AUTHENTICATED~
`U.S. COYeRNMt:NT
`INFORMATION
`CPO
`
`§313.3
`
`with an example, to the extent applica(cid:173)
`ble, constitutes compliance with this
`part.
`[74 FR 62965, Dec. l, 2009]
`
`§ 313.3 Definitions.
`As used in this part, unless the con(cid:173)
`text requires otherwise:
`(a) Affiliate means any company that
`controls, is controlled by, or is under
`common control with another com(cid:173)
`pany.
`(b)(l) Clear and conspicuous means
`that a notice is reasonably understand(cid:173)
`able and designed to call attention to
`the nature and significance of the in(cid:173)
`formation in the notice.
`(2) Examples-(!) Reasonably under(cid:173)
`standable. You make your notice rea(cid:173)
`sonably understandable if you:
`(A) Present the information in the
`notice
`in clear, concise sentences,
`paragraphs, and sections;
`(B) Use short explanatory sentences
`or bullet lists whenever possible;
`(C) Use definite, concrete, everyday
`words and active voice whenever pos(cid:173)
`sible;
`(D) Avoid multiple negatives;
`(E) Avoid legal and highly technical
`business
`terminology whenever pos(cid:173)
`sible; and
`(F) Avoid explanations that are im(cid:173)
`precise and readily subject to different
`interpretations.
`(11) Designed to call attention. You de(cid:173)
`sign your notice to call attention to
`the nature and significance of the in(cid:173)
`formation in it if you:
`(A) Use a plain-language heading to
`call attention to the notice;
`(B) Use a typeface and type size that
`are easy to read;
`(C) Provide wide margins and ample
`line spacing;
`(D) Use boldface or italics for key
`words; and
`(E) In a form that combines your no(cid:173)
`tice with other information, use dis(cid:173)
`tinctive type size, style, and graphic
`devices, such as shading or sidebars,
`when you combine your notice with
`other information.
`(111) Notices on web sites. If you pro(cid:173)
`vide a notice on a web page, you design
`your notice to call attention to the na(cid:173)
`ture and significance of the informa(cid:173)
`tion in it if you use text or visual cues
`to encourage scrolling down the page if
`
`16 CFR Ch. I (1-1-12 Edition)
`
`necessary to view the entire notice and
`ensure that other elements on the web
`site (such as text, graphics, hyperlinks,
`or sound) do not distract attention
`from the notice, and you either:
`(A) Place the notice on a screen that
`consumers frequently access, such as a
`page on which transactions are con(cid:173)
`ducted; or
`(B) Place a link on a screen that con(cid:173)
`sumers frequently access, such as a
`page on which transactions are con(cid:173)
`ducted, that connects directly to the
`notice and is labeled appropriately to
`convey the importance, nature and rel(cid:173)
`evance of the notice.
`(c) Collect means to .obtain informa(cid:173)
`tion that you organize or can retrieve
`by the name of an individual or by
`identifying number, symbol, or other
`identifying particular assigned to the
`individual, irrespective of the source of
`the underlying information.
`(d) Company means any corporation,
`limited
`liability company, business
`trust, general or limited partnership,
`association, or similar organization.
`(e)(l) Consumer means an individual
`who obtains or has obtained a financial
`product or service from you that is to
`be used primarily for personal, family ,
`or household purposes, or that individ(cid:173)
`ual's legal representative.
`(2) Examples-(i) An individual who
`applies to you for credit for personal,
`family, or household purposes is a con(cid:173)
`sumer of a financial service, regardless
`of whether the credit is extended.
`(11) An individual who provides non(cid:173)
`public personal information to you in
`order to obtain a determination about
`whether he or she may qualify for a
`loan to be used primarily for personal,
`family, or household purposes is a con(cid:173)
`sumer of a financial service, regardless
`of whether the loan is extended.
`(111) An individual who provides non(cid:173)
`public personal information to you in
`connection with obtaining or seeking
`to obtain financial, investment, or eco(cid:173)
`nomic advisory services is a consumer,
`regardless of whether you establish a
`continuing advisory relationship.
