[Federal Register Volume 85, Number 145 (Tuesday, July 28, 2020)]
[Notices]
[Pages 45427-45429]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-16301]
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FEDERAL TRADE COMMISSION
Agency Information Collection Activities; Proposed Collection;
Comment Request
AGENCY: Federal Trade Commission.
ACTION: Notice.
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SUMMARY: In accordance with the Paperwork Reduction Act of 1995
(``PRA''), the Federal Trade Commission (``FTC'' or ``Commission'') is
seeking public comment on its proposal to extend for an additional
three years the Office of Management and Budget clearance for
information collection requirements in the Business Opportunity Rule
(``Rule''). That clearance expires on January 31, 2021.
DATES: Comments must be submitted by September 28, 2020.
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 ``Business Opportunity
Rule Paperwork Comment, FTC File No. P114408'' on your comment and file
your comment online at https://www.regulations.gov, 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: 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:
Title of Collection: Disclosure Requirements Concerning Business
Opportunities, 16 CFR part 437.
OMB Control Number: 3084-0142.
Type of Review: Extension without change of currently approved
collection.
Affected Public: Private Sector: Businesses and other for-profit
entities.
Estimated Annual Burden Hours: 10,065.
Estimated Annual Labor Costs: $703,141.
Estimated Annual Non-Labor Costs: $3,056,503.
Abstract: The Business Opportunity Rule requires business
opportunity sellers to furnish prospective purchasers a disclosure
document that provides information regarding the seller, the seller's
business, and the nature of the proposed business opportunity, as well
as additional information to substantiate any claims about actual or
potential sales, income, or profits for a prospective business
opportunity purchaser. The seller must also preserve information that
forms a reasonable basis for such claims.
The Rule is designed to ensure that prospective purchasers receive
information to help them evaluate business opportunities. Sellers must
disclose five key items of information in a simple, one-page document:
(1) The seller's identifying information; (2) whether the seller makes
a claim about the purchaser's likely earnings (and, if yes, the seller
must provide information supporting any such claims); (3) whether the
seller, its affiliates, or key personnel have been involved in certain
legal actions (and, if yes, the seller must provide a separate list of
those actions); (4) whether the seller has a cancellation or refund
policy (and, if yes, the seller must provide a separate document
stating the material terms of such policies); and (5) a list of persons
who have purchased the business opportunity within the previous three
years. Misrepresentations and omissions are prohibited under the Rule,
and for sales conducted in languages other than English, all
disclosures must be provided in the language in which the sale is
conducted.
Burden Estimates
FTC staff estimates there are approximately 3,050 business
opportunity sellers covered by the Rule, including vending machine,
rack display, work-at-home, and other opportunity sellers. Of this
total, staff estimates that on an annual basis approximately 90% are
established sellers and the remaining 10% are new entrants (i.e., 2,745
existing business opportunity sellers plus 305 new entrants). In
addition, staff estimates that approximately 92 business
[[Page 45428]]
opportunity sellers market business opportunities in Spanish (in
addition to English) and another 61 sellers market in languages other
than English or Spanish (in addition to English).\1\
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\1\ FTC bases these estimates on census data. See American
Community Survey, Household Language Table K201601 (2018), at
https://data.census.gov/cedsci/. The census data indicates that
approximately 3% of Spanish-speaking U.S. households are classified
as limited English speaking households. In addition, the data
indicates that approximately 2% of the United States population
speaks a language other than Spanish or English at home and are
classified as limited English speaking households. Staff estimates
that approximately 3% of all entities selling business opportunities
market in Spanish and 2% of all such entities market in languages
other than English or Spanish.
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A. Estimated Hours Burden
Compliance burdens will vary depending on a business opportunity
seller's prior experience with the Rule. Appendices A and B to the Rule
provide models of the required disclosure documents in both English and
Spanish, reducing the potential burden that sellers may incur to
provide the required disclosures. Commission staff estimates that 2,745
existing business opportunity sellers will require approximately two
hours to update their disclosure documents annually. This yields a
total annual burden of 5,490 hours for established sellers. Staff also
projects that 305 new business opportunity sellers will require
approximately five hours to develop their initial disclosure documents.
This yields a total annual burden of approximately 1,525 hours. In
addition, staff estimates that all business opportunity sellers will
require approximately one hour to file and store required records for a
total of 3,050 hours. This yields a cumulative total of 10,065 hours.
B. Estimated Labor Cost
The Commission determines estimated labor costs by applying
applicable wage rates to the burden hours discussed above. Commission
staff assumes that an attorney likely would prepare or update required
disclosure documents at an approximate hourly rate of $69.86.\2\
Accordingly, staff estimates that cumulative labor costs are $703,141
(10,065 hours x $69.86 per hour).
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\2\ This figure is derived from the mean hourly wage for
Lawyers. See ``Occupational Employment and Wages--May 2019,'' Bureau
of Labor Statistics, U.S. Department of Labor (March 31, 2020),
Table 1 (``National employment and wage data from the Occupational
Employment Statistics survey by occupation, May 2019''), available
at https://www.bls.gov/news.release/pdf/ocwage.pdf.
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C. Estimated Non-Labor Costs
1. Printing and Mailing of the Disclosure Document
Business opportunity sellers may also incur costs to print and
distribute the single-page disclosure document, plus any attachments.
