[Federal Register Volume 75, Number 109 (Tuesday, June 8, 2010)]
[Notices]
[Pages 32470-32472]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-13691]



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FEDERAL TRADE COMMISSION




Agency Information Collection Activities; Submission for OMB 

Review; Comment Request



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



ACTION: Notice.



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SUMMARY: The FTC intends to conduct an exploratory study on consumer 

susceptibility to fraudulent and deceptive marketing. This research 

will be conducted to further the FTC's mission of protecting consumers 

from unfair and deceptive marketing. Before gathering this information, 

the FTC is seeking public comments on its proposed research. The 

information collection requirements described below are being submitted 

to the Office of Management and Budget (``OMB'') for review, as 

required by the Paperwork Reduction Act (``PRA'').



DATES: Comments must be submitted on or before July 8, 2010.



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/fraudexperiment2) and following the instructions on the web-based 

form). Comments filed in paper form should refer to ``Fraud 

Susceptibility Experiment, FTC File No. P095501,'' 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, in the 

manner detailed in the SUPPLEMENTARY INFORMATION section below.

    All comments should additionally be submitted to: Office of 

Information and Regulatory Affairs, Office of Management and Budget, 

Attention: Desk Officer for the Federal Trade Commission. Comments 

should be submitted via facsimile to (202) 395-5167 because U.S. postal 

mail at the OMB is subject to delays due to heightened security 

precautions.



FOR FURTHER INFORMATION CONTACT: Requests for additional information 

should be addressed to Patrick McAlvanah, Economist, Bureau of 

Economics, Federal Trade Commission, 600 Pennsylvania Avenue NW, Mail 

Stop NJ-4136, Washington, DC 20580. Telephone: (202) 326-2974; e-mail: 

([email protected]).



SUPPLEMENTARY INFORMATION:



Request for Comments:



    Interested parties are invited to submit written comments 

electronically or in paper form. Comments should refer to ``Fraud 

Susceptibility Experiment, FTC File No. P095501'' 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 an 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 any ``[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 material 

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), 16 CFR 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 by using the following weblink: (https://public.commentworks.com/ftc/fraudexperiment2) (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/fraudexperiment2). 

If this Notice



[[Page 32471]]



appears at (http://www.regulations.gov/search/Regs/home.html#home), you 

may also file an electronic comment through that website. The 

Commission will consider all comments that regulations.gov forwards to 

it.

    A comment filed in paper form should include the ``Fraud 

Susceptibility Experiment, FTC File No. P095501'' reference 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, NW, 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 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 Commission 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).

    On June 11, 2009, the FTC sought comment on the information 

collection requirements associated with the proposed Fraud 

Susceptibility Experiment study.\2\ No comments were received. Pursuant 

to the OMB regulations, 5 CFR Part 1320, that implement the PRA, 44 

U.S.C. 3501-3521, the Commission is providing this second opportunity 

for public comment. All comments should be filed as prescribed in the 

ADDRESSES section above, and must be received on or before July 8, 

2010.

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    \2\ 74 FR 27794.

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Background Information:



    As part of its consumer protection mission, the FTC has brought 

hundreds of cases targeting fraud, and has committed significant 

resources to educational initiatives designed to protect consumers. The 

Commission hosted a Fraud Forum\3\ on February 25-26, 2009 to examine 

fraud in the market place. The Commission has also conducted telephone 

surveys in 2003 and 2005 designed to measure the proportion of the U.S. 

adult population that has fallen victim to various consumer frauds.\4\ 

Despite this, surprisingly little is known about what determines 

consumers' susceptibility to fraud. For example, the 2003 and 2005 FTC 

consumer fraud surveys found that education was not a significant 

predictor of fraud victimization. Understanding when and why people are 

vulnerable to fraud would better inform the FTC's substantial, ongoing 

efforts to fight fraud through law enforcement and consumer education. 

Additional insights into how and why people fall victim to fraud could 

also help improve any future fraud surveys the Commission may 

undertake. The study announced in this notice is a preliminary and 

exploratory step toward facilitating those efforts. The study is not 

intended to lead to enforcement actions; rather, study results may aid 

the FTC's efforts to better target its enforcement actions and consumer 

education initiatives, and improve future fraud surveys.

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    \3\ Information on the Fraud Forum is available at: (http://www.ftc.gov/bcp/workshops/fraudforum/index.shtm).

    \4\ The Commission has published two staff reports describing 

the results of these surveys - Consumer Fraud in the United States: 

An FTC Survey (published August 2004 and available at (http://www.ftc.gov/reports/consumerfraud/040805confraudrpt.pdf) and 

Consumer Fraud in the United States: The Second FTC Survey 

(published in October 2007 and available at (http://www.ftc.gov/opa/2007/10/fraud.pdf).

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    Economic and psychological experiments have identified several 

decision-making biases, such as impulsivity, over-confidence, over-

optimism, and loss aversion, that can cause inaccurate assessments of 

the risks, costs, and benefits of various choices. FTC staff proposes 

to conduct an economic laboratory experiment to study whether these 

types of decision biases are related to consumer susceptibility to 

fraudulent or deceptive marketing claims. Staff intends to study 

consumers' assessment of potentially deceptive advertisements, in 

addition to their assessment of non-deceptive advertisements. Staff 

seeks to understand which characteristics of individuals and 

advertisements predict consumers' ability to differentiate between 

apparently fraudulent materials and apparently legitimate materials.

    Pursuant to the OMB regulations, 5 CFR Part 1320, that implement 

the PRA, 44 U.S.C. 3501-21, the FTC is providing this opportunity for 

public comment while requesting that OMB approve the study. Under the 

PRA, federal agencies must obtain OMB approval 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). All comments should be filed as 

prescribed in the ADDRESSES section above, and must be received on or 

before July 8, 2010.

