[Federal Register Volume 82, Number 17 (Friday, January 27, 2017)]
[Notices]
[Pages 8614-8617]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-01857]
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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 its
Informal Dispute Settlement Procedures Rule. That clearance expires on
April 30, 2017.
DATES: Comments must be received on or before March 28, 2017.
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 ``Warranty Rules:
Paperwork Comment, FTC File No. P044403'' on your comment, and file
your comment online at https://ftcpublic.commentworks.com/ftc/idsprpra
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
Christine M. Todaro, Attorney, Division of Marketing Practices, Bureau
of Consumer Protection, Federal Trade Commission, 600 Pennsylvania
Avenue NW., CC-8528, Washington, DC 20580, (202) 326-3711.
SUPPLEMENTARY INFORMATION:
Proposed Information Collection Activities
Under the Paperwork Reduction Act (PRA), 44 U.S.C. 3501-3520,
federal agencies must get OMB approval for each collection of
information they conduct, sponsor, or require. ``Collection of
information'' means agency requests or requirements to submit reports,
keep records, or provide information to a third party. 44 U.S.C.
3502(3); 5 CFR 1320.3(c). As required by section 3506(c)(2)(A) of the
PRA, the FTC is providing this opportunity for public comment before
requesting that OMB extend the existing PRA clearance for the
information collection requirements associated with the Commission's
Informal Dispute Settlement Procedures Rule (the Dispute Settlement
Rule or the Rule), 16 CFR 703 (OMB Control Number 3084-0113).
The FTC invites comments on: (1) Whether the proposed collection of
information is necessary for the proper performance of the functions of
the agency, including whether the information will have practical
utility; (2) the accuracy of the agency's estimate of the burden of the
proposed collection of information, including the validity of the
methodology and assumptions used; (3) ways to enhance the quality,
utility, and clarity of the information to be collected; and (4) ways
to minimize the burden of the collection of information on those who
are to respond. All comments must be received on or before March 28,
2017.
The Dispute Settlement Rule is one of three rules \1\ that the FTC
implemented pursuant to requirements of the Magnuson-Moss Warranty Act,
15 U.S.C. 2301 et seq. (Warranty Act or Act).\2\ The Dispute Settlement
Rule, 16 CFR 703, specifies the minimum standards which must be met by
any informal dispute settlement mechanism (IDSM) that is incorporated
into a written consumer product warranty and which the consumer must
use before pursuing legal remedies under the Act in court. In enacting
the Warranty Act, Congress recognized the potential benefits of
consumer dispute mechanisms as an alternative to the judicial process.
Section 110(a) of the Act sets out the Congressional policy to
``encourage warrantors to establish procedures whereby consumer
disputes are fairly and expeditiously settled through informal dispute
settlement mechanisms'' and erected a framework for their
establishment.\3\ As an incentive for warrantors to establish IDSMs,
Congress provided in Section 110(a)(3) that warrantors may incorporate
into their written consumer product warranties a requirement that a
consumer must resort to an IDSM before pursuing a legal remedy under
the Act for breach of warranty.\4\ To ensure fairness to consumers,
however, Congress also directed that, if a warrantor were to
incorporate such a ``prior resort requirement'' into its written
warranty, the warrantor must comply with the minimum standards set by
the Commission for such IDSMs.\5\ Section 110(a)(2) of the Act directed
the Commission to establish those minimum standards.\6\
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\1\ The other two rules relate to the information that must
appear in any written warranty offered on a consumer product costing
more than $15 and the pre-sale availability of warranty terms.
\2\ 40 FR 60168 (Dec. 31, 1975).
\3\ 15 U.S.C. 2310(a).
\4\ 15 U.S.C. 2310(a)(3).
\5\ Id.
\6\ 15 U.S.C. 2310(a)(2).
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The Dispute Settlement Rule contains standards for IDSMs, including
requirements concerning the mechanism's structure (e.g., funding,
staffing, and neutrality), the qualifications of staff or decision
makers, the mechanism's procedures for resolving disputes (e.g.,
notification, investigation, time limits for decisions, and follow-up),
recordkeeping, and annual audits. The Rule requires that IDSMs
establish written operating procedures and provide copies of those
procedures upon request.
The Dispute Settlement Rule applies only to those firms that choose
to require consumers to use an IDSM. Neither the Rule nor the Act
requires warrantors to set up IDSMs. A warrantor is free to set up an
IDSM that does not comply with the Rule as long as the warranty does
not contain a prior resort requirement.
Dispute Settlement Rule Burden Statement
Total annual hours burden: 7,841 hours (derived from 5,364
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recordkeeping hours + 1,788 reporting hours + 689 disclosure hours).
