Federal Register: October 19, 2009 (Volume 74, Number 200)
DOCID: fr19oc09-60 FR Doc E9-25030
FEDERAL TRADE COMMISSION
Federal Trade Commission
NOTICE: NOTICES
DOCID: fr19oc09-60
DOCUMENT ACTION: Notice.
SUBJECT CATEGORY:
Agency Information Collection Activities; Proposed Collection; Comment Request
DATES: Comments must be filed by December 18, 2009.
DOCUMENT 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 through January 31, 2013 the current OMB clearance for information collection requirements contained in its Mail or Telephone Order Merchandise Trade Regulation Rule (``MTOR'' or ``Rule''). That clearance expires on January 31, 2010.
SUMMARY:
Agency Information Collection Activities; Proposals, Submissions, and Approvals
SUPPLEMENTAL INFORMATION
Request for Comments:
Interested parties are invited to submit written comments electronically or in paper form. Comments should refer to ``Mail or Telephone Order Merchandise Trade Regulation Rule: FTC File No. R511929,'' to facilitate the organization of comments. Please note that your comment including your name and your state will be placed on the public record of this proceeding, including on the publicly accessible FTC website, at (http://www.ftc.gov/os/publiccomments.shtm).
Because comments will be made public, they should not include any
sensitive personal information, such as any individual'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. Comments also
should not include any sensitive health information, such as medical
records or other individually identifiable health information. In
addition, comments should not include ``[t]rade secret or any
commercial or financial information which is obtained from any person
and which is privileged or confidential'' as provided in Section 6(f)
of the Federal Trade Commission Act (``FTC Act''), 15 U.S.C. 46(f), and
FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2). Comments containing matter 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).\1\
\1\ The comment must be accompanied by an explicit request for
confidential treatment, including the factual and legal basis for
the request, and must identify the specific portions of the comment
to be withheld from the public record. The request will be granted
or denied by the Commission's General Counsel, consistent with
applicable law and the public interest. See FTC Rule 4.9(c), 16 CFR 4.9(c).
Because paper mail addressed to the FTC is subject to delay due to heightened security screening, please consider submitting your comments in electronic form. Comments filed in electronic form should be submitted using the following weblink: (https:// public.commentworks.com/ftc/MTORpra) (and following the instructions on the webbased form). To ensure that the Commission considers an electronic comment, you must file it on the webbased form at the weblink (https://public.commentworks.com/ftc/MTORpra). If this Notice appears at (www.regulations.gov/search/index.jsp), you may also file an electronic comment through that website. The Commission will consider all comments that regulations.gov forwards to it. You may also visit the FTC Website at (http://www.ftc.gov) to read the Notice and the news release describing it.
A comment filed in paper form should include the reference ``Mail or Telephone Order Merchandise Trade Regulation Rule: FTC File No. R511929,'' both in the text and on the envelope, and should be mailed or delivered to the following address: Federal Trade Commission, Office of the Secretary, Room H135 (Annex J), 600 Pennsylvania Avenue, N.W., Washington, DC 20580. The FTC is requesting that any comment filed in paper form be sent by courier or overnight service, if possible, because U.S. postal mail in the Washington area and at the Commission is subject to delay due to heightened security precautions.
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, whether filed in paper or electronic form. Comments received will be available to the public on the FTC website, to the extent practicable, at (http://www.ftc.gov/os/ publiccomments.shtm). As a matter of discretion, the FTC makes every effort to remove home contact information for individuals from the public comments it receives before placing those comments on the FTC website. More information, including routine uses permitted by the Privacy Act, may be found in the FTC's privacy policy, at (http:// www.ftc.gov/ftc/privacy.shtm).
Under the PRA, 44 U.S.C. 35013521, 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 paperwork clearance for the regulations noted herein.
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.
Background:
The MTOR, 16 CFR Part 435, was promulgated in 1975 in response to consumer complaints that many merchants were failing to ship merchandise ordered by mail on time, failing to ship at all, or failing to provide prompt refunds for unshipped merchandise. A second rulemaking proceeding in 1993 demonstrated that the delayed shipment and refund problems of the mail order industry were also being experienced by consumers who ordered merchandise over the telephone. Accordingly, the Commission amended the Rule, effective on March 1, 1994, to include merchandise ordered by telephone, including by telefax or by computer through the use of a modem (e.g., Internet sales), and the Rule was then renamed the ``Mail or Telephone Order Merchandise Rule.''
