associated labor cost) applicable to systems review and monitoring for continued compliance. For lease advertising, estimated setup/monitoring burden is a half-hour.

As noted above, the Commission's jurisdiction covers a highly diverse universe of entities. The population of affected motor vehicle dealers is one component of a much larger universe of such entities. Thus, the FTC's estimates may understate some entities' actual experience and perhaps overstate others'. On balance, though, FTC staff believes these estimates are a fair reflection for the overall universe affected, and the estimates factor into consideration that PRA “burden” does not include effort expended in the ordinary course of business, independent of regulatory requirements.

For example, some entities may advertise leases but may not promote the lease terms covered by Regulation M; instead, they may make general statements about offering leases, which do not trigger advertising compliance responsibilities under Regulation M.

Burden Totals

Recordkeeping:

54,442 hours (40,558 + 13,884 carve-out); $947,288 ($705,712 + $241,576 carve-out), associated labor costs.

Disclosures:

68,403 hours (42,139 + 26,264 carve-out); $2,182,050 ($1,344,228 + $837,822 carve-out), associated labor costs.

Regulation M: Disclosures—Burden Hours

Disclosures

Setup/monitoring

Respondents

Average burden per respondent

(hours)

Total setup/monitoring burden

(minutes)

Transaction-related

Number of transactions

Average burden per transaction

(minutes)

Total transaction burden

(hours)

Total burden

(hours)

Motor Vehicle Leases

29,442

1,972,614

.50

16,438

45,880

Other Leases

25,000

.50

12,500

250,000

.25

1,042

13,542

Advertising

13,471

.50

6,736

538,840

.25

2,245

8,981

Total

68,403

This category focuses on consumer vehicle leases. Vehicle leases are subject to more lease disclosure requirements (pertaining to computation of payment obligations) than other lease transactions. (Only consumer leases for more than four months are covered.)

See

15 U.S.C. 1667(1); 12 CFR 1013.2(e)(1). Leases up to $50,000 (plus an annual adjustment) are now covered, which increases the breadth of transactions subject to the FTC's jurisdiction under Regulation M. This increase, however, is more than offset by the FTC now sharing PRA burden with the CFPB, which thus yields a net decrease from past FTC estimates of the number of transactions.

This category focuses on all types of consumer leases other than vehicle leases. It includes leases for computers, other electronics, small appliances, furniture, and other transactions. (Only consumer leases for more than four months are covered.)

See

15 U.S.C. 1667(1); 12 CFR 1013.2(e)(1). The figures shown for respondents and transactions reflect a net decrease from prior FTC estimates, given current market conditions and the new PRA burden sharing with the CFPB while also recognizing that the CLA and Regulation M now cover leases up to $50,000 (plus an annual adjustment).

Regulation M: Recordkeeping and Disclosures—Cost

Required task

Managerial

Time

(hours)

Cost

($49/hr.)

Skilled technical

Time

(hours)

Cost

($30/hr.)

Clerical

Time

(hours)

Cost

($16/hr.)

Total cost

($)

Recordkeeping

5,444

$163,320

48,998

$783,968

$947,288

Disclosures:

Motor Vehicle Leases

4,588

224,812

41,292

1,238,760

1,463,572

Other Leases

1,354

66,346

12,188

365,640

431,986

Advertising

898

44,002

8,083

242,490

286,492

Total Disclosures

2,182,050

Total Recordkeeping and Disclosures

$3,129,338

4. Regulation Z

Congress enacted the TILA to foster comparison credit shopping and informed credit decision making by requiring creditors and others to provide accurate disclosures regarding the costs and terms of credit to consumers. Regulation Z implements the TILA, establishing disclosure requirements to assist consumers and recordkeeping requirements to assist agencies with enforcement. These requirements pertain to open-end and closed-end credit and apply to various types of entities, including mortgage companies; finance companies; auto dealerships; private education loan companies; merchants who extend credit for goods or services; credit advertisers; acquirers of mortgages; and others.

