[Federal Register Volume 74, Number 200 (Monday, October 19, 2009)]
[Notices]
[Pages 53500-53503]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-25030]


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FEDERAL TRADE COMMISSION


Agency Information Collection Activities; Proposed Collection; 
Comment Request

AGENCY: Federal Trade Commission (``FTC'' or ``Commission'').

ACTION: Notice.

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SUMMARY: The information collection requirements described below will 
be submitted to the Office of Management and Budget (``OMB'') for 
review, as required by the Paperwork Reduction Act (``PRA''). The FTC 
seeks public comments on its proposal to extend through January 31, 
2013 the current OMB clearance for information collection requirements 
contained in its Mail or Telephone Order Merchandise Trade Regulation 
Rule (``MTOR'' or ``Rule''). That clearance expires on January 31, 
2010.

DATES: Comments must be filed by December 18, 2009.

ADDRESSES: Interested parties are invited to submit written comments 
electronically or in paper form by following the instructions in the 
Request for Comments part of the SUPPLEMENTARY INFORMATION section 
below. Comments in electronic form should be submitted by using the 
following weblink: (https://public.commentworks.com/ftc/MTORpra) (and 
following the instructions on the web-based form). Comments filed in 
paper form should be mailed or delivered to the following address: 
Federal Trade Commission, Office of the Secretary, Room H-135 (Annex 
J), 600 Pennsylvania Avenue, N.W., Washington, DC 20580, in the manner 
detailed in the SUPPLEMENTARY INFORMATION section below.

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FOR FURTHER INFORMATION CONTACT: Requests for additional information 
should be addressed to Jock Chung, Attorney, Division of Enforcement, 
Bureau of Consumer Protection, Federal Trade Commission, 600 
Pennsylvania Avenue, N.W., Washington, DC 20580, (202) 326-2984.

SUPPLEMENTARY INFORMATION:

Request for Comments:

    Interested parties are invited to submit written comments 
electronically or in paper form. Comments should refer to ``Mail or 
Telephone Order Merchandise Trade Regulation Rule: FTC File No. 
R511929,'' to facilitate the organization of comments. Please note that 
your comment including your name and your state will be placed on the 
public record of this proceeding, including on the publicly accessible 
FTC website, at (http://www.ftc.gov/os/publiccomments.shtm).
    Because comments will be made public, they should not include any 
sensitive personal information, such as any individual'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. Comments also 
should not include any sensitive health information, such as medical 
records or other individually identifiable health information. In 
addition, comments should not include ``[t]rade secret or any 
commercial or financial information which is obtained from any person 
and which is privileged or confidential'' as provided in Section 6(f) 
of the Federal Trade Commission Act (``FTC Act''), 15 U.S.C. 46(f), and 
FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2). Comments containing matter 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).\1\
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    \1\ The comment must be accompanied by an explicit request for 
confidential treatment, including the factual and legal basis for 
the request, and must identify the specific portions of the comment 
to be withheld from the public record. The request will be granted 
or denied by the Commission's General Counsel, consistent with 
applicable law and the public interest. See FTC Rule 4.9(c), 16 CFR 
4.9(c).
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    Because paper mail addressed to the FTC is subject to delay due to 
heightened security screening, please consider submitting your comments 
in electronic form. Comments filed in electronic form should be 
submitted using the following weblink: (https://public.commentworks.com/ftc/MTORpra) (and following the instructions on 
the web-based form). To ensure that the Commission considers an 
electronic comment, you must file it on the web-based form at the 
weblink (https://public.commentworks.com/ftc/MTORpra). If this Notice 
appears at (www.regulations.gov/search/index.jsp), you may also file an 
electronic comment through that website. The Commission will consider 
all comments that regulations.gov forwards to it. You may also visit 
the FTC Website at (http://www.ftc.gov) to read the Notice and the news 
release describing it.
    A comment filed in paper form should include the reference ``Mail 
or Telephone Order Merchandise Trade Regulation Rule: FTC File No. 
R511929,'' both in the text and on the envelope, and should be mailed 
or delivered to the following address: Federal Trade Commission, Office 
of the Secretary, Room H-135 (Annex J), 600 Pennsylvania Avenue, N.W., 
Washington, DC 20580. The FTC is requesting that any comment filed in 
paper form be sent by courier or overnight service, if possible, 
because U.S. postal mail in the Washington area and at the Commission 
is subject to delay due to heightened security precautions.
    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, whether filed in paper or 
electronic form. Comments received will be available to the public on 
the FTC website, to the extent practicable, at (http://www.ftc.gov/os/publiccomments.shtm). As a matter of discretion, the FTC makes every 
effort to remove home contact information for individuals from the 
public comments it receives before placing those comments on the FTC 
website. More information, including routine uses permitted by the 
Privacy Act, may be found in the FTC's privacy policy, at (http://www.ftc.gov/ftc/privacy.shtm).
    Under the PRA, 44 U.S.C. 3501-3521, federal agencies must obtain 
approval from OMB for each collection of information they conduct or 
sponsor. ``Collection of information'' means agency requests or 
requirements that members of the public submit reports, keep records, 
or provide information to a third party. 44 U.S.C. 3502(3); 5 CFR 
1320.3(c). As required by section 3506(c)(2)(A) of the PRA, the FTC is 
providing this opportunity for public comment before requesting that 
OMB extend the existing paperwork clearance for the regulations noted 
herein.
    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 the collection of information on those who 
are to respond, including through the use of appropriate automated, 
electronic, mechanical, or other technological collection techniques or 
other forms of information technology, e.g., permitting electronic 
submission of responses.

