Federal Register: June 11, 2009 (Volume 74, Number 111)
DOCID: fr11jn09-64 FR Doc E9-13643
FEDERAL TRADE COMMISSION
Federal Trade Commission
DOCUMENT ACTION: Notice.
Agency Information Collection Activities; Proposed Collection; Comment Request
DATES: Comments must be submitted on or before August 10, 2009.
The FTC intends to conduct two exploratory studies on consumer susceptibility to fraudulent and deceptive marketing. This research will be conducted to further the FTC's mission of protecting consumers from unfair and deceptive marketing. Before gathering this information, the FTC is seeking public comments on its proposed research. This notice seeks comments on the Fraud Susceptibility Internet Panel Study, one of the two studies. The Commission is also seeking comments on the other study in a separate Federal Register notice. Comments will be considered before the FTC submits a request for Office of Management and Budget (OMB) review under the Paperwork Reduction Act (PRA).
Agency Information Collection Activities; Proposals, Submissions, and Approvals
As part of its consumer protection mission, the FTC has brought
hundreds of cases targeting fraud, and has committed significant
resources to educational initiatives designed to protect consumers from
fraud. The Commission hosted a Fraud Forum\2\ on February 2526, 2009
to examine fraud in the market place. The Commission also conducted
telephone surveys in 2003 and 2005 designed to measure the proportion
of the U.S. adult population that has fallen victim to various consumer
frauds.\3\ Despite this, surprisingly little is known about what
determines consumers' susceptibility to fraud. For example, the 2003
and 2005 FTC Consumer Fraud surveys found that education was not a
significant predictor of fraud victimization. Understanding when and
why people are vulnerable to fraud would better inform the FTC's
substantial, ongoing efforts to fight fraud through law enforcement and
consumer education. Any additional insights into how and why people
fall victim to fraud could also help improve any future fraud surveys
the Commission may undertake. The study being announced in this notice
is a preliminary and exploratory step toward facilitating those
efforts. The study is not intended to lead to enforcement actions;
rather, study results may aid the FTC's efforts to better target its
enforcement actions and consumer education initiatives and improve future fraud surveys.
\2\ Information on the Fraud Forum is available at: (http:// www.ftc.gov/bcp/workshops/fraudforum/index.shtm).
\3\ The Commission has published two staff reports describing the results of these surveysConsumer Fraud in the United States: An FTC Survey (published August 2004 and available at (http:// www.ftc.gov/reports/consumerfraud/040805confraudrpt.pdf) and Consumer Fraud in the United States: The Second FTC Survey (published in October 2007 and available at (http://www.ftc.gov/opa/ 2007/10/fraud.pdf).
Economic and psychological experiments have identified several decisionmaking biases, such as impulsivity, overconfidence, over optimism, and loss aversion, that can cause inaccurate assessments of the risks, costs, and benefits of various choices. In the study announced in this notice, FTC staff proposes to conduct a survey using an Internet survey protocol to examine whether susceptibility to consumer fraud is related to these types of decision biases. Study results also might shed light on whether consumers with certain behavioral traits are more or less likely to be skeptical about advertisements and whether there is a relationship between ad skepticism and the likelihood of having been a victim of fraud. II. Paperwork Reduction Act
As required by Section 3506(c)(2)(A) of the PRA, 44 U.S.C. 350121, the FTC is providing this opportunity for public comment before requesting that OMB approve the study. Under the PRA, federal agencies must obtain OMB approval 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).
Specifically, the FTC invites comments on: (1) whether the proposed
collection of information is necessary for the proper performance of
the functions of the FTC, including whether the information will have
practical utility; (2) the accuracy of the FTC's estimate of the burden
of the proposed collection of information; (3) ways to enhance the
quality, utility, and clarity of the information to be collected; and
(4) ways to minimize the burden of collecting information on those who
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. All comments should be filed as prescribed in
the ADDRESSES section above, and must be received on or before August 10, 2009.
A. Description of the Collection of Information and Proposed Use
The FTC proposes to conduct a survey which will include approximately 5,000 interviews with individuals representing a large spectrum of the U.S. adult population. The survey will be conducted over the Internet, and participants will be drawn from an Internet survey panel maintained by a commercial survey firm that operates such panels. While the sample will not be nationally representative, it will still provide useful insights into consumer susceptibility to fraud.\4\ \4\ The FTC recognizes, of course, that a sample drawn from an Internet panel does not represent a random sample of the U.S. population. However, the purpose of this study is to compare the experiences and attitudes of people with different characteristics rather than to estimate the percentage or number of U.S. consumers who have particular characteristics or experiences. As such, using an Internet panel should not pose significant problems.
