[Federal Register Volume 81, Number 178 (Wednesday, September 14, 2016)]
[Notices]
[Pages 63179-63186]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-22106]


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FEDERAL TRADE COMMISSION


Agency Information Collection Activities; Submission for OMB 
Review; 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 consumers' 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 second of two notices required under the Paperwork 
Reduction Act (``PRA'') in which the FTC seeks public comments on its 
proposed consumer research. The proposed information collection 
described below will be submitted to the Office of Management and 
Budget (``OMB'') for review, as required by the PRA.

DATES: Comments must be received on or before October 14, 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/autobuyersurveypra2, 
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

[[Page 63180]]

most expensive financial transaction. With prices averaging more than 
$34,000 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.\2\
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    \1\ As of December 2015, the average price of a new car sold in 
the U.S. was $34,428, according to Kelley Blue Book. See Kelley Blue 
Book, Record New-Car Transaction Prices Reported In December 2015, 
According to Kelley Blue Book (Jan. 5, 2016), available at http://mediaroom.kbb.com/record-new-car-transaction-prices-reported-december-2015. 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.
    \2\ See infra notes 7-9 and accompanying text.
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    As the nation's longstanding 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.\3\ Also pursuant to the Dodd-Frank 
Act,\4\ the FTC is authorized to prescribe rules under Section 553 of 
the Administrative Procedure Act (``APA'') \5\ with respect to unfair 
or deceptive acts or practices by motor vehicle dealers.\6\
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    \3\ 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.
    \4\ Dodd-Frank Wall Street Reform and Consumer Protection Act 
Sec.  1029, 12 U.S.C. 5519.
    \5\ 5 U.S.C. 553.
    \6\ 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 25 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.\7\ 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 comments on these issues.\8\ Additionally, the FTC has 
produced many consumer education and business education materials 
related to automobile purchasing and financing.\9\
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    \7\ 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.
    \8\ 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.
    \9\ 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.\10\ The survey is intended to inform the 
Commission about current consumer protection issues that may exist and 
that could be addressed through FTC action, including enforcement 
initiatives, rulemaking, or education.
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    \10\ 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'' or ``above subprime'' 
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.\11\ Generally, 
the sample group of consumers will be racially diverse

[[Page 63181]]

and will include participants of both sexes. The contractor also 
generally will strive to obtain a mix of ages and income levels, as 
well as a mix of consumers who purchased and financed a vehicle from 
franchise, independent, and buy here pay here dealers. The FTC has 
contracted with Shugoll Research, Inc. (``Shugoll''), a consumer 
research firm located in metropolitan Washington, DC, with substantial 
experience conducting consumer surveys, to locate the participants, 
conduct the survey, and write a brief methodological report and any 
other report if requested by the FTC. Shugoll 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. Shugoll will identify 
interview participants who have purchased an automobile, from a dealer 
in the greater Washington, DC metropolitan area, in the previous six 
months, and used financing offered or arranged by the dealer to make 
the purchase. The participants also must have kept the documentation 
(e.g., credit contract) he or she received as part of the purchase and 
financing.\12\ 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 and provide 
documentation of the score to Shugoll.\13\ The interview participants 
and their personal identifying information will be anonymized in 
material received by the FTC, and will be vigorously protected by the 
survey firm.\14\
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    \11\ For example, Experian categorizes consumers with scores 
below 601 as subprime. Other scores are above subprime, and 
categorized as nonprime or prime. See generally Experian, State of 
the Automotive Finance Market, A look at loans and leases in Q1 
2016, available at http://www.experian.com/automotive/automotive-credit-webinar.html.
    \12\ In addition, two other screening criteria apply: (1) 
Consumers and immediate family must not work in advertising, public 
relations, or market research, nor in the automobile industry or a 
finance company; and (2) consumers must be able and willing to 
provide answers that can be clearly understood in English.
    \13\ For privacy purposes, Shugoll will not obtain the credit 
score for the consumer, but will explain to consumers who do not 
have their score that various sources are available for promptly 
obtaining this information, including some that do not charge.
    \14\ Shugoll 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 consumer identifiers in 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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    Shugoll 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 used automobile, 
if applicable;
     the consumer's experience in obtaining financing, and 
discussion of any GPS or tracking device installed in connection with 
the financing; \15\
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    \15\ This interview topic now clarifies that discussion of any 
GPS or tracking devices could be included if part of the consumer's 
experience.
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     additional products or services the dealer may have 
offered;
     contracts and post-purchase experience, such as that 
related to review and signing of paperwork;
     other points raised by the consumer about the process; 
\16\ and
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    \16\ The interview topics now clarify that the survey will 
consider other points that the consumer may raise about the process.
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     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. The 
walk-through of the consumer's documents will include: \17\
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    \17\ The FTC staff has included the topics for the walk-through 
of the consumer's documents. The documents that the consumer may 
have for the purchase and financing could vary among consumers who 
participate.
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     The consumer's overall understanding of the documents;
     a review of the available documents;
     a review of the terms of the deal;
     the consumer's views of the documents and terms;
     discussion of any other documents; and
     other points raised by the consumer about the documents.

