3170-0NEW Supporting Statement for Small Dollar Rule NPRM RIN 3170-AA40 FINAL

Notice of Proposed Rulemaking (RIN 3170-AA40)

BUREAU OF CONSUMER FINANCIAL PROTECTION
PAPERWORK REDUCTION ACT SUBMISSION
INFORMATION COLLECTION REQUEST
SUPPORTING STATEMENT PART A
PAYDAY, VEHICLE TITLE, AND CERTAIN HIGH-COST INSTALLMENT LOANS
(12 CFR PART 1041)
(OMB CONTROL NUMBER: 3170-XXXX)

OMB TERMS OF CLEARANCE: Not applicable. This is a request for a new Office of
Management and Budget (OMB) control number. As such, OMB has not heretofore reviewed the
information collections contained in the proposed rule for 12 CFR part 1041 and included this
Paperwork Reduction Act request.
ABSTRACT: The proposed rule would apply to non-depository institutions and loan brokers
engaged in consumer lending, credit intermediation activities, or activities related to credit
intermediation, along with banks and credit unions that make loans that would be subject to the
proposed rule. The purpose of this rulemaking would be to identify certain unfair and abusive
acts or practices in connection with certain consumer credit transactions, to set forth
requirements for preventing such acts or practices, and to provide certain partial conditional
exemptions from aspects of this rule. This proposed rule also contains requirements to ensure
that the features of those consumer credit transactions are fully, accurately, and effectively
disclosed to consumers. This proposed rule also contains processes and criteria for registration
of information systems.
JUSTIFICATION
1. Circumstances Necessitating the Data Collection
The Bureau is proposing a new rulemaking for payday, vehicle title, and certain high-cost
installment loans (12 CFR part 1041) pursuant to Title X of the Dodd-Frank Wall Street Reform
and Consumer Protection Act (12 U.S.C. 5481, et seq.).
The purpose of this part is to identify certain unfair and abusive acts or practices in connection
with certain consumer credit transactions and to set forth requirements for preventing such acts
or practices (See 12 U.S.C. 5531). This part also provides certain partial conditional exemptions
from aspects of this rule. This part also prescribes requirements to ensure that the features of
those consumer credit transactions are fully, accurately, and effectively disclosed to consumers.
This part also prescribes processes and criteria for registration of information systems. For most
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consumers, credit provides a means of purchasing goods or services and spreading the cost of
repayment over time. Consumers living paycheck to paycheck and with little to no savings have
used credit as a means of coping with shortfalls, with the credit allowing them to cover
miscellaneous living and short-term expenses until they receive additional income. These
shortfalls can arise from mismatched timing between income and expenses, misaligned cash
flows, income volatility, unexpected expenses or income shocks, or expenses that simply exceed
income. Whatever the cause of the shortfall, consumers in these situations sometimes seek what
may broadly be termed a “liquidity loan.” There are a variety of loans and products that
consumers use for these purposes including credit cards, home equity loans and lines of credit,
deposit account overdraft, pawn loans, payday loans, vehicle title loans, and installment loans.
Credit cards, home equity loans and lines of credit, and deposit account overdraft services are
already subject to federal consumer protection regulations and requirements. The Bureau
generally considers these markets to be outside the scope of this rulemaking. This rulemaking is
focused on two general categories of liquidity loan products: (1) shorter-term loans and (2)
certain higher-cost longer-term loans. The largest category of shorter-term loans are “payday
loans,” which are generally required to be repaid in a lump-sum single payment on receipt of the
borrower’s next income payment, and short-term vehicle title loans, which are also almost
always due in a lump-sum single payment, typically within 30 days after the loan is made. The
latter category consists of higher-cost longer-term loans. It includes both what are often referred
to as “payday installment loans”—that is, loans that are repaid over time with each payment
timed to be paid with the borrower’s income payment and electronically deducted from an
account into which the income payment is deposited—and vehicle title installment loans. The
latter category includes higher cost, longer-term loans in which the principal is not amortized but
is scheduled to be paid off in a single payment after a series of smaller, often interest-only,
payments, as well some more typical installment loans repaid in even installments. While loans
covered by this rulemaking are most often made by non-bank lenders, some depository
institution products also fit these descriptions. Some of these loans are available at storefront
locations and branches, others are available on the Internet, and some loans are available through
multiple delivery channels. The rulemaking covers both closed-end loans and open-end lines of
credit.
2. Use of the Information
The Bureau’s proposal includes information collection requirements related to (1) development,
implementation, and continued use of notices for covered short-term loans made under § 1041.7,
upcoming payment notices (including unusual payment notices), and consumer rights notices; (2)
obtaining a consumer report from a registered information system; (3) furnishing information
about consumers’ borrowing behavior to each registered information system; (4) retrieval of
borrowers’ national consumer report information; (5) collection of consumers’ income and major
financial obligations during the underwriting process; (6) obtaining a new and specific
authorization to withdraw payment from a borrower’s deposit account after two consecutive
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failed payment transfer attempts; (7) application to be a registered information system; (8)
biennial assessment of the information security programs for registered information systems; (9)
retention of loan agreement and documentation obtained when making a covered loan, and
electronic records of origination calculations and determination, records for a consumer who
qualifies for an exception to or overcomes a presumption of unaffordability, loan type and term,
and payment history and loan performance.
Loan disclosures would be provided, as applicable, by lenders or vendors working on their
behalf. Under the proposal, disclosures may be provided through a variety of channels,
including electronically. First, under proposed § 1041.7, the proposed rule would require lenders
to provide an origination disclosure for certain covered short-term loans; this disclosure would
communicate to consumers important information about the costs, benefits, and risks of these
loans. Second, under § 1041.15, the proposed rule would require lenders making covered shortterm loans and covered longer-term loans, other than covered longer-term loans made under a
conditional exemption, and that obtain and use authorization to collect payment from a
consumer’s account to provide notice to a consumer prior to initiating a payment transfer from
the consumer’s account. The payment notice would alert consumers to the upcoming withdrawal,
including potential changes to the typical payment amount, thereby mitigating the risk of certain
adverse consequences associated with payment transfer attempts when the consumer’s account
lacks sufficient funds. Third, also under § 1041.15, the proposed rule would also require lenders
to provide a consumer rights notice in certain circumstances when two payment transfer attempts
have failed. Lenders making covered loans would be required to provide this notice, as
applicable. The proposed consumer rights notice would ensure that the costs, benefits, and risks
of the loan and associated payments are effectively disclosed to consumers.
Under proposed §§ 1041.5 through 1041.7, 1041.9, and 1041.10, lenders would also obtain
information about consumer use of covered loans by obtaining a consumer report from a
registered information system. For covered loans subject to the ability-to-repay requirements in
the proposed rule, obtaining and reviewing a consumer report from a registered information
system would be instrumental to a lender’s determination about whether a potential loan would
comply with the presumptions of unaffordability; this information would also be used to verify
the amount and timing of consumer’s major financial obligations, to the extent that the consumer
has outstanding covered loans. Together with the national consumer report and other
underwriting documents described above, information about the consumer’s use of covered loans
would facilitate reliable ability-to-repay determinations. For covered short-term loans made
under § 1041.7, obtaining and reviewing a consumer report would ensure that the consumer is
eligible for such a loan.
Under proposed § 1041.16, lenders would also provide information about consumer use of most
covered loans by furnishing information to each registered information system. For these
covered loans, furnishing information about the consumer’s borrowing behavior to each
registered information system would ensure that the consumer reports lenders obtain from these
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systems are sufficiently timely and accurate to achieve the consumer protections that are the goal
of this part.
Under proposed § 1041.5 and § 1041.9, lenders would obtain a national consumer report and
other underwriting documents, such as documents verifying income and housing expenses, for
covered loans subject to the proposed ability-to-repay requirements. Under the proposal, these
documents can be collected through a variety of channels, including electronically, and would be
collected from a specialty consumer reporting agency and the consumer, and potentially a
nationwide consumer reporting agency. The collection, and review, of the national consumer
report and other underwriting documents would enable the lender to verify of information about
the amount and timing of a consumer’s income and major financial obligations, thereby
facilitating reliable ability-to-repay determinations. These documents would also be used by the
lender in association with proposed § 1041.6 and § 1041.10.
Under proposed § 1041.14, lenders would obtain a new and specific authorization from a
consumer in order to withdraw payment from a consumer’s deposit account after two
consecutive payment transfer attempts have failed. The new and specific authorization would
ensure that consumers maintain control of their deposit account and enable the lender to
withdraw payments on a covered loan from the consumer’s deposit account after two
consecutive failed payment transfer attempts.
Under proposed § 1041.17, applications to be a registered information system would be
submitted to the Bureau by entities seeking to be registered. The proposed process for becoming
a registered information system prior to the effective date of § 1041.16 would require an entity to
submit an application for preliminary approval with information and documentation sufficient to
determine that the entity would be reasonably likely to satisfy the proposed conditions to become
a registered information system. If an entity obtains preliminary approval by the Bureau, it
would need to provide certain written assessments contemplated by the proposed rule and submit
an application to be a registered information system; the proposal would also permit the Bureau
to require an entity to submit to the Bureau additional information and documentation to
facilitate determination of whether the entity satisfies the eligibility criteria to become a
