[Federal Register Volume 81, Number 4 (Thursday, January 7, 2016)]
[Notices]
[Pages 780-783]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-00033]


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FEDERAL TRADE COMMISSION


Agency Information Collection Activities; Proposed Collection: 
Comment Request

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

ACTION: Notice.

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SUMMARY: The FTC plans to conduct a qualitative survey of consumers who 
recently purchased an automobile and financed that purchase through a 
dealer. Through a survey research firm, the FTC seeks to interview 
consumers about the consumer's experience in selecting, purchasing, and 
financing an automobile from a dealer. The interviews also will involve 
reviewing the consumer's documentation from the purchase and financing. 
This is the first of two notices required under the Paperwork Reduction 
Act (``PRA'') in which the FTC seeks public comments on its proposed 
consumer research in connection with Office of Management and Budget 
(``OMB'') review of, and clearance for, the collection of information 
discussed herein.

DATES: Comments must be received on or before March 7, 2016.

ADDRESSES: Interested parties may file a comment online or on paper, by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Write ``Auto Buyer Consumer 
Survey, Project No. P154800'' on your comment, and file your comment 
online at https://ftcpublic.commentworks.com/ftc/autobuyersurveypra, by 
following the instructions on the web-based form. If you prefer to file 
your comment on paper, mail your comment to the following address: 
Federal Trade Commission, Office of the Secretary, 600 Pennsylvania 
Avenue NW., Suite CC-5610 (Annex J), Washington, DC 20580, or deliver 
your comment to the following address: Federal Trade Commission, Office 
of the Secretary, Constitution Center, 400 7th Street SW., 5th Floor, 
Suite 5610 (Annex J), Washington, DC 20024.

FOR FURTHER INFORMATION CONTACT: Carole Reynolds, 202-326-3230, or 
Teresa Kosmidis, 202-326-3216, Division of Financial Practices, Bureau 
of Consumer Protection, Federal Trade Commission, 600 Pennsylvania 
Avenue NW., Mail Stop-CC-10232, Washington, DC 20580.

SUPPLEMENTARY INFORMATION:

I. Background

    For many consumers, aside from housing costs, a car purchase is 
their most expensive financial transaction. With prices averaging more 
than $33,500 for a new vehicle and $20,000 for a used vehicle from a 
dealer, most consumers seek to finance the purchase of a new or used 
car.\1\ Consumers may seek financing from their local bank or credit 
union, as well as from the dealer selling the vehicle. Financing 
obtained at the dealership, whether it is provided by a third party or 
directly by the dealer, may provide benefits for many consumers, such 
as convenience, special manufacturer-sponsored programs, access to a 
variety of banks and financial entities, or access to credit otherwise 
unavailable to a buyer. Financing that is offered or arranged by 
dealers, however, can be a complicated, opaque process and potentially 
involve unfair or deceptive practices.
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    \1\ In 2015, the average price of a new car sold in the U.S. is 
$33,560, according to Kelly Blue Book. See Kelly Blue Book, Average 
New Car Transaction Prices Rise Steadily, Up 2.6% in April 2015 (May 
1, 2015), available at http://mediaroom.kbb.com/2015-05-01-New-Car-Transaction-Prices-Rise-Steadily-Up-2-6-Percent-in-April-2015-According-to-Kelley-Blue-Book. The average price of a used car is 
$20,057. See Used Car Prices Hold Up in Strong New-Vehicle Market), 
J.D. Power (Sept. 8, 2015), available at http://www.jdpower.com/cars/articles/used-cars/used-car-prices-hold-strong-new-vehicle-market. Used cars available from independent dealers and from ``buy 
here pay here'' dealers have been lower in price. For example, in 
2014, over 42% of cars were sold at an average sales price of 
$5,000--$10,000 at independent dealers; the average cost of cars was 
$7,150 at ``buy here pay here'' dealers. See 2015 NIADA Used Car 
Industry Report, at 6 and 16, respectively, available at http://www.niada.com/publications.php.
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    As the nation's consumer protection agency, the Commission is 
committed to protecting consumers in connection with auto-related 
transactions. The Commission has broad authority to protect consumers 
in this area. The agency enforces the FTC Act, which prohibits unfair 
and deceptive practices by a wide variety of entities, including 
automobile dealers.\2\ Also pursuant to the Dodd-Frank Act,\3\ the FTC 
is authorized to prescribe rules under Section 553 of the 
Administrative Procedure Act (APA) \4\ with respect to unfair or 
deceptive acts or practices by motor vehicle dealers.\5\
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    \2\ 15 U.S.C. 45(a). The Commission also has enforcement 
authority over automobile dealers under various other statutes, 
including, for example, the Truth in Lending Act, 15 U.S.C. 1601-
1666j, and its implementing Regulation Z, 12 CFR 226, 12 CFR 1026; 
the Consumer Leasing Act, 15 U.S.C. 1667-1667f, and its implementing 
Regulation M, 12 CFR 213, 12 CFR 1013; the Equal Credit Opportunity 
Act (ECOA), 15 U.S.C. 1691-1691f, and its implementing Regulation B, 
12 CFR 202, 12 CFR 1002; the Electronic Fund Transfer Act, 15 U.S.C. 
1693-1693r, and its implementing Regulation E, 12 CFR 205, 12 CFR 
1005; and the privacy and safeguard provisions of the Gramm-Leach 
Bliley Act, 15 U.S.C. 6801-6809, and related privacy rule, 16 CFR 
313, and safeguards rule, 16 CFR 314.
    \3\ Dodd-Frank Wall Street Reform and Consumer Protection Act 
Sec.  1029, 12 U.S.C. 5519.
    \4\ 5 U.S.C. 553.
    \5\ See Dodd-Frank Act Sec.  1029(d), 12 U.S.C. 5519(d). Under 
the Dodd-Frank Act, the term ``motor vehicle dealer'' refers to 
``any person or resident in the United States, or any territory of 
the United States, who (A) is licensed by a State, a territory of 
the United States, or the District of Columbia to engage in the sale 
of motor vehicles; and (B) takes title to, holds an ownership in, or 
takes physical custody of motor vehicles.'' Id. at 1029(f)(2), 12 
U.S.C. 5519(f)(2). The term ``motor vehicle'' includes, among other 
things, motorcycles, motor homes, recreational vehicle trailers, 
recreational boats and marine equipment, and other vehicles titled 
and sold through dealers. See id. at 1029(f)(1), 12 U.S.C. 
5519(f)(1).
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    In recent years, the FTC has been particularly active in 
enforcement and other initiatives related to automobile transactions. 
Since 2011, the FTC has brought more than twenty-five cases protecting 
consumers in this area, including a sweep of ten actions against 
automobile dealers for deceptive advertising, and a coordinated 
federal-state effort that yielded more than two hundred automobile 
actions for fraud, deception, and other illegal practices.\6\ In 2011, 
the FTC conducted three automobile ``roundtables'' around the country, 
where panelists from government, consumer advocacy groups, and industry 
discussed consumer protection issues related to sales, financing, and 
leasing practices involving automobiles; the Commission also sought and 
received public