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 experiences and 
understanding of the automobile purchasing and financing process at the 
dealership.

B. PRA Burden Analysis

    In its January 7, 2016 Notice,\18\ the FTC provided PRA burden 
estimates for the proposed research. Staff believes that these 
estimates generally remain applicable and appropriate for the survey; 
however, as noted below, staff has adjusted certain aspects of the 
estimates after consultation with the contractor for the study.
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    \18\ 81 FR 780.
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    A. Estimated number of respondents: 170.
    B. Burden Hours: 367 hours.\19\
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    \19\ This is a total increase of 16 hours from the prior 
estimate.
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    C. Labor Costs: Negligible.
    More specifically, staff estimates that the contractor's 
preliminary review of consumers to select 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).\20\
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    \20\ As described below, the contractor also would have 19 
additional consumers (backups) on site as possible replacements for 
pretest and regular survey consumers who do not show-up for the 
interview. These consumers would add certain costs for time related 
to various aspects of the survey as indicated in the text, but they 
would not add to the total number of consumers participating in the 
survey interviews. Also, the 170 consumers include the additional 
maximum 19 pretest and regular survey backups.
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    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, could require no more than 12 minutes per 
consumer, for 34 hours (170 respondents x 12 minutes).\21\ Staff also 
estimates that at most, each of the 170 consumers would take 
approximately 30 minutes to locate or ascertain whether they have their 
documentation and their credit score for the survey, for 85 hours. 
Thus, the preliminary review total would be 119 hours.
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    \21\ The FTC has reduced its estimate of needed preliminary 
review time from 15 minutes to 12 minutes (a 3-minute reduction for 
each consumer), based on the contractor's current estimate.
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    Staff will pretest the questionnaire and interview materials with 
approximately five respondents to ensure that questions are easily 
understood. Based on further FTC staff discussions with the contractor, 
the survey will involve three additional backup consumers to be 
available in the event that any of the five scheduled respondents do 
not show up for the pretest. Staff estimates that each interview 
(including the documentation review) will take approximately 90 
minutes, and 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 19 hours (5 respondents x 160 minutes 
each for the pretest, plus

[[Page 63182]]

