FDIC Federal Register Citations

[Federal Register: July 15, 2004 (Volume 69, Number 135)]
[Proposed Rules]
[Page 42501-42542]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15jy04-22]

[[Page 42501]]

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Part II

Department of the Treasury

Office of the Comptroller of the Currency

12 CFR Part 41

Office of Thrift Supervision

12 CFR Part 571

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Board of Governors of the Federal Reserve System

12 CFR Part 222

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Federal Deposit Insurance Corporation

12 CFR Part 334

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National Credit Union Administration

12 CFR Part 717

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Fair Credit Reporting Affiliate Marketing Regulations; Proposed Rule

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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 41

[Docket No. 04-16]
RIN 1557-AC88

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

12 CFR Part 222

[Regulation V; Docket No. R-1203]

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 334

RIN 3064-AC73

DEPARTMENT OF THE TREASURY

Office of Thrift Supervision

12 CFR Part 571

[No. 2004-31]
RIN 1550-AB90

NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 717

Fair Credit Reporting Affiliate Marketing Regulations

AGENCIES: Office of the Comptroller of the Currency, Treasury (OCC);
Board of Governors of the Federal Reserve System (Board); Federal
Deposit Insurance Corporation (FDIC); Office of Thrift Supervision,
Treasury (OTS); and National Credit Union Administration (NCUA).

ACTION: Notice of proposed rulemaking.

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SUMMARY: The OCC, Board, FDIC, OTS, and NCUA (Agencies) are publishing
for comment proposed regulations to implement the affiliate marketing
provisions in section 214 of the Fair and Accurate Credit Transactions
Act of 2003, which amends the Fair Credit Reporting Act. The proposed
regulations generally prohibit a person from using information received
from an affiliate to make a solicitation for marketing purposes to a
consumer, unless the consumer is given notice and an opportunity and
simple method to opt out of the making of such solicitations.

DATES: Comments must be submitted on or before August 16, 2004.

ADDRESSES: Comments should be directed to:
OCC: You should include OCC and Docket Number 04-16 in your
comment. You may submit comments by any of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.

Follow the instructions for submitting comments.
OCC Web site: http://www.occ.treas.gov. Click on ``Contact

the OCC,'' scroll down and click on ``Comments on Proposed
Regulations.''
E-mail address: regs.comments@occ.treas.gov.
Fax: (202) 874-4448.
Mail: Office of the Comptroller of the Currency, 250 E
Street, SW., Mail Stop 1-5, Washington, DC 20219.
Hand Delivery/Courier: 250 E Street, SW., Attn: Public
Information Room, Mail Stop 1-5, Washington, DC 20219.

Instructions: All submissions received must include the agency name
(OCC) and docket number or Regulatory Information Number (RIN) for this
notice of proposed rulemaking. In general, OCC will enter all comments
received into the docket without change, including any business or
personal information that you provide. You may review comments and
other related materials by any of the following methods:
Viewing Comments Personally: You may personally inspect
and photocopy comments at the OCC's Public Information Room, 250 E
Street, SW., Washington, DC. You can make an appointment to inspect
comments by calling (202) 874-5043.
Viewing Comments Electronically: You may request e-mail or
CD-ROM copies of comments that the OCC has received by contacting the
OCC's Public Information Room at regs.comments@occ.treas.gov.
Docket: You may also request available background
documents and project summaries using the methods described above.
Board: You may submit comments, identified by Docket No. R-1203, by
any of the following methods:
Agency Web site: http://www.federalreserve.gov Follow the instructions for submitting comments at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
Federal eRulemaking Portal: http://www.regulations.gov.

Follow the instructions for submitting comments.
E-mail: regs.comments@federalreserve.gov. Include docket
number in the subject line of the message.
Fax: (202) 452-3819 or (202) 452-3102.
Mail: Jennifer J. Johnson, Secretary, Board of Governors
of the Federal Reserve System, 20th Street and Constitution Avenue,
NW., Washington, DC 20551.
All public comments are available from the Board's Web site at
http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as submitted,

except as necessary for technical reasons. Accordingly, your comments
will not be edited to remove any identifying or contact information.
Public comments may also be viewed electronically or in paper in Room
MP-500 of the Board's Martin Building (20th and C Streets, NW.) between
9 a.m. and 5 p.m. on weekdays.
FDIC: You may submit comments, identified by RIN number 3064-AC73
by any of the following methods:
Agency Web site: http://www.fdic.gov/regulations/laws/federal/propose.html.
Follow instructions for submitting comments on

the Agency Web site.
E-Mail: Comments@FDIC.gov. Include the RIN number in the
subject line of the message.
Mail: Robert E. Feldman, Executive Secretary, Attention:
Comments, Federal Deposit Insurance Corporation, 550 17th Street, NW.,
Washington, DC 20429.
Hand Delivery/Courier: Guard station at the rear of the
550 17th Street Building (located on F Street) on business days between
7 a.m. and 5 p.m.
Instructions: All submissions received must include the agency name
and RIN for this rulemaking. All comments received will be posted
without change to http://www.fdic.gov/regulations/laws/federal/propose.html
including any personal information provided.

OTS: You may submit comments, identified by number 2004-31, by any
of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.

Follow the instructions for submitting comments.
E-mail address: regs.comments@ots.treas.gov. Please
include number 2004-31 in the subject line of the message and include
your name and telephone number in the message.
Fax: (202) 906-6518.
Mail: Regulation Comments, Chief Counsel's Office, Office
of Thrift Supervision, 1700 G Street, NW., Washington, DC 20552,
Attention: No. 2004-31.
Hand Delivery/Courier: Guard's Desk, East Lobby Entrance,
1700 G Street, NW., from 9 a.m. to 4 p.m. on business days, Attention:
Regulation Comments, Chief Counsel's Office, Attention: No. 2004-31.
Instructions: All submissions received must include the agency name
and docket number or Regulatory

[[Page 42503]]

Information Number (RIN) for this rulemaking. All comments received
will be posted without change to the OTS Internet Site at http://www.ots.treas.gov/pagehtml.cfm?catNumber=67&an=1
, including any

personal information provided.
Docket: For access to the docket to read background documents or
comments received, go to http://www.ots.treas.gov/pagehtml.cfm?catNumber=67&an=1.
In addition, you may inspect comments

at the Public Reading Room, 1700 G Street, NW., by appointment. To make
an appointment for access, call (202) 906-5922, send an e-mail to
public.info@ots.treas.gov, or send a facsimile transmission to (202)

906-7755. (Prior notice identifying the materials you will be
requesting will assist us in serving you.) We schedule appointments on
business days between 10 a.m. and 4 p.m. In most cases, appointments
will be available the next business day following the date we receive a
request.
NCUA: You may submit comments by any of the following methods.
(Please send comments by one method only):
Federal eRulemaking Portal: http://www.regulations.gov.

Follow the instructions for submitting comments.
NCUA Web site: http://www.ncua.gov/RegulationsOpinionsLaws/proposed_regs/proposed_regs.html.
Follow the

instructions for submitting comments.
E-mail: Address to regcomments@ncua.gov. Include ``[Your
name] Comments on Proposed Rule Part 717, Fair Credit Reporting--
Affiliate Marketing'' in the e-mail subject line.
Fax: (703) 518-6319. Use the subject line described above
for e-mail.
Mail: Address to Becky Baker, Secretary of the Board,
National Credit Union Administration, 1775 Duke Street, Alexandria,
Virginia 22314-3428.
Hand Delivery/Courier: Address to Becky Baker, Secretary
of the Board, National Credit Union Administration. Deliver to guard
station in the lobby of 1775 Duke Street, Alexandria, Virginia 22314-
3428, on business days between 8 a.m and 5 p.m.

FOR FURTHER INFORMATION CONTACT:
OCC: Amy Friend, Assistant Chief Counsel, (202) 874-5200; Michael
Bylsma, Director, or Stephen Van Meter, Assistant Director, Community
and Consumer Law, (202) 874-5750; Patrick T. Tierney, Attorney,
Legislative and Regulatory Activities Division, (202) 874-5090; or
Carol Turner, Compliance Specialist, Compliance Department, (202) 874-
4858, Office of the Comptroller of the Currency, 250 E Street, SW.,
Washington, DC 20219.
Board: David A. Stein, Counsel; Minh-Duc T. Le, Ky Tran-Trong, or
Krista P. DeLargy, Senior Attorneys, Division of Consumer and Community
Affairs, (202) 452-3667 or (202) 452-2412; or Thomas E. Scanlon,
Counsel, Legal Division, (202) 452-3594, Board of Governors of the
Federal Reserve System, 20th and C Streets, NW., Washington, DC 20551.
For users of a Telecommunications Device for the Deaf (TDD) only,
contact (202) 263-4869.
FDIC: Ruth R. Amberg, Senior Counsel, (202) 898-3736, Robert A.
Patrick, Counsel, (202) 898-3757, or Richard M. Schwartz, Counsel,
Legal Division, (202) 898-7424; April Breslaw, Chief, Compliance
Section, (202) 898-6609; David P. Lafleur, Policy Analyst, Division of
Supervision and Consumer Protection, (202) 898-6569, Federal Deposit
Insurance Corporation, 550 17th Street, NW., Washington, DC 20429.
OTS: Cindy Baltierra, Program Analyst (Compliance), Compliance
Policy, (202) 906-6540; Richard Bennett, Counsel (Banking and Finance),
(202) 906-7409; or Paul Robin, Special Counsel, Regulations and
Legislation Division, (202) 906-6648, Office of Thrift Supervision,
1700 G Street, NW., Washington, DC 20552.
NCUA: Chrisanthy J. Loizos, Staff Attorney, Office of General
Counsel, (703) 518-6540, National Credit Union Administration, 1775
Duke Street, Alexandria, VA 22314-3428.

SUPPLEMENTARY INFORMATION:

I. Background

The Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA or Act), which was 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. 15 U.S.C. 1681-1681x. In 1996, the
Consumer Credit Reporting Reform Act extensively amended the FCRA. Pub.
L. 104-208, 110 Stat. 3009.
The FCRA, as amended, provides that a person may communicate to an
affiliate or a non-affiliated third party information solely as to
transactions or experiences between the consumer and the person without
becoming a consumer reporting agency.\1\ In addition, the communication
of such transaction or experience information among affiliates will not
result in any affiliate becoming a consumer reporting agency. See FCRA
603(d)(2)(A)(i) and (ii).
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\1\ The FCRA creates substantial obligations for a person that
meets the definition of a ``consumer reporting agency'' in section
603(f) of the statute.
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Section 603(d)(2)(A)(iii) of the FCRA provides that a person may
communicate ``other'' information--that is, information that is not
transaction or experience information--among its affiliates without
becoming a consumer reporting agency if the person has given the
consumer a clear and conspicuous notice that such information may be
communicated among affiliates and an opportunity to ``opt out'' or
direct that the information not be communicated, and the consumer has
not opted out. The notice and opt out provided in section
603(d)(2)(A)(iii) of the FCRA limits the sharing of information among
affiliates and was the subject of the October 20, 2000 proposal by the
Federal banking agencies and NCUA. See 65 FR 63120 (Oct. 20, 2000); 65
FR 64168 (Oct. 26, 2000) (the October 2000 proposal).
The current proposal addresses a new notice and opt out provision
that applies to a person's use of certain information that it receives
from an affiliate to market its products and services to consumers.
Although there is a certain degree of overlap between the two opt outs,
the two opt outs are distinct and serve different purposes. Therefore,
nothing in this proposal regarding the opt out for affiliate marketing
supersedes or replaces the affiliate sharing opt out contained in
section 603(d)(2)(A)(iii) of the Act.

The Fair and Accurate Credit Transactions Act of 2003

The Fair and Accurate Credit Transactions Act of 2003 (FACT Act)
was signed into law on December 4, 2003. Pub. L. 108-159, 117 Stat.
1952. In general, the FACT Act amends the FCRA to enhance the ability
of consumers to combat identity theft, to increase the accuracy of
consumer reports, and to allow consumers to exercise greater control
regarding the type and amount of solicitations they receive. The FACT
Act also restricts the use and disclosure of sensitive medical
information. To bolster efforts to improve financial literacy among
consumers, the FACT Act creates a new Financial Literacy and Education
Commission empowered to take appropriate actions to improve the
financial literacy and education programs, grants, and materials of the
Federal government. Lastly, to promote increasingly efficient national
credit markets, the FACT Act establishes uniform national standards in
key areas

[[Page 42504]]

of regulation regarding consumer report information.
Section 214 of the FACT Act adds a new section 624 of the FCRA.
This new provision gives consumers the right to restrict a person from
using certain information about a consumer obtained from an affiliate
to make solicitations to that consumer. That section also requires the
Agencies, in consultation and coordination with each other, to issue
regulations in final form implementing section 214 not later than 9
months after the date of enactment.\2\ These rules must become
effective not later than 6 months after the date on which they are
issued in final form.
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\21\ The Federal Trade Commission (FTC) and the Securities and
Exchange Commission (SEC) are also required to issue regulations
under new section 624 in consultation and coordination with the
Agencies. The FTC published its proposed rule on June 15, 2004 (69
FR 33,324). The SEC proposal will also be published in a separate
Federal Register notice.
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II. Explanation of the Proposed Regulations

New section 624 of the FCRA generally provides that, if a person
shares certain information about a consumer with an affiliate, the
affiliate may not use that information to make or send solicitations to
the consumer about its products or services, unless the consumer is
given notice and a reasonable opportunity to opt out of such use of the
information and 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. As such, the new opt out right contained in
section 624 is distinct from the existing FCRA opt out right for
affiliate sharing under section 603(d)(2)(A)(iii), although these opt
out rights and the information subject to these two opt outs overlap to
some extent. As noted above, the FCRA allows some information
(transaction or experience information) to be shared without giving the
consumer notice and an opportunity to opt out, and provides that
``other'' information may not be shared among affiliates without giving
the consumer notice and an opportunity to opt out. The new opt out
right for affiliate marketing generally applies to both transaction or
experience information and ``other'' information.
The Agencies seek comment on these proposed regulations
implementing section 624 of the FCRA, including in particular the
matters discussed below.

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. Under one view, the person that
receives certain consumer information from its affiliate and wants to
use that information to make or send solicitations to the consumer
could be responsible for giving the notice because the statute is
drafted as a prohibition on the affiliate that receives the information
from using such information to send solicitations, rather than as an
affirmative duty imposed on the affiliate that sends or communicates
that information. On the other hand, section 624(a)(1)(A) provides that
the disclosure must state that the information ``may be communicated''
among affiliates for purposes of making solicitations, suggesting that
the affiliate that sends or communicates information about a consumer
should be responsible for providing the notice. In addition, section
214(b)(3) of the FACT Act requires the Agencies to consider existing
affiliate sharing notification practices and provide for coordinated
and consolidated notices. Similarly, section 214 allows for the
combination of affiliate marketing opt out notices with other notices
required by law, which may include Gramm-Leach-Bliley Act (GLB Act)
privacy notices. Thus, the provisions of section 214 suggest that the
person communicating information about a consumer to its affiliate
should give the notice because that is the person that would likely
provide the affiliate sharing opt out notice under section
603(d)(2)(A)(iii) of the FCRA and other disclosures required by law.
The Agencies have proposed that the person communicating
information about a consumer to its affiliate should be responsible for
satisfying the notice requirement, if applicable. A rule of
construction provides flexibility to allow the notice to be given by
the person that communicates information to its affiliate, by the
person's agent, or through a joint notice with one or more other
affiliates. This approach provides flexibility and facilitates the use
of a single notice. At the same time, it ensures that the notice is not
provided solely by the affiliate that receives and uses the information
to make or send solicitations, which may be a person from which the
consumer would not expect to receive important notices regarding the
consumer's opt out rights. The Agencies invite comment on whether the
affiliate receiving the information should be permitted to give the
notice solely on its own behalf. The Agencies specifically solicit
comment on whether a receiving affiliate could provide notice without
making or sending any solicitations at the time of the notice and on
whether such a notice would be effective.

Scope of Coverage

The statute specifies certain circumstances, which are included in
the proposed regulations, when the requirements do not apply. New
section 624(a)(4) provides that the requirements and prohibitions of
that section do not apply, for example, when: (1) The affiliate
receiving the information has a pre-existing business relationship with
the consumer; (2) the information is used to perform services for
another affiliate (subject to certain conditions); (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 Agencies have incorporated
each of these statutory exceptions into the proposed rule.
In defining the circumstances when the regulatory provisions apply,
the proposal focuses on the communication of eligibility information
among affiliates. Under the proposal, ``eligibility information'' is
defined to mean any information the communication of which would be a
``consumer report'' if the statutory exclusions from the definition of
``consumer report'' in section 603(d)(2)(A) of the FCRA for transaction
or experience information and for ``other'' information that is subject
to the affiliate-sharing opt out did not apply. Under section 603(d)(1)
of the FCRA, a ``consumer report'' means any written, oral, or other
communication of any information by a consumer reporting agency bearing
on the 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 credit or insurance to be used primarily for
personal, family, or household purposes, employment purposes, or any
other purpose authorized in section 604 of the FCRA. The Agencies
invite comment on whether the term ``eligibility information,'' as
defined, appropriately reflects the scope of coverage, or whether the
regulation should track the more complicated language of the statute
regarding the communication of information that would be a consumer
report, but for clauses (i), (ii), and (iii) of section 603(d)(2)(A) of
the FCRA.

[[Page 42505]]

Duration of Opt Out

Section 624 provides that a consumer's election to prohibit
marketing based on shared information shall be effective for at least 5
years. Accordingly, the proposal provides that a consumer's opt out
election is valid for a period of at least 5 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 in writing, or if the consumer agrees, electronically,
before the opt out period has expired. When a consumer opts out, an
affiliate that receives eligibility information about that consumer
from another affiliate may not make or send solicitations to the
consumer during the opt out period based on that information, unless an
exception applies or the opt out is revoked.
To avoid the cost and burden of tracking consumer opt outs over 5-
year periods with varying start and end dates and sending out extension
notices in 5-year cycles, some companies may choose to treat the
consumer's opt out election as effective for a period longer than 5
years, including in perpetuity, unless revoked by the consumer. An
institution that chooses to honor a consumer's opt out election for
more than 5 years would not violate the proposed regulations.

Key Definitions

Section 624 allows eligibility information shared with an affiliate
to be used by that affiliate in making solicitations in certain
circumstances, including where the affiliate has a pre-existing
business relationship with the consumer. The terms ``solicitation'' and
``pre-existing business relationship'' are defined in the statute and
the proposed regulation, and discussed in detail below in the Section-
by-Section Analysis. The Agencies have the authority to prescribe by
regulation circumstances other than those specified in the statute that
would constitute a ``pre-existing business relationship'' or would not
constitute a ``solicitation.'' The Agencies seek comment on whether
there are additional circumstances that should be deemed a ``pre-
existing business relationship'' or other types of communications that
should not be deemed a ``solicitation.''
The Agencies solicit comment on all aspects of the proposal,
including but not limited to items discussed in the Section-by-Section
Analysis below.

III. Section-by-Section Analysis

Section --.1 Purpose, Scope, and Effective Dates

Proposed Sec. ----.1 sets forth the purpose and scope of each
agency's regulations.

Section --.2 Examples

Proposed Sec. ----.2 describes the use of examples in the proposed
regulations. In particular, the examples in this part are not
exclusive. However, compliance with an example, to the extent
applicable, constitutes compliance with this part. Examples in a
paragraph illustrate only the issue described in the paragraph and do
not illustrate any other issue that may arise in this part.

Section --.3 Definitions

Proposed Sec. ----.3 contains definitions for the following terms:
``affiliate'' (as well as the related terms ``company'' and
``control''); ``clear and conspicuous''; ``communication'';
``consumer''; ``eligibility information''; ``person''; ``pre-existing
business relationship''; and ``solicitation.''

Affiliate

Several FCRA provisions apply to information sharing with persons
``related by common ownership or affiliated by corporate control,''
``related by common ownership or affiliated by common corporate
control,'' or ``affiliated by common ownership or common corporate
control.'' E.g., FCRA, sections 603(d)(2), 615(b)(2), and 624(b)(2).
Section 2 of the FACT Act defines the term ``affiliate'' to mean
``persons that are related by common ownership or affiliated by
corporate control.''
The FCRA, the FACT Act, and the GLB Act contain a variety of
definitions of ``affiliate.'' Proposed paragraph (b) simplifies the
various FCRA and FACT Act formulations by defining ``affiliate'' to
mean any person that is related by common ownership or common corporate
control with another person.\3\ The Agencies believe it is important to
harmonize the various definitions of affiliate as much as possible and
construe the various FCRA and FACT Act definitions to mean the same
thing. Comment is solicited on whether there is any meaningful
difference between the various FCRA, FACT Act, and GLB Act definitions.
In addition, the proposal uses a definition of ``control'' that applies
exclusively to the control of a ``company,'' and defines ``company'' to
include any corporation, limited liability company, business trust,
general or limited partnership, association, or similar organization.
See proposed paragraphs (d) (``company'') and (i) (``control'').\4\
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\3\ For purposes of this regulation, an ``affiliate'' of a bank
or savings association includes an operating subsidiary of such bank
or savings association. An affiliate of a credit union includes a
credit union service organization that is controlled by a Federal
credit union.
\4\ For purposes of the proposed regulation, NCUA will presume a
Federal credit union has a controlling influence over the management
or policies of a credit union service organization if it is 67
percent owned by credit unions.
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Clear and Conspicuous

Proposed paragraph (c) defines the term ``clear and conspicuous''
to mean reasonably understandable and designed to call attention to the
nature and significance of the information presented. Institutions
retain flexibility in determining how best to meet the clear and
conspicuous standard.
Institutions may wish to consider a number of practices 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; using a typeface and type
size that are easy to read; using wide margins and ample line spacing;
using boldface or italics for key words. Institutions that provide the
notice on a 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 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

[[Page 42506]]

disclosure, for example, where a privacy notice under the GLB Act
includes several opt out 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 required disclosures.
It may not be feasible to incorporate all of the methods described
above all the time. For example, an institution may have to use legal
terminology, rather than everyday words, in certain circumstances to
provide a precise explanation. Institutions 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.

Consumer

Proposed paragraph (e) defines the term ``consumer'' to mean an
individual, 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.

Eligibility Information

Under proposed paragraph (j), the term ``eligibility information''
means any information the communication of which 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. Eligibility information
may include a person'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.

Person

Proposed paragraph (l) defines the term ``person'' to mean any
individual, partnership, corporation, trust, estate, cooperative,
association, government or governmental subdivision or agency, or other
entity. A person may act through an agent, such as a licensed agent (in
the case of an insurance company), a trustee (in the case of a trust),
or any other agent. 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.

Pre-Existing Business Relationship

Proposed paragraph (m) defines this term to mean a relationship
between a person and a consumer based on the following: (1) A financial
contract between the person and the consumer that is in force; (2) the
purchase, rental, or lease by the consumer of that person's goods 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 that person, during the 18-month period
immediately preceding the date on which a solicitation covered by
subpart C is made or sent to the consumer; or (3) an inquiry or
application by the consumer regarding a product or service offered by
that person during the 3-month period immediately preceding the date on
which a solicitation covered by subpart C is made or sent to the
consumer. The proposed definition generally tracks the statutory
definition contained in section 624 of the Act, with certain revisions
for clarity.
The Agencies have the statutory authority to define in the
regulations other circumstances that qualify as a pre-existing business
relationship. The Agencies have not proposed to exercise this authority
to expand the definition of ``pre-existing business relationship''
beyond the circumstances set forth in the statute. Comment is
solicited, however, on whether there are other circumstances that the
Agencies should include within the definition of ``pre-existing
business relationship.''

Solicitation

Proposed paragraph (n) defines this term to mean marketing
initiated by a person to a particular consumer that is based on
eligibility information communicated to that person by its affiliate
and is intended to encourage the consumer to purchase a 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 products and services from the person initiating
the communications. The proposed definition tracks the statutory
definition contained in section 624 of the Act, with certain revisions
for clarity.
The Agencies have the statutory authority to determine by
regulation that other communications do not constitute a solicitation.
The Agencies have not proposed to exercise this authority to specify
other communications that would not be deemed ``solicitations'' beyond
the circumstances set forth in the statute. Comment is solicited,
however, on whether there are other communications that the Agencies
should determine do not meet the definition of ``solicitation.''
Comment is also requested on whether, and to what extent, various tools
used in Internet marketing, such as pop-up ads, may constitute
solicitations as opposed to communications directed at the general
public, and whether further guidance is needed to address Internet
marketing.

Section ----.20 Use of Eligibility Information by Affiliates for
Marketing

Proposed Sec. ----.20 establishes the basic rules governing the
requirement to provide the consumer with notice and a reasonable
opportunity to opt out of a person's use of eligibility information
that it obtains from an affiliate for the purpose of making or sending
solicitations to the consumer. The statute is ambiguous because it does
not specify which affiliate must provide the opt out notice to the
consumer. The proposed regulation would resolve this ambiguity by
imposing certain duties on the person that communicates the eligibility
information and certain duties on the affiliate that receives the
information with the intent to use that information to make or send
solicitations to consumers. These bifurcated duties are set forth in
paragraphs (a) and (b).\5\
---------------------------------------------------------------------------

\5\ Because the proposed regulations generally would impose
duties on more than one person in an affiliated group, different
Agencies may have enforcement authority over the different
affiliates involved in communicating and using eligibility
information to make or send solicitation.
---------------------------------------------------------------------------

Paragraph (a) sets forth the duty of a person that communicates
eligibility information to an affiliate. Under the proposal, before an
affiliate may use eligibility information to make or send solicitations
to the consumer, the person that communicates eligibility information
about a consumer to an affiliate must provide a notice to the consumer
stating that such information may be communicated to and used by the
affiliate to make or send solicitations to the consumer regarding the
affiliate's products and services, and must give the consumer a
reasonable opportunity and a simple method to opt out.
Some organizations may choose to share eligibility information
among affiliates but not allow the affiliates that receive that
information to use it for marketing purposes. In that case, proposed
paragraph (a) would not apply and an opt out notice would not be
required if none of the affiliates that receive eligibility information
use it to make or send solicitations to consumers.

