Agency information collection activities: Submission for OMB review; comment request,
[Federal Register: November 26, 2002 (Volume 67, Number 228)]
[Notices]
[Page 70733-70740]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26no02-65]
FEDERAL TRADE COMMISSION
Agency Information Collection Activities; Submission for OMB Review; Comment Request
AGENCY: Federal Trade Commission (FTC).
ACTION: Notice.
SUMMARY: The FTC has submitted to the Office of Management and Budget (OMB) for review under the Paperwork Reduction Act (PRA) information collection requirements contained in four regulations enforced by the Commission. The FTC is seeking public comments on the proposal to extend through December 31, 2005 the current PRA clearance for information collection requirements contained in the regulations. That clearance expires on December 31, 2002.
DATES: Comments must be filed by December 26, 2002.
ADDRESSES: Send written comments to the Office of Information and Regulatory Affairs, Office of Management and Budget, New Executive Office Building, Room 10202, Washington, DC 20503, ATTN.: Desk Officer for the Federal Trade Commission (comments in electronic form should be sent to oira_docket@omb.eop.gov), and to the Secretary, Federal Trade Commission, Room H-159, 600 Pennsylvania Ave., NW., Washington, DC 20580 (comments in electronic form should be sent to RegsBEMZpprwork@ftc.gov). All comments should be captioned ``Regs BEMZ: Paperwork Comment.''
FOR FURTHER INFORMATION CONTACT: Requests for additional information or copies of the proposed information requirements should be addressed to Carole Reynolds, Attorney, Division of Financial Practices, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Ave., NW., Washington, DC 20580, (202) 326-3230.
SUPPLEMENTARY INFORMATION: Under the PRA (44 U.S.C. 3501-3520), Federal agencies must obtain approval from OMB for each collection of information they conduct or sponsor. On August 20, 2002, the FTC sought comment on the information collection requirements associated with the regulations discussed below. See 67 FR 53936.
The Commission received one comment pertaining to certain aspects of regulatory burden affecting Regulations B, E, and Z that the commenter believed understated applicable burden.\1\ These
[[Page 70734]]
issues are discussed more specifically below under the applicable regulations. In summary, much of the comment's analysis of the PRA mistakenly includes as a measure of burden procedural activities (e.g., individual credit decisions, investigating account errors) that are inherent in an entity's business, as opposed to disclosures and recordkeeping that are required by these regulations. Moreover, the comment overlooks the fact that the systems entities establish and maintain are commonly used for purposes extending well beyond the disclosure or recordkeeping requirements that these regulations entail.\2\ Nonetheless, staff has revised its burden estimates in several areas to address the issues raised in the comment. Pursuant to the OMB regulations that implement the PRA (5 CFR Part 1320), the FTC is providing this second opportunity for public comment while seeking OMB approval to extend the existing paperwork clearance for the Rule.
\1\ The comment was submitted on behalf of Visa U.S.A. (``Visa''), a membership organization comprised of certain domestic financial institutions licensed to offer Visa cards. Visa's comment is centered on open-end credit and EFT services. Furthermore, the focus of Visa's comment generally concerns banks and other depository institutions. For these regulations, however, except for nonfederally insured and noninsured credit unions (less than five thousand entities) and a limited number of securities-type entities engaged in financial activities covered by these regulations, the Commission, generally, lacks jurisdiction over depository institutions. And, most entities under the FTC's jurisdiction that offer open-end credit and EFT services are specialized regarding their plans and terms. Disclosures and recordkeeping for them would yield different, and lesser, burden than, for example, banks. Finally, regarding Regulation Z in particular, some entities no longer offer open-end credit directly (with banks now offering it instead).
\2\ PRA ``burden'' does not include effort expended in the ordinary course of business, regardless of any regulatory requirement. 5 CFR 1320.3(b)(2).
If a comment contains nonpublic information, it must be filed in paper form, and the first page of the document must be clearly labeled ``confidential.'' Comments that do not contain any nonpublic information may instead be filed in electronic form (in ASCII format, Wordperfect, or Microsoft Word) as part of or as an attachment to email messages directed to the following email box: RegsBEMZpprwork@ftc.gov. Such comments will be considered by the Commission and will be available for inspection and copying at its principal office in accordance with Section 4.9(b)(6)(ii) of the Commission's Rules of Practice, 16 CFR section 4.9(b)(6)(ii)).