3 backups x 60 minutes travel time per backup, plus 2 (of the 3) 
backups x 100 minutes of maximum wait time per backup).\22\
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    \22\ After consultation with the contractor, the FTC has 
slightly increased its estimates of pretest time to account for the 
backups in the pretest, who are replacements for possible no-show 
consumers in the pretest. As noted above, three backups will 
experience travel time to and from the survey, of 60 minutes each, 
for a total of 180 additional minutes or three hours. Also, two of 
the backups would be available on site for approximately 200 minutes 
(each backup would be available to replace two consumers), and one 
of the backups would be available on site for approximately 100 
minutes (to replace one consumer). Thus, the backups might 
experience replacement time for no-show consumers, which would not 
add participation time to the survey. However, if fewer consumers 
are no-shows, it is possible that a maximum of 100 minutes in 
participation time would apply for each of the two backups--a total 
of 200 minutes--while they wait to learn if they are needed for the 
next pretest segment after the initial pretest segment. As noted, 
the other time for the backups--100 minutes for each of the two 
backups, and 100 minutes for one backup--would be as replacement for 
scheduled pretests or, if the backups are not needed, they would be 
released promptly at the beginning of the sessions; neither would 
add participation time.
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    Once the pretest is completed, the initial 40 interviews, including 
travel, will cumulatively total an estimated 108 hours: 60 hours for 
the interviews (i.e., 40 interviews at 90 minutes each) plus 40 hours 
travel time to and from the interview facility for the 40 participants, 
cumulatively, plus eight additional hours, cumulatively, for eight 
additional participants' travel time to and from the interview facility 
as potential replacements for possible no-show participants.\23\ If an 
additional 40 consumers are interviewed,\24\ that will require an 
additional 108 hours, for the same reasons as above. Thus, for the 
interviews of 80 consumers, including travel time for 16 backup 
consumers, staff estimates that 216 hours will be required (80 
respondents x 150 minutes each plus 16 backup consumers x 60 minutes 
each).\25\
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    \23\ As noted, the survey will involve consumers from the 
greater Washington, DC metropolitan area.
    \24\ The survey plan has an option for an additional 40 
consumers, for a maximum of 80 consumers.
    \25\ The FTC has slightly increased its estimates of time for 
the regular interviews, to account for the possibility that backup 
consumers may be needed as replacements for no-show consumers. These 
eight additional consumers will experience travel time of 60 minutes 
each. They will not generate additional participation time: if they 
participate, they will replace the no-show participants; if not 
needed, they will be released promptly.
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    Staff further estimates that approximately 75%, or 78, of the 85 
survey participants and 19 backups who are potential participants 
(three pretest backups and 16 interview backups), for both pretest and 
interviews, do not already have their credit score and thus will 
procure it through the services that provide this information. Staff 
estimates that ten minutes per consumer will be required for this 
purpose, for a total of 13 hours (78 respondents x 10 minutes 
each).\26\
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    \26\ The FTC has slightly increased its estimates for consumers 
to obtain credit scores, to account for the possibility that backups 
may participate and may not already have their credit scores.
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    Thus, the FTC's survey will require 367 hours (119 hours for 
preliminary review + 19 hours for pretest + 216 hours for interviews + 
13 hours for obtaining credit scores). The monetary cost per respondent 
should be negligible. The consumers who participate will already have 
or will obtain their credit score and provide documentation of that 
information to Shugoll.\27\ Costs to obtain their credit score 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 access to, such as credit card 
or other credit statements, in some cases.
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    \27\ After consultation with the contractor, the FTC now plans 
to have consumers who do not already have their credit score obtain 
it before their interview with the contractor; the contractor will 
advise consumers of this approach during screening for the survey, 
which is voluntary. Consumers who do not have, or do not wish to 
obtain, their credit score will not participate in the survey. This 
approach will limit provision of unnecessary personal information to 
the contractor, and will facilitate the survey process, by avoiding 
delaying the pretest and/or regular interviews for the consumer to 
obtain his or her credit score information if the consumer does not 
have it.
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    Shugoll will pay respondents (including regular participants and 
backups) a reasonable and customary financial incentive for 
participation.\28\ Participation will not require start up, capital, or 
labor expenditures by interview participants.
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    \28\ Shugoll also will pay regular participants' and backups' 
parking costs at the interview facility, which will be in Bethesda, 
Maryland and/or Alexandria, Virginia.
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III. Analysis of Comments