registered information system. On or after the effective date of § 1041.16, an entity may become
provisionally registered by submitting an application that contains information and
documentation sufficient to determine that the entity satisfies the proposed conditions to become
a registered information system, including written assessments contemplated by the proposed
rule. An information system that is provisionally registered under this approach will
automatically become a registered information system upon the expiration of a 180-day period.
Once an entity is a registered information system, the proposal would require the entity to submit
biennial assessments of its information security program. The proposed requirement to submit to
the Bureau the applications and written assessments described above is essential to the Bureau’s
ability to ensure that registered information systems would enable lender compliance with the
requirements of the proposed rule so as to achieve the consumer protections therein and to
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confirm that the information systems maintain compliance programs reasonable designed to
ensure compliance with applicable laws.
Under proposed § 1041.18, lenders would be required to retain several types of documentation
related to evidence of compliance with the requirements of the proposed rule. The proposal
requires lenders to use electronic records to satisfy certain recordkeeping requirements. The
proposed recordkeeping requirements would facilitate the Bureau’s supervision and enforcement
of the requirements of the proposed rule.
3. Use of Information Technology
The proposed rule is conscious of the use of information technology and other automated means
as a solution to potentially reduce or limit the information collection burdens associated with the
proposed rule. For example, the required disclosures, if adopted, could be made electronically
through various means, and required reports could also be obtained and retained electronically.
Additionally, the recordkeeping provision in proposed § 1041.18 would not limit the use of
available technology to maintain required records. The proposed rule would allow covered
persons to retain records in any legible form, and in the same manner, format, or place as such
records are kept in the ordinary course of business (See proposed § 1041.18(b)). Thus, this
proposed rule is consistent with the aims of the Government Paperwork Elimination Act, 44
U.S.C. 3504 note.
4. Efforts to Identify Duplication
The recordkeeping, reporting, and disclosure provisions in the proposed rule would not duplicate
any other Federal information collection requirement.
5. Efforts to Minimize Burdens on Small Entities
The disclosure, reporting, and recordkeeping requirements would be imposed on all lenders
making covered loans. Most lenders today utilize some measure of computerization in their
business, and the proposed rule would permit lenders to rely on computer support, among other
alternatives, to meet their recordkeeping, reporting, and disclosure requirements. This flexibility
presumably would yield reduced disclosure, reporting, and recordkeeping costs (see section 3 of
this supporting statement, above). The proposed rule also provides model forms that could be
used to comply with certain of its requirements, if adopted, and lenders that use the model forms
would be deemed to be in compliance with the disclosure requirement with respect to such
model forms.
6. Consequences of Less Frequent Collection and Obstacles to Burden Reduction
If the proposed rule, including the information collection requirements contained therein, is not
adopted some of the most vulnerable consumers who rely on the loan products that would be
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covered by this rule would not have the protections contained in the proposed rule that are
intended to prevent certain unfair and abusive acts or practices in connection with certain
consumer credit transactions.
Without the proposed recordkeeping and reporting requirements, the Bureau would not have a
tangible mechanism to ensure that consumers are receiving the protections contained in the
proposed rule, if adopted.
7. Circumstances Requiring Special Information Collection
There are no special circumstances. The collection of information requirements are
consistent with the applicable guidelines contained in 5 CFR § 1320.5(d)(2).
8. Consultation Outside the Agency
In accordance with 5 CFR § 1320.11, the Bureau has published a notice of proposed
rulemaking in the Federal Register inviting the public to comment on the information
collection requirements contained in the proposed rule. Comments received in response to
the notice of proposed rulemaking will be addressed in the preamble to the final rule.
The Bureau has been studying and conducting market monitoring activities of the markets
for liquidity loans for more than four years, gaining insights from a variety of sources.
During this time the Bureau has also conducted supervisory examinations of a number of
payday lenders and enforcement investigations of a number of different types of liquidity
lenders. Through all of these activities, the Bureau has gained insights into the business
models and practices of such lenders and also has obtained extensive loan-level data that the
Bureau has studied to better understand risks to consumers. The Bureau has published four
reports based upon these data, and, concurrently with the issuance of this Notice of
Proposed Rulemaking, the Bureau is releasing a fifth report. The Bureau has also carefully
reviewed the published literature with respect to small dollar loans and a number of outside
researchers have presented their research at seminars for Bureau staff. In addition, over the
course of the past four years the Bureau has engaged in extensive outreach with a variety of
stakeholders in both formal and informal settings, including several Bureau field hearings
across the country specifically focused on the subject of small dollar lending, meetings with
the Bureau’s standing advisory groups, meetings with State and Federal regulators, meetings
with consumer advocates, religious groups, and industry trade associations, consultations
with Indian tribes, and through a Small Business Review Panel process.
As part of the process under the Small Business Regulatory Enforcement and Fairness Act
(SBREFA process), the Bureau released in March 2015 a summary of the rulemaking
proposals under consideration in the Small Business Review Panel Outline. At the same
time that the Bureau published the Small Business Review Panel Outline, the Bureau held a
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field hearing in Richmond, Virginia, to begin the process of gathering feedback on the
proposals under consideration from a broad range of stakeholders. Immediately after the
Richmond field hearing, the Bureau held separate roundtable discussions with consumer
advocates and with industry members and trade associations to hear feedback on the
proposals under consideration. On other occasions, the Bureau met with members of
industry trade associations representing storefront payday lenders to discuss their feedback
on the Small Business Review Panel Outline.
At the Bureau’s Consumer Advisory Board (CAB) meeting in June 2015 in Omaha,
Nebraska, a number of meetings and field events were held about payday, vehicle title, and
similar loans. The CAB advises and consults with the Bureau in the exercise of its functions
under the Federal consumer financial laws, and provides information on emerging practices
in the consumer financial products and services industry, including regional trends,
concerns, and other relevant information. The CAB events in June 2015 included a visit to a
payday loan store, and a day-long public session that focused on the Bureau’s proposals
under consideration as well as trends in payday and vehicle title lending. The CAB has
convened six other discussions on consumer lending. Two of the Bureau’s other advisory
bodies also discussed the proposals outlined in the Small Business Review Panel Outline:
the Community Bank Advisory Council held two discussions, and the Credit Union
Advisory Council conducted one discussion.
Bureau leaders, including the Director of the agency and staff, have spoken about the
Bureau’s work on payday, vehicle title, and installment lender at events and conferences
throughout the country. These meetings have provided additional opportunities to gather
insight and recommendations from both industry and consumer groups about how to
formulate a proposed rule. In addition to meetings with lenders and trade associations, and
to information learned through supervisory and enforcement activities, Bureau staff has
made fact-finding visits to at least 12 non-depository payday and vehicle title lenders,
including those that offer single payment and installment loans.
See Part III of the Preamble to the proposed rule for a full description of the Bureau’s efforts
to consult with parties outside of the Bureau on this proposed rule.
9. Payments or Gifts to Respondents
Not applicable. No payment, gifts, or other incentives are provided to respondents.
10. Assurances of Confidentiality
To the extent that information covered by a recordkeeping requirement is collected by the
Bureau for law enforcement purposes, the confidentiality provisions of the Bureau’s rules on
Disclosure of Records and Information, 12 CFR part 1070, would apply.
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The information that may be collected for law enforcement purposes would be covered by the
following Systems of Records Notices (SORNs): CFPB.004 Enforcement Database, 76 FR
45757, that can be found at https://www.federalregister.gov/articles/2011/08/01/201119424/privacy-act-of-1974-as-amended; and the CFPB.018 CFPB Litigation Files SORN, 77 FR
27446, that can be found at https://www.federalregister.gov/articles/2012/05/10/201211233/privacy-act-of-1974-as-amended.
Notwithstanding the protections for records containing consumer financial information noted
above, the proposed rule provides no assurance of confidentiality to entities that would be
covered by this rule.
11. Justification for Sensitive Questions
Not applicable. None of the information collection requirements contained in this proposed rule
ask any questions of respondents (covered entities) that would be deemed sensitive in nature.
12. Estimated Burden of Information Collection
In calculating the potential burdens of information collections that would be required by the
proposed rule, if adopted, the Bureau generally relies on estimates of the market as it currently
exists. It is likely that the proposed rule would have significant effects on the number of covered
persons and on the number of covered loans originated. However, the calculations presented
here do not account for potential shifts in the market as a result of the proposed rule. If approved
by OMB at the final rule stage, and assuming the Bureau’s submits the information collections
contained in the rule for renewal of the OMB control number in three years, the Bureau will
account for any changes in the market. Using the Bureau’s burden estimation methodology, the
total estimated burden for the approximately 10,400 institutions subject to the proposal,
including Bureau respondents, would be approximately 6,629,201 labor burden hours annually.
For the Bureau institutions subject to this proposal, the estimates for the total annual labor
burden hours are 3,031,509.
The aggregate estimates of total burdens are based on estimated costs that are averages across
respondents. The Bureau expects that the amount of time required to implement each of the
proposed changes for a given institution may vary based on the size, complexity, and practices of
the respondent.
Exhibit 1: Burden Hour Summary

