NATIONAL ASSOCIATION
OF REALTORS
August 5, 2004
Board of Governors of the Federal Reserve System
Jennifer J. Johnson, Secretary
20th Street and Constitution Avenue,
NW Washington, DC 20551
Docket No. R-1203
Federal Deposit Insurance
Corporation
Robert E. Feldman, Executive Secretary,
Attn.: Comments
550 17th Street, NW Washington, DC 20429
RIN 3064-AC73
Office of
the Comptroller of the Currency
Mail Stop 1-5 250 E Street, SW Washington,
DC 20219
Docket No. 04-16; RIN 1557-AC88
Office of Thrift Supervision
Regulations Comments
Chief Counsel’s Office
1700 G St., NW
Washington, D.C. 20552
No. 2004-31; RIN 1550-AB90
RE: Fair Credit
Reporting Affiliate Marketing Regulations
Dear Sir or Madam: The
NATIONAL ASSOCIATION OF REALTORS® (NAR) appreciates the opportunity
to provide comments to the Federal Banking Agencies (FBAs) on the
proposed rule required by section 624 of the Fair Credit Reporting
Act (FCRA), added by the Fair and Accurate Credit Transactions Act
of 2003 (FACT Act). The FBAs’ proposed regulations generally
prohibit a person or entity from using information received from
an affiliate to solicit a consumer for marketing purposes, unless
the consumer receives notice and an opportunity and simple method
to opt out. The proposed FBA rules apply to affiliates of insured
depository institutions and other entities regulated by the FBAs
NAR represents more than 1,000,000 real estate professionals engaged
in all aspects of the residential and commercial real estate business
including mortgage lenders and real estate settlement services and
some 1,500 state and local associations of REALTORS®.
Impact
on the Real Estate Industry
To the extent real estate firms are involved
in sharing eligibility information with affiliates, or receiving
eligibility information from affiliates, for marketing purposes,
they will be subject to the Federal Trade Commission (FTC) affiliate
marketing regulations. The FBA regulations, for the most part, will
not apply to real estate brokerage, leasing, or management because
these are commercial activities, not financial, and real estate firms
generally are not affiliated with banks. Some state laws, however,
permit state-chartered banks to affiliate with real estate firms.
In addition, federal savings associations may own a real estate firm
as a service company subsidiary, and a grandfathered unitary thrift
holding company may do so as well (whether or not there is a thrift
in the chain of ownership). In these cases, both the FBA and FTC
regulations would apply. Accordingly, NAR is submitting comments
on the FBAs’ proposed rules, consistent with the comments we
have already submitted to the FTC.
REALTORS® Committed to Consumer
Privacy
Trust is foundation of the relationship between a REALTOR® and
a consumer. And this relationship is the livelihood of REALTORS®.
Consumers must trust that the REALTORS® to whom they provide
personal or financial information will protect what is confidential
and use the balance of information in an appropriate fashion that
is consistent with promoting their best interest. To cement this
trust, REALTORS® value the privacy of their clients and are committed
to protecting their personal financial information. Real estate licensees
protect confidential consumer information as the result of the fiduciary
responsibilities imposed by most state real estate laws. The NATIONAL
ASSOCIATION OF REALTORS® Code of Ethics and Standards of Practice
reinforce the fiduciary responsibilities of REALTORS® to protect
consumer information.
Exceptions Triggered by Oral, Electronic, or
Written Communication
The new affiliate marketing
limitations do
not apply to an affiliate that uses the information “in response
to a communication initiated by the consumer” or “in
response to solicitations authorized or requested by the consumer.” NAR
applauds the FBAs for clarifying that these statutory exceptions
may be triggered not only in writing but also orally and electronically.
NAR believes it is extremely important also to permit oral communication
as an acceptable form of consumer consent. Permitting only written
or electronic communications would have costly unintended consequences
that are disproportionate to the good it would seek to address and
would harm consumers. This would be the case, for example, in the
situation where quick action is necessary if a consumer is going
to be able to benefit from an affiliate’s services within a
very short timeframe.
Recommendation.
As for electronic communications,
NAR requests that the FBAs make explicit in the final rule that it
means both e-mail and facsimile transmissions. We assume you at least
intend to permit e-mail communications. Specifying both e-mail and
facsimile communication would be extremely helpful to give consumers
the broadest choice, which promotes the public interest. It will
also avoid uncertainty and the need for the agencies to interpret
the rule.
Regulatory Burden
NAR is concerned about the extent which
Congress has imposed yet another layer of regulatory burdens on our
members. These proposed rules are limited to the sharing of “eligibility
information” between affiliates for the purpose of making or
sending marketing solicitations. The Gramm-Leach-Bliley Act and FCRA
impose different, but overlapping, restrictions on sharing of consumer
information with or among affiliates. NAR appreciates the FBAs’ strong
support for reducing regulatory burden on the institutions you regulate
and urges you to work with Congress, perhaps in connection with the
decennial deregulation initiative mandated by the Economic Growth
and Regulatory Paperwork Reduction Act of 1996 (EGRPRA), to streamline
the current mishmash.
Duplicative Coverage
Both the FTC and the FBA
regulations apply to a real estate firm affiliated with a federal
savings association or state bank. While the regulations appear to
be substantively the same, being subject to two sets of requirements
has the inherent regulatory burden of having to monitor both sets
of regulations for applicable changes and agency interpretations.
If the law permits, we urge you to work with FTC to tailor the regulations
so only one applies to any one individual or entity. If the law does
not permit, we urge you to work with Congress, perhaps in connection
with the EGRPRA deregulation initiative, to remove the existing overlap.
Implementation Period
The FACT Act requires you to issue final regulations
implementing the affiliate marketing requirements by September 4,
2004, and to make them effective within six months. You asked for
comment on setting a later date for compliance. NAR requests you
set a
compliance date 12 months from the effective date of the regulations.
This will provide sufficient time for affected entities and individuals
to learn about their new duties, establish compliance procedures,
and coordinate with existing privacy notices. A long lead time is
especially appropriate for small businesses, such as real estate
firms, that are affected not only by this new requirement but also
with other FACT Act requirements and additional new compliance requirements
for the Do-Not-Call, Do-Not-E-Mail and, potentially, unsolicited
fax requirements in the early months of 2005.
Conclusion
In sum,
NAR appreciates the FBAs’ decision to permit oral communications,
requests that the final rule specify that electronic communication
includes both e-mail and facsimile communications, and urges you
to set a compliance deadline that takes effect 12 months from the
effective date of the final rule.
The NATIONAL ASSOCIATION OF REALTORS® appreciates
the opportunity to comment and stands ready to work with the FBAs
on this and other consumer privacy-related issues.
Sincerely,
Joe
Ventrone
Managing Director Regulatory and Industry Relations Department
REALTOR® is a
registered collective membership mark
which may be
used only
by
real estate professionals who are members of the NATIONAL ASSOCIATION OF REALTORS
and subscribe to its strict Code of Ethics.
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