    In response to the January 7, 2016 Notice, the Commission received 
17 germane comments regarding the proposed collection of 
information.\29\
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    \29\ The Commission received a total of 23 comments; 17 comments 
were germane, and are discussed below: A joint comment from the 
Center for Responsible Lending, the National Council of La Raza, 
NAACP and eight additional national consumer interest organizations 
(#633-6); the National Association of Consumer Advocates (#633-5); 
the National Automobile Dealers Association (#633-4); the National 
Independent Automobile Dealers Association (#633-7); a joint comment 
from the American Financial Services Association and the Consumer 
Bankers Association (#633-1); the Syracuse University College of 
Law, Office of Clinical Legal Education (#633-2); and 11 
individuals. The six non-germane comments are duplicates, ``test,'' 
or unrelated submissions. Public comments associated with the matter 
are available at https://www.ftc.gov/policy/public-comments/initiative-633.
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    A majority of the commenters supported the need for the FTC's 
proposed study and/or recognized the importance of the topics and area 
to be studied, and suggested what they view as improvements or specific 
issues for the proposed study. Three comments questioned the need for 
the survey in view of the FTC's prior auto activities and/or raised 
questions about the purpose or objectivity of the survey.
    Center for Responsible Lending, National Council of La Raza, 
Americans for Financial Reform, Consumer Action, Consumers for Auto 
Reliability and Safety, NAACP, National Association of Consumer 
Advocates, National Consumer Law Center, National Urban League, Public 
Citizen, and U.S. PIRG: This joint comment by 11 broad-based national 
consumer groups applauded the FTC for proposing a survey to explore 
issues in auto purchasing and financing. They noted the FTC's 
roundtables examined issues that persist in auto financing today, on 
which the interviews will shed additional light and serve to probe for 
information about consumers' treatment and experience. They noted that 
the information should help shape enforcement and regulatory efforts. 
They suggested that the survey size be increased to 80 consumers with 
an option for more consumers. They also suggested that Buy Here Pay 
Here (``BHPH'') dealers be addressed separately, through 10-20 
additional interviews exclusively focused on BHPH consumers. Finally, 
they suggested various survey questions or topics, including but not 
limited to those involving ``yo yo financing scams'' and add-on 
products or services. As noted above, the survey plan has an option for 
an additional 40 consumers. The FTC believes this size will provide 
useful information in this qualitative survey, about consumers' 
experiences and issues in the auto purchase and financing area. The 
information gleaned from this survey will help the agency prioritize 
subsequent initiatives to protect consumers in auto-related 
transactions, including selecting strategic areas of focus for 
enforcement, rulemaking, or education. The FTC appreciates the 
commenters' suggestions of topics and questions, and believes that the 
topics it has identified for the survey cover areas that will enable 
consumers to address broadly their experiences, including those noted 
in the comment such as occurrences after the contract is signed and 
add-on products or services.

[[Page 63183]]

