[Federal Register Volume 81, Number 11 (Tuesday, January 19, 2016)]
[Notices]
[Pages 2860-2862]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-00841]


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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, for three years, the current PRA 
clearance for information collection requirements contained in the 
Mail, Internet, or Telephone Order Merchandise Rule (MITOR). This 
clearance expires on April 30, 2016.

DATES: Comments must be received on or before March 21, 2016.

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. Write ``Mail, Internet, or 
Telephone Order Merchandise Trade Regulation Rule: FTC File No. 
R511929'' on your comment, and file your comment online at https://ftcpublic.commentworks.com/ftc/mitorpra by following the instructions 
on the web-based form. If you prefer to file your comment on paper, 
mail or deliver 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: Requests for copies of the collection 
of information and supporting documentation should be addressed to Jock 
Chung, 202-326-2984, Attorney, Enforcement Division, Bureau of Consumer 
Protection, 600 Pennsylvania Ave. NW., Mail Drop CC-9528, Washington, 
DC 20580.

SUPPLEMENTARY INFORMATION: 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 
public comment before requesting that OMB extend the existing PRA 
clearance for the information collection requirements associated with 
the Commission's rules and regulations

[[Page 2861]]

under the Mail, Internet, or Telephone Order Merchandise Trade 
Regulation Rule, 16 CFR part 435 (OMB Control Number 3084-0106).
    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 March 21, 
2016.
    Originally known as the Mail Order Merchandise Rule, the MITOR was 
promulgated in 1975 in response to consumer complaints that many 
merchants were failing to ship merchandise ordered by mail on time, 
failing to ship at all, or failing to provide prompt refunds for 
unshipped merchandise. A second rulemaking proceeding in 1993 
demonstrated that the delayed shipment and refund problems of the mail 
order industry were also being experienced by consumers who ordered 
merchandise over the telephone. Accordingly, the Commission amended the 
Rule, effective on March 1, 1994, to include merchandise ordered by 
telephone, including by telefax or by computer through the use of a 
modem (e.g., Internet sales), and renamed it the ``Mail or Telephone 
Order Merchandise Rule.'' In 2014, Commission amended the Rule, 
effective December 8, 2014, to clarify that the Rule covers all 
Internet merchandise orders, permit flexibility in making refunds and 
refund notices, and clarify refund obligations for non-enumerated 
payments. 79 FR 55615 (Sept. 17, 2014).
    Generally, the MITOR requires a merchant to: (1) have a reasonable 
basis for any express or implied shipment representation made in 
soliciting the sale (if no express time period is promised, the implied 
shipment representation is 30 days); (2) notify the consumer and obtain 
the consumer's consent to any delay in shipment; and (3) make prompt 
and full refunds when the consumer exercises a cancellation option or 
the merchant is unable to meet the Rule's other requirements.\1\
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    \1\ The MITOR does not impose a recordkeeping requirement per 
se. 16 CFR 435.1(d) provides that, in an action for noncompliance, 
the absence of records that establish that a respondent-seller uses 
systems and procedures to assure compliance will create a rebuttable 
presumption that the seller was not compliant, but the MITOR does 
not require a compliant seller to maintain any records. Merchants 
customarily keep records regarding their systems and procedures in 
the ordinary course of business, however; consequently, their 
retention of these documents does not constitute a ``collection of 
information'' under OMB's regulations that implement the PRA. See 5 
CFR 1320.3(b)(2).
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    The notice provisions in the Rule require a merchant who is unable 
to ship within the promised shipment time or 30 days to notify the 
consumer of a revised date and his or her right to cancel the order and 
obtain a prompt refund. Delays beyond the revised shipment date also 
trigger a notification requirement to consumers. When the MITOR 
requires the merchant to make a refund and the consumer has paid by 
credit card, the Rule also requires the merchant to notify the consumer 
either that any charge to the consumer's charge account will be 
reversed or that the merchant will take no action that will result in a 
charge.