[[Page 42507]]

Under the proposal, paragraph (a) would not apply if, for example,
an insurance company asks its affiliated bank to include insurance
company marketing material in periodic statements sent to consumers by
the bank without regard to eligibility information. The Agencies invite
comment on whether, given the policy objectives of section 214 of the
FACT Act, proposed paragraph (a) should apply if affiliated companies
seek to avoid providing notice and opt out by engaging in the
``constructive sharing'' of eligibility information to conduct
marketing. For example, the Agencies request commenters to consider the
applicability of paragraph (a) in the following circumstance. A
consumer has a relationship with a bank, and the bank is affiliated
with an insurance company. The insurance company provides the bank with
specific eligibility criteria, such as consumers having combined
deposit balances in excess of $50,000, and average monthly demand
account deposits in excess of $10,000, for the purpose of having the
bank make solicitations on behalf of the insurance company to consumers
that meet those criteria. Additionally, the consumer responses provide
the insurance company with discernible eligibility information, such as
a response form that is coded to identify the consumer as an individual
who meets the specific eligibility criteria.
Proposed paragraph (a) also contains two rules of construction. The
first rule of construction provides that the notice may be provided
either in the name of a person with which the consumer currently does
or previously has done business or in one or more common corporate
names shared by members of an affiliate group of companies that
includes the common corporate name used by that person. The rule of
construction also provides alternatives regarding the manner in which
the notice is given. A person that communicates eligibility information
to an affiliate may provide the notice directly to the consumer, or may
use an agent to provide the notice on the person's behalf. If the agent
is the person's affiliate, the agent may not include any solicitations
other than those of the person on or with the notice, unless one of the
exceptions in paragraph (c) applies. Additionally, the agent must
provide the opt out notice in the name of the person or a common
corporate name.\6\ If an agent is used, the person remains responsible
for any failure of the agent to fulfill its notice obligations.
Alternatively, a person may provide a joint notice with one or more of
its affiliates as provided in Sec. ----.24(c) and discussed more fully
below.
---------------------------------------------------------------------------

\6\ If the agent sending the notice is not an affiliate, the
agent would only be permitted to use the information for limited
purposes under the GLB Act privacy regulations.
---------------------------------------------------------------------------

This rule of construction strikes a balance between giving
institutions flexibility to allow different entities within the
affiliated group to provide the notice while ensuring that the notice
provided to the consumer is meaningful and designed to be effective.
Thus, an opt out notice provided to the consumer solely in the name of
an affiliate that receives eligibility information but that is not
known or recognizable to the consumer as an entity with which the
consumer does or has done business is not likely to be an effective
notice. For example, if the consumer has a relationship with the ABC
affiliate, but the opt out notice is provided solely in the name of the
XYZ affiliate, which does not share a common name with the ABC
affiliate, then the notice is not likely to be effective. Indeed, many
consumers may disregard a notice from the XYZ affiliate on the
assumption that the notice is unsolicited junk mail. If, however, the
consumer has a relationship with the ABC affiliate, and the opt out
notice is provided jointly in the name of all affiliated companies that
share the ABC name and the XYZ name, the notice is likely to be
effective.
The second rule of construction makes clear that it is not
necessary for each affiliate that communicates the same eligibility
information to provide an opt out notice to the consumer, so long as
the notice provided by the affiliate that initially communicated the
information is broad enough to cover use of that information by each
affiliate that receives and uses it to make solicitations. For example,
if affiliate A communicates eligibility information to affiliate B, and
affiliate B communicates that same information to affiliate C,
affiliate B does not have to provide the consumer with an opt out
notice, so long as affiliate A's notice is broad enough to cover both
B's and C's use of that information to make solicitations to the
consumer. Examples are provided to illustrate how the rules of
construction work.
Paragraph (a) contemplates that the opt out notice will be provided
to the consumer in writing or, if the consumer agrees, electronically.
Comment is solicited on whether there are circumstances in which it is
necessary and appropriate to allow oral notice and opt out and how an
oral notice can satisfy the clear and conspicuous standard in the
statute. In this regard, the Agencies note that certain exceptions to
the notice and opt out requirement may be triggered by an oral
communication from or with a consumer. These exceptions are contained
in paragraph (c) and discussed below.
Paragraph (b) sets forth the general duties of an affiliate that
receives eligibility information (``the receiving affiliate''). The
receiving affiliate may not use eligibility information it receives
from an affiliate to make solicitations to the consumer unless, prior
to such use, the consumer has been provided an opt out notice, as
described in paragraph (a), that applies to that affiliate's use of
eligibility information and a reasonable opportunity and simple method
to opt out and the consumer did not opt out of that use.
Paragraphs (a) and (b) focus on whether the information
communicated to affiliates meets the definition of ``eligibility
information.'' Section 624(a)(1) of the Act focuses on ``a
communication of information that would be a consumer report, but for
clauses (i), (ii), and (iii) of section 603(d)(2)(A).'' The Agencies
have proposed to define ``eligibility information'' in a manner
consistent with the statutory definition. The Agencies recognize,
however, that there are other exceptions to the statutory definition of
``consumer report,'' such that it may be burdensome for institutions to
determine and track whether consumer report information is eligibility
information (to which the marketing opt out provisions of section 624
apply) or information that may be shared with affiliates under other
exceptions in the FCRA (to which the marketing opt out provisions of
section 624 do not apply). To minimize this burden, the Agencies
believe that institutions may satisfy the requirements of section 624
by voluntarily offering consumers the ability to opt out of marketing
based on consumer report information that is shared under any of the
exceptions in section 603(d)(2) of the FCRA, not just those in section
603(d)(2)(A), as required by section 624.
Proposed Sec. ----.20(c) contains exceptions to the requirements
of subpart C. Paragraph (c) 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

[[Page 42508]]

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. See FCRA, section 624(a)(4). Several of these exceptions are
discussed below.
Proposed paragraph (c)(1) clarifies that the provisions of this
subpart do not apply where the affiliate using the information to make
a solicitation to a consumer has a pre-existing business relationship
with that consumer. As noted above, a pre-existing business
relationship exists when: (1) There is a financial contract in force
between the affiliate and the consumer; (2) the consumer and the
affiliate have engaged in a financial transaction (including holding an
active account or a policy in force or having another continuing
relationship) during the 18 months immediately preceding the date of
the solicitation; (3) the consumer has purchased, rented, or leased the
affiliate's goods or services during the 18 months immediately
preceding the date of the solicitation; or (4) the consumer has
inquired about or applied for a product or service offered by the
affiliate during the 3-month period immediately preceding the date of
the solicitation.
The third and fourth elements of the definition are substantially
similar to the definition of ``established business relationship''
under the amended Telemarketing Sales Rule (TSR) (16 CFR 310.2(n)).
That definition was informed by Congress's intent that the
``established business relationship'' exemption to the ``do not call''
provisions of the Telephone Consumer Protection Act (47 U.S.C. 227 et
seq.) should be grounded on the reasonable expectations of the
consumer.\7\ Congress's incorporation of similar language in the
definition of ``pre-existing business relationship'' \8\ suggests that
it would be appropriate to consider the reasonable expectations of the
consumer in determining the scope of this exception. Thus, for purposes
of this regulation, an inquiry includes any affirmative request by a
consumer for information, such that the consumer would reasonably
expect to receive information from the affiliate about its products or
services.\9\ 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.
Proposed paragraph (d)(1) provides examples of the pre-existing
business relationship exception.
---------------------------------------------------------------------------

\7\ H.R. Rep. No. 102-317, at 14-15 (1991). See also 68 FR 4580,
4591-94 (Jan. 29, 2003).
\8\ 149 Cong. Rec. S13,980 (daily ed. Nov. 5, 2003) (statement
of Senator Feinstein).
\9\ See 68 FR at 4594.
---------------------------------------------------------------------------

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 or send solicitations on behalf of itself or
an affiliate if the service provider or the affiliate, as applicable,
would not be permitted to make or send 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, an affiliate
subject to the consumer's opt out election that has received
eligibility information from a person that has a relationship with the
consumer may not circumvent the opt out by instructing the person with
the consumer relationship or another affiliate to make or send
solicitations to the consumer on its behalf.
Proposed paragraph (c)(4) incorporates the statutory exception for
information used in response to a communication initiated by the
consumer. The proposed rule clarifies 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 an
affiliate to ask about retail locations and hours, the affiliate may
not then use eligibility information to make solicitations to the
consumer about specific products because those solicitations would not
be responsive to the consumer's communication. Conversely, if the
consumer calls an affiliate to ask about its products or services, then
solicitations related to those products or services would be responsive
to the communication and thus 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 proposal
also contemplates that a consumer has not initiated a communication if
an affiliate makes the initial call and leaves a message for the
consumer to call back, and the consumer responds. Proposed paragraph
(d)(2) provides examples of the consumer-initiated communications
exception.
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 the proposal, a pre-
selected check box or boilerplate language in a disclosure or contract
would not constitute an affirmative authorization or request.
The exception in paragraph (c)(5) could be triggered, for example,
if a consumer obtains a mortgage from a mortgage lender and authorizes
or requests to receive solicitations about homeowner's insurance from
an insurance affiliate of the mortgage lender. Under this exception,
the consumer may provide the authorization or make the request either
through the person with whom the consumer has a business relationship
or directly to the affiliate that will make the solicitation. In
addition, the duration of the authorization or request will depend on
the facts and circumstances. Finally, nothing in this exception
supersedes the restrictions contained in the Telemarketing Sales Rule,
including the ``Do-Not-Call List'' established by the FTC and the
Federal Communications Commission. Proposed paragraph (d)(3) provides
an example of the affirmative authorization or request exception.
The exceptions in proposed paragraphs (c)(1), (4), and (5)
described above overlap in certain situations. For example, if a
consumer who has an account with a bank makes a telephone call to the
bank's securities affiliate and requests information about brokerage
services or mutual funds, the securities affiliate may use information
about the consumer it obtains from the bank to make or send
solicitations in response

[[Page 42509]]

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
securities affiliate triggers the exceptions in paragraph (c)(1) for
inquiries by the consumer regarding a product or service offered by the
securities 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.
Proposed paragraph (e) provides that the provisions of this subpart
do not apply to eligibility information that was received by an
affiliate prior to the date on which compliance with these regulations
is required. This incorporates a limitation contained in the statute.
The mandatory compliance date will be included in the final rule.
Comment is requested on what the mandatory compliance date should be
and whether it should be different from the effective date of the final
regulations.
Finally, proposed paragraph (f) clarifies the relationship between
the affiliate sharing notice and opt out under section
603(d)(2)(A)(iii) of the FCRA and the affiliate marketing notice and
opt out in new section 624 of the Act. Specifically, paragraph (f)
provides that nothing in subpart C (the affiliate marketing
regulations) limits the responsibility of a company to comply with the
notice and opt out provisions of section 603(d)(2)(A)(iii) of the Act
before it shares information other than transaction or experience
information among affiliates to avoid becoming a consumer reporting
agency.

Section ----.21 Contents of Opt Out Notice

Proposed Sec. ----.21 addresses the contents of the opt out
notice. Proposed paragraph (a) requires that the opt out notice be
clear, conspicuous, and concise, and accurately disclose: (1) That the
consumer may elect to limit a person's affiliate from using eligibility
information about the consumer that it obtains from that person to make
or send solicitations to the consumer; (2) if applicable, that the
consumer's election will apply for a specified period of time and that
the consumer will be allowed to extend the election once that period
expires; and (3) a reasonable and simple method for the consumer to opt
out. Use of a model form in Appendix A in appropriate circumstances
would comply with paragraph (a), but is not required. Paragraph (a)
reflects the intent of Congress, as expressed in section 624(a)(2)(B)
of the FCRA, that the notice required by this subpart must be ``clear,
conspicuous, and concise,'' and that the method for opting out must be
``simple.''
Proposed paragraph (b) defines the term ``concise'' to mean a
reasonably brief expression or statement. Paragraph (b) also provides
that a notice required by subpart C may be concise even if it is
combined with other disclosures required or authorized by Federal or
State law. Such disclosures include, but are not limited to, a notice
under the GLB Act, a notice under section 603(d)(2)(A)(iii) of the
FCRA, and other similar consumer disclosures. Finally, paragraph (b)
clarifies that the requirement for a concise notice would be satisfied
by the appropriate use of one of the model forms contained in Appendix
A of this part, although use of the model forms is not required.
Proposed paragraph (c) provides that the notice may allow a
consumer to choose from a menu of alternatives when opting out, such as
by selecting certain types of affiliates, certain types of information,
or certain modes of delivery from which to opt out, so long as one of
the alternatives gives the consumer the opportunity to opt out with
respect to all affiliates, all eligibility information, and all methods
of delivering solicitations.
Proposed paragraph (d) provides that, where an institution elects
to give consumers a broader right to opt out of marketing than is
required by law, the institution would have the ability to modify the
contents of the opt out notice to reflect accurately the scope of the
opt out right it provides to consumers. Appendix A provides Model Form
A-3 that may be helpful for institutions that wish to allow consumers
to prevent all marketing from the institution and its affiliates, but
use of the model form is not required.

Section ----.22 Reasonable Opportunity To Opt Out

Proposed paragraph (a) provides that before the affiliate uses the
eligibility information to make or send solicitations to the consumer,
the person that communicates such eligibility information to the
affiliate must provide the consumer with a reasonable opportunity to
opt out following delivery of the opt out notice. Given the variety of
circumstances in which institutions must provide a reasonable
opportunity to opt out, the Agencies believe that a reasonable
opportunity to opt out should be construed as a general test that
avoids setting a mandatory waiting period in all cases. A general
standard would provide flexibility to allow affiliates to use
eligibility information received from another affiliate to make or send
solicitations at an appropriate point in time which may vary depending
upon the circumstances, while assuring that the consumer is given a
realistic opportunity to prevent such use of this information. The
Agencies also believe that providing examples for what constitutes a
reasonable opportunity to opt out may be useful by illustrating how the
opt out might work in different situations and by providing a safe
harbor for opt out periods of 30 days in certain situations. Although
30 days is a safe harbor, a person subject to this requirement may
decide, at its option, to give consumers more than 30 days in which to
decide whether or not to opt out. Whether a shorter waiting period
would be adequate in certain situations depends on the circumstances.
Proposed paragraphs (b)(1) and (2) contain examples of reasonable
opportunities to opt out by mail or by electronic means. These examples
are consistent with examples used in the GLB Act privacy rules.
The example of a reasonable opportunity to opt out for notices
given by electronic means in paragraph (b)(2) is triggered by the
consumer's acknowledgement of receipt of the electronic notice. Several
commenters on the October 2000 proposal sought clarification of an
identical acknowledgement of receipt reference in the electronic
delivery example, suggesting that such a reference would be
inconsistent with the E-Sign Act and beyond the scope of the Agencies'
interpretive authority. The current proposal retains the
acknowledgement reference. This reference is consistent with an example
in the GLB Act privacy regulations and the Agencies' determination that
electronic delivery of the FCRA affiliate-marketing opt out notices
would not require consumer consent in accordance with E-Sign, because
nothing in section 624 of the Act requires that the notice be provided
in writing. Moreover, this reference is contained in an example. Thus,
affiliates subject to this rule retain flexibility to determine the
form of consumer agreement.
Proposed paragraph (b)(3) would provide an example of a reasonable
opportunity to opt out where, in a transaction that is conducted
electronically, the consumer is required to decide, as a necessary part
of proceeding with the transaction, whether or not to opt out before
completing the transaction, so long as the institution provides a
simple

[[Page 42510]]

process at the Internet Web site that the consumer may use at that time
to opt out. In this example, the opt out notice would automatically be
provided to the consumer, such as through a non-bypassable link to an
intermediate Webpage, or ``speedbump.'' The consumer would be given a
choice of either opting out or not opting out at that time through a
simple process conducted at the Web site. For example, the consumer
could be required to check a box right at the Internet Web site in
order to opt out or decline to opt out before continuing with the
transaction. However, this example would not cover a situation where
the consumer is required to send a separate e-mail or visit a different
Internet Web site in order to opt out. The Agencies seek comment on
this example and whether additional protections or clarifications are
needed.
Proposed paragraph (b)(4) illustrates that including the affiliate
marketing opt out notice in a notice under the GLB Act will satisfy the
reasonable opportunity standard. In such cases, the consumer should be
allowed to exercise the opt out in the same manner and be given the
same amount of time to exercise the opt out as is provided for any
other opt out provided in the GLB Act privacy notice. This example is
consistent with the statutory requirement that the Agencies consider
methods for coordinating and combining notices.
Proposed paragraph (b)(5) illustrates how an ``opt in'' can meet
the requirement to provide a reasonable opportunity to opt out.
Specifically, if an institution has a policy of not allowing its
affiliates to use eligibility information to market to consumers
without the consumer's affirmative consent, providing the consumer with
an opportunity to ``opt in'' or affirmatively consent to such use
constitutes a reasonable opportunity to opt out. The consumer's
affirmative consent must be documented, and a pre-selected check box is
not evidence of the consumer's affirmative consent.
The proposed regulations do not require institutions subject to
this rule to disclose in their opt out notices how long a consumer has
to respond to the opt out notice before eligibility information
communicated to other affiliates will be used to make or send
solicitations to the consumer. Institutions, however, have the
flexibility to include such disclosures in their notices. In this
respect, the proposed regulations are consistent with the GLB Act
privacy regulations.

Section ----.23 Reasonable and Simple Methods of Opting Out

Proposed paragraph (a) sets forth reasonable and simple methods of
opting out. These examples generally track the examples of reasonable
opt out means from section 7(a)(2)(ii) of the GLB Act privacy
regulations with certain revisions to give effect to Congress's mandate
that methods of opting out be simple. For simplicity, the example in
paragraph (a)(2) contemplates including a self-addressed envelope with
the reply form and opt out notice. In addition, the Agencies
contemplate that a toll-free telephone number would be adequately
designed and staffed to enable consumers to opt out in a single phone
call.
Proposed paragraph (b) sets forth methods of opting out that are
not reasonable and simple. Such methods include requiring the consumer
to write a letter to the institution or to call or write to obtain an
opt out form rather than including it with the notice. In addition, a
consumer who agrees to receive the opt out notice in electronic form
only, such as by electronic mail or a process at a Web site, should be
allowed to opt out by the same or a substantially similar electronic
form and should not be required to opt out solely by telephone or paper
mail.

Section ----.24 Delivery of Opt Out Notices

Proposed paragraph (a) provides that an institution must deliver an
opt out notice so that each consumer can reasonably be expected to
receive actual notice. For opt out notices delivered electronically,
the notices may be delivered either in accordance with the electronic
disclosure provisions in this subpart or in accordance with the E-Sign
Act. For example, the institution may e-mail its notice to a consumer
who has agreed to the electronic delivery of information or provide the
notice on its Internet Web site for the consumer who obtains a product
or service electronically from that Web site.
As indicated by the examples provided in proposed paragraph (b),
the standard described in paragraph (a) is a lesser standard than
actual notice. For instance, if a person subject to the rule mails a
printed copy of its notice to the last known mailing address of a
consumer, the person has met its obligation even if the consumer has
changed addresses and never receives the notice.
Several commenters on the October 2000 proposal sought
clarification of the acknowledgement of receipt reference in the
electronic delivery example in proposed paragraph (b)(1)(iii),
suggesting that it would be inconsistent with the E-Sign Act and beyond
the scope of the Agencies' interpretive authority. As discussed above
with respect to the requirement in proposed Sec. ----.22 to provide a
reasonable opportunity to opt out, the current proposal retains the
acknowledgement reference. This reference is consistent with an example
in the GLB Act privacy regulations and the Agencies' determination that
electronic delivery of the FCRA opt out notices would not require
consumer consent in accordance with E-Sign, because nothing in section
624 of the Act requires that the notice be provided in writing.
Moreover, this reference is contained in an example, thus persons
subject to the rule retain flexibility to determine the method of
delivery that will provide a reasonable expectation of actual notice.
Proposed paragraph (c) permits a person subject to this rule to
provide a joint opt out notice with one or more of its affiliates that
are identified in the notice, so long as the notice is accurate with
respect to each affiliate jointly issuing the notice. A joint notice
does not have to list each affiliate participating in the joint notice
by its name. If each affiliate shares a common name, such as ``ABC,''
then the joint notice may state that it applies to ``all institutions
with the ABC name'' or ``all affiliates in the ABC family of
companies.'' If, however, an affiliate does not have ABC in its name,
then the joint notice must separately identify each family of companies
with a common name or the institution.
Proposed paragraph (d)(1) sets out rules that apply when two or
more consumers jointly obtain a product or service from a person
subject to this rule (referred to in the proposed regulation as joint
consumers), such as a joint checking account. For example, a person
subject to this rule may provide a single opt out notice to joint
accountholders. The notice must indicate whether the person will
consider an opt out by a joint accountholder as an opt out by all of
the associated accountholders, or whether each accountholder may opt
out separately. The person may not require all accountholders to opt
out before honoring an opt out direction by one of the joint
accountholders. Paragraph (d)(2) gives examples of these rules.
Proposed paragraph (d)(1)(vii) and the example in paragraph
(d)(2)(iii) address the situation where only one of two joint consumers
has opted out. Those paragraphs are derived from similar provisions in
the GLB Act privacy regulations. Because section 624 of the

[[Page 42511]]

FCRA deals with the use of information for marketing by affiliates,
rather than the sharing of information among affiliates, comment is
requested 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.

Section ----.25 Duration and Effect of Opt Out

Proposed Sec. ----.25 addresses the duration and effect of the
consumer's opt out election. Proposed paragraph (a) provides that the
consumer's election to opt out shall be effective for the opt out
period, which is a period of at least 5 years, beginning as soon as
reasonably practicable after the consumer's opt out election is
received. Nothing in this paragraph limits the ability of affiliated
persons to set an opt out period longer than 5 years, including an opt
out period that does not expire unless revoked by the consumer. No opt
out period, however, may be less than 5 years. In addition, if a
consumer elects to opt out every year, a new opt out period of at least
5 years begins upon receipt of each successive opt out election.
Proposed paragraph (b) provides that a receiving affiliate may not
make or send solicitations to a consumer during the opt out period
based on eligibility information it receives from an affiliate, except
as provided in the exceptions in Sec. ----.20(c) or if the opt out is
revoked by the consumer. Under this paragraph, the opt out is tied to
the consumer, not to the information. Thus, if a consumer initially
elects to opt out, but does not extend the opt out upon expiration of
the opt out period, a receiving affiliate may use all eligibility
information it has received about the consumer from its affiliate,
including eligibility information that it received during the opt out
period. However, if the consumer subsequently opts out again some time
after the initial opt out period has lapsed, a receiving affiliate may
not use any eligibility information about the consumer it has received
from an affiliate on or after the mandatory compliance date for the
regulations under subpart C, including information it received during
the period in which no opt out election was in effect.\10\ Proposed
paragraph (c) clarifies that a consumer may opt out at any time. Thus,
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 is not prompted by an
opt out notice, a consumer may still opt out. Regardless of when the
consumer opts out, the opt out period must be effective for an opt out
period of at least 5 years.
---------------------------------------------------------------------------

\10\ Section 624(a)(5) of the FCRA contains a non-retroactivity
provision, which provides that nothing shall prohibit the use of
information to send a solicitation to a consumer if such information
was received prior to the date of which persons are required to
comply with the regualtions implementing section 624.
---------------------------------------------------------------------------

Proposed paragraph (d) describes how the termination of a consumer
relationship affects the consumer's opt out. Specifically, if a
consumer's relationship with an institution terminates for any reason
when a consumer's opt out election is in force, the opt out will
continue to apply indefinitely, unless revoked by the consumer.

Section ----.26 Extension of Opt Out

Proposed Sec. ----.26 describes the procedures for extension of an
opt out. Proposed paragraph (a) provides that a receiving affiliate may
not make or send solicitations to the consumer after the expiration of
the opt out period based on eligibility information it receives or has
received from an affiliate, unless the person responsible for providing
the initial opt out notice, or its successor, has given the consumer an
extension notice and a reasonable opportunity to extend the opt out,
and the consumer does not extend the opt out. If an extension notice is
not provided to the consumer, the opt out period continues
indefinitely. The requirement to provide an extension notice also
applies when a consumer fails to opt out initially, but at a subsequent
point in time informs the institution of his or her decision to opt
out, which would be effective for a period of at least 5 years. The
consumer may extend the opt out at the expiration of each successive
opt out period. Paragraph (b) also provides that each opt out extension
must comply with Sec. ----.25(a), which means that it must be
effective for a period of at least 5 years.
Proposed paragraph (c) addresses the contents of an extension
notice. A notice under paragraph (c) must be clear and conspicuous, and
concise. Paragraph (c) provides some flexibility in the design and
contents of the notice. Under one approach, the notice must accurately
disclose the same items required to be disclosed in the initial opt out
notice under Sec. ----.21(a), along with a statement explaining that
the consumer's prior opt out 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. Under another
approach, the extension notice would provide: (1) That the consumer
previously elected to limit an affiliate from using eligibility
information about the consumer that it obtains from the communicating
affiliate to make or send solicitations to the consumer; (2) that the
consumer's election has expired or is about to expire, as applicable;
(3) that the consumer may elect to extend the consumer's previous
election; and (4) a reasonable and simple method for the consumer to
opt out. The Agencies propose to give institutions the flexibility to
decide which of these notices best meets their needs.
Institutions do not need to provide extension notices if they treat
the consumer's opt out election as valid in perpetuity, unless revoked
by the consumer. Comment is requested on whether institutions plan to
limit the duration of the opt out or not, and on the relative burdens
and benefits of the two approaches.
Proposed paragraph (d) addresses the timing of the extension notice
and provides that an extension 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 are made to the consumer. Providing the extension notice 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.
An extension notice given too far in advance of the expiration of
the opt out period, however, may be confusing to consumers. The
Agencies do 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 an extension 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 an
extension 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 (e) makes clear that sending an extension
notice to the consumer before the expiration of the opt out period does
not shorten the 5-year opt out period.
Including an affiliate marketing opt out notice or an extension
notice on an initial or annual notice under the GLB Act raises special
issues, because GLB Act notices typically state that the consumer does
not need to opt out again if the consumer previously opted out.

[[Page 42512]]

This statement would be accurate if the institution 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 5
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.

Section ----.27 Consolidated and Equivalent Notices

Proposed Sec. ----.27 implements section 624(b) of the Act, and
provides that 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, including but not limited to the
notice described in section 603(d)(2)(A)(iii) of the Act and the notice
required by title V of the GLB Act. 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, shall satisfy the requirements of this subpart.
Comment is solicited on whether the affiliate marketing notice will
be consolidated with the GLB Act privacy notice or the affiliate
sharing opt out notice under section 603(d)(2)(A)(iii) of the FCRA,
whether the Agencies have provided sufficient guidance on consolidated
notices, and whether consolidation would be helpful to consumers.

Effective Date

Consistent with the requirements of section 624 of the FACT Act,
the proposed regulations will become effective 6 months after the date
on which they are issued in final form. Comment is requested on whether
there is any need to delay the compliance date beyond the effective
date to permit institutions to incorporate the affiliate marketing
notice into their next annual GLB Act privacy notice.

Appendix A

The Agencies are proposing model forms to illustrate by way of
example how institutions may comply with the notice and opt out
requirements of section 624 and the proposed regulations. Appendix A
includes three proposed model forms. Model Form A-1 is a proposed form
of an initial opt out notice. Model Form A-2 is a proposed form of an
extension notice; it may be used when the consumer's prior opt out has
expired or is about to expire. Model Form A-3 is a proposed form that
institutions may use if they offer consumers a broader right to opt out
of marketing than is required by law.
Use of the model forms is not mandatory. Institutions have the
flexibility to use or not use the model forms, or to modify the forms,
so long as the requirements of the regulation are met. For example,
although Model Forms A-1 and A-2 use 5 years as the duration of the opt
out period, institutions are free to choose an opt out period of longer
than 5 years and substitute the longer time period in the opt out
notices. Alternatively, institutions may choose to treat the consumer's
opt out as effective in perpetuity and thereby omit any reference to
the limited duration of the opt out period or the right to extend the
opt out in the initial opt out notice.
Each of the proposed model forms is designed as a stand-alone form.
The Agencies anticipate that some institutions may want to combine the
opt out form with their GLB Act privacy notice. If so combined, the
Agencies expect that institutions would integrate the affiliate
marketing opt out notice with other required disclosures and avoid
repetition of certain information, such as the methods for opting out.
Developing a model form that combines various opt out notices, however,
is beyond the scope of this rulemaking.
The proposed model forms have been designed to convey the necessary
information to consumers as simply as possible. The Agencies have
tested the proposed model forms using two widely available readability
tests, the Flesch reading ease test and the Flesch-Kincaid grade level
test, each of which generates a score.\11\ Proposed Model Form A-1 has
a Flesch reading ease score of 53.7 and a Flesch-Kincaid grade level
score of 9.9. Proposed Model Form A-2 has a Flesch reading ease score
of 57.5 and a Flesch-Kincaid grade level score of 9.6. Proposed Model
Form A-3 has a Flesch reading ease score of 69.9 and a Flesch-Kincaid
grade level score of 6.7. Ideally, the Agencies would test the proposed
model forms both alone and in conjunction with other opt out notices
under the FCRA and GLB Act. Consumer testing may result in better, more
readable notices. However, such testing is unlikely to be completed
before this rule is issued in final form.
---------------------------------------------------------------------------

\11\ The Flesch reading ease test generates a score between zero
and 100, where the higher score correlates with improved
readability. The Flesch-Kincaid grade level test generates a
numerical assessment of the grade-level at which the text is
written.
---------------------------------------------------------------------------

The Agencies recognize the benefits of working with communications
experts and conducting consumer testing in developing appropriate
language for a consumer opt out notice. Comment is solicited on the
form and content of the proposed model forms based on commenters' work
with communications experts and experience with consumer testing.
Comment is also requested on whether institutions would combine the
affiliate marketing notice with other opt out notices or issue a
separate affiliate marketing opt out notice, and how those two
approaches may affect consumer comprehension of the notices and their
rights. In developing a final rule, the Agencies will carefully
consider any consumer testing that may suggest ways to improve the
proposed model forms, including efforts by consumer groups and
industry, as well as the Agencies' own initiative to consider
alternative forms of privacy notices under the GLB Act. See 68 FR 75164
(Dec. 30, 2003).