The primary burden from the Dispute Settlement Rule comes from the
recordkeeping requirements that apply to IDSMs that are incorporated
into a consumer product warranty through a prior resort clause. A
review of the annual audits completed since the prior submission to OMB
in 2014 (audits for calendar years 2013 through 2015) indicates that
there are two IDSMs operating under the Rule: The BBB AUTO LINE and the
National Center for Dispute Settlement (NCDS).
In its 2014 submission to OMB, staff estimated a total annual hours
burden of approximately 8,318 hours (derived from 5,757 hours for
recordkeeping + 1,919 hours for reporting + 642 hours for disclosures).
Although the Rule's information collection requirements have not
changed since 2014, staff has adjusted its previous estimates downward
for its 2017 calculations because the annual audits filed by the two
IDSMs currently operating under the Rule indicate that, on average,
fewer disputes have been handled since the previous submission to OMB
(11,514 disputes/year in 2014; 10,727 disputes/year in 2017). This
factor results in a decreased annual hours burden estimate for the
IDSMs. The calculations underlying staff's new estimates follow.
Recordkeeping: The Rule requires IDSMs to maintain records of each
consumer warranty dispute that is referred to them. These case files
must include information such as the consumer's contact information,
the make and model of the product at issue, all letters or other
correspondence submitted by the consumer or warrantor, and all evidence
collected to resolve the dispute. Because maintaining individual case
records is a necessary function for any IDSM, much of the burden would
be incurred in the ordinary course of the IDSM's business. Nonetheless,
staff retains its previous estimate that maintaining individual case
files imposes an additional burden of 30 minutes per case.
The amount of work required will depend on the number of dispute
resolution proceedings undertaken in each IDSM. The BBB AUTO LINE
audits from calendar years 2013 through 2015 indicate that it handled
an average of 9,398 disputes each year.\7\ Audit reports submitted on
behalf of NCDS indicate that it handled an average of 1,329 disputes
each year for calendar years 2013 through 2015.\8\
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\7\ According to its annual audits, the BBB AUTO LINE closed
10,162 disputes in 2015. In 2014 and 2013, respectfully, the BBB
AUTO LINE opened and closed 9,038 and 8,995 disputes within the same
year. This includes disputes for at least one manufacturer that does
not include a prior resort requirement. Therefore, this number
likely overstates the number of disputes covered by the Rule.
Nevertheless, staff is using this number to make its current burden
estimates.
\8\ According to NCDS' annual audits, the number of disputes
both within its jurisdiction and closed each year are 1,719 (2015);
1,184 (2014); and 1,084 (2013).
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Based on the above figures, staff estimates that the average number
of disputes handled annually by IDSMs covered by the Rule is
approximately 10,727 (an average of 9,398 disputes handled by BBB AUTO
LINE + an average of 1,329 disputes handled by NCDS).\9\ Accordingly,
staff estimates the total annual recordkeeping burden attributable to
the Rule to be approximately 5,364 hours ((10,727 disputes x 30 minutes
of burden/dispute) / 60 minutes/hour).
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\9\ Both the BBB AUTOLINE and NCDS report the number of disputes
closed each year. Staff is using those numbers to project what will
happen over the next three years of OMB clearance for the Rule.
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Reporting: The Rule requires IDSMs to update indexes, complete
semiannual statistical summaries, and submit an annual audit report to
the FTC. Staff retains its previous estimate that covered entities
spend approximately 10 minutes per case for these activities, resulting
in a total annual burden of approximately 1,788 hours ((10,727 disputes
x 10 minutes of burden/dispute) / 60 minutes/hour).
Disclosure
(a) Warrantors' Disclosure Burden
The Rule requires warrantors that incorporate the use of an IDSM
into their warranties to disclose in their warranties a statement about
the availability of the IDSM, the contact information for the IDSM, and
any ``prior resort requirement.'' \10\ Similar to 2014, staff has
determined that it would be appropriate to account for the disclosure
burden as it relates to warrantors based on two types of additional
information that warrantors are required to disclose under the Rule:
(1) Information concerning IDSM and its procedures; and (2) information
that makes consumers aware of the existence of the IDSM.
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\10\ 16 CFR 703.2(b).
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First, the Rule requires that warrantors include, either in the
warranty or in a separate document accompanying the warranted product,
more detailed information concerning the IDSM. Among other things, this
information may include: A form addressed to the IDSM, filled out by
the consumer, that provides the IDSM with information needed to resolve
consumer disputes, a brief description of IDSM procedures, the time
limits adhered to by the IDSM, and the types of information the IDSM
might require for prompt resolution of the consumer dispute.\11\
Because warrantors have the option of providing this additional
information in materials separate from the warranty, warrantors likely
will bear an additional burden that is separate and apart from whatever
burden already imposed on warrantors from drafting warranty terms that
comply with Rule 701 (the rule on the disclosure of warranty terms).
