Notice2022-03958
Agency Information Collection Activities; Proposed Collection; Comment Request; Extension
Primary source
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Published
February 25, 2022
Issuing agencies
Federal Trade Commission
Abstract
In accordance with the Paperwork Reduction Act of 1995 (PRA), the Federal Trade Commission (FTC or Commission) is seeking public comment on its proposal to extend for an additional three years the Office of Management and Budget (OMB) clearance for information collection requirements contained in the rules and regulations under the Health Breach Notification Rule (or Rule). That clearance expires on June 30, 2022.
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<title>Federal Register, Volume 87 Issue 38 (Friday, February 25, 2022)</title>
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[Federal Register Volume 87, Number 38 (Friday, February 25, 2022)]
[Notices]
[Pages 10792-10795]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-03958]
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FEDERAL TRADE COMMISSION
Agency Information Collection Activities; Proposed Collection;
Comment Request; Extension
AGENCY: Federal Trade Commission.
ACTION: Notice.
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SUMMARY: In accordance with the Paperwork Reduction Act of 1995 (PRA),
the Federal Trade Commission (FTC or Commission) is seeking public
comment on its proposal to extend for an additional three years the
Office of Management and Budget (OMB) clearance for information
collection requirements contained in the rules and regulations under
the Health Breach Notification Rule (or Rule). That clearance expires
on June 30, 2022.
DATES: Comments must be received on or before April 26, 2022.
ADDRESSES: Interested parties may file a comment online or on paper by
following the instructions in the Request for Comments part of the
SUPPLEMENTARY INFORMATION section below. Write ``Health Breach
Notification Rule; PRA Comment: FTC File No. P072108'' on your comment,
and file your comment online at <a href="https://www.regulations.gov">https://www.regulations.gov</a> by
following the instructions on the web-based form. If you prefer to file
your comment on paper, mail your comment to the following address:
Federal Trade Commission, Office of the Secretary, 600 Pennsylvania
Avenue NW, Suite CC-5610 (Annex J), Washington, DC 20580, or deliver
your comment to the following address: Federal Trade Commission, Office
of the Secretary, Constitution Center, 400 7th Street SW, 5th Floor,
Suite 5610 (Annex J), Washington, DC 20024.
FOR FURTHER INFORMATION CONTACT: Ryan Mehm, Attorney, Bureau of
Consumer Protection, (202) 326-2918, Federal Trade Commission, 600
Pennsylvania Ave. NW, Washington, DC 20580.
SUPPLEMENTARY INFORMATION:
Title: Health Breach Notification Rule.
OMB Control Number: 3084-0150.
Type of Review: Extension of a currently approved collection.
Abstract: The Health Breach Notification Rule (Rule), 16 CFR part
318, requires vendors of personal health records (PHR) and PHR related
entities to provide notice to: (1) Consumers whose unsecured personally
identifiable health information has been reached; (2) the Commission;
and (3) in some cases, the media. The Rule only applies to electronic
health records and does not include recordkeeping requirements. The
Rule requires third party service providers (e.g., those companies that
provide services such as billing or data storage) to vendors of
personal health records and PHR related entities to provide
notification to such vendors and PHR related entities following the
discovery of a breach. To notify the FTC of a breach, the Commission
developed a simple, two-page form, which is posted at <a href="https://www.ftc.gov/system/files/documents/rules/health-breach-notification-rule/health_breach_form.pdf">https://www.ftc.gov/system/files/documents/rules/health-breach-notification-rule/health_breach_form.pdf</a>
Likely Respondents: Vendors of personal health records, PHR related
entities and third party service providers.
[[Page 10793]]
Estimated Annual Hours Burden: 4,654.
Estimated Frequency: 2,500 single-person breaches per year and 0.33
major breaches per year.
Total Annual Labor Cost: $90,741.
Total Annual Capital or Other Non-Labor Cost: $31,056.
As required by section 3506(c)(2)(A) of the PRA, 44 U.S.C.
3506(c)(2)(A), the FTC is providing this opportunity for public comment
before requesting that OMB extend the existing clearance for the
information collection requirements contained in the Commission's
Health Breach Notification Rule.
