66018 Federal Register / Vol. 75, No. 207 / Wednesday, October 27, 2010 / Proposed Rules 

be deemed an affiliate of a company for 

purposes of this part if: 

(1) That company is regulated under 

Title V of the GLB Act by the Bureau of 

Consumer Financial Protection or by a 

Federal functional regulator other than 

the Commission; and 

(2) Rules adopted by the Bureau of 

Consumer Financial Protection or 

another Federal functional regulator 

under Title V of the GLB Act treat the 

futures commission merchant, retail 

foreign exchange dealer, commodity 

trading advisor, commodity pool 

operator, introducing broker, major 

swap participant, or swap dealer as an 

affiliate of that company. 

* * * * * 

(n)(1) * * * 

(i) Any futures commission merchant, 

retail foreign exchange dealer, 

commodity trading advisor, commodity 

pool operator, introducing broker, major 

swap participant, or swap dealer that is 

registered with the Commission as such 

or is otherwise subject to the 

Commission’s jurisdiction; and 

(ii) * * * 

(2) * * *: 

(i) Any person or entity, other than a 

futures commission merchant, retail 

foreign exchange dealer, commodity 

trading advisor, commodity pool 

operator, introducing broker, major 

swap participant, or swap dealer that, 

with respect to any financial activity, is 

subject to the jurisdiction of the 

Commission under the Act. 

* * * * * 

(o)(1) * * *: 

(i) Any product or service that a 

futures commission merchant, retail 

foreign exchange dealer, commodity 

trading advisor, commodity pool 

operator, introducing broker, major 

swap participant, or swap dealer could 

offer that is subject to the Commission’s 

jurisdiction; and 

* * * * * 

(s) Major swap participant. The term 

‘‘major swap participant’’ has the same 

meaning as in section 1a(33) of the 

Commodity Exchange Act, 7 U.S.C. 1 et 

seq., as may be further defined by this 

title, and includes any person registered 

as such thereunder. 

* * * * * 

(x) Swap dealer. The term ‘‘swap 

dealer’’ has the same meaning as in 

section 1a(49) of the Commodity 

Exchange Act, 7 U.S.C. 1 et seq., as may 

be further defined by this title, and 

includes any person registered as such 

thereunder. 

(y) * * * 

(4) Any commodity pool operator; 

(5) Any introducing broker; 

(6) Any major swap participant; and 

(7) Any swap dealer subject to the 

jurisdiction of the Commission. 

* * * * * 

5. Amend § 160.15 by revising 

paragraph (a)(4) to read as follows: 

§ 160.15 Other exceptions to notice and 

opt out requirements. 

(a) * * * 

(4) To the extent specifically 

permitted or required under other 

provisions of law and in accordance 

with the Right to Financial Privacy Act 

of 1978, 12 U.S.C. 3401 et seq., to law 

enforcement agencies (including a 

Federal functional regulator, the 

Secretary of the Treasury, with respect 

to 31 U.S.C. Chapter 53, Subchapter II 

(Records and Reports on Monetary 

Instruments and Transactions) and 12 

U.S.C. Chapter 21 (Financial 

Recordkeeping), a State insurance 

authority, with respect to any person 

domiciled in that insurance authority’s 

state that is engaged in providing 

insurance, and the Bureau of Consumer 

Financial Protection), self-regulatory 

organizations, or for an investigation on 

a matter related to public safety; 

* * * * * 

6. Amend § 160.17 by revising 

paragraph (b) to read as follows: 

§ 160.17 Relation to state laws. 

* * * * * 

(b) Greater protection under state law. 

For purposes of this section, a state 

statute, regulation, order or 

interpretation is not inconsistent with 

the provisions of this part if the 

protection such statute, regulation, 

order or interpretation affords to any 

consumer is greater than the protection 

provided under this part. A 

determination regarding whether a state 

statute, regulation, order, or 

interpretation is inconsistent with the 

provisions of this part may be made by 

the Bureau of Consumer Financial 

Protection, after consultation with the 

Commission, on its own motion or in 

response to a nonfrivolous petition 

initiated by any interested person. 

7. Revise § 160.30 to read as follows: 

§ 160.30 Procedures to safeguard 

customer records and information. 

Every futures commission merchant, 

retail foreign exchange dealer, 

commodity trading advisor, commodity 

pool operator, introducing broker, major 

swap participant, and swap dealer 

subject to the jurisdiction of the 

Commission must adopt policies and 

procedures that address administrative, 

technical and physical safeguards for 

the protection of customer records and 

information. 

By the Commission. 

Dated: October 19, 2010. 

David A. Stawick, 

Secretary. 

Statement of Chairman Gary Gensler 

Privacy of Consumer Financial 

Information; Conforming Amendments 

Under Dodd-Frank Act 

October 19, 2010 

I support today’s Commission vote on 

the notice of public rulemaking, which 

expands the scope of the Commission’s 

existing protections afforded to 

consumers’ information to two new 

entities created by the Dodd-Frank Act. 

The proposed rulemaking expands the 

Commission’s Part 160 rules to 

customers of swap dealers and major 

swap participants. Part 160 includes the 

Commission’s existing privacy rules for 

consumers. 

[FR Doc. 2010–26912 Filed 10–26–10; 8:45 am] 

BILLING CODE 6351–01–P 

COMMODITY FUTURES TRADING 

COMMISSION 

17 CFR Part 162 

RIN Number 3038–AD12 

Business Affiliate Marketing and 

Disposal of Consumer Information 

Rules 

AGENCY: Commodity Futures Trading 

Commission. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The Commodity Futures 

Trading Commission (‘‘Commission’’ or 

‘‘CFTC’’) is proposing regulations to 

implement new statutory provisions 

enacted by Title X of the ‘‘Dodd-Frank 

Wall Street Reform and Consumer 

Protection Act’’ (‘‘Dodd-Frank Act’’). 

These proposed regulations apply to 

futures commission merchants, retail 

foreign exchange dealers, commodity 

trading advisors, commodity pool 

operators, introducing brokers, swap 

dealers and major swap participants 

(collectively, ‘‘CFTC registrants’’). The 

Dodd-Frank Act provides the CFTC with 

authority to implement regulations 

under sections 624 and 628 of the Fair 

Credit Reporting Act (‘‘FCRA’’). The 

proposed regulations implementing 

section 624 of the FCRA require CFTC 

registrants to provide consumers with 

the opportunity to prohibit affiliates 

from using certain information to make 

marketing solicitations to consumers. 

The proposed regulations implementing 

section 628 of the FCRA require CFTC 

registrants that possess or maintain 

consumer report information in 

connection with their business activities 


jlentini on DSKJ8SOYB1PROD with PROPOSALS
Federal Register / Vol. 75, No. 207 / Wednesday, October 27, 2010 / Proposed Rules 66019 

1 17 CFR 145.9. 

2See Dodd-Frank Wall Street Reform and 

Consumer Protection Act, Pub. L. 111–203, 124 

Stat. 1376 (2010). The text of the Dodd-Frank Act 

may be accessed at http://www.cftc.gov./ 

LawRegulation/OTCDERIVATIVES/index.htm. 

3Pursuant to Section 701 of the Dodd-Frank Act, 

Title VII may be cited as the ‘‘Wall Street 

Transparency and Accountability Act of 2010.’’ 

4 7 U.S.C. 1 et seq. 

5See 15 U.S.C. 1681–1681x. The FCRA, enacted 

in 1970, sets standards for the collection, 

communication, and use of information bearing on 

a consumer’s credit worthiness, credit standing, 

credit capacity, character, general reputation, 

personal characteristics, or mode of living that is 

collected and communicated by consumer reporting 

agencies. 15 U.S.C. 1681–1681x. 

6See Public Law 108–159, Section 214, 117 Stat. 

1952, 1980 (2003). The FACT Act was signed into 

law on December 4, 2003. The FACT Act amended 

the FCRA to enhance the ability of consumers to 

combat identity theft, to increase the accuracy of 

consumer reports, to allow consumers to exercise 

greater control regarding the type and amount of 

solicitations they receive, and to restrict the use and 

disclosure of sensitive medical information. A 

portion of section 214 of the FACT Act amended 

the FCRA to add section 624 to the FCRA. 

7See Public Law 106–102, 113 Stat. 1338 (1999). 

8 ‘‘CFTC registrant’’ includes a futures commission 

merchant, retail foreign exchange dealer, 

commodity trading advisor, commodity pool 

operator, introducing broker, swap dealer or major 

swap participant. 

9For the disposal rules adopted by the various 

Federal agencies, see 69 FR 68690 (Nov. 24, 2004) 

(FTC); 69 FR 77610 (Dec. 28, 2004) (Banking 

Agencies); 73 FR 13692 (Mar. 13, 2008) (SEC). For 

the affiliate marketing rules adopted by the various 

Federal agencies, see 72 FR 61424 (Oct. 31, 2007) 

(FTC); 72 FR 62910 (Nov. 7, 2007) (Banking 

Agencies); 74 FR 58204 (Sept. 10, 2009) (SEC). 

to develop and implement a written 

program for the proper disposal of such 

information. 

DATES: Comments must be received on 

or before December 27, 2010. 

ADDRESSES: You may submit comments, 

identified by RIN number 3038–AD12, 

by any of the following methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Regular Mail: David Stawick, 

Secretary, Commodity Futures Trading 

Commission, Three Lafayette Centre, 

1155 21st Street, NW., Washington, DC 

20581. 

• E-mail: amr@cftc.gov. 

• Hand Delivery/Courier: Same as 

mail above. 

All comments must be submitted in 

English, or if not, accompanied by an 

English translation. Comments will be 

posted as received at http:// 

www.cftc.gov. You should submit 

information only that you wish to make 

available publicly. If you wish the 

Commission to consider information 

that is exempt from disclosure under the 

Freedom of Information Act, a petition 

for confidential treatment of the exempt 

information may be submitted according 

to the established rules in CFTC 

Regulation 145.9.1

The Commission reserves the right, 

but shall have no obligation, to review, 

pre-screen, filter, redact, refuse or 

remove any or all of your submission 

from http://www.cftc.gov that it may 

deem to be inappropriate for 

publication, such as obscene language. 

All submissions that have been redacted 

or removed that contain comments on 

the merits of the rulemaking will be 

retained in the public comment file and 

will be considered as required under the 

Administrative Procedure Act, 5 U.S.C. 

551 et seq., and other applicable laws, 

and may be accessible under the 

Freedom of Information Act, 5 U.S.C. 

552. 

FOR FURTHER INFORMATION CONTACT: Carl 

E. Kennedy, Counsel, (202) 418–6625, 

Commodity Futures Trading 

Commission, Office of the General 

Counsel, Three Lafayette Centre, 1155 

21st Street, NW., Washington, DC 

20581, facsimile number (202) 418– 

5524, e-mail: c_kennedy@cftc.gov. 

SUPPLEMENTARY INFORMATION: 

I. Background 

On July 21, 2010, President Obama 

signed the Dodd-Frank Wall Street 

Reform and Consumer Protection Act 

(‘‘Dodd-Frank Act’’).2 Title VII of the 

Dodd-Frank Act 3 amended the 

Commodity Exchange Act (‘‘CEA’’) 4 to 

establish a comprehensive new 

regulatory framework for swaps and 

security-based swaps. The legislation 

was enacted to reduce risk, increase 

transparency, and promote market 

integrity within the financial system by, 

among other things: (1) Providing for the 

registration and comprehensive 

regulation of swap dealers and major 

swap participants; (2) imposing clearing 

and trade execution requirements on 

standardized derivative products; (3) 

creating robust recordkeeping and realtime reporting regimes; and (4) 

enhancing the Commodity Futures 

Trading Commission’s (‘‘Commission’’ 

or ‘‘CFTC’’) rulemaking and enforcement 

authorities with respect to, among 

others, all registered entities and 

intermediaries subject to the 

Commission’s oversight. 

In addition, Title X of the Dodd-Frank 

Act—which is entitled the Consumer 

Financial Protection Act of 2010 (‘‘CFP 

Act’’)—established a Bureau of 

Consumer Financial Protection within 

the Federal Reserve System and 

provided this new Federal agency with 

rulemaking, enforcement, and 

supervisory powers over many 

consumer financial products and 

services and the entities that sell them. 

In addition, the CFP Act amends a 

number of other Federal consumer 

protection laws enacted prior to the 

Dodd-Frank Act, including the Fair 

Credit Reporting Act (‘‘FCRA’’),5 the Fair 

and Accurate Credit Transactions Act of 

2003 (‘‘FACT Act’’) 6 and Title V of the 

Gramm-Leach-Bliley Act 7 (‘‘GLB Act’’). 

Section 1088 of the CFP Act sets out 

two amendments to the FCRA and the 

FACT Act directing the Commission to 

promulgate regulations that are 

intended to provide privacy protections 

to certain consumer information held by 

any person that is subject to the 

enforcement jurisdiction of the 

Commission. One provision of section 

1088 amends section 214(b) of the FACT 

Act—which added section 624 to the 

FCRA in 2003—and directs the 

Commission to implement the 

provisions of section 624 of the FCRA 

with respect to persons that are subject 

to the CFTC’s enforcement jurisdiction. 

Section 624 of the FCRA gives 

consumers the right to prohibit a CFTC 

registrant 8 from using certain 

information obtained from an affiliate to 

make solicitations to that consumer 

(hereinafter referred to as the ‘‘affiliate 

marketing rules’’). The other provision 

in the CFP Act amends section 628 of 

the FCRA and mandates that the 

Commission implement regulations 

requiring persons subject to the CFTC’s 

jurisdiction who possess or maintain 

consumer report information in 

connection with their business activities 

to properly dispose of that information 

(hereinafter referred to as the ‘‘disposal 

rules’’). 

Both sections 624 and 628 of the 

FCRA required various Federal agencies 

charged with regulating financial 

institutions in possession of consumer 

information to issue regulations in final 

form in consultation and coordination 

with each other. In particular, these 

sections required the Office of the 

Comptroller of the Currency (‘‘OCC’’), 

the Board of Governors of the Federal 

Reserve System (‘‘Board’’), the Federal 

Deposit Insurance Corporation (‘‘FDIC’’), 

the Office of Thrift Supervision (‘‘OTS’’), 

the National Credit Union 

Administration (‘‘NCUA’’) (collectively, 

the ‘‘Banking Agencies’’), the Securities 

and Exchange Commission (‘‘SEC’’) and 

the Federal Trade Commission (‘‘FTC’’) 

(the SEC, FTC and the Banking 

Agencies, are collectively, the 

‘‘Agencies’’) in consultation and 

coordination with one another, to issue 

rules implementing these sections of the 

FCRA. The Agencies already have 

adopted final affiliate marketing rules 

and disposal rules.9 Accordingly, the 


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10The opt-out right contained in section 624 of 

the FCRA is distinct from the affiliate sharing 

provisions under section 603(d)(2)(A)(iii) of the 

FCRA. 

Commission is now proposing to adopt 

similar rules to the final rules adopted 

by the Agencies, to the extent possible, 

to ensure consistency and 

comparability. 

The Commission requests comment 

on all aspects of the proposed 

regulations—both the affiliate marketing 

rules and the disposal rules—that are 

highlighted in the discussion in Section 

II below. 

II. Explanation of the Proposed 

Regulations 

A. Affiliate Marketing Rules 

Section 624 of the FCRA and the 

Commission’s proposed regulations 

generally provide that consumers can 

block a CFTC registrant from soliciting 

the consumer based on ‘‘eligibility 

information’’ (i.e., certain financial 

information, such as information 

regarding the consumer’s transactions or 

experiences with the person) that such 

registrant received from an affiliate that 

has or previously had pre-existing 

business relationship. Under the 

proposed regulations, these registrants 

can make solicitations to a consumer 

based on that consumer’s eligibility 

information if: 

(1) The consumer is given clear, 

conspicuous and concise notice; 

(2) The consumer is given a 

reasonable opportunity to opt out of 

such use of the information; and 

(3) The consumer does not opt out. 

Section 624 governs the use of 

information by an affiliate, not the 

sharing of information with or among 

affiliates.10 While some of the entities 

that fall under the Commission’s 

jurisdiction may comply already with 

the regulations promulgated by other 

Federal agencies implementing the 

provisions of section 624 of the FCRA, 

the Commission seeks comment on its 

proposed regulations implementing 

section 624 of the FCRA. 

Responsibility for Providing Notice and 

an Opportunity to Opt Out 

Section 624 does not specify which 

affiliate must give the consumer notice 

and an opportunity to opt out of the use 

of the information by an affiliate for 

marketing purposes. The Commission 

has reviewed the proposed and final 

regulations issued by the Agencies 

implementing section 624 and has 

determined to take a consistent 

approach with respect to which affiliate 

may provide the initial opt-out notice. 