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\11\ 16 CFR 703.2(c).
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Second, the Rule requires that warrantors take steps reasonably
calculated to make consumers aware of the IDSM's existence at the time
consumers experience warranty disputes.\12\ The annual audits--which
are required to assess how well warrantors comply with this
requirement--demonstrate the different steps warrantors take to inform
consumers of the existence of the IDSM procedures. For example, some
warrantors create separate pamphlets that deal specifically with the
IDSM process. Other warrantors publish entire warranty manuals or
booklets, within which several pages are dedicated to the IDSM. Still
other warrantors have created posters to alert consumers to the
existence of the informal dispute settlement process. Based on this
information, it is clear that warrantors bear more than a negligible
disclosure burden under the Rule. Accordingly, staff now includes an
assessment of the disclosure burden for warrantors in its estimates. A
review of the annual audits of the BBB AUTO LINE and the NCDS indicates
that there are approximately seventeen automobile manufacturers covered
by the Rule. Staff assumes that each manufacturer spends an average of
thirty hours a year creating, revising, and distributing the
informational materials necessary to comply with the Rule, resulting in
an annual disclosure burden of 510 hours (17 manufacturers x 30 hours).
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\12\ 16 CFR 703.2(d).
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(b) IDSMs' Disclosure Burden
Under the Rule, a portion of the disclosure burden would be borne
by the IDSM itself, which is required to provide to interested
consumers, upon request, copies of the various types of information the
IDSM possesses, including its annual audits. In addition, consumers who
have filed disputes with the IDSM also have a right to copies of their
records. IDSMs are permitted to charge for providing both types of
[[Page 8616]]
information. Based on discussions with representatives of the IDSMs
over the years, staff estimates that the burden imposed by these
disclosure requirements is approximately 179 hours per year for the
existing IDSMs. This estimate draws from the average number of disputes
closed each year with the IDSMs (10,727) and the assumption that twenty
percent of consumers request copies of the records pertaining to their
disputes (approximately 2,145 disputes).\13\ Staff estimates that
copying such records would require approximately 5 minutes per dispute,
including a negligible number of requests for copies of the annual
audit.\14\ Thus, the IDSMs currently operating under the Rule have an
estimated total disclosure burden of approximately 179 hours ((2,145
disputes x 5 minutes of burden/dispute) / 60 minutes/hour).
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\13\ This assumes each dispute is associated with one consumer.
\14\ This estimate includes the additional amount of time
required to copy the annual audit upon a consumer's request.
However, because staff has determined that a very small minority of
consumers request a copy of the annual audit, this estimate is
likely an overstatement. In addition, some case files are provided
to consumers electronically, which further reduces the paperwork
burden borne by the IDSMs.
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Accordingly, the total PRA-related annual hours burden attributed
to the Rule is approximately 7,841 (5,364 hours for recordkeeping +
1,788 hours for reporting + 510 hours for warrantors' disclosures + 179
hours for IDSM disclosures).
Total annual labor cost: $159,265.
Recordkeeping: Staff assumes that IDSMs use clerical staff to
comply with the recordkeeping requirements contained in the Rule at an
hourly rate of approximately $15. Thus, the labor cost associated with
the 5,364 annual burden hours for recordkeeping is approximately
$80,460 (5,364 burden hours x $15 per hour).
Reporting: Staff assumes that IDSMs also use clerical support staff
at an hourly rate of $15 to comply with the reporting requirements.
Thus, the labor cost associated with the 1,788 annual burden hours for
reporting is approximately $26,820 (1,788 burden hours x $15 per hour).
Disclosure: Staff assumes that the work required to comply with the
warrantors' disclosure requirements entails an equal mix of legal,
clerical, and graphic design work. The legal work entails ensuring that
the warranty information and other materials contain the information
required to be disclosed by the Rule, as well as reviewing the annual
audits for any recommendations for improving the warrantors' materials,
and implementing those recommended changes as appropriate. The graphic
design work entails creating pamphlets, brochures, posters, or other
materials aimed at making consumers aware of the existence of the IDSM
and its procedures. The clerical work entails copying and distributing
those informational materials. Staff assumes that one third of the
total disclosure hours for warrantors (170 hours) require legal work at
a rate of $250 per hour, one third require graphic design at a rate of
$25 per hour, and one third require clerical work at a rate of $15 per
hour. This results in a disclosure labor burden of $49,300 for
warrantors ((170 x $250) + (170 x $25) + (170 x $15)).
In addition, staff assumes that IDSMs use clerical support at an
hourly rate of $15 to reproduce records and, therefore, the labor cost
associated with the 179 annual hours of disclosure burden for IDSMs is
approximately $2,685 (179 burden hours x $15 per hour).