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'') (Control Number: 3084-0087);
(2) Regulations promulgated under The Electronic Fund Transfer Act, 15 U.S.C. 1693 et seq. (``EFTA'') (``Regulation E'') (Control Number: 3084-0085);
(3) Regulations promulgated under The Consumer Leasing Act, 15 U.S.C. 1667 et seq., (``CLA''), (``Regulation M''), Control Number: 3084-0086);
(4) Regulations promulgated under The Truth-In-Lending Act, 15 U.S.C. 1601 et seq. (``TILA'') (``Regulation Z'') (Control Number: 3084-0088).
Each of these four rules impose certain PRA recordkeeping and disclosure requirements associated with providing credit or with other financial transactions. All of these rules require covered entities to keep certain records. Staff believes that these entities would likely retain these records in the normal course of business even absent the recordkeeping requirement in the rules. There is, however, some burden associated with ensuring that covered entities do not prematurely dispose of relevant records during the period of time required by the applicable rule.
Disclosure requirements involve both set-up and monitoring costs as well as certain transaction-specific costs. ``Set-up'' burden, incurred by new entrants only, includes identifying the applicable disclosure requirements, determining compliance obligations, and designing and developing compliance systems and procedures. ``Monitoring'' burden, incurred by all covered entities, includes reviewing revisions to regulatory requirements, revising compliance systems and procedures as necessary, and monitoring the ongoing operation of systems and procedures to ensure continued compliance. ``Transaction-related'' burden refers to the effort 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 actual range of compliance burden experienced by covered entities, and reflected in those averages, varies widely. Depending on the extent to which covered entities have developed computer-based systems and procedures for providing the required disclosures (and/or the extent which such entities utilize electronic transactions, communications, and/or electronic recordkeeping), and the efficacy of those systems and procedures, some entities may have little burden, while others may incur a higher burden.\3\
\3\ For example, large retailers 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 retailers or other creditors 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; as such, they may have minimal additional burden. Other entities may have incorporated fewer of these approaches into their systems and 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 credit and lease advertisers, creditors, 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 staff's best assessment, based on its knowledge and expertise relating to the financial services industry. To derive these estimates, 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) types of EFTs used; (4) types and occurrences of adverse actions; (5) types of appraisal reports utilized; and (6) computer systems and electronic features of compliance operations.
In some instances, where covered entities may make certain required disclosures in the ordinary course of business, the Regulation imposes no PRA burden. In addition, as noted above, some entities use computer- based and/or electronic means of providing the required disclosures, while others rely on methods requiring more manual effort.
The estimated PRA burden associated with these rules, attributable to the Commission, is somewhat less today than in the past. Staff believes that as computer-based and/or electronic procedures rise, and as quality control procedures are increasingly integrated into business operating systems, financial services entities also increase compliance efficiency.
The cost estimates shown below relate solely to labor costs. The applicable PRA requirements impose minimal capital or other non-labor costs, as affected entities generally have the necessary equipment for other business purposes. Similarly, 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. The burden estimates shown below include the time necessary to train staff to be in compliance with the regulations.\4\
\4\ Employee training for these regulations may and often does address far more than the particular notices and recordkeeping required by these regulations. Regulatory compliance is just one subset of employee business training, and the regulatory compliance facet, for that matter, commonly encompasses a wide variety of issues and topics extending widely beyond those posed by Regulations B, E, M, and Z (e.g., privacy and security, tax, and contract issues). They also address state and local requirements, not merely those imposed or enforced by federal agencies. Moreover, this training commonly incorporates internal business issues as well (e.g., accounting concerns and secondary market or other investors issues).
[[Page 70735]]
The following paragraphs discuss each of these rules, their particular PRA requirements, and staff's best estimates of the related hour and cost burdens.
-
Regulation B
The ECOA prohibits discrimination in the extension of credit. Regulation B, 12 CFR 202, promulgated by the Board of Governors of the Federal Reserve System, establishes both recordkeeping and disclosure requirements to assist consumers in understanding their rights under the ECOA and to assist in detecting unlawful discrimination. The FTC enforces the ECOA as to all creditors except those that are subject to the regulatory authority of another federal agency (such as federally chartered or insured depository institutions).
