Proposed Rule2022-19382
Technological Modernization
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
September 8, 2022
Issuing agencies
Federal Election Commission
Abstract
The Federal Election Commission is seeking additional public comment on previously proposed rules that would modernize the agency's regulations in light of technological advances in communications, recordkeeping, and financial transactions, and that would eliminate and update references to outdated technologies and address similar technological issues.
Full Text
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<title>Federal Register, Volume 87 Issue 173 (Thursday, September 8, 2022)</title>
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[Federal Register Volume 87, Number 173 (Thursday, September 8, 2022)]
[Proposed Rules]
[Pages 54915-54917]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-19382]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 87, No. 173 / Thursday, September 8, 2022 /
Proposed Rules
[[Page 54915]]
FEDERAL ELECTION COMMISSION
11 CFR Parts 1, 4, 5, 6, 100, 102, 103, 104, 105, 106, 108, 109,
110, 111, 112, 114, 116, 200, 201, 300, 9003, 9004, 9007, 9032,
9033, 9034, 9035, 9036, 9038, and 9039
[NOTICE 2022-18]
Technological Modernization
AGENCY: Federal Election Commission.
ACTION: Request for additional comment.
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SUMMARY: The Federal Election Commission is seeking additional public
comment on previously proposed rules that would modernize the agency's
regulations in light of technological advances in communications,
recordkeeping, and financial transactions, and that would eliminate and
update references to outdated technologies and address similar
technological issues.
DATES: Comments must be submitted on or before October 11, 2022.
ADDRESSES: All comments must be in writing. Commenters may submit
comments electronically via the Commission's website at <a href="http://sers.fec.gov/fosers/">http://sers.fec.gov/fosers/</a>, reference REG 2013-01.
Each commenter must provide, at a minimum, his or her first name,
last name, city, and state. All properly submitted comments, including
attachments, will become part of the public record, and the Commission
will make comments available for public viewing on the Commission's
website and in the Commission's Public Records Office. Accordingly,
commenters should not provide in their comments any information that
they do not wish to make public, such as a home street address,
personal email address, date of birth, phone number, social security
number, or driver's license number, or any information that is
restricted from disclosure, such as trade secrets or commercial or
financial information that is privileged or confidential.
FOR FURTHER INFORMATION CONTACT: Ms. Amy L. Rothstein, Assistant
General Counsel, or Ms. Joanna S. Waldstreicher or Mr. Tony Buckley,
Attorneys, Office of the General Counsel, at <a href="/cdn-cgi/l/email-protection#b8ccdddbd0d5d7dcf8dedddb96dfd7ce"><span class="__cf_email__" data-cfemail="a6d2c3c5cecbc9c2e6c0c3c588c1c9d0">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION: The Federal Election Commission is seeking
additional public comment on certain aspects of its prior proposals to
modernize campaign finance regulations in light of technological
advances. The Commission published its proposals in a Notice of
Proposed Rulemaking (``NPRM'') on November 2, 2016.\1\ The Commission
had previously issued an Advance Notice of Proposed Rulemaking
(``ANPRM'') on the subject.\2\ The Commission received several public
comments in response to both the ANPRM and the NPRM, which are
available on the Commission website, at <a href="https://sers.fec.gov/fosers/search.htm">https://sers.fec.gov/fosers/search.htm</a> (search for REG 2013-01).
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\1\ Technological Modernization, 81 FR 76416 (Nov. 2, 2016).
\2\ Technological Modernization, 78 FR 25635 (May 2, 2013).
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The Commission is now seeking additional public comment about any
technological developments that may have occurred following publication
of the NPRM that would be relevant to the Commission's consideration of
its proposed rules. In particular, the Commission is soliciting updated
information regarding electronic payment processing, newer electronic
payment technologies, and contributions made via prepaid cards, to
ensure that its understanding of the relevant technologies and
associated practices in these areas is up to date.
Payment Processing
Several of the Commission's proposed rules relate to the standards
and practices that vendors and payment processors use to process
payments made by credit card, debit card, prepaid card, and other
electronic payment methods such as text message and direct carrier
billing. Some of the proposed rules also concern the methods by which
vendors and payment processors verify a payor's identity, attribute
payments, and collect, maintain, and transmit transaction records. The
Commission seeks comment on whether practices in these areas have
changed since publication of the NPRM in ways that would affect the
applicability and utility of the proposed rules.
The Commission also seeks additional comment on proposed revisions
to its regulations regarding when a contribution initiated through
electronic means is considered to be ``made'' and ``received.''