`(iv) If you hold ownership or serv(cid:173)
`icing rights to an individual's loan that
`is used primarily for personal, family,
`or household purposes, the individual is
`your consumer, even if you hold those
`rights in conjunction with one or more
`
`386
`
`VERSATA EXHffiiT 2050
`SAP v. VERSATA
`CASE CBM2012-00001
`
`

`

`Federal Trade Commission
`
`other institutions. (The individual is
`also a consumer with respect to the
`other financial institutions involved.)
`An individual who has a loan in which
`you have ownership or servicing rights
`is your consumer, even if you, or an(cid:173)
`other institution with those rights,
`hire an agent to collect on the loan.
`(v) An individual who is a consumer
`of another financial institution is not
`your consumer solely because you act
`as agent for, or provide processing or
`other services to, that financial insti(cid:173)
`tution.
`(vi) An individual is not your con(cid:173)
`sumer solely because he or she has des(cid:173)
`ignated you as trustee for a trust.
`(vii) An individual is not your con(cid:173)
`sumer solely because he or she is a ben(cid:173)
`eficiary of a trust for which you are a
`trustee.
`(viii) An individual is not your con(cid:173)
`sumer solely because he or she is a par(cid:173)
`ticipant or a beneficiary of an em(cid:173)
`ployee benefit plan that you sponsor or
`for which you act as a trustee or fidu(cid:173)
`ciary.
`(f) Consumer reporting agency has the
`same meaning as in section 603(f) of the
`Fair Credit Reporting Act (15 U.S.C.
`1681a(f)).
`(g) Control of a company means:
`(1) Ownership, control, or power to
`vote 25 percent or more of the out(cid:173)
`standing shares of any class of voting
`security of the company, directly or in(cid:173)
`directly, or acting through one or more
`other persons;
`(2) Control in any manner over the
`election of a majority of the directors,
`trustees, or general partners (or indi(cid:173)
`viduals exercising similar functions) of
`the company; or
`(3) The power to exercise, directly or
`indirectly, a controlling influence over
`the management or policies of the
`company.
`(h) Customer means a consumer who
`has a customer relationship with you.
`(i)(1) Customer relationship means a
`continuing relationship between a con(cid:173)
`sumer and you under which you pro(cid:173)
`vide one or more financial products or
`services to the consumer that are to be
`used primarily for personal, family, or
`household purposes.
`(2) Examples-(!) Continuing relation(cid:173)
`ship. A consumer has a continuing rela(cid:173)
`tionship with you if the consumer:
`
`§313.3
`
`(A) Has a credit or investment ac(cid:173)
`count with you;
`(B) Obtains a loan from you;
`(C) Purchases an insurance product
`from you;
`investment product
`(D) Holds an
`through you, such as when you act as a
`custodian for securities or for assets in
`an
`Individual Retirement Arrange(cid:173)
`ment;
`(E) Enters into an agreement or un(cid:173)
`derstanding with you whereby you un(cid:173)
`dertake to arrange or broker a home
`mortgage loan, or credit to purchase a
`vehicle, for the consumer;
`(F) Enters into a lease of personal
`property on a non-operating basis with
`you;
`(G) Obtains financial, investment, or
`economic advisory services from you
`for a fee;
`(H) Becomes your client for the pur(cid:173)
`pose of obtaining tax preparation or
`credit counseling services from you;
`(I) Obtains career counseling while
`seeking employment with a financial
`institution or the finance, accounting,
`or audit department of any company
`(or while employed by such a financial
`institution or department of any com(cid:173)
`pany);
`(J) Is obligated on an account that
`you purchase from another financial
`institution, regardless of whether the
`account is in default when purchased,
`unless you do not locate the consumer
`or attempt to collect any amount from
`the consumer on the account;
`(K) Obtains real estate settlement
`services from you; or
`(L) Has a loan for which you own the
`servicing rights.
`(11) No continuing relationship. A con(cid:173)
`sumer does not, however, have a con(cid:173)
`tinuing relationship with you if:
`(A) The consumer obtains a financial
`product or service from you only in iso(cid:173)
`lated transactions, such as using your
`ATM to withdraw cash from an ac(cid:173)
`count at another financial institution;
`purchasing a money order from you;
`cashing a check with you; or making a
`wire transfer through you;
`(B) You sell the consumer's loan and
`do not retain the rights to service that
`loan;
`(C) You sell the consumer airline
`tickets, travel insurance, or traveler's
`checks in isolated transactions;
`
`387
`
`

`

`§313.3
`
`(D) The consumer obtains one-time
`personal or real property appraisal
`services from you; or
`(E) The consumer purchases checks
`for a personal checking account from
`you.