Generally, the MTOR requires a merchant to: (1) have a reasonable
basis for any express or implied shipment representation made in
soliciting the sale; (2) ship within the time period promised and, if
no time period is promised, within 30 days; (3) notify the consumer and
obtain the consumer's consent to any delay in shipment; and (4) make
prompt and full refunds when the consumer exercises a cancellation option or the merchant is unable to meet the Rule's other
requirements.\2\
\2\ The MTOR does not impose a recordkeeping requirements per se. 16 CFR Sec. 435.1(d) provides that, in an action for
noncompliance, the absence of records that establish that a
respondentseller uses systems and procedures to assure compliance
will create a rebuttable presumption that the seller was not
compliant, but the MTOR does not require a compliant seller to maintain any records.
The notice provisions in the Rule require a merchant who is unable to ship within the promised shipment time
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or 30 days to notify the consumer of a revised date and his or her
right to cancel the order and obtain a prompt refund. Delays beyond the
revised shipment date also trigger a notification requirement to
consumers. When the MTOR requires the merchant to make a refund and the
consumer has paid by credit card, the Rule also requires the merchant
to notify the consumer either that any charge to the consumer's charge
account will be reversed or that the merchant will take no action that will result in a charge.
Burden Statement:
Estimated total annual hours burden: 2,401,000 hours (rounded to the nearest thousand)
In its 2006 PRArelated Federal Register Notices\3\ and
corresponding submission to OMB, FTC staff estimated that established
companies each spend an average of 50 hours per year on compliance with
the Rule, and that new industry entrants spend an average of 230 hours
(an industry estimate) for compliance measures associated with start
up.\4\ Thus, the total estimated hours burden was calculated by
multiplying the estimated number of established companies x 50 hours,
multiplying the estimated number of new entrants x 230 hours, and adding the two totals.
\3\ 71 FR 60530 (Oct. 13, 2006); 71 FR 77751 (Dec. 27, 2006). \4\ Most of the estimated startup time relates to the
development and installation of computer systems geared to more efficiently handle customer orders.
No provisions in the Rule have been amended or changed since
staff's prior submission to OMB. Thus, the Rule's disclosure
requirements remain the same. Since then, however, the number of
businesses engaged in the sale of merchandise by mail or by telephone
has changed. Data from the U.S. Department of Commerce 2009 Statistical
Abstract\5\ indicates that between 2000 and 2005 the number of
businesses subject to the MTOR grew from 26,800 to 33,600, or an
average increase of 1,360 new businesses a year [(33,600 businesses in
2005 26,800 businesses in 2000) / 5 years].\6\ Assuming this growth
rate continues, the average number of established businesses during the
threeyear period for which OMB clearance is sought for the Rule would be 41,760.\7\
\5\ See Table 1008, ``Retail Trade Establishments, Employees and
Payroll: 2000 and 2005,'' U. S. Census Bureau, Statistical Abstract
of the United States: 2009 (128th Edition), Washington, DC, 2008
((http://www.census.gov/compendia/statab/tables/09s1008.pdf)).
\6\ Conceptually, this might understate the number of new
entrants in that it does not factor in the possibility that
established businesses from an earlier year's comparison might have
exited the market preceding the later year of measurement. Given the
virtually unlimited diversity of retail establishments, it is very
unlikely that there is a reliable external measure of such exit;
nonetheless, as in the past, the Commission invites public comment that might better inform these estimates.
\7\ As noted above, the existing OMB clearance for the Rule
expires on January 31, 2010 and the FTC is seeking to extend the clearance through January 31, 2013. The average number of
established businesses during the threeyear clearance period was
determined as follows: [(33,600 businesses in 2005 + (1,360 new
entrants per year x 5 years)) + (33,600 businesses in 2005 + (1,360
new entrants per year x 6 years)) + (33,600 businesses in 2005 + (1,360 new entrants per year x 7 years))]/3 years.