As such, the Commission’s proposed 

regulations provide that the initial optout notice must be provided either by an 

affiliate that has or previously had a 

‘‘pre-existing business relationship’’ 

with the consumer, or as part of a joint 

notice from two or more members of an 

affiliated group, provided that at least 

one of the affiliates on the joint notice 

has or previously had a pre-existing 

business relationship with the 

consumer. The Commission agrees with 

the Agencies that this approach 

provides a measure of flexibility and 

ensures that the notice is provided by an 

entity that is known to the consumer. 

The Commission invites comment on 

whether this approach continues to be 

a reasonable one. 

Scope of Coverage 

Section 624 of the FCRA specifies 

under which circumstances the 

provisions under this section and the 

proposed regulation do not apply. 

Specifically, section 624(a)(4) provides 

that the requirements and prohibitions 

of that section do not apply, in part, 

when: (1) The covered affiliate receiving 

the information has a pre-existing 

business relationship with the 

consumer; (2) the information is used to 

perform services for another affiliate 

that does not have such a relationship 

with the consumer (subject to certain 

conditions described below); (3) the 

information is used in response to a 

communication initiated by the 

consumer; or (4) the information is used 

to make a solicitation that has been 

authorized or requested by the 

consumer. The Commission has 

incorporated each of these statutory 

exceptions into the proposed rule. 

In addition, the Commission has set 

out the persons to whom the proposed 

rule will apply, as well as the type of 

consumer information that is the subject 

of such rule. The Commission solicits 

comments on whether there should be 

other circumstances to which the 

proposed regulations do not apply. 

Duration of Opt Out 

Section 624(a)(3) of the FCRA 

provides that a consumer’s affiliate 

marketing opt-out election shall be 

effective for at least five years. 

Accordingly, the proposed regulations 

provide that a consumer’s opt-out 

election would be valid for a period of 

at least five years (the ‘‘opt-out period’’), 

beginning as soon as reasonably 

practicable after the consumer’s opt-out 

election is received, unless the 

consumer revokes the election before 

the opt-out period has expired. When a 

consumer opts out, unless a statutory 

exception applies, a receiving affiliate 

would be unable to make or send 

marketing solicitations to that consumer 

based on his or her eligibility 

information during the opt-out period. 

As described in the section-by-section 

analysis below, an extension notice 

would be provided to the consumer at 

the end of the opt-out period if the 

receiving affiliate wishes to make 

marketing solicitations. Affiliated 

persons may wish to avoid the cost and 

burden of tracking five-year consumer 

opt-out periods with varying start and 

end dates, and delivering extension 

notices to each consumer at the 

appropriate time, by choosing to treat a 

consumer’s opt-out election as effective 

for a period longer than five years, 

including indefinitely. An affiliate 

without a pre-existing business 

relationship that chooses to honor a 

consumer’s opt-out election for more 

than five years would not violate the 

proposed rules. 

In the discussion that follows, the 

Commission solicits comment on 

specific aspects of the proposed 

regulations on a section-by-section 

basis. 

Section 162.1—Purpose, Scope and 

Examples 

Proposed section 162.1 sets forth the 

purpose and scope of the proposed 

regulations. This section also provides 

that examples in this part are not 

exclusive; compliance with an example, 

to the extent applicable, constitutes 

compliance with this subpart. 

Section 162.2—Definitions 

Proposed section 162.2 contains 

definitions for, inter alia, the following 

terms: ‘‘affiliate’’; ‘‘clear and 

conspicuous’’; ‘‘common ownership or 

common corporate control’’; 

‘‘communication’’; ‘‘company’’; 

‘‘consumer’’; ‘‘covered affiliate’’; 

‘‘eligibility information’’; ‘‘financial 

product or service’’; ‘‘major swap 

participant’’; ‘‘person’’; ‘‘pre-existing 

business relationship’’; ‘‘solicitation’’; 

and ‘‘swap dealer’’. 

Affiliate 

Section 2 of the FACT Act (which, as 

noted above, added section 624 to the 

FCRA) defines the term ‘‘affiliate’’ to 

mean ‘‘persons that are related by 

common ownership or affiliated by 

corporate control.’’ 

The FACT Act and the GLB Act 

contain a variety of approaches to define 

the term ‘‘affiliate.’’ Proposed paragraph 

(a) employs the same formulation used 

by the Commission in defining 

‘‘affiliate’’ under part 160 of the 


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11Part 160 of the Commission’s Regulations 

implement the provisions of Title V of the GLB Act. 

Under Title V of the GLB Act, ‘‘financial 

institutions’’ (which include futures commission 

merchants, retail foreign exchange dealers, 

commodity trading advisors and other CFTC 

registrants) are required to provide initial and 

annual privacy notices to their customers. These 

requirements apply only to customers that are 

individuals who obtain financial products or 

services that are primarily used for personal, family, 

or household purposes. Part 160 also requires 

financial institutions that share nonpublic, personal 

information about a customer with non-affiliates to 

provide the customer with a reasonable opportunity 

to opt out of the sharing of such information. See 

section 160.7 of the Commission’s Regulations. 

12The terms ‘‘swap dealer’’ and ‘‘major swap 

participant’’ as used in this proposed regulation 

refer to the statutory definitions of such terms as 

defined in Title VII of the Dodd-Frank Act, and as 

may be further defined by the Commission in a 

future rulemaking. See section 721(b) of the DoddFrank Act, which provides that the Commission has 

the authority to adopt rules further defining any 

term included in the Dodd-Frank Act, which 

amends the CEA. See also section 721(c) which 

provides that the Commission is required to adopt 

a rule to further define, inter alia, the terms ‘‘swap 

dealer’’ and ‘‘major swap participant’’ to include 

transactions and entities that have been structured 

to evade provisions in the Dodd-Frank Act. 

Commission’s Regulations.11 Under the 

proposed regulation, the definition of 

‘‘affiliate’’ will mean any company that 

is under common ownership or 

common corporate control with a 

covered affiliate.12 The Commission 

believes it is important to harmonize the 

treatment of ‘‘affiliate’’ across its 

Regulations as much as possible and to 

construe them to have the same 

meaning. The Commission solicits 

comments on whether there should be 

any meaningful difference between the 

Commission’s proposed definitions and 

the FACT Act and the GLB Act 

definitions. 

Clear and Conspicuous 

Proposed paragraph (b) defines the 

term ‘‘clear and conspicuous’’ to mean 

reasonably understandable and 

designed to call attention to the nature 

and significance of the information 

presented in the notice. Companies 

retain flexibility in determining how 

best to meet the clear and conspicuous 

standard. Again, the Commission has 

decided to harmonize the definition of 

this term across its Regulations. In 

addition, the Commission believes that 

the FCRA directs the Commission to 

provide specific guidance regarding 

how to comply with the clear and 

conspicuous standard. See 15 U.S.C. 

1682s–3(a)(2)(B). 

Companies may wish to consider a 

number of methods to make their 

notices clear and conspicuous. A notice 

or disclosure may be made reasonably 

understandable through methods that 

include, but are not limited to: Using 

clear and concise sentences, paragraphs, 

and sections; using short explanatory 

sentences; using bullet lists; using 

definite, concrete, everyday words; 

using active voice; avoiding multiple 

negatives; avoiding legal and highly 

technical business terminology; and 

avoiding explanations that are imprecise 

and are readily subject to different 

interpretations. Various methods may 

also be used to design a notice or 

disclosure to call attention to the nature 

and significance of the information in it, 

including, but not limited to, using: A 

plain-language heading; a typeface and 

type size that are easy to read; wide 

margins and ample line spacing; or 

boldface or italics for key words. 

Companies that provide the notice on an 

Internet web page may use text or visual 

cues to encourage scrolling down the 

page if necessary to view the entire 

notice, and take steps to ensure that 

other elements on the Web site (such as 

pop-up ads, text, graphics, hyperlinks, 

or sound) do not distract attention from 

the notice. 

When a notice or disclosure is 

combined with other information, 

methods for designing the notice or 

disclosure to call attention to the nature 

and significance of the information in it 

may include using distinctive type 

sizes, styles, fonts, paragraphs, 

headings, graphic devices, and 

groupings or other devices. It is 

unnecessary, however, to use distinctive 

features, such as distinctive type sizes, 

styles, or fonts, to differentiate an 

affiliate marketing opt-out notice from 

other components of a required 

disclosure (e.g., where a privacy notice 

under the GLB Act includes several optout disclosures in a single notice). 

Nothing in the clear and conspicuous 

standard requires the segregation of an 

affiliate marketing opt-out notice when 

it is combined with a privacy notice 

under the GLB Act or other provisions 

of law. 

It may not be feasible to incorporate 

all of the methods described above all 

of the time. For example, a company 

may have to use legal terminology, 

rather than everyday words, in certain 

circumstances to provide a precise 

explanation. Companies are encouraged, 

but not required, to consider the 

practices described above in designing 

their notices or disclosures, as well as 

using readability testing to devise 

notices that are understandable to 

consumers. 

The Commission has proposed model 

forms in Appendix A that may, but are 

not required to, be used to facilitate 

compliance with the affiliate marketing 

notice requirements. The requirement 

for clear and conspicuous notices would 

be satisfied by the appropriate use of 

one of the model forms. 

Common Ownership or Common 

Corporate Control 

Proposed paragraph (f) defines the 

term ‘‘common ownership or common 

corporate control’’ for purposes of Part 

162 to mirror the definition of ‘‘control’’ 

under Part 160. Under the proposal, 

‘‘common ownership or common 

corporate control’’ means the power to 

exercise a controlling influence over the 

management or policies of a company 

whether through ownership of 

securities, by contract, or otherwise. 

Any person who owns beneficially, 

either directly or through one or more 

controlled companies, more than 25 

percent of the voting securities of any 

company is presumed to control the 

company. Any person who does not 

own more than 25 percent of the voting 

securities of a company will be 

presumed not to control the company. 

Company 

Proposed paragraph (g) defines the 

term ‘‘company’’ to mean any 

corporation, limited liability company, 

business trust, general or limited 

partnership, association, or similar 

organization. This definition is 

consistent with the definition of 

company in Part 160 of the 

Commission’s Regulations. 

Concise 

Proposed paragraph (h) defines the 

term ‘‘concise’’ to mean a reasonably 

brief expression or statement. The 

proposal also provides that a notice 

required by this subpart may be concise 

even if it is combined with other 

disclosures required or authorized by 

Federal or state law. Such disclosures 

may include, but are not limited to, a 

GLB Act privacy notice or other 

consumer disclosures required under 

the FCRA or any other provision of law. 

As noted above, the Commission has 

proposed model forms in Appendix A 

that may, but are not required to, be 

used to facilitate compliance with the 

affiliate marketing notice requirements 

in this subpart. The requirement for 

concise notices would be satisfied by 

the appropriate use of one of the model 

forms. 

Consumer 

Proposed paragraph (i) defines the 

term ‘‘consumer’’ to mean an individual 

person, which follows the statutory 

definition in section 603(c) of the FCRA. 

For purposes of this definition, an 

individual acting through a legal 

representative qualifies as a consumer. 

The Commission notes that the 


jlentini on DSKJ8SOYB1PROD with PROPOSALS
66022 Federal Register / Vol. 75, No. 207 / Wednesday, October 27, 2010 / Proposed Rules 

13Section 603(d)(2)(A) of the FCRA provides that 

the term ‘‘consumer report’’ does not include ‘‘(i) 

[any] report containing information solely as to 

transactions or experiences between the consumer 

and the person making the report; (ii) 

communication of that information among persons 

related by common ownership or affiliated by 

corporate control; or (iii) communication of other 

information among persons related by common 

ownership or affiliated by corporate control, if it is 

clearly and conspicuously disclosed to the 

consumer that the information may be 

communicated among such persons and the 

consumer is given the opportunity, before the time 

that the information is initially communicated, to 

direct that such information not be communicated 

among such persons * * *.’’ Thus, the scope of 

what falls within the definition of ‘‘eligibility 

information’’ is broader than, and includes, 

information that would fall within the definition of 

‘‘consumer report’’. 

definition of ‘‘consumer’’ is broader than 

the definition of that term in the GLB 

Act and is consistent with the 

definitions used by the Agencies in their 

rulemakings promulgated under section 

624 of the FCRA. The Commission 

believes that the use of distinct 

definitions of ‘‘consumer’’ in the two 

statutes reflects differences in the scope 

and objectives of each statute. 

Covered Affiliate 

Proposed paragraph (h) defines the 

term ‘‘covered affiliate’’ to mean a 

futures commission merchant, retail 

foreign exchange dealer, commodity 

trading advisor, commodity pool 

operator, introducing broker, swap 

dealer or major swap participant, which 

is subject to the jurisdiction of the 

Commission. 

Eligibility information 

Under proposed paragraph (j), the 

term ‘‘eligibility information’’ means any 

information that would be a consumer 

report if the exclusions from the 

definition of ‘‘consumer report’’ in 

section 603(d)(2)(A) of the FCRA did not 

apply.13 Examples of the type of 

information that would fall within the 

definition of ‘‘eligibility information’’ 

includes an affiliate’s own transaction 

or experience information, such as 

information about a consumer’s account 

history with that person, and other 

information, such as information from 

credit bureau reports or applications. 

The Commission’s proposal defines the 

term ‘‘eligibility information’’ 

consistently with the definitions in the 

Agencies’ regulations promulgated 

pursuant to section 624 of the FCRA. 

The term ‘‘eligibility information’’ 

does not include aggregate or blind data 

that does not contain personal 

identifiers. Examples of personal 

identifiers include account numbers, 

names, or addresses, as well as Social 

Security numbers, driver’s license 

numbers, telephone numbers, or other 

types of information that, depending on 

the circumstances or when used in 

combination, could identify the 

consumer. 

The Commission invites comment on 

whether the term ‘‘eligibility 

information’’, as defined, appropriately 

reflects the scope of what information 

should be covered by this proposed 

regulation. 

Financial Product or Service 

Proposed paragraph (l) defines the 

term ‘‘financial product or service’’ to 

mean any product or service that a 

futures commission merchant, retail 

foreign exchange dealer, commodity 

trading advisor, commodity pool 

operator, introducing broker, major 

swap participant or swap dealer could 

offer that is subject to the Commission’s 

jurisdiction. This definition is 

consistent with the definition of 

financial product or service in Part 160 

of the Commission’s Regulations, with 

certain revisions made to fit within the 

scope of the proposed regulations. The 

Commission invites comment on 

whether the term ‘‘financial product or 

service’’, as defined, appropriately 

captures the types of products or 

services that should be covered by this 

regulation. 

Major Swap Participant 

Proposed paragraph (n) defines the 

term ‘‘major swap participant’’ to have 

the same meaning as in section 1a(33) 

of the Commodity Exchange Act, as may 

be further defined by the Commission’s 

Regulations, and includes any person 

registered as such thereunder. 

Person 

Proposed paragraph (o) defines the 

term ‘‘person’’ to mean any individual, 

partnership, corporation, trust, 

association, or other entity. For 

purposes of this part, actions taken by 

an agent on behalf of a person that are 

within the scope of the agency 

relationship will be treated as actions of 

that person. The definition of person in 

the proposed regulation is consistent 

with the definition of person in CFTC 

Regulation 1.3(u). 

Pre-Existing Business Relationship 

Proposed paragraph (p) defines this 

term to mean a relationship between a 

person (or a person’s licensed agent) 

and a consumer based on the following: 

(1) A financial contract between the 

person and the consumer that is in force 

on the date on which the consumer is 

sent a solicitation by this subpart; (2) 

the purchase, rental, or lease by the 

consumer of a person’s financial 

products or services, or a financial 

transaction (including holding an active 

account or a policy in force or having 

another continuing relationship) 

between the consumer and the person, 

during the 18-month period 

immediately preceding the date on 

which a solicitation covered by this 

subpart is sent to the consumer; or (3) 

an inquiry or application by the 

consumer regarding a financial product 

or service offered by that person during 

the three-month period immediately 

preceding the date on which the 

consumer is sent a solicitation covered 

by this subpart. The proposed definition 

generally tracks the statutory definition 

contained in section 624 of the FCRA, 

with certain revisions for clarity. 

The Commission believes that, for 

purposes of this proposed regulation, an 

inquiry should include any affirmative 

request by a consumer for information, 

such that the consumer would 

reasonably expect to receive information 

from the affiliate about its financial 

products or services. In addition, the 

Commission believes that a consumer 

would not reasonably expect to receive 

information from the affiliate if the 

consumer does not request information 

or does not provide contact information 

to the affiliate. 

