\30\ See Proposing Release at 69 FR 42305.

A notice or disclosure could also use various design methods to call attention to the nature and significance of the information in it, including but not limited to:

\31\ Id.

Persons who choose to provide the notice or disclosure by using an Internet Web site may use text or visual cues to encourage the reader to scroll down the page, if necessary, to view the entire document. Persons may also take steps to ensure that other elements on the Web site (such as text, graphics, hyperlinks, or sound) do not distract attention from the notice or disclosure.

If a notice or disclosure required under Regulation SAM is combined with other information, methods for designing the notice or disclosure to call attention to the nature and significance of the information in it may include distinctive type sizes, styles, fonts, paragraphs, headings, graphic devices, and appropriate groupings of information. However, there is no need to use distinctive features, such as distinctive type sizes, styles, or fonts, to differentiate an affiliate marketing opt out notice from other components of a required disclosure. For example, the notice could be included in a GLBA privacy notice that combines several opt out disclosures in a single notice. Moreover, nothing in the clear and conspicuous standard requires segregation of the affiliate marketing opt out notice when it is combined with a GLBA privacy notice or other required disclosures.

We recognize that it will not be feasible or appropriate to incorporate all of the methods described above with respect to every affiliate marketing notice. We recommend, but do not require, that institutions consider the methods described above in designing their notices. We also encourage the use of consumer or other readability testing to devise notices that are understandable to consumers.

Five commenters addressed the proposed definition of ``clear and [[Page 40402]]
conspicuous.'' \32\ One commenter expressed approval of the proposed definition because of its similarity to the definition of the term found in Regulation SP.\33\ However, other commenters suggested that the definition could give rise to an increased risk of litigation and civil liability for financial institutions.\34\ While these commenters recognized that the proposed definition was derived from the GLBA privacy regulations, they noted that compliance with the GLBA privacy regulations is enforced exclusively through administrative actions and not through private litigation. One commenter suggested the definition was unnecessary to ensure that consumers receive a clear and conspicuous notice as required by Section 624 of the FCRA, noting that other affiliate sharing notice and opt out requirements have operated in the FCRA for several years without a regulatory definition.\35\ Commenters also pointed to the Board's withdrawal of a similar definition in other regulations as support for not including the definition.\36\ In the alternative, one commenter suggested that the Commission and the Agencies issue questions and answers or non exclusive examples indicating that compliance with one of these examples would satisfy the rule's requirements.\37\ Another commenter suggested outlining reasonable expectations for what would be considered ``clear and conspicuous'' and suggested including reasonable protections against liability and administrative penalties when unintentional errors occur.\38\
\32\ See ACB Letter; Coalition Letter; IAA Letter; ICBA Letter; Wells Fargo Letter.
\33\ See IAA Letter. See also 17 CFR 248.3(c)(1) (defining ``clear and conspicuous'' for purposes of Regulation SP).
\34\ See ACB Letter; ICBA Letter; Wells Fargo Letter.
\35\ See Coalition Letter. The FCRA contains ``affiliate sharing'' notice and opt out provisions that are distinct from the ``affiliate marketing'' provisions of Regulation SAM. Section 603(d)(2)(A)(iii) of the FCRA provides that a person may communicate information that is not transaction or experience information among its affiliates without that information becoming a consumer report if the sharing is clearly and conspicuously disclosed to the consumer and the consumer is given an opportunity to opt out of the sharing. In contrast, Regulation SAM limits the use of information by affiliates for marketing purposes, not the sharing of information among affiliates.
\36\ See Coalition Letter; Wells Fargo Letter. These commenters cited the Board's decision to withdraw a similar proposal to define ``clear and conspicuous'' for purposes of Regulations B, E, M, Z, and DD, in part because of concerns over civil liability.
\37\ See ICBA Letter. One commenter urged us to make clear that a person does not have to use specific terms for opt out and that this should be included as part of the account opening process. See SIFMA Letter I.

\38\ See ACB Letter; see also 12 U.S.C. 4301, et seq.