Accordingly, staff estimates industry hours to comply with the MTOR
during each year of the threeyear OMB clearance period by then will be:
New
Year: Established Businesses Entrants
2010.............................................. 40,400............................................ 1,360
2011.............................................. 41,760............................................ 1,360
2012.............................................. 43,120............................................ 1,360
Average:.......................................... 41,760............................................ 1,360
In an average year during the threeyear OMB clearance period, staff estimates that established businesses and new entrants will devote 2,401,000 hours, rounded to the nearest thousand, to comply with the MTOR [(41,760 established businesses x 50 hours) + (1,360 new entrants x 230 hours) = 2,400,800].
The estimated PRA burden per merchant to comply with the MTOR is
likely overstated. The mailorder industry has been subject to the
basic provisions of the Rule since 1976 and the telephoneorder
industry since 1994. Thus, businesses have had several years (and some
have had decades) to integrate compliance systems into their business
procedures. Moreover, arguably much of the estimated time burden for
disclosurerelated compliance would be incurred even absent the Rule.
Industry trade associations and individual witnesses have consistently
taken the position that compliance with the MTOR is widely regarded by
direct marketers as being good business practice. Providing consumers
with notice about the status of their orders fosters consumer loyalty
and encourages repeat purchases, which are important to direct
marketers' success. Accordingly, the Rule's notification requirements
would be followed in any event by most merchants to meet consumer
expectations regarding timely shipment, notification of delay, and
prompt and full refunds. Thus, it appears that much of the time and
expense associated with Rule compliance may not constitute ``burden'' under the PRA.\8\
\8\ Conceivably, in the three years since the FTC's most recent
clearance request to OMB for this Rule, many businesses have
upgraded the information management systems needed to comply with
the Rule and to track orders more effectively. These upgrades,
however, were primarily prompted by the industry's need to deal with
growing consumer demand for merchandise (resulting, in part, from
increased public acceptance of making purchases over the telephone
and, more recently, the Internet). Accordingly, most companies now
provide updated order information of the kind required by the Rule
in their ordinary course of business. Under the OMB regulation
implementing the PRA, burden is defined to exclude any effort that
would be expended regardless of any regulatory requirement. 5 CFR 1320.3(b)(2).
Estimated labor costs: $47,108,000 (rounded to the nearest thousand)
FTC staff derived labor costs by applying appropriate hourly cost
figures to the burden hours described above. According to the most
recent mean hourly income data available from the Bureau of Labor and
Statistics, average payroll in 2008 for miscellaneous sales and related
workers was $19.62/hr. Because the bulk of the burden of complying with
the MTOR is borne by clerical personnel, staff believes that the
average hourly payroll figure for miscellaneous sales and related
workers is an appropriate measure of a direct marketer's average labor
cost to comply with the Rule. Thus, the total annual labor cost to new
and established businesses for MTOR compliance during the threeyear
period for which OMB approval is sought would be approximately
$47,108,000 (2,401,000 hours x $19.62/hr.), rounded to the nearest
thousand. Relative to direct industry sales, this total is negligible.\9\
\9\ Based on a $13.786 billion average yearly increase in sales
for ``electronic shopping and mailorder houses'' from 2000 to 2007
(according to the 2009 Statistical Abstract), staff estimates that
total mail or telephone order sales to consumers in the threeyear
period for which OMB clearance is sought will average $265.5
billion. Thus, the projected average labor cost for MTOR compliance
by existing and new businesses for that period would amount to less than 0.018% of sales.
Estimated annual nonlabor cost burden: $0 or minimal
The applicable requirements impose minimal startup costs, as
businesses subject to the Rule generally have or obtain necessary
equipment for other business purposes, i.e., inventory and order
management, and customer relations. For the same reason, staff
anticipates printing and copying costs to be minimal, especially given
that telephone order merchants have increasingly turned to electronic
communications to notify consumers of delay and to provide cancellation
options. Staff believes that the above requirements necessitate ongoing, regular training so that covered entities
[[Page 53503]]
stay current and have a clear understanding of federal mandates, but
that this would be a small portion of and subsumed within the ordinary
training that employees receive apart from that associated with the information collected under the Rule.
David C. Shonka,
Acting General Counsel.
FOR FURTHER INFORMATION CONTACT
Requests for additional information should be addressed to Jock Chung, Attorney, Division of Enforcement, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue, N.W., Washington, DC 20580, (202) 3262984.