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Notice of Proposed Rulemaking (RIN 3170-AA40)

Information
No. of
Type of IC
Frequency
Annual
Average
Annual
Collection
Respondents
Responses
Response
Burden
Requirement
Time
Hours
Disclosures
9,599
3rd Party
On
509,854,703
0.005
2,449,892
[§§ 1041.7(e) &
Disclosure
occasion
1041.15]
Obtaining consumer
5,105
Recordkeeping
On
118,918,138
0.007
824,642
report from a
occasion
registered information
system
[§§ 1041.5, 1041.6,
1041.7, 1041.9,
1041.10]
Information furnishing
10,441
Reporting
On
120,225,002
0.007
824,642
requirements
occasion
[§ 1041.16]
National Consumer
5,105
Recordkeeping
On
33,175,281
0.009
312,539
Report
occasion
[§§ 1041.5 and 1041.9]
Underwriting
5,105
Recordkeeping
On
33,175,281
0.040
1,314,304
Documents
occasion
[§§ 1041.5 and 1041.9]
Prohibited payment
9,599
Recordkeeping
On
14,514,734
0.062
903,165
transfer attempts –
occasion
requirements and
conditions for
obtaining consumer’s
authorization
[§ 1041.14]
Compliance Program
10,441 Recordkeeping
On
120,255,002
0
0
and Record Retention
occasion
[§ 1041.18]
Registered Information
1
Reporting
1x
1
13.333
13
system – initial
assessment
[§ 1041.17]
Registered Information
1
Reporting
Biennial
1
4.000
4
system – biennial
assessment
[§ 1041.17]
Totals:
10,442*
950,148,141
6,629,201
*Note: Unduplicated count. Total number of entities that would be required to comply with this regulation if adopted.

Hourly
Rate 1

Hourly Costs

$22.72

$55,666,115

$17.23

$14,205,626

$17.23

$14,205,626

$22.61

$7,067,413

$17.53

$23,043,893

$17.31

$15,636,285

$0

$0

$56.14

$748

$58.69

$235

$129,825,941

A. Disclosures
The proposed rule, if adopted, would require three different notices in certain situations. One
notice would be required to be given before consummation to borrowers taking out a covered
short-term loan made under proposed § 1041.7. The two other notices would relate to lenders’
attempts to obtain payments on covered loans by initiating withdrawals from borrowers’ deposit
accounts or prepaid card accounts. One notice would be required in advance of the lender
seeking to obtain a payment, including in advance of the lender seeking to obtain an unusual
payment, and the other disclosure would be required if a lender were no longer permitted to
1

Bureau of Labor Statistics, April 2016, Occupational Employment and Wage Estimates,
http://www.bls.gov/oes/current/oessrci.htm. The hourly rate is a weighted average composed of the average wages
for a specific sector and corresponding occupation.
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attempt to collect payment directly from a borrower’s account because prior consecutive
payment attempts had failed due to non-sufficient funds.
Many of the costs to comply with these requirements would be common across the three
disclosures, and therefore those costs are discussed together in this section.
The Bureau believes that all lenders originating covered loans would incur some costs due to the
disclosure requirements with the exception of lenders making vehicle title loans. The origination
disclosure would apply only to covered short-term loans originated under proposed § 1041.7,
which would not include loans that take security interest in a consumer’s vehicle. The remaining
disclosures are required when lenders obtain and use the ability to initiate withdrawals from
consumers’ accounts for payment on a covered loan. Vehicle title lenders do not typically obtain
and use the ability to initiate withdrawals from consumers’ accounts. Thus, when calculating the
estimated burden of the notices on respondents, specifically for non-depositories, vehicle title
lenders are excluded. Additionally, the upcoming payment disclosure, including the unusual
payment disclosure, would not be required for loans made under the conditional exemptions for
certain covered longer-term loans.
Under the proposal, it would be the lender’s responsibility to deliver each of the disclosures,
although an affiliate or service provider may create and deliver the notices on the lender’s behalf.
i. One-Time Costs
The Bureau believes that all lenders that would be affected by the new disclosure requirements
have some disclosure system already in place to comply with existing Federal and State law
disclosure requirements, such as those imposed under Regulation Z, 12 CFR part 1026 and
Regulation E, 12 CFR part 1005. Lenders enter data directly into the disclosure system, or the
system automatically collects data from the lenders’ loan origination system. For this analysis,
the Bureau assumes that most lenders would use the services of a vendor to print and/or deliver
disclosures. 2 For disclosures provided via mail, email, or text message, the disclosure system
forwards to a vendor, in electronic form, the information necessary to prepare the disclosures,
and the vendor then prepares and delivers the disclosures. For disclosures provided in person,
the disclosure system produces a disclosure, which the lender then provides to the borrower.
Respondents would incur a one-time burden to modify their existing disclosure systems to
comply with new disclosure requirements. Respondents would need to modify their disclosure
systems to compile necessary loan information to send to the vendors that would produce and
deliver the disclosures relating to payments, as well as origination disclosures for loans
2

