[Federal Register Volume 88, Number 5 (Monday, January 9, 2023)]
[Notices]
[Pages 1231-1234]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-00163]


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FEDERAL TRADE COMMISSION


Agency Information Collection Activities; Proposed Collection; 
Comment Request; Extension

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 (``OMB'') clearance for 
information collection requirements in its Informal Dispute Settlement 
Procedures Rule (``the Dispute Settlement Rule'' or ``the Rule''). The 
current clearance expires on July 31, 2023.

DATES: Comments must be received on or before March 10, 2023.

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 ``Dispute Settlement 
Rule; PRA Comment: FTC File No. P072108'' 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: Laura Basford, General Attorney, 
Division of Marketing Practices, Bureau of Consumer Protection, Federal 
Trade Commission, 600 Pennsylvania Avenue NW, Washington, DC 20580, 
(202) 326-2343, [email protected].

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SUPPLEMENTARY INFORMATION: 
    Title: Informal Dispute Settlement Procedures Rule (the Dispute 
Settlement Rule or the Rule), 16 CFR part 703.
    OMB Control Number: 3084-0113.
    Type of Review: Extension of a currently approved collection.
    Abstract: 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 part 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 is required to use before 
pursuing legal remedies under the Act in court (known as the ``prior 
resort requirement'').\3\
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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\ 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.
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    The Dispute Settlement Rule standards for IDSMs include 
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.
    Likely Respondents: Warrantors that Use an IDSM (Automobile 
Manufacturers) and Informal Dispute Settlement Mechanisms.
    Estimated Annual Burden Hours: 9,267 (derived from 6,210 
recordkeeping hours in addition to 2,070 reporting hours and 987 
disclosure hours).
    Estimated Annual Labor Costs: $239,093.
    Estimated Annual Capital or Other Non-labor Costs: $344,560.
    As required by section 3506(c)(2)(A) of the PRA, 44 U.S.C. 
3506(c)(2)(A), the FTC is providing this opportunity for public comment 
before requesting that OMB extend the existing clearance for the 
information collection requirements associated with the Dispute 
Settlement Rule.

Burden Statement

    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. 
Currently, there are two IDSMs operating under the Rule: (1) the BBB 
AUTO LINE, and (2) the National Center for Dispute Settlement 
(``NCDS''). Although the Rule's information collection requirements 
have not changed since 2020, staff has adjusted its previous estimates 
slightly upward for its 2023 calculations because the two IDSMs 
indicate that, on average, more disputes have been handled since the 
previous submission to OMB (12,241 disputes/year projected in 2020; 
12,420 disputes/year projected in 2023). The calculations underlying 
staff's new estimates follow.
    Recordkeeping: The Rule requires IDSMs to maintain records of each 
consumer warranty dispute. Both the BBB AUTO LINE 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. The BBB AUTO LINE handles an average of 9,365 disputes each 
year.\4\ NCDS handles an average of 3,055 disputes each year.\5\ Based 
on these figures, staff estimates that the average number of IDSM 
disputes covered by the Rule is approximately 12,420. 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 business. Nonetheless, staff 
estimates that maintaining individual case files imposes an additional 
burden of 30 minutes per case.
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    \4\ According to its annual audits, the BBB AUTO LINE closed 
10,351 disputes in 2019, 9,044 in 2020, and 8,700 in 2021. This 
includes disputes for at least two manufacturers that do not include 
a prior resort requirement. Therefore, this number likely overstates 
the number of disputes covered by the Rule.
    \5\ According to NCDS' annual audits, the number of disputes 
both within its jurisdiction and closed each year are 3,861 in 2019, 
2,864 in 2020, and 2,439 in 2021.
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    Accordingly, the total annual recordkeeping burden is approximately 
6,210 hours ((12,420 disputes x 30 minutes of burden/dispute) / 60 
minutes/hour).
    Reporting: The Rule requires IDSMs to update indexes, complete 
semiannual statistical summaries, and submit an annual audit report to 
the FTC. Staff estimates that covered entities spend approximately 10 
minutes per case for these activities, resulting in a total annual 
burden of approximately 2,070 hours ((12,420 disputes x 10 minutes of 
burden/dispute) / 60 minutes/hour).
    Disclosure
    (a) Warrantors' Disclosure Burden
    As it did in 2020, 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 the 
IDSM and its procedures; and (2) information that makes consumers aware 
of the existence of the IDSM.\6\
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    \6\ 16 CFR 703.2(b).
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    A review of the annual audits of the BBB AUTO LINE and the NCDS 
indicates that there are approximately twenty-six 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 780 hours (26 
manufacturers x 30 hours).
    (b) IDSMs' Disclosure Burden
    Under the Rule, the IDSMs are 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 
information.
    Based on discussions with representatives of the two IDSMs, staff 
estimates that the burden imposed by these disclosure requirements is 
approximately 207 hours per year. This estimate draws from the average 
number of disputes closed each year with the IDSMs (12,420) and the 
assumption that twenty percent of consumers request copies of the 
records pertaining to their disputes (approximately 2,484 disputes).\7\ 
Staff estimates that copying such records would require approximately 5 
minutes per dispute.\8\ Staff estimates a total disclosure burden of 
approximately 207 hours ((2,484