The Commission has the statutory 

authority to define in the regulations 

other circumstances that qualify as a 

pre-existing business relationship. The 

Commission has not proposed to 

exercise this authority at this time to 

expand the definition of ‘‘pre-existing 

business relationship’’ beyond the 

circumstances set forth in the statute. 

The Commission solicits comments, 

however, on whether there are other 

circumstances that the Commission 

should include within the definition of 

‘‘pre-existing business relationship’’. 

Solicitation 

Proposed paragraph (q) defines the 

term ‘‘solicitation’’ to mean the 

marketing of a financial product or 

service initiated by a covered affiliate to 

a particular consumer that is based on 

eligibility information communicated to 

the covered affiliate by its affiliate and 

is intended to encourage the consumer 

to purchase the covered affiliate’s 

financial product or service. A 

communication, such as a telemarketing 

solicitation, direct mail, or e-mail, is a 

solicitation if it is directed to a specific 

consumer based on eligibility 

information. The proposed definition of 

solicitation does not, however, include 

communications that are directed at the 

general public without regard to 

eligibility information, even if those 

communications are intended to 

encourage consumers to purchase 


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financial products and services from the 

person initiating the communications. 

The proposed definition tracks the 

statutory definition contained in section 

624 of the FCRA, with certain revisions 

for clarity. 

The proposed definition of 

‘‘solicitation’’ does not distinguish 

between different mediums of 

communication. A determination of 

whether a marketing communication 

constitutes a solicitation will depend 

upon the facts and circumstances. The 

Commission has decided not to make 

those determinations in this rulemaking. 

The Commission has the statutory 

authority to determine by regulation 

that other communications do not 

constitute a solicitation. The 

Commission has decided to use the 

same definition of ‘‘solicitation’’ adopted 

by the Agencies, and as a result, has not 

proposed to exercise its authority under 

section 624 at this time to specify other 

communications that would not be 

deemed ‘‘solicitations’’ beyond the 

circumstances set forth in the statute. 

The Commission solicits comment, 

however, on whether there are other 

communications that the Commission 

should determine do not meet the 

definition of ‘‘solicitation.’’ The 

Commission also solicits comment on 

whether, and to what extent, various 

tools used in Internet marketing, such as 

popup ads, may constitute solicitations 

as opposed to communications directed 

at the general public, and whether 

further guidance is needed to address 

Internet marketing. 

Swap Dealer 

Proposed paragraph (r) defines the 

term ‘‘swap dealer’’ to have the same 

meaning as in section 1a(49) of the 

Commodity Exchange Act, as may be 

further defined by the Commission’s 

Regulations, and includes any person 

registered as such thereunder. 

Section 162.3—Affiliate Marketing Opt 

Out and Exceptions 

Proposed section 162.3 establishes the 

basic rules governing the requirement to 

provide the consumer with notice, a 

reasonable opportunity and a simple 

method to opt out of a company’s use 

of eligibility information that it obtains 

from an affiliate for the purpose of 

making solicitations to the consumer. 

General Notice Requirement 

Proposed paragraph (a) contains three 

conditions that must be met before a 

covered affiliate that does not have a 

pre-existing business relationship with a 

consumer may use eligibility 

information about the consumer that it 

receives from a affiliate that does have 

such a relationship to make a 

solicitation for marketing purposes to 

that consumer. First, the proposal 

provides that it must be clearly and 

conspicuously disclosed to the 

consumer in writing or, if the consumer 

agrees, electronically, in a concise 

notice that the covered affiliate that 

does not have a pre-existing business 

relationship may use shared eligibility 

information to make solicitations to the 

consumer. Second, the consumer must 

be provided a reasonable opportunity 

and a reasonable and simple method to 

opt out of the use of that eligibility 

information to make solicitations to the 

consumer. Third, the consumer must 

not have opted out. 

The Commission believes that an optout notice may not be provided orally. 

Indeed, the Commission is concerned 

that with oral notice, it may be 

impossible to ensure that a consumer 

receives the appropriate notice or 

information on the right to opt out. In 

addition, the Commission is concerned 

that oral notice may create enforcement 

barriers for the Commission. 

Persons Responsible for Satisfying the 

Notice Requirement 

Section 624 does not specify 

explicitly which affiliate must provide 

the opt-out notice to the consumer. 

Proposed paragraph (b) sets forth the 

duty of the persons responsible for 

satisfying the notice requirement under 

section 624. This proposal is consistent 

with the approach taken by the 

Agencies in their respective 

rulemakings pursuant to section 624. 

The proposed regulation strives to 

provide flexibility by allowing either: 

(1) The affiliate with a pre-existing 

business relationship to report the 

initial opt-out notice directly to the 

consumer; or (2) one or more of affiliates 

to provide a joint notice to the 

consumer, provided that at least one of 

the affiliates has or previously had the 

pre-existing business relationship with 

the consumer. The Commission solicits 

comments on whether this approach 

will provide meaningful or effective 

notice and will not lead to consumer 

confusion as to whether the opt-out 

notice is itself a solicitation. 

Exceptions to the General Rule 

Paragraph (c) contains exceptions to 

the requirements of this subpart. It 

incorporates each of the following 

statutory exceptions to the affiliate 

marketing notice and opt-out 

requirements set forth in section 

624(a)(4) of the FCRA: (1) Using the 

information to make a solicitation to a 

consumer with whom the affiliate has a 

pre-existing business relationship; (2) 

using the information to facilitate 

communications to an individual for 

whose benefit the affiliate provides 

employee benefit or other services 

under a contract with an employer 

related to, and arising out of, a current 

employment relationship or an 

individual’s status as a participant or 

beneficiary of an employee benefit plan; 

(3) using the information to perform 

services for another affiliate, unless the 

services involve sending solicitations on 

behalf of the other affiliate and such 

affiliate is not permitted to send such 

solicitations itself as a result of the 

consumer’s decision to opt out; (4) using 

the information to make solicitations in 

response to a communication initiated 

by the consumer; (5) using the 

information to make solicitations in 

response to a consumer’s request or 

authorization for a solicitation; or (6) if 

compliance with the requirements of 

section 624 by the affiliate would 

prevent that affiliate from complying 

with any provision of state insurance 

laws pertaining to unfair discrimination 

in a state where the affiliate is lawfully 

doing business. Several of these 

exceptions are discussed immediately 

below. 

Proposed paragraph (c)(1) clarifies 

that the provisions of this subpart do 

not apply where the covered affiliate 

using the information to make a 

solicitation to a consumer has a ‘‘preexisting business relationship’’ with that 

consumer, a key term that is discussed 

in detail above. 

Proposed paragraph (c)(3) clarifies 

that the provisions of this subpart do 

not apply where the information is used 

to perform services for another affiliate, 

except that the exception does not 

permit the service provider to make 

solicitations on behalf of itself or an 

affiliate if the service provider or the 

affiliate, as applicable, would not be 

permitted to make such solicitations as 

a result of the consumer’s election to opt 

out. Thus, when the notice has been 

provided to a consumer and the 

consumer has opted-out, a covered 

affiliate subject to the consumer’s optout election that has received eligibility 

information from its affiliate may not 

circumvent the opt-out notice 

requirement by instructing its affiliate or 

another affiliate to make solicitations to 

the consumer on its behalf. The 

Commission requests comment on 

whether there are other means of 

circumvention that the final rule should 

also address. 

Proposed paragraph (c)(4) 

incorporates the statutory exception for 

information used in response to a 

communication initiated by the 

consumer. The proposed rule clarifies 


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that this exception may be triggered by 

an oral, electronic, or written 

communication initiated by the 

consumer. To be covered by the 

proposed exception, use of eligibility 

information must be responsive to the 

communication initiated by the 

consumer. For example, if a consumer 

calls a covered affiliate to ask about 

business locations and hours, the 

covered affiliate may not then use 

eligibility information to make 

solicitations to the consumer about 

specific financial products or services 

because those solicitations would not be 

responsive to the consumer’s 

communication. Conversely, if the 

consumer calls a covered affiliate to ask 

about its financial products or services, 

then solicitations related to those 

financial products or services would be 

responsive to the communication and 

thus be permitted under the exception. 

The time period during which 

solicitations remain responsive to the 

consumer’s communication will depend 

on the facts and circumstances. The 

Commission does not intend for this 

exception to apply to a communication 

where a covered affiliate makes the 

initial call and leaves a message for the 

consumer to call back, and the 

consumer responds. 

Proposed paragraph (c)(5) provides 

that the provisions of this subpart do 

not apply where the information is used 

to make solicitations affirmatively 

authorized or requested by the 

consumer. This provision may be 

triggered by an oral, electronic, or 

written authorization or request by the 

consumer. Under this exception, the 

consumer may provide the 

authorization or make the request either 

through the company with whom the 

consumer has a business relationship or 

directly to the covered affiliate that will 

make the solicitation. In addition, the 

duration of the authorization or request 

will depend on the facts and 

circumstances. 

The exceptions in proposed 

paragraphs (c)(1), (4), and (5) described 

above may overlap in certain situations. 

For example, if a customer makes a 

telephone call to the commodity trading 

advisor’s clearing broker affiliate and 

requests information about its services, 

the clearing broker affiliate may use 

information about the consumer it 

obtains from the commodity trading 

advisor to make solicitations in 

response to the telephone call initiated 

by the consumer under the exception in 

paragraph (c)(4) for responding to a 

communication initiated by the 

consumer. In addition, the consumer’s 

request for information from the 

clearing broker affiliate triggers the 

exceptions in paragraph (c)(1) for 

inquiries by the consumer regarding a 

financial product or service offered by 

the clearing broker affiliate under the 

statutory definition of a ‘‘pre-existing 

business relationship’’ as well as the 

exception in paragraph (c)(5) for a use 

in response to a solicitation requested 

by the consumer. 

Making Solicitations 

Proposed paragraph (d) sets forth 

when a covered affiliate makes a 

solicitation to a consumer. Section 624 

does not describe what a covered 

affiliate must do in order to make a 

solicitation. Similarly the legislative 

history does not contain guidance as to 

the meaning of making a solicitation. 

For that reason, the Commission 

believes it important to provide clear 

guidance regarding what activities 

constitute making a solicitation. 

Proposed section 162.3(d)(1) provides 

that a covered affiliate makes a 

solicitation for marketing purposes to a 

consumer if: (i) The covered affiliate 

receives eligibility information from an 

affiliate; (ii) the covered affiliate uses 

that eligibility information to do one of 

the following—identify the consumer or 

type of consumer to receive a 

solicitation, establish the criteria used to 

select the consumer to receive a 

solicitation, or decide which of its 

financial products or services to market 

to the consumer or tailor its solicitation 

to that consumer; and (iii) as a result of 

the covered affiliate’s use of the 

eligibility information, the consumer is 

provided a solicitation about the 

covered affiliate’s financial products or 

services. 

The Commission recognizes that 

several common industry practices 

create issues in applying the provisions 

in proposed subparagraph (d)(1). First, 

affiliated companies often use a 

common database as the repository for 

eligibility information obtained by 

various affiliates, and information in 

that database may be accessible to 

multiple affiliates. Second, affiliated 

companies often use service providers 

to perform marketing activities, and 

some of those service providers may 

provide services for a number of 

different affiliates. Third, a covered 

affiliate may use its own eligibility 

information to market the financial 

products or services of another affiliate. 

Proposed sections 162.3(d)(2)–(5) seek 

to address these issues. 

Proposed subparagraph (d)(2) 

provides that a covered affiliate may 

receive eligibility information from an 

affiliate in various ways, including 

when the covered affiliate places that 

information into a common database 

that the covered affiliate may access. 

Thus, the use of a common database 

may satisfy the first element of the rule 

outlined in subparagraph (d)(1) (i.e., 

through a common database, the 

covered affiliate receives eligibility 

information from an affiliate). 

Proposed subparagraph (d)(3) 

provides that a covered affiliate receives 

or uses an affiliate’s eligibility 

information if a service provider acting 

on behalf of the covered affiliate 

receives or uses that information in the 

manner described in subparagraphs 

(d)(1)(i) or (d)(1)(ii), except as provided 

in subparagraph (d)(5), which is 

discussed below. Proposed 

subparagraph (d)(3) also provides that 

all relevant facts and circumstances will 

determine whether a service provider is 

acting on behalf of a covered affiliate 

when it receives or uses its affiliate’s 

eligibility information in connection 

with marketing the covered affiliate’s 

financial products or services. 

Proposed subparagraph (d)(4) 

describes two situations where a 

covered affiliate is deemed not to have 

made a solicitation subject to this 

subpart. In particular, this section 

provides that unless a covered affiliate 

uses a consumer’s eligibility 

information received from an affiliate in 

a manner described in section 

162.3(d)(1)(ii) (i.e., identify the 

consumer, establish criteria to select the 

consumer, or decide which financial 

product or service to market to the 

consumer), the covered affiliate does not 

make a solicitation for the purposes of 

this subpart if the affiliate: (i) uses its 

own eligibility information obtained in 

connection with that relationship to 

market the covered affiliate’s financial 

products or services; or (ii) directs its 

service provider to use the affiliate’s 

own eligibility information to market 

the covered affiliate’s financial products 

or services. Both situations (i) and (ii) 

assume that the covered affiliate whose 

financial products or services are being 

marketed has not used eligibility 

information received from the affiliate. 

In contrast, the core concept underlying 

situation (ii) is that the affiliate controls 

the actions of the service provider using 

that information. Since the affiliate 

controls the service provider’s use of the 

eligibility information, the solicitation 

should not be attributed to the covered 

affiliate whose financial products or 

services will be marketed to the 

consumers. Instead, the solicitation 

should be attributed to the affiliate. 

The Commission also recognizes that 

there may be situations where the 

covered affiliate whose financial 

products or services are being marketed 

does communicate and have contact 


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Federal Register / Vol. 75, No. 207 / Wednesday, October 27, 2010 / Proposed Rules 66025 

with the service provider of the affiliate. 

This situation might arise, for example, 

where the service provider performs 

services for various affiliates relying on 

information maintained in and accessed 

from a common database. In certain 

circumstances, the covered affiliate 

whose financial products or services are 

being marketed may communicate with 

the service provider, yet the service 

provider is still acting on behalf of the 

affiliate when it uses that affiliate’s 

eligibility information in connection 

with marketing the covered affiliate’s 

financial products or services. Proposed 

subparagraph (d)(5) describes the 

conditions under which a service 

provider (including an affiliated or 

third-party service provider) would be 

deemed to be acting on behalf of the 

affiliate that has or previously had a preexisting business relationship with a 

consumer, rather than the covered 

affiliate whose financial products or 

services are being marketed, 

notwithstanding direct communications 

between the covered affiliate and the 

service provider. 

Proposed subparagraph (d)(5) builds 

upon the concept of control of a service 

provider and thus is a natural outgrowth 

of proposed subparagraph (d)(4). Under 

the conditions set out in subparagraph 

(d)(5), the service provider is acting on 

behalf of an affiliate that obtained the 

eligibility information in connection 

with a pre-existing business relationship 

with the consumer because, inter alia, 

the affiliate controls the actions of the 

service provider in connection with the 

service provider’s receipt and use of the 

eligibility information. This provision is 

designed to minimize uncertainty that 

may arise from application of the facts 

and circumstances test in subparagraph 

(d)(3) to cases that involve direct 

communications between a service 

provider and a covered affiliate whose 

financial products and services will be 

marketed to consumers. 

In particular, proposed subparagraph 

(d)(5) provides that a covered affiliate 

does not make a solicitation subject to 

this subpart if a service provider 

receives eligibility information 

(regardless of whether such information 

is received through a common database 

or otherwise) from an affiliate and the 

service provider uses that eligibility 

information to market the covered 

affiliate’s financial products or services 

to the consumer, only when five 

conditions are met. 

Those five conditions are: 

• First, the affiliate controls access to 

and use of its eligibility information by 

the service provider (including the right 

to establish specific terms and 

conditions under which the service 

provider may use such information to 

market the financial products or 

services of the covered affiliate that does 

not have such relationship). This 

requirement must be set forth in a 

written agreement between the affiliate 

and the service provider. The affiliate 

may demonstrate control by, for 

example, establishing and implementing 

reasonable policies and procedures 

applicable to the service provider’s 

access to and use of its eligibility 

information. 