Burden Estimates
Brief Description of the Need for and Proposed Use of the Information
The Health Breach Notification Rule (Rule), 16 CFR part 318 (OMB
Control Number 3084-0150), requires vendors of personal health records
and PHR related entities to provide notice to: (1) Consumers whose
unsecured personally identifiable health information has been breached;
(2) the Commission; and (3) in some cases, the media.\1\ Under the
Rule, consumers whose unsecured, individually identifiable health
information has been breached must receive notice ``without
unreasonable delay and in no case later than 60 calendar days'' after
discovery of the breach. Among other information, the notices must
provide consumers with steps they can take to protect themselves from
potential harm resulting from the breach. To notify the FTC of a
breach, the Commission developed a simple, two-page form, which is
posted at <a href="https://www.ftc.gov/system/files/documents/rules/health-breach-notification-rule/health_breach_form.pdf">https://www.ftc.gov/system/files/documents/rules/health-breach-notification-rule/health_breach_form.pdf</a>. For breaches involving
the health information of 500 or more individuals, entities must notify
the Commission as soon as possible, and in any event no later than ten
business days after discovering the breach. Entities may report all
breaches involving the information of fewer than 500 individuals in an
annual submission covering the prior calendar year. The Commission uses
entities' notifications to compile a list of breaches affecting 500 or
more individuals that is publicly available on the FTC's website. The
list provides businesses with information about potential sources of
data breaches, which is helpful to those developing data security
procedures. It also provides the public with information about the
extent of data breaches.
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\1\ On September 15, 2021, the Commission, in light of changes
in the marketplace, issued a Policy Statement that clarified that
the Rule applies to most health apps and similar technologies that
are not covered by the Health Insurance Portability and
Accountability Act (``HIPAA''). Statement of the Commission on
Breaches by Health Apps and Other Connected Devices, Fed. Trade
Comm'n (Sept. 15, 2021), available at: <a href="https://www.ftc.gov/system/files/documents/public_statements/1596364/statement_of_the_commission_on_breaches_by_health_apps_and_other_connected_devices.pdf">https://www.ftc.gov/system/files/documents/public_statements/1596364/statement_of_the_commission_on_breaches_by_health_apps_and_other_connected_devices.pdf</a> (``Policy Statement'').
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The Rule also requires third party service providers (e.g., those
companies that provide services such as billing or data storage) to
vendors of personal health records and PHR related entities to provide
notification to such vendors and PHR related entities following the
discovery of a breach.
The Rule only applies to electronic health records and does not
include recordkeeping requirements.
As required by section 3506(c)(2)(A) of the PRA, 44 U.S.C.
3506(c)(2)(A), the FTC is providing this opportunity for public comment
before requesting that OMB extend the existing clearance for the
information collection requirements contained in the Rule.
Burden Estimates
The PRA burden of the Rule's requirements depends on a variety of
factors, including the number of covered firms; the percentage of such
firms that will experience a breach requiring further investigation
and, if necessary, the sending of breach notices; and the number of
consumers notified. The annual hours and cost estimates below likely
overstate the burden because, among other things, they assume, though
it is not necessarily so, that all covered firms experiencing breaches
subject to the Rule's notification requirements will be required to
take all of the steps described below.
The analysis may also overstate the burden of the Rule's
requirements because it assumes that covered firms would not take any
of the steps described were it not for the requirements of the Rule.
For example, the analysis incorporates labor costs associated with
understanding what information has been breached. It seems likely that
some firms would incur such costs even in the absence of the Rule's
requirements because the firms are independently interested in
identifying, understanding, and remediating security risks. A company
that investigates, for its own purposes, what information has been
breached is unlikely to fully duplicate the costs of that investigation
in complying with the Rule. Therefore, it may not be correct in all
cases that complying with the Rule results in added labor costs for
this activity. Nevertheless, in order to allow for a complete
understanding of all the potential costs associated with compliance,
these costs are included in this analysis.
At the time the Rule was issued in 2009, insufficient data was
available about the incidence of breaches in the PHR industry.
Accordingly, staff based its burden estimate on data pertaining to
private sector breaches across multiple industries. Staff estimated
that there would be 11 breaches per year requiring notification of
232,000 consumers. In 2016, based on available data from the years 2010
through 2014, staff arrived at new estimates, projecting an average of
two breaches per year affecting a total of 40,000 individual consumers.