Burden Estimates

    Estimated total annual hours burden: 1,953,840 hours.
    In its 2012-2013 PRA-related Federal Register Notices \2\ and 
corresponding submission to OMB, FTC staff estimated that established 
companies each spend an average of 50 hours per year on compliance with 
the Rule, and that new industry entrants spend an average of 230 hours 
(an industry estimate) for compliance measures associated with start-
up.\3\ Thus, the total estimated hours burden was calculated by 
multiplying the estimated number of established companies x 50 hours, 
multiplying the estimated number of new entrants x 230 hours, and 
adding the two products.
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    \2\ 77 FR 64994 (Oct. 24, 2012); 78 FR 5443 (Jan. 25, 2013).
    \3\ Most of the estimated start-up time relates to the 
development and installation of computer systems geared to more 
efficiently handle customer orders.
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    No substantive provisions in the Rule have been amended or changed 
since staff's prior submission to OMB.\4\ Thus, the Rule's disclosure 
requirements remain the same. Moreover, no public comments were 
received regarding the above-noted estimates; thus, staff will apply 
them to the current PRA burden analysis.
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    \4\ As part of the systematic review of all Commission rules, on 
September 30, 2011, the FTC published a Federal Register Notice 
concluding that the Rule continued to benefit consumers and would be 
retained. 76 FR 60715. For clarity, the Commission reorganized the 
Rule by alphabetizing the definitions at the beginning of the Rule. 
That amendment did not impose any additional ``collection of 
information'' requirements.
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    Since the prior submission to OMB, however, the number of 
businesses engaged in the sale of merchandise by mail or by telephone 
has changed. Data from the U.S. Census Bureau \5\ indicates that, 
between 2000 and 2008, the number of businesses subject to the MITOR 
grew from 11,800 to 21,900, or an average increase of 1,263 new 
businesses a year [(21,900 businesses in 2008 -11,800 businesses in 
2000) / 8 years].\6\ Assuming this growth rate continued in 2009 
through 2015, and continues in 2016 through 2018, the average number of 
established businesses during the three-year period for which OMB 
clearance is sought for the Rule would be 33,267: \7\
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    \5\ See Table 1048, ``Retail Trade--Establishments, Employees, 
and Payroll,'' U.S. Census Bureau, (2012), http://www2.census.gov/library/publications/2011/compendia/statab/131ed/tables/12s1048.xls.
    \6\ Conceptually, this might understate the number of new 
entrants in that it does not factor in the possibility that 
established businesses from an earlier year's comparison might have 
exited the market preceding the later year of measurement. Given the 
virtually unlimited diversity of retail establishments, it is very 
unlikely that there is a reliable external measure of such exit; 
nonetheless, as in the past, the Commission invites public comment 
that might better inform these estimates.
    \7\ As noted above, the existing OMB clearance for the Rule 
expires on April 30, 2016, and the FTC is seeking to extend the 
clearance for three years.

------------------------------------------------------------------------
                                            Established
                  Year                      businesses     New entrants
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2016....................................          32,004           1,263
2017....................................          33,267           1,263
2018....................................          34,530           1,263
Average.................................          33,267           1,263
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In an average year during the three-year OMB clearance period, staff 
estimates that established businesses and new entrants will devote 
1,953,840 hours, to comply with the MITOR [(33,267 established 
businesses x 50 hours) + (1,263 new entrants x 230 hours) = 1,953,840].
    The estimated PRA burden per merchant to comply with the MITOR is 
likely overstated. The mail-order industry has been subject to the 
basic provisions of the Rule since 1976 and the telephone- and 
Internet-order industry since 1994. Thus, businesses have had several 
years (and some have had decades) to integrate compliance systems into 
their business procedures. Moreover, arguably much of the estimated 
time burden for disclosure-related compliance would be incurred even 
absent the Rule. Industry trade associations and individual witnesses 
have consistently taken the position that providing consumers with 
notice about the status of their orders fosters consumer loyalty and 
encourages repeat purchases, which are important to direct marketers' 
success. Accordingly, the

