JPMORGAN CHASE BANK
August 16, 2004
Jennifer J. Johnson
Secretary
Board of Governors of the Federal Reserve System
20th Street & Constitution Avenue, NW
Washington, DC 20551
Attention: Docket No. R-1203
Robert E. Feldman
Executive Secretary
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
Attention: RIN 3064-AC73
Office of the Comptroller of the Currency
250 E. Street, SW
Mail Stop 1-5
Washington, DC 20219
Attention: Docket No. 04-16
Re: FACT Act Affiliate Marketing Rule
To Whom It May Concern
JPMorgan Chase
Bank and Bank One, N.A. and their affiliated companies, including,
but not
limited to, Chase Bank USA, N.A., Chase Manhattan
Mortgage Corporation, Chase Manhattan Automotive Finance Corporation,
Bank One Trust Company, N.A., and Banc One Acceptance Corporation
(collectively referred to as “JPMC”) welcome the opportunity
to comment on the above referenced notice of proposed rule making
published in 69 Fed. Reg. 42,502 on July 15, 2004 (the “Proposal”)
by the above referenced agencies (the Agencies”).
J.P. Morgan Chase & Co. is a leading global financial services
firm with assets of $1.1 trillion and operations in more than 50
countries. The firm
is a leader in investment banking, financial services for consumers and businesses,
financial transaction processing, asset and wealth management, and private
equity. The U.S. consumer and commercial banking businesses currently operate
under the Chase and Bank One brands. These businesses include retail banking,
credit card, home and auto finance, small business, middle market and mid-corporate
banking. Once the merger of the Chase and Bank One businesses are complete,
the Chase brand will be used to serve 850,000 small businesses and 31,000 commercial
businesses through 2,300 branches in 17 states. It also will service 87 million
credit cards.
Background
The FACT Act Section 214 added a new Section 624 to the Fair Credit Reporting
Act (“FCRA”). In general, any person that receives (the “Receiving
Affiliate”) from an affiliate information that would be a “consumer
report” but for the exceptions to that definition in Section 603(d)(2)(A)
(“Eligibility Information”) may not use the information to make
a solicitation for marketing purposes to a consumer about its products or
services unless it is clearly and conspicuously disclosed to the consumer
that the information may be shared for purposes of making solicitations and
the consumer is provided an opportunity and simple method to opt out of receiving
such solicitations. Section 624 governs the use of information by an affiliate,
not the sharing of information with or among affiliates. Section 624 also
provides several instances in which Section 624 will not apply, for example
in circumstances referred to as “pre-existing business relationship”,
services providers, communications initiated by the consumer and solicitations
authorized or requested by the consumer.
In General
JPMC believes
the Proposal includes many provisions that properly reflect the
statutory requirements
and the congressional intent and
we commend the Agencies in this regard. In particular, Section 624
of the FCRA is relatively specific and precise with respect to the
obligations it imposes. The clarity provided in the statute was the
result of careful deliberation by Congress, and the statutory language
reflects a clear congressional intent in most instances. JPMC believes
that a final rule (“Final Rule”) that adheres closely
to the statutory language will, in most instances, provide clear
guidance to those subject to the Final Rule and provide the necessary
protection to consumers. Accordingly, JPMC respectfully suggest that
the Proposal should be modified to reflect more accurately the plain
language of the statute as detailed in our comments below.
Use of Examples
The Proposal
states that “[t]he examples in [the Proposal]
are not exclusive. Compliance with an example, to the extent applicable,
constitutes compliance with [the Proposal].” JPMC commends
the Agencies for providing guidance in the Proposal in the form of
examples. JPMC believes that the use of examples can be illustrative
for persons seeking to comply with the Final Rule, and we urge the
Agencies to retain the use of examples in the Final Rule. JPMC also
believes that it is appropriate to provide that compliance with an
example, to the extent appropriate, constitutes compliance with the
requirements. If the examples are to be useful, the Agencies must
allow reliance on them for purposes of compliance. Therefore, JPMC
urges the Agencies to retain this section without revision.