The Rule has now been in effect for over ten years, and new data
regarding the number and scale of reported breaches from 2017 through
2021 allow staff to update its burden estimates. A review of the breach
reports received by the FTC from 2010 through 2021 reveals that there
are two primary categories of breaches reported: (1) ``single-person
breaches,'' incidents in which a single individual's information is
potentially compromised; and (2) what are hereafter described as
``major breaches,'' in which multiple--and typically, many--individuals
are affected. These two categories of breaches are addressed separately
in this analysis because the frequency and costs of the categories
differ significantly.
Nearly all of the submissions received between 2010 and 2021--over
99% of them--reported single-person breaches related to an individual's
loss of control over his or her login credentials. The rate of such
breaches has fluctuated significantly since the Rule went into effect.
Whereas from 2011 to 2014 the average annual number of single-person
breaches was 7,502, from 2014 to 2017 the average was almost 15,000.
From 2018 to 2021, the rate dropped significantly to 2,500. Assuming
that this rate continues, staff estimates that between 2022 and 2025
the agency will receive, on average, about 2,500 single-person breach
reports per year.
By contrast, major breach reports are quite infrequent. On average,
the FTC receives one major breach report approximately every two and a
half years, with an average of approximately 200,000 persons affected.
Given the low frequency at which major breaches occur, FTC staff are
unable to identify any meaningful trends in the frequency of major
breach reports. FTC staff has not identified any existing research
allowing us to make specific projections about future variation in the
frequency of major breaches. Consequently, FTC staff has assumed that
the average frequency and scale of major breaches
[[Page 10794]]
will remain more or less static. Staff's calculations are based on the
estimate that a major breach will occur approximately every two and a
half years and that 200,000 people will be affected by each major
breach, for an annual average of 80,000 individuals affected per year.
Estimated Annual Burden Hours: 4,654.
As explained in more detail within the next section, FTC staff
projects that the employee time required for each single-person breach
is quite minimal because the processes for notifying consumers are
largely automated and single-person breaches can be reported to the FTC
in an aggregate annual notification using the FTC's two-page form. On
average, staff estimates that covered firms will require approximately
20 seconds of employee labor per single-person breach. With an
estimated 2,500 single-person breaches per year, the total estimated
burden hours for single-person breaches is approximately 14 hours.
For each major breach, covered firms will require on average 100
hours of employee labor to determine what information has been
breached, identify affected customers, prepare the breach notice, and
submit the required report to the Commission. Based on staff's estimate
that one major breach occurs every two and a half years, the average
annual burden of major breaches amounts to 40 hours per year.
Additionally, covered firms will incur labor costs associated with
processing calls they may receive in the event of a major breach. The
Rule requires that covered firms that fail to contact 10 or more
consumers because of insufficient or out-of-date contact information
must provide substitute notice through either a clear and conspicuous
posting on their website or media notice. Such substitute notice must
include a toll-free number for the purpose of allowing a consumer to
learn whether or not his/her information was affected by the breach.
Individuals contacted directly will have already received this
information. Staff estimates that no more than 10 percent of affected
consumers will utilize the offered toll-free number. Thus, of the
200,000 consumers affected by a major breach, staff estimates that
20,000 may call the companies over the 90 days they are required to
provide such access. Staff additionally projects that 10,000 additional
consumers who are not affected by the breach will also call the
companies during this period. Staff estimates that processing all
30,000 calls will require an average of 11,500 hours of employee labor
resulting in an average annual burden of 4,600 labor hours. Given the
low frequency of major breaches, the annual average requirement for
major breaches is 4,640 hours.
The combined annual hours burden for both single-person and major
breaches therefore is 4,654 (4,640 + 14).
Estimated Annual Labor Costs: $90,741.
For each single-person breach, FTC staff estimates that the average
20 seconds of employee labor to provide (likely automated) notification
to affected individuals and produce an annual breach notification for
submission to the FTC will cost approximately $0.27 per breach. With an
estimated 2,500 single-person breaches per year, the annual labor costs
associated with all single-person breaches come to $675.
For major breaches, FTC staff projects that the average 100 hours
of employee labor costs (excluding outside forensic services, discussed
below as estimated non-labor costs) to determine what information has
been breached, identify the affected customers, prepare the breach
notice, and report to the Commission will cost an average of $66.66 per
hour for a total of $6,666.\2\ Based on an estimated one breach every
two and a half years, the annual employee labor cost burden for
affected entities to perform these tasks is $2,666.