Specifically, in the NPRM the Commission proposed to revise 11 CFR
110.1(b)(6), which describes when a contribution is ``made.'' As
revised, it would state that ``[a] contribution made in an electronic
transaction is considered to be made when the contributor authorizes
the transaction,'' even if the contributor has not yet transmitted any
funds. Similarly, the Commission proposed to revise 11 CFR 102.8(a) and
(b)(2), which describe when a person ``receives'' a contribution for a
political committee and must forward the contribution to the political
committee's treasurer. As revised, the ``date of receipt'' of ``a
contribution made in an electronic transaction in which the receipt of
authorization precedes the receipt of funds'' would be the date the
person ``obtains the contributor's authorization of the transaction.''
Finally, the Commission recognized that many electronically initiated
contributions to political committees--including contributions made via
text message or internet-based platforms--are first received by
commercial entities that process the contributions electronically.
Accordingly, the Commission proposed new 11 CFR 102.8(d), which would
provide that ``[e]very person whose usual and normal business involves
the processing and transmission of payments and who processes a
contribution to a political committee in the ordinary course of its
business will satisfy the [forwarding] requirements . . . if such
person transmits funds and contributor information to the recipient
political committee within the time periods prescribed,'' even if the
payment processor has not yet received any funds from the contributor.
The Commission received one comment on these proposals. The
commenter, a wireless communication industry trade association, opposed
the proposals as applied to wireless companies involved in direct
carrier billing.\3\ The commenter stated that
[[Page 54916]]
``[w]ireless companies do not front--in the ordinary course of
business--money to merchants, political committees, or other designated
recipients of funds before the customer pays his or her wireless
bill,'' and asserted that ``[a]ny regulatory requirement that would
force money to be transferred to political committees sooner than
standard business practices dictate will preclude wireless carriers
from offering DCB as a means of processing political contributions.''
\4\ The commenter characterized these proposals as effectively
``overturn[ing] the conclusion in the m-Qube advisory opinion--and
preclud[ing] political contributions made by the processes approved
therein.'' \5\
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\3\ The commenter described direct carrier billing as ``a
payment process . . . which enables consumers to purchase goods and
services by charging them to a wireless bill.'' CTIA, Comment at 1
(Dec. 2, 2016), REG 2013-01.
\4\ CTIA, Comment at 9.
\5\ Id. In Advisory Opinion 2012-17 (Red Blue T, Armour Media,
m-Qube), which concerned the use of text messaging to raise funds
for political committees, the Commission concluded that ``[u]nder m-
Qube's proposed factoring arrangement, which is similar to how
credit card contributions are handled, the Commission considers the
contributions to be received at the time of the opt-in, as opposed
to when the bill is paid.'' Advisory Opinion 2012-17 (Red Blue T,
Armour Media, m-Qube) at 6. The Commission further concluded that
``because m-Qube's factored payments will be extensions of credit
under 11 CFR part 116,'' the payments would not constitute
prohibited corporate contributions by m-Qube. Id. at 9.
Consequently, because ``the factored payments are extensions of
credit by m-Qube in the ordinary course of business and are not
contributions that m-Qube has received and forwarded, the factored
payments do not trigger the forwarding requirements of [52 U.S.C.
30102(b)] and 11 CFR 102.8.'' Id. at 10.
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The Commission invites additional comment on the proposed rules in
light of these statements, and on current processes used by the
wireless communication industry to process contributions to political
committees. For example, how prevalent is direct carrier billing in
processing payments generally, and contributions to political
committees in particular? Under current processes, would these
proposals, if adopted, require wireless carriers or other companies
participating in processing contributions to depart from their standard
business practices? Do wireless carriers or other companies typically
extend credit to political committees and other customers as described
in Advisory Opinion 2012-17 (Red Blue T, Armour Media, m-Qube)? Would
the proposals present an obstacle to direct carrier billing or other
methods wireless carriers use in processing political contributions? Do
connection aggregators still engage in factoring as described in
Advisory Opinion 2012-17 (Red Blue T, Armour Media, m-Qube)? What other
post-NPRM developments in the processing of electronic payments should
the Commission consider?
Electronic Payment Technologies
Some of the Commission's proposed rules also relate to newer
electronic payment methods such as PayPal, Venmo, BitPay, Square, and
other electronic wallet, swipe P2P, mobile app, and social media
payment platforms. The Commission seeks comment on whether practices in
these areas have changed since publication of the NPRM in ways that
would affect the applicability and utility of the proposed rules. The
Commission also seeks comment on whether additional new methods of
electronic payment have been developed or become more commonly used,
that would be affected by the existing or proposed rules in ways that
the Commission has not yet considered.
Contributions by Prepaid Cards
The Commission also proposed revisions to its regulations with
respect to contributions made by prepaid cards. Like currency, prepaid
cards are easily transferable and relatively untraceable. They are not
linked to a customer's identity, and they are not associated with a
depository institution and thus are not subject to those institutions'
``know-your-customer'' obligations under federal law.