`(j) Federal functional regulator means:
`(1) The Board of Governors of the
`Federal Reserve System;
`(2) The Office of the Comptroller of
`the Currency;
`(3) The Board of Directors of the Fed(cid:173)
`eral Deposit Insurance Corporation;
`(4) The Director of the Office of
`Thrift Supervision;
`(5) The National Credit Union Admin(cid:173)
`istration Board; and
`(6) The Securities and Exchange
`Commission.
`(k)(1) Financial institution means any
`institution the business of which is en(cid:173)
`gaging in financial activities as de(cid:173)
`scribed in section 4(k) of the Bank
`Holding Company Act of 1956 (12 U.S.C.
`1843(k)). An institution that is signifi(cid:173)
`cantly engaged in financial activities
`is a financial institution.
`(2) Examples of financial institution. (i)
`A retailer
`that extends credit by
`issuing its own credit card directly to
`consumers is a financial institution be(cid:173)
`cause extending credit is a financial
`activity listed in 12 CFR 225.28(b)(1)
`and referenced in section 4(k)(4)(F) of
`the Bank Holding Company Act and
`issuing
`that
`extension of credit
`through a proprietary credit card dem(cid:173)
`onstrates that a retailer is signifi(cid:173)
`cantly engaged in extending credit.
`(11) A personal property or real estate
`appraiser is a financial institution be(cid:173)
`cause real and personal property ap(cid:173)
`praisal is a financial activity listed in
`12 CFR 225.28(b)(2)(i) and referenced in
`section 4(k)(4)(F) of the Bank Holding
`Company Act.
`(iii) An automobile dealership that,
`as a usual part of its business, leases
`automobiles on a nonoperating basis
`for longer than 90 days is a financial
`institution with respect to its leasing
`business because leasing personal prop(cid:173)
`erty on a nonoperating basis where the
`initial term of the lease is at least 90
`days is a financial activity listed in 12
`CFR 225.28(b)(3) and referenced in sec(cid:173)
`tion 4(k)(4)(F) of the Bank Holding
`Company Act.
`
`16 CFR Ch. I (1-1-12 Edition)
`
`(iv) A career counselor that special(cid:173)
`izes in providing career counseling
`services to individuals currently em(cid:173)
`ployed by or recently displaced from a
`financial organization, individuals who
`are seeking employment with a finan(cid:173)
`cial organization, or individuals who
`are currently employed by or seeking
`placement with the finance, account(cid:173)
`ing or audit departments of any com(cid:173)
`pany is a financial institution because
`such career counseling activities are fi(cid:173)
`nancial activities listed in 12 CFR
`225.28(b)(9)(iii) and referenced in sec(cid:173)
`tion 4(k)(4)(F) of the Bank Holding
`Company Act.
`(v) A business that prints and sells
`checks for consumers, either as its sole
`business or as one of its product lines,
`is a financial institution because print(cid:173)
`ing and selling checks is a financial ac(cid:173)
`tivity
`that
`is
`listed
`in 12 CFR
`225.28(b)(10)(ii) and referenced in sec(cid:173)
`tion 4(k)(4)(F) of the Bank Holding
`Company Act.
`(vi) A business that regularly wires
`money to and from consumers is a fi(cid:173)
`nancial institution because transfer(cid:173)
`ring money is a financial activity ref(cid:173)
`erenced in section 4(k)(4)(A) of the
`Bank Holding Company Act and regu(cid:173)
`larly providing
`that service dem(cid:173)
`onstrates that the business is signifi(cid:173)
`cantly engaged in that activity.
`(vii) A check cashing business is a fi(cid:173)
`nancial institution because cashing a
`check is exchanging money, which is a
`financial activity
`listed
`in section
`4(k)(4)(A) of the Bank Holding Com(cid:173)
`pany Act.
`(viii) An accountant or other tax
`preparation service that is in the busi(cid:173)
`ness of completing income tax returns
`is a financial institution because tax
`preparation services is a financial ac(cid:173)
`tivity listed in 12 CFR 225.28(b)(6)(vi)
`and referenced in section 4(k)(4)(G) of
`the Bank Holding Company Act.