Definitions
“Affiliate”
The definition
of an “affiliate” under the Proposal
is “any person that is related by common ownership or common
corporate control with another person.” The Supplementary Information
notes that the FCRA has several variations of how an affiliate is
described in the statute, and that the FACT Act and the GLBA also
have varying approaches. The Supplementary Information also describes
the Agencies’ intent to “harmonize the various treatments
of ‘affiliate’ and construe them to mean the same thing” and
the Agencies’ desire for comment on “whether there is
any meaningful difference between the FCRA, FACT Act, and GLB Act
definitions.”
JPMC urges the
Agencies to adopt the definition of “affiliate” as
it has in its regulation implementing Title V, Subtitle A of the
GLBA (“GLBA Rule”). The GLBA Rule defines “affiliate” to
mean “any company that controls, is controlled by, or is under
common control with another company.” Although it would appear
that this definition is generally consistent with the definition
provided in the Proposal, JPMC believes it is important to eliminate
any ambiguity with respect to how the Agencies defines “affiliate” across
its regulations, and therefore the Final Rule should include a definition
identical to the definition in the GLBA Rule.
“Clear and Conspicuous”
JPMC believes
that the Agencies have based its definition of “clear
and conspicuous,” at least in part, on the definition provided
under the GLBA Rule and the Board’s proposal (subsequently
rejected) to redefine “clear and conspicuous” in other
contexts. JPMC does not believe that these definitions provide an
appropriate model for the Proposal. An important difference between
the proposal and the GLB Rule is that the GLBA Rule is predicated
on enforcement solely through administrative action—not private
rights of action. However, in providing a similar definition to “clear
and conspicuous” in the Proposal and the Supplementary Information,
the Agencies will have created significant liability concerns for
entities subject to Section 624, including class action liability.
The practical reality is that, if adopted, the Proposal will result
in claims from the plaintiffs’ bar, which will view the Agencies’ definition
and extensive official guidance as required elements of a “clear
and conspicuous” disclosure. Entities seeking to avoid class
action liability with respect to this requirement will feel pressured
to treat the Supplementary Information as substantive requirements.
JPMC also notes that the Board has officially withdrawn its proposal
with respect to redefining “clear and conspicuous” in
the context of other regulations. The Board withdrew the proposal
in response to concerns about the compliance burdens and litigation
risks generated by its proposal.
JPMC
requests that the Agencies delete the definition of “clear
and conspicuous” in its Final Rule. Not only would this mitigate
the compliance and litigation concerns described above, but JPMC
does not believe a definition is necessary to ensure that consumers
receive a clear and conspicuous notice as required under Section
624 of the FCRA. In this regard, a similar “clear and conspicuous” affiliate
sharing notice and opt-out requirement has operated in the FCRA for
several years without a regulatory definition of “clear and
conspicuous.” The Agencies have not provided any evidence that
entities have not properly complied with this requirement, nor has
it been the subject of significant litigation.
“Eligibility
Information”
Section 624 of the FCRA pertains to the use of “information that would
be a consumer report, but for clauses (i), (ii), and (iii) of Section 603(d)
(2) (A)” of the FCRA. Therefore, in order to be covered under the statute,
the information would need to meet the “baseline” definition of
a consumer report, i.e., bear on certain qualities such as credit worthiness
and be collected, used, or expected to be used for certain eligibility determinations.
Information that does not meet both of these criteria would not be covered
by the statute. JPMC is pleased that the Agencies have reflected this concept
in the Supplementary Information.
The Agencies,
in their Proposal, intend to use the term “eligibility
information” to describe information that would be a consumer
report but for the exceptions in Section 603(d) (2) (A) of the FCRA.