Although some lenders may currently create and deliver disclosures in-house, given the increase in the volume of
disclosures the proposed rule would require, the Bureau believes most lenders would typically rely on vendors to
print and deliver the disclosures.
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originated online, and to produce the origination disclosures delivered in person. The Bureau
believes that large depositories and non-depositories rely on in-house proprietary disclosure
systems, and estimates the one-time programming cost for large institutions to modify these
systems to be 1,000 labor burden hours per entity. The Bureau believes small depositories and
non-depositories would incur only operations and materials costs to modify their disclosure
systems, which are discussed in Section 13 below.
To determine the annual burden, the Bureau distributes the one-time burden over three years.
For depositories, the annualized one-time burden to modify existing systems would be 281,410
burden hours, the equivalent of $13,487,981. For non-depositories, the total annualized one-time
burden to modify existing systems would be 38,333 burden hours, the equivalent of $1,751,888.
Covered persons would also incur one-time costs associated with training employees on the
disclosure requirements. The Bureau uses the number of employees per location 3 and the total
number of locations 4 to calculate the total number of labor burden hours depositories and nondepositories would spend training employees on the new requirements for disclosures. Given the
structure of depositories, the Bureau believes depositories would train half of their employees on
average at each location rather than all employees. The Bureau estimates that it would require
one labor burden hour to train each employee on the disclosure requirements. To determine the
annual burden, the Bureau distributes the one-time burden over three years. For the 5,336
depositories, the Bureau estimates the annualized one-time burden from training employees on
the disclosure requirements would be 90,993 labor burden hours, the equivalent of $3,471,476.
For the 4,263 non-depositories 5 the Bureau estimates the one-time burden from training
employees on the disclosure requirements would be 41,828 labor burden hours, the equivalent of
$1,090,519.
ii. Ongoing Costs
The Bureau estimates that covered persons would also need to have periodic staff training to
comply with the disclosure requirements. The Bureau estimates that the 5,336 depositories and
the 4,263 non-depositories would experience half an hour of additional training per employee per
year as a result of the disclosure requirements. For depositories, the total ongoing annual burden
on respondents for periodic staff training would be 136,489 labor burden hours, the equivalent of
$5,207,214. For non-depositories, the total ongoing annual burden on respondents for periodic
staff training would be 62,743 labor burden hours, the equivalent of $1,635,778.

3

Bureau of Labor Statistics Occupational Employment Statistics using the specific NAICS code associated with
each industry covered by the proposed rule.
4
Calculated from State licensee lists and industry estimates.
5
For reasons discussed, vehicle title lenders would not incur burdens as a result of the disclosure requirements in the
proposed rule and thus, are excluded from this calculation.
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a. Origination Disclosure
For covered short-term loans made under § 1041.7, the origination disclosure would be delivered
in the store for loans originated in a storefront and delivered through the website or an e-mail for
loans originated online. In stores, the Bureau estimates that lenders would spend two minutes to
deliver the origination disclosure to the borrower in the store. For non-depositories, the total
annual burden to provide the origination disclosures would be 1,798,095 labor burden hours, the
equivalent of $29,021,257.
b. Upcoming Payment Disclosure, Including Unusual Payment Disclosure
For all covered loan payments, other than for loans made under one of the conditional
exemptions for covered longer-term loans, where lenders obtain and use the ability to initiate
withdrawals from consumers’ accounts for loan payments, the proposed rule would require
payment disclosures, which vary depending on the nature of the payment request. The regular
disclosure informs the borrower of an upcoming payment request that would withdraw a
scheduled payment from the borrower’s account. If a respondent is attempting to withdraw an
unusual payment from the borrower’s account, such as a payment that is being withdrawn on a
day different from what was originally scheduled or a payment for a higher amount than was
originally provided in the payment schedule, the payment notice will provide the borrower with
that information as well. Using information from industry and data provided to the Bureau by
lenders, the Bureau has estimated the total number of loans that would be covered by the
proposed rule. Additionally, the Bureau has used data from several lenders to calculate the
average number of payments for each of the products that would be covered by the proposed
rule. The Bureau believes that all of the payment requests for covered loans, other than loans
made under one of the conditional exemptions for covered longer-term loans, would be subject
to the upcoming payment notice, and 4 percent of the payment requests would be subject to the
unusual payment notice.
The Bureau estimates there would be no labor burden associated with the payments disclosures.
c. Consumer Rights Disclosure
For the third and final disclosure that would be required by the proposed rule, respondents would
be required to provide a consumer rights notice to borrowers after a respondent has made two
consecutive unsuccessful attempts to withdraw payment from a borrower’s deposit account.
This disclosure requirement would apply to all covered loans that meet the other criteria for the
disclosure. Based on industry data and Bureau analysis, the Bureau uses estimates of the number
of loan payments that are made and the share of loan payments that fail twice in a row to
determine the number of payments that would be subject to the consumer rights notice. The
Bureau estimates that about 4 percent of payment requests would cause the need for the
consumer rights notice.
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The Bureau estimates there would be no labor burden associated with the consumer rights
disclosures.
B. Obtaining and Furnishing of Information about Covered Loans
In the proposed rule, respondents would be required to obtain a consumer report from an
information system currently registered pursuant to § 1041.17 to retrieve information about a
loan applicant’s borrowing history. This requirement would apply to all covered loans
originated, except for loans made under the conditional exemptions for certain covered longerterm loans. The Bureau believes depositories would originate loans using only the conditional
exemptions and would not need to obtain a consumer report from a registered information
system. Respondents would also be required to furnish certain information about consumers’
borrowing behavior to each registered information system for all covered loans originated,
except for loans made under the conditional exemptions for certain covered longer-term loans.
For covered longer-term loans made under those conditional exemptions, lenders would be
required to either furnish information to each registered information system or furnish
information concerning the loans to a consumer reporting agency that compiles and maintains
files on consumers on a nationwide basis. While depositories would be required to furnish
information about consumers’ borrowing behavior, the Bureau believes it is a customary and
usual business practice for depositories to furnish information to consumer reporting agencies. 6
The total labor burden is reported separately in Exhibit 1 for the requirement to obtain a
consumer report from a registered information system and the requirement to furnish information
to each registered information system. However, since the two information collections share
related costs, they are discussed together in this section.
i. One-Time Costs
The Bureau estimates a share of the non-depository institutions would upgrade their systems to
retrieve consumer reports regarding loan applicants’ borrowing histories from a registered
information system automatically and to furnish information concerning covered loans
automatically. The Bureau believes that large non-depositories would rely on in-house
proprietary systems, and estimates the one-time programming cost for large institutions to
upgrade their systems to be 500 labor burden hours per entity. The one-time programming
burden would encompass several of the requirements of the proposed rule, and thus only onethird of the 500 labor burden hours are attributed to the obtaining and furnishing of information
about covered loans provisions of the proposed rule. The Bureau believes that all large nondepositories would upgrade their systems to interact with the registered information systems
automatically. The Bureau believes small non-depositories would only experience operations
6