Estimated annual hours burden: 3,146,000 hours, rounded to the nearest thousand (1,153,500 recordkeeping hours + 1,992,832 disclosure hours).\5\
\5\ Visa stated that burden estimates had not been included for credit history reporting; staff has now factored that into its burden estimates for disclosures. Visa also noted the absence of staff estimates for self-testing Staff has increased its burden estimates by including recordkeeping for self-testing. However, it is unclear to what extent entities subject to the Commission's jurisdiction are performing these tests, as defined by the Regulation. Unlike banks, for example, entities under FTC jurisdiction are not subject to regular audits for financial regulatory compliance with Regulations B, E, M, and Z. Rather they may be subject to investigations and enforcement actions that are fact- and issue-focused, rather than conducted in regular, periodic manner as are audits. This difference may account for relatively higher levels in self-testing, as defined under Regulation B, for depository entities under the jurisdiction of other federal agencies. As discussed further below, staff has retained certain other burden estimates.
Recordkeeping: FTC staff estimates that Regulation B's general recordkeeping requirements affect 1,000,000 credit firms subject to the Commission's jurisdiction, at an average annual burden of one hour per firm, for a total of 1,000,000 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\6\ for approximately nine million credit applications (based on industry data regarding the approximate number of mortgage purchase and refinance originations), for a total of 150,000 hours. Staff also estimates that recordkeeping of self-testing subject to the regulation would affect 2,500 firms, with an average annual burden of one hour per firm, for a total of 2,500 hours, and that recordkeeping of any corrective action for self-testing would affect 250 firms in a given year, with an average annual burden of four hours per firm, for a total of 1,000 hours. The total estimated recordkeeping burden is 1,153,500 hours.
\6\ Regulation B contains model forms that creditors may use to gather and retain the required information.
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. It also 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.
Regulation B applies to retailers, mortgage lenders, mortgage brokers, finance companies, Internet businesses, and others. Below is staff's best estimate of burden applicable to this highly broad spectrum of covered entities.\7\
\7\ Visa asserted that burden estimates for adverse action were understated. However, staff believes that its adverse action notice estimates are a reasonable projection for those entities under the Commission's jurisdiction. Again, only incremental time and costs, beyond what would be incurred by an entity in its ordinary course of business apart from these FTC-enforced rules, are factored into staff's PRA burden estimates. Also, where multiple entities are involved in the adverse action decision (some within, and some outside, of Commission jurisdiction), it is only those entities under Commission jurisdiction--and only to the extent they are involved--that staff has attempted to account for in its PRA burden estimates.
Setup/
Transaction-related \2\ monitoring \1\
---------------------------------------------------------------
Total Setup/ Disclosure
Respondents Average burden Monitoring
Average burden Total per burden (hours) Number of
per
Transaction Total burden respondent
transactions transaction burden (hours) (hours) (hours)
(minutes)
Credit history reporting................
250,000
.25
62,500 125,000,000
.25
520,833
583,333 Adverse action notices.................. 1,000,000
.5
500,00 200,000,000
.25
833,333 1,333,333 Appraisal notices.......................
22,000
.5
11,000 6,500,000
.25
27,083
38,083 Appraisal reports.......................
22,000
.5
11,000 6,500,000
.25
27,083
38,083
Total............................... .............. .............. .............. .............. .............. .............. 1,992,832
\1\ With respect to appraisal notices and appraisal reports, the above figures assume that approximately half of applicable mortgage entities (.5 x 44,000, or 22,000 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. \2\ The above figures assume that half of applicable mortgage transactions (.5 x 13,000,000 or 6,500,000) would not otherwise provide the appraisal notices and reports and thus would be affected.
Estimated annual cost burden: $59,905,000, rounded to the nearest thousand. Staff calculated labor costs by applying appropriate hourly cost figures to the burden hours described above. The hourly rates used below ($50 for managerial or professional time, $20 for skilled technical time, and $10 for clerical time) are averages.
Recordkeeping: Staff estimates that the general recordkeeping responsibility of one hour per creditor would involve approximately 90 percent clerical time and 10 percent skilled technical time. Keeping records of race/national origin, sex, age, and marital status requires an estimated on minute of skilled technical time. Keeping records of the self-test responsibility and of any corrective actions requires an estimated one hour and four hours, respectively, of skilled
[[Page 70736]]
technical time. As shown below, the total recordkeeping cost is $14,070,000.
Disclosure: For each notice or information item listed, staff estimates that the burden hours consist of 10 percent managerial time and 90 percent skilled technical time. As shown below, the total disclosure cost is $45,835,100.
