[Federal Register Volume 78, Number 237 (Tuesday, December 10, 2013)]
[Notices]
[Pages 74142-74145]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-29404]


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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 March 31, 2017, the current 
PRA clearance for information collection requirements contained in its 
Informal Dispute Settlement Procedures Rule. That clearance expires on 
March 31, 2014.

DATES: Comments must be received on or before February 10, 2014.

ADDRESSES: Interested parties may file a comment online or on paper by 
following the instructions in the Request for Comments part of the 
SUPPLEMENTARY INFORMATION section below.

FOR FURTHER INFORMATION CONTACT: Requests for copies of the collection 
of information and supporting documentation should be addressed to 
Svetlana Gans, Attorney, Division of Marketing Practices, Bureau of 
Consumer Protection, Federal Trade Commission, Room H-286, 600 
Pennsylvania Ave. NW., Washington, DC 20580, (202) 326-3708.

SUPPLEMENTARY INFORMATION:

Proposed Information Collection Activities

    Under the Paperwork Reduction Act (PRA), 44 U.S.C. 3501-3520, 
federal agencies must get OMB approval for each collection of 
information they conduct, sponsor, or require. ``Collection of 
information'' means agency requests or requirements to 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

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public comment before requesting that OMB extend the existing PRA 
clearance for the information collection requirements associated with 
the Commission's Informal Dispute Settlement Procedures Rule (the 
Dispute Settlement Rule or the Rule), 16 CFR 703 (OMB Control Number 
3084-0113).
    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. All comments must be received on or before February 10, 
2014.
    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 Part 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 
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 require 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.

Dispute Settlement Rule Burden Statement

    Total annual hours burden: 8,318 hours (derived from (5,757 hours 
for recordkeeping + 1,919 hours for reporting + 642 hours for 
disclosures).
    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 
2010 submission to OMB, staff estimated a total annual hours burden of 
approximately 13,266 hours (derived from 9,114 hours for recordkeeping 
+ 3,038 hours for reporting + 1,114 hours for disclosure requirements). 
Although the Rule's information collection requirements have not 
changed since 2010, staff has adjusted its previous estimates downward 
for 2013 calculations because the annual audits filed by the two IDSMs 
currently operating under the Rule indicate that, on average, fewer 
disputes have been handled since the previous submission to OMB in 2010 
(18,227 disputes/year in 2010; 11,514 disputes/year in 2013). This 
factor results in a decreased annual hours burden estimate for the 
IDSMs. 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 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 2010 (audits for 
calendar years 2010 through 2012) indicates that 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 
2010 through 2012 indicate that it handled an average of 9,358 disputes 
each year.\7\ Audit reports submitted on behalf of NCDS, which most 
recently handled disputes on behalf of five automobile manufacturers, 
indicate that an average of 2,156 disputes were closed each year for 
calendar years 2010 through 2012.\8\
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    \7\ According to its annual audits, the number of disputes filed 
each year with the BBB AUTO LINE are 8,821 (2012), 9,177 (2011), and 
10,075 (2010). As of its most recent audit in 2012, the BBB AUTO 
LINE handled disputes on a national basis for ten automobile 
manufacturers.
    \8\ According to its annual audits, the number of disputes 
closed each year with NCDS are 1,505 (2012), 1,359 (2011), and 3,603 
(2010).
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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 11,514 (an average of 9,358 disputes handled by BBB AUTO 
LINE + an average of 2,156 disputes handled by NCDS).\9\ Accordingly, 
staff estimates the total annual recordkeeping burden attributable to 
the Rule to be approximately 5,757 hours (11,514 disputes x 30 minutes 
of burden) / 60 minutes).
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    \9\ Because the number of annual disputes filed has fluctuated, 
staff believes that using the average number of disputes filed for 
years 2010 through 2012 (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

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covered entities spend approximately 10 minutes per case for these 
activities, resulting in a total annual burden of approximately 1,919 
hours (11,514 disputes x 10 minutes of burden / 60 minutes).