JPMC believes the Agencies should retain a relatively simple term,
such as “eligibility information,” to describe he information
covered by the Final Rule so long as this term does not to change
the scope of information covered by Section 624(a) (1) of the FCRA,
including the fact that the information would need to meet the baseline
definition of a consumer report. With the above caveat, JPMC believes
that a simpler approach is appropriate for purposes of understanding
the Final Rule, and that using the more complicated language of the
statute is not necessary.
“Solicitation”
JPMC believes
that the Proposal has inadvertently misstated the types of marketing
that
would not be a “solicitation.” In
this regard, the Proposal states that it would “not include
communications that are directed at the general public and distributed
without the use of eligibility information communicated by an affiliate.” (Emphasis
added.) In short, JPMC believes marketing should be excluded if it
is directed at the general public or if it is distributed without
the use of Eligibility Information. The statute defines a “solicitation” as
marketing “to a particular consumer that is based on an exchange
of [Eligibility Information from one affiliate to another].” In
other words, if the marketing is not “to a particular consumer” or if it is not based on use of Eligibility Information, it would not
be a solicitation. JPMC asks the Agencies to amend the Proposal accordingly.
Duties of the Disclosing Affiliate
In General
Congress amended
the FCRA to prohibit a Receiving Affiliate from using Eligibility
Information
to make a solicitation unless the consumer
has received a notice and opportunity to opt out. The FCRA, however,
does not impose any direct obligation on a specific party to provide
the consumer with a notice and opportunity to opt out. Rather, the
statute imposes liability only on the Receiving Affiliate if it uses
Eligibility Information to make a solicitation without the consumer
having received a notice and opportunity to opt out. Therefore, under
the plain language of the statute, the party disclosing the information
(the “Disclosing Affiliate”), the Receiving Affiliate,
or any other party could provide the consumer with such notice and
opportunity to opt out. This construction makes it more likely that
the consumer will receive a notice and provides flexibility to diversified
entities to determine how best to provide the consumer with a notice
and opportunity to opt out.
In contrast
to the statutory language, the Proposal imposes a requirement on
a specific entity
to provide the consumer with a notice and opportunity
to opt out. In particular, the Proposal requires the Disclosing Affiliate
to provide a consumer with a notice and a reasonable opportunity
to opt out before the Receiving Affiliate can use Eligibility Information
to make a solicitation. The Agencies explain that “[t]he statute
is ambiguous because it does not specify which affiliate must provide
the opt-out notice to the consumer. The [Proposal] 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.”
JPMC respectfully
suggests that the Agencies have mistaken the Congressional intent
to provide
flexibility with respect to the notice
and opt-out process, and the statute’s focus on the Receiving
Affiliate’s duties, as “ambiguity.” The statute
is not ambiguous. In fact, the plain language of the statute imposes
duties and liabilities solely on the Receiving Affiliate. The statute
does not impose a duty on a specific party to provide the notice,
nor does it need to do so in order to operate as intended. JPMC strongly
believes that the Final Rule should reflect the obligations imposed
under the statute, and therefore we ask that the Agencies delete
any obligation on a specific party to provide the notice and opportunity
to opt out to the consumer. There is simply no statutory authority
to impose liability on the Disclosing Affiliate. However, it is apparent
from the “rules of construction” contained in the Supplementary
Information that the Agencies recognize the value of allowing notice
to be provided by different parties and in different ways. JPMC urges
the Agencies to retain the flexibility set forth in their “rules
of construction”.
Form of Notice
Section 624
of the FCRA requires simply that “it is clearly
and conspicuously disclosed to the consumer that [Eligibility Information]
may be communicated among [affiliates]”. According to the Supplementary
Information, the Proposal “contemplates that the opt-out notice
will be provided to the consumer in writing or, if the consumer agrees,
electronically.” The Agencies, however, seek comment on whether “there
are circumstances in which it is necessary and appropriate to allow
an oral notice.” (Emphasis added.)