• Second, the affiliate establishes 

specific terms and conditions under 

which the service provider may access 

and use that eligibility information to 

market the financial products or 

services of the covered affiliate that does 

not have a pre-existing business 

relationship (or those of affiliates 

generally) to the consumer, and 

periodically evaluates the service 

provider’s compliance with those terms 

and conditions. These terms and 

conditions may include the identity of 

the affiliated companies whose financial 

products or services may be marketed to 

the consumer by the service provider, 

the types of financial products or 

services of affiliated companies that 

may be marketed, and the number of 

times the consumer may receive 

marketing materials. The affiliate must 

set forth in writing the specific terms 

and conditions, but need not set forth 

such terms and conditions in a written 

agreement. If a periodic evaluation by 

the affiliate that has or previously had 

a pre-existing business relationship with 

a consumer reveals that the service 

provider is not complying with those 

terms and conditions, the Commission 

expects the affiliate to take appropriate 

corrective action. 

• Third, the affiliate requires the 

service provider to implement 

reasonable policies and procedures 

designed to ensure that the service 

provider uses its eligibility information 

in accordance with the terms and 

conditions established by the such 

affiliate relating to the marketing of the 

financial products or services of the 

covered affiliate that does not have a 

pre-existing business relationship. This 

requirement must be set forth in a 

written agreement between the affiliate 

and the service provider. 

• Fourth, the affiliate that has or 

previously had a pre-existing business 

relationship with a consumer is 

identified on or with the marketing 

materials provided to the consumer. 

This requirement will be construed 

flexibly. For example, the affiliate may 

be identified directly on the marketing 

materials, on an introductory cover 

letter, on other documents included 

with the marketing materials, such as a 

periodic statement, or on the envelope 

which contains the marketing materials. 

• Fifth, the covered affiliate that does 

not have a pre-existing business 

relationship with the consumer does not 

directly use the eligibility information 

of the affiliate that does have such 

relationship in the manner described in 

section 162.3(d)(1)(ii). These five 

conditions together ensure that the 

service provider is acting on behalf of 

the affiliate because that affiliate 

controls the service provider’s receipt 

and use of such affiliate’s eligibility 

information. 

Section 162.4—Scope and Duration of 

Opt Out 

Scope of Opt Out 

The scope of the opt-out election is 

derived from language of section 

624(a)(2)(A) of the FCRA and generally 

depends upon the content of the opt-out 

notice. Proposed section 162.4(a)(1) 

provides that, except as otherwise 

provided in that section, a consumer’s 

election to opt out prohibits any covered 

affiliate subject to the scope of the optout notice from using the eligibility 

information received from another 

affiliate as described in the notice to 

make solicitations for marketing 

purposes to the consumer. The scope of 

the election in the proposed regulations 

is consistent with the scope of the final 

regulations promulgated by the 

Agencies. 

Proposed section 162.4(a)(2)(i) 

clarifies that, in the context of a 

continuing relationship, an opt-out 

notice may apply to eligibility 

information obtained in connection 

with a single continuing relationship, 

multiple continuing relationships, 

continuing relationships established 

subsequent to delivery of the opt-out 

notice, or any other transaction with the 

consumer. Proposed section 

162.4(a)(2)(ii) provides the following 

examples of a continuing relationship: 

(i) The covered affiliate is a futures 

commission merchant through whom a 

consumer has opened an account, or 

that carries the consumer’s account on 

a fully-disclosed basis, or that effects or 

engages in commodity interest 

transactions with or for a consumer, 

even if the covered affiliate does not 

hold any assets of the consumer; (ii) the 

covered affiliate is an introducing 

broker that solicits or accepts specific 

orders for trades; (iii) the covered 

affiliate is a commodity trading advisor 

with whom a consumer has a contract 

or subscription, either written or oral, 

regardless of whether the advice is 

standardized, or is based on, or tailored 


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66026 Federal Register / Vol. 75, No. 207 / Wednesday, October 27, 2010 / Proposed Rules 

to, the commodity interest or cash 

market positions or other circumstances 

or characteristics of the particular 

consumer; (iv) the covered affiliate is a 

commodity pool operator, and accepts 

or receives from the consumer, funds, 

securities, or property for the purpose of 

purchasing an interest in a commodity 

pool; (v) the covered affiliate holds 

securities or other assets as collateral for 

a loan made to the consumer, even if the 

covered affiliate did not make the loan 

or do not affect any transactions on 

behalf of the consumer; or (vi) the 

covered affiliate regularly effects or 

engages in commodity interest 

transactions with or for a consumer 

even if covered affiliate does not hold 

any assets of the consumer. 

Proposed section 162.4(a)(3)(i) limits 

the scope of an opt-out notice that is not 

connected with a continuing 

relationship. This section provides that 

if there is no continuing relationship 

between the consumer and a covered 

affiliate or its affiliate, and if the 

covered affiliate or its affiliate provides 

an opt-out notice to a consumer that 

relates to eligibility information 

obtained in connection with a 

transaction with the consumer, such as 

an isolated transaction, the opt-out 

notice only applies to eligibility 

information obtained in connection 

with that transaction. The notice cannot 

apply to eligibility information that may 

be obtained in connection with 

subsequent transactions or a continuing 

relationship that may be subsequently 

established by the consumer with the 

covered affiliate or its affiliate. Proposed 

section 162.4(a)(3)(ii) provides the 

following examples of where no 

continuing relationship exists: (i) The 

covered affiliate has acted solely as a 

‘‘finder’’ for a futures commission 

merchant, and the covered affiliate does 

not solicit or accept specific orders for 

trades; or (ii) the covered affiliate has 

solicited the consumer to participate in 

a pool or to direct his or her account 

and he or she has not provided the 

covered affiliate with funds to 

participate in a pool or entered into any 

agreement with the covered affiliate to 

direct his or her account. 

Proposed section 162.4(a)(4) provides 

that a consumer may be given the 

opportunity to choose from a menu of 

alternatives when electing to prohibit 

solicitations. An opt-out notice may give 

the consumer the opportunity to elect to 

prohibit: solicitations from certain types 

of affiliates covered by the opt-out 

notice but not other types of affiliates 

covered by the notice; solicitations 

based on certain types of eligibility 

information but not other types of 

eligibility information; or solicitations 

by certain methods of delivery but not 

other methods of delivery, so long as 

one of the alternatives is the 

opportunity to prohibit all solicitations 

from all of the affiliates that are covered 

by the notice. The Commission believes 

that the language of section 624(a)(2)(A) 

of the FCRA requires the opt-out notice 

to contain a single opt-out option for all 

solicitations within the scope of the 

notice. The Commission solicits 

comments as to whether it would be 

burdensome for consumers to receive a 

number of different opt-out notices, 

even from the same affiliate, under the 

circumstances described above. 

Proposed section 162.4(a)(5) contains 

a special rule for notice following 

termination of a continuing 

relationship. This proposed regulation 

provides that a consumer must be given 

a new opt-out notice if, after all 

continuing relationships with a covered 

affiliate or its affiliate have been 

terminated, the consumer subsequently 

establishes a new continuing 

relationship with the covered affiliate or 

the same or a different affiliate and the 

consumer’s eligibility information is 

used to make a solicitation. In addition, 

this section affords the consumer and 

the company a fresh start following 

termination of all continuing 

relationships by requiring a new opt-out 

notice if a new continuing relationship 

is subsequently established. 

The new opt-out notice must apply, at 

a minimum, to eligibility information 

obtained in connection with the new 

continuing relationship. The new optout notice may apply more broadly to 

information obtained in connection 

with a terminated relationship and give 

the consumer the opportunity to opt out 

with respect to eligibility information 

obtained in connection with both the 

terminated and the new continuing 

relationships. Further, the consumer’s 

failure to opt out does not override a 

prior opt-out election by the consumer 

applicable to eligibility information 

obtained in connection with a 

terminated relationship that is still in 

effect, regardless of whether the new 

opt-out notice applies to eligibility 

information obtained in connection 

with the terminated relationship. The 

Commission notes, however, that where 

a consumer was not given an opt-out 

notice in connection with the initial 

continuing relationship because 

eligibility information obtained in 

connection with that continuing 

relationship was not shared with 

affiliates for use in making solicitations, 

an opt-out notice provided in 

connection with a new continuing 

relationship would have to apply to any 

eligibility information obtained in 

connection with the terminated 

relationship that is to be shared with 

affiliates for use in making future 

solicitations. 

Duration of Opt-Out Election 

Proposed section 162.4(b) provides 

that an opt-out election must be 

effective for a period of at least five 

years beginning when the consumer’s 

opt-out election is received and 

implemented, unless the consumer 

subsequently revokes the opt-out 

election in writing or, if the consumer 

agrees, electronically. The Commission 

believes that this approach is consistent 

with the approach taken by the 

Agencies and the Commission’s 

approach in the GLB Act privacy rule in 

Part 160. The Commission does not 

believe it is necessary or appropriate to 

permit oral revocation. 

The Commission believes that this 

approach provides companies with 

flexibility in complying with the 

proposed regulations. For example, to 

avoid the cost and burden of tracking 

consumer opt outs over five-year 

periods with varying start and end dates 

and sending out extension notices in 

five-year cycles, some companies may 

choose to treat the consumer’s opt-out 

election as effective for a period longer 

than five years, including in perpetuity, 

unless revoked by the consumer. A 

company that chooses to honor a 

consumer’s opt-out election for more 

than five years would not violate the 

proposed regulations. 

The Commission seeks comment on 

whether the consumers should be given 

the opportunity to opt-out permanently 

from receiving marketing solicitations 

from affiliates regardless of the opt-out 

period stated in the opt-out notice. This 

approach would provide consumers 

with the ability to avoid receiving and 

responding to extension notices every 

five years. 

Time Period To Opt Out 

Proposed section 162.4(c) provides 

that a consumer may opt out at any 

time. Indeed, a consumer may opt out 

even if the consumer did not opt out in 

response to the initial opt-out notice or 

if the consumer’s election to opt out was 

not prompted by an opt-out notice. 

Regardless of when the consumer opts 

out, the opt out must be effective for a 

period of at least five years. 

No Effect on Opt-Out Period 

Proposed section 162.4(d) provides 

that an opt-out period may not be 

shortened by sending a renewal notice 

to the consumer before expiration of the 

opt-out period, even if the consumer 

does not renew the opt out. 


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Federal Register / Vol. 75, No. 207 / Wednesday, October 27, 2010 / Proposed Rules 66027 

Section 162.5—Contents of Opt-Out 

Notice; Consolidated and Equivalent 

Notices 

Contents in General 

The Commission believes that 

proposed section 162.5(a) reflects the 

intent of Congress, as expressed in 

section 624(a)(2)(B) of the FCRA, which 

provides that the notice required by this 

proposed regulation must be in writing, 

‘‘clear, conspicuous, and concise,’’ and 

that the method for opting out must be 

‘‘simple.’’ Specifically, section 

162.5(a)(1)(i)(A) provides that all optout notices must identify, by name, the 

affiliate that has or previously had a preexisting business relationship with a 

consumer and is providing the notice. 

Section 162.5(a)(1)(B) provides that a 

group of affiliates may jointly provide 

the notice. If the notice is provided 

jointly by multiple affiliates and each 

affiliate shares a common name, then 

the notice may indicate that it is being 

provided by multiple companies with 

the same name or multiple companies 

in the same group or family of 

companies. Acceptable ways of 

identifying the multiple affiliates 

providing the notice include stating that 

the notice is provided by ‘‘all of the XYZ 

companies,’’ or by listing the name of 

each affiliate providing the notice. A 

representation that the notice is 

provided by ‘‘the XYZ commodity 

trading advisors and commodity pools’’ 

applies to all companies in those 

categories, not just some of those 

companies. But if the affiliates 

providing the notice do not all share a 

common name, then the notice must 

either separately identify each affiliate 

by name or identify each of the common 

names used by those affiliates. 

Proposed section 162.5(a)(1)(ii) 

provides that an opt-out notice must 

contain a list of the affiliates or types of 

affiliates covered by the notice. The 

notice may apply to multiple affiliates 

and to companies that become affiliates 

after the notice is provided to the 

consumer. The rule for identifying the 

affiliates covered by the notice is 

substantially similar to the rule for 

identifying the affiliates providing the 

notice in section 162.5(a)(i), as 

described in the previous paragraph. 

Proposed sections 162.5(a)(1)(iii)– 

(vii), respectively, require the opt-out 

notice to include the following: A 

general description of the types of 

eligibility information that may be used 

to make solicitations to the consumer; a 

statement that the consumer may elect 

to limit the use of eligibility information 

to make solicitations to the consumer; a 

statement that the consumer’s election 

will apply for the specified period of 

time stated in the notice and, if 

applicable, that the consumer will be 

allowed to renew the election once that 

period expires; if the notice is provided 

to consumers who may have previously 

opted out, that the consumer who has 

chosen to limit marketing offers does 

not need to act again until the consumer 

receives a renewal notice; and a 

reasonable and simple method for the 

consumer to opt out. 

Proposed section 162.5(a)(2) provides 

that the opt-out notice must specify the 

length of the opt-out period, if the 

consumer is granted an opt-out period 

longer than five years. Proposed section 

162.5(a)(3), however, provides that a 

company that subsequently chooses to 

increase the duration of the opt-out 

period that it previously disclosed or 

honor the opt out in perpetuity has no 

obligation to provide a revised notice to 

the consumer. In that case, the result is 

the same as if the company established 

a five-year opt-out period and then did 

not send a renewal notice at the end of 

that period. So long as no solicitations 

are made using eligibility information 

received from an affiliate, there would 

be no violation of the statute or 

regulation for failing to send a renewal 

notice in this situation. A covered 

affiliate receiving eligibility information 

from an affiliate would be prohibited 

from using that information to make 

solicitations to a consumer unless a 

renewal notice is first provided to the 

consumer and the consumer does not 

renew the opt out. 

Use of the model form in Appendix A, 

in appropriate circumstances, would 

comply with paragraph (a), but is not 

required. 

Joint Relationships 

Proposed section 162.5(b) sets out a 

rule that would apply when two or more 

consumers jointly obtain a financial 

product or service from an affiliate 

subject to the rule (referred to in the 

proposed regulation as ‘‘joint 

consumers’’). Under the proposal, an 

affiliate subject to the rule could 

provide a single opt-out notice to joint 

consumers. The notice would have had 

to indicate whether the affiliate would 

consider an opt out by a joint consumer 

as an opt out by all of the associated 

consumers, or whether each consumer 

would have to opt out separately. The 

affiliate could not require all consumers 

to opt out before honoring an opt-out 

election by one of the joint consumers. 

The revised provision is substantively 

similar to the joint relationships 

provision of the GLB Act privacy rule in 

Part 160, except to the extent that rule 

refers to the sharing of information 

among affiliates. The Commission 

requests comments on whether 

information about a joint account 

should be allowed to be used for making 

solicitations to a joint consumer who 

has not opted out. 

Alternative Contents 

Proposed paragraph (c) provides that 

if the consumer is afforded an 

alternative but broader right to opt out 

of receiving marketing than is required 

by this subpart, the requirements of 

proposed section 162.5(a) may be 

satisfied by providing the consumer 

with a clear, conspicuous, and concise 

notice that accurately discloses the 

consumer’s opt-out rights. 

Consolidated and Equivalent Notices 

Proposed section 162.5(d) provides 

that an opt-out notice required by this 

subpart could be coordinated and 

consolidated with any other notice or 

disclosure required to be issued under 

any other provision of law, including 

but not limited to the notice required by 

Title V of the GLB Act. In addition, 

proposed section 162.5(e) provides that 

a notice or other disclosure that is 

equivalent to the notice required by this 

subpart, and that is provided to a 

consumer together with disclosures 

required by any other provision of law, 

would satisfy the requirements of this 

section. 

Including an affiliate marketing optout notice under this subpart and an 

initial or annual notice under the GLB 

Act raises special issues, however, 

because GLB Act notices typically state 

that the consumer does not need to opt 

out again if the consumer previously 

opted-out. This statement would be 

accurate if the company and its affiliates 

choose to make the affiliate marketing 

opt out effective in perpetuity. However, 

if the opt-out period is limited to a 

defined period of five years or more, 

such a statement would not be accurate 

with respect to the extension notice, and 

the notice would have to make clear to 

the consumer the necessity of opting-out 

again in order to extend the opt-out 

election. 

The Commission solicits comments 

on the consolidation of the affiliate 

marketing notice under this subpart 

with the GLB Act privacy notices in Part 

160. 

Model Notices 

Proposed section 162.5(f) states that 

proposed model notices are provided in 

Appendix A of Part 162. The 

Commission has provided these 

proposed model notices to facilitate 

compliance with the proposed rule. It 

should be noted, however, that the 


jlentini on DSKJ8SOYB1PROD with PROPOSALS
66028 Federal Register / Vol. 75, No. 207 / Wednesday, October 27, 2010 / Proposed Rules 

proposed rule does not require use of 

the model notices. 

