[Federal Register Volume 79, Number 176 (Thursday, September 11, 2014)]
[Notices]
[Pages 54276-54278]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-21685]
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FEDERAL TRADE COMMISSION
Agency Information Collection Activities; Proposed Collection;
Comment Request
AGENCY: Federal Trade Commission (``FTC'' or ``Commission'').
ACTION: Notice.
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SUMMARY: The FTC intends to ask the Office of Management and Budget
(``OMB'') to extend for an additional three years the current Paperwork
Reduction Act (``PRA'') clearance for information collection
requirements contained in the Commission's Business Opportunity Rule
(``Rule''). That clearance expires on February 28, 2015.
DATES: Comments must be submitted by November 10, 2014.
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://ftcpublic.commentworks.com/ftc/BusinessOptionRulePRA 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: Requests for additional information
should be addressed to 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: 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).
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;
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(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.
The Business Opportunity Rule requires business opportunity sellers
to furnish to prospective purchasers a disclosure document that
provides information relating to the seller, the seller's business, the
nature of the proposed business opportunity, as well as additional
information regarding 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. These disclosure and recordkeeping requirements are
subject to the PRA.
The Rule is designed to ensure that prospective purchasers of a
business opportunity receive information that will help them evaluate
the opportunity that is presented to them. Sellers must disclose five
key items of information in a simple, one-page document:
The seller's identifying information;
whether the seller makes a claim about the purchaser's
likely earnings (and, if the seller checks the ``yes'' box, the seller
must provide information supporting any such claims);
whether the seller, its affiliates or key personnel have
been involved in certain legal actions (and, if yes, a separate list of
those actions);
whether the seller has a cancellation or refund policy
(and, if yes, a separate document stating the material terms of such
policies); and
a list of persons who bought 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.
PRA Burden Analysis
Subject to public comment to shed further light, the FTC retains
its respondent population estimates from the PRA analysis tied to its
2011 final amendments to the Rule.\1\ Thus, 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. Staff also estimates that approximately 10% of the
3,050 business opportunity sellers covered by the Rule reflects an
equal amount of new and departing business entrants (thus, for
simplicity, staff assumes that, for a given year, there are 2,745
existing business opportunity sellers plus 305 new entrants to the
field). Additionally, staff estimates that approximately 168 of
business opportunity sellers market business opportunities in Spanish
(in addition to English) and approximately 92 sellers market in
languages other than English or Spanish \2\ (in addition to English).
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\1\ 76 FR 76816, 76856 (Dec. 8, 2011).
\2\ To estimate how many of the 3,050 sellers market business
opportunities in languages other than English, FTC staff relies upon
2012 United States Census Bureau (``Census'') data. Calculations
based upon this data reveal that approximately 5.5% of the United
States population speaks Spanish or Spanish Creole at home and
speaks English less than ``very well.'' Calculations based upon that
same survey reveal that approximately 3.0% of the United States
population speaks a language other than Spanish, Spanish Creole, or
English at home and speak English less than ``very well.'' Staff
thus projected that 5.5% of all entities selling business
opportunities market in Spanish or Spanish Creole and 3.0% of all
entities selling business opportunities market in languages other
than English, Spanish and Spanish Creole. http://factfinder2.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ACS_12_1YR_S1601&prodType=table.
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A. Estimated Hours Burden
The burden estimates for compliance will vary depending on the
particular business opportunity seller's prior experience with the
Rule. Commission staff estimates that the projected 2,745 existing
business opportunity sellers will require no more than approximately
two hours to update the disclosure document [5,490 total hours]. Staff
further projects that the estimated 305 new business opportunity
sellers will require no more than approximately five hours to develop
the disclosure document [1,525 total hours]. Both existing and new
business opportunity sellers will require approximately one hour to
file and store records [3,050 total hours], for a cumulative total of
10,065 hours [5,490 hours + 1,525 hours + 3,050 hours] per year to meet
the Rule's disclosure and recordkeeping requirements.
B. Estimated Labor Cost
Labor costs are determined by applying applicable wage rates to
associated burden hours. Commission staff assumes that an attorney
likely would prepare or update the disclosure document at an estimated
hourly rate of $250. Accordingly, staff estimates that cumulative labor
costs are $2,516,250 [10,065 hours x $250 per hour].
C. Estimated Non-Labor Costs:
1. Printing and Mailing of the Disclosure Document
Business opportunity sellers must 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 Rule requires that sellers update their disclosures. The costs
associated with translating the disclosures will vary depending upon a
business opportunity seller's prior experience with the Rule and the
language the seller uses to market the opportunity. For example,
existing and new business opportunity sellers marketing in Spanish will
not incur costs to translate the disclosure document as Appendices A
and B to the Rule provide, respectively, illustrations of the requisite
disclosure documents in English and Spanish. Existing sellers,
regardless of the non-English language used to present disclosures, may
incur translation costs to update the document. New entrants that
market business opportunities in languages other than English or
Spanish (in addition to an assumed use of disclosure documents in
English) will incur translation costs to translate Appendix A from
English and to enter equivalent responses in these other languages.
As stated above, using assumptions informed by Census data (see
footnote 2), FTC staff estimates that 168 sellers market business
opportunities in Spanish and an additional 92 sellers market in
languages other than English or Spanish. This includes an estimated 9
new entrants in the latter sub-category (based on the assumption that
10% yearly of a given group consists of new entrants with an equal
offset for departing business entities). Those new entrants will incur
initial translation
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costs to draft a disclosure document consistent with Appendix A to the
Rule.
There are 485 words in Appendix A to the Rule. Therefore, the total
cost burden to translate the disclosure document for the 9 new business
opportunity sellers marketing in a language other than English or
Spanish will be approximately $764 [9 sellers x (17.5 cents \3\ per
word x 485 words)].
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\3\ Staff estimates that it will cost approximately 17.5 cents
to translate each word into the language the sellers use to market
the opportunities.
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For purposes of this PRA analysis, staff assumes that both new and
existing business opportunity sellers marketing business opportunities
in languages other than English [260 sellers]: (1) are marketing in
both English and another language; (2) are not incorporating any
existing materials into their disclosure document; (3) have been the
subject of civil or criminal legal actions; (4) are making earnings
claims; (5) have a refund or cancellation policy; and (6) because of
all of the above assumptions, require approximately 250 words
(approximately one standard, double-spaced page) to translate their
updates, in the case of existing business opportunity sellers, or
supply and translate their initial disclosures, in the case of new
business opportunity sellers. Therefore, the total cost to translate
the updates or to translate from English the initial disclosures is
approximately $11,375 [260 sellers x (17.5 cents per word x 250
words)].
Thus, cumulative estimated non-labor costs are $3,062,139
($3,050,000 + $764 + $11,375).
Request for Comment:
You can file a comment online or on paper. For the FTC to consider
your comment, we must receive it on or before November 10, 2014. Write
``Business Opportunity Rule Paperwork Comment, FTC File No. P114408''
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 obtained from any person and which is privileged or
confidential . . . '' as provided 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). 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).\4\ Your comment will be kept confidential only if the FTC
General Counsel grants your request in accordance with the law and the
public interest.
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\4\ 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), 16 CFR 4.9(c).
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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, or to send them to the Commission by courier or
overnight service. To make sure that the Commission considers your
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/BusinessOptionRulePRA by following the instructions on the web-
based form. If this Notice appears at http://www.regulations.gov/#!home, you also may file a comment through that Web site.
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 or deliver 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.
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 November 10,
2014. 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,
Principal Deputy General Counsel.
[FR Doc. 2014-21685 Filed 9-10-14; 8:45 am]
BILLING CODE 6750-01-P