Accordingly, the combined total annual labor cost for PRA-related
burden under the Rule is approximately $159,265 ($80,460 for
recordkeeping + $26,820 for reporting + $51,985 for disclosures).
Total annual capital or other non-labor costs: $312,759.
Total capital and start-up costs: The Rule imposes no appreciable
current capital or start-up costs. The vast majority of warrantors have
already developed systems to retain the records and provide the
disclosures required by the Rule. Rule compliance does not require the
use of any capital goods, other than ordinary office equipment, to
which providers already have access.
The Rule imposes only one additional cost on IDSMs operating under
the Rule that would not apply to other IDSMs: The annual audit
requirement. According to representatives of the IDSMs, the vast
majority of costs associated with this requirement consist of the fees
paid to the auditors and their staffs to perform the annual audit.
Representatives of the IDSMs previously estimated a combined cost of
$300,000 for both IDSMs currently operating under the Rule. Staff
retains that estimate.
Other non-labor costs: $12,759 in copying costs, based on estimated
copying costs of 7 cents per page and several conservative assumptions.
Staff estimates that the average dispute-related file contains 35 pages
and a typical annual audit file contains approximately 200 pages. As
discussed above, staff assumes that the IDSMs operating under the Rule
will copy approximately twenty percent of dispute files (2,145).
Staff also estimates that a very small minority of consumers
request a copy of the annual audit. Staff bases this assumption on (1)
the number of consumer requests received by the IDSMs in the past; and
(2) the fact that the IDSMs' annual audits are available online. For
example, annual audits are available on the FTC's Web site, where
consumers may view and or print pages as needed, at no cost to the
IDSM. In addition, the Better Business Bureau makes available on its
Web site the annual audit of the BBB AUTO LINE. Therefore, staff
conservatively estimates that only five percent of consumers using an
IDSM covered by the Rule will request a copy of the IDSM's audit report
(approximately 536 audit reports).\15\
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\15\ This estimate assumes each dispute is associated with one
consumer.
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Thus, the total annual copying cost for dispute-related files is
approximately $5,255 (35 pages per file x $.07 per page x 2,145
disputes) and the total annual copying cost for annual audit reports is
approximately $7,504 (200 pages per audit report x $.07 per page x 536
audit reports). Accordingly, the total cost attributed to copying under
the Rule is approximately $12,759. Thus, the total non-labor cost under
the Rule is approximately $312,759 ($300,000 for auditor fees + $12,759
for copying costs).
Request for Comments
You can file a comment online or on paper. Write ``Warranty Rules:
Paperwork Comment, FTC File No. P044403'' on your comment. Your
comment--including your name and your state--will be placed on the
public record of this proceeding, including, to the extent practicable,
on the public Commission Web site, at http://www.ftc.gov/os/publiccomments.shtm. As a matter of discretion, the Commission tries to
remove individuals' home contact information from comments before
placing them on the Commission Web site.
Because your comment will be made public, you are solely
responsible for making sure that your comment does not include any
sensitive personal information, like anyone's Social Security number,
date of birth, driver's license number or other state identification
number or foreign country equivalent, passport number, financial
account number, or credit or debit card number. You are also solely
responsible for making sure that your comment does not include any
sensitive health information, like medical records or other
individually identifiable health
[[Page 8617]]
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).\16\ 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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\16\ In particular, the written request for confidential
treatment that accompanies the comment must include the factual and
legal basis for the request, and must identify the specific portions
of the comment to be withheld from the public record. See FTC Rule
4.9(c), 16 CFR 4.9(c).
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Postal mail addressed to the Commission is subject to delay due to
heightened security screening. As a result, the Commission encourages
you to submit your comments online. To make sure that the Commission
considers your online comment, you must file it at https://ftcpublic.commentworks.com/ftc/idsprpra by following the instructions
on the web-based form. If this Notice appears at http://www.regulations.gov, you also may file a comment through that Web site.
If you file your comment on paper, write ``Warranty Rules:
Paperwork Comment, FTC File No. P044403'' on your comment and on the
envelope, and mail or deliver it to the following address: Federal
Trade Commission, Office of the Secretary, Room H-113 (Annex J), 600
Pennsylvania Avenue NW., Washington, DC 20580. If possible, submit your
paper comment to the Commission by courier or overnight service.
Visit the Commission Web site at http://www.ftc.gov to read this
Notice. The FTC Act and other laws that the Commission administers
permit the collection of public comments to consider and use in this
proceeding as appropriate. The Commission will consider all timely and
responsive public comments that it receives on or before March 28,
2017. 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. 2017-01857 Filed 1-26-17; 8:45 am]
BILLING CODE 6750-01-P