IV. Regulatory Analysis

Paperwork Reduction Act

Request for Comment on Proposed Information Collection
In accordance with the requirements of the Paperwork Reduction Act
of 1995, the Agencies may not conduct or sponsor, and the respondent is
not required to respond to, an information collection unless it
displays a currently valid Office of Management and Budget (OMB)
control number. The Agencies are currently requesting OMB approval of
this information collection.
Comments are invited on:
(a) Whether the collection of information is necessary for the
proper performance of the Agency's functions, including whether the
information has practical utility;
(b) The accuracy of the estimates of the burden of the information
collection, including the validity of the methodology and assumptions
used;
(c) Ways to enhance the quality, utility, and clarity of the
information to be collected;
(d) Ways to minimize the burden of the information collection on
respondents, including through the use of automated collection
techniques or other forms of information technology; and
(e) Estimates of capital or start up costs and costs of operation,
maintenance, and purchase of services to provide information.
At the end of the comment period, the comments and recommendations
received will be analyzed to determine whether the information
collections should be modified. Any material modifications will be
submitted to OMB

[[Page 42513]]

for review and approval. All comments will become a matter of public
record.
Comments should be addressed to:
OCC: Public Information Room, Office of the Comptroller of the
Currency, 250 E Street, SW., Mail stop 1-5, Attention: Docket 04-16,
Washington, DC 20219; fax number (202) 874-4448; Internet address:
regs.comments@occ.treas.gov. Due to delays in paper mail delivery in
the Washington area, commenters are encouraged to submit their comments
by fax or e-mail. You can make an appointment to inspect the comments
at the Public Information Room by calling (202) 874-5043.
Board: Comments should refer to Docket No. R-1203 and may be mailed
to Ms. Jennifer J. Johnson, Secretary, Board of Governors of the
Federal Reserve System, 20th Street and Constitution Avenue, NW.,
Washington, DC 20551. However, because paper mail in the Washington
area and at the Board of Governors is subject to delay, please consider
submitting your comments by e-mail to regs.comments@federalreserve.gov,
or faxing them to the Office of the Secretary at (202) 452-3819 or
(202) 452-3102. Members of the public may inspect comments in Room MP-
500 between 9 a.m. and 5 p.m. on weekdays pursuant to 261.12, except as
provided in 261.14, of the Board's Rules Regarding Availability of
Information, 12 CFR 261.12 and 261.14.
FDIC: Leneta Gregorie, Legal Division, Room MB-3064, Federal
Deposit Insurance Corporation, 550 17th Street, NW., Washington, DC
20429. All comments should refer to the title of the proposed
collection. Comments may be hand-delivered to the guard station at the
rear of the 17th Street Building (located on F Street), on business
days between 7 a.m. and 5 p.m., Attention: Comments/Legal Division,
Federal Deposit Insurance Corporation, 550 17th Street, NW.,
Washington, DC 20429. Comments may also be submitted electronically
through the FDIC's Web site, http://www.fdic.gov/regulations/laws/federal/propose.html
, or by e-mail, Comments@FDIC.gov.
OTS: Send comments, referring to the collection by title of the
proposal, to Information Collection Comments, Chief Counsel's Office,
Office of Thrift Supervision, 1700 G Street, NW., Washington, DC 20552;
send a facsimile transmission to (202) 906-6518; or send an e-mail to
infocollection.comments@ots.treas.gov. OTS will post comments and the

related index on the OTS internet site at http://www.ots.treas.gov. In

addition, interested persons may inspect the comments at the Public
Reading Room, 1700 G Street, NW., by appointment. To make an
appointment, call (202) 906-5922, send an e-mail to
publicinfo@ots.treas.gov, or send a facsimile transmission to (202)

906-7755.
NCUA: Joseph F. Lackey, the Office of Information and Regulatory
Affairs, OMB, Attn: Joseph F. Lackey, Room 10226, New Executive Office
Building, Washington, DC 20503. Please send a copy to the attention of
Becky Baker, Secretary of the Board, at NCUA.
Title of Information Collection:
OCC: Comptroller's Licensing Manual (Formerly Comptroller's
Corporate Manual).
Board: Information Collection Requirements in Connection with
Regulation V (Fair Credit Reporting Act).
FDIC: Affiliate Marketing Disclosures/Consumer Opt-Out Notices.
OTS: Fair Credit Reporting Affiliate Marketing Regulations.
NCUA: Information Collection Requirements in Connection with Fair
Credit Reporting Act Regulations.
Frequency of Response: On occasion.
Affected Public:
OCC: National banks, Federal branches and agencies of foreign
banks, and their respective operating subsidiaries that are not
functionally regulated within the meaning of section 5(c)(5) of the
Bank Holding Company Act of 1956, as amended (12 U.S.C. 1844(c)(5)).
Board: State member banks, branches and agencies of foreign banks
(other than federal branches, Federal agencies, and insured State
branches of foreign banks), commercial lending companies owned or
controlled by foreign banks, Edge and agreement corporations, and bank
holding companies and affiliates of such holding companies (other than
depository institutions and consumer reporting agencies).
FDIC: Insured state nonmember banks.
OTS: Savings associations and Federal savings association operating
subsidiaries that are not functionally regulated within the meaning of
section 5(c)(5) of the Bank Holding Company Act of 1956, as amended (12
U.S.C. 1844(c)(5)).
NCUA: Federal credit unions with CUSO affiliates.
Abstract: The information collections in this proposal involve
disclosure and reporting requirements associated with section 624 of
the FCRA. This section generally provides that, if a person shares
certain information about a consumer with an affiliate and the
affiliate intends to use that information to make or send solicitations
to the consumer about its products or services, then the person must
give the consumer notice (Sec. ----.21(a)) and a reasonable
opportunity to opt out (Sec. ----.23) of such use. A person's
obligations to provide a consumer with a notice and a right to opt out
applies to the use of ``eligibility information,'' as defined in the
proposed rule. The consumer must opt out in order to prevent an
affiliate from making solicitations based on such information. If a
consumer elects to opt out and the person has notified the consumer
that the election is effective for only five years or such longer
period as established by the person, then (prior to the expiration of
the opt out period or any time after the expiration of the opt out
period but before any affiliate makes or sends solicitations that would
have been prohibited by the consumer's prior decision to opt out) the
person must send the consumer an extension notice and provide the
consumer with a reasonable opportunity to opt out (Sec. ----.26(c)).
At that time, the consumer can again choose to opt out and prohibit the
use of ``eligibility information'' for marketing solicitations.
In order to help minimize the paperwork burden imposed on covered
institutions, the Agencies have provided model disclosures in Appendix
A that would apply to some of the examples mentioned in the proposed
rule. The proposed rule contains provisions that would permit the use
of coordinated and consolidated notices between affiliates, as provided
under section 214. The proposed rule also facilitates compliance by
allowing a covered entity to combine its affiliate marketing opt-out
notice with other notices required by law, as provided under section
214.
Estimated Burden: The Agencies estimate that the average amount of
time for a person to prepare an initial notice as required under the
proposal and distribute the notice to consumers will be approximately
18 hours. Although the amount of time needed for any particular person
that actually would be subject to the requirements as proposed may be
higher or lower, the Agencies believe that this average figure is a
reasonable estimate for several reasons. First, a significant number of
persons do not have affiliates, and are not covered by section 214 of
the FACT Act or the proposed rule. Second, persons that do have
affiliates may choose not to engage in the sharing of certain
information or marketing to consumers covered by section 214 or the
proposed rule, as explained in the SUPPLEMENTARY INFORMATION section.
Finally, in an effort to minimize the compliance costs and burdens for
persons, particularly small entities, the proposed rule contains

[[Page 42514]]

model disclosures and opt out notices that may be used to satisfy the
statutory requirements. The proposed rule gives covered persons
flexibility to satisfy the notice and opt out requirement by sending
the consumer a freestanding opt out notice or by adding the opt out
notice to the privacy notices already provided to consumers in
accordance with the provisions of title V of the GLB Act. For covered
persons that choose to prepare a freestanding opt out notice, the time
necessary to prepare a freestanding opt out notice would be minimal,
because those persons could simply copy the model disclosure, making
minor adjustments as indicated by the model disclosure. Similarly, for
covered persons that choose to incorporate the opt out notice into
their GLB Act privacy notices, the time necessary to integrate the
model opt out notice into their privacy notices would be minimal.
The Agencies estimate that the average consumer will take
approximately 5 minutes to respond to the notice and opt out.
As mentioned above, persons that limit the duration of the opt-out
time period must notify the consumer of the upcoming expiration. The
Agencies are not estimating burden at this time for the notices of opt
out expiration because the minimum effective time period for the opt
out is five years. The Agencies will estimate the burden for this
requirement when they review the information collection in three years.

OCC:

Number of Respondents: 2,115 National banks and 996,625 Consumers.
Estimated Time per Response: 18 hours, Notice to consumers and 5
minutes, Consumer response to opt out notice.
Total Estimated Annual Burden: 121,122 hours.

Board:

Number of Respondents: 6,738 Financial institutions and 1,598,450
Consumers.
Estimated Time per Response: 18 hours, Notice to consumers and 5
minutes, Consumer response to opt out notice.
Total Estimated Annual Burden: 253,955 hours.

FDIC:

Number of Respondents: 5,318 Financial institutions and 1,088,850
Consumers.
Estimated Time per Response: 18 hours, Notice to consumers and 5
minutes, Consumer response to opt out notice.
Total Estimated Annual Burden: 186,099 hours.

OTS:

Number of Respondents: 916 Financial institutions and 235,200
Consumers.
Estimated Time per Response: 18 hours, Notice to consumers and 5
minutes, Consumer response to opt out notice.
Total Estimated Annual Burden: 36,010 hours.

NCUA:

Number of Respondents: 1,065 Financial institutions and 1,023,693
Consumers.
Estimated Time per Response: 18 hours, Notice to consumers and 5
minutes, Consumer response to opt out notice.
Total Estimated Annual Burden: 104,137 hours.

Regulatory Flexibility Act

OCC: The Regulatory Flexibility Act (5 U.S.C. 601-612) (RFA)
requires an agency to either provide an Initial Regulatory Flexibility
Analysis with a proposed rule or certify that the proposed rule will
not have a significant economic impact on a substantial number of small
entities (defined for purposes of the RFA to include banks with assets
less than or equal to $150 million).
A. Reasons for Proposed Rule
Section 214 of the FACT Act adds a new section 624 to the FCRA that
gives consumers a limited right to restrict a person from using certain
information, about the consumer and that is obtained from an affiliate,
to make solicitations to that consumer. The statute also requires the
OCC, in consultation and coordination with the other financial
regulators, to issue regulations in final form implementing section 214
not later than nine months after the date of enactment.
B. Statement of Objectives and Legal Basis
The objectives of the proposed rule are described in the
SUPPLEMENTARY INFORMATION section. In sum, the objectives are: (1) to
implement the general statutory provision giving consumers the right to
restrict a person from using certain information, about the consumer
and that is obtained from an affiliate, to make solicitations to that
consumer and (2) to fulfill the statutory mandate to prescribe
regulations to implement section 214. The legal bases for the proposed
rule are the National Bank Act found at 12 U.S.C. 1 et seq.,
24(Seventh), 481, and 484; the Depository Institutions Deregulation and
Monetary Control Act of 1980 found at 12 U.S.C. 93a; the Federal
Deposit Insurance Act found at 12 U.S.C. 1818; and the Fair Credit
Reporting Act found at 15 U.S.C. 1681 et seq.
C. Description of Small Entities to Which the Rule Will Apply
The proposed rule would apply to 1,220 national banks, Federal
branches, and Federal agencies of foreign banks (which include
operating subsidiaries thereof that are not functionally regulated
within the meaning of section 5(c)(5) of the Bank Holding Company Act
of 1956) each with assets of less than or equal to $150 million.
D. Projected Reporting, Recordkeeping and Other Compliance Requirements
Section 214 of the FACT Act generally provides that, if a person
shares certain information about a consumer with an affiliate, the
affiliate may not use that information to make or send solicitations to
the consumer about its products or services, unless the consumer is
given notice and a reasonable opportunity to opt out of such use of the
information and the consumer does not opt out. The notice and opt out
provisions do not apply in certain circumstances such as when an
institution has a pre-existing relationship with a consumer, uses a
consumer's information in response to a communication initiated by the
consumer; or uses a consumer's information in response to solicitations
authorized or requested by the consumer.
The proposed rule sets forth the duties on two groups of covered
institutions: (1) Institutions that communicate their consumers'
eligibility information to their affiliates for use in marketing; and
(2) the affiliates that receive such information (``the receiving
affiliates''). A person that communicates eligibility information to
its affiliates and has a pre-existing business relationship with the
consumer will be responsible for providing the consumer with an opt out
notice, as specified in the proposed rule. The receiving affiliates
must establish systems to prevent solicitations from being sent to
consumers who have opted out, as specified in the proposed rule. A
system must also be established to ensure that receiving affiliates are
informed about consumer opt outs.
Affiliates that communicate or receive eligibility information will
likely need the advice of legal counsel to ensure that they comply with
the proposed rule, and may also require computer programming changes
and additional staff training, which may entail some training costs.
Based on the annual

[[Page 42515]]

estimate of burden cost for the privacy notices required by regulations
implementing title V of the GLB Act, the OCC estimates that this
proposed regulation, which the FACT-ACT requires to be issued, would
have associated implementation costs of $ 3,998 for each small
institution. This estimate was calculated by the following method:

Initial Notice to Consumers Requirement: 1,220 small banks x 18
average hours per response = 21,960 burden hours.
Subsequent Notice to Customers Requirement: 1,220 small banks x 1.6
average hours per response (divided by 5 to reflect the ability of a
person under the proposal to restrict the opt out to 5 years) = 1,952
burden hours.
Costs to Institutions to Record Responses, including training,
systems changes, etc.: 96,390 consumer respondents (481,950 consumer
respondents in privacy rules x .20 reflecting the number of these
consumers served by smaller institutions) x .5 average hours per
response = 48,195.
Total Burden Hours: 72,107.

The OCC estimates the cost of the hour burden (by wage rate
category) for small national banks to be as follows:

Total Costs: $ 4,878,039.
Total Costs/number of small national banks = $ 4,878,039/1220 = $
3,998 per institution.

The OCC believes that the proposal's burden cost per small
institution will likely be lower because institutions that are covered
by the proposal have implemented, and are already familiar with,
similar notice and opt out procedures. Thus, we expect there to be
certain experience efficiencies with the implementation process that
will lower the annual burden costs for small institutions.
The OCC seeks information and comment on any costs, such as
training costs, compliance requirements, or changes in operating
procedures arising from the application of the proposed rule in
addition to, or which may differ from, those arising from the
application of the statute generally.
E. Identification of Duplicative, Overlapping, or Conflicting Federal
Rules
The OCC is unable to identify any statutes or rules, which would
overlap or conflict with the proposed regulation. The OCC seeks comment
and information about any such statutes or rules, as well as any other
State, local, or industry rules or policies that require a covered
institution to implement business practices that would comply with the
requirements of the proposed rule.
F. Discussion of Significant Alternatives
Section 214 of the FACT Act generally provides that, if a person
shares certain information about a consumer with an affiliate, the
affiliate may not use that information to make or send solicitations to
the consumer about its products or services, unless the consumer is
given notice and a reasonable opportunity to opt out of such use of the
information and the consumer does not opt out. Section 214 provides
that the notice and opt out provisions do not apply in certain
circumstances as discussed in the SUPPLEMENTARY INFORMATION section. As
required by the FACT Act, the proposed rule applies to all covered
institutions, regardless of the size of the institution. One approach
to minimizing the burden on small entities would be to provide a
specific exemption for small institutions. The OCC has no authority
under section 214 of the FACT Act to grant an exception that would
remove small institutions from the scope of the rule.
The proposed rule does, however, provide substantial flexibility so
that any bank, regardless of size, may tailor its practices to its
individual needs. For example, to minimize the burden the proposal
would permit institutions to coordinate and consolidate notice and opt
out communications to consumers with any other notice that is required
to be issued by applicable law. In addition, the Agencies have included
model forms for opt out notices that the Agencies would deem to comply
with the requirements of the proposed regulation and that institutions
could customize to suit their needs. Furthermore, the proposal would
permit institutions to offer consumers a permanent opt out from the
sharing of information for making or sending solicitations among
affiliates, which would reduce institutional recordkeeping
requirements.
The OCC welcomes comments on any significant alternatives,
consistent with the mandate in section 214 to restrict the use of
certain information for marketing purposes that would minimize the
impact of the proposed rule on small entities.
Board: Subject to certain exceptions, the Regulatory Flexibility
Act (5 U.S.C. 601-612) (RFA) requires an agency to publish an initial
regulatory flexibility analysis with a proposed rule whenever the
agency is required to publish a general notice of proposed rulemaking
for a proposed rule. The Supplementary Information above describes the
reasons why the regulation is being proposed and the objectives and the
legal basis of the proposed rule. The SUPPLEMENTARY INFORMATION section
also describes the compliance requirements of the proposed rule and
identifies other relevant Federal rules which may duplicate or overlap
with the proposed rule. The Board, in connection with its initial
regulatory flexibility analysis, requests public comment in the
following areas.
A. Reasons for the Proposed Rule
Section 214 of the FACT Act (which adds a new section 624 to the
FCRA) generally prohibits a person from using certain information
received from an affiliate to make a solicitation for marketing
purposes to a consumer, unless the consumer is given notice and an
opportunity and simple method to opt out of the making of such
solicitations. Section 214 also requires the Agencies and the Federal
Trade Commission, in consultation and coordination with each other, to
issue regulations implementing the section that are as consistent and
comparable as possible.
B. Statement of Objectives and Legal Basis
The Supplementary Information above contains this information. The
legal basis for the proposed rule is section 214 of the FACT Act.
C. Description of Small Entities to Which the Rule Applies
The proposed rule would apply to all banks that are members of the
Federal Reserve System (other than national banks), branches and
Agencies of foreign banks (other than Federal branches, Federal
Agencies, and insured State branches of foreign banks), commercial
lending companies owned or controlled by foreign banks, organizations
operating under section 25 or 25A of the Federal Reserve Act (12 U.S.C.
601 et seq., and 611 et seq.), bank holding companies and affiliates
(other than depository institutions and consumer reporting agencies) of
such holding companies. The Board's

[[Page 42516]]

proposed rule will apply to the following institutions (numbers
approximate): State member banks (932), bank holding companies (5,152),
holding company non-bank subsidiaries (2,131), U.S. branches and
agencies of foreign banks (289), Edge and agreement corporations (75),
for a total of approximately 8,579 institutions. The Board estimates
that over 5,000 of these institutions could be considered small
institutions with assets less than $150 million.
D. Projected Reporting, Recordkeeping and Other Compliance Requirements
Section 214 of the FACT Act (which adds a new section 624 to the
FCRA) generally provides that, if a person shares certain information
about a consumer with an affiliate, the affiliate may not use that
information to make or send solicitations to the consumer about its
products or services, unless the consumer is given notice and a
reasonable opportunity to opt out of such use of the information and
the consumer does not opt out. The notice and opt out provisions do not
apply in certain circumstances.
The proposed rule sets forth the duties on two groups of covered
institutions: (1) Institutions that communicate their consumers'
eligibility information to their affiliates for use in marketing; and
(2) the affiliates that receive such information (``the receiving
affiliates''). A person that communicates eligibility to its affiliates
about a consumer will be responsible for providing the consumer with an
opt out notice, as specified in the rule. The receiving affiliates must
not make or send solicitations to consumers who have opted-out, as
specified in the rule. Affiliates that communicate or receive
eligibility information will likely need the advice of legal counsel to
ensure that they comply with the rule, and may also require computer
programming changes and additional staff training.
As noted in the burden estimate discussion in the Paperwork
Reduction Act section, the Board believes that the costs of complying
with the proposed rule would be minimal. Small institutions that do not
have affiliates would not have to comply with the proposed rule. Small
institutions that have affiliates may choose not to engage in any
activity that would require compliance with the proposed rule. For
small institutions required to comply with the proposed rule, small
institutions may use the proposed model disclosures and opt out notices
to minimize the cost of compliance.
The Board seeks information and comment on any costs, compliance
requirements, or changes in operating procedures arising from the
application of the proposed rule to small institutions.
E. Identification of Duplicative, Overlapping, or Conflicting Federal
Rules
With the exception of the opt out for information other than
transaction or experience information in section 603(d)(2)(A)(iii), the
Board is unable to identify any federal statutes or regulations that
would duplicate, overlap, or conflict with the proposed rule. The
overlap of the proposed rule and section 603(d)(2)(A)(iii) is discussed
in the Supplementary Information. The Board seeks comment regarding any
other statues or regulations, including State or local statutes or
regulations, that would duplicate, overlap, or conflict with the
proposed rule.
F. Discussion of Significant Alternatives
Section 214 of the FACT Act (which adds a new section 624 to the
FCRA) generally provides that, if a person shares certain information
about a consumer with an affiliate, the affiliate may not use that
information to make or send solicitations to the consumer about its
products or services, unless the consumer is given notice and a
reasonable opportunity to opt out of such use of the information and
the consumer does not opt out. The notice and opt out provisions do not
apply in certain circumstances. The proposed rule applies to all
covered institutions as specified in the rule, regardless of the size
of the institution.
The Board welcomes comments on any significant alternatives,
consistent with the mandate in section 214 to restrict the use of
certain information for marketing purposes, that would minimize the
impact of the proposed rule on small entities.
FDIC: Subject to certain exceptions, the Regulatory Flexibility Act
(5 U.S.C. 601-612) (RFA) requires an agency to publish an initial
regulatory flexibility analysis with a proposed rule whenever the
agency is required to publish a general notice of proposed rulemaking
for a proposed rule. The Supplementary Information above describes the
reasons why the regulation is being proposed and the objectives and the
legal basis of the proposed rule. The SUPPLEMENTARY INFORMATION section
also describes the compliance requirements of the proposed rule and
identifies other relevant Federal rules which may duplicate or overlap
with the proposed rule. The FDIC, in connection with its initial
regulatory flexibility analysis, requests public comment in the
following areas.
A. Reasons for the Proposed Rule
Section 214 of the FACT Act (which adds a new section 624 to the
FCRA) generally prohibits a person from using certain information
received from an affiliate to make a solicitation for marketing
purposes to a consumer, unless the consumer is given notice and an
opportunity and simple method to opt out of the making of such
solicitations. Section 214 also requires the Agencies and the Federal
Trade Commission, in consultation and coordination with each other, to
issue regulations implementing the section that are as consistent and
comparable as possible.
B. Statement of Objectives and Legal Basis
The Supplementary Information above contains this information. The
legal basis for the proposed rule is section 214 of the FACT Act.
C. Description of Small Entities to Which the Rule Applies
The proposed rule would apply to all banks that are insured by the
FDIC (other than District Banks and members of the Federal Reserve
System) insured State branches of foreign banks and any subsidiaries
and affiliates of such entities; and other entities or persons with
respect to which the FDIC may exercise its enforcement authority under
any provision of law. For purposes of this proposed rule, a subsidiary
does not include a broker, dealer, person providing insurance,
investment company, and investment advisor. The proposed rule would
apply to all State non-member banks, approximately 3,700 of which are
small entities as defined by the RFA.
D. Projected Reporting, Recordkeeping and Other Compliance Requirements
Section 214 of the FACT Act (which adds a new section 624 to the
FCRA) generally provides that, if a person shares certain information
about a consumer with an affiliate, the affiliate may not use that
information to make or send solicitations to the consumer about its
products or services, unless the consumer is given notice and a
reasonable opportunity to opt out of such use of the information and
the consumer does not opt out. The notice and opt out provisions do not
apply in certain circumstances.
The proposed rule sets forth the duties of two groups of covered
institutions: (1) Institutions that

[[Page 42517]]

communicate their consumers' eligibility information to their
affiliates for use in marketing; and (2) the affiliates that receive
such information (``the receiving affiliates''). A person that
communicates eligibility to its affiliates about a consumer will be
responsible for providing the consumer with an opt out notice, as
specified in the rule. The receiving affiliates must not make or send
solicitations to consumers who have opted-out, as specified in the
rule. Affiliates that communicate or receive eligibility information
will likely need the advice of legal counsel to ensure that they comply
with the rule, and may also require computer programming changes and
additional staff training.
The FDIC believes that the costs of complying with the proposed
rule would be minimal. Small institutions that do not have affiliates
would not have to comply with the proposed rule. Small institutions
that have affiliates may choose not to engage in any activity that
would require compliance with the proposed rule. Those small
institutions required to comply with the proposed rule may use the
proposed model disclosures and opt out notices to minimize the cost of
compliance.
The FDIC seeks information and comment on any costs, compliance
requirements, or changes in operating procedures arising from the
application of the proposed rule to small institutions.
E. Identification of Duplicative, Overlapping, or Conflicting Federal
Rules
With the exception of the opt out for information other than
transaction or experience information in section 603(d)(2)(A)(iii), the
FDIC is unable to identify any federal statutes or regulations that
would duplicate, overlap, or conflict with the proposed rule. The
overlap of the proposed rule and section 603(d)(2)(A)(iii) is discussed
in the Supplementary Information. The FDIC seeks comment regarding any
other statues or regulations, including State or local statutes or
regulations, that would duplicate, overlap, or conflict with the
proposed rule.
F. Discussion of Significant Alternatives
Section 214 of the FACT Act (which adds a new section 624 to the
FCRA) generally provides that, if a person shares certain information
about a consumer with an affiliate, the affiliate may not use that
information to make or send solicitations to the consumer about its
products or services, unless the consumer is given notice and a
reasonable opportunity to opt out of such use of the information and
the consumer does not opt out. The notice and opt out provisions do not
apply in certain circumstances. The proposed rule applies to all
covered institutions as specified in the rule, regardless of the size
of the institution.
The FDIC welcomes comments on any significant alternatives,
consistent with the mandate in section 214 to restrict the use of
certain information for marketing purposes, that would minimize the
impact of the proposed rule on small entities.
OTS: The Regulatory Flexibility Act (5 U.S.C. 601-612) (RFA)
requires an agency to either provide an Initial Regulatory Flexibility
Analysis with a proposed rule or certify that the proposed rule will
not have a significant economic impact on a substantial number of small
entities (defined for purposes of the RFA to include savings
associations with assets of $150 million or less).
A. Reasons for Proposed Rule
Section 214 of the FACT Act adds a new section 624 to the FCRA that
generally prohibits a person from using certain information received
from an affiliate to make a solicitation for marketing purposes to a
consumer, unless the consumer is given notice of the information
sharing for marketing purposes and a simple method to opt out of the
solicitations. Section 214 requires the Federal banking agencies, the
NCUA, the FTC, and the SEC, in consultation and coordination with each
other, to issue implementing regulations that, to the extent possible,
are consistent and comparable with the regulations prescribed by each
other agency.
B. Statement of Objectives and Legal Basis
The objectives of the proposed rule are described in the
SUPPLEMENTARY INFORMATION section. In sum, the objectives are: (1) To
implement the general statutory provision giving consumers the right to
restrict a person from using certain information about the consumer
that is obtained from an affiliate to make solicitations to that
consumer and (2) to fulfill the statutory mandate to prescribe
regulations to implement section 214. The legal bases for the proposed
rule are (1) the Home Owners' Loan Act found at 12 U.S.C. 1462a, 1463,
1464, and 1467a; (2) the Federal Deposit Insurance Act found at 12
U.S.C. 1818; and (3) the Fair Credit Reporting Act found at 15 U.S.C.
1681 et seq.
C. Description of Small Entities to Which the Rule Will Apply
The proposed rule would apply to all savings associations. In
accordance with 12 CFR 559.3(h)(1), it would apply to Federal savings
association operating subsidiaries as well.
Small savings associations are generally defined, for Regulatory
Flexibility Act purposes, as those with assets of $150 million or less.
13 CFR 121.201 (2003). OTS calculates (numbers approximate) that of the
917 savings associations, a maximum of 476 of these are small savings
associations.
D. Projected Reporting, Recordkeeping, and Other Compliance
Requirements
Section 214 of the FACT Act generally provides that, if a person
shares certain information about a consumer with an affiliate, the
affiliate may not use that information to make or send solicitations to
the consumer about its products or services, unless the consumer is
given notice and a reasonable opportunity to opt out of such use of the
information and the consumer does not opt out. The notice and opt-out
provisions do not apply in certain circumstances such as when an
institution has a pre-existing relationship with a consumer, uses a
consumer's information in response to a communication initiated by the
consumer, or uses a consumer's information in response to solicitations
authorized or requested by the consumer.
The proposed rule sets forth the duties on two groups of covered
institutions: (1) Institutions that communicate their consumers'
eligibility information to their affiliates for use in marketing and
(2) the affiliates that receive such information (``the receiving
affiliates''). A person that communicates eligibility information to
its affiliates and has a pre-existing business relationship with the
consumer will be responsible for providing the consumer with an opt-out
notice as specified in the rule. The receiving affiliates must
establish systems to prevent solicitations from being sent to consumers
who have opted out, as specified in the proposed rule. Implicitly, a
system must exist to ensure that receiving affiliates are informed of
any opt-outs.
Affiliates that communicate or receive eligibility information will
likely need the advice of legal counsel to ensure that they comply with
the proposed rule and may also require computer programming changes and
additional staff training, which may entail some training costs.