JPMC respectfully
notes nothing in Section 624 of the FCRA requires that the notice
be
provided in writing. Furthermore, Congress modeled
the notice requirement in Section 624 of the FCRA on the notice requirement
in Section 603(d) (2) (A) (iii) of the FCRA that excludes certain
information from the definition of a “consumer report” “if
it is clearly and conspicuously disclosed to the consumer that the
information may be communicated among [affiliates]”. In using
this language in the FACT Act, Congress recognized that companies
have complied with Section 603(d)(2)(A)(iii) by providing oral notices
and intended for the same result when it enacted the same language
in Section 624 of the FCRA.
The Agencies
appear to express some concern with respect to oral notices by
asking whether “there exists any practical method
for meeting the ‘clear and conspicuous’ standard in oral
notices.” JPMC believes that, like with written notices, compliance
with a “clear and conspicuous” requirement is a fact-based
inquiry and establishes a goal that can be attained through oral
notices.
“Constructive
Sharing”
In the Supplementary
Information the Agencies explain situations in which Section 624
of the FCRA, and therefore the Proposal, would
not be implicated. For example, the Agencies state that “[s]ome
organizations may choose to share eligibility information among affiliates
but not allow the affiliates that receive that information to use
it to make or send marketing solicitations. In that case, [the Proposal]
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.” JPMC agrees with
this interpretation, and we hope the Agencies will retain it in the
Final Rule.
The Agencies
ask for comment on what they term “constructive
sharing.” The Supplementary Information explains that the Proposal “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.” JPMC agrees with this conclusion.
The Agencies
also invite comment on a different scenario (“Scenario
#2”) involving a bank and its affiliated insurance company.
JPMC believes that the plain language of the statute, which also
clearly defines the Congressional policy objectives, dictates that
Scenario #2 described by the Agencies would not be subject to Section
624 of the FCRA for the following reasons.
As a primary
matter, there is no exchange of Eligibility Information among affiliates
in Scenario #2. In fact, it is the consumer who
provides information to an affiliate that may reveal that the consumer
has deposit balances. Furthermore, information provided by a consumer
about the consumer does not meet the “baseline” definition
of a consumer report, and therefore the information provided to the
insurance company in the Agencies’ example is not Eligibility
Information.
Assuming, strictly arguendo, that a communication of information
from the consumer to the insurance company should be deemed to be
a communication of Eligibility Information from the bank to the insurance
company, the Proposal would still not apply. In order for Section
624 of the FCRA to apply, the Receiving Affiliate must use Eligibility
Information obtained from the Disclosing Affiliate to make a solicitation
for its own products or services to the consumer. However, in Scenario
#2, the Receiving Affiliate (the insurance company) did not use Eligibility
Information to make the solicitation. The insurance company did not
receive the Eligibility Information, to the extent it does at all,
until after the solicitation has been made and the consumer has responded.
JPMC also notes that the example provided by the Agencies would
be expressly exempt from coverage under the statute. First of all,
the party making the solicitation (the Bank) has a pre-existing business
relationship with the consumer. Second, the use of Eligibility Information
by the insurance company is in response to a communication initiated
by the consumer. In Scenario #2, there is no exchange of Eligibility
Information between affiliates. To the extent there is any exchange
of information, it does not take place until the consumer initiates
a communication with the insurance company in response to the marketing
material. Said differently, if the consumer does not respond, there
is simply no conceivable argument to suggest that the insurance company
receives Eligibility Information.
Exceptions and Examples of Exceptions
Section 624 of the FCRA includes several circumstances in which
Section 624 does not apply. The Proposal includes variations on these
exceptions, a few of which are addressed below.
General
The Proposal lists several exceptions to the notice and opt-out
requirement that generally track the statutory exceptions in Section
624(a) (4) of the FCRA. Importantly, these proposed exceptions are
listed in the disjunctive in both section 624 and the Proposal. Nevertheless,
JPMC believes that the Agencies should state specifically that if
any one exception applies then Section 624 and the Final Rule do
not apply.