Accordingly, the Commission proposed to update its rules to apply
the limitations on contributions of cash or currency at 11 CFR 110.4(c)
to contributions made by prepaid cards, to clarify that a ``cash
contribution'' includes a contribution made using a prepaid card. The
Commission also proposed a conforming change to 11 CFR 110.4(c)(1) by
updating the current prohibition on making contributions aggregating
more than $100 in ``currency of the United States, or of any foreign
country'' to apply to any ``cash contribution,'' as provided in new 11
CFR 110.4(c)(4).
The Commission received one comment on this proposal. The
commenter, a non-connected political committee that processes
electronic contributions, opposed treating prepaid cards differently
from other electronic contributions.\6\ The commenter acknowledged that
prepaid cards could be used to evade campaign finance regulations, but
pointed out that ``[n]o online contribution is ever made without the
contributor providing identifying information.'' \7\ The commenter
further stated that a ``committee to whom the card number is presented
online for payment is unlikely to know that it is a prepaid card.'' \8\
The Commission requests feedback on these two statements by this
commenter. First, as a practical matter, are online contributions made
by prepaid cards always accompanied by sufficient identifying
information about the contributor to enable recipient political
committees to fulfill their reporting obligations and avoid accepting
prohibited contributions? Are there any ways in which the process of
making a contribution using a prepaid card differs from the process of
making a contribution using a credit card, such as the information
collected or the way the card number is provided? Second, are recipient
political committees actually able to determine whether online
contributions are made using prepaid cards? How do (or could) they make
that determination?
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\6\ ActBlue, Comment at 3 (June 3, 2013), REG 2013-01.
\7\ Id. at 6.
\8\ Id.
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The same commenter also stated that it ``would not be practical to
expect that the payment industry would limit all transactions using
these cards to $100 to accommodate campaign finance regulations.'' \9\
The Commission's understanding, however, is that prepaid card issuers
are able to exclude certain categories of merchants from receiving
payments made by prepaid cards.\10\ Is this understanding accurate? Do
prepaid card issuers, in fact, exclude certain categories of merchants
from receiving payments made by prepaid cards? Could political
committees, as a category of merchants, use this or another mechanism
(such as partial authorization) to decline contributions made by
prepaid cards either entirely or in excess of $100? The Commission is
interested in how this might work in practice. For example, does
Merchant Category Code 8651 (``political organizations'') cover all
political committees (including separate segregated funds, party
committees, and nonconnected committees), or only a
[[Page 54917]]
subset? \11\ Is it possible to exclude political committees without
also excluding any non-political committees that might also fall under
MCC 8651? Who would request the political committees' exclusion, and
who would be responsible for putting their exclusion into effect?
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\9\ Id.
\10\ See, e.g., Visa, Visa Core Rules and Visa Product and
Service Rules 258 (2022), <a href="https://www.visa.com.bs/content/dam/VCOM/download/about-visa/visa-rules-public.pdf">https://www.visa.com.bs/content/dam/VCOM/download/about-visa/visa-rules-public.pdf</a> (indicating that selective
authorization may be based on criteria including merchant category
classification); Visa Merchant Data Standards Manual, Visa Supp.
Requirements 101 (2021), visa-merchant-data-standards-manual.pdf
(listing ``political organizations'' as Merchant Category Code
8651); see also U.S. Dept. of Labor, Description for 8651: Political
Organizations [verbar] Occupational Safety and Health Administration
(<a href="http://osha.gov">osha.gov</a>) (describing ``political organizations'' in SIC 8651 as
including ``Political Action Committees (PACs),'' ``Political
campaign organizations,'' and ``Political fundraising (except on a
contract or fee basis'')).
\11\ See Visa Merchant Data Standards Manual, Visa Supp.
Requirements 101 (2021), visa-merchant-data-standards-manual.pdf
(listing ``political organizations'' as Merchant Category Code
8651).
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What other means do political committees have to limit or decline
contributions made by prepaid cards? Can individual merchants set
limits on the amounts of payments they will accept using prepaid cards?
Are there other factors relating to the mechanisms of prepaid card
transactions that the Commission should take into consideration?
Finally, the Commission invites comments on whether it should
consider any other post-NPRM developments in the processing of
electronic payments in general, or prepaid cards in particular, before
promulgating final rules.
Conclusion
The Commission's goal in this rulemaking is to promulgate final
rules that are flexible enough to encompass both traditional and
electronic forms of payments and communications, and that remain
relevant as new forms of information storage and payment methods emerge
in the future. Accordingly, the Commission welcomes comment on any
other recent innovations in technologies used for recordkeeping,
payment processing, or communications that would affect issues
addressed by this rulemaking.
Dated: August 31, 2022.
On behalf of the Commission.
Allen J. Dickerson,
Chairman, Federal Election Commission.
[FR Doc. 2022-19382 Filed 9-7-22; 8:45 am]
BILLING CODE 6715-01-P
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