[[Page 42518]]

Based in part on the annual estimate of burden cost for the privacy
notices required by regulations implementing title V of the GLB Act,
OTS estimates that this proposed regulation, which the FACT Act
requires to be issued, would have associated implementation costs of
$2,286 for each small institution. This estimate was calculated by the
following method:

Notice to consumers requirements: 476 small thrifts x 18 average
hours per response = 8,568 burden hours.
Subsequent notice to consumers with expired opt-outs requirements:
476 small thrifts x 1.6 average hours per responses (divided by 5 to
reflect the ability of a person under the proposal to restrict the opt
out to a minimum of 5 years) = 762 burden hours.
Costs to institutions to record consumer responses, including
training, systems changes, etc.: 13,510 consumer respondents (67,550
consumer respondents in privacy rules x .20 reflecting the number of
these consumers served by smaller institutions) x .5 average hours per
response = 6,755 burden hours.
Total Burden Hours: 16,085.

The OTS estimates the cost of the hour burden (by wage rate
category) for small thrifts to be as follows:

Total Costs: $1,088,150.
Total Costs / of small thrifts = $1,088,150/476 = $2,286.

OTS believes that the proposal's burden cost per small institution
will likely be lower because institutions that are covered by the
proposal have implemented, and are already familiar with, similar
notice and opt-out procedures applicable under other statutes and
regulations such as the privacy notices required by regulations
implementing title V of the GLB Act. Thus we expect there to be certain
experience efficiencies with the implementation process that will lower
the annual burden costs for small institutions. Further, institutions
can reduce the burden of providing notices every 5 years by allowing
longer opt-out periods or eliminate that burden entirely by allowing
opt-outs in perpetuity.
OTS seeks information and comment on any costs, such as training
costs, compliance requirements, or changes in operating procedures
arising from the application of the proposed rule in addition to, or
which may differ from, those arising from the application of the
statute generally.
E. Identification of Duplicative, Overlapping, or Conflicting Federal
Rules
OTS is unable to identify any statutes or rules that would overlap
or conflict with the proposed regulation. OTS notes, however, as
discussed in the SUPPLEMENTARY INFORMATION section, that section
603(d)(2)(A)(iii) of the FCRA provides that a person may communicate
``other'' information--that is, non-transaction or experience
information--among its affiliates without becoming a consumer reporting
agency if the person has given the consumer a clear and conspicuous
notice that such information may be communicated among affiliates and
an opportunity to ``opt out'' or direct that the information not be
communicated, and the consumer has not opted out. The notice and opt-
out provided in section 603(d)(2)(A)(iii) of the FCRA limits the
sharing of information among affiliates and was the subject of an
October 20, 2000 proposal by the Federal banking agencies. The current
proposal addresses a new notice and opt-out provision that applies to
the use by affiliates of certain information that they receive from
another affiliate to market their products and services to consumers.
Although there is a certain degree of overlap between the two opt-outs,
the two opt-outs are distinct and serve different purposes. Therefore,
nothing in this proposal regarding the opt-out for affiliate marketing
supercedes or replaces the affiliate sharing opt-out contained in
section 603(d)(2)(A)(iii) of the Act.
OTS seeks comment and information about any such statutes or rules,
as well as any other State, local, or industry rules or policies that
require a covered institution to implement business practices that
would comply with the requirements of the proposed rule.
F. Discussion of Significant Alternatives
Section 214 of the FACT Act generally provides that, if a person
shares certain information about a consumer with an affiliate, the
affiliate may not use that information to make or send solicitations to
the consumer about its products or services, unless the consumer is
given notice and a reasonable opportunity to opt out of such use of the
information and the consumer does not opt out. Section 214 provides
that the notice and opt-out provisions do not apply in certain
circumstances as discussed in the SUPPLEMENTARY INFORMATION section. As
required by the FACT Act, the proposed rule applies to all covered
institutions, regardless of the size of the institution.
One approach to minimizing the burden on small entities would be to
provide a specific exemption for small institutions. OTS has no
authority under section 214 of the FACT Act to grant an exemption that
would remove small institutions from the scope of the rule.
The proposed rule does, however, provide substantial flexibility so
that any savings association, regardless of size, may tailor its
practices to its individual needs. For instance, to minimize the burden
the proposal would permit institutions to coordinate and consolidate
notice and opt-out communications to consumers with any other notice
that applicable law requires. In addition, the Agencies have included
model forms for opt-out notices that the Agencies would deem to comply
with the requirements of the proposed regulation and that institutions
could customize to suit their needs. Furthermore, the proposal would
permit institutions to offer consumers a permanent opt-out from the
sharing of information for making or sending solicitations among
affiliates, which would reduce institutional recordkeeping
requirements.
OTS welcomes comments on any significant alternatives, consistent
with the mandate in section 214 to restrict the use of certain
information for marketing purposes, that would minimize the impact of
the proposed rule on small entities.
NCUA: The Regulatory Flexibility Act requires NCUA to prepare an
analysis to describe any significant economic impact any proposed
regulation may have on a substantial number of small entities (those
under $10 million in assets). NCUA, in connection with its initial
regulatory flexibility analysis, requests public comment in the
following areas.
A. Reasons for the Proposed Rule
Section 214 of the FACT Act (which adds a new section 624 to the
FCRA) generally prohibits a person from using certain information
received from an affiliate to make a solicitation for marketing
purposes to a consumer, unless the consumer is given notice and an
opportunity and simple method to opt out of the making of such
solicitations. Section 214 also requires the Agencies, the FTC, and the
SEC in consultation and coordination with each other, to issue
regulations implementing that section.

[[Page 42519]]

B. Statement of Objectives and Legal Basis
The Supplementary Information above contains this information. The
legal basis for the proposed rule is section 214 of the FACT Act.
C. Description of Small Entities to Which the Rule Applies
The proposed rule would apply to all federally chartered credit
unions that have CUSO affiliates, which total approximately 1,065.
Approximately 84 of those Federal credit unions could be considered
small entities with assets less than $10 million.
D. Projected Reporting, Recordkeeping and Other Compliance Requirements
Section 214 of the FACT Act (which adds a new section 624 to the
FCRA) generally provides that, if a person shares certain information
about a consumer with an affiliate, the affiliate may not use that
information to make or send solicitations to the consumer about its
products or services, unless the consumer is given notice and a
reasonable opportunity to opt out of such use of the information and
the consumer does not opt out. The notice and opt out provisions do not
apply in certain circumstances.
The proposed rule sets forth a Federal credit union's duties when
either: (1) The credit union communicates its consumers' eligibility
information to an affiliate for use in marketing (``communicating
affiliate''); or (2) the credit union receives such information from
its affiliate (``receiving affiliate''). Before an affiliate may use
eligibility information shared with it by a communicating affiliate to
provide solicitations to a consumer, the communicating affiliate must
provide the consumer with an opt out notice, as specified in the rule.
A receiving affiliate may not use eligibility information it receives
from a communicating affiliate to make solicitations to the consumer
unless the consumer has been provided an opt out notice, as specified
in the rule, and does not opt out of that use. Federal credit unions
will likely need the advice of legal counsel to ensure that they comply
with the rule, and may also require computer programming changes and
additional staff training. NCUA does not have a practicable or reliable
basis for quantifying the costs of the proposed rule.
NCUA seeks information and comment on any costs, compliance
requirements, or changes in operating procedures arising from the
application of the proposed rule in addition to or which may differ
from those arising from the application of the statute generally.
E. Identification of Duplicative, Overlapping, or Conflicting Federal
Rules
NCUA is unable to identify any Federal statutes or regulations that
would duplicate, overlap, or conflict with the proposed rule. NCUA
seeks comment regarding any statutes or regulations, including State or
local statutes or regulations, that would duplicate, overlap, or
conflict with the proposed rule.
F. Discussion of Significant Alternatives
Section 214 of the FACT Act (which adds a new section 624 to the
FCRA) generally provides that, if a person shares certain information
about a consumer with an affiliate, the affiliate may not use that
information to make or send solicitations to the consumer about its
products or services, unless the consumer is given notice and a
reasonable opportunity to opt out of such use of the information and
the consumer does not opt out. The notice and opt out provisions do not
apply in certain circumstances. The proposed rule applies to all
Federal credit unions, regardless of asset size.
NCUA welcomes comments on any significant alternatives, consistent
with the mandate in section 214 to restrict the use of certain
information for marketing purposes that would minimize the impact of
the proposed rule on small entities.

OCC and OTS Executive Order 12866 Determination

The OCC and OTS each has determined that its portion of the
proposed rulemaking is not a significant regulatory action under
Executive Order 12866.

OCC Executive Order 13132 Determination

The OCC has determined that this proposal does not have any
federalism implications, as required by Executive Order 13132.

NCUA Executive Order 13132 Determination

Executive Order 13132 encourages independent regulatory agencies to
consider the impact of their actions on State and local interests. In
adherence to fundamental federalism principles, the NCUA, an
independent regulatory agency as defined in 44 U.S.C. 3502(5),
voluntarily complies with the executive order. The proposed rule
applies only to federally chartered credit unions and would not have
substantial direct effects on the States, on the connection between the
national government and the States, or on the distribution of power and
responsibilities among the various levels of government. The NCUA has
determined that this proposed rule does not constitute a policy that
has federalism implications for purposes of the executive order.

OCC and OTS Unfunded Mandates Reform Act of 1995 Determination

Section 202 of the Unfunded Mandates Reform Act of 1995, Public Law
104-4 (Unfunded Mandates Act) requires that an agency prepare a
budgetary impact statement before promulgating a rule that includes a
Federal mandate that may result in expenditure by State, local, and
tribal governments, in the aggregate, or by the private sector, of $100
million or more in any one year. If a budgetary impact statement is
required, section 205 of the Unfunded Mandates Act also requires an
agency to identify and consider a reasonable number of regulatory
alternatives before promulgating a rule. The OCC and OTS each has
determined that this proposed rule will not result in expenditures by
State, local, and tribal governments, or by the private sector, of $100
million or more. Accordingly, neither the OCC nor the OTS has prepared
a budgetary impact statement or specifically addressed the regulatory
alternatives considered.

NCUA: The Treasury and General Government Appropriations Act, 1999--
Assessment of Federal Regulations and Policies on Families

The NCUA has determined that this proposed rule would not affect
family well-being within the meaning of section 654 of the Treasury and
General Government Appropriations Act, 1999, Pub. L. 105-277, 112 Stat.
2681 (1998).

NCUA: Interpretive Ruling and Policy Statement (IRPS) 87-2, as Amended
by IRPS 03-2

Under NCUA's IRPS 87-2, as amended by IRPS 03-2, the NCUA Board's
general policy is to provide a 60-day comment period for a proposed
regulation. In this case, the NCUA Board believes that a 30-day comment
period will be adequate and is appropriate given that the statutory
deadline for the final rule is September 4, 2004. NCUA IRPS 87-2, 52 FR
35231, Sept. 18, 1987, as amended by IRPS 03-2, 68 FR 31949, May 29,
2003.

Community Bank Comment Request

The Agencies invite your comments on the impact of this proposal on

[[Page 42520]]

community banks. The Agencies recognize that community banks operate
with more limited resources than larger institutions and may present a
different risk profile. Thus, the Agencies specifically request comment
on the impact of the proposal on community banks' current resources and
available personnel with the requisite expertise, and whether the goals
of the proposal could be achieved, for community banks, through an
alternative approach.

V. Solicitation of Comments on Use of Plain Language

Section 722 of the GLBA requires the Federal banking agencies to
use plain language in all proposed and final rules published after
January 1, 2000. The Federal banking agencies invite comment on how to
make this proposed rule easier to understand. For example:
Have we organized the material to suit your needs? If not,
how could this material be better organized?
Are the requirements in the rule clearly stated? If not,
how could the rule be more clearly stated?
Do the regulations contain technical language or jargon
that is not clear? If so, which language requires clarification?
Would a different format (grouping and order of sections,
use of headings, paragraphing) make the regulation easier to
understand? If so, what changes to the format would make the regulation
easier to understand?
Would more, but shorter, sections be better? If so, which
sections should be changed?
What else could we do to make the regulation easier to
understand?
The Federal banking agencies solicit comment on whether the
inclusion of examples in the regulation is appropriate. Elevating the
fact patterns to safe harbors in the rule may generate certain problems
over time. For example, changes in technology or practices may
ultimately impact the fact patterns contained in the examples and
require changes to the regulation. Are there alternative methods to
offer illustrative guidance of the concepts portrayed by the examples?

NCUA Regulatory Goal

NCUA's goal is to promulgate clear and understandable regulations
that impose minimal regulatory burden. We request your comments on
whether the proposed rule is understandable and minimally instrusive if
implemented as proposed.

List of Subjects

12 CFR Part 41

Banks, banking, Consumer protection, National banks, Reporting and
recordkeeping requirements.

12 CFR Part 222

Banks, Banking, Consumer protection, Fair Credit Reporting Act,
Holding companies, Privacy, Reporting and recordkeeping requirements,
State member banks.

12 CFR Part 334

Administrative practice and procedure, Bank deposit insurance,
Banks, Banking, Reporting and recordkeeping requirements, Safety and
soundness.

12 CFR Part 571

Consumer protection, Credit, Fair Credit Reporting Act, Privacy,
Reporting and recordkeeping requirements, Savings associations.

12 CFR Part 717

Consumer protection, Credit unions, Fair credit reporting, Privacy,
Reporting and recordkeeping requirements.

Office of the Comptroller of the Currency

12 CFR Chapter I

Authority and Issuance

For the reasons set forth in the preamble, the OCC proposes to
amend part 41 (as proposed to be added at 69 FR 23394, April 28, 2004)
of chapter I of title 12 of the Code of Federal Regulations as follows:

PART 41--FAIR CREDIT

1. The authority citation for part 41 is revised to read as
follows:

Authority: 12 U.S.C. 1 et seq., 24(Seventh), 93a, 481, 484, and
1818; 15 U.S.C. 1681a, 1681b, 1681s, and 1681t.

2. In Sec. 41.1 paragraph (b) is republished to read as follows:

Sec. 41.1 Purpose, scope, and effective dates.

(a) * * * * *
(b) Scope.
(1) [Reserved]
(2) Institutions covered. Except as otherwise provided in this
part, these regulations apply to national banks, Federal branches and
agencies of foreign banks, and their respective operating subsidiaries
that are not functionally regulated within the meaning of section
5(c)(5) of the Bank Holding Company Act of 1956, as amended (12 U.S.C.
1844(c)(5)).
3. Section 41.2 is republished to read as follows:

Sec. 41.2 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 paragraph illustrate only the issue described in
the paragraph and do not illustrate any other issue that may arise in
this part.
4. Revise Sec. 41.3 to read as follows:

Sec. 41.3 Definitions.

For purposes of this part, unless explicitly stated otherwise:
(a) Act means the Fair Credit Reporting Act (15 U.S.C. 1681 et
seq.).
(b) Affiliate means any person that is related by common ownership
or common corporate control with another person.
(c) Clear and conspicuous means reasonably understandable and
designed to call attention to the nature and significance of the
information presented.
(d) Company means any corporation, limited liability company,
business trust, general or limited partnership, association, or similar
organization.
(e) Consumer means an individual.
(f) [Reserved].
(g) [Reserved].
(h) [Reserved].
(i) Control means:
(1) Ownership, control, or power to vote 25 percent or more of the
outstanding shares of any class of voting security of the company,
directly or indirectly, or acting through one or more other persons;
(2) Control in any manner over the election of a majority of the
directors, trustees, or general partners (or individuals exercising
similar functions) of the company; or
(3) The power to exercise, directly or indirectly, a controlling
influence over the management or policies of the company, as the OCC
determines.
(j) Eligibility information means any information the communication
of which would be a consumer report if the exclusions from the
definition of ``consumer report'' in section 603(d)(2)(A) of the Act
did not apply.
(k) [Reserved].
(l) Person means any individual, partnership, corporation, trust,
estate, cooperative, association, government or governmental
subdivision or agency, or other entity.
(m) Pre-existing business relationship means a relationship between
a person 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
covered by subpart C of this part;

[[Page 42521]]

(2) The purchase, rental, or lease by the consumer of the person's
goods 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 subpart C of this part is made or sent to the consumer; or
(3) An inquiry or application by the consumer regarding a product
or service offered by that person during the three-month period
immediately preceding the date on which a solicitation covered by
subpart C of this part is made or sent to the consumer.
(n) Solicitation--(1) General. Solicitation means marketing
initiated by a person to a particular consumer that is:
(i) Based on eligibility information communicated to that person by
its affiliate as described in subpart C of this part; and
(ii) Intended to encourage the consumer to purchase or obtain such
product or service.
(2) Exclusion of marketing directed at the general public. A
solicitation does not include communications that are directed at the
general public and distributed without the use of eligibility
information communicated by an affiliate. For example, television,
magazine, and billboard advertisements do not constitute solicitations,
even if those communications are intended to encourage consumers to
purchase products and services from the person initiating the
communications.
(3) Examples of solicitations. A solicitation would include, for
example, a telemarketing call, direct mail, e-mail, or other form of
marketing communication directed to a specific consumer that is based
on eligibility information communicated by an affiliate.
5. A new Subpart C is added to read as follows:

Subpart C--Affiliate Use of Eligibility Information for Marketing
Sec.
41.20 Affiliate use of eligibility information for marketing.
41.21 Contents of opt out notice.
41.22 Reasonable opportunity to opt out.
41.23 Reasonable and simple methods of opting out.
41.24 Delivery of opt out notices.
41.25 Duration and effect of opt out.
41.26 Extension of opt out.
41.27 Consolidated and equivalent notices.

Subpart C--Affiliate Use of Eligibility Information for Marketing

Sec. 41.20 Affiliate use of eligibility information for marketing.

For purposes of this subpart, Bank means national banks, Federal
branches and agencies of foreign banks, and their respective operating
subsidiaries that are not functionally regulated within the meaning of
section 5(c)(5) of the Bank Holding Company Act of 1956, as amended (12
U.S.C. 1844(c)(5)).
(a) General duties of a person communicating eligibility
information to an affiliate--(1) Notice and opt out. If a bank
communicates eligibility information about a consumer to its affiliate,
the bank's affiliate may not use the information to make or send
solicitations to the consumer, unless prior to such use by the
affiliate:
(i) The bank provides a clear and conspicuous notice to the
consumer stating that the information may be communicated to and used
by the bank's affiliate to make or send solicitations to the consumer
about its products and services;
(ii) The bank provides the consumer a reasonable opportunity and a
simple method to ``opt out'' of such use of that information by its
affiliate; and
(iii) The consumer has not chosen to opt out.
(2) Rules of construction--(i) General. The notice required by this
paragraph (a) may be provided either in the name of a person with which
the consumer currently does or previously has done business or in one
or more common corporate names shared by members of an affiliated group
of companies that includes the common corporate name used by that
person, and may be provided in the following manner:
(A) A bank may provide the notice directly to the consumer;
(B) A bank's agent may provide the notice on the bank's behalf, so
long as--
(1) The bank's agent, if an affiliate of the bank, does not include
any solicitation other than the bank's on or with the notice, unless it
falls within one of the exceptions in paragraph (c) of this section;
and
(2) The bank's agent gives the notice in the bank's name or a
common name or names used by the family of companies; or
(C) A bank may provide a joint notice with one or more of the
bank's affiliates or under a common name or names used by the family of
companies as provided in Sec. 41.24(c).
(ii) Avoiding duplicate notices. If Affiliate A communicates
eligibility information about a consumer to Affiliate B, and Affiliate
B communicates that same information to Affiliate C, Affiliate B does
not have to give an opt out notice to the consumer when it provides
eligibility information to Affiliate C, so long as Affiliate A's notice
is broad enough to cover Affiliate C's use of the eligibility
information to make solicitations to the consumer.
(iii) Examples of rules of construction. A, B, and C are
affiliates. The consumer currently has a business relationship with
affiliate A, but has never done business with affiliates B or C.
Affiliate A communicates eligibility information about the consumer to
B for purposes of making solicitations. B communicates the information
it received from A to C for purposes of making solicitations. In this
circumstance, the rules of construction would:
(A) Permit B to use the information to make solicitations if:
(1) A has provided the opt out notice directly to the consumer; or
(2) B or C has provided the opt out notice on behalf of A.
(B) Permit B or C to use the information to make solicitations if:
(1) A's notice is broad enough to cover both B's and C's use of the
eligibility information; or
(2) A, B, or C has provided a joint opt out notice on behalf of the
entire affiliated group of companies.
(C) Not permit B or C to use the information for marketing purposes
if B has provided the opt out notice only in B's own name, because no
notice would have been provided by or on behalf of A.
(b) General duties of an affiliate receiving eligibility
information. If the bank receives eligibility information from an
affiliate, the bank may not use the information to make or send
solicitations to a consumer, unless the consumer has been provided an
opt out notice, as described in paragraph (a) of this section, that
applies to the bank's use of eligibility information and the consumer
has not opted-out.
(c) Exceptions. The provisions of this subpart C do not apply if a
bank uses eligibility information it receives from an affiliate:
(1) To make or send a marketing solicitation to a consumer with
whom a bank has a pre-existing business relationship as defined in
Sec. 41.3(m);
(2) To facilitate communications to an individual for whose benefit
a bank provides employee benefit or other services pursuant to a
contract with an employer related to and arising out of the current
employment relationship or status of the individual as a participant or
beneficiary of an employee benefit plan;

[[Page 42522]]

(3) To perform services on behalf of an affiliate, except that this
paragraph shall not be construed as permitting a bank to make or send
solicitations on its behalf or on behalf of an affiliate if the bank or
the affiliate, as applicable, would not be permitted to make or send
the solicitation as a result of the election of the consumer to opt out
under this subpart C;
(4) In response to a communication initiated by the consumer
orally, electronically, or in writing;
(5) In response to an affirmative authorization or request by the
consumer orally, electronically, or in writing to receive a
solicitation; or
(6) If a bank's compliance with this subpart C would prevent it
from complying with any provision of State insurance laws pertaining to
unfair discrimination in any State in which the bank is lawfully doing
business.
(d) Examples of exceptions--(1) Examples of pre-existing business
relationships. (i) If a consumer has an insurance policy with a bank's
insurance affiliate that is currently in force, the bank's insurance
affiliate has a pre-existing business relationship with the consumer
and can therefore use eligibility information it has received from the
bank to make solicitations.
(ii) If a consumer has an insurance policy with a bank's insurance
affiliate that has lapsed, the bank's insurance affiliate has a pre-
existing business relationship with the consumer for 18 months after
the date on which the policy ceases to be in force and can therefore
use eligibility information it has received from the bank to make
solicitations for 18 months after the date on which the policy ceases
to be in force.
(iii) If a consumer applies to the bank's affiliate for a product
or service, or inquires about the affiliate's products or services and
provides contact information to the bank's affiliate for receipt of
that information, the bank's affiliate has a pre-existing business
relationship with the consumer for three months after the date of the
inquiry or application and can therefore use eligibility information it
has received from the bank to make solicitations for three months after
the date of the inquiry or application.
(iv) If a consumer makes a telephone call to a centralized call
center for an affiliated group of companies to inquire about the
consumer's bank account, the call does not constitute an inquiry with
any affiliate other than the bank that holds the consumer's bank
account and does not establish a pre-existing business relationship
between the consumer and any affiliate of the bank.
(2) Examples of consumer-initiated communications. (i) If a
consumer who has an account with the bank initiates a telephone call to
the bank's securities affiliate to request information about brokerage
services or mutual funds and provides contact information for receiving
that information, the bank's securities affiliate may use eligibility
information about the consumer it obtains from the bank to make
solicitations in response to the consumer-initiated call.
(ii) If the bank's affiliate makes the initial marketing call,
leaves a message for the consumer to call back, and the consumer
responds, the communication is not initiated by the consumer, but by
the bank's affiliate.
(iii) If the consumer calls the bank's affiliate to ask about the
affiliate's retail locations and hours, but does not request
information about the bank's affiliate's products or services,
solicitations by the bank's affiliate using eligibility information
about the consumer it obtains from the bank would not be responsive to
the consumer-initiated communication.
(3) Example of consumer affirmative authorization or request. If a
consumer who obtains a mortgage from a bank requests or affirmatively
authorizes information about homeowner's insurance from the bank's
insurance affiliate, such authorization or request, whether given to
the bank or to the bank's insurance affiliate, would permit the bank's
insurance affiliate to use eligibility information about the consumer
it obtains from the bank to make solicitations about homeowner's
insurance to the consumer. A pre-selected check box would not satisfy
the requirement for an affirmative authorization or request.
(e) Prospective application. The provisions of this subpart C shall
not prohibit a bank's affiliate from using eligibility information
communicated by the bank to make or send solicitations to a consumer if
such information was received by the bank's affiliate prior to [Insert
Mandatory Compliance Date].
(f) Relation to affiliate-sharing notice and opt out. Nothing in
this subpart C limits the responsibility of a company to comply with
the notice and opt out provisions of section 603(d)(2)(A)(iii) of the
Act before it shares information other than transaction or experience
information among affiliates to avoid becoming a consumer reporting
agency.

Sec. 41.21 Contents of opt out notice.