Managerial
Skilled Technical
Clerical
Total Cost Required Task
Cost ($50/
Cost ($20/
Cost ($10/
($) Time (hours) hr.)
Time (hours) hr.)
Time (hours) hr.)
General recordkeeping...................
0
$0
100,000 $2,000,000
900,000 $9,000,000 $11,000,000
Other recordkeeping.....................
0
0
150,000 3,000,000
0
0 3,000,000 Recordkeeping of test...................
0
0
2,500
50,000
0
0
50,000 Recordkeeping of corrective action......
0
0
1,000
20,000
0
0
20,000
Total Recordkeeping................. .............. .............. .............. .............. .............. .............. 14,070,000
Credit history reporting............
58,333 2,916,650
525,000 10,500,000
0
0 13,416,650
Adverse action notices..............
133,333 6,666,650 1,200,000 24,000,000
0
0 30,666,650
Appraisal notices...................
3,808
190,400
34,275
685,500
0
0
875,900
Appraisal reports...................
3,808
190,400
34,275
685,500
0
0
875,900
Total Disclosure.................... .............. .............. .............. .............. .............. .............. 45,835,100
Total Recordkeeping and Disclosure.. .............. .............. .............. .............. .............. .............. 59,905,100
-
Regulation E
The EFTA requires accurate disclosure of the ocsts, terms, and rights relating to EFT services to consumers. Regulation E, 12 CFR 205, promulgated by the Board of Governors of the Federal Reserve System, establishes both recordkeeping and disclosure requirements applicable to entities providing EFT services to consumers. The FTC enforces the EFTA as to all entities providing EFT services except those that are subject to the regulatory authority of another federal agency (such as federally chartered or insured depository institutions).
Estimated annual hours burden: 3,580,000 hours (500,000 recordkeeping hours + approximately 3,080,000 disclosure hours).
Recordkeeping: Staff estimates that Regulation E's recordkeeping requirements affect 500,000 firms offering EFT services to consumers and subject to the Commission's jurisdiction, at an average annual burden of one hour per firm, for a total of 500,000 hours.
Disclosure: Regulation E applies to financial institutions (including certain retailers and electronic commerce entities), service providers, various federal and state agencies offering EFTs, and others. Below is staff's best estimate of burden applicable to this highly broad spectrum of covered entities.\8\
\8\ Visa believes that staff's burden estimates were understated for the initial terms and periodic statements disclosures and for error resolution. Generally, however, under Regulation E, the Commission lacks jurisdiction over traditional depository-type entities, other than nonfederally-insured or noninsured credit unions and certain securities-type entities that may offer EFT services to consumers. While staff's analysis does not overlook the depository-type entities under the Commission's jurisdiction, their relative weighting is more than counterbalanced by the fact that many other entities under Commission jurisdiction subject to these requirements engage in limited types of EFTs, with more specialized terms and charges. The nature of entities subject to this jurisdiction impacts, among other things, initial and periodic disclosures. Moreover, regarding error resolution, staff notes that the procedural aspects that may be associated with investigation and account adjustments are not, per se PRA collected[s] of information.'' See note 2. Staff has retained its projected estimates in view of these considerations.
Setup/monitoring
Transaction-related
average
Average Disclosure
Respondents burden per Total setup/ Number of burden per
Total Total burden respondent monitoring transactions transaction transaction (hours) (hours) burden (hours)
(minutes) burden (hours)
Initial terms...........................
100,000
.5
50,000 1,000,000
.02
333
50,333 Change in terms.........................
25,000
.5
12,500 33,000,000
.02
11,000
23,500 Periodic statements.....................
100,000
.5
50,000 1,200,000,000
.02
400,000
450,000
[[Page 70737]]
Error resolution........................
100,000
.5
50,000 1,000,000
5
83,333
133,333 Transaction receipts....................
100,000
.5
50.000 5,000,000
.02 1,666,667 1,716,667 Preauthorized transfers.................
500,000
.5
250,000 1,000,000
.25
4,167
254,167 Service provider notices................
100,000
.25
25,000 1,000,000
.25
4,167
29,167 Govt. benefit notices...................
10,000
.5
5,000 100,000,000
.25
416,667
421,667 ATM notices \1\.........................