    National Association of Consumer Advocates (``NACA''): This 
consumer interest group supported a well-executed survey aimed at 
uncovering important data to assist the FTC in monitoring the 
marketplace and curbing unfair and deceptive practices in auto sales 
and lending. The group suggested that the survey should be large enough 
to provide an accurate representation of the population. It agreed with 
the FTC approach to obtain experiences from different populations and 
encouraged the FTC to include Native Americans, non-English speakers 
and military members. The FTC notes that this survey is not intended to 
be representative of the full population; one of its aims is to help 
the agency shape strategic priorities, including whether follow-on 
surveys studying particular segments of the population more in-depth 
should be among the agency's next priorities. However, the survey will 
be racially diverse and include participants of both sexes; the survey 
will strive to be inclusive, and respondents' characteristics will in 
part depend on consumers who participate in the survey.\30\ Finally, 
the suggested topics and questions provided by NACA fall within the 
survey topic areas and may be addressed depending on experiences that 
participants may have encountered.
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    \30\ Depending on the consumers who participate, it is 
additionally possible that participants with Native American 
heritage and those with military backgrounds could be included. 
However, including non-English speakers in the survey would require 
translators to be available for many potential languages and 
dialects, for possible participants in the survey. This could vastly 
increase costs, and create delays during the survey, particularly if 
the needed translator was not present. Participation by non-English 
speakers is beyond the focus of the instant survey.
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    National Automobile Dealers Association (``NADA''): NADA raised 
questions about the purpose, necessity, and methodology of the survey. 
NADA stated that the Commission already conducted a broad examination 
of the same questions and developed a record that obviates the need for 
further examination of this matter, through its roundtable discussions 
and related comments received through May 2012. It also stated that the 
FTC does not cite complaint data or data from another source that 
supports the exercise, that the FTC requested data demonstrating that 
prevalent abuses exist in the auto industry but received none, and that 
the FTC overlooks credible quantitative surveys that have been 
conducted finding a high level of consumer satisfaction, which NADA 
references in its comment. NADA also provided comments on survey 
methodology, including asking how the Commission will control for 
respondent fatigue during the survey; \31\ what questions will be asked 
of consumers and how the Commission will control for interviewer 
influence; how the Commission will be aided by anecdotal results; how 
it will control for limits of location research facilities; how it will 
control for survey respondent characteristics that may not be 
representative of the consumer population, and control for different 
attitudes and experiences over time; and whether it will include key 
analytical variables with only 40 respondents. It also asks about pre-
set review criteria for documentation review, asks how the Commission 
will determine whether to go beyond the initial 40 consumers, and 
requests that the Commission make available the full methodological 
report or other written report, and identify additional stages that the 
Commission will conduct.
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    \31\ NADA's comment misstates that the proposed survey is 
quantitative. See NADA comment at 5. The survey is qualitative.
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    The FTC's work since 2011 demonstrates, rather than obviates, the 
need for further examination of consumer protection issues in the auto 
marketplace. During the 2011 roundtables, with comments through May 
2012, participants raised various auto purchase and lease issues.\32\ 
Since that time, the FTC has brought more than 25 auto dealer cases, 
many focusing on issues that became known in the roundtables, including 
misrepresentations in auto dealer advertisements about payments and 
rates; issues related to negative equity; add-ons; and many others.\33\ 
Despite these public law enforcement actions, there has continued to be 
illegal conduct in the auto marketplace, often involving the same or 
similar conduct as the conduct challenged in prior actions.\34\ This 
persistent conduct indicates that additional measures are necessary, 
including to study consumer experiences and help determine additional 
ways to protect consumers in auto transactions.
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    \32\ The roundtables transcripts and videos from all three 
forums are available at: https://www.ftc.gov/news-events/press-releases/2012/02/ftc-continues-seek-public-input-consumer-issues-motor-vehicle; public comments received in this matter are available 
at https://www.ftc.gov/policy/public-comments/initiative-369.
    \33\ As also noted in the prior 60-day Federal Register Notice, 
more information on FTC cases in the auto area is available at 
https://www.ftc.gov/news-events/media-resources/consumer-finance/auto-marketplace.
    \34\ For example, in 2012, the Commission settled charges that 
five dealerships made deceptive claims that they would pay off the 
remaining balance on consumers' trade-ins, no matter what they owed. 
According to the FTC's complaints, the dealers actually rolled the 
remaining balance (negative equity) into the customers' new car 
financing, or in one instance, required the consumer to pay it out-
of-pocket. See In the Matter of Billion Auto, Inc., Docket No. C-
4356 (May 1, 2012), available at https://www.ftc.gov/enforcement/cases-proceedings/112-3209/billion-auto-inc-matter; In the Matter of 
Frank Myers AutoMaxx, LLC, Docket No. C-4353 (Apr. 19, 2012), 
available at https://www.ftc.gov/enforcement/cases-proceedings/112-3206/frank-meyers-automaxx-llc-matter; In the Matter of Key Hyundai 
of Manchester, LLC, and Key Hyundai of Milford, LLC, Docket Number 
C-3358 (May 4, 2012), available at https://www.ftc.gov/enforcement/cases-proceedings/112-3204/key-hyundai-manchester-llc-hyundai-milford-llc-matter; and In the Matter of Ramey Motors, Inc., Docket 
No. C-4354 (Apr. 19, 2012), available at https://www.ftc.gov/enforcement/cases-proceedings/112-3207/ramey-motors-inc-matter. A 
few years later, the FTC settled charges that another dealer, among 
other things, promoted the sale and lease of its vehicles using an 
ad that claimed consumers could get out of their current loan or 
lease for $1, when in fact the dealer rolled the balance of the 
prior obligation into the new transaction. See In the Matter of TXVT 
Limited Partnership, Docket No. C-4508 (Feb. 12, 2015), available at 
https://www.ftc.gov/enforcement/cases-proceedings/142-3117/txvt-limited-partnership-matter. In 2013, the FTC settled charges that 
two auto dealers deceptively advertised the cost or available 
discounts for their vehicles. See, e.g., In the Matter of Ganley 
Ford West, Inc., Docket No. C-4428 (Jan. 28, 2014), available at 
https://www.ftc.gov/enforcement/cases-proceedings/1223269/ganley-ford-west-inc-matter, and In the Matter of Timonium Chrysler, Inc., 
Docket No. C-4429 (Jan. 28, 2014), available at https://www.ftc.gov/enforcement/cases-proceedings/1323014/timonium-chrysler-inc-matter. 
About a year later, the FTC settled charges that another dealer, 
among other things, misrepresented that specific discounts, rebates, 
incentives or prices were generally available to consumers, when in 
fact they were not. See In the Matter of TT of Longwood, Inc., C-
4431 (July 2, 2015), available at https://www.ftc.gov/enforcement/cases-proceedings/152-3047/tt-longwood-inc-matter-cory-fairbanks-mazda. The FTC has brought multiple other cases addressing deceptive 
practices by auto dealers. See, e.g., FTC, Press Releases, FTC 
Announces Sweep Against 10 Auto Dealers, Jan. 9, 2014, available at 
https://www.ftc.gov/news-events/press-releases/2014/01/ftc-announces-sweep-against-10-auto-dealers, 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.
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    The proposed survey is expected to provide in-depth information 
about consumer protection issues that could be addressed through FTC 
initiatives, including enforcement, rulemaking, or education.\35\ The 
survey will focus on

