[Federal Register Volume 75, Number 226 (Wednesday, November 24, 2010)]
[Notices]
[Pages 71704-71707]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-29607]
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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 is seeking
public comments on its proposal to extend through February 28, 2014,
the current PRA clearance for information collection requirements
contained in its Informal Dispute Settlement Procedures Rule. That
clearance expires on February 28, 2011.
DATES: Comments must be received on or before January 24, 2011.
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 Web link: (https://ftcpublic.commentworks.com/ftc/idsrpra)
(and following the instructions on the Web-based form). Comments in
paper form should be mailed or delivered to the following address:
Federal Trade Commission, Office of the Secretary, Room HB-113 (Annex
J), 600 Pennsylvania Avenue, NW., Washington, DC 20580, in the manner
detailed in the SUPPLEMENTARY INFORMATION section below.
FOR FURTHER INFORMATION CONTACT: Requests for copies of the collection
of information and supporting documentation should be addressed to
Allyson Himelfarb, Investigator, Division of Marketing Practices,
Bureau of Consumer Protection, Federal Trade Commission, Room H-286,
600 Pennsylvania Ave., NW., Washington, DC 20580, (202) 326-2505.
SUPPLEMENTARY INFORMATION:
Proposed Information Collection Activities
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). Because the number of entities affected by the Commission's
requests will exceed ten, the Commission plans to seek OMB clearance
under the PRA. As required by Sec. 3506(c)(2)(A) of the PRA, the
Commission is providing this opportunity for public comment before
requesting that OMB extend the existing paperwork clearance for the
information collection requirements associated with the Commission's
regulations under the FTC's Informal Dispute Settlement Procedures Rule
(the Dispute Settlement Rule or Rule) (OMB Control Number 3084-0113),
16 CFR 703.
The Dispute Settlement Rule is one of three rules \1\ that the FTC
implemented pursuant to requirements of the Magnuson-Moss Warranty Act,
15 U.S.C. 2301 et seq. (Warranty Act or Act).\2\ The Dispute Settlement
Rule, 16 CFR 703, specifies the minimum standards which must be met by
any informal dispute settlement mechanism (IDSM) that is incorporated
into a written consumer product warranty and which the consumer must
use before pursuing legal remedies under the Act in court. In enacting
the Warranty Act, Congress recognized the potential benefits of
consumer dispute mechanisms as an alternative to the judicial process.
Section 110(a) of the Act sets out the Congressional policy to
``encourage warrantors to establish procedures whereby consumer
disputes are fairly and expeditiously settled through informal dispute
settlement mechanisms'' and erected a framework for their
establishment.\3\ As an incentive to warrantors to establish IDSMs,
Congress provided in Section 110(a)(3) that warrantors may incorporate
into their written consumer product warranties a requirement that a
consumer must resort to an IDSM before pursuing a legal remedy under
the Act for breach of warranty.\4\ To ensure fairness to consumers,
however, Congress also directed that, if a warrantor were to
incorporate such a ``prior resort requirement'' into its written
warranty, the warrantor must comply with the minimum standards set by
the Commission for such IDSMs.\5\ Section 110(a)(2) of the Act directed
the Commission to establish those minimum standards.\6\
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\1\ The other two rules relate to the information that must
appear in any written warranty offered on a consumer product costing
more than $15 and the pre-sale availability of warranty terms.
\2\ 40 FR 60168 (Dec. 31, 1975).
\3\ 15 U.S.C. 2310(a).
\4\ 15 U.S.C. 2310(a)(3).
\5\ Id.
\6\ 15 U.S.C. 2310(a)(2).
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The Dispute Settlement Rule contains standards for IDSMs, including
[[Page 71705]]
requirements concerning the mechanism's structure (e.g., funding,
staffing, and neutrality), the qualifications of staff or decision
makers, the mechanism's procedures for resolving disputes (e.g.,
notification, investigation, time limits for decisions, and follow-up),
recordkeeping, and annual audits. The Rule requires that IDSMs
establish written operating procedures and provide copies of those
procedures upon request.
The Dispute Settlement Rule applies only to those firms that choose
to be bound by it by requiring consumers to use an IDSM. Neither the
Rule nor the Act requires warrantors to set up IDSMs. A warrantor is
free to set up an IDSM that does not comply with the Rule as long as
the warranty does not contain a prior resort requirement.
Request for Comments
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. All comments should be filed as prescribed
below, and must be received on or before January 24, 2011.