Because the FACT Act requires that we provide specific guidance on how to comply with the clear and conspicuous standard,\39\ we believe that it is important to both define ``clear and conspicuous'' in the final rules and provide specific guidance for how to satisfy that standard.\40\ The Commission notes that an affiliate sharing opt out notice required under the FCRA, which may be enforced through private rights of action, must be included in a GLBA privacy notice.\41\ Therefore, the affiliate sharing opt out notices generally are provided in a manner consistent with the clear and conspicuous standard set forth in the GLBA privacy regulations.\42\ We believe that Covered Persons' experience in providing clear and conspicuous affiliate sharing notices should help them provide clear and conspicuous affiliate marketing notices under Regulation SAM.
\39\ See 15 U.S.C. 1681s3(a)(2)(B) (``Notwithstanding
subparagraph (A), the notice required under paragraph (1) shall be clear, conspicuous, and concise * * *. The regulations prescribed to implement this section shall provide specific guidance regarding how to comply with such standards.'').
\40\ The Commission is providing two types of specific guidance on satisfying the requirement to provide a clear and conspicuous affiliate marketing opt out notice. First, this release and Sec. 248.121(a) describe certain techniques that may be used to make notices clear and conspicuous. Second, the Commission is adopting as part of Regulation SAM the model forms set forth in the Appendix to Subpart BModel Forms (``Appendix'') that may, but are not required to, be used to facilitate compliance with the affiliate marketing notice requirements.
\41\ See 15 U.S.C. 6803(b)(4).
\42\ See, e.g., the definition and examples in Regulation SP at 17 CFR 248.3(c).

Accordingly, we are adopting the definition of ``clear and conspicuous'' as proposed.\43\ We urge Covered Persons to consider the guidance discussed above regarding practices and methods for making notices clear and conspicuous. Moreover, like the Agencies, we are adopting model forms that may, but are not required to, be used to facilitate compliance with the affiliate marketing notice
requirements.\44\ The requirement that a notice be clear and conspicuous would be satisfied by the appropriate use of one of the model forms. Accordingly, use of the model forms, although optional, should help alleviate risks from litigation related to the requirement that notices be clear and conspicuous, about which some commenters expressed concern.\45\
\43\ See Sec. 248.120(c), which was proposed as Sec. 247.3(c). \44\ See Appendix to Regulation SAM.
\45\ See ACB Letter; ICBA Letter; Wells Fargo Letter.

4. Commission

We received no comment on the definition of ``Commission'' to mean the Securities and Exchange Commission and are adopting it as proposed.\46\
\46\ See Sec. 248.120(d), which was proposed as Sec. 247.3(d). 5. Company

We received no comment on the definition of ``company'' and are adopting the term as proposed.\47\
\47\ See Sec. 248.120(e), which was proposed as Sec. 247.3(e). 6. Concise

We received no comment on the definition of ``concise'' and are adopting it as proposed.\48\ Section 248.120(f)(1) defines the term ``concise'' to mean a reasonably brief expression or statement. Paragraph (f)(2) provides that a notice required by Regulation SAM may be concise even if it is combined with other disclosures required or authorized by Federal or State law.\49\
\48\ See Sec. 248.120(f), which was proposed as Sec. 247.21(b)(3). The Appendix provides that the requirement for a concise notice would be satisfied by the appropriate use of one of the model forms contained in the Appendix, although use of the model forms is not required. See supra note 40.
\49\ Such disclosures include, but are not limited to, a GLBA privacy notice, an affiliatesharing notice under Section
603(d)(2)(A)(iii) of the FCRA, and other consumer disclosures. 7. Consumer

Proposed paragraph (f) of Sec. 247.3 defined ``consumer'' to mean an individual, including an individual acting through a legal representative.\50\ Some commenters suggested that the definition of ``consumer'' used in Regulation SAM should track the definition in Regulation SP.\51\ Some also asked that the Commission include in the definition the examples that accompany the definition of ``consumer'' in Regulation SP.\52\
\50\ The proposed definition follows the statutory definition of Section 603(c) of the FCRA. See 15 U.S.C. 1681a(c).
\51\ See ACB Letter; IAA Letter; T. Rowe Price Letter.

\52\ See IAA Letter; T. Rowe Price Letter.

The Commission is aware of the narrower definition of ``consumer'' in the privacy regulations enacted under Title V of the GLBA.\53\ However, we believe that the use of distinct definitions of ``consumer'' reflects differences in the scope and objectives of the two statutes. Accordingly, we are adopting the definition of ``consumer'' as proposed.\54\ For purposes of this definition, an individual acting through
[[Page 40403]]
a legal representative would qualify as a consumer.
\53\ See Proposing Release at 69 FR 42305.
\54\ See Sec. 248.120(g).