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\2\ Hourly wages throughout this document are based on mean
hourly wages found at <a href="http://www.bls.gov/news.release/ocwage.htm">http://www.bls.gov/news.release/ocwage.htm</a>
(``Occupational Employment and Wages--May 2020,'' U.S. Department of
Labor, released March 2021, Table 1 (``National employment and wage
data from the Occupational Employment Statistics survey by
occupation, May 2020'').
The breakdown of labor hours and costs is as follows: 50 hours
of computer and information systems managerial time at approximately
$78 per hour; 12 hours of marketing manager time at $74 per hour; 33
hours of computer programmer time at $46 per hour; and 5 hours of
legal staff time at $72 per hour.
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Additionally, staff expects covered firms will require, for each
major breach, 11,500 hours of labor associated with answering consumer
telephone calls at a cost of $218,500.\3\ Since a major breach occurs
approximately every two and a half years, the average annual burden of
4,600 labor hours results in annualized labor cost of approximately
$87,400.
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\3\ The cost of telephone operators is estimated at $19/hour.
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Accordingly, estimated cumulative annual labor costs, excluding
outside forensic services, for both single-person and major breaches,
is $90,741 ($87,400 + $2,666 + $675).
Estimated Annual Capital and Other Non-Labor Costs: $31,056.
Commission staff estimates that capital and other non-labor costs
associated with single-person breaches will be negligible. Companies
generally use automated notification systems to notify consumers of
single-person breaches. Automated notifications are typically delivered
by email or other electronic methods. The costs of providing such
electronic notifications are minimal.
Commission staff anticipates that capital and other non-labor costs
associated with major breaches will consist of the following:
1. Services of a forensic expert in investigating the breach;
2. notification of consumers via email, mail, web posting, or
media; and
3. the cost of setting up a toll-free number, if needed.
Staff estimates that, for each major breach, covered firms will
require 240 hours of a forensic expert's time, at a cumulative cost of
$37,440 for each breach. This estimate is based on a projection that an
average major breach will affect approximately 20 machines and that a
forensic analyst will require about 12 hours per machine to conduct his
or her analysis. The projected cost of retaining the forensic analyst
consists of the hourly wages of an information security analyst ($52),
tripled to reflect profits and overhead for an outside consultant
($156), and multiplied by 240 hours. Based on the estimate that there
will be one major breach every two and a half years, the annual cost
associated with the services of an outside forensic expert is $14,976.
As explained above, staff estimates that an average of 200,000
consumers will be entitled to notification of each major breach. Given
the online relationship between consumers and vendors of personal
health records and PHR related entities, most notifications will be
made by email and the cost of such notifications will be minimal.
In some cases, however, vendors of personal health records and PHR
related entities will need to notify individuals by postal mail, either
because these individuals have asked for such notification, or because
the email addresses of these individuals are not current or not
working. Staff estimates that the cost of a mailed notice is $0.11 for
the paper and envelope, and $0.58 for a first class stamp. Assuming
that vendors of personal health records and PHR related entities will
need to notify by postal mail 10 percent of the 200,000 customers whose
information is breached, the estimated cost of this notification will
be $13,800 per breach. The annual cost will be around $5,520.
In addition, vendors of personal health records and PHR related
entities may need to notify consumers by
[[Page 10795]]
posting a message on their home page, or by providing media notice.
Staff estimates the cost of providing notice via website posting to be
$0.08 per breached record, and the cost of providing notice via
published media to be $0.04 per breached record. Applied to the above-
stated estimate of 200,000 affected consumers, the estimated total cost
of website notice will be $16,000, and the estimated total cost of
media notice will be $8,000, yielding an estimated total per-breach
cost for both forms of notice to consumers of $24,000. Annualized, this
number is approximately $9,600 per year.
Finally, staff estimates that the cost of providing a toll-free
number will depend on the costs associated with T1 lines sufficient to
handle the projected call volume and the cost of obtaining a toll-free
telephone number. Based on industry research, staff projects that
affected entities may need two T1 lines at a cost of $1,800 for the 90-
day period. In addition, staff estimates the cost of obtaining a
dedicated toll-free line to be $100 per month. Accordingly, staff
projects that the cost of obtaining two toll-free lines for 90 days
will be $2,400. The total annualized cost for providing a toll-free
number will be $960.
