[Federal Register Volume 62, Number 231 (Tuesday, December 2, 1997)]
[Notices]
[Pages 63717-63718]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-31728]
=======================================================================
-----------------------------------------------------------------------
FEDERAL TRADE COMMISSION
Submission for OMB Review; Comment Request
AGENCY: Federal Trade Commission.
ACTION: Notice.
-----------------------------------------------------------------------
SUMMARY: The Federal Trade Commission (FTC or Commission) has submitted
information collection requirements associated with the Mail or
Telephone Order Merchandise Trade Regulation Rule, 16 CFR Part 435, to
the Office of Management and Budget (OMB) for review and clearance
under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501-3520).
The FTC previously solicited comments from the public concerning these
information collection requirements, and provided the information
specified in 5 CFR 1320.5(a)(1)(iv). 62 FR 46498 (September 3, 1997).
No comments were received. The current OMB clearance for these
requirements expires on December 31, 1997. The FTC has requested that
OMB extend the PRA clearance through December 31, 2000.
DATES: Comments must be filed by January 2, 1998.
ADDRESSES: Send comments to the Office of Information and Regulatory
Affairs, Office of Management and Budget, New Executive Office
Building, Room 3228, Washington, D.C. 20530, ATTN: Edward Clarke, Desk
Officer for the Federal Trade Commission. Comments may also be sent to
Elaine W. Crockett, Attorney, Office of the General Counsel, Room 598,
6th St. and Pennsylvania Ave., N.W. 20580, telephone: (202) 326-2453;
fax: (202) 326-2477; e-mail [email protected]
SUPPLEMENTARY INFORMATION:
Title: Mail or Telephone Order Merchandise Trade Regulation Rule, 16
CFR Part 435--(OMB Control Number 3084-0106)--Extension
The Mail Order Merchandise Rule was promulgated in 1975 in response
to consumer complaints that many merchants were failing to ship mail
order merchandise on time, failing to ship at all, or failing to
provide prompt refunds for unshipped merchandise. The Rule took effect
on February 2, 1976. A second rulemaking proceeding in 1993
demonstrated that the delayed shipment and refund problems of the mail
order industry were also being experienced by consumers who ordered
merchandise over the telephone. The Commission therefore amended the
Rule, effective on March 1, 1994, to include merchandise ordered by
telephone, including by fax or by computer through the use of a modem.
Generally, the Rule requires a merchant to: (1) have a reasonable
basis for any express or implied shipment representation made in
soliciting the sale; (2) ship within the time period promised, and if
no time period is promised, within 30 days; (3) notify the consumer and
obtain the consumer's consent to any delay in shipment; and (4) make
prompt and full refunds when the consumer exercises a cancellation
option or the merchant is unable to meet the Rule's other requirements.
Under the notice provisions in the Rule, a merchant who is unable
to ship within the promised shipment time or 30 days must notify the
consumer of a revised date and of his or her right to cancel the order
and obtain a prompt refund. Delays beyond the revised shipment date
also trigger a notification requirement to consumers. When the Rule
requires the merchant to make a refund and the consumer paid by credit
card, it also requires the merchant to notify the consumer either that
any charge to the consumer's charge account will be reversed or that
the merchant will take no action resulting in a charge.
Burden statement: In its 1995 PRA submission to OMB, the FTC
estimated that 1,897 large businesses and 68,663 small businesses were
covered by the Rule, for a total of 70,560 businesses. As stated in the
agency's 1995 submission, the conditional nature of some of the Rule's
requirements makes it difficult to quantify the exact PRA burden
involved. Nonetheless, the agency estimated that, at that time, 70,560
businesses spent an average of 229.78 hours per year on compliance with
the Rule, for a total estimate of 16,213,300 burden hours. In the
September 3, 1997,
[[Page 63718]]
Federal Register notice, we calculated that established businesses
would need 150 hours annually toward maintenance of associated computer
programs. We have now reduced that figure further after determining
that most maintenance and upkeep of computer systems would be part of
ordinary business practice in the industry. The OMB regulation that
implements the PRA defines ``burden'' to exclude any effort that would
be expended regardless of any regulatory requirement. 5 CFR
1320.3(b)(2).
No provisions in the Mail or Telephone Order Merchandise Rule have
been amended or changed in any manner. All of the Rule's requirements
relating to disclosure and notification remain the same. We have,
however, reduced the 1995 total burden estimate for the following
reasons.
Most of the 1995 estimated burden hours were associated with one-
time start up tasks associated with establishing implementing standard
systems and processes. This is because the Rule had recently been
amended (in 1994) to include the telephone order industry. The mail
order industry, in contrast, had been subject to the basic provisions
of the Rule since 1976. Thus, most of the 230 burden hours that we
estimated per firm related to the development and installation of
computer systems to handle telephone ordering, and not to the
maintenance of such systems.
As noted above, the OMB regulation that implements the PRA defines
``burden'' to exclude any effort that would be expended regardless of
any regulatory requirement. 5 CFR 1320.3(b)(2). In past rulemaking
proceedings, industry trade associations and individual witnesses have
testified that compliance with the Rule is now widely regarded by
direct marketers as being good business practice. The Rule's
notification requirements would be followed in any event by most
merchants to meet consumer expectations with respect to timely
shipment, notification of delay, and prompt and full refunds. Providing
consumers with notice about the status of their orders encourages
repeat purchase behavior that is essential to the survival of direct
mail or telephone order businesses.
Also, the industry is highly automated; notices are produced
mechanically and little labor is involved. Nonetheless, even for
established businesses, there may be some burden attributable strictly
to the existence of the rule. For example, some merchants rely on
contractors to handle orders and must therefore monitor how the
contractor complies with the Rule. This entails reviewing consumer
complaints to determine whether appropriate delay notification is being
provided. The Rule allows merchants to use as much or as little time as
necessary to assure that notification and disclosure requirements are
being met. Companies employ a broad range of energy, time, and
resources for performing these tasks. Also, while established companies
spend some time maintaining existing compliance systems, their
expenditures are only a fraction of those by new businesses required to
establish entirely new systems. An exact figure is difficult to
quantify; however, based on staff's familiarity with the industry, we
have determined that the average among the industry is unlikely to be
more than 50 hours per year.
Staff responsible for the Rule have also estimated that
approximately 1,000 additional companies have entered the market since
1995 (for a total of 71,560 incumbent firms) and that, due to
escalating sales, approximately 1,000 new companies will enter the
market during the coming year. We estimate that these 1,000 new
companies will each expend 230 hours per year (the 1995 figure of
229.78 rounded to 230) to establish compliance measures associated with
system start-up, although it could be argued once again that most of
these efforts would be undertaken even absent the Rule. Nonetheless, we
have estimated the total burden imposed by the disclosure and
notification requirements at approximately 3,808,000 hours
(1,000 x 230=230,000)+(71,560 x 50+3,578,000).
Debra A. Valentine,
General Counsel.
[FR Doc. 97-31728 Filed 12-1-97; 8:45 am]
BILLING CODE 6750-01-P