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comments on these issues.\7\ Additionally, the FTC has produced many 
consumer education and business education materials related to 
automobile purchasing and financing.\8\
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    \6\ See Press Releases, FTC Announces Sweep Against 10 Auto 
Dealers (Jan. 9, 2014), available at http://www.ftc.gov/news-events/press-releases/2014/01/ftc-announces-sweep-against-10-auto-dealers; 
FTC Approves Final Consent Orders in Deceptive Auto Dealers' Ad 
Cases (May 6, 2014), available at http://www.ftc.gov/news-events/press-releases/2014/05/ftc-approves-final-consent-orders-deceptive-auto-dealers-ads and FTC, Multiple Law Enforcement Partners Announce 
Crackdown on Deception, Fraud in Auto Sales, Financing and Leasing 
(Mar. 26, 2015), available at https://www.ftc.gov/news-events/press-releases/2015/03/ftc-multiple-law-enforcement-partners-announce-crackdown. See also https://www.ftc.gov/news-events/media-resources/consumer-finance/auto-marketplace.
    \7\ See Press Release, FTC Continues To Seek Public Input On 
Consumer Issues in Motor Vehicle Sales, Financing and Leasing, 
available at http://www.ftc.gov/news-events/press-releases/2012/02/ftc-continues-seek-public-input-consumer-issues-motor-vehicle. See 
also Public Comments, #369: FTC Roundtables Will Address Consumer 
Issues in Motor Vehicle Financing and Leasing; FTC File No. P104811, 
available at https://www.ftc.gov/policy/public-comments/initiative-369.
    \8\ See, e.g., Understanding Vehicle Financing (revised January 
2014), produced in cooperation with the American Financial Services 
Education Foundation and the National Automobile Dealers 
Association, available at http://www.consumer.ftc.gov/articles/0056-understanding-vehicle-financing; Lesley Fair, FTC, Operation Ruse 
Control: 6 tips if cars are up your alley (Mar. 26, 2015), available 
at https://www.ftc.gov/news-events/blogs/business-blog/2015/03/operation-ruse-control-6-tips-if-cars-are-your-alley; Colleen 
Tressler, FTC, Check out the auto dealer and financing before you 
sign (Oct. 31, 2014), available at http://www.consumer.ftc.gov/blog/check-out-auto-dealer-and-financing-you-sign.
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    The FTC's proposed survey will explore in more detail the 
experience of actual consumers who recently purchased and financed an 
automobile from a dealer.\9\ The survey is intended to inform the 
Commission about current consumer protections issues that may exist and 
that could be addressed through FTC action, including enforcement 
initiatives, rulemaking, or education.
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    \9\ For purposes of this survey, ``automobile'' refers to cars, 
minivans, SUVs, and light trucks--all of which consumers commonly 
purchase and finance through automobile dealers. Depending on the 
consumers who participate in the survey, the dealers could 
potentially include: (1) Franchise dealers (e.g., that have 
franchises with automobile manufacturers and may offer consumers 
financing that is assigned to ``captive'' finance companies--
subsidiaries owed by the manufacturers--or to other finance 
entities); (2) independent dealers (e.g., that do not have 
franchises with automobile manufacturers and may offer consumers 
financing that is assigned to finance entities that are not 
subsidiaries owned by the manufacturers but that may be an entity 
related to or associated with the dealer); and (3) ``buy here pay 
here'' dealers (e.g., a type of independent dealer that offers 
consumers in-house financing that the dealers usually retain, 
although some larger dealers may assign the financing to ``buy here 
pay here'' finance entities.
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II. The FTC's Proposed Study

