Prescreen Opt-Out Notice Rule
| Published date | 13 September 2021 |
| Citation | 86 FR 50848 |
| Record Number | 2021-19465 |
| Section | Rules and Regulations |
| Court | Federal Trade Commission |
Federal Register, Volume 86 Issue 174 (Monday, September 13, 2021)
[Federal Register Volume 86, Number 174 (Monday, September 13, 2021)]
[Rules and Regulations]
[Pages 50848-50854]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-19465]
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FEDERAL TRADE COMMISSION
16 CFR Parts 642 and 698
RIN 3084-AB63
Prescreen Opt-Out Notice Rule
AGENCY: Federal Trade Commission.
ACTION: Final rule.
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SUMMARY: The Federal Trade Commission (``FTC'' or ``Commission'') is
issuing a final rule (``Final Rule'') to amend its Prescreen Opt-Out
Notice Rule to correspond to changes made to the Fair Credit Reporting
Act (``FCRA'') by the Dodd-Frank Act and to reinstate and amend a model
prescreen opt-out notice.
DATES: This rule is effective October 13, 2021.
FOR FURTHER INFORMATION CONTACT: David Lincicum (202-326-2773),
Division of Privacy and Identity Protection, Bureau of Consumer
Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW,
Washington, DC 20580.
SUPPLEMENTARY INFORMATION:
I. Background
A. The Prescreen Opt-Out Notice Rule
Section 615(d) of the FCRA \1\ requires that any person who uses a
consumer report in order to make an unsolicited firm offer of credit or
insurance to the consumer (``prescreened offer'' or ``prescreened
solicitation'') shall provide with each written solicitation a clear
and conspicuous statement that: (A) Information contained in the
consumer's consumer report was used in connection with the transaction;
(B) the consumer received the offer of credit or insurance because the
consumer satisfied the criteria for credit worthiness or insurability
under which the consumer was selected for the offer; (C) if applicable,
the credit or insurance may not be extended if, after the consumer
responds to the offer, the consumer does not meet the criteria used to
select the consumer for the offer or any applicable criteria bearing on
credit worthiness or insurability or does not furnish any required
collateral; (D) the consumer has a right to prohibit information
contained in the consumer's file with any consumer reporting agency
from being used in connection with any credit or insurance transaction
that is not initiated by the consumer; and (E) the consumer may
exercise the opt-out right by notifying a notification system
established under section 604(e) of the FCRA.
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\1\ 15 U.S.C. 1681m(d).
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The Fair and Accurate Credit Transactions Act of 2003 (``FACT
Act'') was signed into law on December 4, 2003. Public Law 108-159, 117
Stat. 1952. Section 213(a) of the FACT Act amended FCRA section 615(d)
to require that the statement mandated by section 615(d) ``be presented
in such format and in such type size and manner as to be simple and
easy to understand, as established by the Commission, by rule, in
consultation with the Federal banking agencies and the National Credit
Union Administration.'' On August 1, 2005, the FTC issued its Prescreen
Opt-Out Notice Rule.\2\
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\2\ 70 FR 5021 (Aug. 1, 2005).
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B. Dodd-Frank Act
The Dodd-Frank Wall Street Reform and Consumer Protection Act
(``Dodd-Frank Act'') was signed into law in 2010.\3\ The Dodd-Frank Act
substantially changed the federal legal framework for financial
services providers. Among the changes, the Dodd-Frank Act transferred
to the Consumer Financial Protection Bureau (``CFPB'') the Commission's
rulemaking authority under portions of the FCRA.\4\ Accordingly, in
2012, the Commission rescinded several of its FCRA rules, which had
been replaced by rules issued by the CFPB.\5\ The FTC retained
rulemaking authority for other rules to the extent the rules apply to
motor vehicle dealers described in section 1029(a) of the Dodd-Frank
Act \6\ that are predominantly engaged in the sale and servicing of
motor vehicles, the leasing and servicing of motor vehicles, or both
(``motor vehicle dealers'').\7\ The retained rules include the
Prescreen Opt-Out Notice Rule, which now applies only to motor vehicle
dealers.\8\ Consumer report users originally covered by the Prescreen
Opt-Out Notice Rule that are not motor vehicle dealers are covered by
the CFPB's rule.\9\
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\3\ Public Law 111-203 (2010).
\4\ 15 U.S.C. 1681 et seq. The Dodd-Frank Act does not transfer
to the CFPB rulemaking authority for section 615(e) of the FCRA
(``Red Flag Guidelines and Regulations Required'') and section 628
of the FCRA (``Disposal of Records''). See 15 U.S.C. 1681s(e).