Section 162.6—Reasonable Opportunity 

to Opt Out 

Proposed paragraph (a) sets forth the 

general rule prohibiting covered 

affiliates from using eligibility 

information about a consumer received 

from an affiliate to make a solicitation 

to such consumer about the covered 

affiliate’s financial products or services, 

unless the consumer is provided a 

reasonable opportunity to opt out, as 

required by the proposed regulation. 

The general rule does not set a 

mandatory waiting period in all cases. 

Instead, proposed paragraph (b) sets 

forth several examples illustrating what 

constitutes a reasonable opportunity to 

opt out. Paragraph (b) does maintain, 

however, a safe harbor of 30 days to 

provide certainty to entities that choose 

to follow the 30-day waiting period. 

Although 30 days is a safe harbor in all 

cases, an affiliate subject to the rule 

providing an opt-out notice may decide, 

at its option, to give consumers more 

than 30 days in which to decide 

whether to opt out. A shorter waiting 

period could be adequate in certain 

situations, depending on the 

circumstances, in accordance with the 

general test for a reasonable opportunity 

to opt out. 

Section 162.7—Reasonable and Simple 

Methods of Opting Out 

Section 624 of the FCRA requires that 

consumers are given reasonable and 

simple methods of opting out. Proposed 

paragraph (a) prohibits covered affiliates 

from using eligibility information about 

a consumer received from an affiliate to 

make a solicitation to such consumer 

about the financial products or services 

of the covered affiliate, unless the 

consumer is provided a reasonable and 

simple method to opt out, as required by 

this proposed regulation. 

Proposed paragraph (b) sets forth 

reasonable and simple methods of 

opting out. Such methods include 

designating a check-off box in a 

prominent position on an opt-out 

election form, including a reply form 

and a self-addressed envelope (in a 

mailing), providing an electronic means 

that can be electronically mailed or 

processed through an Internet Web site, 

providing a toll-free telephone number, 

or exercising an opt-out election 

through whatever means are acceptable 

under a consolidated privacy notice 

required under other laws. 

Proposed paragraph (c) clarifies that 

each consumer may be required to opt 

out through a specific medium, as long 

as that medium is reasonable and 

simple for that consumer. 

Section 162.8—Acceptable Delivery of 

Opt-Out Notices 

Proposed section 162.8(a) provides 

that an affiliate that has or previously 

had a pre-existing business relationship 

with a consumer must deliver an optout notice so that each consumer can 

reasonably be expected to receive actual 

notice. For opt-out notices that are 

delivered electronically at the 

consumer’s election, proposed section 

162.8(b) provides that opt-out notices 

may be delivered either in accordance 

with the electronic disclosure 

provisions in section 101 of the 

Electronic Signatures in Global and 

National Commerce Act, 15 U.S.C. 7001 

et seq. or in accordance with CFTC 

Regulation 1.4. 

Section 162.9—Renewal of Opt Out 

Proposed section 162.9 describes the 

procedures for renewal or extension of 

an opt-out election. Proposed 

subparagraph (a)(1) provides that, after 

the opt-out period expires, and unless 

an exception in section 162.3(c) applies, 

a covered affiliate may not make a 

solicitation to a consumer based on 

eligibility information received by an 

affiliate unless: The consumer has been 

given a renewal notice that complies 

with requirements of this section and 

the other sections 162.6 through 162.8; 

the consumer is given a reasonable 

opportunity and a reasonable and 

simple to renew the opt-out election; 

and the consumer does not opt out. 

Proposed subparagraph (a)(2) provides 

that the renewal period for each renewal 

shall be a period of not less than five 

years. Proposed subparagraph (a)(3) 

outlines which affiliates may provide 

notice required by this section. A 

renewal notice must be provided either 

by: The affiliate that provided the 

previous opt-out notice or its successor; 

or as part of a joint renewal notice from 

two or more members of an affiliated 

group of companies, or their successors, 

that jointly provided the previous optout notice. The Commission believes 

that this subparagraph will provide 

flexibility to account for changes in the 

corporate structure, which may result 

from mergers and acquisitions, 

corporate names changes, and other 

events. 

Proposed paragraph (b) addresses the 

contents of a renewal or extension 

notice. The Commission recognizes that 

the content of the renewal notice differs 

from the content of the initial notice. 

Nothing in the FCRA, however, requires 

identical content in the initial and 

renewal notices. Moreover, the FCRA 

requires the Commission to provide 

specific guidance to ensure that opt-out 

notices are clear, conspicuous and 

concise. The Commission believes that 

it is unreasonable to expect consumers, 

upon receipt of a renewal notice, to 

remember that they previously opted 

out five years ago (or longer) or, even if 

they do remember, to know that they 

must opt out again in order to renew 

their opt-out election. Therefore, to 

ensure that the renewal notice is 

meaningful, the Commission is 

proposing that the renewal notice must 

remind the consumer he or she must opt 

out again to renew the opt-out election 

and continue to limit the solicitations 

from covered affiliates. In addition, 

proposed paragraph (b) requires that the 

notice must accurately disclose the 

same items required to be disclosed in 

the initial opt-out notice under 

proposed section 162.5(a), along with a 

statement explaining that the 

consumer’s prior opt-out election has 

expired or is about to expire, as 

applicable, and that if the consumer 

wishes to keep the consumer’s opt-out 

election in force, the consumer must opt 

out again. 

Proposed paragraph (c) addresses the 

timing of the renewal notice and 

provides that a renewal notice can be 

given to the consumer either a 

reasonable period of time before the 

expiration of the opt-out period, or any 

time after the expiration of the opt-out 

period but before solicitations that 

would have been prohibited by the 

expired opt-out election are made to the 

consumer. Providing the renewal notice 

to a consumer within a reasonable 

period of time before the expiration of 

the opt-out period is appropriate to 

facilitate the smooth transition of 

consumers that choose to change their 

election. A renewal notice given too far 

in advance of the expiration of the optout period, however, may be confusing 

to consumers. The Commission does not 

propose to set a fixed time for what 

would constitute a reasonable period of 

time before the expiration of the opt-out 

period to send a renewal notice, because 

a reasonable period of time may depend 

upon the amount of time afforded to the 

consumer for a reasonable opportunity 

to opt out, the amount of time necessary 

to process opt outs, and other factors. 

Nevertheless, providing a renewal 

notice on or with the last annual privacy 

notice required by the GLB Act privacy 

provisions sent to the consumer before 

the expiration of the opt-out period 

shall be deemed reasonable in all cases. 

Proposed paragraph (d) clarifies that 

sending a renewal notice to the 

consumer before the expiration of the 

opt-out period does not shorten the fiveVerDate Mar<15>2010 16:25 Oct 26, 2010 Jkt 223001 PO 00000 Frm 00034 Fmt 4702 Sfmt 4702 E:\FR\FM\27OCP1.SGM 27OCP1

jlentini on DSKJ8SOYB1PROD with PROPOSALS
Federal Register / Vol. 75, No. 207 / Wednesday, October 27, 2010 / Proposed Rules 66029 

14The term ‘‘consumer report’’ is defined in 

section 603(d)(1) of the FCRA as ‘‘any written, oral, 

or other communication of any information by a 

consumer reporting agency bearing on a consumer’s 

credit worthiness, credit standing, credit capacity, 

character, general reputation, personal 

characteristics, or mode of living which is used or 

expected to be used or collected in whole or in part 

for the purpose of serving as a factor in establishing 

the consumer’s eligibility for [several purposes, 

including employment, the provision of credit or 

insurance].’’ 

year opt-out period, even if the 

consumer does not renew the opt-out 

election. 

B. Disposal Rules 

As noted above, section 1088 of the 

Dodd-Frank Act also amends section 

628 of the FCRA, which directs the 

Commission to adopt comparable and 

consistent rules with the Agencies 

regarding the disposal of sensitive 

consumer report information. The 

purpose of these rules is to reduce the 

risk of identity theft and other consumer 

harm from improper disposal of a 

consumer report or any record derived 

from one. The proposed disposal rules 

apply to any CFTC registrant that, for a 

business purpose, maintains or 

otherwise possesses such consumer 

report information. 

The general disposal requirement 

provides that CFTC registrants covered 

by the proposed regulation ‘‘take 

reasonable measures to protect against 

unauthorized access to or use of the 

information in connection with its 

disposal.’’ The standard for disposal is 

flexible to allow CFTC registrants to 

determine what measures are reasonable 

based on the sensitivity of the 

information, the costs and benefits of 

different disposal methods, and relevant 

changes in technology over time. The 

proposed disposal rule’s flexibility 

should also facilitate compliance for 

smaller CFTC registrants. 

In the discussion that follows, the 

Commission solicits comment on 

specific aspects of the proposed 

disposal rules on a section-by-section 

basis. 

Section 162.2—Definitions 

In addition to the definitions 

previously discussed above, the 

proposed regulations to implement 

section 628 of the FCRA require the 

addition of the following terms to the 

definition section of the new Part 162. 

Consumer Information 

Proposed paragraph (h) defines the 

term ‘‘consumer information’’ to mean 

any record about an individual, whether 

in paper, electronic, or other form that 

is a consumer report or is derived from 

a consumer report.14 Consumer 

information also means a compilation of 

such records. Consumer information 

does not include information that does 

not identify individuals, such as 

aggregate information or blind data. The 

Commission believes that a broad 

definition of the term, which includes 

all types of records that are consumer 

reports, or contain consumer 

information derived from consumer 

reports, will best effectuate the purposes 

of the FCRA. However, under this 

definition, information which does not 

identify a particular consumer would 

not be included. The Commission 

believes that limiting the definition to 

information which identifies particular 

consumers is consistent with the 

purpose of the FCRA. 

Dispose or Disposal 

Proposed paragraph (i) defines the 

terms ‘‘dispose’’ or ‘‘disposal’’ to mean 

the discarding or abandonment of 

consumer information or the sale, 

donation, or transfer of any medium, 

including computer equipment, upon 

which consumer information is stored. 

The sale, donation, or transfer of 

consumer information would not be 

considered ‘‘disposal’’ under the 

proposed regulation. For example, an 

entity subject to the proposed disposal 

rule that transfers consumer information 

to a third party for marketing purposes 

would not be discarding the information 

for the purposes of the proposed 

disposal rule. If the entity donates 

computer equipment on which 

consumer information is stored, 

however, the donation would be 

considered a disposal under the 

proposed disposal rule. The 

Commission requests comments on this 

definition. 

Section 162.21—Disposal Rules 

Proposed section 162.21 implements 

section 628(a)(1) of the FCRA. Proposed 

paragraph (a) would require any covered 

affiliate to adopt must adopt reasonable, 

written policies and procedures that 

address administrative, technical, and 

physical safeguards for the protection of 

consumer information. The proposal 

requires these written policies and 

procedures to be reasonably designed to: 

(1) Insure the security and 

confidentiality of consumer 

information; (2) protect against any 

anticipated threats or hazards to the 

security or integrity of consumer 

information; and (3) protect against 

unauthorized access to or use of 

consumer information that could result 

in substantial harm or inconvenience to 

any consumer. 

Proposed paragraph (b) would require 

that any person that maintains or 

otherwise possesses consumer 

information to take ‘‘reasonable 

measures to protect against 

unauthorized access to or use of the 

information in connection with its 

disposal.’’ The Commission recognizes 

that there are few foolproof methods of 

record destruction. Therefore, the 

proposed regulation does not require 

persons subject to the rule to ensure 

perfect destruction of consumer 

information in every instance; rather, it 

requires covered entities to take 

reasonable measures to protect against 

unauthorized access to or use of the 

information in connection with its 

disposal. 

In determining what measures are 

‘‘reasonable’’ under this subpart, the 

Commission expects that entities within 

the scope of the proposed regulation 

would consider the sensitivity of the 

consumer information, the nature and 

size of the entity’s operations, the costs 

and benefits of different disposal 

methods, and relevant technological 

changes. ‘‘Reasonable measures’’ are 

very likely to require elements such as 

the establishment of policies and 

procedures governing disposal, as well 

as appropriate employee training. 

The flexible standard for disposal in 

the proposed rule would allow persons 

subject to the rule to make decisions 

appropriate to their particular 

circumstances and should minimize the 

disruption of existing practices to the 

extent that they already provide 

appropriate protections for consumers. 

It is also intended to minimize the 

burden of compliance for smaller 

entities. 

Despite the benefits of a flexible 

‘‘reasonableness’’ standard, the 

Commission recognizes that such a 

standard could leave entities within the 

scope of the proposed regulations with 

some uncertainty about compliance. 

While each entity would have to 

evaluate what is appropriate for its size 

and the complexity of its operations, 

proposed paragraph (c) sets forth the 

following examples of what the 

Commission believes constitute 

‘‘reasonable’’ disposal measures for 

purposes of the proposed regulation: 

• Implementing and monitoring 

compliance with policies and 

procedures that require the burning, 

pulverizing, or shredding of papers 

containing consumer information so 

that the information cannot practicably 

be read or reconstructed; 

• Implementing and monitoring 

compliance with policies and 

procedures that require the destruction 

or erasure of electronic media 

containing consumer information so 


jlentini on DSKJ8SOYB1PROD with PROPOSALS
66030 Federal Register / Vol. 75, No. 207 / Wednesday, October 27, 2010 / Proposed Rules 

15The heads of the other Federal agencies are: 

The Comptroller of the Currency; the Director of the 

Office of Thrift Supervision; the Secretary of the 

Department of Housing and Urban Development; 

the Director of the Office of Management and 

Budget; the Chairman of the National Credit Union 

Administration Board; and the Chairperson of the 

Corporation. 

16See 75 FR 57252–02 (Sept. 20, 2010). 17 7 U.S.C. 19(a). 

that the information cannot practically 

be read or reconstructed; and 

• After due diligence, entering into 

and monitoring compliance with a 

written contract with another party 

engaged in the business of record 

destruction to dispose of consumer 

information in a manner that is 

consistent with this rule. 

The Commission invites comment on 

the proposed standard for disposal. In 

particular, the Commission seeks 

comment on whether the proposed 

‘‘reasonableness’’ standard provides 

sufficient guidance to CFTC registrants. 

The Commission also seeks comment on 

whether the proposed disposal rule 

should include alternative standards, 

specify particular disposal methods, or 

should provide examples, and what 

those examples should be. 

Proposed paragraph (d) makes clear 

that nothing in the proposed disposal 

rule is intended to create a requirement 

that a covered entity maintain or destroy 

any record pertaining to an individual. 

The rule also is not intended to affect 

any requirement imposed under any 

other provision of law to maintain or 

destroy such records, particularly the 

record keeping requirements located in 

Part 1 of the Commission’s Regulations. 

C. Effective Date 

Pursuant to section 1100H of the 

Dodd-Frank Act, the Commission 

proposes to make the proposed 

regulations—the affiliate marketing 

rules and the disposal rules—become 

effective on the ‘‘designated transfer 

date’’ of authority from various Federal 

agencies to the Bureau. Section 1062 of 

the Dodd-Frank Act provides that the 

‘‘designated transfer date’’ is a date 

designated in the FEDERAL REGISTER no 

later than 60 days after the enactment of 

the Dodd-Frank Act by the Secretary of 

the Treasury, the Chairman of the Board 

of Governors, the Chairman of the 

Federal Trade Commission, and several 

other Federal agencies.15 On September 

20, 2010, these Federal agencies issued 

a notice designating July 21, 2011 as the 

designated transfer date.16 As a result, 

the Commission proposes to adopt the 

affiliate marketing rules and the 

disposal rules on that date. 

III. Cost-Benefit Analysis 

Section 15(a) of the CEA 17 requires 

the Commission to consider the costs 

and benefits of its actions before issuing 

an order under the CEA. By its terms, 

section 15(a) does not require the 

Commission to quantify the costs and 

benefits of an order or to determine 

whether the benefits of the order 

outweigh its costs; rather, it requires 

that the Commission ‘‘consider’’ the 

costs and benefits of its actions. Section 

15(a) further specifies that the costs and 

benefits shall be evaluated in light of 

five broad areas of market and public 

concern: (1) Protection of market 

participants and the public; (2) 

efficiency, competitiveness and 

financial integrity of futures markets; (3) 

price discovery; (4) sound risk 

management practices; and (5) other 

public interest considerations. The 

Commission may in its discretion give 

greater weight to any one of the five 

enumerated areas and could in its 

discretion determine that, 

notwithstanding its costs, a particular 

order is necessary or appropriate to 

protect the public interest or to 

effectuate any of the provisions or 

accomplish any of the purposes of the 

CEA. 

