[Federal Register Volume 64, Number 19 (Friday, January 29, 1999)]
[Notices]
[Pages 4655-4659]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-2174]


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FEDERAL TRADE COMMISSION


Submission for OMB Review; Comment Request

AGENCY: Federal Trade Commission.

ACTION: Notice.

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SUMMARY: The Federal Trade Commission (FTC) has submitted to the Office 
of Management and Budget (OMB) for review and clearance under the 
Paperwork Reduction Act information collection requirements associated 
with five rules issued and enforced by the Commission. OMB had 
provisionally extended the expiration for these clearances from 
September 30, 1998 to March 31, 1999. The FTC proposes that OMB extend 
its approval for the clearances an additional three years from the 
prior expiration date of September 30, 1998.

DATES: Comments must be submitted on or before March 1, 1999.

ADDRESSES: Send written comments to Gary M. Greenfield, Attorney, 
Office of the General Counsel, Federal Trade Commission, Washington, 
D.C. 20580. All comments should be identified as responding to this 
notice.

FOR FURTHER INFORMATION CONTACT: Requests for additional information

[[Page 4656]]

should be addressed to Gary M. Greenfield, Attorney, Office of the 
General Counsel, Federal Trade Commission, Washington, D.C. 20580, 202-
326-2753.

SUPPLEMENTARY INFORMATION: The FTC has submitted a request to OMB to 
extend the existing clearance to collect information associated with 
the five rules described below. A Federal Register Notice with a 60-day 
comment period soliciting comments on this collection of information 
was published on November 16, 1998 (63 FR 63731). No comments were 
received.
    The relevant information collection requirements are as follows: 1. 
The Funeral Rule, 16 C.F.R. Part 453 (OMB Control Number: 3084-0025), 
ensures that consumers who are purchasing funeral goods and services 
have accurate information about the terms and conditions (especially 
prices) for such goods and services. The Rule requires that funeral 
providers disclose this information to consumers and maintain records 
to facilitate enforcement of the Rule.
    Estimated annual hours burden: The estimated burden associated with 
the collection of information required by the Rule is 22,300 hours for 
recordkeeping and 57,900 hours for disclosures, for a total of 80,200 
hours. This estimate is based on the number of funeral providers 
(approximately 22,300), the number of funerals annually (approximately 
2.3 million), and the time needed to fulfill the information collection 
tasks required by the Rule.
    Recordkeeping: The Rule requires that funeral providers retain 
copies of price lists and statements of funeral goods and services 
selected by consumers. Based on an average burden of one hour per 
provider per year for this task, the total burden for the 22,300 
providers is 22,300 hours. This estimate is unchanged from 1995.
    Disclosure: The Rule requires that funeral providers (1) maintain 
current price lists for funeral goods and services, (2) provide written 
documentation of the funeral goods and services selected by consumers 
making funeral arrangements, and (3) provide information about funeral 
prices in response to telephone inquiries.
    Maintaining current price lists requires that funeral providers 
revise their price lists from time to time through the year to reflect 
price changes. Based on an average burden of two hours per provider per 
year for this task, the total burden for 22,300 providers is 44,600 
hours. This estimate is unchanged from the FTC's previous estimate in 
1995.
    The original rulemaking record indicated that 87 percent of funeral 
providers provided written documentation of funeral arrangements, even 
in the absence of the Rule's requirements.\1\ Accordingly, the Rule 
imposes a disclosure burden on 2,899 providers (13 percent of 22,300 
providers). These providers are typically the smallest funeral homes. 
The disclosure requirement can be satisfied through the use of a 
standard form (an example of which is available to the industry in the 
Compliance Guide to the Funeral Rule). Based on an estimation that 
these smaller homes arrange, on average, approximately 20 funerals per 
year, and that it would take each of them about 3 minutes to record 