\5\ 77 FR 22200 (April 13, 2012); 12 U.S.C. 5519.
\6\ 15 U.S.C. 5519.
\7\ 77 FR 22200 (April 13, 2012).
\8\ Id.
\9\ 12 CFR 1022.54.
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On May 22, 2019, the FTC rescinded several FCRA model notices and
forms that were no longer necessary due to the Dodd-Frank Act's change
to its rulemaking authority.\10\ The prescreen opt-out model notice was
included in this rescission.
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\10\ 84 FR 23471 (May 22, 2019).
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II. Regulatory Review of the Prescreen Opt-Out Notice Rule
On September 21, 2020, the Commission solicited comments on the
Prescreen Opt-Out Notice Rule. The Commission sought information about
the costs and benefits of the Rule, and its regulatory and economic
impact. In addition, the Commission proposed amending sections 642.1
and 642.2 to narrow the scope of the Rule to motor vehicle dealers
excluded from CFPB jurisdiction as described in the Dodd-Frank Act and
reinstating the Prescreen Opt-Out Notice Rule model notice. The
Commission received two comments concerning the Rule.\11\
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\11\ The comments can be found at www.regulations.gov/document/FTC-2020-0066-0001/comment.
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III. Overview of Final Rule
The Commission promulgated the Prescreen Opt-Out Notice Rule at a
time when it had rulemaking authority for a broader group of consumer
report users. While the Dodd-Frank Act did not change the Commission's
enforcement authority for the Prescreen Opt-Out Notice Rule, it did
narrow the Commission's rulemaking authority with respect to the Rule.
It now covers only motor vehicle dealers.\12\ The amendments in the
Dodd-Frank Act necessitate technical revisions to the Prescreen Opt-Out
Notice Rule to ensure that the regulation is consistent with the text
of the amended FCRA. Accordingly, the Commission amends the Prescreen
Opt-Out Notice Rule to properly reflect the Rule's scope.
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\12\ 15 U.S.C. 1681s(e)(1); 12 U.S.C. 5519.
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The amendment to section 642.1 narrows the scope of the Prescreen
Opt-Out Notice Rule to those entities set forth in the Dodd-Frank Act
that are predominantly engaged in the sale and servicing of motor
vehicles, excluding those dealers that directly extend credit to
consumers and do not routinely assign the extensions of credit to an
unaffiliated third party.\13\ It does so by replacing the general term
``person'' with the term ``motor vehicle dealers,'' as defined in
amended section 642.2. One commenter argued the Rule should use the
term ``MVD'' in the place of ``motor vehicle dealers'' in order to
reduce the word count of the Rule.\14\ The Commission believes the term
[[Page 50849]]
``motor vehicle dealers'' is more easily understood than an
abbreviation and declines to make this change.
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\13\ 12 U.S.C. 5519.
\14\ Devin Davis (Comment 2).
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The amendment to section 642.2 adds a definition of ``motor vehicle
dealer'' that defines motor vehicle dealers as entities excluded from
CFPB jurisdiction as described in the Dodd-Frank Act.\15\
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\15\ 12 U.S.C. 5519.
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The amendments also reinstate the model prescreen opt-out notice
that was rescinded in 2019 on the basis that motor vehicle dealers
could use the CFPB-provided model form.\16\ The model notice, Appendix
C to Part 698, remains largely unchanged from the one previously
provided except, as noted below, the model now includes a reference to
the consumer reporting agencies' opt-out website. The amendments also
revise section 698.2 to include Appendix C in the list of model
notices. The amendments make no substantive changes to the Rule.
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\16\ 84 FR 23471 (May 22, 2019).
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The South Carolina Department of Consumer Affairs (the
``Department'') stated that there is a continuing need for the
Prescreen Opt-Out Notice Rule and it benefits consumers by informing
them their information has been shared for a prescreen offer and
educating them of their rights to opt out of such offers.\17\ The
Department also suggested that the Commission amend the Rule to require
companies to provide the URL for the consumer reporting agencies' opt-
out website, www.optoutprescreen.com. Although the Commission agrees
that the opt-out website is a valuable resource for consumers, it
declines to change the Rule to require dealers to include it. Changing
the Rule in this way would cause the Commission's Rule to differ
substantively from the CFPB's rule, which applies much more broadly.
The Commission believes that consumers and businesses are better served
by uniformity in the rules. However, because the Commission agrees that
including the address for the optoutprescreen.com site would be helpful
to consumers who choose to opt out, the Commission has revised the
model notice to include a reference to the optoutprescreen.com website.