[[Page 2862]]

Rule's notification requirements would be followed in any event by most 
merchants to meet consumer expectations regarding timely shipment, 
notification of delay, and prompt and full refunds. Thus, it appears 
that much of the time and expense associated with Rule compliance may 
not constitute ``burden'' under the PRA.\8\
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    \8\ Conceivably, in the three years since the FTC's most recent 
clearance request to OMB for this Rule, many businesses have 
upgraded the information management systems needed to comply with 
the Rule and to track orders more effectively. These upgrades, 
however, were primarily prompted by the industry's need to deal with 
growing consumer demand for merchandise (resulting, in part, from 
increased public acceptance of making purchases over the telephone 
and, more recently, the Internet). Accordingly, most companies now 
provide updated order information of the kind required by the Rule 
in their ordinary course of business. Under the OMB regulation 
implementing the PRA, burden is defined to exclude any effort that 
would be expended regardless of any regulatory requirement. 5 CFR 
1320.3(b)(2).
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    Estimated labor costs. $42,828,173.
    FTC staff derived labor costs by applying appropriate hourly cost 
figures to the burden hours described above. According to the most 
recent data available from the Bureau of Labor and Statistics,\9\ the 
mean hourly income for workers in sales and related occupations was 
$21.92/hr. The bulk of the burden of complying with the MITOR is borne 
by clerical personnel along with assistance from sales personnel. Staff 
believes that the mean hourly income for workers in sales and related 
occupations is an appropriate measure of a direct marketer's average 
labor cost to comply with the Rule. Thus, the total annual labor cost 
to new and established businesses for MITOR compliance during the 
three-year period for which OMB approval is sought would be 
approximately $42,828,173 (1,953,840 hours x $21.92/hr.). Relative to 
direct industry sales, this total is negligible.\10\
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    \9\ See Table 1, National employment and wage data from the 
Occupational Employment Statistics survey by occupation, May 2014, 
at http://www.bls.gov/news.release/ocwage.t01.htm.
    \10\ Considering that sales for ``electronic shopping and mail-
order houses'' grew from $235 billion in 2009 to $348 billion in 
2013 (according to ``Estimated Annual Sales of U.S. Retail and Food 
Services Firms by Kind of Business: 1992 Through 2013,'' available 
at http://www.census.gov/econ/isp/sampler.php?naicscode=454111&naicslevel=6?cssp=SERP, staff estimates 
the annual mail, Internet, or telephone sales to consumers in the 
three-year period for which OMB clearance is sought will average 
$461 billion. Thus, the projected average labor cost for MITOR 
compliance by existing and new businesses for that period would 
amount to 0.01% of sales.
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    Estimated annual non-labor cost burden: $0 or minimal.
    The applicable requirements impose minimal start-up costs, as 
businesses subject to the Rule generally have or obtain necessary 
equipment for other business purposes, i.e., inventory and order 
management, and customer relations. For the same reason, staff 
anticipates printing and copying costs to be minimal, especially given 
that mail, Internet, and telephone order merchants have increasingly 
turned to electronic communications to notify consumers of delay and to 
provide cancellation options. Staff believes that the above 
requirements necessitate ongoing, regular training so that covered 
entities stay current and have a clear understanding of federal 
mandates, but that this would be a small portion of, and subsumed 
within, the ordinary training that employees receive apart from that 
associated with the information collected under the Rule.

Request for Comments

    You can file a comment online or on paper. Write ``Mail, Internet, 
or Telephone Order Merchandise Trade Regulation Rule: FTC File No. 
R511929'' 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, such as a 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, such as 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). 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. 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/mitorpra 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 ``Mail, Internet, or 
Telephone Order Merchandise Trade Regulation Rule: FTC File No. 
R511929'' on your comment and on the envelope, and mail it 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.
    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 21, 
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.

David C. Shonka,
Principal Deputy General Counsel.
[FR Doc. 2016-00841 Filed 1-15-16; 8:45 am]
BILLING CODE 6750-01-P