8. Control

We are adopting the definition of ``control'' as proposed.\55\ Two commenters supported the proposed definition, indicating it was consistent with the one found in Regulation SP and the GLBA.\56\ For purposes of Covered Persons, ``control'' means the power to exercise a controlling influence over the management or policies of a company, whether through ownership of securities, by contract, or otherwise.\57\ Ownership of more than 25 percent of a company's voting securities would create a presumption of control of the company.\58\ As the Proposing Release explained, this definition would be used to determine when companies are affiliated \59\ and would result in financial institutions being considered affiliates regardless of whether the control is exercised by a company or an individual.\60\
\55\ See Sec. 248.120(h), which was proposed as Sec. 247.3(g). \56\ See IAA Letter; T. Rowe Price Letter.
\57\ Section 248.120(h). This definition is consistent with definitions of control found elsewhere under the securities laws. See, e.g., 17 CFR 240.19g21(b)(2); 17 CFR 248.3(i); 15 U.S.C. 80a 2(a)(9); 15 U.S.C. 80b2(a)(12).
\58\ This presumption may be rebutted by evidence, but in the case of an investment company, will continue until the Commission makes a decision to the contrary according to the procedures described in Section 2(a)(9) of the Investment Company Act. 15 U.S.C. 80a2(a)(9).
\59\ See supra Part III.C.1; Proposing Release at 69 FR 42305. \60\ In Sec. 222.3(i) of their Joint Proposal, the Banking Agencies and the NCUA defined ``control'' as ownership of 25 percent of a company's voting securities, control over the election of a majority of the directors, trustees or general partners of the company, or the power to exercise a controlling influence over management or policies of a company, as determined by the particular agency. See Banking Agencies and NCUA, Fair Credit Reporting Affiliate Marketing Regulation; Proposed Rules, 69 FR 42502 (July 15, 2004) (``Joint Proposal''). However, as we emphasized in the Proposing Release, the definition of ``control'' in the proposed rules differed from the Agencies' definition in the Joint Proposal. See Proposing Release at 69 FR 42305. The Joint Rules incorporate the definition of ``control'' to mean ``common ownership or common corporate control'' as in the Agencies' final FCRA medical information rules. See Joint Rules at 72 FR 62913 (citing 70 FR 70664 (Nov. 22, 2005)).

9. Dealer

We received no comments on the definition of ``dealer'' and are adopting it as proposed.\61\ Section 248.120(i) defines ``dealer'' to have the same meaning as in Section 3(a)(5) of the Exchange Act,\62\ regardless of whether the dealer is registered under Section 15(b) of the Exchange Act.\63\ The term includes a municipal securities dealer as defined in Section 3(a)(30) of the Exchange Act,\64\ other than a bank (as defined in Section 3(a)(6) of the Exchange Act),\65\ regardless of whether it is registered under Section 15(b) or 15B(a)(2) of the Exchange Act.\66\ In addition, the term includes a government securities dealer as defined in Section 3(a)(44) of the Exchange Act,\67\ regardless of whether it is registered under Section 15(b) or 15C(a)(2) of the Exchange Act.\68\ The definition specifically excludes noticeregistered brokerdealers.\69\
\61\ See Sec. 248.120(i), proposed as Sec. 247.3(h).
\62\ 15 U.S.C. 78c(a)(5).
\63\ 15 U.S.C. 78o(b).
\64\ 15 U.S.C. 78c(a)(30).
\65\ 15 U.S.C. 78c(a)(6).
\66\ 15 U.S.C. 78o(b), 78o4(a)(2).
\67\ 15 U.S.C. 78c(a)(44).
\68\ 15 U.S.C. 78o(b), 78o5(a)(2).
\69\ See discussion of the inapplicability of Regulation SAM to noticeregistered brokerdealers supra note 16 and accompanying text.