While motor vehicle dealers are not required to use the model notice,
the Commission believes that many will choose to do so.\18\ The
Commission has consulted with the CFPB concerning this change to the
Commission's model notice.
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\17\ The Department also argued the Commission should issue
regulations that would modify prescreened offers of credit under the
FCRA by: (1) Limiting the information motor vehicle dealers can
obtain for prescreened offers to that which is necessary for
determining eligibility for the prescreened offer, (2) requiring
motor vehicle dealers to extend the prescreened offer within a
specified time frame after they receive the information from the
consumer reporting agency; and (3) requiring all information related
to a prescreened offer be deleted after the offer has expired. We
welcome the Department's suggestions on these issues. As the
Department recognized in its comment, however, these changes would
require changes to statutory provisions not at issue in this
rulemaking.
\18\ The South Carolina Department of Consumer Affairs also
suggests that the Commission revise the model notice so that the
fictional offer of credit in the notice is being sent from a motor
vehicle dealer rather than a credit card company. The Commission
understands this change would further the goal of making clear that
the Commission's Rule applies only to motor vehicle dealers.
However, as much of the notice's content is dummy text, it is clear
the model notice is meant to illustrate the formatting and content
of the Rule's required disclosures, and there is value in
maintaining consistency with the CFPB's Rule. Accordingly, the
Commission declines to make this change.
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IV. Paperwork Reduction Act
Under the Paperwork Reduction Act of 1995 (PRA),\19\ federal
agencies are generally required to seek Office of Management and Budget
(``OMB'') approval for information collection requirements prior to
implementation.
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\19\ 44 U.S.C. 3501 et seq.
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The Final Rule amends 16 CFR part 642 and 698. The Rule does not
contain information collection requirements as defined by the PRA. The
rule requires certain motor vehicle dealers using consumer report to
provide consumers with opt-out notices and the amendments include a
model notice that motor vehicle dealers may use. The public disclosure
of information originally supplied by the Federal Government for the
purpose of disclosure to the public is not included within the
definition of the collection of information.\20\ Therefore, the
Commission does not believe that the amendments will add any
``collections of information'' as defined by the PRA.
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\20\ See 5 CFR 1320.3(c)(2).
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V. Regulatory Flexibility Act
The Regulatory Flexibility Act (``RFA''), as amended by the Small
Business Regulatory Enforcement Fairness Act of 1996, requires an
agency to either provide an Initial Regulatory Flexibility Analysis
(``IRFA'') with a proposed rule, or certify that the proposed rule will
not have a significant impact on a substantial number of small
entities.\21\ The Commission published an Initial Regulatory
Flexibility Analysis in order to inquire into the impact of the
proposed Rule on small entities.\22\ The Commission received no
responsive comments.
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\21\ 5 U.S.C. 603-605.
\22\ 85 FR 59226, 59228 (Sept. 21, 2020).
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The Commission does not believe that these amendments have the
threshold impact on small entities. The amendments effectuate changes
to the Dodd-Frank Act and will not impose costs on small motor vehicle
dealers because the amendments are for clarification purposes and will
not result in any increased burden on any motor vehicle dealer. Thus, a
small entity that complies with current law need not take any different
or additional action under the Final Rule. Although the Final Rule
adopts a slightly revised model notice, motor vehicle dealers are not
obligated to use the model notice. Therefore, the Commission certifies
that amending the Prescreen Opt-Out Notice Rule will not have a
significant economic impact on a substantial number of small
businesses.
Although the Commission certifies under the RFA that the Final Rule
will not have a significant impact on a substantial number of small
entities, and hereby provides notice of that certification to the Small
Business Administration, the Commission nonetheless has determined that
publishing a final regulatory flexibility analysis (``FRFA'') is
appropriate to ensure that the impact of the rule is fully addressed.
Therefore, the Commission has prepared the following analysis:
A. Need for and Objectives of the Final Rule
To address the Dodd-Frank Act's changes to the Commission's
rulemaking authority, the amendments clarify that the Rule applies only
to motor vehicle dealers and reinstate a model form.
B. Significant Issues Raised in Public Comments in Response to the IRFA
The Commission did not receive any comments that addressed the
burden on small entities. In addition, the Commission did not receive
any comments filed by the Chief Counsel for Advocacy of the Small
Business Administration (``SBA'').
C. Estimate of Number of Small Entities to Which the Final Rule Will
Apply
The Commission anticipates that many covered motor vehicle dealers
may qualify as small businesses according to the applicable SBA size
standards. As explained in the IRFA, however, determining a precise
estimate of the number of small entities is not readily feasible. No
commenters addressed this issue. Nonetheless, as discussed above, these
amendments do not add any additional burdens on any covered small
businesses.
