[Federal Register Volume 77, Number 206 (Wednesday, October 24, 2012)]
[Notices]
[Pages 64994-64996]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-26168]
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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: 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 February 28,
2016, 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 February 28,
2013.
DATES: Comments must be received by December 24, 2012.
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.
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 NW., Washington, DC 20580, (202) 326-2984.
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 Federal Trade Commission (``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 rules and regulations under the Mail
or Telephone Order Merchandise Trade Regulation Rule (``MTOR''), 16 CFR
Part 435 (OMB Control Number 3084-0106).
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 December 24,
2012.
The MTOR 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
[[Page 64995]]
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 (if no express time period is promised, the implied
shipment representation is 30 days); (2) notify the consumer and obtain
the consumer's consent to any delay in shipment; and (3) make prompt
and full refunds when the consumer exercises a cancellation option or
the merchant is unable to meet the Rule's other requirements.\1\
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\1\ The MTOR does not impose a recordkeeping requirements per
se. 16 CFR 435.1(d) provides that, in an action for noncompliance,
the absence of records that establish that a respondent-seller 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. Merchants
customarily keep records regarding their systems and procedures in
the ordinary course of business, however; consequently, their
retention of these documents does not constitute a ``collection of
information'' under OMB's regulations that implement the PRA. See 5
CFR 1320.3(b)(2).
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The notice provisions in the Rule require a merchant who is unable
to ship within the promised shipment time 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: 1,764,390 hours.
In its 2009-2010 PRA-related Federal Register Notices \2\ 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.\3\ 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 products.
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\2\ 74 FR 53500 (Oct. 19, 2009); 75 FR 2142 (Jan. 14, 2010).
\3\ Most of the estimated start-up time relates to the
development and installation of computer systems geared to more
efficiently handle customer orders.
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No substantive provisions in the Rule have been amended or changed
since staff's prior submission to OMB.\4\ Thus, the Rule's disclosure
requirements remain the same. Moreover, no public comments were
received regarding the above-noted estimates; thus, staff will apply
them to the current PRA burden analysis.
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\4\ As part of the systematic review of all Commission rules, on
September 30, 2011, the FTC published a Federal Register Notice
concluding that the Rule continued to benefit consumers and would be
retained. 76 FR 60715. For clarity, the Commission reorganized the
Rule by alphabetizing the definitions at the beginning of the Rule.
That amendment did not impose any additional ``collection of
information'' requirements.
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Since the prior submission to OMB, however, the number of
businesses engaged in the sale of merchandise by mail or by telephone
has changed. Data from the U.S. Census Bureau \5\ indicates that
between 2000 and 2008 the number of businesses subject to the MTOR grew
from 11,800 to 21,900, or an average increase of 1,263 new businesses a
year [(21,900 businesses in 2008-11,800 businesses in 2000) / 8
years].\6\ Assuming this growth rate continued in 2009 through 2012,
and continues in 2013 through 2016, the average number of established
businesses during the three-year period for which OMB clearance is
sought for the Rule would be 29,478: \7\
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\5\ See Table 1048, ``Retail Trade--Establishments, Employees,
and Payroll,'' U.S. Census Bureau, ``County Business Patterns,''
July 2009 (www.census.gov/compendia/statab/2012/tables/12s1048.xls
).
\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, 2013, and the FTC is seeking to extend the
clearance through January 31, 2016.
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Established
Year businesses New entrants
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2013.................................... 28,215 1,263
2014.................................... 29,478 1,263
2015.................................... 30,741 1,263
Average................................. 29,478 1,263
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In an average year during the three-year OMB clearance period,
staff estimates that established businesses and new entrants will
devote 1,858,000 hours, rounded to the nearest thousand, to comply with
the MTOR [(29,478 established businesses x 50 hours) + (1,263 new
entrants x 230 hours) = 1,764,390].
The estimated PRA burden per merchant to comply with the MTOR is
likely overstated. The mail-order industry has been subject to the
basic provisions of the Rule since 1976 and the telephone-order
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
disclosure-related 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\
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\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).
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Estimated labor costs: $31,830,000 (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 data available from the Bureau of Labor and Statistics,\9\ the
mean hourly income for
[[Page 64996]]
workers in sales and related occupations was $18.04/hr. The bulk of the
burden of complying with the MTOR is borne by clerical personnel along
with assistance from sales personnel. Staff believes that the mean
hourly income for workers in sales and related occupations 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 three-year period for which
OMB approval is sought would be approximately $31,830,000 (1,764,390
hours x $18.04/hr.), rounded to the nearest thousand. Relative to
direct industry sales, this total is negligible.\10\
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\9\ See Table 1, National employment and wage data from the
Occupational Employment Statistics survey by occupation, May 2011,
at http://www.bls.gov/news.release/pdf/ocwage.pdf.
\10\ Considering that sales for ``electronic shopping and mail-
order houses'' grew from $80 billion in 1998 to $235.0 billion in
2009 (according to Table 1055 in the 2012 Statistical Abstracts;
found on 12s1055-1.xls available at http://www.census.gov/compendia/statab/cats/wholesale_retail_trade/online_retail_sales.html ),
staff estimates the annual mail or telephone sales to consumers in
the three-year period for which OMB clearance is sought will average
$305 billion. Thus, the projected average labor cost for MTOR
compliance by existing and new businesses for that period would
amount to 0.01% of sales.
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Estimated annual non-labor cost burden: $0 or minimal.
The applicable requirements impose minimal start-up 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 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.
Request for Comments
You can file a comment online or on paper. Write ``Mail or
Telephone Order Merchandise Trade Regulation Rule: FTC File No.
R511929'' 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 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 have to follow the procedure explained
in FTC Rule 4.9(c), 16 CFR 4.9(c). Your comment will be kept
confidential only if the FTC General Counsel, in his or her sole
discretion, grants your request in accordance with the law and the
public interest.
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/MTORpra, 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 ``Mail or Telephone Order
Merchandise Trade Regulation Rule: FTC File No. R511929'' 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 December 24,
2012. 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,
Acting General Counsel.
[FR Doc. 2012-26168 Filed 10-23-12; 8:45 am]
BILLING CODE 6750-01-P