Pre-existing Business Relationship
Section 624(d)
(1) states that “The term pre-existing business
relationship means a relationship between a person, or a person’s
licensed agent, and a consumer, based on-”. For some reason
the Proposal fails to include the italicized phrase above. JPMC requests
that the Agencies revise the Proposal to mirror the language of the
statute.
The Proposal
provides examples of situations that would qualify and would not
qualify
as a pre-existing business relationship. One
such example provides that if a consumer inquires about an affiliate’s
products or services and provides contact information for receipt
of this information, the affiliate can use Eligibility Information
to make the consumer a solicitation within three months. Although
providing contact information may indicate that a consumer reasonably
expects to receive solicitations this exception should not hinge
on providing contact information or on the consumer’s expectation.
For example, in the context of an e-mail request, the contact information
may be self-evident and the consumer may view it as unnecessary to
provide that information a second time. Similarly, the return address
on an envelope or the captured telephone number of a consumer requesting
information about products or services should be sufficient even
if the consumer neglects to provide his or her address or telephone
number.
Finally, the Agencies specifically request comment on whether there
are additional circumstances that should be included within the definition
of pre-existing business relationship. JPMC believes that the term
pre-existing business relationship should be defined to include relationships
arising out of the ownership of servicing rights, a participation
interest in lending and other similar relationships.
Communications Initiated by the Consumer
Although the
language of the Proposal itself appears to implement the statutory
exception,
the Agencies’ discussion of this exception
in the Supplementary Information and the examples used in the Proposal
suggests otherwise. In particular, the Agencies state that “[t]o
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.” The Agencies further opine that “[t]he
time period during which solicitations remain responsive to the consumer’s
communication will depend on the facts and circumstances.”
JPMC strongly
urges the Agencies to reject this interpretation in the Final Rule.
First,
JPMC does not believe that the Agencies’ interpretation
implements the statutory language or the congressional intent of
the law. As noted above, the exception applies to the use of information
in response to a communication initiated by a consumer. Congress
did not impose an additional qualifier, such as the Agencies have
proposed, because the exception recognized that responses to consumer
inquiries are not interruptions or intrusions into the consumer’s
routine and, therefore, not the type of communications regulated
under Section 624 of the FCRA. The end result of such an interpretation
will not be a reduction of interruptions in the consumer’s
life, but a reduction in opportunities to learn of better products
or lower costs.
In addition,
JPMC is also concerned that the Agencies’ interpretation
creates a vague standard that will subject companies to inappropriate
compliance risk. The Agencies do not provide a clear definition of
what will be “responsive” to the consumer, nor can they.
The determination will vary by the facts and circumstances. However,
a company can never be certain that it will be in compliance with
the law. Furthermore, the standard proposed by the Agencies will
not necessarily lend itself to customer service scripts and other
methods of employee training. Therefore, companies may be discouraged
from making use of the exception granted by Congress for fear that
customer service representatives do not know how to comply with the
Agencies’ interpretation.
The Supplementary
Information also includes the Agencies’ view
that if an affiliate calls the consumer and leaves a message for
the consumer to call back, and the consumer calls the affiliate back,
the consumer’s call would not constitute a communication initiated
by the consumer. JPMC disagrees. If the consumer decides to initiate
contact with a company, the exception should apply. A call by a consumer
is a communication initiated by the consumer, regardless of whether
the consumer is responding to a television advertisement to “Call
now!” or whether he or she is responding to a voice mail urging
the same action. The fact that the consumer has decided to call the
affiliate is sufficient for purposes of the statute. It would seem
the consumer has ample opportunity to “opt out” of any
solicitation from the affiliate by not picking up the telephone and
calling the affiliate.