500
.25
125
250,000
.25
1,041
1,166
Total............................... .............. .............. .............. .............. .............. .............. 3,080,000
\1\ Starting in 2001, ATM operators were required to provide certain notices to consumers regarding ATM fees. Generally, these notices must be provided on or at ATM machines and/or on paper before the consumer is committed to paying a fee.
Estimated annual cost burden: $76,240,000, rounded to the nearest thousand.
Staff calculated labor costs by applying appropriate hourly cost figures to the burden hours described above. The hourly rates used below ($50 for managerial or professional time, $20 for skilled technical time, and $10 for clerical time) are averages.
Recordkeeping: For the 500,000 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 $5,500,000.
Disclosure: For each notice or information item listed, staff estimates that 10 percent of the burden hours require managerial time and 90 percent require skilled technical time. As shown below, the total disclosure cost is $70,740,000.
Managerial
Skilled technical
Clerical
Total Cost Required Task
Cost ($50/
Cost ($20/
Cost ($10/
($) Time (hours) hr.)
Time (hours) hr.)
Time (hours) hr.)
Recordkeeping...........................
0
$0
50,000 $1,000,000
450,000 $4,500,000 $5,500,000 Disclosure: Initial terms...........................
5,033
251,650
45,300
906,000
0
0 1,157,650 Change in terms.........................
2,350
117,500
21,150
423,000
0
0
540,500 Periodic statements.....................
45,000 2,250,000
405,000 8,100,000
0
0 10,350,000 Error resolution........................
13,333
666,650
120,000 2,400,000
0
0 3,066,650 Transaction receipts....................
171,667 8,583,350 1,540,000 30,800,000
0
0 39,383,350 Preauthorized transers..................
25,417 1,270,850
228,750 4,575,000
0
0 5,845,850 Service provider notices................
2,917
145,850
26,250
525,000
0
0
670,850 Govt. benefit notices...................
42,167 2,108,350
379,500 7,590,000
0
0 9,698,350 ATM Notices.............................
116
5,800
1,050
21,000
0
0
26,800
Total Disclosure.................... .............. .............. .............. .............. .............. .............. 70,740,000
Total Recordkeeping and Disclosures. .............. .............. .............. .............. .............. .............. 76,240,000
-
Regulation M
The CLA requires accurate disclosure of the costs and terms of leases to consumers. Regulation M, 12 CFR 213, promulgated by the Board of Governors of the Federal Reserve System, establishes disclosure requirements that assist consumers in comparison shopping and in understanding the terms of leases and recordkeeping requirements that assist enforcement of the CLA. The FTC enforces the CLA as to all lessors and advertisers except those that are subject to the regulatory authority of another federal agency (such as federally chartered or insured depository institutions).
Estimated annual hours burden: 279,000 hours, rounded to the nearest thousand (150,000 recordkeeping hours + 129,167 disclosure hours).
Recordkeeping: Staff estimates that Regulation M's recordkeeping requirements affect approximately 150,000 firms leasing products to consumers and subject to the Commission's jurisdiction, at an average annual burden of one hour per firm, for a total of 150,000 hours.
Disclosure: Regulation M applies to automobile 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, and diverse types of lease advertisers, and others. Below is staff's best estimate of burden applicable to this highly broad spectrum of covered entities.
[[Page 70738]]
Setup/monitoring
Transaction-related
Average Disclosure
Average Burden Total Setup/ Number of Burden per
Total Total Burden Respondents per Respondent Monitoring Transactions Transaction Transaction (hours) (hours) Burden (hours)
(minutes) Burden (hours)
Auto Leases \1\.........................
50,000
.75
37,500 2,500,000
.50
20,833
58,333 Other Leases \2\........................
100,000
.50
50,000 1,000,000
.25
4,167
54,167 Advertising.............................
25,000
.50
12,500 1,000,000
.25
4,167
16,667
Total............................... .............. .............. .............. .............. .............. ..............
129,167
\1\ This category focuses on consumer vehicle leases. Vehicle leasing has decreased in the past two years. 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 Sec. 213.2(e)(1). \2\ 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 consumers leases for more than four months are covered.) See 15 U.S.C. 1667(1); 12 CFR 213.2(e)(1).
Estimated annual cost burden: $4,621,000, rounded to the nearest thousand.
Staff calculated labor costs by applying appropriate hourly cost figures to the burden hours described above. The hourly rates used below ($50 for managerial or professional time, $20 for skilled technical time, and $10 for clerical time) are averages.