`(ix) A business that operates a travel
`agency in connection with financial
`services is a financial institution be(cid:173)
`cause operating a travel agency in con(cid:173)
`nection with financial services is a fi(cid:173)
`nancial activity
`listed
`in 12 CFR
`211.5(d)(15) and referenced in section
`4(k)(4)(G) of the Bank Holding Com(cid:173)
`pany Act.
`(x) An entity that provides real es(cid:173)
`tate settlement services is a financial
`
`388
`
`

`

`Federal Trade Commission
`
`institution because providing real es(cid:173)
`tate settlement services is a financial
`activity
`listed
`in
`12
`CFR
`225.28(b)(2)(v11i) and referenced in sec(cid:173)
`tion 4(k)(4)(F) of the Bank Holding
`Company Act.
`(xi) A mortgage broker is a financial
`institution because brokering loans is
`a financial activity listed in 12 CFR
`225.28(b)(1) and referenced in section
`4(k)(4)(F) of the Bank Holding Com(cid:173)
`pany Act.
`(xii) An investment advisory com(cid:173)
`pany and a credit counseling service
`are each financial institutions because
`providing financial and investment ad(cid:173)
`visory services are financial activities
`referenced in section 4(k)(4)(C) of the
`Bank Holding Company Act.
`(3) Financial institution does not in(cid:173)
`clude:
`(i) Any person or entity with respect
`to any financial activity that is subject
`to the jurisdiction of the Commodity
`Futures Trading Commission under the
`Commodity Exchange Act (7 U.S.C. 1 et
`seq.);
`(11) The Federal Agricultural Mort(cid:173)
`gage Corporation or any entity char(cid:173)
`tered and operating under the Farm
`Credit Act of 1971 (12 u.s.a. 2001 et
`seq.); or
`(iii) Institutions chartered by Con(cid:173)
`gress
`specifically
`to
`engage
`in
`securitizations, secondary market sales
`(including sales of servicing rights) or
`similar transactions related to a trans(cid:173)
`action of a consumer, as long as such
`institutions do not sell or transfer non(cid:173)
`public personal information to a non(cid:173)
`aff111ated third party other than as per(cid:173)
`mitted by §§313.14 and 313.15 of this
`part.
`(iv) Entities that engage in financial
`activities but that are not significantly
`engaged in those financial activities.
`(4) Examples of entities that are not sig(cid:173)
`nificantly engaged in financial activities.
`(i) A retailer is not a financial institu(cid:173)
`tion if its only means of extending
`credit are occasional "lay away" and
`deferred payment plans or accepting
`payment by means of credit cards
`issued by others.
`(11) A retailer is not a financial insti(cid:173)
`tution merely because it accepts pay(cid:173)
`ment in the form of cash, checks, or
`credit cards that it did not issue.
`
`§313.3
`
`(iii) A merchant is not a financial in(cid:173)
`stitution merely because it allows an
`individual to "run a tab."
`(iv) A grocery store is not a financial
`institution merely because it allows in(cid:173)
`dividuals to whom it sells groceries to
`cash a check, or write a check for a
`higher amount than the grocery pur(cid:173)
`chase and obtain cash in return.
`(1)(1) Financial product or service
`means any product or service that a fi(cid:173)
`nancial holding company could offer by
`engaging in a financial activity under
`section 4(k) of the Bank Holding Com(cid:173)
`pany Act of 1956 (12 U.S.C. 1843(k)).
`(2) Financial service includes your
`evaluation or brokerage of information
`that you collect in connection with a
`request or an application from a con(cid:173)
`sumer for a financial product or serv(cid:173)
`ice.
`(m)(1) Nonaffiliated third party means
`any person except:
`(i) Your affiliate; or
`(ii) A person employed jointly by you
`and any company that is not your affil(cid:173)
`iate (but nonaffiliated third party inr
`eludes the other company that jointly
`employs the person).
`(2) Nonaffiliated third party includes
`any company that is an affiliate by vir(cid:173)
`tue of your or your affiliate's direct or
`indirect ownership or control of the
`company
`in
`conducting merchant
`banking or investment banking activi(cid:173)
`ties of the type described in section
`4(k)(4)(H) or insurance company invest(cid:173)
`ment activities of the type described in
`section 4(k)(4)(l) of the Bank Holding
`Company Act (12 u.s.a. 1843(k)(4)(H)
`and(!)).