prices for each consumer on the standard form, FTC staff estimates that 
the total burden associated with this disclosure requirement is one 
hour per provider not already in compliance, for a total of 2,899 
hours.
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    \1\ The original version of the Funeral Rule required that 
funeral providers retain a copy of and give each customer a separate 
``Statement of Funeral Goods and Services Selected.'' The 1994 
amendments to the Rule eliminated that requirement, allowing instead 
for such disclosures to be incorporated into a written contract, 
bill of sale, or other record of a transaction that providers use to 
memorialize sales agreements with customers.
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    The Funeral Rule also requires funeral providers to answer 
telephone inquiries about the provider's offerings or prices. Industry 
data indicate that only about nine percent of funeral purchasers make 
telephone inquiries, with each call lasting an estimated three minutes. 
Only about half of that additional time is attributable to disclosures 
required solely by the Rule, since many providers would provide the 
requested information even without the Rule. Thus, assuming that the 
average purchaser makes two calls per funeral to compare prices, the 
estimated burden is 10,350 hours [(\1/2\  x  3 minute call  x  2 calls/
funeral)  x  207,000 funerals (nine percent of 2,300,000 funerals/
year)]. This burden likely will decline over time as consumers 
increasingly rely on the Internet for funeral price information.
    In sum, the disclosure total is 57,849 hours (44,600 + 2,899 + 
10,350), rounded to 57,900 hours. The total estimated hours burden 
associated with the Rule for both recordkeeping and disclosure 
requirements is 80,200 (Recordkeeping: 22,300 hours + Disclosure: 
57,900 hours).
    Estimated annual cost burden: $3,900,000, rounded ($3,560,000 in 
labor costs and $340,300 in non-labor costs).
    Labor costs: Labor costs are derived by applying appropriate hourly 
cost figures to the burden hours described above. The hourly rates used 
below are averages.
    Clerical personnel, at an hourly rate of $10, can perform the 
recordkeeping tasks required under the Rule. Based on the estimated 
hour burden of 22,300 hours, the estimated cost burden for 
recordkeeping is $223,000 ($10  x  22,300 hours).
    The two hours required of each provider, on average, to update 
price lists should consist of approximately 1.5 hours of managerial or 
professional time, at $75 per hour, and .5 hours of clerical time, at 
$10 per hour, for a total of $117.50 per provider. Thus, the estimated 
total cost burden for maintaining price lists is $2,620,250 ($117.50 
x  22,300 providers) (rounded to $2,620,000). The cost of providing 
written documentation of the goods and services selected by the 
consumer is 2,899 hours of managerial or professional time at 
approximately $75 per hour, or $217,425 (rounded to $217,000). The cost 
of responding to telephone inquiries about offerings or prices is 
10,350 hours of managerial or professional time at $75, or $776,250 
(rounded to $776,000).
    The total labor cost of the three disclosure requirements imposed 
by the Funeral Rule is $3,613,000 ($2,620,000 + $217,000 + $776,000). 
The total labor cost for recordkeeping and disclosures is $3,836,000 
($223,000 for recordkeeping + $3,613,000 for disclosures).
    Capital or other non-labor costs: The Rule imposes minimal capital 
costs and no current start-up costs. Most funeral homes already have 
access, for other business purposes, to the ordinary office equipment 
needed for compliance.
    Compliance with the Rule however, does entail some expense to 
funeral providers for printing and duplication of price lists. Based on 
a rough estimate of 300 pages per year per provider for copies of the 
various price lists, at 5 cents per page, and 22,300 providers, the 
total cost burden associated with printing and copying is $334,500. In 
addition, the estimated 2,899 providers not already providing written 
documentation of funeral arrangements apart from the Rule will incur 
additional printing and copying costs. Assuming that those providers 
use the standard two-page form shown in the Compliance Guide, at 5 
cents per page, at an average of 20 funerals per year, the added cost 
burden would be $5,798, rounded to $5,800. Thus, estimated non-labor 
costs are $340,300.

