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CFTC Proposes Rules on Affiliate Marketing, Data Disposal, and GLBA Privacy

28 October 2010


The rulemakings were prompted by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).


The CFTC, an independent federal agency, maintains oversight over the commodity and financial futures and options markets.  The Dodd-Frank Act creates two new categories of entities that are subject to CFTC jurisdiction:  “swap dealers” and “major swap participants.”  Thus, the CFTC has proposed that those two types of entities would explicitly be subject to the CFTC’s existing GLBA privacy rules, first issued in 2001. Those rules impose certain obligations regarding the treatment of consumers' nonpublic personal information - in particular, restricting the ability of a covered entity to disclose such information to a party not affiliated with that entity. 


The CFTC’s second NPRM proposes to implement sections of FCRA dealing with affiliate marketing and data disposal.  The CFTC's proposed affiliate marketing rule would closely resemble the affiliate marketing rules issued by the Federal Trade Commission and the federal banking agencies in late 2007. While the CFTC has joined those agencies in other rulemakings, it did not join that particular rulemaking.  However, the Dodd-Frank Act specifically authorizes the CFTC to issue rules implementing the affiliate marketing and data disposal provisions of FCRA.


As with the other agencies' affiliate marketing rules, under the proposed rule an entity generally could not use a consumer's "eligibility information" received from an affiliate to make marketing solicitations to that consumer unless the consumer had first been given notice that such marketing may occur, a reasonable opportunity to opt-out of such use, and had not opted out. 


The disposal rule would require entities subject to CFTC jurisdiction that possess or maintain consumer information to develop and implement written policies and procedures for the proper safeguarding and disposal of such information.  The policies and procedures would be required to address, among other things, administrative, technical, and physical safeguards for consumer information, including protections against unauthorized access to or use of such information in connection with its disposal.  Such requirements are similar to the disposal rules issued by the FTC and federal banking agencies in 2004.


The CFTC is proposing to make the rules effective on July 21, 2011, the planned "transfer date" on which certain authority over consumer protection matters is to be transferred from other federal agencies to the Consumer Financial Protection Bureau created by Dodd-Frank. 


Public comments are due on each proposal by December 27, 2010.

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