Recordkeeping: For the 150,000 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 $1,650,000.
Disclosure: For each notice or information item listed, staff estimates that 10 percent of the burden hours require managerial time and 90 percent require skilled technical time. As shown below, the total disclosure cost is $2,970,850.
Managerial
Skilled Technical
Clerical Required Task
------------------------------------------------------------------------------------------------ Total Cost Time (hours) Cost ($50/hr.) Time (hours) Cost ($20/hr.) Time (hours) Cost ($10/hr.)
($)
Recordkeeping...........................
0
$0
15,000
$300,000
135,000 $1,350,000 $1,650,000 Disclosures: Auto Leases.............................
5,833
291,650
52,500 1,050,000
0
0 1,341,650 Other Leases............................
5,417
270,850
48,750
975,000
0
0 1,245,850 Advertising.............................
1,667
83,350
15,000
300,000
0
0
383,350
Total Disclosures................... .............. .............. .............. .............. .............. .............. 2,970,850
Total Recordkeeping and Disclosures. .............. .............. .............. .............. .............. .............. $4,620,850
-
Regulation Z
The TILA 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. Regulation Z, 12 CFR 226, promulgated by the Board of Governors of the Federal Reserve System, establishes both recordkeeping and disclosure requirements to assist consumers and the enforcement of the TILA. The FTC enforces the TILA as to all creditors and advertisers except those that are subject to the regulatory authority of another federal agency (such as federally chartered or insured depository institutions).
Estimated annual hours burden: 20, 179,000 hours, rounded to the nearest thousand (1,000,000 recordkeeping hours + 19,178,749 disclosure hours).
Recordkeeping: FTC staff estimates that Regulation Z's recordkeeping requirements affect approximately 1,000,000 firms offering credit and subject to the Commission's jurisdiction, at an average annual burden of one hour per firm, for a total of 1,000,000 hours.
Disclosure: Regulation Z disclosure requirements pertain to open- end and closed-end credit. The Regulation applies to retailers (such as department stores, appliance stores, discount retailers, medical-dental service providers, home improvement sellers, and electronic commerce retail operators); mortgage companies; finance companies; credit advertisers; auto dealerships; student loan companies; home fuel or power services (for furnaces, stoves, microwaves, and other heating, cooling or residential power equipment); credit advertisers; and others. Below is staff's best estimate of burden applicable to this highly broad spectrum of covered entities.\9\
\9\ Visa asserted that the burden estimates were understated for the initial terms and periodic statements disclosures and for billing error resolution. As noted above regarding these regulations, generally, the Commission lacks jurisdiction over traditional depository-type entities (including banks), other than nonfederally-insured or noninsured credit unions and certain securities-type entities that offer credit services to consumers. The Commission has jurisdiction over certain nondepository financial services entities that offer open-end credit, as well as certain health care providers, and other retailers that still issue credit under their own names. Staff has accounted for these entities in its estimates. However, although some entities under the Commission's jurisdiction offer varying forms of and terms within open-ended credit to consumers, many have a more limited offering, including some retailers, health care providers, and others. Moreover, some entities no longer offer open-end credit directly (with banks offering it instead), including, for example, many oil companies, department stores, and other retailers. The nature of entities subject to this jurisdiction impacts initial and periodic disclosures. In addition, regarding billing error resolution, staff notes that the time associated with investigation and account adjustments is not burden imposed by these regulations and is thus not covered by the PRA. Staff has retained its projected estimates in view of these considerations.
[[Page 70739]]
Setup/Monitoring
Transaction-related
Average burden
Total burden Disclosure \1\
Average burden Total setup/ Number of
per
Total
(hours) Respondents per respondent monitoring transactions transaction transaction (hours) burden (hours)
(minutes) burden (hours)
Open-end credit: Initial terms...........................
100,000
.5
50,000 50,000,000
.25
208,333
258,333 Rescission notices......................
10,000
.5
5,000
100,000
.25
417
5,417 Change in terms.........................
25,000
.5
12,500 136,000,000
.125
283,333
295,833 Periodic statements.....................
100,000
.5
50,000 4,800,000,000
.0625 5,000,000 5,050,000 Error resolution........................
100,000
.5
50,000 10,000,000
5
833,333
883,333 Credit and charge card accounts.........