[[Page 4657]]

    The cost of training associated with Rule compliance is generally 
included in continuing education requirements for licensing and 
voluntary certification programs. Moreover, the FTC has provided its 
Compliance Guide to all funeral providers at no cost, and additional 
copies are available on the FTC web site or by mail. Accordingly, the 
Rule imposes no additional training costs.
    2. The Used Car Rule, 16 CFR Part 455 (OMB Control Number: 3084-
0108), facilitates informed purchasing decisions by consumers by 
requiring used car dealers to disclose information about warranty 
coverage, if any, and the mechanical condition of used cars they offer 
for sale.
    Estimated annual hours burden: The FTC is requesting approval for 
an estimated burden of 1,925,000 hours relating solely to disclosure 
requirements.\2\ This estimate is based on the number of used car 
dealers (approximately 80,000, according to industry sources \3\), the 
number of used cars sold by dealers annually (approximately 30,000,000, 
according to industry data), and the time needed to fulfill the 
information collection tasks required by the Rule.\4\ The current 
estimated annual burden reflects a decrease from the prior estimate, 
attributable to a more accurate estimate of the number of used cars 
sold by dealers, and recent industry input to more accurately reflect 
the time it takes used car dealers to enter data on Buyers Guides.
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    \2\ The Used Car Rule does not impose any recordkeeping 
requirement.
    \3\ Source: 1997 Used Car Market Report (``ADT Market Report''), 
published by ADT Automotive, 435 Metroplex Drive, Nashville, 
Tennessee 37211.
    \4\ A relatively small number of dealers opt to contract with 
outside companies to perform the various tasks associated with 
complying with the Rule. Staff assumes that outside contractors 
would require about the same amount of time and incur similar cost 
as dealers to perform these tasks. Accordingly, the hours and cost 
burden totals shown, while referring to ``dealers,'' incorporate the 
time and cost borne by outside companies in performing the tasks 
associated with the Rule.
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    The Rule requires that used car dealers display a one-page, double-
sided Buyers Guide in the window of each used car they offer for 
sale.The component tasks associated with this requirement include (1) 
ordering and stocking Buyers Guide forms, (2) entering applicable data 
on Buyers Guides, (3) posting the Buyers Guides on vehicles, and (4) 
making any necessary revisions in Buyers Guides.
    Dealers should need no more than an average of one hour per year to 
obtain Buyers Guide forms, which are readily available from many 
commercial printers or could be produced by an office word-processing 
or desk-top publishing system. Based on a universe of 80,000 dealers, 
the annual hours burden for producing or obtaining and stocking Buyers 
Guides is 80,000 hours.
    For used cars sold ``as is,'' copying vehicle-specific data from 
dealer inventories to the Buyers Guide forms and checking off the ``no 
warranty'' box may take up to two minutes per vehicle if done by hand, 
and only seconds for those dealers who have automated the process. 
Staff conservatively assumes that this task, on average, will require 
1.5 minutes. For used cars sold under warranty, checking off the 
warranty box and adding warranty information may take an additional one 
minute, i.e., 2.5 minutes, Based on input from industry sources, staff 
estimates that approximately 60% of used cars sold by dealers are sold 
``as is,'' with the remainder sold under warranty. Thus, staff 
estimates the time required to enter data for used cars sold without 
warranty is 450,000 hours (30,000,000  x  60%  x  1.5 minutes  
60 minutes/hour) and 500,000 hours for used cars sold under warranty 
(30,000,000  x  40%  x  2.5 minutes 60 minutes/hour), for an 
overall total of 950,000 hours.
    Although there will be substantial variance in the time required to 
post the Buyers Guides on each used car, FTC staff estimates that, on 
average, dealers will spend 1.75 minutes per vehicle to match the 
correct Buyers Guide to the vehicle and place it in or on the vehicle. 
For the 30,000,000 vehicles sold, the burden associated with this task 
is 875,000 hours. To the extent dealers are able to integrate this 
process into other activities performed in their ordinary course of 
business, this estimate likely overstates the actual burden.
    If negotiations between buyer and seller over warranty coverage 
produce a sale on terms other than those originally entered on the 
Buyers Guide, the dealer must revise the Guide to reflect the actual 
terms of sale. According to the rulemaking record, bargaining over 
warranty coverage rarely occurs. Allowing for revision in 2% of sales, 
at two minutes per revision, staff estimates that dealers will spend 
20,000 hours annually revising Buyers Guides.
    Estimated annual cost burden: $28,250,000, consisting of 
$19,250,000 in labor costs and $9,000,000 in non-labor costs.
    Labor costs: Labor costs are derived by applying appropriate hourly 
cost figures to the burden hours described above. Staff has determined 
that all of the tasks associated with ordering forms, entering data on 
Buyers Guides, posting Buyers Guides on vehicles, and revising them as 
needed are typically done by clerical or low-level administrative 
personnel. Using a clerical cost rate of $10 per hour and an estimate 
of 1,925,000 burden hours for disclosure requirements, the total labor 
cost burden would be approximately $19,250,000.
    Capital or other non-labor costs: The cost of the Buyers Guide form 
itself is estimated to be 30 cents per form, so that forms for 30 
million vehicles would cost dealers $9,000,000. In making this 
estimate, staff conservatively assumes that all dealers will purchase 
preprinted forms instead of producing them internally, although dealers 
may produce them at minimal expense using currently office automation 
technology. Capital and start-up costs associated with the Rule are de 
minimis.
    3. The Consumer Product Warranty Rule, 16 CFR Part 701 (OMB Control 
Number: 3084-0111), prevents deception by providing consumers with 
information to assess written warranty terms. The Rule requires that 
written warranties disclose certain material facts regarding their 
terms and conditions.
    Estimated annual hours burden: In 1995, FTC staff estimated that 
the required disclosures imposed an average annual burden of 8 hours on 
each of approximately 4,241 warrantors of products. Because there have 
been no changes to the Rule's requirements, staff has no reason to 
believe that this estimate requires revision. Based on this assumption, 
the total compliance burden relating to disclosures is approximately 
34,000 hours (rounded from 33,928).5 Nonetheless, this 
estimate likely overstates substantially the actual burden because most 
warrantors would disclose the terms and conditions of their warranties 
even in the absence of the Rule.
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    \5\ The Consumer Product Warranty Rule imposes no recordkeeping 
requirement.
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    Estimated annual cost burden: $340,000, consisting solely of labor 
costs.
    Labor costs: The work required to comply with the Rule is 
predominantly clerical. Based on an average hourly rate of $10 for 
clerical employees and the total hours burden of 34,000 hours, the 
annual labor cost is approximately $340,000.
    Capital or other non-labor costs: The Rule imposes no appreciable 
current capital or start-up costs. The vast majority of warrantors have 
already modified their warranties to include the information required 
by the Rule. Rule compliance does not require the use of any capital 
goods other than ordinary