The proposed regulations would 

implement new statutory provisions 

enacted by Title X of the Dodd-Frank 

Act. These proposed regulations would 

require CFTC registrants to do two 

things with respect to certain consumer 

information. First, the proposed 

regulations would require CFTC 

registrants to provide consumers with 

the opportunity to prohibit affiliates 

from using certain information to make 

marketing solicitations to consumers. 

Second, the proposed rules would 

require CFTC registrants that possess or 

maintain consumer report information 

in connection with their business 

activities to develop and implement a 

written program for the proper disposal 

of such information. 

With respect to costs, the Commission 

has determined that costs to market 

participants would be de minimis 

because: (1) The Commission is 

providing model notices in the 

proposed regulations in order to assist 

these participants in complying with the 

affiliate marketing rules; (2) the affiliate 

marketing rules only require periodic 

notice (i.e., at a maximum, companies 

would have to provide notice to a 

consumer once every five years; at a 

minimum, companies would have to 

provide notice only once per consumer); 

(3) market participants can file 

consolidated and equivalent notices in 

order to comply with the affiliate 

marketing rules; and (4) the disposal 

rules were designed to provide market 

participants with the greatest flexibility 

in the development and implementation 

of a disposal program (which may vary 

according to a company’s size and the 

complexity of its operations, the costs 

and benefits of available disposal 

methods, and the sensitivity of 

information involved). The Commission 

also has determined that the costs to the 

general public are: (1) Absent the 

implementation of the affiliate 

marketing rules, consumers would have 

no control over both the use of their 

personal information, and the number of 

solicitations such consumers would 

receive from affiliates of company with 

which they have a pre-existing business 

relationship; and (2) absent the 

implementation of the disposal rules, 

would increase the chances that 

consumer information would be 

accessible to third parties who may use 

such information for identity theft or 

other unlawful purposes. 

With respect to benefits, the 

Commission has determined that, 

through the implementation of the 

affiliate marketing rules, consumers 

generally will be able to opt out of 

receiving unsolicited and targeted 

materials from businesses with which 

the consumers have no pre-existing 

business relationship. In addition, the 

Commission has determined that, as a 

result of the implementation of the 

disposal rules, the potential for the 

misuse of consumer information will 

greatly decrease. 

The Commission invites public 

comment on its cost-benefit 

considerations. Commenters are also are 

invited to submit any data or other 

information that they may have 

quantifying or qualifying the costs and 

benefits of the proposed regulations 

with their comment letters. 

IV. Paperwork Reduction Act 

Provisions of proposed Part 162 

would result in new collection of 

information requirements within the 

meaning of the Paperwork Reduction 

Act of 1995 (‘‘PRA’’). The Commission 

therefore is submitting this proposal to 

the Office of Management and Budget 

(‘‘OMB’’) for review in accordance with 

44 U.S.C. 3507(d) and 5 CFR 1320.11. 

The title for this collection of 

information is ‘‘Part 162—Protection of 

Consumer Information Under the Fair 

Credit Reporting Act.’’ If adopted, 

responses to this new collection of 

information would be mandatory. The 

Commission will protect proprietary 

information according to the Freedom of 


jlentini on DSKJ8SOYB1PROD with PROPOSALS
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18See the National Futures Association’s (‘‘NFA’’) 

Internet Web site at: http://www.nfa.futures.org/ 

NFA-registration/NFA-membership-anddues.HTML for the most up-to-date number of CFTC 

registrants. For the purposes of the PRA calculation, 

Commission staff used the number of registered 

futures commission merchants, commodity trading 

advisors, commodity pool operators and 

introducing brokers on the NFA’s Web site as of 

August 31, 2010. 

Commission staff estimated the number of swap 

dealers and major swap participants, which staff 

believes will register with the Commission 

following the issuance of final rules under the 

Dodd-Frank Act further defining the terms ‘‘swap 

dealers’’ and ‘‘major swap participants’’ and setting 

forth a registration regime for these entities. While 

staff believes that there may likely be approximately 

200 swap dealers, we have taken a conservative 

approach in estimating that there will be 250 swap 

dealers for Paperwork Reduction Act purposes. 

Some of the entities that were registered as 

futures commission merchants as of August 31, 

2010 will soon register as retail foreign exchange 

dealers. Consequently, the total number of CFTC 

registrants will not be affected as a result of the 

change in registration from future commission 

merchants to retail foreign exchange dealers. 

19 5 U.S.C. 601 et seq. 

20 5 U.S.C. 601 et seq. 

21Previous determinations for FCMs at 47 FR 

18618, 18619 (1982) and CPOs at 47 FR 18618, 

18619 (1982). 

Information Act and 17 CFR part 145, 

‘‘Commission Records and Information.’’ 

In addition, section 8(a)(1) of the CEA 

strictly prohibits the Commission, 

unless specifically authorized by the 

CEA, from making public ‘‘data and 

information that would separately 

disclose the business transactions or 

market positions of any person and 

trade secrets or names of customers.’’ 

The Commission also is required to 

protect certain information contained in 

a government system of records 

according to the Privacy Act of 1974, 5 

U.S.C. 552a. 

1. Information Provided by Reporting 

Entities/Persons 

Under proposed Part 162, reporting or 

recordkeeping CFTC registrants, which 

presently would include approximately 

3,172 persons (including an estimate of 

the number of new CFTC registrants 

pursuant to Title VII of the Dodd-Frank 

Act),18 would be required to collect 

information and keep records for the 

purposes of providing opt-out notices to 

consumers at a maximum of at least 

every five years. The proposed 

collection for the affiliate marketing 

rules is estimated to involve 0.01 

burden hours per report or record. The 

estimated number of opt-out notices per 

five-year period is 412,000. The 

estimated aggregate number of burden 

hours each five-year period is 13,068.64 

burden hours for the affiliate marketing 

rules. 

The same number of persons would 

be required to develop written disposal 

plans only once. The proposed 

collection for the disposal rules is 

estimated to involve between three to 10 

burden hours per plan, at an average of 

3.5 burden hours, for an aggregate of 

11,102 burden hours. 

2. Information Collection Comments 

The Commission invites the public 

and other Federal agencies to comment 

on any aspect of the reporting and 

recordkeeping burdens discussed above. 

Pursuant to 44 U.S.C. 3506(c)(2)(B), the 

Commission solicits comments in order 

to: (i) Evaluate whether the proposed 

collection of information is necessary 

for the proper performance of the 

functions of the Commission, including 

whether the information will have 

practical utility; (ii) evaluate the 

accuracy of the Commission’s estimate 

of the burden of the proposed collection 

of information; (iii) determine whether 

there are ways to enhance the quality, 

utility, and clarity of the information to 

be collected; and (iv) minimize the 

burden of the collection of information 

on those who are to respond, including 

through the use of automated collection 

techniques or other forms of information 

technology. 

Comments may be submitted directly 

to the Office of Information and 

Regulatory Affairs, by fax at (202) 395– 

6566 or by e-mail at 

OIRAsubmissions@omb.eop.gov. Please 

provide the Commission with a copy of 

submitted comments so that all 

comments can be summarized and 

addressed in the final rule preamble. 

Refer to the ADDRESSES section of this 

notice of proposed rulemaking for 

comment submission instructions to the 

Commission. A copy of the supporting 

statements for the collections of 

information discussed above may be 

obtained by visiting RegInfo.gov. OMB 

is required to make a decision 

concerning the collection of information 

between 30 and 60 days after 

publication of this release. 

Consequently, a comment to OMB is 

most assured of being fully effective if 

received by OMB (and the Commission) 

within 30 days after publication of this 

notice of proposed rulemaking. 

V. Regulatory Flexibility Act 

The Regulatory Flexibility Act 

(‘‘RFA’’) 19 requires that agencies 

consider whether the regulations they 

propose will have a significant 

economic impact on a substantial 

number of small entities and, if so, 

provide a regulatory flexibility analysis 

respecting the impact.20 The regulations 

proposed by the Commission shall affect 

only futures commission merchants, 

introducing brokers, commodity trading 

advisors, commodity pool operators, 

swap dealers and major swap 

participants. The Commission has 

determined that the notice obligations 

under this proposed regulation will not 

create a significant economic impact on 

a substantial number of small entities. 

Moreover, the Commission previously 

has determined that futures commission 

merchants and commodity pool 

operators are not small entities for 

purposes of the RFA.21 Accordingly, the 

Chairman, on behalf of the Commission, 

hereby certifies pursuant to 5 U.S.C. 

605(b) that the proposed rules, will not 

have a significant impact on a 

substantial number of small entities. 

VI. Text of Proposed Rules 

List of Subjects in 17 CFR Part 162 

Consumer protection, Privacy. 

For the reasons stated in the 

preamble, the Commodity Futures 

Trading Commission proposes to add 17 

CFR part 162 to read as follows: 

PART 162—PROTECTION OF 

CONSUMER INFORMATION UNDER 

THE FAIR CREDIT REPORTING ACT 

Sec. 

162.1 Purpose and scope. 

162.2 Definitions. 

Subpart A—Business Affiliate Marketing 

Rules 

162.3 Affiliate marketing opt out and 

exceptions. 

162.4 Scope and duration of opt out. 

162.5 Contents of opt-out notice; 

consolidated and equivalent notices. 

162.6 Reasonable opportunity to opt out. 

162.7 Reasonable and simple methods of 

opting out. 

162.8 Delivery of opt-out notices 

162.9 Renewal of opt out. 

162.10–162.20 [Reserved] 

Subpart B—Disposal Rules 

162.21 Proper disposal of consumer 

information. 

Authority: Sec. 1088, Pub. L. 111–203; 124 

Stat. 1376 (2010). 

§ 162.1 Purpose and scope. 

(a) Purpose. The purpose of this part 

is to implement various provisions in 

the Fair Credit Reporting Act, 15 U.S.C. 

1681, et seq. (‘‘FCRA’’), which provide 

certain protections to consumer 

information. 

(b) Scope. This part applies to certain 

consumer information held by the 

entities listed below. This part shall 

apply to futures commission merchants, 

retail foreign exchange dealers, 

commodity trading advisors, commodity 

pool operators, introducing brokers, 


jlentini on DSKJ8SOYB1PROD with PROPOSALS
66032 Federal Register / Vol. 75, No. 207 / Wednesday, October 27, 2010 / Proposed Rules 

swap dealers and major swap 

participants, regardless of whether they 

are required to register with the 

Commission. This part does not apply to 

foreign futures commission merchants, 

foreign retail foreign exchange dealers, 

commodity trading advisors, commodity 

pool operators, introducing brokers, 

swap dealers and major swap 

participants unless such entity registers 

with the Commission. Nothing in this 

part modifies limits or supersedes the 

requirements set forth in Part 160 of this 

title. 

(c) Examples. The examples in this 

part are not exclusive. Compliance with 

an example, to the extent applicable, 

constitutes compliance with this part. 

Examples in a section illustrate only the 

issue described in the section and do 

not illustrate any other issue that may 

arise in this part. 

§ 162.2 Definitions. 

(a) Affiliate. The term ‘‘affiliate’’ of a 

means any company that is under 

common ownership or common 

corporate control with a covered 

affiliate. 

(b) Clear and conspicuous. The term 

‘‘clear and conspicuous’’ means 

reasonably understandable and 

designed to call attention to the nature 

and significance of the information 

presented in the notice. 

(c) Common ownership or common 

corporate control. The term ‘‘common 

ownership or common corporate 

control’’ means the power to exercise a 

controlling influence over the 

management or policies of a company 

whether through ownership of 

securities, by contract, or otherwise. 

Any person who owns beneficially, 

either directly or through one or more 

controlled companies, more than 25 

percent of the voting securities of any 

company is presumed to control the 

company. Any person who does not 

own more than 25 percent of the voting 

securities of a company will be 

presumed not to control the company. 

(d) Company. The term ‘‘company’’ 

means any corporation, limited liability 

company, business trust, general or 

limited partnership, association, or 

similar organization. 

(e) Concise.— 

(1) In general. The term ‘‘concise’’ 

means a reasonably brief expression or 

statement. 

(2) Combination with other required 

disclosures. A notice required by this 

part may be concise even if it is 

combined with other disclosures 

required or authorized by Federal or 

state law. 

(f) Consumer. The term ‘‘consumer’’ 

means an individual person. 

(g) Consumer information. The term 

‘‘consumer information’’ means any 

record about an individual, whether in 

paper, electronic, or other form, that is 

a consumer report or is derived from a 

consumer report. Consumer information 

also means a compilation of such 

records. Consumer information does not 

include information that does not 

identify individuals, such as aggregate 

information or blind data. 

(h) Covered affiliate. The term 

‘‘covered affiliate’’ means a futures 

commission merchant, retail foreign 

exchange dealer, commodity trading 

advisor, commodity pool operator, 

introducing broker, swap dealer or 

major swap participant, which is subject 

to the jurisdiction of the Commission. 

(i) Dispose or Disposal.— 

(1) In general. The terms ‘‘dispose’’ or 

‘‘disposal’’ means: 

(i) The discarding or abandonment of 

consumer information; or 

(ii) The sale, donation, or transfer of 

any medium, including computer 

equipment, upon which consumer 

information is stored. 

(2) Sale, donation, or transfer of 

consumer information. The sale, 

donation, or transfer of consumer 

information is not considered disposal 

for the purposes of subpart B. 

(j) Dodd-Frank Act. The term ‘‘DoddFrank Act’’ means the Dodd-Frank Wall 

Street Reform and Consumer Protection 

Act (Pub. L. 111–203, 124 Stat. 1376 

(2010)). 

(k) Eligibility information. The term 

‘‘eligibility information’’ means any 

information that would be a consumer 

report if the exclusions from the 

definition of ‘‘consumer report’’ in 

section 603(d)(2)(A) of the FCRA did not 

apply. Examples of the type of 

information that would fall within the 

definition of eligibility information 

includes an affiliate’s own transaction 

or experience information, such as 

information about a consumer’s account 

history with that affiliate, and other 

information, such as information from 

credit bureau reports or applications. 

Eligibility information does not include 

aggregate or blind data that does not 

contain personal identifiers such as 

account numbers, names, or addresses. 

(l) FCRA. The term ‘‘FCRA’’ means the 

Fair Credit Reporting Act (15 U.S.C. 

1681 et seq.). 

(m) Financial product or service. The 

term ‘‘financial product or service’’ 

means any product or service that a 

futures commission merchant, retail 

foreign exchange dealer, commodity 

trading advisor, commodity pool 

operator, introducing broker, major 

swap participant or swap dealer could 

offer that is subject to the Commission’s 

jurisdiction. 

(n) GLB Act. The term ‘‘GLB Act’’ 

means the Gramm-Leach-Bliley Act 

(Pub. L. No. 106–102, 113 Stat. 1338 

(1999)). 

(o) Major swap participant. The term 

‘‘major swap participant’’ has the same 

meaning as in section 1a(33) of the 

Commodity Exchange Act, 7 U.S.C. 1 et 

seq., as may be further defined by this 

title, and includes any person registered 

as such thereunder. 

(p) Person. The term ‘‘person’’ means 

any individual, partnership, 

corporation, trust, estate, cooperative, 

association, or other entity. 

(q) Pre-existing business relationship. 

The term ‘‘pre-existing business 

relationship’’ means a relationship 

between a person, or a person’s licensed 

agent, and a consumer based on— 

(1) A financial contract between the 

person and the consumer which is in 

force on the date on which the 

consumer is sent a solicitation by this 

part; 

(2) The purchase, rental, or lease by 

the consumer of a persons’ services or 

a financial transaction (including 

holding an active account or policy in 

force or having another continuing 

relationship) between the consumer and 

the person, during the 18-month period 

immediately preceding the date on 

which the consumer is sent a 

solicitation covered by this part; or 

(3) An inquiry or application by the 

consumer regarding a financial product 

or service offered by that person during 

the three-month period immediately 

preceding the date on which the 

consumer is sent a solicitation covered 

by this part. 

(r) Solicitation—(1) In general. The 

term ‘‘solicitation’’ means the marketing 

of a financial product or service 

initiated by an affiliate to a particular 

consumer that is— 

(i) Based on eligibility information 

communicated to that covered affiliate 

by an affiliate that has or previously had 

the pre-existing business relationship 

with a consumer as described in this 

part; and 

(ii) Intended to encourage the 

consumer to purchase or obtain such 

financial product or service. 

A solicitation does not include 

marketing communications that are 

directed at the general public. 

(2) Examples. Examples of what 

communications constitute a 

solicitation include communications 

such as a telemarketing solicitation, 

direct mail, or e-mail, when those 

communications are directed to a 

specific consumer based on eligibility 

information. A solicitation does not 


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Federal Register / Vol. 75, No. 207 / Wednesday, October 27, 2010 / Proposed Rules 66033 

include communications that are 

directed at the general public without 

regard to eligibility information, even if 

those communications are intended to 

encourage consumers to purchase 

financial products and services from the 

affiliate initiating the communications. 