Please also note that because your comments will be made public,
you are solely responsible for ensuring that it does 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. It is also
your own responsibility to ensure that your comment does not include
any sensitive health information, such as medical records or other
individually identifiable health information. In addition, your comment
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 FTC Act, 15
U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2). No comment,
whether it contains such material or not, will be given confidential
treatment unless the comment has been filed with the FTC Secretary; the
comment is accompanied by a written confidentiality request that
complies fully with FTC Rule 4.9(c), 16 CFR 4.9(c); \7\ and the General
Counsel, in his or her sole discretion, has determined to grant the
request in accordance with applicable law and the public interest.
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\7\ In particular, the written request for confidential
treatment that accompanies the comment must include the factual and
legal basis for the request, and must identify the specific portions
of the comment to be withheld from the public record. 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 Web link: https://ftcpublic.commentworks.com/ftc/idsrpra (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 Web
link: https://ftcpublic.commentworks.com/ftc/idsrpra). If this Notice
appears at http://www.regulations.gov/search/index.jsp, you may also
file an electronic comment through that Web site. The Commission will
consider all comments that regulations.gov forwards to it. You may also
visit the FTC Web site at http://www.ftc.gov to read the Notice and the
news release describing it.
A comment filed in paper form should include the ``Warranty Rules:
Paperwork Comment, FTC File No. P044403'' 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-113
(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 Web
site, 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 Web site. 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.
Informal Dispute Settlement Rule Burden Statement
Total annual hours burden: 13,000 hours, rounded to the nearest
thousand. The primary burden from the Dispute Settlement Rule comes
from the recordkeeping requirements that apply to IDSMs that are
incorporated into a consumer product warranty through a prior resort
clause. In its 2007 submission to OMB, staff estimated that the
recordkeeping burden was 12,241 hours per year, the reporting burden
was 4,080 hours per year, and the disclosure requirements were 408
hours per year, or cumulatively, approximately 17,000 hours. Although
the Rule's information collection requirements have not changed since
2007, staff has adjusted its previous estimates based on the following
two factors. First, the annual audits filed by the two IDSMs currently
operating under the Rule indicate that, on average, fewer disputes were
handled since the previous submission to OMB in 2007. This factor
results in a decreased annual hours burden estimate for the IDSMs.
Second, staff has reevaluated the methodology used and the assumptions
made in its previous submission with respect to the burden imposed on
warrantors under the Rule, and now includes that analysis in its new
estimates. This factor results in an increased annual burden estimate
for warrantors. The calculations underlying staff's new estimates
follow.
Recordkeeping: The Rule requires IDSMs to maintain records of each
consumer warranty dispute that is referred to it. These case files must
include information such as the consumer's contact information, the
make and model of the product at issue, all letters or other
correspondence submitted by the consumer or warrantor, and all evidence
collected to resolve the dispute. Because maintaining individual case
records is a necessary function for any IDSM, much of the burden would
be incurred in the ordinary course of the IDSM's business. Nonetheless,
staff retains its previous
[[Page 71706]]
estimate that maintaining individual case files imposes an additional
burden of 30 minutes per case.
The amount of work required will depend on the number of dispute
resolution proceedings undertaken in each IDSM. A review of the annual
audits completed since the prior submission to OMB in 2007 (audits for
calendar years 2006 through 2009) indicates that currently there are
two IDSMs operating under the Rule: the BBB AUTO LINE and the National
Center for Dispute Settlement (NCDS). The BBB AUTO LINE audits from
calendar years 2006 through 2009 indicate that it handled an average of
16,187 disputes each year.\8\ Audit reports submitted on behalf of
NCDS, which most recently handled disputes on behalf of six automobile
manufacturers, indicate that an average of 2,040 disputes were closed
each year for calendar years 2006 through 2009.\9\
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\8\ According to its annual audits, the number of disputes filed
each year with the BBB AUTO LINE are as follows: 20,658 in 2006;
17,365 in 2007; 14,958 in 2008; and 11,768 in 2009. As of its most
recent audit in 2009, the BBB AUTO LINE handled disputes on a
national basis for thirteen automobile manufacturers. An additional
eight manufacturers utilized BBB AUTO LINE in some States, but not
others.
\9\ According to its annual audits, the number of disputes
closed each year with NCDS are as follows: 1,836 in 2006; 1,759 in
2007; 2,110 in 2008; and 2,455 in 2009.
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Based on the above figures, staff estimates that the average number
of disputes handled annually by IDSMs covered by the Rule is
approximately 18,227 (an average of 16,187 disputes handled by BBB AUTO
LINE + an average of 2,040 disputes handled by NCDS).\10\ Accordingly,
staff estimates the total annual recordkeeping burden attributable to
the Rule to be approximately 9,114 hours (18,227 disputes x 30 minutes
of burden) / 60 minutes).
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\10\ Because the number of annual disputes filed has fluctuated,
staff believes that taking the average number of disputes filed for
years 2006 through 2009 (the most recent available data) is the best
way to project what will happen over the next three years of the OMB
clearance for the Rule.