[[Page 4658]]

office equipment, which providers would already have available for 
general business use.
    4. The Pre-Sale Availability Rule, 16 C.F.R. Part 702 (OMB Control 
Number: 3084-0112), ensures that consumers can make informed purchasing 
decisions by requiring that the terms of written warranties for 
consumer products be made available to consumers prior to purchase. The 
Rule requires retailers to make warranty information available to 
consumers and requires warrantors (i.e., manufacturers) to provide 
retailers with the materials necessary to do so. The Rule also requires 
catalog and door-to-door sellers to make warranty information 
available.
    Estimated annual hours burden: The FTC is seeking approval for an 
estimated disclosure burden of 2,760,000 hours.\6\ This estimate is 
based on the number of large and small retailers and manufacturers, 
according to census data, and the estimated scope of the compliance 
burden for businesses by type. FTC staff first calculated burden 
estimates by type of business in the early 1980s. Staff believes that 
estimates remain valid for manufacturers, and that subsequent 
amendments to the Rule to allow more flexibility have reduced the 
burden on retailers by approximately 50 percent.\7\ Approximately 6,552 
large retailers and 422,100 small retailers spend an annual average of 
26 hours and 6 hours, respectively, to comply with the Rule, for a 
cumulative combined total of 2,702,952 hours for retailers. 
Approximately 146 large manufacturers and 4,095 small manufacturers 
spend an annual average of 52 hours and 12 hours, respectively, for a 
cumulative total of 56,732 hours for manufacturers. Thus, the combined 
cumulative total for retailers and manufacturers is 2,759,684 hours, 
rounded to 2,760,000 hours.
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    \6\ The Pre-Sale Availability Rule does not impose any 
recordkeeping requirement.
    \7\ To comply with Rule 702, sellers need only maintain specimen 
copies of the warranties provided to them by manufacturers. The Rule 
allows sellers substantial flexibility in how to maintain those 
copies, since the Rule states only that the warranty must be made 
readily available upon request. If the warrantor prints the warranty 
on the product's package, for example, the retailer has no further 
obligation since consumers can readily review the warranty by 
looking at the package.
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    Estimated annual cost burden: $27,600,000, consisting sole of labor 
costs.
    Labor costs: Most of Rule 702's disclosure requirements involve 
simple clerical functions such as maintaining copies of the warranties 
at the retail level and, at the manufacturer level, ensuring that 
copies of warranties are provided to retailers. Assuming a clerical 
labor cost rate of $10/hour and an estimate of 2,760,000 burden hours 
for disclosures, the total annual labor cost burden is approximately 
$27,600,000.
    Capital or other non-labor costs: The capital or start-up costs 
imposed by the Rule are de minimis. The vast majority of retailers and 
warrantors already have developed systems to provide the information 
the Rule requires. Compliance by retailers typically entails simply 
filing warranties in binders and posting an inexpensive sign indicating 
warranty availability.\8\ Manufacturer compliance entails providing 
retailers with a copy of the warranties included with their products.
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    \8\ Although some retailers may choose to display a more 
elaborate or expensive sign, that is not required by the Rule.
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    5. The Informal Dispute Settlement Procedure Rule, 16 C.F.R. Part 
703 (OMB Control Number: 3084-0113), helps to ensure that consumers are 
fully informed regarding informal dispute settlement procedures in 
product warranties. The Rule imposes certain requirements when a 
warrantor requires, as part of a written warranty, that consumers first 
use an informal dispute settlement mechanism (IDSM) to seek resolution 
of a warranty dispute before pursuing remedies in court. The Rule 
requires that affected warrantors disclose certain information to 
consumers. It also requires that warrantors, through IDSMs, retain (1) 
individual records for each dispute, (2) indexes that categorize 
disputes by product model and show the extent to which the warrantor 
has abided by decisions of the resolution process, and (3) statistical 
summaries that classify disputes according to various status and final 
disposition categories. Affected entities must conduct an annual audit 
of their dispute resolution procedures and report to the FTC.
    Estimated annual hours burden: The FTC is requesting approval for 
an estimated burden of 4,333 recordkeeping hours and 1,625 disclosure 
hours, for a total burden estimate of approximately 6,000 hours. This 
estimate is based on the number of warranty disputes handled by IDSMs 
and the average time needed to fulfill the information collection tasks 
required by the Rule.
    Recordkeeping: Since maintenance of individual case records is 
necessary in the ordinary course of business, the Rule imposes little 
additional recordkeeping burden. FTC staff estimates that retaining 
additional information that would not otherwise be kept adds a burden 
of 30 minutes per case. Staff also estimates that IDSMs require an 
additional 10 minutes per case for compilation of the indexes, 
statistical summaries, and the annual audit required by the Rule, 
resulting in a total recordkeeping requirement of 40 minutes per case. 
Finally, staff estimates that the two IDSMs affected by the Rule 
handle, combined, about 6,500 covered disputes annually. Thus, the 
total recordkeeping burden associated with the Rule is approximately 
4,333 hours.
    Disclosure: The Rule requires that affected warrantors disclose 
information about the dispute settlement mechanism in the written 
warranty, and that IDSMs disclose certain information upon request. The 
incremental cost of a warrantor's required disclosure is negligible. 
IDSMs must provide certain information, such as their annual audits, to 
anyone who requests it. In addition, on request, IDSMs must also 
provide consumers who have a dispute before them with a copy of records 
relating to their disputes. FTC staff estimates that the average hour 
burden of copying and producing this information is approximately 15 
minutes for each dispute handled by an IDSM. Based on an estimate of 
6,500 disputes annually, the hour burden associated with copying and 
providing these disclosures is 1,625 hours.
    Estimateed annul cost burden: $281,000, consisting of $81,000 in 
labor costs and $200,000 in non-labor costs.
    Labor costs: Assuming that IDSMs would use skilled clerical 
personnel or technical support staff, at an hourly rate of $15, to 
compile and maintain the records required by the Rule the labor cost of 
the 4,333 recordkeeping burden hours is approximately $64,995. Assuming 
that IDSMs would use less-skilled labor, at an hourly rate of $10, to 
reproduce records, the labor costs of the 1,625 hours disclosure burden 
hours is approximately $16,250. The combined total labor cost for 
recordkeeping and disclosures is $81,245, rounded to $81,000.
    Capital or other non-labor costs: The Rule imposes no appreciable 
current capital or start-up costs. The vast majority of warrantors have 
already developed systems to retain the records and provide the 
disclosures required by the Rule. Rule compliance does not require the 
use of any capital goods other than ordinary office equipment, to which 
providers would already have access.
    The only additional cost imposed on IDSMs operating under the Rule 
that would not be incurred for other IDSMs is the annual audit 
requirement. One of the two IDSMs currently operating

