STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY
August 11, 2004
Office of the Comptroller of the Currency
250 E Street, S.W., Mail Stop 1-5
Washington, DC 20219
Jennifer J. Johnson, Secretary
Board of Governors of the Federal Reserve System
20th Street and Constitution Avenue, N.W.
Washington, D.C. 20551
Robert E. Feldman
Executive Secretary
Attention: Comments
Federal Deposit Insurance Corporation
550 17th Street, N.W.
Washington, D.C. 20429
Becky Baker
Secretary of the Board
National Credit Union Administration
1775 Duke Street
Alexandria, VA 22341-3428
Regulation Comments
Chief Counsel’s Office
Office of Thrift Supervision
1700 G Street, NW
Washington, DC 20552
Attention: No. 2004-31
Dear
Sir or Madam:
This comment
letter is sent on behalf of State Farm Mutual Automobile Insurance
Company
in response to the notice of proposed rulemaking
issued by the Office of the Comptroller of the Currency ("OCC"),
Board of Governors of the Federal Reserve System ("Board"),
the Federal Deposit Insurance Corporation ("FDIC"), the
Office of Thrift Supervision ("OTS"), and the National
Credit Union Administration ("NCUA") (collectively referred
to as "the agencies") regarding the Fair Credit Reporting
Act Affiliate Marketing Regulations, published in the Federal
Register on July 15, 2004 (69 Fed. Reg. 42501). State Farm appreciates the
opportunity to comment on the agencies' proposed rules.
State Farm
Bank, F.S.B., Bloomington, Illinois, began operations in March
of 1999 as a
wholly owned subsidiary of State Farm Mutual
Automobile Insurance Company ("State Farm Mutual"). State
Farm Bank now has assets in excess of $9 billion and services its customers through a network of roughly 16,000 Bank certified agents.
State Farm Mutual is the leading underwriter of private passenger automobile
insurance in the United States. State Farm Mutual with its affiliated
property companies State Farm Fire and Casualty Company, State
Farm General Insurance Company and State Farm Florida Insurance
Company, is the largest homeowner insurance carrier in the United
States. The State Farm group of companies provide insurance products
and financial services to consumers across the United States.
Our comments
focus on the language of the Fair and Accurate Credit Reporting
Act ("FACT Act")
affiliate sharing provisions in Section 214(a) (adding Section
624 of the Fair Credit Reporting
Act, codified at 15 U.S.C. 1681s-3), and requiring that the language
be carried forward to the agencies' rules. Specifically, State
Farm is concerned with the omission of explicit and meaningful
language from the statute in the proposed regulations.
The scope of Section 624 is outlined in subsection (a)(4). That
provision provides, in relevant part:
(4) Scope.
This section shall not apply to a person – (A)
using information to make a solicitation for marketing purposes
to a consumer with whom the person has a pre-existing business
relationship.
The legislation
provides a clear definition of "pre-existing
business relationship" in Section 624(d)(1) as "a relationship
between a person, or a person's licensed agent, and a consumer
based on four possible scenarios.
The agencies'
proposed rules omit a crucial phrase from the statutory definition
of
pre-existing relationship. The same omission is evident
in the proposed regulations which define the term "pre-existing
business relationship," as follows: the OCC proposed regulations
at section 41.3(m), the Board's proposed regulations at section
222.3(m), the FDIC proposed regulations at section 334.3(m), the
OTS proposed regulations at section 571.3(m), and the NCUA proposed
regulations at 717.3(m). The proposed definitions in these sections
should mirror the statute's language by providing that the term "Pre-existing
business relationship" means a relationship between a person
or a person's licensed agent and a consumer based on the types
of relationships outlined in the statute.
State Farm also provides comment with respect to the proposed
sections regarding the scope of the affiliate marketing rule (i.e.,
the OCC proposed regulations at section 41.20(c), the Board's proposed
regulations at section 222.20(c), the FDIC proposed regulations
at section 334.20(c), the OTS proposed regulations at section 571.20(c),
and the NCUA proposed regulations at section 717.20(c)). Notably,
the introductory portion should be modified to mirror the scope
provisions set forth in section 624(a)(4) as provided in Section
214 of the FACT Act, quoted above. In this respect, we offer the
following language for your consideration:
(c) Exceptions. The provisions of this part [or subpart, as the
case may be]
shall
not apply to a person using eligibility information received from
an affiliate: (1) To make or send a marketing solicitation
to a consumer with whom the person making the solicitation has
a pre-existing business relationship as defined in §[41.3(m),
222.3(m), 334.3(m), 571.3(m), or 717.3(m), as the case may be];
This language
follows both the actual language and intent within the "scope" provisions
of Section 214.
Finally, State
Farm believes an example of an exception may provide some guidance
in relation to the pre-existing business relationship
exception, particularly to the extent "pre-existing business
relationship" must be defined in terms of a relationship between
a person or a person's licensed agent, and a consumer. Such an
example may outline those instances where a consumer has purchased
a policy of insurance or other financial service product through
a person's licensed agent. In those instances, the agent has a
pre-existing business relationship with the consumer and provisions
of this part of the regulations are not applicable to the solicitations
of such licensed agent.
We appreciate the opportunity to provide these comments to the
agencies. Thank you for your consideration. Please feel free to
contact me in the event you have any questions.
Sincerely yours,
Todd J. Haynes
Bank Counsel
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