(a) General. A notice must be clear, conspicuous, and concise, and
must accurately:
(1) Disclose that the consumer may elect to limit a bank's
affiliate from using eligibility information about the consumer that it
obtains from the bank to make or send solicitations to the consumer;
(2) Disclose if applicable, that the consumer's election will apply
for a specified period of time and that the consumer will be allowed to
extend the election once that period expires; and
(3) Include a reasonable and simple method for the consumer to opt
out.
(b) Concise--(1) General. For purposes of this subpart C, the term
``concise'' means a reasonably brief expression or statement.
(2) Combination with other required disclosures. A notice required
by this subpart C may be concise even if it is combined with other
disclosures required or authorized by Federal or State law.
(3) Use of model forms. The requirement for a concise notice is
satisfied by use of a model form contained in Appendix A to this part,
although use of a model form is not required.
(c) Providing a menu of opt out choices. With respect to the opt
out election, a bank may allow a consumer to choose from a menu of
alternatives when opting out of affiliate use of eligibility
information for marketing, such as by selecting certain types of
affiliates, certain types of information, or certain methods of
delivery from which to opt out, so long as the bank offers as one of
the alternatives the opportunity to opt out with respect to all
affiliates, all eligibility information, and all methods of delivery.
(d) Alternative contents. If a bank provides the consumer with a
broader right to opt out of marketing than is required by law, the bank
satisfies the requirements of this section by providing the consumer
with a clear, conspicuous, and concise notice that accurately discloses
the consumer's opt out rights. A model notice is provided in Appendix A
of this part for guidance, although use of the model notice is not
required.

Sec. 41.22 Reasonable opportunity to opt out.

(a) General. Before a bank's affiliate uses eligibility information
communicated by the bank to make or send solicitations to a consumer,
the bank must provide the consumer with a reasonable opportunity,
following the delivery of the opt out notice, to opt out of such use by
the bank's affiliate.
(b) Examples of a reasonable opportunity to opt out. A bank
provides a consumer with a reasonable opportunity to opt out if:

[[Page 42523]]

(1) By mail. The bank mails the opt out notice to a consumer and
gives the consumer 30 days from the date the bank mailed the notice to
elect to opt out by any reasonable means.
(2) By electronic means. The bank notifies the consumer
electronically and gives the consumer 30 days after the date that the
consumer acknowledges receipt of the electronic notice to elect to opt
out by any reasonable means.
(3) At the time of an electronic transaction. The bank provides the
opt out notice to the consumer at the time of an electronic
transaction, such as a transaction conducted on a Web site, and
requests that the consumer decide, as a necessary part of proceeding
with the transaction, whether to opt out before completing the
transaction, so long as the bank provides a simple process at the
Internet Web site that the consumer may use at that time to opt out.
(4) By including in a privacy notice. The bank includes the opt out
notice in a Gramm-Leach-Bliley Act privacy notice (12 CFR part 40,
subpart A) and allows the consumer to exercise the opt out within a
reasonable period of time and in the same manner as the opt out under
the Gramm-Leach-Bliley Act (15 U.S.C. 1681 et seq.).
(5) By providing an opt in. If a bank has a policy of not allowing
an affiliate to use eligibility information to make or send
solicitations to the consumer unless the consumer affirmatively
consents, the bank gives the consumer the opportunity to opt in by
affirmative consent to such use by the bank's affiliate. The bank must
document the consumer's affirmative consent. A pre-selected check box
does not constitute evidence of the consumer's affirmative consent.

Sec. 41.23 Reasonable and simple methods of opting out.

(a) Reasonable and simple methods of opting out. A bank provides a
reasonable and simple method for a consumer to exercise a right to opt
out if it:
(1) Designates check-off boxes in a prominent position on the
relevant forms included with the opt out notice required by this
subpart C;
(2) Includes a reply form and a self-addressed envelope together
with the opt out notice required by this subpart C;
(3) Provides an electronic means to opt out, such as a form that
can be electronically mailed or processed at the bank's Web site, if
the consumer agrees to the electronic delivery of information; or
(4) Provides a toll-free telephone number that consumers may call
to opt out.
(b) Methods of opting out that are not reasonable or simple. A bank
does not provide a reasonable and simple method for exercising an opt
out right if it:
(1) Requires the consumer to write a letter to the bank;
(2) Requires the consumer to call or write the bank to obtain a
form for opting out, rather than including the form with the notice; or
(3) Requires the consumer who agrees to receive the opt out notice
in electronic form only, such as by electronic mail or at the bank's
Web site, to opt out solely by telephone or by paper mail.

Sec. 41.24 Delivery of opt out notices.

(a) General. A bank must provide an opt out notice so that each
consumer can reasonably be expected to receive actual notice. For opt
out notices the bank provides electronically, it may either comply with
the electronic disclosure provisions in this subpart C or with the
provisions in section 101 of the Electronic Signatures in Global and
National Commerce Act, 15 U.S.C. 7001 et seq.
(b) Examples of expectation of actual notice. (1) A bank may
reasonably expect that a consumer will receive actual notice if it:
(i) Hand-delivers a printed copy of the notice to the consumer;
(ii) Mails a printed copy of the notice to the last known mailing
address of the consumer; or
(iii) For the consumer who obtains a product or service from a bank
electronically, such as at an Internet Web site, post the notice on the
bank's electronic Web site and require the consumer to acknowledge
receipt of the notice as a necessary step for obtaining a particular
product or service.
(2) A bank may not reasonably expect that a consumer will receive
actual notice if it:
(i) Only posts a sign in its branch or office or generally
publishes advertisements presenting the notice; or
(ii) Sends the notice via electronic mail to a consumer who has not
agreed to the electronic delivery of information.
(c) Joint notice with affiliates--(1) General. A bank may provide a
joint notice from it and one or more of the bank's affiliates, as
identified in the notice, so long as the notice is accurate with
respect to the bank and each affiliate.
(2) Identification of affiliates. A bank does not have to list each
affiliate providing the joint notice by its name. If each affiliate
shares a common name, such as ``ABC,'' then the joint notice may state
that it applies to ``all institutions with the ABC name'' or ``all
affiliates in the ABC family of companies.'' If, however, an affiliate
does not have ABC in its name, then the joint notice must separately
identify each family of companies with a common name or the
institution.
(d) Joint relationships--(1) General. If two or more consumers
jointly obtain a product or service from a bank (joint consumers), the
following rules apply:
(i) The bank may provide a single opt out notice.
(ii) Any of the joint consumers may exercise the right to opt out.
(iii) The bank may either:
(A) Treat an opt out direction by a joint consumer as applying to
all of the associated joint consumers; or
(B) Permit each joint consumer to opt out separately.
(iv) If a bank permits each joint consumer to opt out separately,
the bank must permit:
(A) One of the joint consumers to opt out on behalf of all of the
joint consumers; and
(B) One or more joint consumers to notify the bank of their opt out
directions in a single response.
(v) A bank must explain in its opt out notice which of the policies
in paragraph (d)(1)(iii) of this section the bank will follow, as well
as the information required by paragraph (d)(1)(iv) of this section.
(vi) A bank may not require all joint consumers to opt out before
it implements any opt out direction.
(vii) If a bank receives an opt out by a particular joint consumer
that does not apply to the others, the bank may use eligibility
information about the others as long as no eligibility information is
used about the consumer who opted out.
(2) Example. If consumers A and B, who have different addresses,
have a joint checking account with a bank and arrange for the bank to
send statements to A's address, the bank may do any of the following,
but the bank must explain in the bank's opt out notice which opt out
policy the bank will follow. The bank may send a single opt out notice
to A's address and:
(i) Treat an opt out direction by A as applying to the entire
account. If the bank does so and A opts out, the bank may not require B
to opt out as well before implementing A's opt out direction.
(ii) Treat A's opt out direction as applying to A only. If a bank
does so, it must also permit:
(A) A and B to opt out for each other; and

[[Page 42524]]

(B) A and B to notify the bank of their opt out directions in a
single response (such as on a single form) if they choose to give
separate opt out directions.
(iii) If A opts out only for A, and B does not opt out, the bank's
affiliate may use information only about B to send solicitations to B,
but may not use information about A and B jointly to send solicitations
to B.

Sec. 41.25 Duration and effect of opt out.

(a) Duration of opt out. The election of a consumer to opt out
shall be effective for the opt out period, which is a period of at
least five years beginning as soon as reasonably practicable after the
consumer's opt out election is received. A bank may establish an opt
out period of more than five years, including an opt out period that
does not expire unless the consumer revokes it in writing, or if the
consumer agrees, electronically.
(b) Effect of opt out. A receiving affiliate may not make or send
solicitations to a consumer during the opt out period based on
eligibility information it receives from an affiliate, except as
provided in the exceptions in Sec. 41.20(d) or if the opt out is
revoked by the consumer.
(c) Time of opt out. A consumer may opt out at any time.
(d) Termination of relationship. If the consumer's relationship
with a bank terminates when a consumer's opt out election is in force,
the opt out will continue to apply indefinitely, unless revoked by the
consumer.

Sec. 41.26 Extension of opt out.

(a) General. For a consumer who has opted out, a receiving
affiliate may not make or send solicitations to the consumer after the
expiration of the opt out period based on eligibility information it
receives or has received from an affiliate, unless the person
responsible for providing the initial opt out notice, or its successor,
has given the consumer an extension notice and a reasonable opportunity
to extend the opt out, and the consumer does not extend the opt out.
(b) Duration of extension. Each opt out extension shall comply with
Sec. 41.25(a).
(c) Contents of extension notice. The notice provided at extension
must be clear, conspicuous, and concise, and must accurately disclose
either:
(1) The same contents specified in Sec. 41.21(a) for the initial
notice, along with a statement explaining that the consumer's previous
opt out has expired or is about to expire, as applicable, and that the
consumer must opt out again if the consumer wishes to keep the opt out
election in force; or
(2) Each of the following items:
(i) That the consumer previously elected to limit a bank's
affiliate from using information about the consumer that it obtains
from the bank to make or send solicitations to the consumer;
(ii) That the consumer's election has expired or is about to
expire, as applicable;
(iii) That the consumer may elect to extend the consumer's previous
election; and
(iv) A reasonable and simple method for the consumer to opt out.
(d) Timing of the extension notice--(1) General. An extension
notice may be provided to the consumer either:
(i) A reasonable period of time before the expiration of the opt
out period; or
(ii) Any time after the expiration of the opt out period but before
any affiliate makes or sends solicitations to the consumer that would
have been prohibited by the expired opt out.
(2) Reasonable period of time before expiration. Providing an
extension notice on or with the last annual privacy notice required by
the Gramm-Leach-Bliley Act, 15 U.S.C. 6801 et seq., that is provided to
the consumer before expiration of the opt out period shall be deemed
reasonable in all cases.
(e) No effect on opt out period. The opt out period may not be
shortened to a period of less than five years by sending an extension
notice to the consumer before expiration of the opt out period.

Sec. 41.27 Consolidated and equivalent notices.

(a) Coordinated and consolidated notices. A notice required by this
subpart C may 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 described in section
603(d)(2)(A)(iii) of the Act and the Gramm-Leach-Bliley Act privacy
notice.
(b) Equivalent notices. A notice or other disclosure that is
equivalent to the notice required by this subpart C, and that a bank
provides to a consumer together with disclosures required by any other
provision of law, shall satisfy the requirements of this subpart C.
6. Appendix A to part 41 is added to read as follows:

Appendix A to 12 CFR Part 41--Model Forms for Opt Out Notices

A-1: Model Form for Initial Opt Out Notice

Your Choice To Limit Marketing

You may limit our affiliates from marketing their
products or services to you based on information that we share with
them, such as your income, your account history with us, and your
credit score.
[Include if applicable.] Your decision to limit
marketing offers from our affiliates will apply for 5 years. Once
that period expires, you will be allowed to extend your decision.
[Include if applicable.] This limitation does not apply
in certain circumstances, such as if you currently do business with
one of our affiliates or if you ask to receive information or offers
from them.
To limit marketing offers [include all that apply]:
Call us toll-free at 877--
; or
Visit our Web site at http://www.websiteaddress.com; or

Check the box below and mail it to:

[Company name].
[Company address].

-- I do not want your affiliates to market their products or
services to me based on information that you share with them.

A-2: Model Form for Extension Notice

Extending Your Choice to Limit Marketing

You previously chose to limit our affiliates from
marketing their products or services to you based on information
that we share with them, such as your income, your account history
with us, and your credit score.
Your choice has expired or is about to expire.
[Include if applicable.] This limitation does not apply
in certain circumstances, such as if you currently do business with
one of our affiliates or if you ask to receive information or offers
from them.
To extend your choice for another 5 years [include all that
apply]:
Call us toll-free at 877--
; or
Visit our Web site at http://www.websiteaddress.com; or

Check the box below and mail it to:

[Company name].
[Company address].

---- I want to extend my choice for another 5 years.

A-3: Model Form for Voluntary ``No Marketing'' Notice

Your Choice To Stop Marketing

You may choose to stop all marketing offers from us and
our affiliates.
To stop all marketing offers [include all that apply]:
Call us toll-free at 877--
; or
Visit our Web site at http://www.websiteaddress.com; or

Check the box on the form below and mail it to:

[Company name].
[Company address].

--I do not want you or your affiliates to send me marketing offers.

Board of Governors of the Federal Reserve System

12 CFR Chapter II

Authority and Issuance

For the reasons set forth in the joint preamble, title 12, chapter
II, of the

[[Page 42525]]

Code of Federal Regulations is proposed to be amended as follows:

PART 222--FAIR CREDIT REPORTING (REGULATION V)

1. The authority citation for part 222 is revised to read as
follows:

Authority: 15 U.S.C. 1681b and 1681s; secs. 3, 214, and 217,
Pub. L. 108-159, 117 Stat. 1952.

Subpart A--General Provisions

2. Section 222.1 is amended by adding a new paragraph (a), and
paragraph (b)(2)(i) (as proposed to be added at 69 FR 23397, April 28,
2004) is revised to read as follows:

Sec. 222.1 Purpose, scope, and effective dates.

(a) Purpose. The purpose of this part is to implement the
provisions of the Fair Credit Reporting Act applicable to the
institutions listed in paragraph (b)(2) of this section. This part
generally applies to institutions that obtain and use information about
consumers to determine the consumer's eligibility for products,
services, or employment, share such information among affiliates, and
furnish such information to consumer reporting agencies.
(b) * * *
(2) Institutions covered. (i) Except as otherwise provided in
paragraph (b)(2) of this section, these regulations apply to banks that
are members of the Federal Reserve System (other than national banks),
branches and Agencies of foreign banks (other than Federal branches,
Federal Agencies, and insured State branches of foreign banks),
commercial lending companies owned or controlled by foreign banks,
organizations operating under section 25 or 25A of the Federal Reserve
Act (12 U.S.C. 601 et seq., and 611 et seq.), and bank holding
companies and affiliates of such holding companies (other than
depository institutions and consumer reporting agencies).
* * * * *
3. Section 222.2 (as proposed to be added at 69 FR 23397, April 28,
2004) is republished to read as follows:

Sec. 222.2 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 paragraph illustrate only the issue described in
the paragraph and do not illustrate any other issue that may arise in
this part.
4. Section 222.3 (as proposed to be added at 69 FR 23397, April 28,
2004) is revised to read as follows:

Sec. 222.3 Definitions.

As used in this part, unless the context requires otherwise:
(a) Act means the Fair Credit Reporting Act (15 U.S.C. 1681 et
seq.).
(b) Affiliate means any person that is related by common ownership
or common corporate control with another person.
(c) Clear and conspicuous means reasonably understandable and
designed to call attention to the nature and significance of the
information presented.
(d) Company means any corporation, limited liability company,
business trust, general or limited partnership, association, or similar
organization.
(e) Consumer means an individual.
(f) [Reserved].
(g) [Reserved].
(h) [Reserved].
(i) Control of a company means:
(1) Ownership, control, or power to vote 25 percent or more of the
outstanding shares of any class of voting security of the company,
directly or indirectly, or acting through one or more other persons;
(2) Control in any manner over the election of a majority of the
directors, trustees, or general partners (or individuals exercising
similar functions) of the company; or
(3) The power to exercise, directly or indirectly, a controlling
influence over the management or policies of the company, as the Board
determines.
(j) Eligibility information means any information the communication
of which would be a consumer report if the exclusions from the
definition of ``consumer report'' in section 603(d)(2)(A) of the Act
did not apply.
(k) [Reserved].
(l) Person means any individual, partnership, corporation, trust,
estate, cooperative, association, government or governmental
subdivision or agency, or other entity.
(m) Pre-existing business relationship means a relationship between
a person 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
covered by subpart C of this part;
(2) The purchase, rental, or lease by the consumer of the person's
goods 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 subpart C of this part is made or sent to the consumer; or
(3) An inquiry or application by the consumer regarding a product
or service offered by that person during the 3-month period immediately
preceding the date on which a solicitation covered by subpart C of this
part is made or sent to the consumer.
(n) Solicitation. (1) In general. Solicitation means marketing
initiated by a person to a particular consumer that is--
(i) Based on eligibility information communicated to that person by
its affiliate as described in subpart C of this part; and
(ii) Intended to encourage the consumer to purchase or obtain such
product or service.
(2) Exclusion of marketing directed at the general public. A
solicitation does not include communications that are directed at the
general public and distributed without the use of eligibility
information communicated by an affiliate. For example, television,
magazine, and billboard advertisements do not constitute solicitations,
even if those communications are intended to encourage consumers to
purchase products and services from the person initiating the
communications.
(3) Examples of solicitations. A solicitation would include, for
example, a telemarketing call, direct mail, e-mail, or other form of
marketing communication directed to a specific consumer that is based
on eligibility information communicated by an affiliate.
(o) You means member banks of the Federal Reserve System (other
than national banks), branches and Agencies of foreign banks (other
than Federal branches, Federal Agencies, and insured State branches of
foreign banks), commercial lending companies owned or controlled by
foreign banks, organizations operating under section 25 or 25A of the
Federal Reserve Act (12 U.S.C. 601 et seq., and 611 et seq.), and bank
holding companies and affiliates of such holding companies (other than
depository institutions and consumer reporting agencies).
5. A new subpart C is added to part 222 to read as follows:
Subpart C--Affiliate Use of Information for Marketing
Sec.
222.20 Affiliate use of eligibility information for marketing.
222.21 Contents of opt out notice.
222.22 Reasonable opportunity to opt out.
222.23 Reasonable and simple methods of opting out.
222.24 Delivery of opt out notices.
222.25 Duration and effect of opt out.
222.26 Extension of opt out.
222.27 Consolidated and equivalent notices.

[[Page 42526]]

Subpart C--Affiliate Use of Information for Marketing

Sec. 222.20 Affiliate use of eligibility information for marketing.

(a) General duties of a person communicating eligibility
information to an affiliate--(1) Notice and opt out. If you communicate
eligibility information about a consumer to your affiliate, your
affiliate may not use the information to make or send solicitations to
the consumer, unless prior to such use by the affiliate--
(i) You provide a clear and conspicuous notice to the consumer
stating that the information may be communicated to and used by your
affiliate to make or send solicitations to the consumer about its
products and services;
(ii) You provide the consumer a reasonable opportunity and a simple
method to ``opt out'' of such use of that information by your
affiliate; and
(iii) The consumer has not chosen to opt out.
(2) Rules of construction--(i) In general. The notice required by
this paragraph may be provided either in the name of a person with
which the consumer currently does or previously has done business or in
one or more common corporate names shared by members of an affiliated
group of companies that includes the common corporate name used by that
person, and may be provided in the following manner:
(A) You may provide the notice directly to the consumer;
(B) Your agent may provide the notice on your behalf, so long as--
(1) Your agent, if your affiliate, does not include any
solicitation other than yours on or with the notice, unless it falls
within one of the exceptions in paragraph (c) of this section; and
(2) Your agent gives the notice in your name or a common name or
names used by the family of companies; or
(C) You may provide a joint notice with one or more of your
affiliates or under a common corporate name or names used by the family
of companies as provided in Sec. 222.24(c).
(ii) Avoiding duplicate notices. If Affiliate A communicates
eligibility information about a consumer to Affiliate B, and Affiliate
B communicates that same information to Affiliate C, Affiliate B does
not have to give an opt out notice to the consumer when it provides
eligibility information to Affiliate C, so long as Affiliate A's notice
is broad enough to cover Affiliate C's use of the eligibility
information to make solicitations to the consumer.
(iii) Examples of rules of construction. A, B, and C are
affiliates. The consumer currently has a business relationship with
affiliate A, but has never done business with affiliates B or C.
Affiliate A communicates eligibility information about the consumer to
B for purposes of making solicitations. B communicates the information
it received from A to C for purposes of making solicitations. In this
circumstance, the rules of construction would--
(A) Permit B to use the information to make solicitations if:
(1) A has provided the opt out notice directly to the consumer; or
(2) B or C has provided the opt out notice on behalf of A.
(B) Permit B or C to use the information to make solicitations if:
(1) A's notice is broad enough to cover both B's and C's use of the
eligibility information; or
(2) A, B, or C has provided a joint opt out notice on behalf of the
entire affiliated group of companies.
(C) Not permit B or C to use the information for marketing purposes
if B has provided the opt out notice only in B's own name, because no
notice would have been provided by or on behalf of A.
(b) General duties of an affiliate receiving eligibility
information. If you receive eligibility information from an affiliate,
you may not use the information to make or send solicitations to a
consumer, unless the consumer has been provided an opt out notice, as
described in paragraph (a) of this section, that applies to your use of
eligibility information and the consumer has not opted-out.
(c) Exceptions. The provisions of this subpart do not apply if you
use eligibility information you receive from an affiliate:
(1) To make or send a marketing solicitation to a consumer with
whom you have a pre-existing business relationship as defined in Sec.
222.3(m);
(2) To facilitate communications to an individual for whose benefit
you provide employee benefit or other services pursuant to a contract
with an employer related to and arising out of the current employment
relationship or status of the individual as a participant or
beneficiary of an employee benefit plan;
(3) To perform services on behalf of an affiliate, except that this
subparagraph shall not be construed as permitting you to make or send
solicitations on your behalf or on behalf of an affiliate if you or the
affiliate, as applicable, would not be permitted to make or send the
solicitation as a result of the election of the consumer to opt out
under this subpart;
(4) In response to a communication initiated by the consumer
orally, electronically, or in writing;
(5) In response to an affirmative authorization or request by the
consumer orally, electronically, or in writing to receive a
solicitation; or
(6) If your compliance with this subpart would prevent you from
complying with any provision of State insurance laws pertaining to
unfair discrimination in any State in which you are lawfully doing
business.
(d) Examples of exceptions--(1) Examples of pre-existing business
relationships. (i) If a consumer has an insurance policy with your
insurance affiliate that is currently in force, your insurance
affiliate has a pre-existing business relationship with the consumer
and can therefore use eligibility information it has received from you
to make solicitations.
(ii) If a consumer has an insurance policy with your insurance
affiliate that has lapsed, your insurance affiliate has a pre-existing
business relationship with the consumer for 18 months after the date on
which the policy ceases to be in force and can therefore use
eligibility information it has received from you to make solicitations
for 18 months after the date on which the policy ceases to be in force.
(iii) If a consumer applies to your affiliate for a product or
service, or inquires about your affiliate's products or services and
provides contact information to your affiliate for receipt of that
information, your affiliate has a pre-existing business relationship
with the consumer for 3 months after the date of the inquiry or
application and can therefore use eligibility information it has
received from you to make solicitations for 3 months after the date of
the inquiry or application.
(iv) If a consumer makes a telephone call to a centralized call
center for an affiliated group of companies to inquire about the
consumer's bank account, the call does not constitute an inquiry with
any affiliate other than the bank that holds the consumer's bank
account and does not establish a pre-existing business relationship
between the consumer and any affiliate of the bank.
(2) Examples of consumer-initiated communications. (i) If a
consumer who has an account with you initiates a telephone call to your
securities affiliate to request information about brokerage services or
mutual funds and provides contact information for receiving that
information, your securities affiliate may use eligibility information
about the consumer it obtains from you to

[[Page 42527]]

make solicitations in response to the consumer-initiated call.
(ii) If your affiliate makes the initial marketing call, leaves a
message for the consumer to call back, and the consumer responds, the
communication is not initiated by the consumer, but by your affiliate.
(iii) If the consumer calls your affiliate to ask about retail
locations and hours, but does not request information about your
affiliate's products or services, solicitations by your affiliate using
eligibility information about the consumer it obtains from you would
not be responsive to the consumer-initiated communication.
(3) Example of consumer affirmative authorization or request. If a
consumer who obtains a mortgage from you requests or affirmatively
authorizes information about homeowner's insurance from your insurance
affiliate, such authorization or request, whether given to you or to
your insurance affiliate, would permit your insurance affiliate to use
eligibility information about the consumer it obtains from you to make
solicitations about homeowner's insurance to the consumer. A pre-
selected check box would not satisfy the requirement for an affirmative
authorization or request.
(e) Prospective application. The provisions of this subpart shall
not prohibit your affiliate from using eligibility information
communicated by you to make or send solicitations to a consumer if such
information was received by your affiliate prior to [Insert Mandatory
Compliance Date].
(f) Relation to affiliate-sharing notice and opt out. Nothing in
this subpart limits the responsibility of a company to comply with the
notice and opt out provisions of section 603(d)(2)(A)(iii) of the Act
before it shares information other than transaction or experience
information among affiliates to avoid becoming a consumer reporting
agency.

Sec. 222.21 Contents of opt out notice.

(a) In general. A notice must be clear, conspicuous, and concise,
and must accurately disclose:
(1) That the consumer may elect to limit your affiliate from using
eligibility information about the consumer that it obtains from you to
make or send solicitations to the consumer;
(2) If applicable, that the consumer's election will apply for a
specified period of time and that the consumer will be allowed to
extend the election once that period expires; and
(3) A reasonable and simple method for the consumer to opt out.
(b) Concise--(1) In general. For purposes of this subpart, the term
``concise'' means a reasonably brief expression or statement.
(2) Combination with other required disclosures. 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.
(3) Use of model form. The requirement for a concise notice is
satisfied by use of a model form contained in Appendix A of this part,
although use of the model form is not required.
(c) Providing a menu of opt out choices. With respect to the opt
out election, you may allow a consumer to choose from a menu of
alternatives when opting out of affiliate use of eligibility
information for marketing, such as by selecting certain types of
affiliates, certain types of information, or certain methods of
delivery from which to opt out, so long as you offer as one of the
alternatives the opportunity to opt out with respect to all affiliates,
all eligibility information, and all methods of delivery.
(d) Alternative contents. If you provide the consumer with a
broader right to opt out of marketing than is required by law, you
satisfy the requirements of this section by providing the consumer with
a clear, conspicuous, and concise notice that accurately discloses the
consumer's opt out rights. A model notice is provided in Appendix A of
this part for guidance, although use of the model notice is not
required.

Sec. 222.22 Reasonable opportunity to opt out.

(a) In general. Before your affiliate uses eligibility information
communicated by you to make or send solicitations to a consumer, you
must provide the consumer with a reasonable opportunity, following the
delivery of the opt out notice, to opt out of such use by your
affiliate.
(b) Examples of a reasonable opportunity to opt out. You provide a
consumer with a reasonable opportunity to opt out if:
(1) By mail. You mail the opt out notice to a consumer and give the
consumer 30 days from the date you mailed the notice to elect to opt
out by any reasonable means.
(2) By electronic means. You notify the consumer electronically and
give the consumer 30 days after the date that the consumer acknowledges
receipt of the electronic notice to elect to opt out by any reasonable
means.
(3) At the time of an electronic transaction. You provide the opt
out notice to the consumer at the time of an electronic transaction,
such as a transaction conducted on an Internet Web site, and request
that the consumer decide, as a necessary part of proceeding with the
transaction, whether to opt out before completing the transaction, so
long as you provide a simple process at the Internet Web site that the
consumer may use at that time to opt out.
(4) By including in a privacy notice. You include the opt out
notice in a Gramm-Leach-Bliley Act privacy notice and allow the
consumer to exercise the opt out within a reasonable period of time and
in the same manner as the opt out under the Gramm-Leach-Bliley Act, 15
U.S.C. 6801 et seq.
(5) By providing an ``opt in''. If you have a policy of not
allowing an affiliate to use eligibility information to make or send
solicitations to the consumer unless the consumer affirmatively
consents, you give the consumer the opportunity to ``opt in'' by
affirmative consent to such use by your affiliate. You must document
the consumer's affirmative consent. A pre-selected check box does not
constitute evidence of the consumer's affirmative consent.