100,000
.5
50,000 50,000,000
.25
208,333
258,333 Home equity lines of credit.............
10,000
.5
5,000 5,000,000
.25
20,833
25,833 Advertising.............................
250,000
.25
62,500
700,000
.5
5,833
68,333 Closed-end credit: Credit disclosures......................
800,000
.50
400,000 330,000,000
2 11,000,000 11,400,000 Rescission notices......................
100,000
.50
50,000 34,000,000
1
566,667
616,667 Variable rate mortgages.................
75,000
.50
37,500 1,800,000
2
60,000
97,500 High rate/high-fee mortgages............
50,000
.50
25,000
750,000
2
25,000
50,000 Reserve mortgages.......................
50,000
.50
25,000
150,000
1
2,500
27,500 Advertising.............................
500,000
.25
125,000 1,000,000
1
16,667
141,667
Total open-end credit............... .............. .............. .............. .............. .............. .............. 6,845,415
Total closed-end credit............. .............. .............. .............. .............. .............. .............. 12,333,334
Total credit.................... .............. .............. .............. .............. .............. .............. 19,178,749
\1\ In some areas, e.g., home equity lines of credit, companies have merged, changed their business focus, and/or have shifted that focus into areas not under the FTC's jurisdiction. Accordingly, staff's estimates account for a reduced number of respondents in these areas. For high-rate, high-fee loans, some respondents in this area have merged and/or changed their business focus. However, revisions to these rules by the FRB became effective 10/ 1/02; as a result, certain additional mortgages may be covered by these rules.
Estimated annual cost burden: $452,111,000 rounded to the nearest thousand.
Staff calculated labor costs by applying appropriate hourly cost figures to the burden hours described above. The hourly rates used below ($50 for managerial or professional time, $20 for skilled technical time, and $10 for clerical time) are averages.
Recordkeeping: For the 1,000,000 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 $11,000,000.
Disclosure: For each notice or information item listed, staff estimates that 10 percent of the burden hours require managerial time and 90 percent require skilled technical time. As shown below, the total disclosure cost is $441,111,200.
Managerial
Skilled Technical
Clerical
Required Task
Cost ($10/ Total Cost ($) Time (hours) Cost ($50/hr.) Time (hours) Cost ($20/hr.) Time (hours)
hr.)
Recordkeeping...........................
0
$0
100,000 $2,000,000
900,000 $9,000,000 $11,000,000 Open-end Disclosure: Initial terms...........................
25,833 1,291,650
232,500 4,650,000
0
0 5,941,650 Rescission notices......................
542
27,100
4,875
97,500
0
0
124,600 Change in terms.........................
29,583 1,479,150
266,250 5,325,000
0
0 6,804,150 Periodic statements.....................
505,000 25,250,000 4,545,000 90,900,000
0
0 116,150,000 Error resolution........................
88,333 4,416,650
795,000 15,900,000
0
0 20,316,650 Credit and charge card accounts.........
25,833 1,291,650
232,500 4,650,000
0
0 5,941,650 Home equity lines of credit.............
2,583
129,150
23,250
465,000
0
0
594,150 Advertising.............................
6,833
341,650
61,500 1,230,000
0
0 1,571,650
Total open-end credit............... .............. .............. .............. .............. .............. .............. 157,444,500
Closed-end credit Disclosures: Credit disclosures...................... 1,140,000 57,000,000 10,260,000 205,200,000
0
0 262,200,000 Rescission notices......................
61,667 3,083,350
555,000 11,100,000
0
0 14,183,350
[[Page 70740]]
Variable rate mortgages.................
9,750
487,500
87,750 1,755,000
0
0 2,242,500 High-rate/high-fee mortgages............
5,000
250,000
45,000
900,000
0
0 1,150,000 Reverse mortgages.......................
2,750
137,500
24,750
495,000
0
0
632,500 Advertising.............................
14,167
708,350
127,500 2,550,000
0
0 3,258,350
Total closed-end credit............. .............. .............. .............. .............. .............. .............. 283,666,700
Total Disclosures................... .............. .............. .............. .............. .............. .............. 441,111,200
Total Recordkeeping and
.............. .............. .............. .............. .............. .............. 452,111,200 disclosures:...................
John D. Graubert, Acting General Counsel.
[FR Doc. 02-29980 Filed 11-25-02; 8:45 am]
BILLING CODE 6750-01-M
