This summer has seen an explosion in rulemaking as required by the FACT Act. AFSA has stayed on top of it all, thanks to help received from several members who submitted comments to the association on all of the proposed rules.

The following is a list of the letters AFSA has submitted. Member company executives who would like a copy of a particular letter or want to be included on AFSA's regulatory emails, may email Beth Frank at bfrank@afsamail.org.

Asset-Backed Securitization:
Proposed Rule by the SEC

The SEC published for comment a 100-page rule regarding asset-backed securitization on May 13, 2004. AFSA responded to the request on July 12. AFSA agreed with the treatment of master trusts under the proposal, but suggested the elimination of a limitation on additions to pool assets that maintain the depositor's interest in a trust. AFSA commented on the agency's definition of "delinquent," and asked that the proposal be redefined to allow a receivable to be determined to be delinquent in accordance with the terms specified in the relevant transaction agreement. AFSA also addressed the sponsor securitization program disclosure, the disclosure of static pool data, the categorization of static pool data, credit enhancement requirements, prefunding limits for shelf registration, and the transition period.

Stored Value Cards:
The FDIC Explores the Definition of "Deposit"

In a proposed rule, the FDIC sought to provide new guidance on whether funds underlying stored value cards are considered "deposits" under Section 3(1) of the Federal Deposit Insurance Act. In a letter submitted on July 15, AFSA forewarned that any regulation should not hinder the development of stored value card programs. AFSA also addressed the issue of "bearer cards" and asked that the FDIC include a definition of "issuer" in the final rule.

More Free Credit Reports?
The FTC Study on Adverse Action

AFSA submitted a letter to the Federal Trade Commission in response to its development of a study regarding adverse action. The FTC will study the feasibility of requiring that a consumer receive a copy of the same credit report that the creditor relied on in taking the adverse action. This study is required by section 318(a)(2)(C) of the FACT Act. AFSA stated that existing consumer rights effectively address this issue, and that the proposed system could "materially increase the incidence and severity of identity theft." Additionally, AFSA pointed out that the process would generate significant operational issues for consumer reporting agencies and lenders.

Disposal of Consumer Information:
The Banking Agencies Proposed Rule

Earlier this year, the FTC published its version of a rule regarding the proper disposal of "consumer information" with respect to Section 216 of the FACT Act. The FACT Act required joint rulemaking, however, and the Banking Agencies were also required to develop a rule of their own. Luckily for the industry, the rules were nearly identical. AFSA submitted comments on both the FTC and Banking Agencies rules. In its comment letter to the Banking Agencies, AFSA stated that it: (1) supports the Agencies' proposal to require that "consumer information" be disposed of in a manner consistent with the disposal of "customer information" under the Interagency Guidelines; (2) recommends revising the definition of "consumer information" by adding an example and several exclusions; (3) recommends defining the terms "dispose" and "disposal", and proposes a definition; (4) proposes changing the effective date from 3 months after publication in the Federal Register to 6 months.

Prescreened Solicitations:
The Federal Reserve to Conduct a Study

AFSA also submitted a comment letter to the Federal Reserve Board on prescreened solicitations. Section 213(e) of the FACT Act requires the Federal Reserve Board to conduct a study on the potential impact that any further restrictions on providing prescreened solicitations would have on consumers. AFSA's letter addressed each of the issues raised for the study, specifically emphasizing the benefits of prescreening. AFSA pointed out that prescreened solicitations ease the process of shopping for credit, minimize the negative impact of shopping for credit, expand access to borrowers, fosters competition among businesses and reduces the costs of finding a borrower.

Credit Scoring and Affiliate Marketing:
Letters due in August

AFSA is accepting comments from its members on the following proposed rules. On August 16, comment letters are due to the FTC for its study on credit scoring. Also on August 16, letters are due to both the Banking Agencies and the FTC for their rule on affiliate marketing. Please send your comments or questions to bfrank@afsamail.org.