Solicitations Authorized or Requested by the Consumer
Congress provided
an exception to the notice and opt-out requirements of Section
624
of the FCRA if the Receiving Affiliate uses Eligibility
Information for “solicitations authorized or requested by the
consumer.” In other words, Congress stated that if a consumer
authorizes or requests the solicitations, a Receiving Affiliate’s
use of Eligibility Information to make such solicitations would not
be governed by Section 624.
Although the
statute provides only that the solicitations be “authorized” or “requested” by
the consumer for the exception to apply, the Proposal requires that
there be “an affirmative authorization or request by the consumer
orally, electronically, or in writing to receive a solicitation.” The
Agencies further explain in the Supplementary Information and the
examples used in the Proposal that “a pre-selected check box
or boilerplate language in a disclosure or contract would not constitute
an affirmative authorization or request.”
JPMC believes
that the Proposal has inappropriately limited the scope of the
exception provided in the plain language of the statute.
In this regard, Congress specified that the consumer need only authorize
or request the solicitations. Had Congress intended to create a more
limited exception, such as requiring that the authorization or request
be provided in a specific manner, it could have done so. In fact,
by declining to specify how the authorization or request should be
presented by the consumer, Congress did not intend to narrow the
scope of the exception. JPMC does not believe it is appropriate for
the Agencies to do so arbitrarily.
Prospective Application
Congress provided
that the requirements of Section 624 would not apply with respect
to “information…received prior to
the date on which persons are required to comply with” the
Final Rule. The prospective application of the law is necessary in
light of the practical realities associated with complying with the
new requirement. In particular, it could be difficult for a family
of companies to deconstruct its existing databases to determine the
exact origin of information so that the statute could be applied
appropriately to all information in the family’s possession.
It would be more reasonable to expect a family of companies to develop
a compliance program on a prospective basis for information received
by the entities within the corporate family after the mandatory compliance
date. Therefore, Congress intended to exempt information that had
been received by the family of companies prior to the compliance
deadline.
The Proposal
provides that it “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” the mandatory compliance date provided
in the Final Rule. (Emphasis added.) JPMC urges the Agencies to revise
the Proposal to provide a prospective application of the Final Rule
to information received by any entity within the corporate family
prior to the mandatory compliance date. JPMC believes that such an
approach more faithfully reflects the statutory language and legislative
intent. If the Agencies retain the notion that the information must
be received by the Receiving Affiliate prior to the mandatory compliance
deadline, JPMC asks the Agencies to clarify that any information
provided to a centralized database or repository that can be accessed
by an affiliate, such as may be provided by a service provider, be
deemed to have been provided to such affiliate for purposes of the
prospective application of the Proposal. Without this clarification
it would be unclear whether companies would need to deconstruct their
databases in a manner intended to be avoided by Congress.
Reasonable and Simple Methods of Opting Out
Congress required
that any opportunity provided to the consumer to opt out be “simple.” The Proposal has implemented
this requirement by requiring the opt-out method to be “reasonable
and simple.” The Proposal then states that a company provides
a “reasonable and simple method” to opt out if it does
one of four things. The Proposal also provides that a company does
not provide a “reasonable and simple method” if it does
one of three things.
The Agencies
were directed by Congress to provide “specific
guidance regarding how to” provide a simple method of opting
out. In so doing, JPMC urges the Agencies to clarify that the Final
Rule is providing examples of compliance. As drafted, the plain language
of the Proposal could be read to mean that the four methods listed
for complying with the requirement are exclusive. JPMC does not believe
this was the Agencies’ intent. Furthermore, JPMC strongly urges
the Agencies to use the same examples for purposes of the Final Rule
as are provided in the GLBA Rule. It does not make sense that Congress
would intend to allow coordinated and consolidated notices with respect
to the Final Rule and the GLBA Rule but require different methods
of opting out. For example, the Agencies should delete the requirement
to provide a self-addressed envelope under the Final Rule, since
there is no similar requirement under the GLBA Rule.
