FTC Issues Final Rule on Prescreen Notices

Following a public comment period, the Federal Trade Commission has issued its final regulation to improve required notices in prescreened offers for credit or insurance. The notices, among other things, inform consumers about their right to opt out of receiving future prescreened offers. The FTC received comments on its proposed regulation, issued in September 2004, from a variety of groups, including trade associations, creditors, insurers, consumer advocacy groups, members of Congress, and individual consumers. The final rule, which will be published in the Federal Register shortly, is similar to the proposed rule and requires a “layered” notice – a short portion on the first page of the solicitation and a longer portion containing further information.

“Prescreened” solicitations sent to consumers – such as “pre-approved” offers for credit cards – are required to contain a notice with information about the offer and instructions on how consumers can opt out of receiving future offers by calling a toll-free number or writing to a specified address. The Fair and Accurate Credit Transactions Act of 2003 (FACTA) requires the FTC to prescribe prescreen notices that are “simple and easy to understand,” in consultation with the federal banking agencies. FACTA specifies that the FTC must establish a format, type size, and manner for the presentation of opt-out notices.

In its final rule, the FTC retains the “layered” approach presented in its proposed rule, requiring that each prescreened offer contain a short statement informing consumers of their right to opt out and listing the toll-free number to call, as well as a longer statement providing additional information about prescreening. The rule presents “model” notices in English and Spanish.

The FTC’s final rule specifies that the short portion of the notice should appear on the document designed to be seen first by the consumer, such as the cover letter. The final rule also establishes other baseline requirements for the format, type size, and manner of the notices.

The Commission vote approving the final rule and publication of the Federal Register notice was 5-0.

Copies of the FTC’s final rule are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish (bilingual counselors are available to take complaints), or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.