10. Eligibility Information

We are adopting the proposed definition of ``eligibility information'' to mean any information, the communication of which would be a consumer report, if the statutory exclusions from the definition of ``consumer report'' in Section 603(d)(2)(A) of the FCRA, for transaction or experience information and for ``other'' information that is subject to the affiliatesharing opt out, did not apply.\70\ As under the proposal, eligibility information would include a Covered Person's own transaction or experience information, such as information about a consumer's account history with that Covered Person, and ``other'' information under Section 603(d)(2)(A)(iii), such as information from consumer reports or applications.\71\
\70\ See Sec. 248.120(j). See also 15 U.S.C.
1681a(d)(2)(A)(iii). Under the FCRA, the term ``consumer report'' is defined to include any communication of information from a consumer reporting agency bearing on a consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living that is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer's eligibility for credit or insurance to be used primarily for personal, family or household purposes, employment purposes, or other purposes authorized elsewhere in the FCRA. 15 U.S.C. 1681a(d)(1).

\71\ See Sec. 248.120(j).

We have revised the definition of ``eligibility information'' to clarify that the term does not apply to aggregate or blind data that does not contain personal identifiers.\72\ Examples of personal identifiers listed in the definition include account numbers, names or addresses, and also could include Social Security numbers, driver's license numbers, telephone numbers, or other types of information that, depending on the circumstances or when used in combination, could identify the individual or individuals to whom the data relates. Other types of personal identifiers could include passwords, screen names, user names, email addresses, or Internet Protocol addresses. \72\ Id.

We recognized in the Proposing Release that it might be burdensome for Covered Persons to determine and track whether consumer report information is (1) ``eligibility information'' and thus subject to the notice and opt out provisions of Section 624 or (2) information that might be shared with affiliates under other exceptions to the FCRA (to which the notice and opt out provisions of Section 624 do not apply). We invited comment on whether the proposed definition of ``eligibility information'' appropriately reflected the scope of coverage of the FACT Act and provided meaningful guidance to Covered Persons.

Some commenters indicated that the proposed definition did not provide enough meaningful guidance as to what sort of information is covered.\73\ Others suggested that the Commission should provide examples to illustrate the common types of information that would and would not constitute eligibility information.\74\ One commenter requested examples specifically relevant to the securities industry.\75\ Another commenter offered an alternative definition, stating that the proposed definition was unnecessarily complex and difficult to apply.\76\ Another commenter noted that, unlike the Agencies, the Commission did not provide in the Proposing Release that the term was designed to ``facilitate discussion, and not change the scope of the information covered by Section 624(a)(1)'' of the FCRA.\77\ The commenter expressed concern that the divergence may signal some other
[[Page 40404]]
interpretation, but did not provide an example of a secondary interpretation.
\73\ See FSR Letter; SIFMA Letter I.
\74\ See ICI Letter; T. Rowe Price Letter.
\75\ See ICI Letter.
\76\ See ICBA Letter. The commenter proposed to define eligibility information as ``any information that bears on a consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer's eligibility for credit or insurance to market products and services for personal, family or household purposes to that person.''

\77\ See Coalition Letter.

The Commission believes that further clarification of, or exclusions from, the term ``eligibility information'' would implicate the definitions of ``consumer report'' and ``consumer reporting agency'' in Sections 603(d) and (f), respectively, of the FCRA. The Commission does not define the terms ``consumer report'' and ``consumer reporting agency'' in this rulemaking or construe terms therein, such as ``transaction or experience'' information. We note that financial institutions have relied on these statutory definitions for many years. Providing examples of information that would or would not be eligibility information would not necessarily reduce the complexity of the definition, and could create greater uncertainty with regard to information that is not covered by an example. The definition of ``eligibility information'' in Regulation SAM is the same as the one found in the Joint Rules adopted by the Banking Agencies.\78\ \78\ In adopting their final rules, the Banking Agencies stated that they anticipate addressing the definitions of ``consumer report'' and ``consumer reporting agency'' in a separate rulemaking after the required FACT Act rules have been completed. See Joint Rules at 72 FR 62915.

11. FCRA

We received no comment on the term ``FCRA'' and are adopting it as proposed to mean the Fair Credit Reporting Act.\79\
\79\ See Sec. 248.120(k), which was proposed as Sec. 247.3(j). 12. GLBA

The proposed rule defined ``GLB Act'' to mean the GrammLeach Bliley Act. We received no comment on this definition but are changing the term to ``GLBA'' to be more consistent with the way the Agencies refer to the GrammLeachBliley Act.\80\
\80\ See Sec. 248.120(l), proposed as Sec. 247.3(k).