[[Page 50850]]
D. Projected Reporting, Recordkeeping, and Other Compliance
Requirements, Including Classes of Covered Small Entities and
Professional Skills Needed To Comply
The amendments impose no new reporting, recordkeeping, or other
compliance requirements.
E. Description of Steps Taken To Minimize Significant Economic Impact,
if Any, on Small Entities, Including Alternatives
The Commission did not propose any specific small entity exemption
or other significant alternatives because the amendments will not
increase reporting requirements and will not impose any new
requirements or compliance costs.
VI. Other Matters
Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.),
the Office of Information and Regulatory Affairs designated this rule
as not a ``major rule,'' as defined by 5 U.S.C. 804(2).
Final Rule Language
List of Subjects in 16 CFR Parts 642 and 698
Consumer protection, Credit, Trade practices.
For the reasons stated above, the Federal Trade Commission amends
title 16 of the Code of Federal Regulations as follows:
PART 642--PRESCREEN OPT-OUT NOTICE
0
1. Revise the authority section for part 642 to read as follows:
Authority: Pub. L. 108-159, sec. 311; 15 U.S.C. 1681m(d); 12
U.S.C. 5519(d).
0
2. In Sec. 642.1, revise paragraph (b) to read as follows:
Sec. 642.1 Purpose and scope.
* * * * *
(b) Scope. This part applies to any motor vehicle dealer as defined
in Sec. 642.2 of this part that uses a consumer report on any consumer
in connection with any credit or insurance transaction that is not
initiated by the consumer, and that is provided to that motor vehicle
dealer under section 604(c)(1)(B) of the FCRA (15 U.S.C.
1681b(c)(1)(B)).
0
3. In Sec. 642.2, redesignate paragraph (b) as paragraph (c) and add a
new paragraph (b) to read as follows:
Sec. 642.2 Definitions.
* * * * *
(b) Motor vehicle dealer means any person excluded from Consumer
Financial Protection Bureau jurisdiction as described in 12 U.S.C.
5519.
* * * * *
0
4. In Sec. 642.3, revise the introductory text to read as follows:
Sec. 642.3 Prescreen opt-out notice.
Any motor vehicle dealer that uses a consumer report on any
consumer in connection with any credit or insurance transaction that is
not initiated by the consumer, and that is provided to that person
under section 604(c)(1)(B) of the FCRA (15 U.S.C. 1681b(c)(1)(B)),
shall, with each written solicitation made to the consumer about the
transaction, provide the consumer with the following statement,
consisting of a short portion and a long portion, which shall be in the
same language as the offer of credit or insurance:
* * * * *
PART 698--MODEL FORMS AND DISCLOSURES
0
5. The authority citation continues to read as follows:
Authority: 12 U.S.C. 5519; 15 U.S.C. 1681m(h); 15 U.S.C. 1681s-
3; Sec. 214(b), Pub. L. 108-159.
0
6. Revise Sec. 698.2 to read as follows:
Sec. 698.2 Legal effect.
The model forms and disclosures prescribed by the FTC in this part
do not constitute a trade regulation rule. The issuance of the model
forms and disclosures set forth in appendices A, B, and C of this part
carry out the directive in the statute that the FTC prescribe these
forms and disclosures. Use or distribution of the model forms and
disclosures in this part will constitute compliance with any section or
subsection of the FCRA requiring that such forms and disclosures be
used by any motor vehicle dealer subject to the FTC's rulemaking
authority.
0
7. Add appendix C to part 698 to read as follows:
Appendix C to Part 698--Model Prescreen Opt-Out Notices
In order to comply with 16 CFR part 642, the following model
notices may be used:
(a) English language model notice--(1) Short notice.
BILLING CODE 6750-01-P
[[Page 50851]]
[GRAPHIC] [TIFF OMITTED] TR13SE21.001
[[Page 50852]]
(2) Long notice.
[GRAPHIC] [TIFF OMITTED] TR13SE21.002
[[Page 50853]]
(b) Spanish language model notice--(1) Short notice.
[GRAPHIC] [TIFF OMITTED] TR13SE21.003
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(2) Long notice.
[GRAPHIC] [TIFF OMITTED] TR13SE21.004
By direction of the Commission.
April J. Tabor,
Secretary.
[FR Doc. 2021-19465 Filed 9-10-21; 8:45 am]
BILLING CODE 6750-01-C
