July 27, ATTN: OMB Desk Officer for the Bureau of Consumer Financial Protection

Transcription

1 1615 H Street, NW Washington, DC July 27, 2015 Office of Management and Budget New Executive Office Building, Room Washington, DC ATTN: OMB Desk Officer for the Bureau of Consumer Financial Protection Re. Agency Information Collection Activities: Submission for OMB Review; Comment Requests, Docket Nos. CFPB ; CFPB , OMB Control No XXXX. Dear Sir or Madam: These comments are submitted on behalf of the U.S. Chamber of Commerce Center for Capital Markets Competitiveness ( CCMC ). The U.S. Chamber of Commerce (the Chamber ) is the world s largest business federation, representing the interests of more than three million companies of every size, sector, and region. The Chamber created CCMC to promote a modern and effective regulatory structure for capital markets to fully function in a 21 st century economy. CCMC appreciates the opportunity to comment on two generic information collections proposed by the Consumer Financial Protection Bureau (the Bureau ) that relate to: (1) surveys using the consumer credit panel; and (2) cognitive research and pilot testing. 1 These proposed generic collections raise substantial questions about the Bureau s commitment to transparency, public participation, and accountability in the regulatory process. We previously have expressed to the Bureau our concerns about its use of generic information collections and its compliance or lack thereof with the requirements of the Paperwork Reduction Act. 2 The Bureau has defeated that law s 1 See Agency Information Collection Activities: Submission for OMB Review; Comment Request, 80 Fed. Reg (June 25, 2015) (request re. Generic Information Collection Plan to Conduct Cognitive Research and Pilot Testing ) ( Cognitive Research Request ); Agency Information Collection Activities: Submission for OMB Review; Comment Request, 80 Fed. Reg (June 25, 2015) (request re. Generic Information Collection Plan for Surveys Using the Consumer Credit Panel ) ( Credit Panel Request ). 2 See Letter from Jess Sharp to Ashwin Vasan, Re: Agency Information Collection Activities: Comment Request, Docket No. CFPB ; OMB Control No XXXX (Oct. 9, 2014) ( October 9, 2014 letter ), available at

2 Page 2 goal of ensuring transparency and accountability by denying the public adequate notice of the information collections it would undertake and their associated burdens and risks. This in turn prevents public comment, causing the Bureau to gather less useful information and weakening the Bureau s policy making. We accordingly write to emphasize three points: A generic information collection must provide meaningful notice to the public of the individual information collections that will follow. The two generic clearances proposed by the Bureau do not provide adequate notice to the public of the contemplated individual information collections. Failure to provide adequate notice of future individual collections has been a consistent feature of the Bureau s use of generic information collections. We thus urge the Office of Management and Budget ( OMB ) to reject the two generic clearances as proposed by the Bureau and to prevent it from relying, going forward, on any generic information collection that does not provide reasonable notice of the information the Bureau actually will collect. * * * * * (1) A Generic Information Collection Must Provide Meaningful Notice To The Public Of The Individual Information Collections That Will Follow. The Paperwork Reduction Act generally requires an agency planning to collect information from ten or more people to solicit public comment and secure approval from OMB. Per OMB guidance, this notice and comment requirement does not apply to an individual collection if the agency has received prior OMB approval, after notice and comment, of an applicable generic information collection request. Comment-Letter.pdf. We also previously have noted our concern regarding the Bureau s collection of data from nine financial institutions in order to avoid triggering the requirements of the Paperwork Reduction Act. That practice was not only troubling, but plainly illegal when joined with the practice of sharing information with other agencies that themselves collected information from nine other financial institutions. See generally Government Accountability Office, Consumer Financial Protection Bureau: Some Privacy and Security Procedures for Data Collections Should Continue Being Enhanced (Sept. 2014) ( GAO Report ) (describing practice).