`(n)(1) Nonpublic personal information
`means:
`(i) Personally identifiable financial
`information; and
`(11) Any list, description, or other
`grouping of consumers (and publicly
`available
`information pertaining
`to
`them) that is derived using any person(cid:173)
`ally identifiable financial information
`that is not publicly available.
`(2) Nonpublic personal information does
`not include:
`(i) Publicly available information,
`except as included on a list described in
`paragraph (n)(1)(11) of this section; or
`(11) Any list, description, or other
`grouping of consumers (and publicly
`available
`information pertaining
`to
`
`389
`
`

`

`§313.3
`
`them) that is derived without using
`any personally identifiable financial
`information that is not publicly avail(cid:173)
`able.
`(3) Examples of lists-{i) Nonpublic
`personal information includes any list
`of individuals' names and street ad(cid:173)
`dresses that is derived in whole or in
`part using personally identifiable fi(cid:173)
`nancial information (that is not pub(cid:173)
`licly available), such as account num(cid:173)
`bers.
`(ii) Nonpublic personal information
`does not include any list of individuals'
`names and addresses that contains
`only publicly available information, is
`not derived, in whole or in part, using
`personally identifiable financial infor(cid:173)
`mation that is not publicly available,
`and is not disclosed in a manner that
`indicates that any of the individuals on
`the list is a consumer of a financial in(cid:173)
`stitution.
`(o)(l) Personally identifiable financial
`information means any information:
`(i) A consumer provides to you to ob(cid:173)
`tain a financial product or service from
`you;
`(ii) About a consumer resulting from
`any transaction involving a financial
`product or service between you and a
`consumer; or
`(iii) You otherwise obtain about a
`consumer in connection with providing
`a financial product or service to that
`consumer.
`(2) Examples-(!) Information included.
`Personally identifiable financial infor(cid:173)
`mation includes:
`(A) Information a consumer provides
`to you on an application to obtain a
`loan, credit card, or other financial
`product or service;
`information,
`(B) Account balance
`payment history, overdraft history,
`and credit or debit card purchase infor(cid:173)
`mation;
`(C) The fact that an individual is or
`has been one of your customers or has
`obtained a financial product or service
`from you;
`(D) Any information about your con(cid:173)
`sumer if it is disclosed in a manner
`that indicates that the individual is or
`has been your consumer;
`(E) Any information that a consumer
`provides to you or that you or your
`agent otherwise obtain in connection
`
`16 CFR Ch. I (1-1-12 Edition)
`
`with collecting on, or servicing, a cred(cid:173)
`it account;
`information you collect
`(F) Any
`through an Internet "cookie" (an in(cid:173)
`formation collecting device from a web
`server); and
`(G) Information from a consumer re(cid:173)
`port.
`(ii) Information not included. Person(cid:173)
`ally identifiable financial information
`does not include:
`(A) A list of names and addresses of
`customers of an entity that is not a fi(cid:173)
`nancial institution; and
`(B) Information that does not iden(cid:173)
`tify a consumer, such as aggregate in(cid:173)
`formation or blind data that does not
`contain personal identifiers such as ac(cid:173)
`count numbers, names, or addresses.
`(p)(l) Publicly available
`information
`means any information that you have a
`reasonable basis to believe is lawfully
`made available to the general public
`from:
`(i) Federal, State, or local govern(cid:173)
`ment records;
`(ii) Widely distributed media; or
`(iii) Disclosures to the general public
`that are required to be made by Fed(cid:173)
`eral, State, or local law.
`(2) Reasonable basis. You have a rea(cid:173)
`sonable basis to believe that informa(cid:173)
`tion is lawfully made available to the
`general public if you have taken steps
`to determine:
`(i) That the information is of the
`type that is available to the general
`public; and
`(ii) Whether an individual can direct
`that the
`information not be made
`available to the general public and, if
`so, that your consumer has not done
`so.
`(3) Examples-(!) Government records.
`Publicly available information in gov(cid:173)
`ernment records includes information
`in government real estate records and
`security interest filings .