In sum, the total annual estimate for non-labor costs associated
with major breaches is $31,056: $14,976 (services of a forensic expert)
+ $5,520 (cost of mail notifications) + $9,600 (cost of website and
media notice) + $960 (cost of providing a toll-free number). Negligible
non-labor costs are associated with single-person breaches.
The total estimated PRA annual cost burden is $90,741 for labor
costs and $31,056 for non-labor costs, totaling approximately $121,797.
Request for Comments
Pursuant to Section 3506(c)(2)(A) of the PRA, the FTC invites
comments on: (1) Whether the proposed collection of information is
necessary for the proper performance of the functions of the agency,
including whether the information will have practical utility; (2) the
accuracy of the agency's estimate of the burden of the proposed
collection of information, including the validity of the methodology
and assumptions used; (3) ways to enhance the quality, utility, and
clarity of the information to be collected; and (4) ways to minimize
the burden of maintaining records and providing disclosures to
consumers. All comments must be received on or before April 26, 2022.
You can file a comment online or on paper. For the FTC to consider
your comment, we must receive it on or before April 26, 2022. Write
``Health Breach Notification Rule; PRA Comment: FTC File No. P072108''
on your comment. Your comment--including your name and your state--will
be placed on the public record of this proceeding, including the
<a href="https://www.regulations.gov">https://www.regulations.gov</a> website.
Due to the public health emergency in response to the COVID-19
outbreak and the agency's heightened security screening, postal mail
addressed to the Commission will be subject to delay. We encourage you
to submit your comments online through the <a href="https://www.regulations.gov">https://www.regulations.gov</a>
website.
If you prefer to file your comment on paper, write ``Health Breach
Notification Rule; PRA Comment: FTC File No. P072108'' on your comment
and on the envelope, and mail your comment to the following address:
Federal Trade Commission, Office of the Secretary, 600 Pennsylvania
Avenue NW, Suite CC-5610 (Annex J), Washington, DC 20580; or deliver
your comment to the following address: Federal Trade Commission, Office
of the Secretary, Constitution Center, 400 7th Street SW, 5th Floor,
Suite 5610 (Annex J), Washington, DC 20024. If possible, submit your
paper comment to the Commission by courier or overnight service.
Because your comment will become publicly available at <a href="https://www.regulations.gov">https://www.regulations.gov</a>, you are solely responsible for making sure that
your comment does not include any sensitive or confidential
information. In particular, your comment should not include any
sensitive personal information, such as your or anyone else's Social
Security number; date of birth; driver's license number or other state
identification number, or foreign country equivalent; passport number;
financial account number; or credit or debit card number. You are also
solely responsible for making sure that your comment does not include
any sensitive health information, such as medical records or other
individually identifiable health information. In addition, your comment
should not include any ``trade secret or any commercial or financial
information which . . . . is privileged or confidential''--as provided
by Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule
4.10(a)(2), 16 CFR 4.10(a)(2)--including in particular competitively
sensitive information such as costs, sales statistics, inventories,
formulas, patterns, devices, manufacturing processes, or customer
names.
Comments containing material for which confidential treatment is
requested must be filed in paper form, must be clearly labeled
``Confidential,'' and must comply with FTC Rule 4.9(c). In particular,
the written request for confidential treatment that accompanies the
comment must include the factual and legal basis for the request, and
must identify the specific portions of the comment to be withheld from
the public record. See FTC Rule 4.9(c). Your comment will be kept
confidential only if the General Counsel grants your request in
accordance with the law and the public interest. Once your comment has
been posted publicly at <a href="http://www.regulations.gov">www.regulations.gov</a>, we cannot redact or remove
your comment unless you submit a confidentiality request that meets the
requirements for such treatment under FTC Rule 4.9(c), and the General
Counsel grants that request.
The FTC Act and other laws that the Commission administers permit
the collection of public comments to consider and use in this
proceeding, as appropriate. The Commission will consider all timely and
responsive public comments that it receives on or before April 26,
2022. For information on the Commission's privacy policy, including
routine uses permitted by the Privacy Act, see <a href="https://www.ftc.gov/site-information/privacy-policy">https://www.ftc.gov/site-information/privacy-policy</a>.
Josephine Liu,
Assistant General Counsel for Legal Counsel.
[FR Doc. 2022-03958 Filed 2-24-22; 8:45 am]
BILLING CODE 6750-01-P
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