3 Page 3 Because they prevent the public from commenting on individual collections, such generic information collections are subject to important limitations. The head of the Office of Information and Regulatory Affairs ( OIRA ) explained in 2010: A generic [information collection request] is a request for OMB approval of a plan for conducting more than one information collection using very similar methods when (1) the need for and the overall practical utility of the data collection can be evaluated in advance, as part of the review of the proposed plan, but (2) the agency cannot determine the details of the specific individual collections until a later time.... An agency might, for example, have a general plan to gather views from the public through a series of customer satisfaction surveys in which the agency asks the public about certain agency activities. As part of this plan, the agency would construct, distribute, and analyze the surveys in a similar manner, and the agency would customize each survey. Because the agency sought public comment on the plan, it would not need to seek public comment on each specific information collection that falls within the plan. Instead, agencies need only obtain OMB approval for the specific information collection after a typically brief period of review, subject to the terms of the generic clearance developed during prior OMB review. 3 Notice thus is the touchstone for evaluating a generic information collection request: a generic collection must give fair notice of the content of the future individual information collections. Only then is further notice and comment unnecessary. As described above, for example, a generic information request would be proper if the notice detailed a customer satisfaction survey that would be given in a number of versions in the future. In that example, as in the others provided by OIRA, 4 the component individual collections would be very similar and within the defined parameters of the generic clearance. The public consequently would have had a meaningful opportunity to evaluat[e] in advance and comment upon the need for and practical utility of the agency s individual information collections, rendering future notice and comment unnecessary. 3 Cass R. Sunstein, Memorandum for the Heads of Executive Departments and Agencies, and Independent Regulatory Agencies, at 2 (May 28, 2010) ( Sunstein May 2010 Memo ), available at See also Cass R. Sunstein, Memorandum for the Heads of Executive Departments and Agencies, and Independent Regulatory Agencies (Apr. 7, 2010), available at 4 See Sunstein May 2010 Memo at 5 ( Appendix: Sample Generic Clearances ).

4 Page 4 (2) The Two Generic Clearances Proposed By The Bureau Do Not Provide Adequate Notice To The Public Of The Contemplated Individual Information Collections. Neither the Consumer Credit Panel Request nor the Cognitive Testing Request provides meaningful notice of the actual individual information collections that will be performed if the requests are granted. Informed evaluation of and comment on the collections is not possible. Both collections consequently are inadequate under the Paperwork Reduction Act. The Consumer Credit Panel Request In order to improve its understanding of how consumers engage with financial markets, the Bureau states in its abstract, the CFPB uses the Consumer Credit Panel..., a proprietary sample dataset from one of the national credit reporting agencies, as a frame to survey people about their experiences in consumer credit markets. 5 The Bureau now seeks approval for a generic information collection plan for these types of surveys, which will be used for general, formative, and informational research on consumer financial markets and consumers use of financial products. 6 What exactly the Bureau contemplates by this is unclear. What is certain, is that this description covers a broad range of unrelated surveys, not a set that reasonably can be evaluated in advance. The rest of the explanatory materials do not provide meaningful additional detail on this broad request. In general, the Bureau explains, the topics that [it] is interested in studying seemingly cover the entire breadth of the Bureau s authority. 7 The stated focus areas are: consumer experiences with financial products and potential risks to consumers, including traditionally underserved consumers; consumer awareness and decision-making, for example, understanding what financial products or features people are aware of and why they choose one product over another; information disclosure and how disclosure may affect behavior; 5 Credit Panel Request, Supporting Statement A at 1, available at 6 Id. 7 Id. at 2.

5 Page 5 the effect of educational or other interventions on consumer financial behavior or outcomes. 8 Nor does the use of the Consumer Credit Panel provide any meaningful guide. That dataset is not public, but we understand it to include records of a substantial number (5 million) of Americans use of a wide range of consumer financial services. While it is true that it does not include all the records of all Americans, that hardly provides comfort. Rather, it seemingly provides the Bureau insight into and the ability to ask questions about countless details of Americans financial lives. Thus, the Bureau highlights mortgages, auto loans, student loans, installment loans, small dollar loans, credit cards, debit cards, and prepaid cards 9 as matters covered by the Consumer Credit Panel and indicates that it will solicit over 25,000 responses in three years to surveys on those topics. In short, it is hard to imagine a broader clearance request, limited, as it is, only by the fact that each individual collection will involve a survey and will refer, in some unknown way, to existing financial data about survey respondents. Meaningful evaluation of and comment upon future individual collections is impossible. The Cognitive Testing Request The description of the Cognitive Testing Request also is too broad and generic to provide meaningful notice of the content of subsequent individual collections. In order to improve its understanding of how consumers engage with financial markets, the Bureau explains in its abstract, it seeks approval for a generic information collection plan to conduct research to improve the quality of data collection by examining the effectiveness of data-collection procedures and processes, including potential psychological and cognitive issues. 10 The Supporting Statement describes certain techniques that may be covered by this collection plan. Some of the techniques would appear to be subject to reasonable limits. The Bureau says that it may undertake debriefing questionnaire[s], for example, that would be limited to asking questions of participants in otherwise approved field tests. 11 Other contemplated techniques have no obvious limits. The Bureau proposes to use [f]ocus groups, for example, which it describes only in generic fashion, explaining that they are useful for surfacing and exploring issues. 12 And while the Bureau 8 Id. 9 Id. at Cognitive Research Request Supporting Statement A at 1, available at 11 Id. at Id. at 5.