`(ii) Widely distributed media. Publicly
`available information from widely dis(cid:173)
`tributed media includes information
`from a telephone book, a television or
`radio program, a newspaper, or a web
`site that is available to the general
`public on an unrestricted basis. A web
`site is not restricted merely because an
`Internet service provider or a site oper(cid:173)
`ator requires a fee or a password, so
`
`390
`
`

`

`Federal Trade Commission
`
`long as access is available to the gen(cid:173)
`eral public.
`(iii) Reasonable basis-(A) You have a
`reasonable basis to believe that mort(cid:173)
`gage
`information
`is
`lawfully made
`available to the general public if you
`have determined that the information
`is of the type included on the public
`record in the jurisdiction where the
`mortgage would be recorded.
`(B) You have a reasonable basis to
`believe that an individual's telephone
`number is lawfully made available to
`the general public if you have located
`the telephone number in the telephone
`book or the consumer has informed you
`that the telephone number is not un(cid:173)
`listed.
`(q) You includes each "financial in(cid:173)
`stitution" (but excludes any "other
`person") over which the Commission
`has enforcement jurisdiction pursuant
`to section 505(a)(7) of the Gramm(cid:173)
`Leach-Bliley Act.
`
`Subpart A-Privacy and Opt Out
`Notices
`§ 313.4 Initial privacy notice to con(cid:173)
`sumers required.
`requirement. You
`(a)
`Initial notice
`must provide a clear and conspicuous
`notice that accurately reflects your
`privacy policies and practices to:
`(1) Customer. An individual who be(cid:173)
`comes your customer, not later than
`when you establish a customer rela(cid:173)
`tionship, except as provided in para(cid:173)
`graph (e) of this section; and
`(2) Consumer. A consumer, before you
`disclose any nonpublic personal infor(cid:173)
`mation about the consumer to any
`nonaffiliated third party, if you make
`such a disclosure other than as author(cid:173)
`ized by §§313.14 and 313.15.
`(b) When initial notice to a consumer is
`not required. You are not required to
`provide an initial notice to a consumer
`under paragraph (a) of this section if:
`(1) You do not disclose any nonpublic
`personal information about the con(cid:173)
`sumer to any nonaffiliated third party,
`other than as authorized by §§313.14
`and 313.15; and
`(2) You do not have a customer rela(cid:173)
`tionship with the consumer.
`(c) When you establish a customer rela(cid:173)
`tionship-(!) General rule. You establish
`a customer relationship when you and
`
`§313.4
`
`the consumer enter into a continuing
`relationship.
`(2) Special rule for loans. You establish
`a customer relationship with a con(cid:173)
`sumer when you originate a loan to the
`consumer
`for personal,
`family, or
`household purposes. If you subse(cid:173)
`quently transfer the servicing rights to
`that loan to another financial institu(cid:173)
`tion, the customer relationship trans(cid:173)
`fers with the servicing rights.
`(3)(i) Examples of establishing customer
`relationship. You establish a customer
`relationship when the consumer:
`(A) Opens a credit card account with
`you;
`(B) Executes the contract to obtain
`credit from you or purchase insurance
`from you;
`(C) Agrees to obtain financial, eco(cid:173)
`nomic, or investment advisory services
`from you for a fee; or
`(D) Becomes your client for the pur(cid:173)
`pose of your providing credit coun(cid:173)
`seling or tax preparation services, or to
`obtain career counseling while seeking
`employment with a financial institu(cid:173)
`tion or the finance, accounting, or
`audit department of any company (or
`while employed by such a company or
`financial institution);
`(E) Provides any personally identifi(cid:173)
`able financial information to you in an
`effort
`to obtain a mortgage
`loan
`through you;
`(F) Executes the lease for personal
`property with you;
`(G) Is an obligor on an account that
`you purchased from another financial
`institution and whom you have located
`and begun attempting
`to collect
`amounts owed on the account; or
`(H) Provides you with the informa(cid:173)
`tion necessary for you to compile and
`provide access to all of the consumer's
`on-line financial accounts at your Web
`site.
`(ii) Examples of loan rule. You estab(cid:173)
`lish a customer relationship with a
`consumer who obtains a loan for per(cid:173)
`sonal, family, or household purposes
`when you:
`(A) Originate the loan to the con(cid:173)
`sumer and retain the servicing rights;
`or
`(B) Purchase the servicing rights to
`the consumer's loan.
`(d) Existing customers. When an exist(cid:173)
`ing customer obtains a new financial
`
`391
`
`