[[Page 1233]]

disputes x 5 minutes of burden/dispute) / 60 minutes/hour) for the 
IDSMs.
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    \7\ This assumes each dispute is associated with one consumer.
    \8\ 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 9,267 (6,210 hours for recordkeeping plus 
2,070 hours for reporting plus 780 hours for warrantors' disclosures 
and 207 hours for IDSM disclosures).
    Total Annual Labor Cost: $239,093.
    Recordkeeping: Staff assumes that IDSMs use clerical staff to 
comply with the recordkeeping requirements contained in the Rule at an 
hourly rate of approximately $19.\9\ Thus, the labor cost associated 
with the 6,210 annual burden hours for recordkeeping is approximately 
$117,990 (6,210 burden hours x $19 per hour).
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    \9\ The wage rate is derived from occupational data found in the 
Bureau of Labor Statistics, Occupational Employment and Wages (Mar. 
2022), available at https://www.bls.gov/news.release/ocwage.htm. The 
clerical wage rate estimate is based on the mean hourly wage data 
for the category of ``Office Clerks, general'' ($18.75), rounded up 
to the nearest whole dollar amount ($19).
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    Reporting: Staff assumes that IDSMs also use clerical support staff 
at an hourly rate of $19 to comply with the reporting requirements. 
Thus, the labor cost associated with the 2,070 annual burden hours for 
reporting is approximately $39,330 (2,070 burden hours x $19 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. Staff assumes that one third of the 
total disclosure hours for warrantors (260 hours) require legal work at 
a rate of $250 per hour, one third require graphic design at a rate of 
$29 per hour,\10\ and one third require clerical work at a rate of $19 
per hour. This results in a disclosure labor burden of $77,480 for 
warrantors ((260 x $250) + (260 x $29) + (260 x $19)).
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    \10\ Id. The wage rate estimate for graphic design work is based 
on the mean hourly wage data for the category of ``Graphic 
designers'' ($28.83), rounded up to the nearest whole dollar amount 
($29).
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    In addition, staff assumes that IDSMs use clerical support at an 
hourly rate of $19 to reproduce records and, therefore, the labor cost 
associated with the 207 annual hours of disclosure burden for IDSMs is 
approximately $3,933 (207 burden hours x $19 per hour).
    Accordingly, the combined total annual labor cost for PRA-related 
burden under the Rule is approximately $239,093 ($117,990 for 
recordkeeping + $39,330 for reporting + $81,413 for disclosures).
    Total Annual Capital or Other Non-Labor Costs: $344,560.
    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 one additional cost on IDSMs operating under the 
Rule, which is 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. Representatives of the IDSMs previously estimated a 
combined cost of $300,000 associated with the audits. In light of cost 
increases over the past three years, staff has increased that estimate 
by five percent, estimating that the annual audit requirement now costs 
$315,000.
    Other Non-Labor Costs: As discussed above, staff assumes that 
approximately twenty percent of dispute files (approximately 2,484 
files) are requested by consumers. Staff also estimates that only five 
percent of consumers will request a copy of the IDSM's audit report 
(approximately 612 audit reports).\11\ Staff bases this assumption on 
the number of consumer requests received by the IDSMs in the past and 
the fact that the IDSMs' annual audits are available online. Staff 
estimates that the average dispute-related file contains 35 pages and a 
typical annual audit file contains approximately 200 pages. Staff 
estimates copying costs of 14 cents per page.
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    \11\ 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 $12,172 (35 pages per file x $0.14 per page x 2,484 
disputes) and the total annual copying cost for annual audit reports is 
approximately $17,388 (200 pages per audit report x $0.14 per page x 
621 audit reports). Accordingly, the total cost attributed to copying 
under the Rule is approximately $29,560.
    Thus, the total non-labor cost under the Rule is approximately 
$344,560 ($315,000 for auditor fees + $29,560 for copying costs).

Request for Comments

    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 maintaining records, providing reports to the government 
and providing disclosures to consumers.
    For the FTC to consider a comment, we must receive it on or before 
March 10, 2023. 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.
    You can file a comment online or on paper. Due to the public health 
emergency in response to the COVID-19 outbreak and the agency's 
heightened security screening, postal mail addressed to the Commission 
will be subject to delay. We encourage you to submit your comments 
online through the https://www.regulations.gov website.
    If you file your comment on paper, write ``Dispute Settlement Rule; 
PRA Comment: FTC File No. P072108'' on your comment and on the 
envelope, and mail it to the following address: Federal Trade 
Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, Suite 
CC-5610 (Annex J), Washington, DC 20580, or deliver your comment to the 
following address: Federal Trade Commission, Office of the Secretary, 
Constitution Center, 400 7th Street SW, 5th Floor, Suite 5610 (Annex 
J), Washington, DC 20024. If possible, submit your paper comment to the 
Commission by courier or overnight service.
    Because your comment will become publicly available at https://www.regulations.gov, 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

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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 (1) be filed in paper form, (2) be clearly labeled 
``Confidential,'' and (3) 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 publicly at www.regulations.gov, 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 March 10, 
2023. 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. 2023-00163 Filed 1-6-23; 8:45 am]
BILLING CODE 6750-01-P