[[Page 63184]]

learning directly from consumers their specific experiences through the 
entire purchase and financing process, and will include a review of 
their documents, as opposed to hearing about more general experiences 
from the perspective of the auto industry, consumer advocates, and 
regulators, as the roundtables did.\36\ While the latter stakeholders' 
perspectives are certainly important, it is also critical to hear from 
consumers themselves.
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    \35\ With respect to the studies that NADA referenced about 
generalized ``customer satisfaction,'' the proposed survey neither 
is a duplicate of such a survey nor is it similarly focused. 
Instead, the proposed survey pertains to individual consumers' 
discussion of their experiences with the car purchase and financing 
process, including a walk-through of the consumer's related 
documents. This information to be gathered by the survey is also not 
necessarily something that is covered by complaints filed with the 
FTC--which last year numbered 93,917, making it our eighth most 
complained about category--because it encompasses a broader 
consideration of the purchase and financing process and consumers' 
experiences. See, e.g., FTC, Consumer Sentinel Network Data Book for 
January-December, 2015 (Feb. 2016) at 6, available at https://www.ftc.gov/system/files/documents/reports/consumer-sentinel-network-data-book-january-december-2015/160229csn-2015databook.pdf.
    \36\ Staff also has now provided additional information 
regarding the topics to be discussed, as described above.
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    As the proposed survey is qualitative, the results will not be 
interpreted as quantitative measures of prevalence of practices. A 
qualitative survey facilitates an understanding of the nuances of 
consumer comprehension and thought-processes in the complex task of 
vehicle purchasing and financing. The proposed survey focuses 
expansively on consumers' experiences at the dealership in car 
purchasing and financing, and the interviewer will avoid suggesting 
particular problems. There is no indication that respondent fatigue 
will impede consumers in their ability to describe their own 
experiences, which they will do on a voluntary basis. Only consumers 
who purchased a car within the past six months will be involved, which 
is a recent timeframe. The Commission cannot state for now whether it 
would go beyond the initial 40 consumers in the survey, which may, in 
part, be contingent on the time required for that first segment. The 
FTC has not determined whether it will publish a report on the survey 
results. Finally, the information obtained by the FTC through the 
survey could support or be useful in various initiatives for this 
important area, such as enforcement, rulemaking, or education.
    American Financial Services Association and Consumer Bankers 
Association: These groups supported the general professionalism of the 
FTC's work and its research staff. However, they expressed concern 
about possible bias, based on references about potentially ``unfair or 
deceptive practices'' in the January 7, 2016 Notice, and they noted 
that the FTC previously had three roundtables and ``did not find any 
problems with the selling, financing, or leasing of motor vehicles.'' 
\37\ The comment also expressed a preference for separating research 
from enforcement and for removing all identifying information about 
dealers and financiers from the survey. The comment stated that the 
survey size is too small, making an analysis for statistical trends 
impossible; inquired about the questions to be asked; expressed the 
need to avoid interviewer steering of respondents; and encouraged the 
survey to focus on third party financing at a bank or credit union. 
Finally, it provided various questions, including about: The reason for 
the project, additional phases of the project, issues for 
consideration, the purpose of the documents, the reason for diversity 
in the respondents, and how results of the project will be distributed.
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    \37\ AFSA-CBA Comment at 1.
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    The FTC is charged with enforcement of numerous statutes, as noted 
in the January 7, 2016 Notice, including protecting consumers against 
unfair or deceptive conduct, in violation of Section 5 of the FTC Act; 
this focus was also noted in the FTC's announcements regarding its auto 
roundtables.\38\ The FTC has brought more than 25 enforcement actions, 
which specifically address such alleged conduct, as well as other 
alleged violations of federal laws and regulations related to 
automobile sales and financing. It is erroneous to state that the FTC 