Sec. 222.23 Reasonable and simple methods of opting out.

(a) Reasonable and simple methods of opting out. You provide a
reasonable and simple method for a consumer to exercise a right to opt
out if you--
(1) Designate check-off boxes in a prominent position on the
relevant forms included with the opt out notice required by this
subpart;
(2) Include a reply form and a self-addressed envelope together
with the opt out notice required by this subpart;
(3) Provide an electronic means to opt out, such as a form that can
be electronically mailed or processed at your Web site, if the consumer
agrees to the electronic delivery of information; or
(4) Provide a toll-free telephone number that consumers may call to
opt out.
(b) Methods of opting out that are not reasonable or simple. You do
not provide a reasonable and simple method for exercising an opt out
right if you--
(1) Require the consumer to write his or her own letter to you;
(2) Require the consumer to call or write to you to obtain a form
for opting out, rather than including the form with the notice; or
(3) Require the consumer who agrees to receive the opt out notice
in electronic form only, such as by electronic mail or at your Web
site, to opt out solely by telephone or by paper mail.

[[Page 42528]]

Sec. 222.24 Delivery of opt out notices.

(a) In general. You must provide an opt out notice so that each
consumer can reasonably be expected to receive actual notice. For opt
out notices you provide electronically, you may either comply with the
electronic disclosure provisions in this subpart or with the provisions
in section 101 of the Electronic Signatures in Global and National
Commerce Act, 15 U.S.C. 7001 et seq.
(b) Examples of expectation of actual notice. (1) You may
reasonably expect that a consumer will receive actual notice if you:
(i) Hand-deliver a printed copy of the notice to the consumer;
(ii) Mail a printed copy of the notice to the last known mailing
address of the consumer; or
(iii) For the consumer who obtains a product or service from you
electronically, such as on an Internet Web site, post the notice on
your electronic site and require the consumer to acknowledge receipt of
the notice as a necessary step to obtaining a particular product or
service.
(2) You may not reasonably expect that a consumer will receive
actual notice if you:
(i) Only post a sign in your branch or office or generally publish
advertisements presenting your notice; or
(ii) Send the notice via electronic mail to a consumer who has not
agreed to the electronic delivery of information.
(c) Joint notice with affiliates--(1) In general. You may provide a
joint notice from you and one or more of your affiliates, as identified
in the notice, so long as the notice is accurate with respect to you
and each affiliate.
(2) Identification of affiliates. You do not have to list each
affiliate providing the joint notice by its name. If each affiliate
shares a common name, such as ``ABC,'' then the joint notice may state
that it applies to ``all institutions with the ABC name'' or ``all
affiliates in the ABC family of companies.'' If, however, an affiliate
does not have ABC in its name, then the joint notice must separately
identify each family of companies with a common name or the
institution.
(d) Joint relationships--(1) In general. If two or more consumers
jointly obtain a product or service from you (joint consumers), the
following rules apply:
(i) You may provide a single opt out notice.
(ii) Any of the joint consumers may exercise the right to opt out.
(iii) You may either--
(A) Treat an opt out direction by a joint consumer as applying to
all of the associated joint consumers; or
(B) Permit each joint consumer to opt out separately.
(iv) If you permit each joint consumer to opt out separately, you
must permit:
(A) One of the joint consumers to opt out on behalf of all of the
joint consumers; and
(B) One or more joint consumers to notify you of their opt out
directions in a single response.
(v) You must explain in your opt out notice which of the policies
in paragraph (d)(1)(iii) of this section you will follow, as well as
the information required by paragraph (d)(1)(iv) of this section.
(vi) You may not require all joint consumers to opt out before you
implement any opt out direction.
(vii) If you receive an opt out by a particular joint consumer that
does not apply to the others, you may use eligibility information about
the others as long as no eligibility information is used about the
consumer who opted out.
(2) Example. If consumers A and B, who have different addresses,
have a joint checking account with you and arrange for you to send
statements to A's address, you may do any of the following, but you
must explain in your opt out notice which opt out policy you will
follow. You may send a single opt out notice to A's address and:
(i) Treat an opt out direction by A as applying to the entire
account. If you do so and A opts out, you may not require B to opt out
as well before implementing A's opt out direction.
(ii) Treat A's opt out direction as applying to A only. If you do
so, you must also permit:
(A) A and B to opt out for each other; and
(B) A and B to notify you of their opt out directions in a single
response (such as on a single form) if they choose to give separate opt
out directions.
(iii) If A opts out only for A, and B does not opt out, your
affiliate may use information only about B to send solicitations to B,
but may not use information about A and B jointly to send solicitations
to B.

Sec. 222.25 Duration and effect of opt out.

(a) Duration of opt out. The election of a consumer to opt out
shall be effective for the opt out period, which is a period of at
least 5 years beginning as soon as reasonably practicable after the
consumer's opt out election is received. You may establish an opt out
period of more than 5 years, including an opt out period that does not
expire unless the consumer revokes it in writing, or if the consumer
agrees, electronically.
(b) Effect of opt out. A receiving affiliate may not make or send
solicitations to a consumer during the opt out period based on
eligibility information it receives from an affiliate, except as
provided in the exceptions in Sec. 222.20(c) or if the opt out is
revoked by the consumer.
(c) Time of opt out. A consumer may opt out at any time.
(d) Termination of relationship. If the consumer's relationship
with you terminates when a consumer's opt out election is in force, the
opt out will continue to apply indefinitely, unless revoked by the
consumer.

Sec. 222.26 Extension of opt out.

(a) In general. For a consumer who has opted out, a receiving
affiliate may not make or send solicitations to the consumer after the
expiration of the opt out period based on eligibility information it
receives or has received from an affiliate, unless the person
responsible for providing the initial opt out notice, or its successor,
has given the consumer an extension notice and a reasonable opportunity
to extend the opt out, and the consumer does not extend the opt out.
(b) Duration of extension. Each opt out extension shall comply with
Sec. 222.25(a).
(c) Contents of extension notice. The notice provided at extension
must be clear, conspicuous, and concise, and must accurately disclose
either:
(1) The same contents specified in Sec. 222.21(a) for the initial
notice, along with a statement explaining that the consumer's previous
opt out has expired or is about to expire, as applicable, and that the
consumer must opt out again if the consumer wishes to keep the opt out
election in force; or
(2) Each of the items listed below:
(i) That the consumer previously elected to limit your affiliate
from using information about the consumer that it obtains from you to
make or send solicitations to the consumer;
(ii) That the consumer's election has expired or is about to
expire, as applicable;
(iii) That the consumer may elect to extend the consumer's previous
election; and
(iv) A reasonable and simple method for the consumer to opt out.
(d) Timing of the extension notice--(1) In general. An extension
notice may be provided to the consumer either'
(i) A reasonable period of time before the expiration of the opt
out period; or
(ii) Any time after the expiration of the opt out period but before
any

[[Page 42529]]

affiliate makes or sends solicitations to the consumer that would have
been prohibited by the expired opt out.
(2) Reasonable period of time before expiration. Providing an
extension notice on or with the last annual privacy notice required by
the Gramm-Leach-Bliley Act, 15 U.S.C. 6801 et seq., that is provided to
the consumer before expiration of the opt out period shall be deemed
reasonable in all cases.
(e) No effect on opt out period. The opt out period may not be
shortened to a period of less than 5 years by sending an extension
notice to the consumer before expiration of the opt out period.

Sec. 222.27 Consolidated and equivalent notices.

(a) Coordinated and consolidated 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,
including but not limited to the notice described in section
603(d)(2)(A)(iii) of the Act and the Gramm-Leach-Bliley Act privacy
notice.
(b) Equivalent notices. A notice or other disclosure that is
equivalent to the notice required by this subpart, and that you provide
to a consumer together with disclosures required by any other provision
of law, shall satisfy the requirements of this subpart.
6. A new Appendix A to part 222 is added to read as follows:

Appendix A to Part 222--Model Forms for Opt Out Notices

A-1 Model Form for Initial Opt Out Notice
A-2 Model Form for Extension Notice
A-3 Model Form for Voluntary ``No Marketing'' Notice

A-1--Model Form for Initial Opt Out Notice

Your Choice To Limit Marketing

You may limit our affiliates from marketing their
products or services to you based on information that we share with
them, such as your income, your account history with us, and your
credit score.
[Include if applicable.] Your decision to limit
marketing offers from our affiliates will apply for 5 years. Once
that period expires, you will be allowed to extend your decision.
[Include if applicable.] This limitation does not apply
in certain circumstances, such as if you currently do business with
one of our affiliates or if you ask to receive information or offers
from them.
To limit marketing offers [include all that apply]:
Call us toll-free at 877--
; or
Visit our Web site at http://www.websiteaddress.com; or

Check the box below and mail it to:

[Company name].
[Company address].

-- I do not want your affiliates to market their products or
services to me based on information that you share with them.

A-2--Model Form for Extension Notice

Extending Your Choice To Limit Marketing

You previously chose to limit our affiliates from
marketing their products or services to you based on information
that we share with them, such as your income, your account history
with us, and your credit score.
Your choice has expired or is about to expire.
[Include if applicable.] This limitation does not apply
in certain circumstances, such as if you currently do business with
one of our affiliates or if you ask to receive information or offers
from them.
To extend your choice for another 5 years [include all that
apply]:
Call us toll-free at 877--
; or
Visit our Web site at http://www.websiteaddress.com; or

Check the box below and mail it to:

[Company name].
[Company address].

-- I want to extend my choice for another 5 years.

A-3--Model Form for Voluntary ``No Marketing'' Notice

Your Choice To Stop Marketing

You may choose to stop all marketing offers from us and
our affiliates.
To stop all marketing offers [include all that apply]:
Call us toll-free at 877--
; or
Visit our Web site at http://www.websiteaddress.com; or

Check the box on the form below and mail it to:

[Company name].
[Company address].

-- I do not want you or your affiliates to send me marketing offers.

Federal Deposit Insurance Corporation

12 CFR Chapter III

Authority and Issuance

For the reasons set forth in the joint preamble, the Federal
Deposit Insurance Corporation proposes to amend part 334 (as proposed
to be added at 69 FR 23399, April 28, 2004) of chapter III of title 12
of the Code of Federal Regulations to read as follows:

PART 334--FAIR CREDIT REPORTING

1. The authority citation for part 334 continues to read as
follows:

Authority: 12 U.S.C. 1819 (Tenth) and 1818; 15 U.S.C. 1681b and
1681s.

Subpart A--General Provisions

2. Section 334.1 is revised to read as follows:

Sec. 334.1 Purpose, scope, and effective dates.

(a) Purpose. The purpose of this part is to implement the
provisions of the Fair Credit Reporting Act applicable to the
institutions listed in paragraph (b)(2) of this section. This part
generally applies to institutions that obtain and use information about
consumers to determine the consumer's eligibility for products,
services, or employment, share such information among affiliates, and
furnish such information to consumer reporting agencies.
(b) Scope.
(1) [Reserved]
(2) Institutions covered. (i) Except as otherwise provided in
paragraph (b)(2) of this section, these regulations apply to banks
insured by the FDIC (other than District Banks and members of the
Federal Reserve System) and insured State branches of foreign banks and
any subsidiaries and affiliates of such entities; and other entities
and persons with respect to which the FDIC may exercise its enforcement
authority under any provision of law. For purposes of this definition,
a subsidiary does not include a broker, dealer, person providing
insurance, investment company, and investment advisor.
3. Section 334.2 is republished to read as follows:

Sec. 334.2 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 paragraph illustrate only the issue described in
the paragraph and do not illustrate any other issue that may arise in
this part.
4. Section 334.3 is revised to read as follows:

Sec. 334.3 Definitions.

As used in this part, unless the context requires otherwise:
(a) Act means the Fair Credit Reporting Act (15 U.S.C. 1681 et
seq.).
(b) Affiliate means any person that is related by common ownership
or common corporate control with another person.
(c) Clear and conspicuous means reasonably understandable and
designed to call attention to the nature and significance of the
information presented.
(d) Company means any corporation, limited liability company,
business trust, general or limited partnership, association, or similar
organization.
(e) Consumer means an individual.
(f) [Reserved].
(g) [Reserved].
(h) [Reserved].

[[Page 42530]]

(i) Control of a company means:
(1) Ownership, control, or power to vote 25 percent or more of the
outstanding shares of any class of voting security of the company,
directly or indirectly, or acting through one or more other persons;
(2) Control in any manner over the election of a majority of the
directors, trustees, or general partners (or individuals exercising
similar functions) of the company; or
(3) The power to exercise, directly or indirectly, a controlling
influence over the management or policies of the company, as the FDIC
determines.
(j) Eligibility information means any information the communication
of which would be a consumer report if the exclusions from the
definition of ``consumer report'' in section 603(d)(2)(A) of the Act
did not apply.
(k) [Reserved].
(l) Person means any individual, partnership, corporation, trust,
estate, cooperative, association, government or governmental
subdivision or agency, or other entity.
(m) Pre-existing business relationship means a relationship between
a person 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
covered by subpart C of this part;
(2) The purchase, rental, or lease by the consumer of the person's
goods 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 subpart C of this part is made or sent to the consumer; or
(3) An inquiry or application by the consumer regarding a product
or service offered by that person during the three month period
immediately preceding the date on which a solicitation covered by
subpart C of this part is made or sent to the consumer.
(n) Solicitation--(1) In general. Solicitation means marketing
initiated by a person to a particular consumer that is--
(i) Based on eligibility information communicated to that person by
its affiliate as described in subpart C of this part; and
(ii) Intended to encourage the consumer to purchase or obtain such
product or service.
(2) Exclusion of marketing directed at the general public. A
solicitation does not include communications that are directed at the
general public and distributed without the use of eligibility
information communicated by an affiliate. For example, television,
magazine, and billboard advertisements do not constitute solicitations,
even if those communications are intended to encourage consumers to
purchase products and services from the person initiating the
communications.
(3) Examples of solicitations. A solicitation would include, for
example, a telemarketing call, direct mail, e-mail, or other form of
marketing communication directed to a specific consumer that is based
on eligibility information communicated by an affiliate.
(o) You means all banks that are insured by the FDIC (other than
District Banks and members of the Federal Reserve System); insured
State branches of foreign banks and any subsidiaries and affiliates of
such entities; and other entities or persons with respect to which the
FDIC may exercise its enforcement authority under any provision of law.
For purposes of this definition, a subsidiary does not include a
broker, dealer, person providing insurance, investment company, and
investment advisor.
5. Subpart C is added to read as follows:
Subpart C--Affiliate Use of Information for Marketing
Sec.
334.20 Affiliate use of eligibility information for marketing.
334.21 Contents of opt out notice.
334.22 Reasonable opportunity to opt out.
334.23 Reasonable and simple methods of opting out.
334.24 Delivery of opt out notices.
334.25 Duration and effect of opt out.
334.26 Extension of opt out.
334.27 Consolidated and equivalent notices.

Subpart C--Affiliate Use of Information for Marketing

Sec. 334.20 Affiliate use of eligibility information for marketing.

(a) General duties of a person communicating eligibility
information to an affiliate--(1) Notice and opt out. If you communicate
eligibility information about a consumer to your affiliate, your
affiliate may not use the information to make or send solicitations to
the consumer, unless prior to such use by the affiliate--
(i) You provide a clear and conspicuous notice to the consumer
stating that the information may be communicated to and used by your
affiliate to make or send solicitations to the consumer about its
products and services;
(ii) You provide the consumer a reasonable opportunity and a simple
method to ``opt out'' of such use of that information by your
affiliate; and
(iii) The consumer has not chosen to opt out.
(2) Rules of construction--(i) In general. The notice required by
this paragraph may be provided either in the name of a person with
which the consumer currently does or previously has done business or in
one or more common corporate names shared by members of an affiliated
group of companies that includes the common corporate name used by that
person, and may be provided in the following manner:
(A) You may provide the notice directly to the consumer;
(B) Your agent may provide the notice on your behalf, so long as--
(1) Your agent, if your affiliate, does not include any
solicitation other than yours on or with the notice, unless it falls
within one of the exceptions in paragraph (c) of this section; and
(2) Your agent gives the notice in your name or a common name or
names used by the family of companies; or
(C) You may provide a joint notice with one or more of your
affiliates or under a common corporate name or names used by the family
of companies as provided in Sec. 334.24(c).
(ii) Avoiding duplicate notices. If Affiliate A shares eligibility
information about a consumer with Affiliate B, and Affiliate B shares
that same information with Affiliate C, Affiliate B does not have to
give an opt out notice to the consumer when it provides eligibility
information to Affiliate C, so long as Affiliate A's notice is broad
enough to cover Affiliate C's use of the eligibility information to
make solicitations to the consumer.
(iii) Examples of rules of construction. A, B, and C are
affiliates. The consumer currently has a business relationship with
affiliate A, but has never done business with affiliates B or C.
Affiliate A communicates eligibility information about the consumer to
B for purposes of making solicitations. B communicates the information
it received from A to C for purposes of making solicitations. In this
circumstance, the rules of construction would--
(A) Permit B to use the information to make solicitations if:
(1) A has provided the opt out notice directly to the consumer; or
(2) B or C has provided the opt out notice on behalf of A.
(B) Permit B or C to use the information to make solicitations if:

[[Page 42531]]

(1) A's notice is broad enough to cover both B's and C's use of the
eligibility information; or
(2) A, B, or C has provided a joint opt out notice on behalf of the
entire affiliated group of companies.
(C) Not permit B or C to use the information for marketing purposes
if B has provided the opt out notice only in B's own name, because no
notice would be provided by or on behalf of A.
(b) General duties of an affiliate receiving eligibility
information. If you receive eligibility information from an affiliate,
you may not use the information to make or send solicitations to a
consumer, unless the consumer has been provided an opt out notice, as
described in paragraph (a) of this section, that applies to your use of
eligibility information and the consumer has not opted-out.
(c) Exceptions. The provisions of this subpart do not apply if you
use eligibility information you receive from an affiliate:
(1) To make or send a marketing solicitation to a consumer with
whom you have a pre-existing business relationship as defined in Sec.
334.3(m);
(2) To facilitate communications to an individual for whose benefit
you provide employee benefit or other services pursuant to a contract
with an employer related to and arising out of the current employment
relationship or status of the individual as a participant or
beneficiary of an employee benefit plan;
(3) To perform services on behalf of an affiliate, except that this
subparagraph shall not be construed as permitting you to make or send
solicitations on your behalf or on behalf of an affiliate if you or the
affiliate, as applicable, would not be permitted to make or send the
solicitation as a result of the election of the consumer to opt out
under this subpart;
(4) In response to a communication initiated by the consumer
orally, electronically, or in writing;
(5) In response to an affirmative authorization or request by the
consumer orally, electronically, or in writing to receive a
solicitation; or
(6) If your compliance with this subpart would prevent you from
complying with any provision of State insurance laws pertaining to
unfair discrimination in any State in which you are lawfully doing
business.
(d) Examples of exceptions--(1) Examples of pre-existing business
relationships. (i) If a consumer has an insurance policy with your
insurance affiliate that is currently in force, your insurance
affiliate has a pre-existing business relationship with the consumer
and can therefore use eligibility information it has received from you
to make solicitations.
(ii) If a consumer has an insurance policy with your insurance
affiliate that has lapsed, your insurance affiliate has a pre-existing
business relationship with the consumer for 18 months after the date on
which the policy ceases to be in force and can therefore use
eligibility information it has received from you to make solicitations
for 18 months after the date on which the policy ceases to be in force.
(iii) If a consumer applies to your affiliate for a product or
service, or inquires about your affiliate's products or services and
provides contact information to your affiliate for receipt of that
information, your affiliate has a pre-existing business relationship
with the consumer for three months after the date of the inquiry or
application and can therefore use eligibility information it has
received from you to make solicitations for three months after the date
of the inquiry or application.
(iv) If a consumer makes a telephone call to a centralized call
center for an affiliated group of companies to inquire about the
consumer's bank account, the call does not constitute an inquiry with
any affiliate other than the bank that holds the consumer's bank
account and does not establish a pre-existing business relationship
between the consumer and any affiliate of the bank.
(2) Examples of consumer-initiated communications. (i) If a
consumer who has an account with you initiates a telephone call to your
securities affiliate to request information about brokerage services or
mutual funds and provides contact information for receiving that
information, your securities affiliate may use eligibility information
about the consumer it obtains from you to make solicitations in
response to the consumer-initiated call.
(ii) If your affiliate makes the initial marketing call, leaves a
message for the consumer to call back, and the consumer responds, the
communication is not initiated by the consumer, but by your affiliate.
(iii) If the consumer calls your affiliate to ask about retail
locations and hours, but does not request information about your
affiliate's products or services, solicitations by your affiliate using
eligibility information about the consumer it obtains from you would
not be responsive to the consumer-initiated communication.
(3) Example of consumer affirmative authorization or request. If a
consumer who obtains a mortgage from you requests or affirmatively
authorizes information about homeowner's insurance from your insurance
affiliate, such authorization or request, whether given to you or to
your insurance affiliate, would permit your insurance affiliate to use
eligibility information about the consumer it obtains from you to make
solicitations about homeowner's insurance to the consumer. A pre-
selected check box would not satisfy the requirement for an affirmative
authorization or request.
(e) Prospective application. The provisions of this subpart shall
not prohibit your affiliate from using eligibility information
communicated by you to make or send solicitations to a consumer if such
information was received by your affiliate prior to [Insert Mandatory
Compliance Date].
(f) Relation to affiliate-sharing notice and opt out. Nothing in
this subpart limits the responsibility of a company to comply with the
notice and opt out provisions of section 603(d)(2)(A)(iii) of the Act
before it shares information other than transaction or experience
information among affiliates to avoid becoming a consumer reporting
agency.

Sec. 334.21 Contents of opt out notice.

(a) In general. A notice must be clear, conspicuous, and concise,
and must accurately disclose:
(1) That the consumer may elect to limit your affiliate from using
eligibility information about the consumer that it obtains from you to
make or send solicitations to the consumer;
(2) If applicable, that the consumer's election will apply for a
specified period of time and that the consumer will be allowed to
extend the election once that period expires; and
(3) A reasonable and simple method for the consumer to opt out.
(b) Concise--(1) In general. For purposes of this subpart, the term
``concise'' means a reasonably brief expression or statement.
(2) Combination with other required disclosures. 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.
(3) Use of model form. The requirement for a concise notice is
satisfied by use of a model form contained in Appendix A of this part,
although use of the model form is not required.
(c) Providing a menu of opt out choices. With respect to the opt
out election, you may allow a consumer to choose from a menu of
alternatives when opting out of affiliate use of eligibility
information for marketing, such as by selecting certain types of
affiliates, certain types of information,

[[Page 42532]]

or certain methods of delivery from which to opt out, so long as you
offer as one of the alternatives the opportunity to opt out with
respect to all affiliates, all eligibility information, and all methods
of delivery.
(d) Alternative contents. If you provide the consumer with a
broader right to opt out of marketing than is required by law, you
satisfy the requirements of this section by providing the consumer with
a clear, conspicuous, and concise notice that accurately discloses the
consumer's opt out rights. A model notice is provided in Appendix A of
this part for guidance, although use of the model notice is not
required.

Sec. 334.22 Reasonable opportunity to opt out.

(a) In general. Before your affiliate uses eligibility information
communicated by you to make or send solicitations to a consumer, you
must provide the consumer with a reasonable opportunity, following the
delivery of the opt out notice, to opt out of such use by your
affiliate.
(b) Examples of a reasonable opportunity to opt out. You provide a
consumer with a reasonable opportunity to opt out if:
(1) By mail. You mail the opt out notice to a consumer and give the
consumer 30 days from the date you mailed the notice to elect to opt
out by any reasonable means.
(2) By electronic means. You notify the consumer electronically and
give the consumer 30 days after the date that the consumer acknowledges
receipt of the electronic notice to elect to opt out by any reasonable
means.
(3) At the time of an electronic transaction. You provide the opt
out notice to the consumer at the time of an electronic transaction,
such as a transaction conducted on an Internet Web site, and request
that the consumer decide, as a necessary part of proceeding with the
transaction, whether to opt out before completing the transaction, so
long as you provide a simple process at the Internet web site that the
consumer may use at that time to opt out.
(4) By including in a privacy notice. You include the opt out
notice in a Gramm-Leach-Bliley Act privacy notice and allow the
consumer to exercise the opt out within a reasonable period of time and
in the same manner as the opt out under the Gramm-Leach-Bliley Act.
(5) By providing an ``opt in''. If you have a policy of not
allowing an affiliate to use eligibility information to make or send
solicitations to the consumer unless the consumer affirmatively
consents, you give the consumer the opportunity to ``opt in'' by
affirmative consent to such use by your affiliate. You must document
the consumer's affirmative consent. A pre-selected check box does not
constitute evidence of the consumer's affirmative consent.

Sec. 334.23 Reasonable and simple methods of opting out.

(a) Reasonable and simple methods of opting out. You provide a
reasonable and simple method for a consumer to exercise a right to opt
out if you--
(1) Designate check-off boxes in a prominent position on the
relevant forms included with the opt out notice required by this
subpart;
(2) Include a reply form and a self-addressed envelope together
with the opt out notice required by this subpart;
(3) Provide an electronic means to opt out, such as a form that can
be electronically mailed or processed at your Web site, if the consumer
agrees to the electronic delivery of information; or
(4) Provide a toll-free telephone number that consumers may call to
opt out.
(b) Methods of opting out that are not reasonable or simple. You do
not provide a reasonable and simple method for exercising an opt out
right if you--
(1) Require the consumer to write his or her own letter to you;
(2) Require the consumer to call or write to you to obtain a form
for opting out, rather than including the form with the notice; or
(3) Require the consumer who agrees to receive the opt out notice
in electronic form only, such as by electronic mail or at your Web
site, to opt out solely by telephone or by paper mail.

Sec. 334.24 Delivery of opt out notices.

(a) In general. You must provide an opt out notice so that each
consumer can reasonably be expected to receive actual notice. For opt
out notices you provide electronically, you may either comply with the
electronic disclosure provisions in this subpart or with the provisions
in section 101 of the Electronic Signatures in Global and National
Commerce Act, 15 U.S.C. 7001 et seq.
(b) Examples of expectation of actual notice. (1) You may
reasonably expect that a consumer will receive actual notice if you:
(i) Hand-deliver a printed copy of the notice to the consumer;
(ii) Mail a printed copy of the notice to the last known mailing
address of the consumer; or
(iii) For the consumer who obtains a product or service from you
electronically, such as on an Internet Web site, post the notice on
your electronic site and require the consumer to acknowledge receipt of
the notice as a necessary step to obtaining a particular product or
service.
(2) You may not reasonably expect that a consumer will receive
actual notice if you:
(i) Only post a sign in your branch or office or generally publish
advertisements presenting your notice; or
(ii) Send the notice via electronic mail to a consumer who has not
agreed to the electronic delivery of information.
(c) Joint notice with affiliates--(1) In general. You may provide a
joint notice from you and one or more of your affiliates, as identified
in the notice, so long as the notice is accurate with respect to you
and each affiliate.
(2) Identification of affiliates. You do not have to list each
affiliate providing the joint notice by its name. If each affiliate
shares a common name, such as ``ABC,'' then the joint notice may state
that it applies to ``all institutions with the ABC name'' or ``all
affiliates in the ABC family of companies.'' If, however, an affiliate
does not have ABC in its name, then the joint notice must separately
identify each family of companies with a common name or the
institution.
(d) Joint relationships--(1) In general. If two or more consumers
jointly obtain a product or service from you (joint consumers), the
following rules apply:
(i) You may provide a single opt out notice.
(ii) Any of the joint consumers may exercise the right to opt out.
(iii) You may either--
(A) Treat an opt out direction by a joint consumer as applying to
all of the associated joint consumers; or
(B) Permit each joint consumer to opt out separately.
(iv) If you permit each joint consumer to opt out separately, you
must permit:
(A) One of the joint consumers to opt out on behalf of all of the
joint consumers; and
(B) One or more joint consumers to notify you of their opt out
directions in a single response.
(v) You must explain in your opt out notice which of the policies
in paragraph (d)(1)(iii) of this section you will follow, as well as
the information required by paragraph (d)(1)(iv) of this section.
(vi) You may not require all joint consumers to opt out before you
implement any opt out direction.
(vii) If you receive an opt out by a particular joint consumer that
does not apply to the others, you may use

[[Page 42533]]

eligibility information about the others as long as no eligibility
information is used about the consumer who opted out.
(2) Example. If consumers A and B, who have different addresses,
have a joint checking account with you and arrange for you to send
statements to A's address, you may do any of the following, but you
must explain in your opt out notice which opt out policy you will
follow. You may send a single opt out notice to A's address and:
(i) Treat an opt out direction by A as applying to the entire
account. If you do so and A opts out, you may not require B to opt out
as well before implementing A's opt out direction.
(ii) Treat A's opt out direction as applying to A only. If you do
so, you must also permit:
(A) A and B to opt out for each other; and
(B) A and B to notify you of their opt out directions in a single
response (such as on a single form) if they choose to give separate opt
out directions.
(iii) If A opts out only for A, and B does not opt out, your
affiliate may use information only about B to send solicitations to B,
but may not use information about A and B jointly to send solicitations
to B.