A. Description of the collection of information and proposed use

    The FTC proposes to conduct an experiment in a university's 

economics laboratory with 250 subjects drawn from the campus 

community.\5\ A sample of 250 persons enables random assignment of 

subjects into different experimental conditions of sufficient size for 

analytic power. The sample is not intended to be nationally 

representative, but will still provide useful insights into consumer 

susceptibility to fraud. In addition, five to ten of these subjects 

will participate in a pretest. Pretest subjects will participate in an 

in-person interview about the clarity and comprehensibility of the 

instructions.

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    \5\ Staff has contracted with a faculty member of George Mason 

University who will recruit the study subjects and oversee and 

administer the experiment.

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    The study will gauge consumer attitudes towards legitimate and 

potentially fraudulent or deceptive advertisements. Staff plans to ask 

subjects to examine advertisements for fraudulent products and report 

their opinion about the credibility of the advertisements. Staff also 

plans to ask participants to rate the credibility of advertisements for 

apparently legitimate products to gauge how participants distinguish 

between apparently fraudulent product claims and legitimate product 

claims. Staff plans to measure consumer knowledge, risk attitudes, 

impatience, and skepticism using existing methods from economics and 

psychology research. Staff intends to measure consumer knowledge using 

consumer literacy, financial literacy, and numeracy questions\6\ in 

order to test subjects' marketplace understanding and sophistication. 

Staff seeks to determine if people with such knowledge deem fraudulent 

advertisements to be less credible than legitimate advertisements. 

Staff plans to measure subjects' risk attitudes through



[[Page 32472]]



a series of choices between smaller certain amounts of money or larger 

risky amounts.\7\ Staff intends to describe the product to some 

subjects as creating benefits, while presenting to other subjects 

nearly identical information depicted as a reduction in harm. Staff 

intends to then test whether risk-averse and loss-averse subjects are 

particularly susceptible to fraudulent claims framed as opportunities 

to escape losses.\8\ Staff plans to measure subjects' impatience 

through a series of choices between smaller monetary amounts received 

sooner or larger amounts but received later.\9\ Staff would then test 

to see if impatient subjects are more susceptible to fraudulent claims. 

Staff also plans to elicit measures of optimism \10\ and skepticism 

\11\ to determine their roles in deeming advertisements, both of 

fraudulent and legitimate products, as credible. In addition, staff 

intends to collect demographic and background information from the 

surveyed subjects. The FTC has contracted with the faculty of a 

university-run experimental economics laboratory to locate and recruit 

subjects and conduct the experiments.

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    \6\ Staff plans to use financial literacy and numeracy measures 

such as in James Banks and Zoe Oldfield, Understanding Pensions: 

Cognitive Function, Numerical Ability and Retirement Saving, Fiscal 

Studies, 2007, 28 (2).

    \7\ Staff intends to use standard risk aversion measurement 

methodologies akin to those in Charles Holt and Susan Laury, Risk 

Aversion and Incentive Effects, American Economic Review, December 

2002, 1644-1655.

    \8\ Several academic articles report that people are more 

willing to take identical risks over monetary gambles if the risk is 

presented as an opportunity to escape losses rather than as a chance 

to gain. Our ``framing'' methodologies emulate those in Amos Tversky 

and Daniel Kahneman, The Framing of Decisions and the Psychology of 

Choice, Science, Vol. 211, No. 4481 (Jan. 30, 1981), 453-458.

    \9\ Staff intends to use methodology similar to that in Stephan 

Meier and Charles Sprenger, Present-Biased Preferences and Credit 

Card Borrowing, American Economic Journal: Applied Economics 2010, 

2:1, 193-210.

    \10\ Staff plans to use standard questions similar to those in 

Manju Puri and David Robinson, Optimism and Economic Choice, Journal 

of Financial Economics, 2007, Vol. 86, 71-99.

    \11\ Staff plans to use the scale developed in Carl Obermiller 

and Eric Spangenberg, Development of a Scale to Measure Consumer 

Skepticism toward Advertising, Journal of Consumer Psychology, Vol. 

7, No. 2, 1998, 159-186.

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    Staff will pre-test the experimental procedures with up to ten 

subjects to ensure that the instructions provided to participants are 

clear and comprehensible, and that the experimental procedures are 

workable. Pre-test subjects will be drawn from the same university 

subject pool as the experiment's subjects.

B. Estimated Hours Burden

    The FTC plans to seek information from up to 250 respondents for 

approximately 90 minutes each. Allowing for pre-testing of the 

instructions on as many as 10 respondents, at an additional 30 minutes 

apiece, cumulative burden, inclusive of the pre-testing, will total 

approximately 380 hours.

C. Estimated Costs Burden

    The cost per respondent should be negligible. Participation will 

not require start-up, capital, or labor expenditures by respondents. 

The above-noted contractor will recruit the student and community 

member subjects to participate in this study; subjects will be asked to 

respond to an initial recruitment email to participate voluntarily. 

Staff will compensate all subjects for their participation in the 90-

minute study. Subjects will receive approximately $8 as a show-up fee; 

in addition, they will have the opportunity to earn more during the 

course of the study based upon their responses to various questions. 

Staff expects that subjects will earn an average of $30 each for their 

participation in the 90 minute study, and that most subjects will earn 

between $20 and $40.



David C. Shonka

Acting General Counsel

[FR Doc. 2010-13691 Filed 6-7-10; 8:45 am]

BILLING CODE 6750-01-S