See 5 CFR § 1320.3(b)(2).
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and materials costs to upgrade their systems to interact with the registered information systems
automatically, which are discussed in section 13 below. To determine the annual burden, the
Bureau distributes the one-time burden over three years. For non-depositories, the annualized
one-time burden to upgrade their systems to interact automatically with a registered information
system would be 24,167 burden hours, the equivalent of $1,103,444. Half of the 24,167 burden
hours is attributed to the proposed requirement to obtain a consumer report from a registered
information system, and the remaining half is attributed to the proposed requirement to furnish
information to each registered information system.
As a result of the obtaining and furnishing requirements, non-depository respondents would
incur one-time costs associated with training employees. The Bureau uses the same
methodology introduced in the “Disclosures” section to determine the total number of employees
that would need to be trained at non-depositories as a result of the obtaining and furnishing
requirements. The Bureau estimates that it would take one hour to train an employee on the
proposed rule’s requirements regarding obtaining and furnishing of information about covered
loans. For the 5,105 non-depositories, the Bureau estimates the annualized one-time burden to
train employees on the requirements pertaining to consumers’ borrowing history would be
59,295 labor burden hours, the equivalent of $1,493,680. Half of the 59,295 burden hours is
attributed to the proposed requirement to obtain a consumer report from a registered information
system, and the remaining half is attributed to the proposed requirement to furnish specified
information to each registered information collection.
ii. Ongoing Costs
Lenders would be required to obtain a consumer report containing borrowing history information
for every loan that is originated, except loans made under one of the conditional exemptions for
certain covered longer-term loans. Lenders likely would not obtain these consumer reports
containing borrowing history information for all loan applicants, but rather only the subset that
has passed other basic screening during the lending process. The estimate of the ongoing costs
to obtain consumer reports containing borrowing history information provided here is calculated
based on the number of loans currently originated, which are, by definition, loans that have
passed the other basic screens that lenders currently employ. This may still be an upper bound,
as lenders might not carry out all of the steps required by the proposal if, for example, some
applications were to be rejected based on one of the steps required and therefore the lender
would not complete subsequent steps. The Bureau has relied on industry estimates and data
provided by lenders to estimate the total number of loans originated.
The Bureau estimates 100 percent of large lenders and 80 percent of small lenders, excluding
lenders only making loans under one of the conditional exemptions for certain covered longerterm loans, would implement systems that would automatically request the consumer report
containing borrowing history information from an information system currently registered
pursuant to § 1041.17 during the application process. For the remaining 20 percent of small
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respondents, the Bureau estimates that it would take three minutes to obtain a consumer report
containing borrowing history information. For non-depositories, the annual burden to obtain
consumer reports would be 738,440 labor burden hours, the equivalent of $11,786,803.
Respondents also would be required to furnish information about some covered loans to each
registered information system. Respondents would be required to furnish information about a
loan no later than the date on which the loan is consummated or as close in time as feasible to the
date the loan is consummated. While a loan is outstanding, respondents would be required to
furnish any updates to information previously furnished. And, when a loan ceases to be an
outstanding loan, respondents would be required to furnish the date as of which the loan ceased
to be outstanding, and for certain loans that have been paid in full, the amount paid on the loan.
Again, the Bureau estimates 100 percent of large respondents and 80 percent of small
respondents, excluding lenders only making loans under one of the conditional exemptions for
certain covered longer-term loans, would implement systems that would automatically furnish
this information to each registered information system. For the remaining 20 percent of small
respondents, the Bureau estimates that it would take three minutes or less per originated loan to
meet all furnishing requirements. For non-depositories, the total annual burden to furnish loan
information to each registered information system would be 738,440 labor burden hours, the
equivalent of $11,786,803.
In addition to the one-time costs for staff training, the Bureau estimates that covered persons
would also need to have periodic staff training on the proposed rule’s requirements to verify and
furnish information about covered loans. The Bureau estimates that the 5,105 non-depositories
would experience half an hour of additional training per employee per year as a result of the
requirements regarding borrowing history. For non-depositories, the total ongoing annual
burden on respondents for periodic staff training would be 88,943 labor burden hours, the
equivalent of $2,240,520. Half of the 88,943 burden hours is attributed to the proposed
requirement to obtain a consumer report from a registered information system, and the remaining
half is attributed to the proposed requirement to furnish specified information to each registered
information collection.
C. National Consumer Report
The proposed rule requires respondents to retrieve information from a borrower’s national
consumer report in order to identify any major financial obligations. This requirement applies to
all covered loans, except loans made under one of the conditional exemptions. The Bureau
believes depositories would originate loans using only the conditional exemptions. Therefore,
depositories would not incur any additional burden to collect borrowers’ national consumer
report information.
For any covered loan originated under proposed § 1041.5 or § 1041.9, lenders would be required
to retrieve national consumer report information. Some specialty consumer reporting agencies
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offer consumer reports that include the required national consumer report information, and the
Bureau believes that lenders would satisfy these requirements by obtaining such a report.
i. One-Time Costs
The Bureau estimates a share of respondents would upgrade their systems to retrieve loan
applicants’ national consumer report information from a specialty consumer reporting agency
automatically during the application process. The Bureau believes that large non-depositories
would rely on in-house proprietary systems, and estimates the one-time programming cost for
large institutions to upgrade their systems to be 500 labor burden hours per entity. As mentioned
in the “Obtaining and Furnishing of Information about Covered Loans” section, this
programming burden encompasses several information collections, and thus only one-third of the
500 programming hours is attributed to the national consumer report requirement. The Bureau
believes that all large non-depositories would upgrade their systems to interact with the specialty
credit reporting agency automatically. The Bureau believes small non-depositories would only
experience operations and materials costs to upgrade their systems to interact with the specialty
consumer reporting agencies automatically, which is discussed in section 13 below. To
determine the annual burden, the Bureau distributes the one-time burden over three years. For
non-depositories, the annualized one-time burden to upgrade their systems to interact
automatically would be 24,167 burden hours, the equivalent of $1,103,444.
As a result of the national consumer report requirements, respondents would incur one-time costs
associated with training employees. As described when calculating the training costs for the
disclosure requirements and the requirements concerning borrowing history, the Bureau uses the
number of employees at each location that would need to be trained and the total number of
locations to calculate the total number of labor burden hours non-depositories would spend
training employees on the proposal’s national consumer report requirements. The Bureau
estimates that it would take one hour to train an employee on the national consumer report
requirements. For the 5,105 non-depositories, the Bureau estimates the annualized one-time cost
of training employees on the national consumer report requirements would be 59,295 labor
burden hours, the equivalent of $1,493,680.
ii. Ongoing Costs
The ongoing cost to obtain information from a national consumer report is calculated based on
the current number of loans originated. As described in the “Obtaining and Furnishing of
Information about Covered Loans” section, the Bureau has relied on industry estimates and data
provided by lenders on loan to estimate total originations. Lenders would be required to obtain
the information from the consumer report for every loan that is originated, excluding the loans
originated using one of the conditional exemptions for covered loans. The Bureau uses the total
number of loans originated to calculate the costs respondents would incur to retrieve the
applicant’s consumer report information.
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The Bureau estimates 100 percent of large respondents and 80 percent of small respondents
would implement systems that would automatically request this information from the specialty
consumer reporting agency during the application process. For the remaining 20 percent of
small respondents, the Bureau estimates that it would take two minutes to obtain a consumer
report from a specialty consumer reporting agency that has the national consumer report
information. For non-depositories, to obtain applicants’ national consumer report information
would impose an annual burden of 140,135 labor burden hours, the equivalent of $2,229,769.
In addition to one-time costs for the training of staff, the Bureau estimates that covered persons
would also need to have periodic staff training on the proposed rule’s consumer report
requirements. The Bureau estimates that the 5,105 non-depositories would experience half an
hour of additional training per employee per year on the consumer report requirements. For nondepositories, the total ongoing annual burden for periodic staff training would be 88,943 labor
burden hours, the equivalent of $2,240,520.
D. Underwriting Documents
Sections § 11041.5 and § 11041.9 of the proposed rule includes requirements to collect certain
documents for respondents that originate covered loans other than covered loans made under one
of the conditional exemptions.
i. One-Time Costs
The Bureau estimates a share of respondents would upgrade their systems to retrieve the various
underwriting documents from specialty consumer reporting agencies automatically. The Bureau
believes that large non-depositories would rely on in-house proprietary systems, and estimates
the one-time programming cost for large institutions to upgrade their systems to be 500 labor
burden hours per entity. As mentioned in the “Obtaining and Furnishing of Information about
Covered Loans” and the “National Consumer Report” sections, this programming burden
encompasses several information collections, and thus only one-third of the 500 programming
hours is attributed to the underwriting documents information collection. The Bureau believes
that all large depositories, to the extent that such institutions are making loans under proposed
§ 1041.5 or § 1041.9, would upgrade their systems to interact with the specialty consumer
reporting agency automatically. The Bureau believes small depositories and non-depositories
would only experience operations and materials costs to upgrade their systems to interact with
the specialty consumer reporting agencies automatically, which are discussed in Section 13
below. To determine the annual burden, the Bureau distributes the one-time burden over three
years. For non-depositories, the annualized one-time burden to upgrade their systems to interact
automatically would be 24,167 burden hours, the equivalent of $1,103,444.