Sec. 334.25 Duration and effect of opt out.

(a) Duration of opt out. The election of a consumer to opt out
shall be effective for the opt out period, which is a period of at
least 5 years beginning as soon as reasonably practicable after the
consumer's opt out election is received. You may establish an opt out
period of more than 5 years, including an opt out period that does not
expire unless the consumer revokes it in writing, or if the consumer
agrees, electronically.
(b) Effect of opt out. A receiving affiliate may not make or send
solicitations to a consumer during the opt out period based on
eligibility information it receives from an affiliate, except as
provided in the exceptions in Sec. 334.20(c) or if the opt out is
revoked by the consumer.
(c) Time of opt out. A consumer may opt out at any time.
(d) Termination of relationship. If the consumer's relationship
with you terminates when a consumer's opt out election is in force, the
opt out will continue to apply indefinitely, unless revoked by the
consumer.

Sec. 334.26 Extension of opt out.

(a) In general. For a consumer who has opted out, a receiving
affiliate may not make or send solicitations to the consumer after the
expiration of the opt out period based on eligibility information it
receives or has received from an affiliate, unless the person
responsible for providing the initial opt out notice, or its successor,
has given the consumer an extension notice and a reasonable opportunity
to extend the opt out, and the consumer does not extend the opt out.
(b) Duration of extension. Each opt out extension shall comply with
Sec. 334.25(a).
(c) Contents of extension notice. The notice provided at extension
must be clear, conspicuous, and concise, and must accurately disclose
either:
(1) The same contents specified in Sec. 334.21(a) for the initial
notice, along with a statement explaining that the consumer's previous
opt out has expired or is about to expire, as applicable, and that the
consumer must opt out again if the consumer wishes to keep the opt out
election in force; or
(2) Each of the items listed below:
(i) That the consumer previously elected to limit your affiliate
from using information about the consumer that it obtains from you to
make or send solicitations to the consumer;
(ii) That the consumer's election has expired or is about to
expire, as applicable;
(iii) That the consumer may elect to extend the consumer's previous
election; and
(iv) A reasonable and simple method for the consumer to opt out.
(d) Timing of the extension notice--(1) In general. An extension
notice may be provided to the consumer either--
(i) A reasonable period of time before the expiration of the opt
out period; or
(ii) Any time after the expiration of the opt out period but before
any affiliate makes or sends solicitations to the consumer that would
have been prohibited by the expired opt out.
(2) Reasonable period of time before expiration. Providing an
extension notice on or with the last annual privacy notice required by
the Gramm-Leach-Bliley Act, 15 U.S.C. 6801 et seq., that is provided to
the consumer before expiration of the opt out period shall be deemed
reasonable in all cases.
(e) No effect on opt out period. The opt out period may not be
shortened to a period of less than 5 years by sending an extension
notice to the consumer before expiration of the opt out period.

Sec. 334.27 Consolidated and equivalent notices.

(a) Coordinated and consolidated 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,
including but not limited to the notice described in section
603(d)(2)(A)(iii) of the Act and the Gramm-Leach-Bliley Act privacy
notice.
(b) Equivalent notices. A notice or other disclosure that is
equivalent to the notice required by this subpart, and that you provide
to a consumer together with disclosures required by any other provision
of law, shall satisfy the requirements of this subpart.
* * * * *
6. Appendix A to part 334 is added to read as follows:

Appendix A to Part 334--Model Forms for Opt Out Notices

A-1 Model Form for Initial Opt Out Notice
A-2 Model Form for Extension Notice
A-3 Model Form for Voluntary ``No Marketing'' Notice

A-1--Model Form for Initial Opt Out Notice

Your Choice To Limit Marketing

You may limit our affiliates from marketing their
products or services to you based on information that we share with
them, such as your income, your account history with us, and your
credit score.
[Include if applicable.] Your decision to limit
marketing offers from our affiliates will apply for 5 years. Once
that period expires, you will be allowed to extend your decision.
[Include if applicable.] This limitation does not apply
in certain circumstances, such as if you currently do business with
one of our affiliates or if you ask to receive information or offers
from them.
To limit marketing offers [include all that apply]:
Call us toll-free at 877--
; or
Visit our Web site at http://www.websiteaddress.com; or

Check the box below and mail it to:

[Company name].
[Company address].

--I do not want your affiliates to market their products or services
to me based on information that you share with them.

A-2--Model Form for Extension Notice

Extending Your Choice To Limit Marketing

You previously chose to limit our affiliates from
marketing their products or services to you based on information
that we share with them, such as your income, your account history
with us, and your credit score.
Your choice has expired or is about to expire.
[Include if applicable.] This limitation does not apply
in certain circumstances, such as if you currently do business with
one of our affiliates or if you ask to receive information or offers
from them.
To extend your choice for another 5 years [include all that
apply]:
Call us toll-free at 877--
; or
Visit our Web site at http://www.websiteaddress.com; or

Check the box below and mail it to:

[Company name].

[[Page 42534]]

[Company address].

--I want to extend my choice for another 5 years.

A-3--Model Form for Voluntary ``No Marketing'' Notice

Your Choice To Stop Marketing

You may choose to stop all marketing offers from us and
our affiliates.
To stop all marketing offers [include all that apply]:
Call us toll-free at 877--
; or
Visit our Web site at http://www.websiteaddress.com; or

Check the box on the form below and mail it to:

[Company name].
[Company address].

--I do not want you or your affiliates to send me marketing offers.

Office of Thrift Supervision

12 CFR Chapter V

Authority and Issuance

For the reasons set forth in the joint preamble, the Office of
Thrift Supervision proposes to amend chapter V of title 12 of the Code
of Federal Regulations by amending part 571 (as proposed to be added at
69 FR 23402, April 28, 2004), as follows:

PART 571--FAIR CREDIT REPORTING

1. The authority citation for part 571 is revised to read as
follows:

Authority: 12 U.S.C. 1462a, 1463, 1464, 1467a, 1828, 1831p-1,
1881-1884; 15 U.S.C. 1681b, 1681s, and 1681w; 15 U.S.C. 6801 and
6805(b)(1); Sec. 214, Pub. L. 108-159, 117 Stat. 1952.

2. Amend Sec. 571.1 by adding new paragraphs (a) and (b)(2)(ii).

Sec. 571.1 Purpose, scope, and effective dates.

(a) Purpose. The purpose of this part is to implement the
provisions of the Fair Credit Reporting Act applicable to the
institutions listed in paragraph (b)(2) of this section. This part
generally applies to institutions that obtain and use information about
consumers to determine the consumer's eligibility for products,
services, or employment, share such information among affiliates, and
furnish such information to consumer reporting agencies.
(b) * * *
(2) * * *
(ii) Subpart C of this part does not apply to federal savings
association operating subsidiaries that are functionally regulated
within the meaning of section 5(c)(5) of the Bank Holding Company Act
of 1956, as amended (12 U.S.C. 1844(c)(5)).
* * * * *
3. Amend Sec. 571.3 by revising paragraphs (b) and (o) and adding
new paragraphs (c), (j), (l), (m), and (n).

Sec. 571.3 Definitions.

* * * * *
(b) Affiliate means any person that is related by common ownership
or common corporate control with another person.
(c) Clear and conspicuous means reasonably understandable and
designed to call attention to the nature and significance of the
information presented.
* * * * *
(j) Eligibility information means any information the communication
of which would be a consumer report if the exclusions from the
definition of ``consumer report'' in section 603(d)(2)(A) of the Act
did not apply.
* * * * *
(l) Person means any individual, partnership, corporation, trust,
estate, cooperative, association, government or governmental
subdivision or agency, or other entity.
(m) Pre-existing business relationship means a relationship between
a person 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
covered by subpart C of this part;
(2) The purchase, rental, or lease by the consumer of the person's
goods 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 subpart C of this part is made or sent to the consumer; or
(3) An inquiry or application by the consumer regarding a product
or service offered by that person during the 3-month period immediately
preceding the date on which a solicitation covered by subpart C of this
part is made or sent to the consumer.
(n) Solicitation--(1) In general. Solicitation means marketing
initiated by a person to a particular consumer that is--
(i) Based on eligibility information communicated to that person by
its affiliate as described in subpart C of this part; and
(ii) Intended to encourage the consumer to purchase or obtain such
product or service.
(2) Exclusion of marketing directed at the general public. A
solicitation does not include communications that are directed at the
general public and distributed without the use of eligibility
information communicated by an affiliate. For example, television,
magazine, and billboard advertisements do not constitute solicitations,
even if those communications are intended to encourage consumers to
purchase products and services from the person initiating the
communications.
(3) Examples of solicitations. A solicitation would include, for
example, a telemarketing call, direct mail, e-mail, or other form of
marketing communication directed to a specific consumer that is based
on eligibility information communicated by an affiliate.
(o) You means savings associations whose deposits are insured by
the Federal Deposit Insurance Corporation (and Federal savings
association operating subsidiaries in accordance with Sec. 559.3(h)(1)
of this chapter). For purposes of subpart C of this part, ``You'' does
not include a Federal savings association operating subsidiary that is
functionally regulated within the meaning of section 5(c)(5) of the
Bank Holding Company Act of 1956, as amended (12 U.S.C. 1844(c)(5)).
4. Add a new subpart C to part 571 to read as follows:
Subpart C--Affiliate Use of Information for Marketing
Sec.
571.20 Affiliate use of eligibility information for marketing.
571.21 Contents of opt out notice.
571.22 Reasonable opportunity to opt out.
571.23 Reasonable and simple methods of opting out.
571.24 Delivery of opt out notices.
571.25 Duration and effect of opt out.
571.26 Extension of opt out.
571.27 Consolidated and equivalent notices.

Subpart C--Affiliate Use of Information for Marketing

Sec. 571.20 Affiliate use of eligibility information for marketing.

(a) General duties of a person communicating eligibility
information to an affiliate--(1) Notice and opt out. If you communicate
eligibility information about a consumer to your affiliate, your
affiliate may not use the information to make or send solicitations to
the consumer, unless prior to such use by the affiliate--
(i) You provide a clear and conspicuous notice to the consumer
stating that the information may be communicated to and used by your
affiliate to make or send solicitations to the consumer about its
products and services;

[[Page 42535]]

(ii) You provide the consumer a reasonable opportunity and a simple
method to ``opt out'' of such use of that information by your
affiliate; and
(iii) The consumer has not chosen to opt out.
(2) Rules of construction--(i) In general. The notice required by
this paragraph (a)(2) may be provided either in the name of a person
with which the consumer currently does or previously has done business
or in one or more common corporate names shared by members of an
affiliated group of companies that includes the common corporate name
used by that person, and may be provided in the following manner:
(A) You may provide the notice directly to the consumer;
(B) Your agent may provide the notice on your behalf, so long as--
(1) Your agent, if your affiliate, does not include any
solicitation other than yours on or with the notice, unless it falls
within one of the exceptions in paragraph (c) of this section; and
(2) Your agent gives the notice in your name or a common name or
names used by the family of companies; or
(C) You may provide a joint notice with one or more of your
affiliates or under a common corporate name or names used by the family
of companies as provided in Sec. 571.24(c).
(ii) Avoid duplicating notices. If Affiliate A communicates
eligibility information about a consumer to Affiliate B, and Affiliate
B communicates that same information to Affiliate C, Affiliate B does
not have to give an opt out notice to the consumer when it provides
eligibility information to Affiliate C, so long as Affiliate A's notice
is broad enough to cover Affiliate C's use of the eligibility
information to make solicitations to the consumer.
(iii) Examples of rules of construction. A, B, and C are
affiliates. The consumer currently has a business relationship with A,
but has never done business with B or C. A communicates eligibility
information about the consumer to B for purposes of B making
solicitations on B's behalf. B communicates the information it received
from A to C for purposes of C making solicitations on C's behalf. In
this circumstance, the rules of construction would--
(A) Permit B to use the information to make solicitations on B's
behalf if:
(1) A has provided the opt out notice directly to the consumer; or
(2) B or C has provided the opt out notice on behalf of A.
(B) Permit B or C to use the information to make solicitations on
B's and C's behalf respectively if:
(1) A's notice is broad enough to cover both B's and C's use of the
eligibility information; or
(2) A, B, or C has provided a joint opt out notice on behalf of the
entire affiliated group of companies.
(C) Not permit B or C to use the information for marketing purposes
if B has provided the opt out notice only in B's own name, because no
notice would have been provided by or on behalf of A.
(b) General duties of an affiliate receiving eligibility
information. If you receive eligibility information from an affiliate,
you may not use the information to make or send solicitations to a
consumer, unless the consumer has been provided an opt out notice, as
described in paragraph (a) of this section, that applies to your use of
eligibility information and the consumer has not opted out.
(c) Exceptions. The provisions of this subpart do not apply if you
use eligibility information you receive from an affiliate:
(1) To make or send a marketing solicitation to a consumer with
whom you have a pre-existing business relationship as defined in Sec.
571.3(m);
(2) To facilitate communications to an individual for whose benefit
you provide employee benefit or other services pursuant to a contract
with an employer related to and arising out of the current employment
relationship or status of the individual as a participant or
beneficiary of an employee benefit plan;
(3) To perform services on behalf of an affiliate, except that this
paragraph (c)(3) shall not be construed as permitting you to make or
send solicitations on your behalf or on behalf of an affiliate if you
or the affiliate, as applicable, would not be permitted to make or send
the solicitation as a result of the election of the consumer to opt out
under this subpart;
(4) In response to a communication initiated by the consumer
orally, electronically, or in writing;
(5) In response to an affirmative authorization or request by the
consumer orally, electronically, or in writing to receive a
solicitation; or
(6) If your compliance with this subpart would prevent you from
complying with any provision of State insurance laws pertaining to
unfair discrimination in any State in which you are lawfully doing
business.
(d) Examples of exceptions--(1) Examples of pre-existing business
relationships.
(i) If a consumer has an insurance policy with your insurance
affiliate that is currently in force, your insurance affiliate has a
pre-existing business relationship with the consumer and can therefore
use eligibility information it has received from you to make
solicitations.
(ii) If a consumer has an insurance policy with your insurance
affiliate that has lapsed, your insurance affiliate has a pre-existing
business relationship with the consumer for 18 months after the date on
which the policy ceases to be in force and can therefore use
eligibility information it has received from you to make solicitations
for 18 months after the date on which the policy ceases to be in force.
(iii) If a consumer applies to your affiliate for a product or
service, or inquires about your affiliate's products or services and
provides contact information to your affiliate for receipt of that
information, your affiliate has a pre-existing business relationship
with the consumer for 3 months after the date of the inquiry or
application and can therefore use eligibility information it has
received from you to make solicitations for 3 months after the date of
the inquiry or application.
(iv) If a consumer makes a telephone call to a centralized call
center for an affiliated group of companies to inquire about the
consumer's bank account, the call does not constitute an inquiry with
any affiliate other than the bank that holds the consumer's bank
account and does not establish a pre-existing business relationship
between the consumer and any affiliate of the bank.
(2) Examples of consumer-initiated communications. (i) If a
consumer who has an account with you initiates a telephone call to your
securities affiliate to request information about brokerage services or
mutual funds and provides contact information for receiving that
information, your securities affiliate may use eligibility information
about the consumer it obtains from you to make solicitations in
response to the consumer-initiated call.
(ii) If your affiliate makes the initial marketing call, leaves a
message for the consumer to call back, and the consumer responds, the
communication is not initiated by the consumer, but by your affiliate.
(iii) If the consumer calls your affiliate to ask about retail
locations and hours, but does not request information about your
affiliate's products or services, solicitations by your affiliate using
eligibility information about the consumer it obtains from you would
not be responsive to the consumer-initiated communication.
(3) Example of consumer affirmative authorization or request. If a
consumer who obtains a mortgage from you

[[Page 42536]]

requests or affirmatively authorizes information about homeowner's
insurance from your insurance affiliate, such authorization or request,
whether given to you or to your insurance affiliate, would permit your
insurance affiliate to use eligibility information about the consumer
it obtains from you to make solicitations about homeowner's insurance
to the consumer. A pre-selected check box would not satisfy the
requirement for an affirmative authorization or request.
(e) Prospective application. The provisions of this subpart shall
not prohibit your affiliate from using eligibility information
communicated by you to make or send solicitations to a consumer if such
information was received by your affiliate prior to [Insert Mandatory
Compliance Date].
(f) Relation to affiliate-sharing notice and opt out. Nothing in
this subpart limits the responsibility of a company to comply with the
notice and opt out provisions of section 603(d)(2)(A)(iii) of the Act
before it shares information other than transaction or experience
information among affiliates to avoid becoming a consumer reporting
agency.

Sec. 571.21 Contents of opt out notice.

(a) In general. A notice must be clear, conspicuous, and concise,
and must accurately disclose:
(1) That the consumer may elect to limit your affiliate from using
eligibility information about the consumer that it obtains from you to
make or send solicitations to the consumer;
(2) If applicable, that the consumer's election will apply for a
specified period of time and that the consumer will be allowed to
extend the election once that period expires; and
(3) A reasonable and simple method for the consumer to opt out.
(b) Concise--(1) In general. For purposes of this subpart, the term
``concise'' means a reasonably brief expression or statement.
(2) Combination with other required disclosures. 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.
(3) Use of model form. The requirement for a concise notice is
satisfied by use of a model form contained in Appendix A of this part,
although use of the model form is not required.
(c) Providing a menu of opt out choices. With respect to the opt
out election, you may allow a consumer to choose from a menu of
alternatives when opting out of affiliate use of eligibility
information for marketing, such as by selecting certain types of
affiliates, certain types of information, or certain methods of
delivery from which to opt out, so long as you offer as one of the
alternatives the opportunity to opt out with respect to all affiliates,
all eligibility information, and all methods of delivery.
(d) Alternative contents. If you provide the consumer with a
broader right to opt out of marketing than is required by law, you
satisfy the requirements of this section by providing the consumer with
a clear, conspicuous, and concise notice that accurately discloses the
consumer's opt out rights. A model notice is provided in Appendix A-3
of this part for guidance, although use of the model notice is not
required.

Sec. 571.22 Reasonable opportunity to opt out.

(a) In general. Before your affiliate uses eligibility information
communicated by you to make or send solicitations to a consumer, you
must provide the consumer with a reasonable opportunity, following the
delivery of the opt out notice, to opt out of such use by your
affiliate.
(b) Examples of a reasonable opportunity to opt out. You provide a
consumer with a reasonable opportunity to opt out if:
(1) By mail. You mail the opt out notice to a consumer and give the
consumer 30 days from the date you mailed the notice to elect to opt
out by any reasonable means.
(2) By electronic means. You notify the consumer electronically and
give the consumer 30 days after the date that the consumer acknowledges
receipt of the electronic notice to elect to opt out by any reasonable
means.
(3) At the time of an electronic transaction. You provide the opt
out notice to the consumer at the time of an electronic transaction,
such as a transaction conducted on an Internet Web site, and request
that the consumer decide, as a necessary part of proceeding with the
transaction, whether to opt out before completing the transaction, so
long as you provide a simple process at the Internet web site that the
consumer may use at that time to opt out.
(4) By including in a privacy notice. You include the opt out
notice in a Gramm-Leach-Bliley Act privacy notice and allow the
consumer to exercise the opt out within a reasonable period of time and
in the same manner as the opt out under the Gramm-Leach-Bliley Act.
(5) By providing an ``opt in''. If you have a policy of not
allowing an affiliate to use eligibility information to make or send
solicitations to the consumer unless the consumer affirmatively
consents, you give the consumer the opportunity to ``opt in'' by
affirmative consent to such use by your affiliate. You must document
the consumer's affirmative consent. A pre-selected check box does not
constitute evidence of the consumer's affirmative consent.

Sec. 571.23 Reasonable and simple methods of opting out.

(a) Reasonable and simple methods of opting out. You provide a
reasonable and simple method for a consumer to exercise a right to opt
out if you--
(1) Designate check-off boxes in a prominent position on the
relevant forms included with the opt out notice required by this
subpart;
(2) Include a reply form and a self-addressed envelope together
with the opt out notice required by this subpart;
(3) Provide an electronic means to opt out, such as a form that can
be electronically mailed or processed at your web site, if the consumer
agrees to the electronic delivery of information; or
(4) Provide a toll-free telephone number that consumers may call to
opt out.
(b) Methods of opting out that are not reasonable or simple. You do
not provide a reasonable and simple method for exercising an opt out
right if you--
(1) Require the consumer to write his or her own letter to you;
(2) Require the consumer to call or write to you to obtain a form
for opting out, rather than including the form with the notice; or
(3) Require the consumer who agrees to receive the opt out notice
in electronic form only, such as by electronic mail or at your web
site, to opt out solely by telephone or by paper mail.

Sec. 571.24 Delivery of opt out notices.

(a) In general. You must provide an opt out notice so that each
consumer can reasonably be expected to receive actual notice. For opt
out notices you provide electronically, you may either comply with the
electronic disclosure provisions in this subpart or with the provisions
in section 101 of the Electronic Signatures in Global and National
Commerce Act, 15 U.S.C. 7001 et seq.
(b) Examples of expectation of actual notice. (1) You may
reasonably expect that a consumer will receive actual notice if you:
(i) Hand-deliver a printed copy of the notice to the consumer;
(ii) Mail a printed copy of the notice to the last known mailing
address of the consumer; or

[[Page 42537]]

(iii) For the consumer who obtains a product or service from you
electronically, such as on an Internet Web site, post the notice on
your electronic site and require the consumer to acknowledge receipt of
the notice as a necessary step to obtaining a particular product or
service.
(2) You may not reasonably expect that a consumer will receive
actual notice if you:
(i) Only post a sign in your branch or office or generally publish
advertisements presenting your notice; or
(ii) Send the notice via electronic mail to a consumer who has not
agreed to the electronic delivery of information.
(c) Joint notice with affiliates--(1) In general. You may provide a
joint notice from you and one or more of your affiliates, as identified
in the notice, so long as the notice is accurate with respect to you
and each affiliate.
(2) Identification of affiliates. You do not have to list each
affiliate providing the joint notice by its name. If each affiliate
shares a common name, such as ``ABC,'' then the joint notice may state
that it applies to ``all institutions with the ABC name'' or ``all
affiliates in the ABC family of companies.'' If, however, an affiliate
does not have ABC in its name, then the joint notice must separately
identify each family of companies with a common name or the
institution.
(d) Joint relationships--(1) In general. If two or more consumers
jointly obtain a product or service from you (joint consumers), the
following rules apply:
(i) You may provide a single opt out notice.
(ii) Any of the joint consumers may exercise the right to opt out.
(iii) You may either--
(A) Treat an opt out direction by a joint consumer as applying to
all of the associated joint consumers; or
(B) Permit each joint consumer to opt out separately.
(iv) If you permit each joint consumer to opt out separately, you
must permit:
(A) One of the joint consumers to opt out on behalf of all of the
joint consumers; and
(B) One or more joint consumers to notify you of their opt out
directions in a single response.
(v) You must explain in your opt out notice which of the policies
in paragraph (d)(1)(iii) of this section you will follow, as well as
the information required by paragraph (d)(1)(iv) of this section.
(vi) You may not require all joint consumers to opt out before you
implement any opt out direction.
(vii) If you receive an opt out by a particular joint consumer that
does not apply to the others, you may use eligibility information about
the others as long as no eligibility information is used about the
consumer who opted out.
(2) Example. If consumers A and B, who have different addresses,
have a joint checking account with you and arrange for you to send
statements to A's address, you may do any of the following, but you
must explain in your opt out notice which opt out policy you will
follow. You may send a single opt out notice to A's address and:
(i) Treat an opt out direction by A as applying to the entire
account. If you do so and A opts out, you may not require B to opt out
as well before implementing A's opt out direction.
(ii) Treat A's opt out direction as applying to A only. If you do
so, you must also permit:
(A) A and B to opt out for each other; and
(B) A and B to notify you of their opt out directions in a single
response (such as on a single form) if they choose to give separate opt
out directions.
(iii) If A opts out only for A, and B does not opt out, your
affiliate may use information only about B to send solicitations to B,
but may not use information about A and B jointly to send solicitations
to B.

Sec. 571.25 Duration and effect of opt out.

(a) Duration of opt out. The election of a consumer to opt out
shall be effective for the opt out period, which is a period of at
least 5 years beginning as soon as reasonably practicable after the
consumer's opt out election is received. You may establish an opt out
period of more than 5 years, including an opt out period that does not
expire unless the consumer revokes it in writing, or if the consumer
agrees, electronically.
(b) Effect of opt out. A receiving affiliate may not make or send
solicitations to a consumer during the opt out period based on
eligibility information it receives from an affiliate, except as
provided in the exceptions in Sec. 571.20(c) or if the opt out is
revoked by the consumer.
(c) Time of opt out. A consumer may opt out at any time.
(d) Termination of relationship. If the consumer's relationship
with you terminates when a consumer's opt out election is in force, the
opt out will continue to apply indefinitely, unless revoked by the
consumer.

Sec. 571.26 Extension of opt out.

(a) In general. For a consumer who has opted out, a receiving
affiliate may not make or send solicitations to the consumer after the
expiration of the opt out period based on eligibility information it
receives or has received from an affiliate, unless the person
responsible for providing the initial opt out notice, or its successor,
has given the consumer an extension notice and a reasonable opportunity
to extend the opt out, and the consumer does not extend the opt out.
(b) Duration of extension. Each opt out extension shall comply with
Sec. 571.25(a).
(c) Contents of extension notice. The notice provided at extension
must be clear, conspicuous, and concise, and must accurately disclose
either:
(1) The same contents specified in Sec. 571.21(a) for the initial
notice, along with a statement explaining that the consumer's previous
opt out has expired or is about to expire, as applicable, and that the
consumer must opt out again if the consumer wishes to keep the opt out
election in force; or
(2) Each of the items listed below:
(i) That the consumer previously elected to limit your affiliate
from using information about the consumer that it obtains from you to
make or send solicitations to the consumer;
(ii) That the consumer's election has expired or is about to
expire, as applicable;
(iii) That the consumer may elect to extend the consumer's previous
election; and
(iv) A reasonable and simple method for the consumer to opt out.
(d) Timing of the extension notice--(1) In general. An extension
notice may be provided to the consumer at either--
(i) A reasonable period of time before the expiration of the opt
out period; or
(ii) Any time after the expiration of the opt out period but before
any affiliate makes or sends solicitations to the consumer that would
have been prohibited by the expired opt out.
(2) Reasonable period of time before expiration. Providing an
extension notice on or with the last annual privacy notice required by
the Gramm-Leach-Bliley Act, 15 U.S.C. 6801 et seq., that is provided to
the consumer before expiration of the opt out period shall be deemed
reasonable in all cases.
(e) No effect on opt out period. The fact that you send an
extension notice to the consumer before expiration of the opt out
period and the consumer fails to extend the opt out, does not shorten
the opt out period.