Background:

    The MTOR, 16 CFR Part 435, was promulgated in 1975 in response to 
consumer complaints that many merchants were failing to ship 
merchandise ordered by mail on time, failing to ship at all, or failing 
to provide prompt refunds for unshipped merchandise. 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. 
Accordingly, the Commission amended the Rule, effective on March 1, 
1994, to include merchandise ordered by telephone, including by telefax 
or by computer through the use of a modem (e.g., Internet sales), and 
the Rule was then renamed the ``Mail or Telephone Order Merchandise 
Rule.''
    Generally, the MTOR 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.\2\
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    \2\ The MTOR does not impose a recordkeeping requirements per 
se. 16 CFR Sec.  435.1(d) provides that, in an action for 
noncompliance, the absence of records that establish that a 
respondent-seller uses systems and procedures to assure compliance 
will create a rebuttable presumption that the seller was not 
compliant, but the MTOR does not require a compliant seller to 
maintain any records.
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    The notice provisions in the Rule require a merchant who is unable 
to ship within the promised shipment time

[[Page 53502]]

or 30 days to notify the consumer of a revised date and 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 MTOR requires the merchant to make a refund and the 
consumer has paid by credit card, the Rule 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 that 
will result in a charge.

Burden Statement:

    Estimated total annual hours burden: 2,401,000 hours (rounded to 
the nearest thousand)
    In its 2006 PRA-related Federal Register Notices\3\ and 
corresponding submission to OMB, FTC staff estimated that established 
companies each spend an average of 50 hours per year on compliance with 
the Rule, and that new industry entrants spend an average of 230 hours 
(an industry estimate) for compliance measures associated with start-
up.\4\ Thus, the total estimated hours burden was calculated by 
multiplying the estimated number of established companies x 50 hours, 
multiplying the estimated number of new entrants x 230 hours, and 
adding the two totals.
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    \3\ 71 FR 60530 (Oct. 13, 2006); 71 FR 77751 (Dec. 27, 2006).
    \4\ Most of the estimated start-up time relates to the 
development and installation of computer systems geared to more 
efficiently handle customer orders.
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    No provisions in the Rule have been amended or changed since 
staff's prior submission to OMB. Thus, the Rule's disclosure 
requirements remain the same. Since then, however, the number of 
businesses engaged in the sale of merchandise by mail or by telephone 
has changed. Data from the U.S. Department of Commerce 2009 Statistical 
Abstract\5\ indicates that between 2000 and 2005 the number of 
businesses subject to the MTOR grew from 26,800 to 33,600, or an 
average increase of 1,360 new businesses a year [(33,600 businesses in 
2005 - 26,800 businesses in 2000) / 5 years].\6\ Assuming this growth 
rate continues, the average number of established businesses during the 
three-year period for which OMB clearance is sought for the Rule would 
be 41,760.\7\
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    \5\ See Table 1008, ``Retail Trade Establishments, Employees and 
Payroll: 2000 and 2005,'' U. S. Census Bureau, Statistical Abstract 
of the United States: 2009 (128th Edition), Washington, DC, 2008 
((http://www.census.gov/compendia/statab/tables/09s1008.pdf)).
    \6\ Conceptually, this might understate the number of new 
entrants in that it does not factor in the possibility that 
established businesses from an earlier year's comparison might have 
exited the market preceding the later year of measurement. Given the 
virtually unlimited diversity of retail establishments, it is very 
unlikely that there is a reliable external measure of such exit; 
nonetheless, as in the past, the Commission invites public comment 
that might better inform these estimates.
    \7\ As noted above, the existing OMB clearance for the Rule 
expires on January 31, 2010 and the FTC is seeking to extend the 
clearance through January 31, 2013. The average number of 
established businesses during the three-year clearance period was 
determined as follows: [(33,600 businesses in 2005 + (1,360 new 
entrants per year x 5 years)) + (33,600 businesses in 2005 + (1,360 
new entrants per year x 6 years)) + (33,600 businesses in 2005 + 
(1,360 new entrants per year x 7 years))]/3 years.
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    Accordingly, staff estimates industry hours to comply with the MTOR 
during each year of the three-year OMB clearance period by then will 
be:

 
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                                                                                                           New
                       Year:                                      Established Businesses                Entrants
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2010..............................................  40,400............................................  1,360
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2011..............................................  41,760............................................  1,360
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2012..............................................  43,120............................................  1,360
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Average:..........................................  41,760............................................  1,360
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    In an average year during the three-year OMB clearance period, 
staff estimates that established businesses and new entrants will 
devote 2,401,000 hours, rounded to the nearest thousand, to comply with 
the MTOR [(41,760 established businesses x 50 hours) + (1,360 new 
entrants x 230 hours) = 2,400,800].
    The estimated PRA burden per merchant to comply with the MTOR is 
likely overstated. The mail-order industry has been subject to the 
basic provisions of the Rule since 1976 and the telephone-order 
industry since 1994. Thus, businesses have had several years (and some 
have had decades) to integrate compliance systems into their business 
procedures. Moreover, arguably much of the estimated time burden for 
disclosure-related compliance would be incurred even absent the Rule. 
Industry trade associations and individual witnesses have consistently 
taken the position that compliance with the MTOR is widely regarded by 
direct marketers as being good business practice. Providing consumers 
with notice about the status of their orders fosters consumer loyalty 
and encourages repeat purchases, which are important to direct 
marketers' success. Accordingly, the Rule's notification requirements 
would be followed in any event by most merchants to meet consumer 
expectations regarding timely shipment, notification of delay, and 
prompt and full refunds. Thus, it appears that much of the time and 
expense associated with Rule compliance may not constitute ``burden'' 
under the PRA.\8\
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    \8\ Conceivably, in the three years since the FTC's most recent 
clearance request to OMB for this Rule, many businesses have 
upgraded the information management systems needed to comply with 
the Rule and to track orders more effectively. These upgrades, 
however, were primarily prompted by the industry's need to deal with 
growing consumer demand for merchandise (resulting, in part, from 
increased public acceptance of making purchases over the telephone 
and, more recently, the Internet). Accordingly, most companies now 
provide updated order information of the kind required by the Rule 
in their ordinary course of business. Under the OMB regulation 
implementing the PRA, burden is defined to exclude any effort that 
would be expended regardless of any regulatory requirement. 5 CFR 
1320.3(b)(2).
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    Estimated labor costs: $47,108,000 (rounded to the nearest 
thousand)
    FTC staff derived labor costs by applying appropriate hourly cost 
figures to the burden hours described above. According to the most 
recent mean hourly income data available from the Bureau of Labor and 
Statistics, average payroll in 2008 for miscellaneous sales and related 
workers was $19.62/hr. Because the bulk of the burden of complying with 
the MTOR is borne by clerical personnel, staff believes that the 
average hourly payroll figure for miscellaneous sales and related 
workers is an appropriate measure of a direct marketer's average labor 
cost to comply with the Rule. Thus, the total annual labor cost to new 
and established businesses for MTOR compliance during the three-year 
period for which OMB approval is sought would be approximately 
$47,108,000 (2,401,000 hours x $19.62/hr.), rounded to the nearest 
thousand. Relative to direct industry sales, this total is 
negligible.\9\
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    \9\ Based on a $13.786 billion average yearly increase in sales 
for ``electronic shopping and mail-order houses'' from 2000 to 2007 
(according to the 2009 Statistical Abstract), staff estimates that 
total mail or telephone order sales to consumers in the three-year 
period for which OMB clearance is sought will average $265.5 
billion. Thus, the projected average labor cost for MTOR compliance 
by existing and new businesses for that period would amount to less 
than 0.018% of sales.
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    Estimated annual non-labor cost burden: $0 or minimal
    The applicable requirements impose minimal start-up costs, as 
businesses subject to the Rule generally have or obtain necessary 
equipment for other business purposes, i.e., inventory and order 
management, and customer relations. For the same reason, staff 
anticipates printing and copying costs to be minimal, especially given 
that telephone order merchants have increasingly turned to electronic 
communications to notify consumers of delay and to provide cancellation 
options. Staff believes that the above requirements necessitate 
ongoing, regular training so that covered entities

[[Page 53503]]

stay current and have a clear understanding of federal mandates, but 
that this would be a small portion of and subsumed within the ordinary 
training that employees receive apart from that associated with the 
information collected under the Rule.

David C. Shonka,
Acting General Counsel.
[FR Doc. E9-25030 Filed 10-16-09: 10:32 am]
Billing code: 6750-01-S