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Reporting: The Rule requires IDSMs to update indexes, complete
semiannual statistical summaries, and submit an annual audit report to
the FTC. Staff retains its previous estimate that covered entities
spend approximately 10 minutes per case for these activities, resulting
in a total annual burden of approximately 3,038 hours (18,227 disputes
x 10 minutes of burden / 60 minutes).
Disclosure
(a) Warrantors' Disclosure Burden
The Rule requires warrantors that elect to incorporate the use of
an IDSM into their warranties to disclose in their warranties the
following: a statement about the availability of the IDSM, the contact
information for the IDSM, and any ``prior resort requirement.'' \11\ In
its 2007 submission to OMB, staff noted that any incremental costs to
the warrantor of including this additional information in the warranty
would be negligible, and thus, did not account for warrantors'
disclosure burden in its previous submission. While staff continues to
agree with that assessment, upon further review, staff has determined
that it would be appropriate to account for the disclosure burden as it
relates to warrantors based on two types of additional information that
warrantors are required to disclose under the Rule: (1) More detailed
information concerning the IDSM and its procedures; and (2) information
that makes consumers aware of the existence of the IDSM.
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\11\ 16 CFR 703.2(b).
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First, the Rule requires that warrantors include, either in the
warranty or in a separate document accompanying the warranted product,
more detailed information concerning the IDSM. Among other things, this
information may include: a form addressed to the IDSM with spaces to be
filled out by the consumer to provide the IDSM with information needed
to resolve consumer disputes, a brief description of IDSM procedures,
the time limits adhered to by the IDSM, and the types of information
the IDSM might require for prompt resolution of the consumer
dispute.\12\ Because warrantors have the option of providing this
additional information in materials separate from the warranty,
warrantors likely will bear an additional burden that is separate and
apart from whatever burden already is imposed on warrantors from
drafting warranty terms that comply with Rule 701, the rule on the
disclosure of warranty terms.
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\12\ 16 CFR 703.2(c).
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Second, the Rule requires that warrantors take steps reasonably
calculated to make consumers aware of the IDSM's existence at the time
consumers experience warranty disputes.\13\ The annual audits--which
are required to assess how well warrantors comply with this
requirement--demonstrate the different steps warrantors take to inform
consumers of the existence of the IDSM procedures. For example, some
warrantors create separate pamphlets that deal specifically with the
IDSM process. Other warrantors publish entire warranty manuals or
booklets, within which several pages are dedicated to the IDSM. Still
other warrantors have created posters to alert consumers to the
existence of the informal dispute settlement process. Based on this
information, it is clear that warrantors bear more than a negligible
disclosure burden under the Rule. Accordingly, staff now includes an
assessment of the disclosure burden for warrantors in its estimates as
follows.
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\13\ 16 CFR 703.2(d).
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A review of the annual audits of the BBB AUTO LINE and the NCDS
indicates that currently there are approximately twenty-seven
automobile manufacturers covered by the Rule. Staff assumes that each
manufacturer spends an average of thirty hours a year creating,
revising, and distributing the informational materials necessary to
comply with the Rule, resulting in an annual disclosure burden of 810
hours (27 manufacturers x 30 hours).
(b) IDSMs' Disclosure Burden
Under the Rule, a portion of the disclosure burden would be borne
by the IDSM itself, which is required to provide to interested
consumers upon request copies of the various types of information the
IDSM possesses, including its annual audits. In addition, consumers who
have filed disputes with the IDSM also have a right to copies of their
records. (IDSMs are permitted to charge for providing both types of
information.)
Based on discussions with representatives of the IDSMs over the
years, staff estimates that the burden imposed by the disclosure
requirements is approximately 304 hours per year for the existing IDSMs
to provide copies of this information. This estimate draws from the
average number of consumers who file claims each year with the IDSMs
(18,227) and the assumption that twenty percent of consumers
individually request copies of the records pertaining to their
disputes, or approximately 3,645 consumers. Staff estimates that
copying such records would require approximately 5 minutes per
consumer, including a negligible number of requests for copies of the
annual audit.\14\ Thus, the IDSMs
[[Page 71707]]
currently operating under the Rule have an estimated total disclosure
burden of 304 hours (3,645 consumers x 5 minutes of burden / 60
minutes).
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\14\ This estimate includes the additional amount of time
required to copy the annual audit upon a consumer's request.
However, because staff has determined that a very small minority of
consumers request a copy of the annual audit, this estimate is
likely an overstatement. In addition, at least a portion of case
files are provided to consumers electronically, which further would
reduce the paperwork burden borne by the IDSMs.
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Accordingly, the total PRA-related annual hours burden attributed
to the Rule is approximately 13,266 hours (9,114 hours for
recordkeeping + 3,038 hours for reporting + 1,114 hours for
disclosures).