has found no problems in this area; indeed, it has found many diverse 
problems affecting consumers at auto dealerships, and has been bringing 
enforcement actions repeatedly since that time to address them, as 
described in the prior Notice and as available at its Web site at 
https://www.ftc.gov.\39\
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    \38\ See, e.g., FTC, Press Release, Third FTC Roundtable to 
Cover Motor Vehicle Leasing Issues, Review Sales, Financing and 
Leasing Issues from All of the Roundtables, and Discuss Possible 
Next Steps (Oct. 25, 2011) (``Dealer-arranged financing can be a 
complicated, opaque process and could potentially involve unfair or 
deceptive practices.''), available at https://www.ftc.gov/news-events/press-releases/2011/10/third-ftc-roundtable-cover-motor-vehicle-leasing-issues-review; see also FTC, Public Roundtables: 
Protecting Consumers in the Sale and Leasing of Motor Vehicles, 76 
FR 14014 (Mar. 15, 2011), available at https://www.gpo.gov/fdsys/pkg/FR-2011-03-15/pdf/2011-5873.pdf.
    \39\ Indeed, these cases include two civil penalty matters filed 
in federal court against auto dealers that were previously charged 
by the FTC with violating Section 5 of the FTC Act by engaging in 
deceptive practices, among other things, and who--after entering 
into administrative orders with the Commission--were charged with 
violating those orders, again engaging in deceptive practices. See 
FTC, Press Releases, FTC Takes Action Against Two Auto Dealership 
Chains For Violating 2012 Orders Prohibiting Deceptive Advertising 
of Vehicle Costs, Dec. 12, 2014, available at https://www.ftc.gov/news-events/press-releases/2014/12/ftc-takes-action-against-two-auto-dealership-chains-violating, and FTC Action: Auto Dealership 
Will Pay $80,000 Penalty for Violating 2012 order Prohibiting 
Deceptive Advertising of Vehicle Costs, Sept. 18, 2015, available at 
https://www.ftc.gov/news-events/press-releases/2015/09/ftc-action-auto-dealership-will-pay-80000-penalty-violating-2012. The dealers 
paid $360,000 (Billion) and $80,000 (Ramey). See id.
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    The purpose of the survey is to explore broadly consumers' 
experiences in the purchase and financing process of their automobiles; 
as indicated, no decision has been made about what initiatives would be 
appropriate as an outgrowth of the process because the survey itself 
has not occurred. As noted above, the survey is qualitative; therefore, 
its size or structure is not designed to be representative of the 
population. Steering of respondents will be avoided; the survey is 
broadly explorative of the auto buying and financing process and 
consumers' experiences at the dealership. Additional information about 
survey topics, including about the review of consumers' documents, 
appears above. The survey focuses on entities and activities over which 
the agency has jurisdiction, namely auto dealerships and their 
financing practices--not third party financing from banks (or federal 
credit unions) over which the FTC does not have jurisdiction.\40\ The 
survey will be racially diverse and include participants from both 
sexes--as these various consumers may offer information about differing 
experiences at dealerships where consumers have purchased and financed 
vehicles.\41\ The results of the study will be used to inform and 
provide insights to the FTC regarding consumer understanding of the 
automobile purchasing and financing process at the dealership. The FTC 
has not determined whether it will publish a report on this matter.
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    \40\ See, e.g., 15 U.S.C. 45(a).
    \41\ The Commission generally does not expect to redact 
information from consumers' documents about the names and locations 
of dealerships. However, to the extent that individual consumers' or 
dealers' information such as account numbers, Social Security 
numbers, or Taxpayer ID numbers are contained on these documents, 
such information will be redacted from information provided to the 
FTC. The survey will utilize rigorous protections for privacy and 
security of consumer information.
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    National Independent Dealers Association (``NIADA''): This 
organization stated that the survey's results will not be generalizable 
to the U.S. population, and thus it does not believe its costs are 
warranted. The comment stated that the survey was duplicative of the 
prior FTC roundtables. As noted above, the survey will be qualitative, 
and is not duplicative of prior roundtables because it focuses on 
consumers' individual experiences and the process of purchasing and 
financing automobiles