In its comment, NADA stated that Regulation Z closed-end credit advertising requires much more than one minute of review for individual dealers to gauge compliance with disclosure requirements. As with its point about the FTC's estimate for lease advertising under Regulation M, NADA focused here on the FTC estimate of the time per disclosure in an individual transaction, here, for advertisements, rather than on the time for “set-up/monitoring.” Under the latter category of PRA burden, the FTC estimate is a half-hour.

NADA also stated that the estimated burden total appears to assume an average of two transactions per respondent for advertising, with an average burden per transaction of one minute. NADA stated that automobile dealers advertise hundreds, if not thousands of vehicles per year in print, on television, radio, and on sometimes numerous Web sites and other electronic media, and that many are subject to Regulation Z. Again, we note that PRA “burden” does not include effort expended in the ordinary course of business, independent of regulatory requirements.

Here, too, as with the other regulations discussed above, we have sought to focus on average incremental PRA burden for the overall—and broad—universe of affected entities.

Some entities may not promote credit terms covered by Regulation Z. For example, they may offer sale prices for products or make general statements about the availability of credit, which do not trigger advertising compliance responsibilities under Regulation Z. Others may offer specific credit terms but they may be subject to exceptions under Regulation Z, and disclosures would not be required, such as offers that no downpayment or no trade-in is required.

Commission staff estimates that Regulation Z's recordkeeping requirements affect approximately 530,479 entities subject to the FTC's jurisdiction, at an average annual burden of 1.25 hours per entity,

for a

total of 663,099 hours. This is further detailed below along with estimates for disclosures under Regulation Z.

This is an increase from past estimates of one hour per respondent in recognition of the breadth of amendments to Regulation Z and their associated

impact on recordkeeping though increased coverage and more complex transactions.

Burden Totals

Recordkeeping:

663,099 hours (586,900 + 76,199 carve-out); $11,537,924 ($10,212,060 + $1,325,864 carve-out), associated labor costs.

Disclosures:

12,000,274 hours (10,957,621 + 1,042,653 carve-out); $382,858,568 ($349,597,924 + $33,260,644 carve-out), associated labor costs.

Regulation Z: Disclosures—Burden Hours

Disclosures

Setup/monitoring

Respondents

Average burden per

respondent

(hours)

Total setup/monitoring burden

(hours)

Transaction-related

Number of transactions

Average

burden per

transaction

(minutes)

Total

transaction

burden

(hours)

Total burden

(hours)

Open-end credit:

Initial terms

45,000

.75

33,750

20,000,000

.375

125,000

158,750

Rescission notices

1,875

938

100,000

.25

417

1,355

Subsequent disclosures

10,000

.75

7,500

62,500,000

.188

195,833

203,333

Periodic statements

45,000

.75

33,750

1,750,000,000

.0938

2,735,833

2,769,583

Error resolution

45,000

.75

33,750

4,000,000

400,000

433,750

Credit and charge card accounts

25,000

.75

18,750

12,500,000

.375

78,125

96,875

Settlement of estate debts

45,000

.75

33,750

1,000,000

.375

6,250

40,000

Special credit card requirements

25,000

.75

18,750

12,500,000

.375

78,125

96,875

Home equity lines of credit

1,875

938

875,000

.25

3,646

4,584

College student credit card marketing—ed. institutions

2,500

1,250 250,000

.25

1,042

2,292

College student credit card marketing—card issuer reports

300

.75

225

18,000

.75

225

450

Posting and reporting of credit card agreements

25,000

.75

18,750

12,500,000

.375

78,125

96,875

Advertising

100,000

.75

75,000

300,000

.75

3,750

78,750

Sale, transfer, or assignment of mortgages

1,875

938

1,750,000

.25

7,292

8,230

Appraiser misconduct reporting

625,000

.75

468,750

12,500,000

.375

78,125

546,875

Closed-end credit:

Credit disclosures

380,480

.75

285,360

163,225,920

2.25

6,120,972

6,406,332

Rescission notices

18,750

9,375

7,500,000

125,000

134,375

Redisclosures

200,000

100,000

1,000,000

2.25

37,500

137,500

Variable rate mortgages

17,500

8,750

500,000

1.5

12,500

21,250

High rate/high-fee mortgages and higher priced mortgages

10,000

5,000

125,000

1.5

3,125

8,125

Reverse mortgages

12,500

6,250

43,750

729

6,979

Advertising

240,240

120,120

480,480

8,008

128,128

Private education loans

100

50,000

1.5

1,250

1,300

Sale, transfer, or assignment of mortgages

100,000

50,000

5,000,000

.25

20,833

70,833

Appraiser misconduct reporting

625,000

.75

468,750

12,500,000

.375

78,125

546,875

Total open-end credit

4,538,577

Total closed-end credit

7,461,697

Total credit

12,000,274

Regulation Z requires disclosures for closed-end and open-end credit. TILA and Regulation Z now cover credit up to $50,000 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 now sharing with the CFPB estimated PRA burden (for all but certain motor vehicle dealers) yields a net decrease from the FTC's prior reported estimate for open-end credit and a net increase from the FTC's prior burden estimate for closed-end credit.

Burden per respondent in many categories has increased compared to prior FTC estimates, due to changes in rules.

Burden per transaction in many categories has increased compared to prior FTC estimates, due to changes in rules.

Mortgages have decreased.

Regulation Z now requires disclosures for timely settlement of estate debts.

Regulation Z now has special credit card requirements.

Home equity lines of credit have decreased.

Regulation Z now requires higher education institutions to disclose credit card marketing agreements.

Regulation Z now requires card issuers to submit reports on college student credit card marketing.

Regulation Z now requires card issuers to post and report general credit card agreements.

Regulation Z now requires certain acquirers of legal title to disclose the sale, transfer, or assignment of mortgages.

Regulation Z now requires reporting of appraiser misconduct.

Estimated closed-end credit disclosure transactions have increased from the FTC's previously cleared estimate.

Mortgages have decreased.

Regulation Z now has substantial redisclosure requirements. Previously, redisclosures generally were provided in the ordinary course of business. Rule changes since set numerous procedures and circumstances for redisclosures.

Variable rate mortgages have decreased.

Mortgages have decreased.

Reverse mortgages have decreased.

Regulation Z now requires disclosures for private education loans.

Regulation Z now requires certain acquirers of legal title to disclose the sale, transfer, or assignment of mortgages.

Regulation Z now requires reporting of appraiser misconduct.

Regulation Z: Recordkeeping and Disclosures—Cost

Required task

Managerial

Time

(hours)

Cost

($49/hr.)

Skilled technical

Time

(hours)

Cost

($30/hr.)

Clerical

Time

(hours)

Cost

($16/hr.)

Total cost

($)

Recordkeeping

66,310

$1,989,300

596,789

$9,548,624

$11,537,924

Open-end credit Disclosures:

Initial terms

15,875

777,875

142,875

4,286,250

5,064,125

Rescission notices

135

6,615

1,220

36,600

43,215

Subsequent disclosures

20,333

996,317

183,000

5,490,000

6,486,317

Periodic statements

276,958

13,570,942

2,492,625

74,778,750

88,349,692

Error resolution

43,375

2,125,375

390,375

11,711,250

13,836,625

Credit and charge card accounts

9,688

474,712

87,187

2,615,610

3,090,322

Settlement of estate debts

4,000

196,000

36,000

1,080,000

1,276,000

Special credit card requirements

9,688

474,712

87,187

2,615,610

3,090,322

Home equity lines of credit

458

22,442

4,126

123,780

146,222

College student credit card marketing—ed institutions

229

11,221

2,063

61,890

73,111

College student credit card marketing—card issuer reports

2,205

405

12,150

14,355

Posting and reporting of credit card agreements

9,688

474,712

87,187

2,615,610

3,090,322

Advertising

7,875

385,875

70,875

2,126,250

2,512,125

Sale, transfer, or assignment of mortgages

823

40,327

7,407

222,210

262,537

Appraiser misconduct reporting

54,687

2,679,663

492,188

14,765,640

17,445,303

Total open-end credit

144,780,593

Closed-end credit Disclosures:

Credit disclosures

640,633

31,391,017

5,765,699

172,970,970

204,361,987

Rescission notices

13,437

658,413

120,938

3,628,140

4,286,553

Redisclosures

13,750

673,750

123,750

3,712,500

4,386,250

Variable rate mortgages

2,125

104,125

19,125

573,750

677,875

High-rate/high-fee mortgages and higher priced mortgages

969

47,481

8,719

261,570

309,051

Reverse mortgages

698

34,202

6,281

188,430

222,632

Advertising

12,813

627,837

115,315

3,459,450

4,087,287

Private education loans

130

6,370

1,170

35,100

41,470

Sale, transfer, or assignment of mortgages

7,083

347,067

63,750

1,912,500

2,259,567

Appraiser misconduct reporting

54,687

2,679,663

492,188

14,765,640

17,445,303

Total closed-end credit

238,077,975

Total Disclosures

382,858,568

Total Recordkeeping and Disclosures

394,396,492

Request for Comment:

You can file a comment online or on paper. For the Commission to consider your comment, we must receive it on or before May 29, 2012. Write “Regs BEMZ, PRA Comments, P084812” on your comment. Your comment—including your name and your state—will be placed on the public record of this proceeding, including to the extent practicable, on the public Commission Web site, at

http://www.ftc.gov/os/publiccomments.shtm.

As a matter of discretion, the Commission tries to remove individuals' home contact information from comments before placing them on the Commission Web site.

Because you comment will be made public, you are solely responsible for making sure that your comment does not include any sensitive personal information, like anyone's Social Security number, date of birth, driver's license number or other state identification number or foreign country equivalent, passport number, financial account number, or credit or debit card number. You are also solely responsible for making sure that your comment does not include any sensitive health information, like medical records or other individually identifiable health information. In addition, do not include any “[t]rade secret or any commercial or financial information which is obtained from any person and which is privileged or confidential” as provided in Section 6(f) of the FTC Act 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2). In particular, do not include competitively sensitive information such as costs, sales statistics, inventories, formulas, patterns devices, manufacturing processes, or customer names.

If you want the Commission to give your comment confidential treatment, you must file it in paper form, with a request for confidential treatment, and you have to follow the procedure explained in FTC Rule 4.9(c)).

Your

comment will be kept confidential only if the FTC General Counsel, in his or her sole discretion, grants your request in accordance with the law and the public interest.

In particular, the written request for confidential treatment that accompanies the

comment must include the factual and legal basis for the request, and must identify the specific portions of the comment to be withheld from the public record.

See

FTC Rule 4.9(c), CFR 4.9(c), 16 CFR 4.9(c).

Postal mail addressed to the Commission is subject to delay due to heightened security screening. As a result, we encourage you to submit your comments online. To make sure that the Commission considers your online comment, you must file it at

https://ftcpublic.commentworks.com/ftc/RegsBEMZpra2

by following the instructions on the web-based form. If this Notice appears at

http://www.regulations.gov/#!home

, you also may file a comment through that Web site.

If you file your comment on paper, write “Regs BEMZ, PRA Comments, P084812” on your comment and on the envelope, and mail or deliver it to the following address: Federal Trade Commission, Office of the Secretary, Room H-113 (Annex J) 600 Pennsylvania Avenue NW., Washington, DC 20580. If possible, submit your paper comment to the Commission by courier or overnight service.

Comments on the information collection requirements subject to review under the PRA should additionally be submitted to OMB. If sent by U.S. mail, they should be addressed to Office of Information and Regulatory Affairs, Office of Management and Budget, Attention: Desk Officer for the Federal Trade Commission, New Executive Office Building, Docket Library, Room 10102, 725 17th Street NW., Washington, DC 20503. Comments sent to OMB by U.S. postal mail, however, are subject to delays due to heightened security precautions. Thus, comments instead should be sent by facsimile to (202) 395-5167.

Visit the Commission Web site at to read this Notice and the news release describing it. The FTC Act and other laws that the Commission administers permit the collection of public comments to consider and use in this proceeding as appropriate. The Commission will consider all timely and responsive public comments that it receives on or before May 29, 2012. You can find more information, including routine uses permitted by the Privacy Act, in the Commission's privacy policy, at

http://www.ftc.gov/ftc/privacy.htm.

Willard K. Tom,

General Counsel.

[FR Doc. 2012-10097 Filed 4-26-12; 8:45 am]

BILLING CODE 6750-01-P

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