Disclosure

(a) Warrantors' Disclosure Burden
    The Rule requires warrantors that incorporate the use of an IDSM 
into their warranties to disclose in their warranties a statement about 
the availability of the IDSM, the contact information for the IDSM, and 
any ``prior resort requirement.'' \10\ Similar to 2010, 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) Information concerning IDSM and its procedures; and (2) information 
that makes consumers aware of the existence of the IDSM.
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    \10\ 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, filled out by 
the consumer, that provides 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.\11\ 
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 imposed on warrantors from drafting warranty terms that 
comply with Rule 701 (the rule on the disclosure of warranty terms).
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    \11\ 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.\12\ 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.
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    \12\ 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 there are approximately fifteen 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 450 hours (15 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 192 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 
(11,514) and the assumption that twenty percent of consumers 
individually request copies of the records pertaining to their 
disputes, or approximately 2,303 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.\13\ Thus, the IDSMs currently operating under the Rule 
have an estimated total disclosure burden of 192 hours (2,303 consumers 
x 5 minutes of burden / 60 minutes).
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    \13\ 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, some case files are provided 
to consumers electronically, which further reduces 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 8,318 hours (5,757 hours for recordkeeping 
+ 1,919 hours for reporting + 642 hours for disclosures).
    Total annual labor cost: $161,000, 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 $14.07. Thus, the labor cost associated with the 5,757 
annual burden hours for recordkeeping is approximately $86,355 (5,757 
burden hours x $15 per hour).
    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 1,919 annual burden hours for 
reporting is approximately $28,785 (1,919 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 improving the warrantors' materials, 
and implementing those recommended changes as appropriate. The graphic 
design work entails creating pamphlets, brochures, posters, or other 
materials 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 (150 hours) require legal work at 
a rate of $250 per hour, one third requires graphic design at a rate of 
$23 per hour, and one third requires clerical work at a rate of $15 per 
hour. This results in a disclosure labor burden of $43,200 for 
warrantors ((150 x $250) + (150 x $23) + (150 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 192 annual hours of disclosure burden for IDSMs is 
approximately $2,880 (192 burden hours x $15 per hour).
    Accordingly, the combined total annual labor cost for PRA-related 
burden under the Rule is approximately $161,220 ($86,355 for 
recordkeeping +

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$28,785 for reporting + $46,080 for disclosures).
    Total annual capital or other non-labor costs: $314,000, 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 already have access.
    The Rule imposes only one additional cost on IDSMs operating under 
the Rule that would not apply to other IDSMs: The annual audit 
requirement. According to representatives of the IDSMs, the vast 
majority of costs associated with this requirement consist of 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. Staff 
retains that estimate.
    Other non-labor costs: $13,707 in copying costs, based on estimated 
copying costs of 7 cents per page and several conservative assumptions. 
Staff estimates that the average dispute-related file contains 35 pages 
and a typical annual audit file contains approximately 200 pages. As 
discussed above, staff assumes that twenty percent of consumers using 
an IDSM currently operating under the Rule (approximately 2,303 
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. Staff bases this assumption on (1) 
the number of consumer requests 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 576 consumers) will request a 
copy of the IDSM's audit report.
    Thus, the total annual copying cost for dispute-related files is 
approximately $5,643 (35 pages per file x $.07 per page x 2,303 
consumer requests) and the total annual copying cost for annual audit 
reports is approximately $8,064 (200 pages per audit report x $.07 per 
page x 576 consumer requests). Accordingly, the total cost attributed 
to copying under the Rule is approximately $13,707. Thus, the total 
non-labor cost under the Rule is approximately $314,000 ($300,000 for 
auditor fees + $13,707 for copying costs).

Request for Comments

    You can file a comment online or on paper. Write ``Warranty Rules: 
Paperwork Comment, FTC File No. P044403'' on your comment. Your 
comment--including your name and your state--will be placed on the 
public record of this proceeding, including, to the extent practicable, 
on the public Commission Web site, at http://www.ftc.gov/os/publiccomments.shtm. As a matter of discretion, the Commission tries to 
remove individuals' home contact information from comments before 
placing them on the Commission Web site.
    Because your comment will be made public, you are solely 
responsible for making sure that your comment does not include any 
sensitive personal information, like anyone'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. You are also solely 
responsible for making sure that your comment does not include any 
sensitive health information, like medical records or other 
individually identifiable health information. In addition, do not 
include any ``[t]rade secret or any commercial or financial information 
which is * * * privileged or confidential,'' as discussed 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). In particular, do not include competitively sensitive 
information such as costs, sales statistics, inventories, formulas, 
patterns, devices, manufacturing processes, or customer names.
    If you want the Commission to give your comment confidential 
treatment, you must file it in paper form, with a request for 
confidential treatment, and you must follow the procedure explained in 
FTC Rule 4.9(c), 16 CFR 4.9(c).\14\ Your comment will be kept 
confidential only if the FTC General Counsel, in his or her sole 
discretion, grants your request in accordance with the law and the 
public interest.
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    \14\ 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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    Postal mail addressed to the Commission is subject to delay due to 
heightened security screening. As a result, the Commission encourages 
you to submit your comments online. To make sure that the Commission 
considers your online comment, you must file it at https://ftcpublic.commentworks.com/ftc/idsrpra by following the instructions on 
the web-based form. If this Notice appears at http://www.regulations.gov, you also may file a comment through that Web site.
    If you file your comment on paper, write ``Warranty Rules: 
Paperwork Comment, FTC File No. P044403'' on your comment and on the 
envelope, and mail or deliver it to the following address: Federal 
Trade Commission, Office of the Secretary, Room H-113 (Annex J), 600 
Pennsylvania Avenue NW., Washington, DC 20580. If possible, submit your 
paper comment to the Commission by courier or overnight service.
    Visit the Commission Web site at http://www.ftc.gov to read this 
Notice. 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 on or before February 10, 
2014. You can find more information, including routine uses permitted 
by the Privacy Act, in the Commission's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.

David C. Shonka,
Principal Deputy General Counsel.
[FR Doc. 2013-29404 Filed 12-9-13; 8:45 am]
BILLING CODE 6750-01-P