13. Investment Adviser

We received no comment on the definition of ``investment adviser'' and are adopting it as proposed.\81\ This definition incorporates the definition of ``investment adviser'' in the Investment Advisers Act. \81\ See Sec. 248.120(m), proposed as Sec. 247.3(l).

14. Investment Company

We received no comment on the definition of ``investment company'' and are adopting it as proposed.\82\ This definition incorporates the definition of ``investment company'' in the Investment Company Act. \82\ See Sec. 248.120(n), proposed as Sec. 247.3(m).

15. Marketing Solicitation

We are adopting the definition of ``marketing solicitation,'' with modifications discussed below.\83\ The proposed rule defined ``marketing solicitation'' to mean marketing initiated by a Covered Person to a particular consumer that is based on eligibility information communicated to that Covered Person by its affiliate, and that is intended to encourage the consumer to purchase or obtain a product or service. The definition included any form of communication, such as a telemarketing call, direct mail, or electronic mail that is directed to a specific consumer based on that consumer's eligibility information. It did not include communications that are directed at the general public without regard to eligibility information, even if those communications are intended to encourage consumers to purchase products and services. We noted in the Proposing Release that the definition tracked the definition in Section 624 of the FCRA but did not follow the statute exactly to prevent confusion with the term ``solicitation'' in the context of the Federal securities laws.\84\ Although Section 624 also authorizes the Commission to exclude other communications from the definition of ``marketing solicitation,'' we did not propose to do so, but rather, sought comment on whether any other communications should be excluded from the statutory definition of ``solicitation.'' \85\ We also requested comment on whether, and to what extent, various tools used in Internetbased marketing, such as popup ads, could constitute marketing solicitations as opposed to communications directed at the general public.
\83\ See Sec. 248.120(o), proposed as Sec. 247.3(n).
\84\ See Proposing Release at 69 FR 42306. In particular, Regulation SAM uses the term ``marketing solicitation'' rather than ``solicitation.'' Although ``solicitation'' is a defined term in Section 624 of the FACT Act, the operative phrase in Section 624(a) is ``solicitation for marketing purposes.'' See 15 U.S.C. 1681s 3(a).

\85\ 15 U.S.C. 1681s3(d)(2).

Seven commenters addressed the definition of ``marketing solicitation.'' \86\ Some expressed concern that the proposed definition was not the same as the definition in Section 214 of the FCRA \87\ and suggested including the phrase ``of a product or service'' in the introductory language to be consistent.\88\ Other commenters favored the exclusion from the definition of marketing solicitation, solicitations made to the general public.\89\ However, one commenter believed that the phrase ``distributed without the use of eligibility information communicated by an affiliate'' inadvertently misstated the types of general marketing that would not be marketing solicitations.\90\ Another commenter asked the Commission to clarify that any communications directed at the general public are not marketing solicitations regardless of whether they were developed using specific eligibility information.\91\
\86\ See Coalition Letter; FSR Letter; ICBA Letter; ICI Letter; MetLife Letter; SIFMA Letter I; Wells Fargo Letter.
\87\ See FSR Letter; SIFMA Letter I.
\88\ Id. One commenter indicated that the lack of this phrase raised the possibility that the definition could be misinterpreted. See FSR Letter.
\89\ See Coalition Letter; ICBA Letter; Wells Fargo Letter. \90\ See Coalition Letter.

\91\ See Wells Fargo Letter.

Several commenters also addressed Internetbased marketing and generally opposed including it in this rulemaking.\92\ Some expressed the view that discussion of a particular delivery mechanism would be counterproductive and contrary to congressional intent, noting that the Internet was not specifically addressed in this legislation.\93\ Another suggested that Internet issues should be addressed in a separate process to ensure that notice and opportunity to be heard are given to the parties affected.\94\
\92\ See Coalition Letter; FSR Letter; MetLife Letter.
\93\ See Coalition Letter; MetLife Letter.

\94\ See MetLife Letter.

The commenter also opined that popup ads that appear automatically without the use of eligibility information or information from other affiliates are communications directed at the general public, and that a consumer visiting an Internet Web site is effectively making an inquiry which is tantamount to an affirmative request for information. In addition, the commenter asked for clarification that prerecorded messages played while consumers are on hold when calling a call center should be construed as general marketing solicitations. Another commenter asked for a similar clarification for advertisements that appear on passwordprotected Web sites.\95\

\95\ See ICI Letter.