A. Study Description

    The FTC plans to conduct a qualitative survey of consumer 
experiences in recent purchases of automobiles that were financed 
through automobile dealers. The survey will involve an initial sample 
of five in-person consumer interviews to test the survey questionnaire, 
followed by in-person interviews of 40 consumers, with the option to 
interview 40 more, if the FTC deems the additional interviews likely to 
be helpful. For the initial 40 consumers, the FTC seeks to interview 
approximately 20 consumers who have ``prime'' credit scores and 
approximately 20 consumers who have ``subprime'' credit scores in order 
to learn about the consumer's experience with purchasing and financing 
in these two market segments.\10\ Generally, the sample group of 
consumers will be racially diverse and will include participants of 
both sexes. The FTC will use a survey research firm to locate the 
participants, conduct the survey, and write a brief methodological 
report, and other written report as requested by the FTC. The survey 
research firm will select the consumers from a pool of people who 
previously have indicated that they are willing to participate in 
surveys but who have not participated in any in-depth survey interviews 
in the past year. The firm will identify interview subjects who have 
purchased an automobile from a dealer in the previous six months and 
used financing offered or arranged by the dealer to make the purchase. 
The interview subject also must have kept the documentation (e.g., 
credit contract) he or she received as part of the purchase and 
financing. The consumer's credit score will be used in the survey; if 
survey participants do not have their credit score, the consumer may 
obtain it through services that provide this information or the 
contractor will obtain it for the consumer, with the consumer's 
permission. The interview subjects and their personal identifying 
information will be anonymized in material received by the FTC, and 
will be vigorously protected by the survey firm.\11\
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    \10\ For example, Experian categorizes consumers with scores 
below 601 as subprime (either ``subprime,'' or ``deep subprime''). 
See Experian, State of the Automotive Finance Market Third Quarter 
2015 available at http://www.experian.com/automotive/automotive-credit-webinar.html.
    \11\ The survey firm will set up two secure databases for 
maintaining information about potential and selected survey 
participants. The firm will assign each consumer a random 
identification number (``random ID number''), and that information 
along with the consumer's identifying information will be maintained 
by the contractor in one database. The FTC will only have access to 
a second database that will include the random ID number with 
anonymized information about the consumers and redacted information 
regarding the consumers' purchase and finance documents. Thus, only 
redacted copies of purchase and finance documents will be maintained 
in the survey. The survey will utilize rigorous protections for 
privacy and security of consumer information.
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    The survey research firm will conduct interviews lasting 
approximately 90 minutes with each consumer. The interviews will focus 
on, among other things:
     The consumer's experience in shopping for and choosing an 
automobile;
     the process of agreeing to a price for the automobile;
     the process of trading in the consumer's old automobile, 
if applicable;
     the consumer's experience in obtaining financing;
     additional products or services the dealer may have 
offered;
     contacts between the consumer and the dealer after the 
purchase; and
     the consumer's overall perception of the purchase 
experience.
    The interviews will conclude by reviewing the consumer's 
documentation and exploring the consumer's understanding of that 
documentation. Participation in the survey will be voluntary. While the 
results will not be generalizable to the U.S. population, the 
Commission believes that they can provide useful insights into consumer 
understanding of the automobile purchasing and financing process at the 
dealership.