[[Page 63185]]

at dealerships, including through a review of their documents. Thus, 
the survey will provide new information in this area, which involves a 
significant and costly financial transaction for most consumers. The 
FTC believes the information will be useful to the Commission, as it 
continues striving to address issues in the important area of auto 
purchases and financing at dealerships.
    Syracuse University School of Law Legal Clinic: This comment 
provided information regarding problems affecting consumers in the auto 
financing area, and suggested that regulation in this area would 
protect consumers. It stated that dealers use high-pressure tactics to 
force people into vehicles they cannot afford, that some vehicles 
involve warranties and other costly additional items, and that dealers 
routinely falsify documents to finance the deals. The comment provided 
several examples of consumers who have experienced specific problems 
with auto dealerships. The FTC appreciates this information, as it is 
helpful to know about issues in the marketplace given that we are 
focused on protecting consumers in this area.
    Eleven Additional Individuals: \42\ Each of these comments raised 
specific problems that the individuals or consumers, or others for whom 
they provided the FTC information, had encountered with auto 
dealerships.\43\ They described a variety of problems that the 
consumers experienced, including but not limited to: Changing offers at 
the dealership for financing after the consumer had responded to a 
specific ad; dealers that sold cars on terms beyond the consumers' 
circumstances or ability to pay; dealerships that convinced the 
consumer to accept dealer-financing that was later declined to be 
finalized; misrepresentations by dealers to sell vehicles; dealer 
financing of ``back-end products'' like warranties, GAP policies and 
wheel protection; and problems in used car sales and trade-ins. The FTC 
appreciates this information regarding specific issues consumers face 
in the auto buying marketplace because we are focused on protecting 
consumers in this area.
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    \42\ These comments are: Wilson #633-00017; Prohaska #633-00012; 
Burton #633-00010; Mandola #633-00008; Dawson #633-00009; Leech 
#633-00005; Aragon #633-00006; Johnson #633-00007; Sloan #633-00004; 
and Sutton #633-00002, available at https://www.ftc.gov/policy/public-comments/initiative-633.
    \43\ For example, one mother commented regarding the experience 
of her son who has learning disabilities, in connection with an auto 
dealership where he went to claim a ``scratch-off prize'' that he 
thought he had won in response to a flyer that he received in the 
mail. See Sloan #633-00004, available https://www.ftc.gov/policy/public-comments/initiative-633.
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IV. Request for Comment

    Pursuant to the OMB regulations, 5 CFR part 1320, that implement 
the PRA, the Commission is providing this second opportunity for public 
comment. In addition to inviting comment on the practical utility of 
the proposed survey, accuracy of the FTC's associated PRA burden 
estimates, ways to enhance the information to be collected and to 
minimize burden, 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 October 14, 
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 https://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 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).\44\ Your comment will be kept 
confidential only if the FTC General Counsel or the General Counsel's 
designee grants your request in accordance with the law and the public 
interest.
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    \44\ 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/autobuyersurveypra2, by following the instructions on the web-based 
form. When this Notice appears at https://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 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. If possible, submit your 
paper comment to the Commission by courier or overnight service.
    Comments on the information collection requirements subject to 
review under the PRA should also be submitted to OMB. If sent by U.S. 
mail, they should be addressed to: Office of Information and Regulatory 
Affairs, Office of Management and Budget, Attention: Desk Officer for 
the Federal Trade Commission, New Executive Office Building, Docket 
Library, Room 10102, 725 17th Street NW., Washington, DC 20503. 
Comments sent to OMB by U.S. postal mail, however, are subject to 
delays due to heightened security precautions. Thus, comments instead 
should be sent by facsimile to (202) 395-5806.
    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

[[Page 63186]]

consider all timely and responsive public comments that it receives on 
or before [30 days from Federal Register date of publication]. For 
information on the Commission's privacy policy, including routine uses 
permitted by the Privacy Act, see http://www.ftc.gov/ftc/privacy.htm.

David C. Shonka,
Acting General Counsel.
[FR Doc. 2016-22106 Filed 9-13-16; 8:45 am]
 BILLING CODE 6750-01-P