The revised definition tracks the statutory language more closely by encompassing the marketing ``of a product or service.'' \96\ To ensure consistency with the definition of ``preexisting business relationship,'' the definition applies to marketing intended to encourage the consumer to purchase
[[Page 40405]]
``or obtain'' a product or service. In this way, the definition includes marketing for the rental or lease of goods or services, financial transactions, and financial contracts. The Commission is not adopting the reference to communications ``distributed without the use of eligibility information communicated by an affiliate'' in the exclusion for marketing directed at the general public because we do not believe it is necessary. Marketing that is undertaken without the use of eligibility information received from an affiliate is not covered by the affiliate marketing rules. Moreover, there is no restriction on using eligibility information received from an affiliate in marketing directed at the general public, such as radio, television, general circulation magazine, billboard advertisements, or publicly available Web sites that are not directed to particular consumers.\97\ \96\ For purposes of this release and the final rule, we interpret and use the term ``products and services'' to include shareholder investments in investment companies.
\97\ See supra text accompanying note 90. Similarly, visiting a publicly available Web site should not, by itself, constitute an ``inquiry'' for purposes of the preexisting business relationship exception.

The definition of ``marketing solicitation'' does not distinguish among different delivery methods or media. A determination of whether a marketing communication in any medium constitutes a marketing solicitation depends upon the facts and circumstances. The Commission declines to exclude categorically from the definition of ``marketing solicitation,'' prerecorded messages played while a consumer is on hold with a call center, or advertisements that appear solely on passwordprotected Web sites. Marketing delivered by such media may constitute a marketing solicitation if it is targeted to a particular consumer based on eligibility information received from an affiliate. For example, a prerecorded message played while a consumer is on hold with a call center would be a marketing solicitation if it is targeted to a particular consumer based on eligibility information received from an affiliate, but would not be a marketing solicitation if it is played for all consumers who are on hold with the call center.

We note that the Agencies declined to exclude educational seminars, customer appreciation events, focus group invitations, and similar forms of communication from the definition of ``solicitation'' in their final rules.\98\ While we received no comments on these types of activities, like the Agencies, we believe that such activities must be evaluated according to the facts and circumstances, and that some of these activities may be coupled with, or a prelude to, a marketing solicitation. For example, an invitation to a financial educational seminar when the invitees are selected based on eligibility information received from an affiliate may be a marketing solicitation if the seminar is used to solicit the consumer to purchase or obtain investment products or services.
\98\ See Joint Rules at 72 FR 62919; FTC Rule at 72 FR 61432. 16. Person

We received no comment on the definition of ``person,'' and we are adopting it as proposed.\99\ The proposed rule defined ``person'' to mean any individual, partnership, corporation, trust, estate, cooperative, association, government or governmental subdivision or agency, or other entity. A person could act through an agent, such as a licensed agent (in the case of an insurance company), a trustee (in the case of a trust), or any other agent. For purposes of Regulation SAM, actions taken by an agent on behalf of a person that are within the scope of the agency relationship will be treated as actions of that person.
\99\ See Sec. 248.120(p), proposed as Sec. 247.3(o).
17. PreExisting Business Relationship

a. Definition

We are adopting the definition of ``preexisting business relationship'' substantially as proposed,\100\ with the modifications discussed below. The proposed rule contained a threepart definition of ``preexisting business relationship.'' Under the first part, a ``pre existing business relationship'' would exist when there is a financial contract in force between a Covered Person and a consumer.\101\ Under the second part, a ``preexisting business relationship'' would exist when a consumer purchased, rented, or leased a Covered Person's goods or services, or entered into a financial transaction (including holding an active account or a policy in force or having another continuing relationship) with a Covered Person during the 18month period immediately preceding the date on which a marketing solicitation is made.\102\ Under the third part, a ``preexisting business
relationship'' would exist when, in certain circumstances, a consumer inquired about, or applied for, a product or service offered by a Covered Person during the threemonth period immediately preceding the date on which a marketing solicitation is made to the consumer.\103\ In the Proposing Release, we noted that the proposed definition tracked the definition in Section 624 of the FCRA but did not follow the statute exactly.\104\ We also noted that while Section 624 authorizes the Commission to recognize any other circumstances that would constitute a preexisting business relationship, we did not propose to exercise this authority.\105\
\100\ See Sec. 248.120(q)(1), proposed as Sec. 247.3(p). \101\ See Proposed Sec. 247.3(p)(1).
\102\ See Proposed Sec. 247.3(p)(2).
\103\ See Proposed Sec. 247.3(p)(3).
\104\ See Proposing Release at 42306 (citing 15 U.S.C. 1681s 3(d)(1)).