Online lenders would experience an additional one-time cost to update their online loan
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application. The new underwriting requirements would require online lenders to obtain new
information from borrowers during the application process. The Bureau estimates this would
require eight hours of programming time per entity. For the 125 online lenders, the Bureau
estimates the one-time burden to update their websites would be 1,000 labor burden hours.
Annualized, the one-time cost for online lenders to update their websites would be 333 hours or
the equivalent of $15,235.
Respondents would incur one-time costs associated with training employees as a result of the
underwriting requirements. As described when calculating the one-time training costs in the
previous three sections, the Bureau uses the number of employees per location that would need
to be trained and the total number of locations to calculate the total number of labor burden hours
depositories and non-depositories would spend training employees on the underwriting
requirements. The Bureau estimates that it would take one labor burden hour to train each
employee on the underwriting requirements. For the 5,105 non-depositories, the Bureau
estimates the annualized one-time cost of training employees on the underwriting requirements
would be 59,295 labor burden hours, the equivalent of $1,493,680.
ii. Ongoing costs
The proposed rule also would require covered persons to obtain documents that detail several of
the applicant’s financial metrics in order to underwrite and originate a loan. These requirements
apply to all covered loans except covered loans originated using one of the conditional
exemptions. The Bureau estimates this requirement would affect 33 million loans per year.
First, respondents would be required to obtain documentation detailing the applicant’s income
through documents such as past pay stubs or through bank statements. The Bureau believes that
it is the customary and usual business practice of most lenders making loans that would be
covered loans under the proposal to obtain this documentation. Many vehicle title lenders,
however, do not currently obtain this documentation. Based on industry estimates and data
provided to the Bureau, the Bureau estimates there are nearly 3 million vehicle title loans per
year. The Bureau estimates that it would take two minutes for a respondent to identify an
applicant’s income. The total annual burden to identify income for non-depositories would be
86,530 labor burden hours, the equivalent of $1,350,734 for non-depositories.
Respondents would also be required to obtain documentation of or otherwise estimate applicant’s
housing expenses. The lender may estimate applicants’ housing expenses in several ways.
For borrowers with monthly mortgage payments, respondents would be able to determine the
amount from the national consumer report. Other borrowers may provide a reliable transaction
record or records of recent housing expense payments or a lease. The Bureau estimates that for
20 percent of loan applications received by storefront lenders, the housing expenses would be
included in the national consumer report or the applicant would provide the documentation.
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When the lender obtains the housing expenses through the national consumer report or
consumer-provided documentation, the Bureau estimates it would require one minute per
application for the lender to document the housing expenses. For non-depositories, the total
annual burden to document housing expenses from applicants would be 65,961 labor burden
hours, the equivalent of $1,053,470.
Alternatively, lenders may determine an amount under a reliable method of estimating a
consumer’s housing expense based on the housing expenses of consumers with households in the
locality of the consumer. The Bureau believes respondents would be able to obtain this
information from a specialty consumer reporting agency at the same time that the respondent
requests the consumer report information. The Bureau believes that 80 percent of the storefront
lenders’ applications and all of the online lenders’ applications would obtain the additional
housing information from a specialty consumer reporting agency. The Bureau estimates 100
percent of large respondents and 80 percent of small respondents would implement systems that
would automatically request this information from a specialty consumer reporting agency during
the application process. For the remaining 20 percent of small respondents, the Bureau estimates
there would be minimal additional burden to request the applicant’s housing expenses from a
specialty consumer reporting agency while requesting the consumer report information; this
burden is covered in the “National Consumer Report” section.
In addition, the proposed rule requires respondents making loans subject to the ability-to-repay
requirements to ask applicants to provide information regarding the applicant’s major financial
obligations. The Bureau estimates this would take three minutes on average per application. For
non-depositories, the total annual burden to assess major financial obligations would be 989,409
labor burden hours, the equivalent of $15,802,045.
Respondents would also experience ongoing costs to train employees. The Bureau estimates that
the 5,105 non-depositories would experience half an hour of additional training per employee per
year as a result of the underwriting requirements. For non-depositories, the total annual ongoing
cost to respondents for periodic staff training would be 88,943 labor burden hours, the equivalent
of $2,240,520 for non-depositories.
E. Obtaining a New and Specific Authorization
After a respondent has made two consecutive unsuccessful attempts to withdraw payment for a
covered loan from a borrower’s account, the proposed rule would prohibit lenders from making
additional payment attempts to withdraw funds from the borrower’s account unless a new and
specific authorization is obtained from the borrower to do so. The Bureau believes that most
respondents would send the request to obtain a new and specific authorization while sending the
consumer rights disclosure as described in the “Disclosures” section.
As discussed in the “Disclosures” section, vehicle title lenders do not typically obtain and use the
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ability to initiate payment withdrawals from consumers’ accounts, and thus, such lenders are
excluded when calculating the burden for obtaining a new and specific authorization to withdraw
payment from a borrower’s deposit account.
i. One-Time Costs
The Bureau estimates that 25 percent of small storefront lenders and all the remaining
respondents would upgrade their websites to allow for borrowers to provide authorization online.
The Bureau estimates that it would take the respondents 40 burden hours to perform these
upgrades. For depositories, the annualized one-time burden to program their systems to obtain
authorization through their websites would be 24,520 burden hours, the equivalent of
$1,175,231. For non-depositories, the annualized one-time to program their systems to obtain
authorization through their websites would be 15,360 labor burden hours, the equivalent of
$702,618.
ii. Ongoing Costs
When borrowers do not provide a new and specific authorization on the lenders website, there
would be labor burden to the lenders to obtain the consumer’s authorization. When consumers
reauthorize by clicking a link, the marginal cost would be zero. When consumers reauthorize by
responding to a lender’s new and specific authorization request with another email, phone call, or
store visit, the cost to lenders to process the reauthorization would be two minutes. The Bureau
estimates that storefront lenders would engage with consumers for 80 percent of the
authorization requests. For lenders operating online, the Bureau estimates that lenders would
engage with consumers for 50 percent of the authorization requests. For depositories, the total
annual burden to obtain would be 42,664 labor burden hours, the equivalent of $715,467. For
non-depositories, total annual burden to obtain authorization through their websites would be
820,622 labor burden hours, the equivalent of $13,042,696.
F. Compliance Program and Record Retention
The proposed rule would impose new compliance program and record retention requirements on
respondents. The proposed rule would require covered persons to maintain written policies and
procedures reasonably designed to ensure compliance with the rule. Covered persons would also
need to retain loan agreements and documentation obtained for a covered loan. Covered persons
would also have to retain electronically calculations used to determine the applicant’s ability to
repay and determine whether the applicant qualifies for an exception to or overcomes an
applicable presumption of unaffordability for a covered. Respondents would be required to keep
electronic records regarding loan type and terms. Respondents would also be required to keep
electronic records of payment history and loan performance for all covered loans. Respondents
would be required to keep these records for three years after the loan ceases to be an outstanding
loan. The Bureau believes it is customary and usual for lenders to maintain loan agreements and
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information collected from the consumer during the application process. Given lenders existing
business practices and the requirements to electronically furnish information to a registered
information system, the Bureau believes that maintaining any additional information required by
the proposed rule would not impose additional costs on respondents that have not already been
calculated.
G. Registered Information System
Section § 1041.17 identifies criteria that an entity must meet to become a registered information
system. When applying to be a registered information system, the entity must provide the
Bureau with information and documentation sufficient for the Bureau to determine that the
criteria are met. Additionally, once registered, the information system would be required to
provide a biennial independent assessment of its information security program.
In Exhibit 1, the labor burden is reported separately for the application process to be a registered
information system and the biennial assessment. However, since the two information collections
are related, they are discussed together in this section.
i. One-Time Costs
The Bureau estimates that it would take approximately 40 hours to collect and document the
required information to apply to be a registered information system. As this designation does not
currently exist and thus, no entities are currently considered to be a registered information
system, the Bureau estimates the burden for one representative respondent. The total annualized
cost to apply to become a registered information system would be 13 burden hours, the
equivalent of $748.
ii. Ongoing costs
The Bureau estimates the ongoing burden to the registered information system to prepare and
report the biennial assessment of their information security program to be 8 hours. Annualized,
the burden for the representative one registered information system would be 4 labor burden
hours, the equivalent of $235.
13. Estimated Total Annual Cost Burden to Respondents or Recordkeepers
Given the framework described in Section 12, “Estimated Burden for Information Collection,”
the Bureau estimates the cost burden to respondents as a result of each of the information
collections.
Using the Bureau’s cost burden estimation methodology, the total estimated cost burden annually
for the approximately 10,400 institutions subject to the proposal, including Bureau respondents,
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would be approximately $140,451,505. For the Bureau institutions subject to this proposal, the
total estimated cost burden annually would be approximately $69,516,848.
Exhibit 2: Cost Burden Summary
Description of Costs (O&M)
Information Collection Requirement
Disclosures
[§§ 1041.7(e) & 1041.15]
Obtaining consumer report from a registered
information system
[§§ 1041.5, 1041.6, 1041.7, 1041.9, 1041.10]
Information furnishing requirements
[§ 1041.16]
National Consumer Report
[§§ 1041.5 and 1041.9]
Underwriting Documents
[§§ 1041.5 and 1041.9]
Prohibited payment transfer attempts –
requirements and conditions for obtaining
consumer’s authorization
[§ 1041.14]
Compliance Program and Record Retention
[§ 1041.18]
Registered Information system – initial
assessment
[§ 1041.17]
Registered Information system – biennial
assessment
[§ 1041.17]
Totals:

Per Unit Costs

Quantity

Costs

$0.05

509,854,703

$27,829,034

$0.51

118,918,138

$60,291,108

$0.00

120,225,002

$0

$1.47

33,175,281

$48,731,140

$0.09

33,175,281

$3,124,960

$0.03

14,514,734

$475,264

$0.00

120,225,002

$0

$0.00

1

$0

$0.00

1

$0

950,148,141

$140,451,505

A. Disclosures
i. One-Time Costs
The Bureau believes small depositories and non-depositories rely on licensed commercial
disclosure system software. Depending on the nature of the software licensing agreement, the
Bureau estimates that the cost to upgrade this software would be $10,000 for lenders licensing
the software at the entity-level and $100 per seat for lenders licensing the software using a seatlicense contract. For respondents using seat licenses software, the Bureau estimates that each
location for small depositories and non-depositories has on average three seats licensed. Given
the price differential between the entity-level licenses and the seat-license contracts, the Bureau
believes that only small lenders with a significant number of stores would rely on the entity-level
licenses. The Bureau estimates that 5 percent of the small respondents would rely on entity-level
licenses and the remaining 95 percent would rely on seat-license contracts.
In addition to the modifications to the disclosure systems, the Bureau estimates that small nondepository storefront lenders would pay $200 to a vendor for a standard electronic origination
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disclosure form template.
To determine the annual cost burden, the Bureau distributes the one-time cost over three years.
For depositories, the annualized one-time burden to modify existing systems would be
$2,156,551 in material costs. For non-depositories, the annualized one-time burden to modify
existing systems would be $1,863,842 in material costs for non-depositories.
ii. Ongoing Costs
For disclosures delivered through the mail, the Bureau estimates that vendors would charge two
different rates, one for high volume mailings and another for low volume mailings. The Bureau
applies the high volume cost to large respondents and the low volume cost to small respondents.
For the high volume mailings, the Bureau estimates vendors would charge $0.53 per disclosure.
For the low volume mailings, the Bureau estimates vendors would charge $1.00 per disclosure.
For disclosures delivered through e-mail, the Bureau estimates vendors would charge $0.01 to
create and deliver each e-mail such that it complies with the requirements of the proposed rule.
For disclosures delivered through text message, the Bureau estimates vendors would charge
$0.08 to create and deliver each text message such that it complies with the requirements of the
proposed rule.
Using these standard estimates, the Bureau estimates the ongoing costs to create and deliver each
of three disclosures. As previously mentioned, not all disclosures would apply to all loans or
loan payments.
a. Origination Disclosure
The origination disclosure would only be required for loans made under § 1041.7. Using total
origination volume for payday loans, the Bureau estimates that there are approximately 67
million short-term covered loans that are originated in a storefront location and 40 million shortterm covered loans originated online. For non-depositories, the Bureau estimates that 80 percent
of short-term loans per year would be originated using the conditional exemption for covered
short-term loans. The remaining 20 percent of loans would be made under the ability-to-repay
requirements. The Bureau believes that depositories would only originate loans using the
conditional exemptions for certain longer-term loans, not short term loans under proposed
§ 1041.7.
For loans originated using the conditional exemption for short-term loans, the origination
disclosure would be delivered in the store for loans originated in a storefront and delivered
through the website or an e-mail for loans originated online. In stores, the Bureau estimates the
cost of printing the origination disclosure to deliver the disclosure to the borrower in the store
would be $0.10 per loan. For similar loans originated online, the Bureau estimates the lender
would pay the vendor $0.01 to produce and deliver each disclosure. For non-depositories, the
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total annual burden to provide the origination disclosures would be $5,712,286 in materials cost.
b. Upcoming Payment Disclosure, Including Unusual Payment Disclosure
The Bureau believes that all of the payment requests for covered loans, other than loans made
under one of the conditional exemptions for covered longer-term loans, would be subject to the
upcoming payment notice, and 4 percent of the payment requests would be subject to the unusual
payment notice.
For both short-term and longer-term loans originated in a storefront, the Bureau estimates that 10
percent of the payment notices would be delivered by mail, 80 percent of the payment notices
will be delivered by e-mail, and 10 percent of the payment notices would be delivered by text
message. For loans originated online, the Bureau estimates that 80 percent of the payment
notices would be delivered by e-mail, and 20 percent of the payment notices would be delivered
by text message.
For each payment notice, the lender would pay the vendor $0.53 or $1.00, depending on volume,
for disclosures delivered by mail, $0.01 for disclosures delivered by e-mail, and $0.08 for
disclosures delivered by text message. The total annual burden that non-depositories would
incur for the payment notices would be $17,448,737 in materials cost.
c. Consumer Rights Disclosure
The Bureau estimates that about 4 percent of payment requests would cause the need for the
consumer rights notice. For loans originated at a storefront location, the Bureau estimates 10
percent of notices would be delivered by mail, 80 percent of notices would be delivered by email, and 10 percent of notices would be delivered by text message. For loans originated online,
the Bureau estimates that 20 percent of notices would be delivered by e-mail, and 80 percent of
notices would be delivered by text message. The total annual burden imposed on depositories to
provide the consumer rights disclosure would be $215,127 in materials cost. The total annual
burden imposed on non-depositories to provide the consumer rights disclosure would be
$595,624 in materials cost.
B. Obtaining and Furnishing Information about Covered Loans
i. One-time Costs
The Bureau estimates that 80 percent of small depositories, excluding those only making loans
under the conditional exemptions for certain covered longer-term loans, would upgrade their
systems to obtain consumer reports reflecting loan applicants’ borrowing histories from a
registered information system automatically and to furnish certain information about covered
loans to each registered information system automatically. This burden has been calculated in
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Section 12 for large depositories. The Bureau believes small non-depositories would rely on
licensed software. Depending on the nature of the software licensing agreement, the Bureau
estimates that the cost to upgrade this software would be $10,000 for lenders licensing the