JPMC also requests
that the Agencies clarify that if a reasonable and simple method
of
opting out is designated, a company is not required
to honor opt out requests provided through other mechanisms. For
example, the GLBA Rule specifically states that a financial institution “may
require each consumer to opt out through a specific means, as long
as the means is reasonable for that consumer.” For the reasons
why the Agencies adopted this provision in the GLBA Rule, JPMC believes
a similar provision is appropriate for the Final Rule.
Duration and Effect of the Opt Out
JPMC is also
concerned with the Agencies’ interpretation
of the statute in the context of relationships that terminate. The
Proposal states that if the consumer’s relationship terminates
with the Disclosing Affiliate while the consumer’s opt out
is in force, the opt out will continue to apply indefinitely unless
revoked by the consumer. JPMC does not believe that such an approach
is consistent with the statute, nor is it appropriate. In this regard,
Congress provided that a consumer’s opt out be honored for “at
least 5 years.” JPMC is unaware of any authority for the Agencies
to extend, by regulation, the duration of the opt-out period so long
as it lasts for “at least 5 years.” JPMC also does not
believe it is necessary to make the opt-out period permanent after
the Disclosing Affiliate no longer has a relationship with the consumer.
In particular, the statute provides sufficient assurances that the
consumer must receive another notice and opportunity to opt out if
the Receiving Affiliate wishes to use Eligibility Information to
make a solicitation once the opt out expires.
JPMC also believes
that it is worth clarifying the application of the Proposal to
circumstances
when a consumer’s relationship
is terminated but subsequently re-established. In those circumstances,
a new relationship is established that should not be dependent upon
or subject to a prior opt out by the consumers. This approach is
consistent with the GLBA Rule that provides “If the individual
subsequently establishes a new relationship with the bank, the opt
out direction that applied to the former relationship does not apply
to the new relationship” (see GLBA Rule 40.7(g) (2)).
Consolidated and Equivalent Notices
The Proposal states that a notice required by the Final Rule may
be coordinated and consolidated with any other notice or disclosure
required to be issued under any other provision of law, including
notices provided pursuant to the GLBA Rule. The Proposal also provides
that a notice or other disclosure that is equivalent to the notice
required by the Final Rule and that is provided to a consumer with
disclosures required by any other provision of law satisfies the
Final Rule. These provisions are consistent with the statute, and
JPMC urges that they be retained in the Final Rule.
Effective Date
The FCRA requires
that the Final Rule be issued by September 4, 2004 and that it
become
effective no later than six months after
it is issued. The Agencies request comment on "whether there
is any need to delay the compliance date beyond the effective date,
to permit financial institutions to incorporate the affiliate marketing
notice in their next annual GLB Act notice."
JPMC believes that companies will need more than six months to review
the Final Rule, determine how it will affect their business model,
implement the necessary
systems changes, and provide notices to consumers (as needed). Therefore, although
the Final Rule may become "effective" six months after it is issued,
JPMC asks that compliance not be required for at least an additional six months,
and longer if necessary to incorporate the affiliate marketing notice in the
next GLBA notice provided after that time. JPMC believes such an approach will
provide a more appropriate time period for companies to comply with the Final
Rule. JPMC also believes that Congress recognized that an effective date is
not necessarily the same as a mandatory compliance date. In this regard, it
is not uncommon for banking regulations to have effective dates and mandatory
compliance dates that differ. Congress enacted the FACT Act will full knowledge
of this practice. Furthermore, the statute explicitly recognizes that the effective
date may not necessarily be the date on which compliance is required (compare
Section 624(a)(5) of the FCRA to Section 214(b)(4)(B) of the FACT Act).
JPMC appreciates the opportunity to comment on this FACT Act Proposal regarding
affiliate marketing. If you have any questions or comments on this matter,
please do not hesitate to contact the undersigned (212-552-1721) or Lynn Goldstein
(312-732-5130).
Sincerely,
Jay N. Soloway
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