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under the Rule estimates the total annual costs of this requirement to 
be less than $100,000. Since there are two IDSMs operating under the 
Rule, the total cost imposed by them is an estimated $200,000.\9\ This 
total includes copying costs of roughly $20,000, which is based on 
estimated copying costs of 5 cents per page and several conservative 
assumptions or estimates. Staff estimates that the ``average'' dispute-
related file is about 25 pages long and that a typical annual audit 
file is about 200 pages in length. For purposes of estimating copying 
costs, staff conservatively assumes that every consumer complainant 
requests a copy of the file relating to his or her dispute. Staff also 
assumes that, for 1,000 of the estimated 6,500 disputes each year, 
consumers request copies of warrantors' annual audit reports (although, 
based on requests for audit reports made directly to the FTC, the 
indications are that considerably less requests are actually made). 
Thus, the estimated total annual copying costs for average-sized files 
would be approximately $8,125 (25 pages/file  x  .05  x  6,500 
requests) and $10,000 for copies of annual audits (200 pages/audit 
report  x  .05  x  1,000 requests), rounded to a total of $20,000.
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    \9\ The commenter did not break down this estimate by cost item. 
Staff conservatively included the entire $100,000 in its estimate of 
capital and other non-labor costs, even though some of this burden 
is likely already accounted for as labor costs.
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    Combined with estimated annual labor cost of $81,000, total 
estimated annual cost burden is $281,000 ($200,000+$81,000).
John D. Graubert,
Acting General Counsel.
[FR Doc. 99-2174 Filed 1-28-99; 8:45 am]
BILLING CODE 6750-01-M