\105\ Id. (citing 15 U.S.C. 1681s3(d)(1)(D)).

Ten commenters addressed the definition of ``preexisting business relationship.'' \106\ Several commenters noted that the statutory reference to ``a person's licensed agent'' was not in the rule.\107\ One commenter expressed the view that Congress intended the phrase to be included in any implementing rule because it is in the statute.\108\ Two commenters noted the importance of licensed agents in the insurance industry, and stated that independent, licensed agents frequently act as the main point of contact between a consumer and an insurance company.\109\ In light of these comments and to more closely track the statute, we have added the phrase ``or a person's licensed agent'' in the final definition of ``preexisting business relationship.'' For example, a person who is both a licensed agent for an insurance company and a registered representative for a brokerdealer may sell to a consumer a variable annuity issued by the insurance company. The licensed agent may use eligibility information that it obtains in connection with selling the variable annuity to the consumer to market the insurance company's life insurance policies to the consumer for the duration of the preexisting business relationship without offering an opt out opportunity.
\106\ See ABASA Letter; ACB Letter; ACLI Letter; AIA Letter; Coalition Letter; FSR Letter; ICBA Letter; MetLife Letter; Wells Fargo Letter; SIFMA Letter I.
\107\ See ACB Letter; ACLI Letter; Coalition Letter; FSR Letter; ICBA Letter; MetLife Letter; SIFMA Letter I.
\108\ See Coalition Letter.
\109\ See ACLI Letter; MetLife Letter. The ACLI Letter also noted that this type of role played by licensed agents would have implications for not only life insurers who issue variable life insurance and variable annuity contracts but also the brokerdealers who sell these products.

Some commenters questioned the requirement in the first part of the definition that a financial contract be in force ``on the date on which the consumer is sent a marketing
[[Page 40406]]
solicitation.'' \110\ In their view, delays between the time when information is processed and prepared for a marketing solicitation and the time a marketing solicitation is made or sent would create an undue burden of having to synchronize the sending of the marketing solicitation with a contract that is in force. They recommended that a contract should only have to be in force when the information is prepared for a marketing solicitation and not when the marketing solicitation is made. We do not agree with these comments and are adopting the second part of the definition as proposed. This approach is consistent with the approach used in the other two parts of the statutory definition.\111\ We also note that the second part of the definition alleviates these synchronization problems since a pre existing business relationship would continue to exist for another 18 months after a financial contract ceases to be in force.
\110\ See ACLI Letter; SIFMA Letter I; Wells Fargo Letter. \111\ See 15 U.S.C. 1681s(d)(1)(A)(C). As noted earlier, the definition of ``preexisting business relationship'' in Regulation SAM tracks the statutory definition. Although the statutory definition does not contain the term ``sent'' for the provision dealing with a contract that is in force (15 U.S.C.1681s(d)(1)(A)), the other two parts of the statutory definition do contain the term ``sent'' (15 U.S.C. 1681s(d)(1)(B)(C)). Accordingly, we believe that the statutory definition is best implemented by including this concept in all three parts of the definition in Regulation SAM.

Some commenters addressed various parts of the second part of the definition.\112\ One commenter suggested that ``any account with outstanding contractual responsibilities on either side of an account relationship should be considered an active account, regardless of whether the individual transactions occur or do not occur under the account.'' \113\ We decline to interpret an ``active account'' in this way. Section 603(r) of the FCRA defines an ``account'' to have the same meaning as in Section 903 of the Electronic Fund Transfer Act (

FOR FURTHER INFORMATION CONTACT

For information regarding the regulation as it relates to brokers, dealers, or transfer agents, contact Brice Prince, Special Counsel, or Ignacio Sandoval, Attorney, Office of Chief Counsel, Division of Trading and Markets, (202) 551 5550, or regarding the regulation as it relates to investment companies or investment advisers, contact Penelope Saltzman, Assistant Director, Office of Regulatory Policy, Division of Investment Management, (202) 5516792, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549.