The study will examine whether participants have been the victim of
certain forms of consumer fraud in the recent past. In addition, staff
may attempt to measure consumer skepticism about advertisements, as
well as consumer knowledge, risk attitudes, and impulsivity using
existing methods from economics and psychological research. Staff may
measure consumer knowledge using consumer literacy and financial
literacy surveys \5\ in order to test subjects' marketplace
understanding and sophistication. Staff seeks to determine if the
presence of such knowledge and behavioral characteristics affects the likelihood a person will have been a victim of fraud.
\5\ See Annamaria Lusardi, Financial Literacy: An Essential Tool for Informed Consumer Choice?, Working Paper, Joint Center for Housing Studies, Harvard University (2008), for examples of financial literacy questions similar to those the FTC is
The study will measure subjects' risk attitudes through a series of
choices between smaller certain amounts of money and larger risky
amounts.\6\ The study's design may describe the product to some
subjects as creating benefits, while presenting to other subjects
nearly identical information depicted as a reduction in harm. Staff
would then test whether fraud victims tend to be less likely to be
riskaverse and/or lossaverse than nonvictims. Staff also may seek to
determine whether riskaverse and/or lossaverse subjects are
particularly susceptible to fraudulent claims framed as opportunities
to escape losses.\7\ The study may measure subjects' impulsivity
through a series of choices between smaller monetary amounts received
sooner and larger amounts received later.\8\ Staff then would test to
see if impulsive subjects are more likely to have been victims of fraud
and/or are more susceptible to fraudulent claims. The study also may measure participants' optimism \9\ and
skepticism \10\ to determine how these characteristics affect the likelihood that someone becomes a victim of consumer fraud. In addition, staff anticipates collecting demographic information from the surveyed subjects.
\6\ Staff anticipates using standard risk aversion measurement methodologies akin to those in Charles Holt and Susan Laury, Risk Aversion and Incentive Effects, American Economic Review, December 2002, 16441655. Some changes may be made to the questions and question sequence since participants in this study will not receive actual cash payments reflecting the results of their decisions. \7\ Several academic articles report that people are more willing to take identical risks over monetary gambles if the risk is presented as an opportunity to escape losses rather than as a chance to gain. Our ``framing'' methodologies may emulate those in Amos Tversky and Daniel Kahneman, The Framing of Decisions and the Psychology of Choice, Science, Vol. 211, No. 4481 (Jan. 30, 1981), 453458.
\8\ Staff anticipates using methodology similar to that in Stephan Meier and Charles Sprenger, Impatience and Credit Behavior: Evidence from a Field Experiment, Working Papers 073, Federal Reserve Bank of Boston (2007).
\9\ Staff plans to use standard questions similar to those in Manju Puri and David Robinson, Optimism and Economic Choice, Journal of Financial Economics, 2007, Vol. 86, 7199.
\10\ Staff may use the scale developed in Carl Obermiller and Eric Spangenberg, Development of a Scale to Measure Consumer Skepticism toward Advertising, Journal of Consumer Psychology, Vol. 7, No. 2, 1998, 159186.
B. Estimated Burden Hours
The FTC plans to seek information from approximately 5,000 respondents using a questionnaire that should take no more than 30 minutes to complete. Prior to that, a pretest of up to 100 participants will be conducted. Allowing for an extra two minutes for questions unique to the pretest, the pretest should total no more than 32 minutes to complete. Accordingly, the information collection burden of the Internet Panel study should total no more than 2,553 hours. Finally, the cost per respondent should be negligible. Participants will be compensated for their participation in the study using the contractor's standard method of rewarding members of its Internet panel for survey participation. Participation is voluntary and will not require startup, capital, or labor expenditures by respondents.
By direction of the Commission.
Donald S. Clark,
[FR Doc. E913643 Filed 61009: 8:45 am]
BILLING CODE 675001S
FOR FURTHER INFORMATION CONTACT
Requests for additional information should be addressed to Keith B. Anderson, Economist, Bureau of Economics, Federal Trade Commission, 600 Pennsylvania Avenue, NW, Mail Stop NJ4136, Washington, DC 20580. Telephone: (202) 3263428; email: email@example.com.