software at the entity-level and $100 per seat for lenders licensing the software using a seatlicense contract. For respondents using seat-licensed software, the Bureau estimates that each
location for small non-depositories has on average three seats licensed. Given the price
differential between the entity-level licenses and the seat-license contracts, the Bureau believes
that only small lenders with a significant number of stores would rely on the entity-level licenses.
The Bureau estimates that 5 percent of the small respondents would rely on entity-level licenses
and the remaining 95 percent would rely on seat-license contracts. Only one-third of the total
estimated cost to implement these systems are attributed to the obtaining and furnishing of
information about covered loans provisions of the proposed rule, as the Bureau believes these
system upgrades would address the provision regarding national consumer reports and
underwriting documents, as well. To determine the annual cost burden, the Bureau distributes
the one-time cost over three years. The annualized one-time burden to upgrade systems would
be $1,664,077 in material costs for non-depositories. Half of the $1,664,077 is attributed to the
proposed requirement to obtain a consumer report from a registered information system, and the
remaining half is attributed to the proposed requirement to furnish information to each registered
information system.
ii. Ongoing Costs
Based on estimates from furnishers, obtaining a consumer report documenting the applicant’s
borrowing history would cost $0.50 per application. For the 119 million loans non-depositories
make that would require lenders to retrieve consumers’ borrowing history, the annual burden to
obtain applicants’ borrowing history would be $59,459,069 for the material cost of the reports.
The Bureau does not anticipate that there would be any material cost to furnish information to
each registered information system.
C. National Consumer Report
i. One-time Costs
This burden has been calculated in Section 12 for large depositories. The Bureau estimates that
80 percent of small depositories would upgrade their systems to retrieve loan applicants’ national
consumer report automatically. Following the methodology described in the “Obtaining and
Furnishing of Information about Covered Loans” section, the Bureau estimates the annualized
one-time burden for respondents to upgrade their systems to automatically retrieve loan
applicants’ national consumer report would be $1,664,077 in material costs for non-depositories.
ii. Ongoing Costs
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The Bureau estimates that it would cost $0.50 per application for large lenders and $1.95 per
application for small lenders to obtain a national consumer report from a specialty consumer
reporting agency that has the consumer report information. For the 33 million loans nondepositories make that would be originated using the ability to repay requirements, to obtain the
national consumer report information would impose an annual burden of $47,067,062 in
materials cost.
D. Underwriting Documents
i. One-time
This burden has been calculated in Section 12 for large depositories. The Bureau estimates that
80 percent of small depositories would upgrade their systems to retrieve the various underwriting
documents from specialty consumer reporting agencies automatically. Following the
methodology described in the “Obtaining and Furnishing Information about Covered Loans”
section, the Bureau estimates the annualized one-time burden for respondents to upgrade their
systems to automatically retrieve underwriting documents from specialty consumer reporting
agencies for loan applicants would be $1,664,077 in material costs for non-depositories.
ii. Ongoing Costs
To request the estimated housing expense information from the specialty consumer reporting
agency would be $0.05 per application in addition to the cost of the consumer report information.
For non-depositories, the total annual burden to assess applicants’ housing expenses would be
$1,460,882 in materials cost.
E. Obtaining a New and Specific Authorization
Based on industry data and Bureau analysis, the Bureau uses estimates of the number of loan
payments that are made and the share of loan payments that fail twice in a row to determine the
number of times a respondent would need to obtain a new and specific authorization to withdraw
payment from a borrower’s deposit account. The Bureau estimates that about 4 percent of
payment requests would result in the need for a respondent to obtain a new and specific
authorization. For loans originated at a storefront location, the Bureau estimates 10 percent of
requests to obtain authorization would be delivered by mail and 90 percent of requests would be
delivered by e-mail. For loans originated online, the Bureau estimates that 100 percent of
requests would be delivered by e-mail. For each request delivered by mail, the Bureau estimates
it would cost the lenders $0.10 to include an additional page requesting the borrower to provide a
new and specific authorization while mailing the consumer rights notice. For the requests
delivered by e-mail, the Bureau believes lenders would send a separate e-mail from the consumer
rights notice requesting a new and specific authorization. For each e-mail, it would cost the
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lender $0.01. The total annual burden imposed on depositories to request a new and specific
authorization would be $43,730 in materials cost. The total annual burden imposed on nondepositories to request a new and specific authorization would be $431,534 in materials cost.
F. Compliance Program and Record Retention
The Bureau estimates there would be no new cost burden associated with the compliance
program and record retention requirements of the proposed rule.
G. Registered Information System
The Bureau estimates there would be no new cost burden associated with the registered
information system requirements of the proposed rule.

14. Estimated Cost to the Federal Government
There are no additional costs to the Federal Government.
15. Program Changes or Adjustments
Since this is a new information collection request associated with a new rulemaking, all the
burden is considered contained this request is considered to be a program change.
16. Plans for Tabulation, Statistical Analysis, and Publication
There are no plans to provide any publications based on the information collection of this
regulation.
17. Display of Expiration Date
The OMB control number and expiration date associated with this PRA submission will be
displayed on the Federal government’s electronic PRA docket at www.reginfo.gov, as well as in
the Code of Federal Regulations. There are no required forms or other documents upon which
display of the control number and expiration date would be appropriate.
18. Exceptions to the Certification Requirement
The Bureau certifies that this collection of information is consistent with the requirements of 5
CFR § 1320.9, and the related provisions of 5 CFR § 1320.8(b)(3) and is not seeking an
exemption to these certification requirements.
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PART B: COLLECTIONS OF INFORMATION USING STATISTICAL METHODS
Not applicable. The information collections contained in this proposed rule do not involve the
use of statistical methods.
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