Total annual labor cost: $265,000 rounded to the nearest thousand.
Recordkeeping: Staff assumes that IDSMs use clerical staff to
comply with the recordkeeping requirements contained in the Rule at an
hourly rate of $15.\15\ Thus, the labor cost associated with the 9,114
annual burden hours for recordkeeping is approximately $136,710 (9,114
burden hours x $15 per hour).
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\15\ The wage rates used in this Notice are based on recent data
from the Bureau of Labor Statistics National Compensation Survey at
http://www.bls.gov/ncs/ncswage2009.htm, with the exception of the
hourly wage rate for legal professionals, which is based upon
industry knowledge. Hourly rates are rounded to the nearest dollar.
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Reporting: Staff assumes that IDSMs also use clerical support staff
at an hourly rate of $15 to comply with the reporting requirements.
Thus, the labor cost associated with the 3,038 annual burden hours for
reporting is approximately $45,570 (3,038 burden hours x $15 per hour).
Disclosure: Staff assumes that the work required to comply with the
warrantors' disclosure requirements entails an equal mix of legal,
clerical, and graphic design work. The legal work entails ensuring that
the warranty information and other materials contain the information
required to be disclosed by the Rule, as well as reviewing the annual
audits for any recommendations for how to improve the warrantors'
materials, and implementing those recommended changes as appropriate.
The graphic design work entails creating pamphlets, brochures, posters,
or other materials that are aimed at making consumers aware of the
existence of the IDSM and its procedures. The clerical work entails
copying and distributing those informational materials. Staff assumes
that one third of the total disclosure hours for warrantors (270 hours)
requires legal work at a rate of $250 an hour, one third requires
graphic design at a rate of $23 an hour, and one third requires
clerical work at a rate of $15 an hour. This results in a disclosure
labor burden of $77,760 for warrantors ((270 x $250) + (270 x $23) +
(270 x $15).
In addition, staff assumes that IDSMs use clerical support at an
hourly rate of $15 to reproduce records and, therefore, the labor cost
associated with the 304 annual hours of disclosure burden for IDSMs is
approximately $4,560 (304 burden hours x $15 per hour).
Accordingly, the combined total annual labor cost for PRA-related
burden under the Rule is approximately $264,600 ($136,710 for
recordkeeping + $45,570 for reporting + $82,320 for disclosures).
Total annual capital or other nonlabor costs: $322,000, rounded to
the nearest thousand.
Total capital and start-up 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. In addition, according to a
representative of one IDSM, it has already developed systems to collect
and retain information needed to produce the indexes and statistical
summaries required by the Rule, and thus, estimated very low capital or
startup costs.
The only additional cost imposed on IDSMs operating under the Rule
that would not be incurred for other IDSMs is the annual audit
requirement. According to representatives of the IDSMs, the vast
majority of costs associated with this requirement are the fees paid to
the auditors and their staffs to perform the annual audit.
Representatives of the IDSMs previously estimated a combined cost of
$300,000 for both IDSMs currently operating under the Rule, and staff
retains that estimate.
Other non-labor costs: $22,000 in copying costs. This total is
based on estimated copying costs of 7 cents per page and several
conservative assumptions. Staff estimates that the average dispute-
related file is 35 pages long and that a typical annual audit file is
approximately 200 pages in length. As discussed above, staff assumes
that twenty percent of consumers using an IDSM currently operating
under the Rule (approximately 3,645 consumers) request copies of the
records relating to their disputes.
Staff also estimates that a very small minority of consumers
request a copy of the annual audit. This assumption is based on (1) the
number of consumer requests actually received by the IDSMs in the past;
and (2) the fact that the IDSMs' annual audits are available online.
For example, annual audits are available on the FTC's Web site, where
consumers may view and or print pages as needed, at no cost to the
IDSM. In addition, the Better Business Bureau makes available on its
Web site the annual audit of the BBB AUTO LINE. Therefore, staff
conservatively estimates that only five percent of consumers using an
IDSM covered by the Rule (approximately 911 consumers) will request a
copy of the IDSM's audit report.
Thus, the total annual copying cost for dispute-related files is
approximately $8,930 (35 pages per file x $.07 per page x 3,645
consumer requests) and the total annual copying cost for annual audit
reports is approximately $12,754 (200 pages per audit report x $.07 per
page x 911 consumer requests). Accordingly, the total cost attributed
to copying under the Rule is approximately $21,684. Thus, the total
non-labor cost under the Rule is approximately $321,684 ($300,000 for
auditor fees + $21,684 for copying costs).
Willard K. Tom,
General Counsel.
[FR Doc. 2010-29607 Filed 11-23-10; 8:45 am]
BILLING CODE 6750-01-P