6 Page 6 asserts that other agencies have received clearances that are similar in intent and scope, the Bureau does not identify those clearances in a manner that permits ready comparison. 13 Here, as before, the Bureau does not support the transparency demanded by the Paperwork Reduction Act. (3) The Bureau s Use Of Generic Clearances Demonstrates A Pattern Of Disregard For The Requirements Of The Paperwork Reduction Act. As noted above, this is not the first time that the Bureau s proposed generic information collections have failed to provide adequate notice of the covered individual data collections. Instead, the Bureau s existing use of generic data collections reveals a pattern of disregard for the requirements and goals of the Paperwork Reduction Act. The Bureau described the Generic Clearance for Development and/or Testing of Model Forms, Disclosures, Tools, and Other Similar Related Materials as permitting the collect[ion of] information in connection with the development and testing of new model forms, disclosures, tools, and similar related materials pursuant to the CFPB s authority with respect to Federal consumer financial laws. 14 So far, there have been eleven associated collections, none of which was previously detailed in the Federal Register notices. These include collections regarding Credit Card Rewards and Deferred Interest Products Focus Groups, Unmoderated Usability Testing of the Mortgage Closing Product, and Consumer Focus Groups Relating to Prepaid Products Rulemaking and Model Form Development. 15 Many of these collections relate to products that are of significant public interest and are subject to Bureau rulemaking. For example, stakeholders many of whom have extensive experience with consumer focus groups and other forms of market research were deprived of the opportunity to comment on the Bureau s activities regarding the prepaid products rulemaking and model form development. The Bureau described the Generic Clearance for the Collection of Qualitative Feedback on the Service Delivery of the Consumer Financial 13 Id. 14 See 76 Fed. Reg (Nov. 2, 2011); 77 Fed. Reg (June 19, 2012). See also OMB Control No ; ICR Reference No ; Expiration Date Nov. 30, See Inventory of Currently Approved Information Collections,

7 Page 7 Protection Bureau as providing for the collection of useful insights on, for example, comprehension, usability, perceptions, and opinions, but... not statistical surveys that yield quantitative results that can be generalized to the population of study. 16 So far, there have been twenty eight associated collections, none of which was detailed in the Federal Register notices. These have covered topics as diverse as the Project Flapjack Usability Test (no mention of which appears on the Bureau s website), Consumer Focus Groups and Usability Testing for Proposed Telephone Arbitration Survey, and Owning a Home Study[:] Pilot Phase. 17 Once again, the Bureau used this generic collection to consider issues, such as arbitration, that were of high public interest and that were subject to actual or prospective rulemaking. And, once more, the public was unable to evaluate these collections in advance. The Bureau described the Generic Clearance For Qualitative Consumer Education and Engagement Information Collections as using qualitative data on effective strategies and consumer experiences from both financial education practitioners and consumers through a variety of methods, including in-person meetings, interviews, focus groups, qualitative surveys, online discussion forums, social media polls, and other qualitative methods as necessary. 18 Neither the Federal Register notices nor the supporting statements provide sufficient detail to permit evaluation of the underlying covered collections, however. So far, there have been fifteen associated collections, none of which was detailed in the Federal Register notices or in the supporting materials. The topics of those collections include: Parents & Teachers Focus Groups, Elder Financial Protection Networks Study, CFPB Ready, Set, Save Tax Time Savings Campaign, and Qualitative Research of Consumer Understanding and Decision-making Related to Overdrafts. Here, again, the Bureau thus used the generic clearance to consider topics, such as overdraft, that were of substantial public interest and that were not reasonably contemplated by the notice provided to the public. The Bureau described the generic information collection for the Program Evaluation of Financial Empowerment Training Programs as 16 See 77 Fed. Reg , (Aug. 7, 2012); 77 Fed. Reg (Oct. 17, 2012). See also OMB Control No ; ICR Reference No ; Expiration Date Dec. 31, See Inventory of Currently Approved Information Collections, supra note See 78 Fed. Reg. 2961, 2962 (Jan. 15, 2013); 78 Fed. Reg (Apr. 8, 2013). See also OMB Control No ; ICR Reference No ; Expiration Date Aug. 31, 2016.