B. PRA Burden Analysis

    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'' includes 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). The FTC seeks 
clearance for the automobile buyer study and the FTC's associated PRA 
burden estimates that follow.
    A. Estimated number of respondents: 170.
    B. Burden Hours: 351.5 hours.
    C. Labor Costs: Negligible.
    More specifically, staff estimates that the contractor's 
preliminary review of consumers to ascertain consumers for the survey 
would involve no more than 170 consumers (at most twice the maximum 
number of consumers--85 --that would be involved in the survey).
    The estimated hours are a total of the time for preliminary review, 
the pretest, the interviews, and obtaining credit scores. The 
preliminary review will include topics such as whether the consumer has 
recently purchased a car and has participated in a survey in the past 
year, as well as the consumer's self-identified race and origin. This 
review, done by phone, would require no more than 15 minutes per 
consumer, for 42.5 hours (170 respondents x 15 minutes). Staff also 
estimates that at most, each of the 170 consumers would take 
approximately 30 minutes to locate or ascertain whether they have their

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documentation and their credit score for the survey, for 85 hours. 
Thus, the preliminary review total would be 127.5 hours.
    Staff will pretest the questionnaire and interview materials with 
approximately five respondents to ensure that questions are easily 
understood. Staff estimates that each interview (including the 
documentation review) will take approximately 90 minutes, plus 60 
minutes travel time to and from the survey. Allowing for an extra ten 
minutes for questions unique to the pretest, the pretest will total 
approximately 13.33 hours (5 respondents x 160 minutes each).
    Once the pretest is completed, the initial 40 interviews will take 
100 hours (60 hours for the interviews plus 40 hours travel time to and 
from the survey). If an additional 40 consumers are interviewed, that 
will require an additional 100 hours, respectively. Thus, for the 
interviews of 80 consumers, staff estimates that 200 hours will be 
required (80 x 150 minutes each).
    Staff further estimates that approximately 75%, or 64, of the 85 
survey participants (pretest and interviews) do not already have their 
credit score and will thus procure it through the contractor or 
services that provide this information. Staff estimates that 10 minutes 
per consumer will be required for this purpose, for a total of 10.67 
hours (64 respondents x 10 minutes each).
    Thus, the FTC's survey will require 351.5 hours (127.5 hours for 
preliminary review + 13.33 hours for pretest + 200 hours for interviews 
+ 10.67 hours for obtaining credit scores). The monetary cost per 
respondent should be negligible. The contractor will assist those 
consumers who seek the contractor's assistance in obtaining their 
credit score if the consumers do not have it. Alternatively, costs to 
obtain their credit score through other means should be nil or 
negligible. Increasingly, Web sites offer free credit scores; 
additionally, credit score information often is available to consumers 
through credit sources they already have, such as credit card or other 
credit statements, in some cases.
    The survey research firm may pay respondents a reasonable and 
customary financial incentive for participation. Participation will not 
require start up, capital, or labor expenditures by interview subjects.

III. Request for Comment

    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.\12\ As required by Section 
3506(c)(2)(A) of the PRA, the FTC is providing this opportunity for 
public comment before requesting that OMB provide clearance for this 
matter.
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    \12\ 44 U.S.C. 3502(3); 5 CFR 132.3(c).
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    Pursuant to Section 3506(c)(2)(A) of the PRA, the FTC invites 
comments on:
    (1) Whether the reporting requirements are necessary, including 
whether the information will be practically useful; (2) the accuracy of 
our burden estimates, including whether the methodology and assumptions 
used are valid; (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.
    Additionally, the FTC seeks comments on the proposed survey 
methodology and specific issues or questions that should be included in 
the interview process.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before March 7, 2016. 
Write ``Auto Buyer Consumer Survey, Project No. P154800'' 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 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). 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 have to follow the procedure explained 
in FTC Rule 4.9(c), 16 CFR 4.9(c).\13\ Your comment will be kept 
confidential only if the FTC General Counsel grants your request in 
accordance with the law and the public interest.
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    \13\ 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, we encourage 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/autobuyersurveypra, by following the instructions on the web-based 
form. When this Notice appears at http://www.regulations.gov/#!home, 
you also may file a comment through that Web site.
    If you prefer to file your comment on paper, write ``Auto Buyer 
Consumer Survey, Project No. P154800'' on your comment and on the 
envelope and mail your comment to the following address: Federal Trade 
Commission, Office of the Secretary, 600 Pennsylvania Avenue NW., Suite 
CC-5610 (Annex J), Washington, DC 20580, or deliver your comment to the 
following address: Federal Trade Commission, Office of the Secretary, 
Constitution Center, 400 7th Street SW., 5th Floor, Suite 5610 (Annex 
J), Washington, DC 20024. 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 and the news release describing it. 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 March 7, 2016. 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.


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    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2016-00033 Filed 1-6-16; 8:45 am]
 BILLING CODE 6750-01-P