(s) Swap dealer. The term ‘‘swap 

dealer’’ has the same meaning as in 

section 1a(49) of the Commodity 

Exchange Act, 7 U.S.C. 1 et seq., as may 

be further defined by this title, and 

includes any person registered as such 

thereunder. 

Subpart A—Business Affiliate 

Marketing Rules 

§ 162.3 Affiliate marketing opt out and 

exceptions. 

(a) Initial notice and opt out. A 

covered affiliate may not use eligibility 

information about a consumer that the 

covered affiliate receives from an 

affiliate with the consumer to make a 

solicitation for marketing purposes to 

such consumer unless— 

(1) It is clearly and conspicuously 

disclosed to the consumer in writing or 

if the consumer agrees, electronically, in 

a concise notice that the person may use 

shared eligibility information about that 

consumer received from an affiliate to 

make solicitations for marketing 

purposes to such consumer; 

(2) The consumer is provided a 

reasonable opportunity and a reasonable 

and simple method to opt out, or 

prohibit the covered affiliate from using 

eligibility information to make 

solicitations for market purposes to the 

consumer; and 

(3) The consumer has not opted out. 

(b) Persons responsible for satisfying 

the notice requirement. The notice 

required by this section must be 

provided: 

(1) By an affiliate that has or 

previously had a pre-existing business 

relationship with a consumer; or 

(2) As part of a joint notice from two 

or more members of an affiliated group 

of companies, provided that at least one 

of the affiliates on the joint notice has 

or previously had a pre-existing 

business relationship with the 

consumer. 

(c) Exceptions. These proposed 

regulations would not apply to the 

following covered affiliate: 

(1) A covered affiliate that has a preexisting business relationship with a 

consumer; 

(2) Communications between an 

employer and employee-consumer (or 

his or her beneficiary) in connection 

with an employee benefit plan; 

(3) A covered affiliate that is currently 

providing services to the consumer; 

(4) If the consumer initiated the 

communication with the covered 

affiliate by oral, electronic, or written 

means; 

(5) If the consumer authorized or 

requested the covered affiliate’s 

solicitation; or 

(6) If compliance by a person with 

these regulations would prevent that 

person’s compliance with state 

insurance laws pertaining to unfair 

discrimination. 

(d) Making solicitations. 

(1) When a solicitation occurs. A 

covered affiliate makes a solicitation for 

marketing purposes if the person— 

(i) Receives eligibility information 

from an affiliate; 

(ii) Uses that eligibility information to 

do one or more of the following: 

(A) Identify the consumer or type of 

consumer to receive a solicitation; 

(B) Establish criteria used to select the 

consumer to receive a solicitation about 

the covered affiliate’s financial products 

or services; or 

(C) Decide which of the services or 

contracts to market to the consumer or 

tailor the solicitation to that consumer; 

and 

(iii) As a result of the covered 

affiliate’s use of the eligibility 

information, the consumer is provided a 

solicitation. 

(2) Receipt of eligibility information. 

A covered affiliate may receive 

eligibility information from an affiliate 

in various ways, including when the 

affiliate places that information into a 

common database that the covered 

affiliate may access. 

(3) Service Providers. Except as 

provided in paragraph (d)(5) of this 

section, a covered affiliate receives or 

uses an affiliate’s eligibility information 

if a service provider acting on the 

covered affiliate’s behalf (regardless of 

whether such service provider is a third 

party or an affiliate of the covered 

affiliate) receives or uses that 

information in the manner described in 

paragraph (d)(1)(i) or (d)(1)(ii) of this 

section. All relevant facts and 

circumstances will determine whether a 

service provider is acting on behalf of a 

covered affiliate when it receives or uses 

an affiliate’s eligibility information in 

connection with marketing the covered 

affiliate’s financial products or services. 

(4) Use by an affiliate of its own 

eligibility information. Unless a covered 

affiliate uses eligibility information that 

the covered affiliate receives from an 

affiliate in the manner described in 

paragraph (d)(2) of this section, the 

covered affiliate does not make a 

solicitation subject to this subpart: 

(i) Uses its own eligibility information 

that it obtained in connection with a 

pre-existing business relationship it has 

or previously had with the consumer to 

market the covered affiliate’s financial 

products or services to the consumer; or 

(ii) Directs its service provider to use 

the affiliate’s own eligibility information 

that it obtained in connection with a 

pre-existing business relationship it has 

or previously had with the consumer to 

market the covered affiliate’s financial 

products or services to the consumer, 

and the covered affiliate does not 

communicate directly with the service 

provider regarding that use. 

(5) Use of eligibility information by a 

service provider—(i) In general. A 

covered affiliate does not make a 

solicitation subject to this subpart if a 

service provider (including an affiliated 

or third-party service provider that 

maintains or accesses a common 

database that the covered affiliate may 

access) receives eligibility information 

from an affiliate that has or previously 

had a pre-existing business relationship 

with the consumer and uses that 

eligibility information to market the 

covered affiliate’s financial products or 

services to the consumer, so long as— 

(A) The affiliate controls access to and 

use of its eligibility information by the 

service provider (including the right to 

establish the specific terms and 

conditions under which the service 

provider may use such information to 

market the covered affiliate’s financial 

products or services); 

(B) The affiliate establishes specific 

terms and conditions under which the 

service provider may access and use 

such affiliate’s eligibility information to 

market the covered affiliate’s financial 

products and services (or those of 

affiliates generally) to the consumer, 

such as the identity of the affiliated 

companies whose financial products or 

services may be marketed to the 

consumer by the service provider, the 

types of financial products or services of 

affiliated companies that may be 

marketed, and the number of times the 

consumer may receive marketing 

materials, and periodically evaluates the 

service provider’s compliance with 

those terms and conditions; 

(C) The affiliate requires the service 

provider to implement reasonable 

policies and procedures designed to 

ensure that the service provider uses 

such affiliate’s eligibility information in 

accordance with the terms and 

conditions established by such affiliate 

relating to the marketing of the covered 

affiliate’s financial products or services; 

(D) The affiliate is identified on or 

with the marketing materials provided 

to the consumer; and 

(E) The covered affiliate does not 

directly use its affiliate’s eligibility 


jlentini on DSKJ8SOYB1PROD with PROPOSALS
66034 Federal Register / Vol. 75, No. 207 / Wednesday, October 27, 2010 / Proposed Rules 

information in the manner described in 

paragraph (b)(1)(ii) of this section. 

(ii) Writing requirements. (A) The 

requirements of paragraphs (b)(5)(i)(A) 

and (C) of this section must be set forth 

in a written agreement between the 

affiliate that has or previously had a preexisting business relationship with the 

consumer and the service provider; and 

(B) The specific terms and conditions 

established by the affiliate as provided 

in paragraph (b)(5)(i)(B) of this section 

must be set forth in writing. 

(e) Relation to affiliate-sharing notice 

and opt out. Nothing in this rulemaking 

will limit the responsibility of a covered 

affiliate to comply with the notice and 

opt-out provisions under other privacy 

rules under the FCRA, the GLB Act or 

the CEA. 

§ 162.4 Scope and duration of opt out. 

(a) Scope of opt-out election—(1) In 

general. The consumer’s election to opt 

out prohibits any covered affiliate 

subject to the scope of the opt-out notice 

from using eligibility information 

received from another affiliate to make 

solicitations to the consumer. 

(2) Continuing relationship—(i) In 

general. If the consumer establishes a 

continuing relationship with a covered 

affiliate or its affiliate, an opt-out notice 

may apply to eligibility information 

obtained in connection with— 

(A) A single continuing relationship 

or multiple continuing relationships 

that the consumer establishes with a 

covered affiliate or its affiliates, 

including continuing relationships 

established subsequent to delivery of 

the opt-out notice, so long as the notice 

adequately describes the continuing 

relationships covered by the opt out; or 

(B) Any other transaction between the 

consumer and the covered affiliate or its 

affiliates as described in the notice. 

(ii) Examples of a continuing 

relationship. A consumer has a 

continuing relationship with a covered 

affiliate or its affiliate if: 

(A) The covered affiliate is a futures 

commission merchant through whom a 

consumer has opened an account, or 

that carries the consumer’s account on 

a fully-disclosed basis, or that effects or 

engages in commodity interest 

transactions with or for a consumer, 

even if the covered affiliate does not 

hold any assets of the consumer; 

(B) The covered affiliate is an 

introducing broker that solicits or 

accepts specific orders for trades; 

(C) The covered affiliate is a 

commodity trading advisor with whom 

a consumer has a contract or 

subscription, either written or oral, 

regardless of whether the advice is 

standardized, or is based on, or tailored 

to, the commodity interest or cash 

market positions or other circumstances 

or characteristics of the particular 

consumer; 

(D) The covered affiliate is a 

commodity pool operator, and accepts 

or receives from the consumer, funds, 

securities, or property for the purpose of 

purchasing an interest in a commodity 

pool; 

(E) The covered affiliate holds 

securities or other assets as collateral for 

a loan made to the consumer, even if the 

covered affiliate did not make the loan 

or do not affect any transactions on 

behalf of the consumer; or 

(F) The covered affiliate regularly 

effects or engages in commodity interest 

transactions with or for a consumer 

even if the covered affiliate does not 

hold any assets of the consumer. 

(3) No continuing relationship—(i) In 

general. If there is no continuing 

relationship between a consumer and 

the covered affiliate or its affiliate, and 

the covered affiliate or its affiliate obtain 

eligibility information about a consumer 

in connection with a transaction with 

the consumer, such as an isolated 

transaction or a credit application that 

is denied, an opt-out notice provided to 

the consumer only applies to eligibility 

information obtained in connection 

with that transaction. 

(ii) Examples of no continuing 

relationship. A consumer does not have 

a continuing relationship with a covered 

affiliate or its affiliate if: 

(A) The covered affiliate has acted 

solely as a ‘‘finder’’ for a futures 

commission merchant, and the covered 

affiliate does not solicit or accept 

specific orders for trades; or 

(B) The covered affiliate has solicited 

the consumer to participate in a pool or 

to direct his or her account and he or 

she has not provided the covered 

affiliate with funds to participate in a 

pool or entered into any agreement with 

the covered affiliate to direct his or her 

account. 

(4) Menu of alternatives. A consumer 

may be given the opportunity to choose 

from a menu of alternatives when 

electing to prohibit solicitations, such as 

by electing to prohibit solicitations from 

certain types of affiliates covered by the 

opt-out notice but not other types of 

affiliates covered by the notice, electing 

to prohibit solicitations based on certain 

types of eligibility information but not 

other types of eligibility information, or 

electing to prohibit solicitations by 

certain methods of delivery but not 

other methods of delivery. However, 

one of the alternatives must allow the 

consumer to prohibit all solicitations 

from all of the affiliates that are covered 

by the notice. 

(5) Special rule for a notice following 

termination of all continuing 

relationships. A consumer must be 

given a new opt-out notice if, after all 

continuing relationships with the 

covered affiliate or its affiliate(s) are 

terminated, the consumer subsequently 

establishes another continuing 

relationship with the covered affiliate or 

its affiliate(s) and the consumer’s 

eligibility information is to be used to 

make a solicitation. The new opt-out 

notice must apply, at a minimum, to 

eligibility information obtained in 

connection with the new continuing 

relationship. Consistent with paragraph 

b of this section, the consumer’s 

decision not to opt out after receiving 

the new opt-out notice would not 

override a prior opt-out election by the 

consumer that applies to eligibility 

information obtained in connection 

with a terminated relationship, 

regardless of whether the new opt-out 

notice applies to eligibility information 

obtained in connection with the 

terminated relationship. 

(b) Duration of opt-out election. An 

opt-out election must be effective for a 

period of at least five years beginning 

when the consumer’s opt-out election is 

received and implemented, unless the 

consumer subsequently revokes the optout election in writing or, if the 

consumer agrees, electronically. An optout election may be established for a 

period of more than five years or for an 

indefinite period unless revoked. 

(c) Time period in which a consumer 

can opt out. A consumer may opt out at 

any time. 

(d) No effect on opt-out period. An 

opt-out period may not be shortened by 

sending a renewal notice to the 

consumer before expiration of the optout period, even if the consumer does 

not renew the opt out. 

§ 162.5 Contents of opt-out notice; 

consolidated and equivalent notices. 

(a) Contents of the opt-out notice— 

(1) In general. An opt-out notice must be 

in writing, be clear and conspicuous, as 

well as concise, and must accurately 

disclose the following: 

(i)(A) The name of the affiliate that 

has or previously had a pre-existing 

business relationship with a consumer, 

which is providing the notice; or 

(B) If jointly provided jointly by 

multiple affiliates and each affiliate 

shares a common name, then the notice 

may indicate that it is being provided by 

multiple companies with the same name 

or multiple companies in the same 

group or family of companies. If the 

affiliates providing the notice do not 

share a common name, then the notice 

must either separately identify each 


jlentini on DSKJ8SOYB1PROD with PROPOSALS
Federal Register / Vol. 75, No. 207 / Wednesday, October 27, 2010 / Proposed Rules 66035 

affiliate by name or identify each of the 

common names used by those affiliates; 

(ii) The list of affiliates or types of 

affiliates whose use of eligibility 

information is covered by the notice, 

which may include companies that 

become affiliates after the notice is 

provided to the consumer; 

(iii) A general description of the types 

of eligibility information that may be 

used to make solicitations to the 

consumer; 

(iv) A statement that the consumer 

may elect to limit the use of eligibility 

information to make solicitations to the 

consumer; 

(v) A statement that the consumer’s 

election will apply for the specified 

period of time and, if applicable, that 

the consumer will be allowed to renew 

the election once that period expires; 

(vi) If the notice is provided to 

consumers who have previously elected 

to opt out, that such consumer does not 

need to act again until the consumer 

receives a renewal notice; and 

(vii) A reasonable and simple method 

for the consumer to opt out. 

(2) Specifying length of time period. If 

consumer is granted an opt-out period 

longer than a five-year duration, the optout notice must specify the length of the 

opt-out period. 

(3) No revised notice for extension of 

opt-out period. The duration of an optout period may be increased for a period 

longer than the period specified in the 

opt-out notice without having to 

provide a revised notice of the increase 

to the consumer. 

(b) Joint relationships. (1) If two or 

more consumers jointly obtain a 

financial product or service, a single 

opt-out notice may be provided to joint 

consumers. 

(2) Any of the joint consumers may 

exercise the right to opt out on behalf 

of each joint consumer. 

(3) The opt-out election notice must 

explain how an opt-out election by a 

joint consumer will be treated. That is, 

the notice should specify whether an 

opt-out election by a joint consumer 

will be treated as applying to all of the 

associated joint consumers, or as 

applying to each joint consumer 

separately. 

(4) If the opt-out election notice 

provides that each joint consumer is 

permitted to opt out separately, one of 

the joint consumers must be permitted 

to opt out on behalf of all of the joint 

consumers and the joint consumer must 

be permitted to exercise his or her 

separate rights to opt out in a single 

response. 

(5) A covered affiliate cannot require 

all joint consumers to opt out before 

implementing any opt-out election. 

(c) Alternative contents. If the 

consumer is afforded a broader right to 

opt out of receiving marketing than is 

required by this subpart, the 

requirements of this section may be 

satisfied by providing the consumer 

with a clear, conspicuous, and concise 

notice that accurately discloses the 

consumer’s opt-out rights. 

(d) Coordinated and consolidated 

consumer notices. A notice required by 

this subpart may be coordinated and 

consolidated with any other notice or 

disclosure required to be issued under 

any other provision of law by the 

covered affiliate providing the notice, 

including but not limited to notices in 

the FCRA or the GLB Act privacy 

notices. 

(e) Equivalent notices. A notice or 

disclosure that is equivalent to the 

notice required by this part in terms of 

content, and that is provided to a 

consumer together with a notice 

required by any other provision of law, 

satisfies the requirements of this 

section. 

(f) Model notices. Model notices are 

provided in Appendix A of this part. 

These notices were meant to facilitate 

compliance with this subpart; provided, 

however, that nothing herein shall be 

interpreted to require persons subject to 

this part to use the model notices. 

§ 162.6 Reasonable opportunity to opt out. 

(a) In general. A covered affiliate must 

not use eligibility information about a 

consumer that the covered affiliate 

receives from an affiliate to make a 

solicitation to such consumer about the 

covered affiliate’s financial products or 

services, unless the consumer is 

provided a reasonable opportunity to 

opt out, as required by this subpart. 