These costs vary based upon the length of the attachments and the
number of copies produced to meet the expected demand. Commission staff
estimates that 3,050 business opportunity sellers will print and mail
approximately 1,000 disclosure documents per year at a cost of $1.00
per document, for a total cost of $3,050,000. Conceivably, many
business opportunity sellers will elect to furnish disclosures
electronically; thus, the total cost could be much less.
2. Translating the Required Disclosures Into a Language Other Than
English
The costs associated with translating the disclosures will vary
depending upon a business opportunity seller's prior experience and the
language the seller uses to market business opportunities. Because
Appendices A and B to the Rule provide illustrations of the required
disclosure documents in both English and Spanish, business opportunity
sellers marketing in Spanish will not incur costs to translate their
disclosure documents. Existing sellers who market business
opportunities in either Spanish or another non-English language may
incur translation costs to update their disclosures over time. New
entrants that market business opportunities in languages other than
English or Spanish will incur costs to translate Appendix A into other
languages.
Informed by Census data, FTC staff estimates that 92 sellers market
business opportunities in Spanish and an additional 61 sellers market
in languages other than English or Spanish. This includes an estimated
9 new entrants annually that market business opportunities in Spanish
and 6 new entrants that market business opportunities in languages
other than English or Spanish.
FTC staff estimates that approximately 137 existing business
opportunity sellers are marketing business opportunities in languages
other than English. Staff estimates these sellers will require on
average approximately 250 words (about one standard, double-spaced
page) to update initial disclosures. Therefore, staff estimates the
total cost to translate the updates to sellers' initial disclosures is
approximately $5,994 [137 sellers x (17.5 \3\ cents per word x 250
words)].
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\3\ Staff estimates that this represents the current market rate
per word to translate the disclosure documents into the language the
sellers use to market business opportunities.
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In addition, staff estimates that new entrant business opportunity
sellers marketing in languages other than English or Spanish will incur
burden to translate the required disclosures. There are 485 words in
Appendix A to the Rule. Therefore, staff estimates that the average
annual cost burden for new business opportunity sellers to translate
the required disclosures into a language other than English or Spanish
will be approximately $509 [6 sellers x (17.5 cents per word x 485
words)].
Thus, cumulative estimated non-labor costs are $3,056,503
($3,050,000 + $5,994 + $509).
Request for Comment
Under the PRA, 44 U.S.C. 3501-3521, federal agencies must obtain
approval from OMB for each collection of information they conduct or
sponsor. ``Collection of information'' means agency requests or
requirements that members of the public submit reports, keep records,
or provide information to a third party. 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 clearance for the information collection
requirements contained in the Business Opportunity Rule, 16 CFR part
437 (OMB Control Number 3084-0142).
Pursuant to Section 3506(c)(2)(A) of the PRA, 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, including through the use of appropriate automated,
electronic, mechanical, or other technological collection techniques or
other forms of information technology, e.g., permitting electronic
submission of responses.
You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before September 28,
2020. Write
[[Page 45429]]
``Business Opportunity Rule Paperwork Comment, FTC File No. P114408''
on your comment. 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 through the https://www.regulations.gov website by following the instructions on the web-
based form provided. Your comment, including your name and your state--
will be placed on the public record of this proceeding, including the
https://www.regulations.gov website.
If you file your comment on paper, write ``Business Opportunity
Rule Paperwork Comment, FTC File No. P114408'' on your comment and on
the envelope, and mail your comment to the following address: Federal
Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW,
Suite CC-5610 (Annex J), Washington, DC 20580, or deliver your comment
to the following address: Federal Trade Commission, Office of the
Secretary, Constitution Center, 400 7th Street SW, 5th Floor, Suite
5610, Washington, DC 20024. If possible, please submit your paper
comment to the Commission by courier or overnight service.
Because your comment will be placed on the public record, you are
solely responsible for making sure that your comment does not include
any sensitive or confidential information. In particular, your comment
should not include any sensitive personal information, such as your or
anyone else'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, such as
medical records or other individually identifiable health information.
In addition, your comment should not include any ``trade secret or any
commercial or financial information which . . . is privileged or
confidential''--as provided by 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)--including in
particular competitively sensitive information such as costs, sales
statistics, inventories, formulas, patterns, devices, manufacturing
processes, or customer names.
Comments containing material for which confidential treatment is
requested must be filed in paper form, must be clearly labeled
``Confidential,'' and must comply with FTC Rule 4.9(c). 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). Your comment will be kept
confidential only if the General Counsel grants your request in
accordance with the law and the public interest. Once your comment has
been posted on the https://www.regulations.gov website--as legally
required by FTC Rule 4.9(b)--we cannot redact or remove your comment,
unless you submit a confidentiality request that meets the requirements
for such treatment under FTC Rule 4.9(c), and the General Counsel
grants that request.
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 September 28,
2020. For information on the Commission's privacy policy, including
routine uses permitted by the Privacy Act, see https://www.ftc.gov/site-information/privacy-policy.
Josephine Liu,
Assistant General Counsel for Legal Counsel.
[FR Doc. 2020-16301 Filed 7-27-20; 8:45 am]
BILLING CODE 6750-01-P