8 Page 8 using paper surveys and focus groups to evaluate (1) training practices and programs that are designed to enhance the ability of caseworkers to inform and educate low income consumers about managing their finances and strategies for making choices among available financial products and services available to them; (2) the evaluation tool that the trainers will use to determine the effectiveness of the training; and (3) the scope of workshop participants use of the training. 19 So far, there have been two associated collections, relating to Evaluation Materials and Your Money, Your Goals Toolkit Customer Surveys and Select Field Tests. The use of this generic collection thus appears to have been quite limited, although at this point it remains the exception that proves the rule. The Bureau described the Generic Clearance for Consumer Complaint and Information Collection System (Testing and Feedback) as supporting the tasks of developing new questions and improving upon existing complaint questions along with related feedback to improve the complaint processing system. 20 The supporting documentation, however, alludes to substantial policy issues, including discrimination. 21 The public should not have been denied the opportunity to comment on collections that touch on such significant policy issues. As we explained in our October 9, 2014, letter, 22 the CFPB Generic Information Collection Plan for Studies of Consumers using Controlled Trials in Field and Economic Laboratory Settings, would provide for collections that are similar in form but that would vary widely in content, apparently ranging across all issues within the Bureau s authority. 23 What the Bureau actually will collect under this clearance is unclear. As detailed above, the dominant feature of the Bureau s use of generic information collections has been inadequate notice of the contents of the future individual collections, even when they pertained to topics of great public interest and 19 See 78 Fed. Reg. 6074, 6075 (Jan. 29, 2013); 78 Fed. Reg (July 2, 2013). See also OMB Control No ; ICR Reference No ; Expiration Date June 30, See 76 Fed. Reg (Oct. 31, 2011); 78 Fed. Reg , (July 25, 2013). See also OMB Control No ; ICR Reference No ; Expiration Date May 31, See Supporting Statement at 9, available at 22 See October 9, 2014 letter. 23 See 79 Fed. Reg (Apr. 14, 2014); 79 Fed. Reg (Sept. 9, 2014). See also OMB Control No ; ICR Reference No ; Expiration Date Dec. 31, 2017.

9 Page 9 regulatory significance. While the Paperwork Reduction Act does not require every detail of a contemplated collection to be stated in advance, merely describing a method of collection is not enough. By providing no details of the actual contents of substantially varying individual collections, the Bureau has failed to meet its obligation to give meaningful notice of the types of collections that will be made pursuant to generic information collections. The Bureau s approach thus has frustrated a key goal of the Paperwork Reduction Act. While that Act establishes public review as the key guard against overly burdensome collections, the Bureau s approach sanctioned by OMB has preferred government review. It may be convenient to permit overly broad generic collections that have the effect of ensuring that only the government, not the public, can review specific collections, but it is nonetheless inadequate under the Paperwork Reduction Act. There are two possible explanations for this deficiency: the Bureau did not know at the time of the generic information collection requests what collections it was likely to undertake, or the Bureau did know, but did not want to say. Neither explanation is satisfactory under the Paperwork Reduction Act. The Bureau should know and describe the information collections it will perform pursuant to a generic information collection, subject only to minor variations. Anything less would be inadequate as OMB itself previously has explained. * * * * * The Bureau must provide transparency into and an opportunity to comment on the information collections that inform its policymaking. We accordingly urge OMB not only to reject the present pair of generic information collection requests, but to stop the Bureau from relying, going forward, on any generic information request that does not provide reasonable notice of the information the Bureau actually will collect. We thank you for your consideration of these comments and would be happy to discuss these issues further with appropriate staff. Sincerely, Jess Sharp Managing Director