(b) Examples. A reasonable 

opportunity to opt out under this 

subpart is: 

(1) If the opt-out notice is mailed to 

the consumer, the consumer has 30 days 

from the date the notice is mailed to opt 

out. 

(2) If the opt-out notice is sent via 

electronic means to the consumer, the 

consumer has 30 days from the date the 

consumer acknowledges receipt to elect 

to opt out by any reasonable method. 

(3) If the opt-out notice is sent via email (where the consumer has agreed to 

receive disclosures by e-mail), the 

consumer is given 30 days after the email is sent to elect to opt out by any 

reasonable method. 

(4) If the opt-out notice provided to 

the consumer at the time of an 

electronic transaction, the consumer is 

required to decide, as a necessary part 

of proceeding with the transaction, 

whether to opt out before completing 

the transaction. 

(5) If the opt-out notice is provided 

during an in-person transaction, the 

consumer is required to decide, as a 

necessary part of completing the 

transaction, whether to opt out through 

a simple process. 

(6) If the opt-out notice is provided in 

conjunction with other privacy notices 

required by law, the consumer is 

allowed to exercise the opt-out election 

within a reasonable period of time and 

in the same manner as the opt out under 

that privacy notice. 

§ 162.7 Reasonable and simple methods of 

opting out. 

(a) In general. A covered affiliate shall 

be prohibited from using eligibility 

information about a consumer received 

from an affiliate to make a solicitation 

to the consumer about the covered 

affiliate’s financial products or services, 

unless the consumer is provided a 

reasonable and simple method to opt 

out, as required by this subpart. 

(b) Examples. Reasonable and simple 

methods of opting out include: 

(1) Designating a check-off box in a 

prominent position on an opt-out 

election form; 

(2) Including a reply form and a selfaddressed envelope (in a mailing); 

(3) Providing an electronic means, if 

the consumer agrees, that can be 

electronically mailed or processed 

through an Internet Web site; 

(4) Providing a toll-free telephone 

number; or 

(5) Exercising an opt-out election 

through whatever means are acceptable 

under a consolidated privacy notice 

required under other laws. 

(c) Specific opt-out method. Each 

consumer may be required to opt out 

through a specific method, as long as 

that method is acceptable under this 

subpart. 

§ 162.8 Acceptable delivery methods of 

opt-out notices. 

(a) In general. The opt-out notice must 

be provided so that each consumer can 

reasonably be expected to receive actual 

notice. 

(b) Electronic notices. For opt-out 

notices provided electronically, the 

notice may be provided in compliance 

with either the electronic disclosure 

provisions in Sec. 1.4 of this title or the 

provisions in section 101 of the 

Electronic Signatures in Global and 

National Commerce Act, 15 U.S.C. 7001 

et seq. 

§ 162.9 Renewal of opt out. 

(a) Renewal notice and opt-out 

requirement—(1) In general. Since the 


jlentini on DSKJ8SOYB1PROD with PROPOSALS
66036 Federal Register / Vol. 75, No. 207 / Wednesday, October 27, 2010 / Proposed Rules 

FCRA provides that opt-out elections 

can expire in a period of no less than 

five years, an affiliate that has or 

previously had a pre-existing business 

relationship with a consumer must 

provide a renewal notice to the 

consumer after such time in order to 

allow its affiliates to make solicitations. 

After the opt-out election period 

expires, its affiliates may make 

solicitations unless: 

(i) The consumer has been given a 

renewal notice that complies with the 

requirements of this section and Secs. 

162.6 through 162.8 of this subpart, and 

a reasonable opportunity and a 

reasonable and simple method to renew 

the opt-out election, and the consumer 

does not renew the opt out; or 

(ii) An exception in Sec. 162.3(c) of 

this subpart applies. 

(2) Renewal period. Each opt-out 

renewal must be effective for a period of 

at least five years as provided in Sec. 

162.4(b) of this subpart. 

(3) Affiliates who may provide the 

renewal notice. The notice required by 

this paragraph must be provided: 

(i) By the affiliate that provided the 

previous opt-out notice, or its successor; 

or 

(ii) As part of a joint renewal notice 

from two or more members of an 

affiliated group of companies, or their 

successors, that jointly provided the 

previous opt-out notice. 

(b) Contents of renewal or extension 

notice. The contents of the renewal 

notice must include all of the same 

contents of the initial notices, but also 

must include: 

(1) A statement that the consumer 

previously elected to limit the use of 

certain information to make solicitations 

to the consumer; 

(2) A statement that the consumer 

may elect to renew the consumer’s 

previous election; and 

(3) If applicable, a statement that the 

consumer’s election to renew will apply 

for a specified period of time stated in 

the notice and that the consumer will be 

allowed to renew the election once that 

period expires. 

(c) Timing of renewal notice. Renewal 

notices must be provided in a 

reasonable period of time before the 

expiration of the opt-out election period 

or any time after the expiration of the 

opt-out period, but before solicitations 

that would have been prohibited by the 

expired opt-out election are made to the 

consumer. 

(d) No effect on opt-out period. An 

opt-out period may not be shortened by 

sending a renewal notice to the 

consumer before the expiration of the 

opt-out period, even if the consumer 

does not renew the opt-out election. 

§§ 162.10–162.20 [Reserved] 

Subpart B—Disposal Rules 

§ 162.21 Proper disposal of consumer 

information. 

(a) In general. Any covered affiliate 

must adopt must adopt reasonable, 

written policies and procedures that 

address administrative, technical, and 

physical safeguards for the protection of 

consumer information. These written 

policies and procedures must be 

reasonably designed to: 

(1) Insure the security and 

confidentiality of consumer 

information; 

(2) Protect against any anticipated 

threats or hazards to the security or 

integrity of consumer information; and 

(3) Protect against unauthorized 

access to or use of consumer 

information that could result in 

substantial harm or inconvenience to 

any consumer. 

(b) Standard. Any covered affiliate 

under this part who maintains or 

otherwise possesses consumer 

information for a business purpose must 

properly dispose of such information by 

taking reasonable measures to protect 

against unauthorized access to or use of 

the information in connection with its 

disposal pursuant to a written disposal 

plan. 

(c) Examples. The following examples 

are ‘‘reasonable’’ disposal measures for 

the purposes of this subpart— 

(i) Implementing and monitoring 

compliance with policies and 

procedures that require the burning, 

pulverizing, or shredding of papers 

containing consumer information so 

that the information cannot practicably 

be read or reconstructed; 

(ii) Implementing and monitoring 

compliance with policies and 

procedures that require the destruction 

or erasure of electronic media 

containing consumer information so 

that the information cannot practically 

be read or reconstructed; and 

(iii) After due diligence, entering into 

and monitoring compliance with a 

written contract with another party 

engaged in the business of record 

destruction to dispose of consumer 

information in a manner that is 

consistent with this rule. 

(d) Relation to other laws. Nothing in 

this section shall be construed: 

(1) To require a person to maintain or 

destroy any record pertaining to a 

consumer that is imposed under Sec. 

1.31 or any other provision of law; or 

(2) To alter or affect any requirement 

imposed under any other provision of 

law to maintain or destroy such a 

record. 

Appendix A to Part 162—Sample 

Clauses 

A. Although use of the model forms is not 

required, use of the model forms in this 

Appendix (as applicable) complies with the 

requirement in section 624 of the FCRA for 

clear, conspicuous, and concise notices. 

B. Certain changes may be made to the 

language or format of the model forms 

without losing the protection from liability 

afforded by use of the model forms. These 

changes may not be so extensive as to affect 

the substance, clarity, or meaningful 

sequence of the language in the model forms. 

Persons making such extensive revisions will 

lose the safe harbor that this Appendix 

provides. Acceptable changes include, for 

example: 

1. Rearranging the order of the references 

to ‘‘your income’’, ‘‘your account history’’, and 

‘‘your credit score’’. 

2. Substituting other types of information 

for ‘‘income’’, ‘‘account history’’, or ‘‘credit 

score’’ for accuracy, such as ‘‘payment 

history’’, ‘‘credit history’’, or ‘‘claims history’’. 

3. Substituting a clearer and more accurate 

description of the affiliates providing or 

covered by the notice for phrases such as ‘‘the 

[ABC] group of companies,’’ including 

without limitation a statement that the entity 

providing the notice recently purchased the 

consumer’s account. 

4. Substituting other types of affiliates 

covered by the notice for ‘‘commodity 

advisor’’, ‘‘futures clearing merchant’’, or 

‘‘swap dealer’’ affiliates. 

5. Omitting items that are not accurate or 

applicable. For example, if a person does not 

limit the duration of the opt-out period, the 

notice may omit information about the 

renewal notice. 

6. Adding a statement informing 

consumers how much time they have to opt 

out before shared eligibility information may 

be used to make solicitations to them. 

7. Adding a statement that the consumer 

may exercise the right to opt out at any time. 

8. Adding the following statement, if 

accurate: ‘‘If you previously opted out, you do 

not need to do so again.’’ 

9. Providing a place on the form for the 

consumer to fill in identifying information, 

such as his or her name and address. 

• A–1 Model Form for Initial Opt-out 

notice (Single-Affiliate Notice) 

• A–2 Model Form for Initial Opt-out 

notice (Joint Notice) 

• A–3 Model Form for Renewal Notice 

(Single-Affiliate Notice) 

• A–4 Model Form for Renewal Notice 

(Joint Notice) 

• A–5 Model Form for Voluntary ‘‘No 

Marketing’’ Notice 

A–1 Model Form for Initial Opt-Out Notice 

(Single-Affiliate Notice) 

[Your Choice To Limit Marketing]/ 

[Marketing Opt Out] 

—[Name of Affiliate] is providing this notice. 

—[Optional: Federal law gives you the right 

to limit some but not all marketing from 

our affiliates. Federal law also requires us 

to give you this notice to tell you about 

your choice to limit marketing from our 

affiliates.] 


jlentini on DSKJ8SOYB1PROD with PROPOSALS
Federal Register / Vol. 75, No. 207 / Wednesday, October 27, 2010 / Proposed Rules 66037 

—You may limit our affiliates in the [ABC] 

group of companies, such as our 

[commodity advisor, futures clearing 

merchant, and swap dealer] affiliates, from 

marketing their financial products or 

services to you based on your personal 

information that we collect and share with 

them. This information includes your 

[income], your [account history with us], 

and your [credit score]. 

—Your choice to limit marketing offers from 

our affiliates will apply [until you tell us 

to change your choice]/[for x years from 

when you tell us your choice]/[for at least 

5 years from when you tell us your choice]. 

[Include if the opt-out period expires.] 

Once that period expires, you will receive 

a renewal notice that will allow you to 

continue to limit marketing offers from our 

affiliates for [another x years]/[at least 

another 5 years]. 

—[Include, if applicable, in a subsequent 

notice, including an annual notice, for 

consumers who may have previously opted 

out.] If you have already made a choice to 

limit marketing offers from our affiliates, 

you do not need to act again until you 

receive the renewal notice. 

To limit marketing offers, contact us 

[include all that apply]: 

—By telephone: 1–877–###–#### 

—On the Web: www.—.com 

—By mail: check the box and complete the 

form below, and send the form to: 

—[Company name] 

—[Company address] 

lll Do not allow your affiliates to use my 

personal information to market to me. 

A–2 Model Form for Initial Opt-out Notice 

(Joint Notice) 

[Your Choice To Limit Marketing]/ 

[Marketing Opt Out] 

—The [ABC group of companies] is providing 

this notice. 

—[Optional: Federal law gives you the right 

to limit some but not all marketing from 

the [ABC] companies. Federal law also 

requires us to give you this notice to tell 

you about your choice to limit marketing 

from the [ABC] companies.] 

—You may limit the [ABC companies], such 

as the [ABC commodity advisor, futures 

clearing merchant, and swap dealer] 

affiliates, from marketing their financial 

products or services to you based on your 

personal information that they receive from 

other [ABC] companies. This information 

includes your [income], your [account 

history], and your [credit score]. 

—Your choice to limit marketing offers from 

the [ABC] companies will apply [until you 

tell us to change your choice]/[for x years 

from when you tell us your choice]/[for at 

least 5 years from when you tell us your 

choice]. [Include if the opt-out period 

expires.] Once that period expires, you will 

receive a renewal notice that will allow 

you to continue to limit marketing offers 

from the [ABC] companies for [another x 

years]/[at least another 5 years]. 

—[Include, if applicable, in a subsequent 

notice, including an annual notice, for 

consumers who may have previously opted 

out.] If you have already made a choice to 

limit marketing offers from the [ABC] 

companies, you do not need to act again 

until you receive the renewal notice. 

To limit marketing offers, contact us 

[include all that apply]: 

By telephone: 1–877–###–#### 

On the Web: www.—.com 

By mail: check the box and complete the 

form below, and send the form to: 

[Company name] 

[Company address] 

lllDo not allow any company [in the ABC 

group of companies] to use my personal 

information to market to me. 

A–3 Model Form for Renewal Notice (SingleAffiliate Notice) 

[Renewing Your Choice To Limit Marketing]/ 

[Renewing Your Marketing Opt Out] 

—[Name of Affiliate] is providing this notice. 

—[Optional: Federal law gives you the right 

to limit some but not all marketing from 

our affiliates. Federal law also requires us 

to give you this notice to tell you about 

your choice to limit marketing from our 

affiliates.] 

—You previously chose to limit our affiliates 

in the [ABC] group of companies, such as 

our [commodity advisor, futures clearing 

merchant, and swap dealer] affiliates, from 

marketing their financial products or 

services to you based on your personal 

information that we share with them. This 

information includes your [income], your 

[account history with us], and your [credit 

score]. 

—Your choice has expired or is about to 

expire. 

To renew your choice to limit marketing 

for [x] more years, contact us [include all that 

apply]: 

By telephone: 1–877–###–#### 

On the Web: www.—.com 

By mail: check the box and complete the 

form below, and send the form to: 

[Company name] 

[Company address] 

lllRenew my choice to limit marketing 

for [x] more years. 

A–4 Model Form for Renewal Notice (Joint 

Notice) 

[Renewing Your Choice To Limit Marketing]/ 

[Renewing Your Marketing Opt Out] 

—The [ABC group of companies] is providing 

this notice. 

—[Optional: Federal law gives you the right 

to limit some but not all marketing from 

the [ABC] companies. Federal law also 

requires us to give you this notice to tell 

you about your choice to limit marketing 

from the [ABC] companies.] 

—You previously chose to limit the [ABC 

companies], such as the [ABC commodity 

advisor, futures clearing merchant, and 

swap dealer] affiliates, from marketing 

their financial products or services to you 

based on your personal information that 

they receive from other [ABC] companies. 

This information includes your [income], 

your [account history], and your [credit 

score]. 

—Your choice has expired or is about to 

expire. 

To renew your choice to limit marketing 

for [x] more years, contact us [include all that 

apply]: 

By telephone: 1–877–###–#### 

On the web: www.—.com 

By mail: check the box and complete the 

form below, and send the form to: 

[Company name] 

[Company address] 

lllRenew my choice to limit marketing 

for [x] more years. 

A–5 Model Form for Voluntary ‘‘No 

Marketing’’ Notice 

[Your Choice To Stop Marketing] 

—[Name of Affiliate] is providing this notice. 

You may choose to stop all marketing from 

us and our affiliates. 

To stop all marketing offers, contact us 

[include all that apply]: 

By telephone: 1–877–###–#### 

On the Web: www.—.com 

By mail: check the box and complete the 

form below, and send the form to: 

[Company name] 

[Company address] 

lllDo not market to me. 

By the Commission, 

Dated: October 19, 2010. 

David A. Stawick, 

Secretary. 

Statement of Chairman Gary Gensler 

Business Affiliate Marketing and Disposal of 

Consumer Information Rules 

October 19, 2010 

I support today’s Commission vote on the 

proposed rulemaking providing privacy 

protections to nonpublic, consumer 

information held by entities that are subject 

to the jurisdiction of the Commission. The 

proposed rulemaking provides customers of 

Commission-regulated entities with the same 

privacy protections now enjoyed by the 

customers of entities regulated by other 

Federal agencies. 

The proposal includes two important rules. 

The first allows customers to prohibit 

Commission-regulated entities from using 

certain consumer information obtained from 

an affiliate to make solicitations to that 

customer for marketing purposes. This will 

be done by means of a customer opt out. The 

second rule requires Commission-regulated 

entities to develop and implement a written 

program and procedures for the proper 

disposal of consumer information. I believe 

that these rules will help prevent the 

unauthorized use and disclosure of 

nonpublic, consumer information. 

[FR Doc. 2010–26893 Filed 10–26–10; 8:45 am] 

BILLING CODE 6351–01–P 


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