Sec. 571.27 Consolidated and equivalent notices.

(a) Coordinated and consolidated notices. A notice required by this
subpart may be coordinated and

[[Page 42538]]

consolidated with any other notice or disclosure required to be issued
under any other provision of law, including but not limited to the
notice described in section 603(d)(2)(A)(iii) of the Act and the Gramm-
Leach-Bliley Act privacy notice.
(b) Equivalent notices. A notice or other disclosure that is
equivalent to the notice required by this subpart, and that you provide
to a consumer together with disclosures required by any other provision
of law, shall satisfy the requirements of this subpart C.
5. Add a new Appendix A to part 571 to read as follows:

Appendix A to Part 571--Model Forms for Opt Out Notices

A-1 Model Form for Initial Opt Out Notice
A-2 Model Form for Extension Notice
A-3 Model Form for Voluntary ``No Marketing'' Notice

A-1--Model Form for Initial Opt Out Notice

Your Choice To Limit Marketing

You may limit our affiliates from marketing their
products or services to you based on information that we share with
them, such as your income, your account history with us, and your
credit score.
[Include if applicable.] Your decision to limit
marketing offers from our affiliates will apply for 5 years. Once
that period expires, you will be allowed to extend your decision.
[Include if applicable.] This limitation does not apply
in certain circumstances, such as if you currently do business with
one of our affiliates or if you ask to receive information or offers
from them.
To limit marketing offers [include all that apply]:
Call us toll-free at 877--
; or
Visit our Web site at http://www.websiteaddress.com; or

Check the box below and mail it to:

[Company name].
[Company address].

--I do not want your affiliates to market their products or services
to me based on information that you share with them.

A-2--Model Form for Extension Notice

Extending Your Choice To Limit Marketing

You previously chose to limit our affiliates from
marketing their products or services to you based on information
that we share with them, such as your income, your account history
with us, and your credit score.
Your choice has expired or is about to expire.
[Include if applicable.] This limitation does not apply
in certain circumstances, such as if you currently do business with
one of our affiliates or if you ask to receive information or offers
from them.
To extend your choice for another 5 years [include all that
apply]:
Call us toll-free at 877--
; or
Visit our Web site at http://www.websiteaddress.com; or

Check the box below and mail it to:

[Company name].
[Company address].

--I want to extend my choice for another 5 years.

A-3--Model Form for Voluntary ``No Marketing'' Notice

Your Choice To Stop Marketing

You may choose to stop all marketing offers from us and
our affiliates.
To stop all marketing offers [include all that apply]:
Call us toll-free at 877--
; or
Visit our Web site at http://www.websiteaddress.com; or

Check the box on the form below and mail it to:

[Company name].
[Company address].

--I do not want you or your affiliates to send me marketing offers.

National Credit Union Administration

Authority and Issuance

For the reasons set forth in the joint preamble, NCUA proposes to
amend title 12, chapter VII, of the Code of Federal Regulations by
amending part 717 (as proposed to be added at 69 FR 23405, April 28,
2004) to read as follows:

PART 717--FAIR CREDIT REPORTING

1. The authority citation for part 717 is revised to read as
follows:

Authority: 15 U.S.C. 1681a, 1681b, 1681s, 1681w, 6801 and
6805(b).

Subpart A--General Provisions

2. Section 717.1 is revised by adding a new paragraph (a) to read
as follows:

Sec. 717.1 Purpose, scope, and effective dates.

(a) Purpose. This part implements the provisions of the Fair Credit
Reporting Act applicable to Federal credit unions. This part applies to
Federal credit unions that obtain and use information about consumers
to determine the consumer's eligibility for products, services, or
employment, share such information among affiliates, and furnish such
information to consumer reporting agencies.
* * * * *
3. Section 717.2 is republished to read as follows:

Sec. 717.2 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 paragraph illustrate only the issue described in
the paragraph and do not illustrate any other issue that may arise in
this part.
4. Section 717.3 is revised to read as follows:

Sec. 717.3 Definitions.

As used in this part, unless the context requires otherwise:
(a) Act means the Fair Credit Reporting Act (15 U.S.C. 1681 et
seq.).
(b) Affiliate means any person that is related by common ownership
or common corporate control with another person.
(c) Clear and conspicuous means reasonably understandable and
designed to call attention to the nature and significance of the
information presented.
(d) Company means any corporation, limited liability company,
business trust, general or limited partnership, association, or similar
organization.
(e) Consumer means an individual.
(f) [Reserved].
(g) [Reserved].
(h) [Reserved].
(i) Control of a company means:
(1) Ownership, control, or power to vote 25 percent or more of the
outstanding shares of any class of voting security of the company,
directly or indirectly, or acting through one or more other persons;
(2) Control in any manner over the election of a majority of the
directors, trustees, or general partners (or individuals exercising
similar functions) of the company; or
(3) The power to exercise, directly or indirectly, a controlling
influence over the management or policies of the company, as the Board
determines.
(4) Example. NCUA will presume a credit union has a controlling
influence over the management or policies of a CUSO, if the CUSO is 67%
owned by credit unions.
(j) Eligibility information means any information the communication
of which would be a consumer report if the exclusions from the
definition of ``consumer report'' in section 603(d)(2)(A) of the Act
did not apply.
(k) [Reserved].
(l) Person means any individual, partnership, corporation, trust,
estate, cooperative, association, government or governmental
subdivision or agency, or other entity.
(m) Pre-existing business relationship means a relationship between
a person and a consumer based on--
(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
covered by subpart C of this part;
(2) The purchase, rental, or lease by the consumer of the person's
goods or services, or a financial transaction

[[Page 42539]]

(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 subpart C of this part is made or sent to the
consumer; or
(3) An inquiry or application by the consumer regarding a product
or service offered by that person during the 3-month period immediately
preceding the date on which a solicitation covered by subpart C of this
part is made or sent to the consumer.
(n) Solicitation--(1) In general. Solicitation means marketing
initiated by a person to a particular consumer that is--
(i) Based on eligibility information communicated to that person by
its affiliate as described in subpart C of this part; and
(ii) Intended to encourage the consumer to purchase or obtain such
product or service.
(2) Exclusion of marketing directed at the general public. A
solicitation does not include communications that are directed at the
general public and distributed without the use of eligibility
information communicated by an affiliate. For example, television,
magazine, and billboard advertisements do not constitute solicitations,
even if those communications are intended to encourage consumers to
purchase products and services from the person initiating the
communications.
(3) Examples of solicitations. A solicitation would include, for
example, a telemarketing call, direct mail, e-mail, or other form of
marketing communication directed to a specific consumer that is based
on eligibility information communicated by an affiliate.
(o) You means a Federal credit union.
5. A new subpart C is added to part 717 to read as follows:
Subpart C--Affiliate Use of Information for Marketing
Sec.
717.20 Affiliate use of eligibility information for marketing.
717.21 Contents of opt out notice.
717.22 Reasonable opportunity to opt out.
717.23 Reasonable and simple methods of opting out.
717.24 Delivery of opt out notices.
717.25 Duration and effect of opt out.
717.26 Extension of opt out.
717.27 Consolidated and equivalent notices.

Subpart C--Affiliate Use of Information for Marketing

Sec. 717.20 Affiliate use of eligibility information for marketing.

(a) General duties of a person communicating eligibility
information to an affiliate--(1) Notice and opt out. If you communicate
eligibility information about a consumer to your affiliate, your
affiliate may not use the information to make or send solicitations to
the consumer, unless before such use by the affiliate--
(i) You provide a clear and conspicuous notice to the consumer
stating that the information may be communicated to and used by your
affiliate to make or send solicitations to the consumer about its
products and services;
(ii) You provide the consumer a reasonable opportunity and a simple
method to ``opt out'' of such use of that information by your
affiliate; and
(iii) The consumer has not chosen to opt out.
(2) Rules of construction--(i) In general. The notice required by
this paragraph may be provided either in the name of a person with
which the consumer currently does or previously has done business or in
one or more common corporate names shared by members of an affiliated
group of companies that includes the common corporate name used by that
person, and may be provided in the following manner:
(A) You may provide the notice directly to the consumer;
(B) Your agent may provide the notice on your behalf, so long as--
(1) Your agent, if your affiliate, does not include any
solicitation other than yours on or with the notice, unless it falls
within one of the exceptions in paragraph (c) of this section; and
(2) Your agent gives the notice in your name or a common name or
names used by the family of companies; or
(C) You may provide a joint notice with one or more of your
affiliates or under a common corporate name or names used by the family
of companies as provided in Sec. 717.24(c).
(ii) Avoiding duplicate notices. If Affiliate X communicates
eligibility information about a consumer to Affiliate Y, and Affiliate
Y communicates that same information to Affiliate Z, Affiliate Y does
not have to give an opt out notice to the consumer when it provides
eligibility information to Affiliate Z, so long as Affiliate X's notice
is broad enough to cover Affiliate Z's use of the eligibility
information to make solicitations to the consumer.
(iii) Examples of rules of construction. X, Y, and Z are
affiliates. The consumer currently has a business relationship with
affiliate X, but has never done business with affiliates Y or Z.
Affiliate X communicates eligibility information about the consumer to
Y for purposes of making solicitations. Y communicates the information
it received from X to Z for purposes of making solicitations. In this
circumstance, the rules of construction would--
(A) Permit Y to use the information to make solicitations if:
(1) X has provided the opt out notice directly to the consumer; or
(2) Y or Z has provided the opt out notice on behalf of X.
(B) Permit Y or Z to use the information to make solicitations if:
(1) X's notice is broad enough to cover both Y's and Z's use of the
eligibility information; or
(2) X, Y, or Z has provided a joint opt out notice on behalf of the
entire affiliated group of companies.
(C) Not permit Y or Z to use the information for marketing purposes
if Y has provided the opt out notice only in Y's own name, because no
notice would have been provided by or on behalf of X.
(b) General duties of an affiliate receiving eligibility
information. If you receive eligibility information from an affiliate,
you may not use the information to make or send solicitations to a
consumer, unless the consumer has been provided an opt out notice, as
described in paragraph (a) of this section, that applies to your use of
eligibility information and the consumer has not opted-out.
(c) Exceptions. The provisions of this subpart do not apply if you
use eligibility information you receive from an affiliate:
(1) To make or send a marketing solicitation to a consumer with
whom you have a pre-existing business relationship as defined in Sec.
717.3(m);
(2) To facilitate communications to an individual for whose benefit
you provide employee benefit or other services pursuant to a contract
with an employer related to and arising out of the current employment
relationship or status of the individual as a participant or
beneficiary of an employee benefit plan;
(3) To perform services on behalf of an affiliate, except that this
subparagraph will not be construed as permitting you to make or send
solicitations on your behalf or on behalf of an affiliate if you or the
affiliate, as applicable, would not be permitted to make or send the
solicitation as a result

[[Page 42540]]

of the election of the consumer to opt out under this subpart;
(4) In response to a communication initiated by the consumer
orally, electronically, or in writing;
(5) In response to an affirmative authorization or request by the
consumer orally, electronically, or in writing to receive a
solicitation; or
(6) If your compliance with this subpart would prevent you from
complying with any provision of state insurance laws pertaining to
unfair discrimination in any state in which you are lawfully doing
business.
(d) Examples of exceptions.--(1) Examples of pre-existing business
relationships. (i) If a consumer has an insurance policy with your
insurance agency affiliate that is currently in force, your insurance
agency affiliate has a pre-existing business relationship with the
consumer and can therefore use eligibility information it has received
from you to make solicitations.
(ii) If a consumer has an insurance policy with your insurance
agency affiliate that has lapsed, your insurance agency affiliate has a
pre-existing business relationship with the consumer for 18 months
after the date on which the policy ceases to be in force and can
therefore use eligibility information it has received from you to make
solicitations for 18 months after the date on which the policy ceases
to be in force.
(iii) If a consumer applies to your affiliate for a product or
service, or inquires about your affiliate's products or services and
provides contact information to your affiliate for receipt of that
information, your affiliate has a pre-existing business relationship
with the consumer for 3 months after the date of the inquiry or
application and can therefore use eligibility information it has
received from you to make solicitations for 3 months after the date of
the inquiry or application.
(iv) If a consumer makes a telephone call to a centralized call
center for an affiliated group of companies to inquire about the
consumer's credit union account, the call does not constitute an
inquiry with any affiliate other than the credit union that holds the
consumer's credit union account and does not establish a pre-existing
business relationship between the consumer and any affiliate of the
credit union.
(2) Examples of consumer-initiated communications. (i) If a
consumer who has an account with you initiates a telephone call to your
securities affiliate to request information about brokerage services or
mutual funds and provides contact information for receiving that
information, your securities affiliate may use eligibility information
about the consumer it obtains from you to make solicitations in
response to the consumer-initiated call.
(ii) If your affiliate makes the initial marketing call, leaves a
message for the consumer to call back, and the consumer responds, the
communication is not initiated by the consumer, but by your affiliate.
(iii) If the consumer calls your affiliate to ask about retail
locations and hours, but does not request information about your
affiliate's products or services, solicitations by your affiliate using
eligibility information about the consumer it obtains from you would
not be responsive to the consumer-initiated communication.
(3) Example of consumer affirmative authorization or request. If a
consumer who obtains a mortgage from you requests or affirmatively
authorizes information about homeowner's insurance from your insurance
agency affiliate, such authorization or request, whether given to you
or to your insurance agency affiliate, would permit your affiliate to
use eligibility information about the consumer it obtains from you to
make solicitations about homeowner's insurance to the consumer. A pre-
selected check box would not satisfy the requirement for an affirmative
authorization or request.
(e) Prospective application. The provisions of this subpart do not
prohibit your affiliate from using eligibility information communicated
by you to make or send solicitations to a consumer if such information
was received by your affiliate before [Insert Mandatory Compliance
Date].
(f) Relation to affiliate-sharing notice and opt out. Nothing in
this subpart limits your responsibility to comply with the notice and
opt out provisions of section 603(d)(2)(A)(iii) of the Act before you
share information other than transaction or experience information
among affiliates to avoid becoming a consumer reporting agency.

Sec. 717.21 Contents of opt out notice.

(a) In general. A notice must be clear, conspicuous, and concise,
and must accurately disclose:
(1) That the consumer may elect to limit your affiliate from using
eligibility information about the consumer that it obtains from you to
make or send solicitations to the consumer;
(2) If applicable, that the consumer's election applies for a
specified period of time and that the consumer can extend the election
once that period expires; and
(3) A reasonable and simple method for the consumer to opt out.
(b) Concise--(1) In general. For purposes of this subpart, the term
``concise'' means a reasonably brief expression or statement.
(2) Combination with other required disclosures. 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.
(3) Use of model form. Use of a model form contained in Appendix A
of this part satisfies the requirement for a concise notice, although
use of the model form is not required.
(c) Providing a menu of opt out choices. With respect to the opt
out election, you may allow a consumer to choose from a menu of
alternatives when opting out of affiliate use of eligibility
information for marketing, such as by selecting certain types of
affiliates, certain types of information, or certain methods of
delivery from which to opt out, so long as you offer as one of the
alternatives the opportunity to opt out with respect to all affiliates,
all eligibility information, and all methods of delivery.
(d) Alternative contents. If you provide the consumer with a
broader right to opt out of marketing than is required by law, you
satisfy the requirements of this section by providing the consumer with
a clear, conspicuous, and concise notice that accurately discloses the
consumer's opt out rights. A model notice is provided in Appendix A-3
of this part for guidance, although use of the model notice is not
required.

Sec. 717.22 Reasonable opportunity to opt out.

(a) In general. Before your affiliate uses eligibility information
communicated by you to make or send solicitations to a consumer, you
must provide the consumer with a reasonable opportunity, following the
delivery of the opt out notice, to opt out of such use by your
affiliate.
(b) Examples of a reasonable opportunity to opt out. You provide a
consumer with a reasonable opportunity to opt out if:
(1) By mail. You mail the opt out notice to a consumer and give the
consumer 30 days from the date you mailed the notice to elect to opt
out by any reasonable means.
(2) By electronic means. You notify the consumer electronically and
give the consumer 30 days after the date that the consumer acknowledges
receipt of the electronic notice to elect to opt out by any reasonable
means.
(3) At the time of an electronic transaction. You provide the opt
out

[[Page 42541]]

notice to the consumer at the time of an electronic transaction, such
as a transaction conducted on an Internet Web site, and request that
the consumer decide, as a necessary part of proceeding with the
transaction, whether to opt out before completing the transaction, so
long as you provide a simple process at the Internet web site that the
consumer may use at that time to opt out.
(4) By including in a privacy notice. You include the opt out
notice in a Gramm-Leach-Bliley Act privacy notice and allow the
consumer to exercise the opt out within a reasonable period of time and
in the same manner as the opt out under the Gramm-Leach-Bliley Act, 15
U.S.C. 6801 et seq.
(5) By providing an ``opt in.'' If you have a policy of not
allowing an affiliate to use eligibility information to make or send
solicitations to the consumer unless the consumer affirmatively
consents, you give the consumer the opportunity to ``opt in'' by
affirmative consent to such use by your affiliate. You must document
the consumer's affirmative consent. A pre-selected check box does not
constitute evidence of the consumer's affirmative consent.

Sec. 717.23 Reasonable and simple methods of opting out.

(a) Reasonable and simple methods of opting out. You provide a
reasonable and simple method for a consumer to exercise a right to opt
out if you--
(1) Designate check-off boxes in a prominent position on the
relevant forms included with the opt out notice required by this
subpart;
(2) Include a reply form and a self-addressed envelope together
with the opt out notice required by this subpart;
(3) Provide an electronic means to opt out, such as a form that can
be electronically mailed or processed at your Web site, if the consumer
agrees to the electronic delivery of information; or
(4) Provide a toll-free telephone number that consumers may call to
opt out.
(b) Methods of opting out that are not reasonable or simple. You do
not provide a reasonable and simple method for exercising an opt out
right if you--
(1) Require the consumer to write his or her own letter to you;
(2) Require the consumer to call or write to you to obtain a form
for opting out, rather than including the form with the notice; or
(3) Require the consumer who agrees to receive the opt out notice
in electronic form only, such as by electronic mail or at your Web
site, to opt out solely by telephone or by paper mail.

Sec. 717.24 Delivery of opt out notices.

(a) In general. You must provide an opt out notice so that each
consumer can reasonably be expected to receive actual notice. For opt
out notices you provide electronically, you may either comply with the
electronic disclosure provisions in this subpart or with the provisions
in section 101 of the Electronic Signatures in Global and National
Commerce Act, 15 U.S.C. 7001 et seq.
(b) Examples of expectation of actual notice. (1) You may
reasonably expect that a consumer will receive actual notice if you:
(i) Hand-deliver a printed copy of the notice to the consumer;
(ii) Mail a printed copy of the notice to the last known mailing
address of the consumer; or
(iii) For the consumer who obtains a product or service from you
electronically, such as on an Internet Web site, post the notice on
your electronic site and require the consumer to acknowledge receipt of
the notice as a necessary step to obtaining a particular product or
service.
(2) You may not reasonably expect that a consumer will receive
actual notice if you:
(i) Only post a sign in your branch or office or generally publish
advertisements presenting your notice; or
(ii) Send the notice via electronic mail to a consumer who has not
agreed to the electronic delivery of information.
(c) Joint notice with affiliates--(1) In general. You may provide a
joint notice from you and one or more of your affiliates, as identified
in the notice, so long as the notice is accurate with respect to you
and each affiliate.
(2) Identification of affiliates. You do not have to list each
affiliate providing the joint notice by its name. If each affiliate
shares a common name, such as ``ABC,'' then the joint notice may state
that it applies to ``all institutions with the ABC name'' or ``all
affiliates in the ABC family of companies.'' If, however, an affiliate
does not have ABC in its name, then the joint notice must separately
identify each family of companies with a common name or the
institution.
(d) Joint relationships--(1) In general. If two or more consumers
jointly obtain a product or service from you (joint consumers), the
following rules apply:
(i) You may provide a single opt out notice.
(ii) Any of the joint consumers may exercise the right to opt out.
(iii) You may either--
(A) Treat an opt out direction by a joint consumer as applying to
all of the associated joint consumers; or
(B) Permit each joint consumer to opt out separately.
(iv) If you permit each joint consumer to opt out separately, you
must permit:
(A) One of the joint consumers to opt out on behalf of all of the
joint consumers; and
(B) One or more joint consumers to notify you of their opt out
directions in a single response.
(v) You must explain in your opt out notice which of the policies
in paragraph (d)(1)(iii) of this section you will follow, as well as
the information required by paragraph (d)(1)(iv) of this section.
(vi) You may not require all joint consumers to opt out before you
implement any opt out direction.
(vii) If you receive an opt out by a particular joint consumer that
does not apply to the others, you may use eligibility information about
the others as long as no eligibility information is used about the
consumer who opted out.
(2) Example. If consumers X and Y, who have different addresses,
have a joint checking account with you and arrange for you to send
statements to X's address, you may do any of the following, but you
must explain in your opt out notice which opt out policy you will
follow. You may send a single opt out notice to X's address and:
(i) Treat an opt out direction by X as applying to the entire
account. If you do so and X opts out, you may not require Y to opt out
as well before implementing X's opt out direction.
(ii) Treat X's opt out direction as applying to X only. If you do
so, you must also permit:
(A) X and Y to opt out for each other; and
(B) X and Y to notify you of their opt out directions in a single
response (such as on a single form) if they choose to give separate opt
out directions.
(iii) If X opts out only for X, and Y does not opt out, your
affiliate may use information only about Y to send solicitations to Y,
but may not use information about X and Y jointly to send solicitations
to Y.

Sec. 717.25 Duration and effect of opt out.

(a) Duration of opt out. A consumer's election to opt out is
effective for the opt out period, which is a period of at least 5 years
beginning as soon as reasonably practicable after the consumer's opt
out election is received. You may establish an opt out period of more
than 5 years, including an opt out period that does

[[Page 42542]]

not expire unless the consumer revokes it in writing, or if the
consumer agrees, electronically.
(b) Effect of opt out. A receiving affiliate may not make or send
solicitations to a consumer during the opt out period based on
eligibility information it receives from an affiliate, except as
provided in the exceptions in Sec. 717.20(c) or if the consumer
revokes the opt out.
(c) Time of opt out. A consumer may opt out at any time.
(d) Termination of relationship. If the consumer's relationship
with you terminates when a consumer's opt out election is in force, the
opt out continues to apply indefinitely, unless revoked by the
consumer.

Sec. 717.26 Extension of opt out.

(a) In general. For a consumer who has opted out, a receiving
affiliate may not make or send solicitations to the consumer after the
expiration of the opt out period based on eligibility information it
receives or has received from an affiliate, unless the person
responsible for providing the initial opt out notice, or its successor,
has given the consumer an extension notice and a reasonable opportunity
to extend the opt out, and the consumer does not extend the opt out.
(b) Duration of extension. Each opt out extension must comply with
Sec. 717.25(a).
(c) Contents of extension notice. The notice provided at extension
must be clear, conspicuous, and concise, and must accurately disclose
either:
(1) The same contents specified in Sec. 717.21(a) for the initial
notice, along with a statement explaining that the consumer's previous
opt out has expired or is about to expire, as applicable, and that the
consumer must opt out again if the consumer wishes to keep the opt out
election in force; or
(2) Each of the items listed below:
(i) That the consumer previously elected to limit your affiliate
from using information about the consumer that it obtains from you to
make or send solicitations to the consumer;
(ii) That the consumer's election has expired or is about to
expire, as applicable;
(iii) That the consumer may elect to extend the consumer's previous
election; and
(iv) A reasonable and simple method for the consumer to opt out.
(d) Timing of the extension notice--(1) In general. An extension
notice may be provided to the consumer either--
(i) A reasonable period of time before the expiration of the opt
out period; or
(ii) Any time after the expiration of the opt out period but before
any affiliate makes or sends solicitations to the consumer that would
have been prohibited by the expired opt out.
(2) Reasonable period of time before expiration. Providing an
extension notice on or with the last annual privacy notice required by
the Gramm-Leach-Bliley Act, 15 U.S.C. 6801 et seq., that is provided to
the consumer before expiration of the opt out period will be deemed
reasonable in all cases.
(e) No effect on opt out period. The opt out period may not be
shortened to a period of less than 5 years by sending an extension
notice to the consumer before expiration of the opt out period.

Sec. 717.27 Consolidated and equivalent notices.

(a) Coordinated and consolidated 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,
including but not limited to the notice described in section
603(d)(2)(A)(iii) of the Act and the Gramm-Leach-Bliley Act privacy
notice.
(b) Equivalent notices. A notice or other disclosure that is
equivalent to the notice required by this subpart, and that you provide
to a consumer together with disclosures required by any other provision
of law, satisfies the requirements of this subpart.
6. A new Appendix A to part 717 is added to read as follows:

Appendix A to Part 717--Model Forms for Opt Out Notices

A-1 Model Form for Initial Opt Out Notice
A-2 Model Form for Extension Notice
A-3 Model Form for Voluntary ``No Marketing'' Notice

A-1--Model Form for Initial Opt Out Notice

Your Choice To Limit Marketing

You may limit our affiliates from marketing their
products or services to you based on information that we share with
them, such as your income, your account history with us, and your
credit score.
[Include if applicable.] Your decision to limit
marketing offers from our affiliates will apply for 5 years. Once
that period expires, you will be allowed to extend your decision.
[Include if applicable.] This limitation does not apply
in certain circumstances, such as if you currently do business with
one of our affiliates or if you ask to receive information or offers
from them.
To limit marketing offers [include all that apply]:
Call us toll-free at 877--
; or
Visit our Web site at http://www.websiteaddress.com; or

Check the box below and mail it to:

[Company name].
[Company address].

-- I do not want your affiliates to market their products or
services to me based on information that you share with them.

A-2--Model Form for Extension Notice

Extending Your Choice To Limit Marketing

You previously chose to limit our affiliates from
marketing their products or services to you based on information
that we share with them, such as your income, your account history
with us, and your credit score.
Your choice has expired or is about to expire.
[Include if applicable.] This limitation does not apply
in certain circumstances, such as if you currently do business with
one of our affiliates or if you ask to receive information or offers
from them.
To extend your choice for another 5 years [include all that
apply]:
Call us toll-free at 877--
; or
Visit our Web site at http://www.websiteaddress.com; or

Check the box below and mail it to:

[Company name].
[Company address].

-- I want to extend my choice for another 5 years.

A-3--Model Form for Voluntary ``No Marketing'' Notice

Your Choice To Stop Marketing

You may choose to stop all marketing offers from us and
our affiliates.
To stop all marketing offers [include all that apply]:
Call us toll-free at 877--
; or
Visit our Web site at http://www.websiteaddress.com; or

Check the box on the form below and mail it to:

[Company name].
[Company address].

--I do not want you or your affiliates to send me marketing offers.

Dated: June 18, 2004.
John D. Hawke, Jr.,
Comptroller of the Currency.

By order of the Board of Governors of the Federal Reserve
System, July 1, 2004.
Jennifer J. Johnson,
Secretary of the Board.
Dated at Washington, DC, this 28th day of June, 2004.

By order of the Board of Directors, Federal Deposit Insurance
Corporation.
Valerie J. Best,
Assistant Executive Secretary.
Dated: May 26, 2004.

By the Office of Thrift Supervision.
James E. Gilleran,
Director.

By the National Credit Union Administration Board on June 24,
2004.
Becky Baker,
Secretary.
[FR Doc. 04-15950 Filed 7-14-04; 8:45 am]

BILLING CODE 4810-33-P