Agency Information Collection Activities; Proposed Collection; Comment Request; Extension, 51817-51824 [05-17326]

Agencies

• FEDERAL TRADE COMMISSION

[Federal Register Volume 70, Number 168 (Wednesday, August 31, 2005)]
[Notices]
[Pages 51817-51824]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-17326]


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FEDERAL TRADE COMMISSION


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

AGENCY: Federal Trade Commission (``Commission'' or ``FTC'').

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'') (44 U.S.C. 
3501-3520). The FTC is seeking public comments on its proposal to 
extend through August 31, 2008, the current Paperwork Reduction Act 
clearances for information collection requirements contained in four 
Commission rules and one clearance covering the Commission's 
administrative activities. Those clearances expire on August 31, 2005.

DATES: Comments must be received on or before September 30, 2005.

ADDRESSES: Interested parties are invited to submit written comments. 
Comments should refer to ``Paperwork Comment: FTC File No. P822108'' to 
facilitate the organization of comments. A comment filed in paper form 
should include this reference both in the text and on the envelope and 
should be mailed or delivered, with two complete copies, to the 
following address: Federal Trade Commission/Office of the Secretary, 
Room H-135 (Annex J), 600 Pennsylvania Avenue, NW., Washington, DC 
20580. Because paper mail in the Washington area and at the Commission 
is subject to delay, please consider submitting your comments in 
electronic form, (in ASCII format, WordPerfect, or Microsoft Word) as 
part of or as an attachment to e-mail messages directed to the 
following e-mail box: PaperworkComment@ftc.gov. However, if the comment 
contains any material for which confidential treatment is requested, it 
must be filed in paper form, and the first page of the document must be 
clearly labeled ``Confidential.'' \1\
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    \1\ Commission Rule 4.2(d), 16 CFR 4.2(d). 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 Commission Rule 4.9(c), 16 CFR 4.9(c).
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    All comments should additionally be submitted to: Office of 
Management and Budget, Attention: Desk Officer for the Federal Trade 
Commission. Comments should be submitted via facsimile to (202) 395-
6974 because U.S. Postal Mail is subject to lengthy delays due to 
heightened security precautions.
    The FTC Act and other laws the Commission administers permit the 
collection of public comments to consider and use in this proceeding as 
appropriate. All timely and responsive public comments will be 
considered by the Commission and will be available to the public on the 
FTC Web site, to the extent practicable, at https://www.ftc.gov. 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 Web site. More information, including 
routine uses permitted by the Privacy Act, may be found in the FTC's 
privacy policy at https://www.ftc.gov/ftc/privacy.htm.

FOR FURTHER INFORMATION CONTACT: Requests for additional information or 
copies of the proposed information requirements should be addressed as 
follows:
    For the Negative Option Rule, contact Edwin Rodriguez, Attorney, 
Division of Enforcement, Bureau of Consumer Protection, Federal Trade 
Commission, 600 Pennsylvania Ave., NW., Washington, DC 20580, (202) 
326-3147.
    For the Amplifier Rule, contact Neil Blickman, Attorney, Division 
of Enforcement, Federal Trade Commission, Bureau of Consumer 
Protection, 600 Pennsylvania Ave., NW., Washington, DC 20580, (202) 
326-3038.
    For the Franchise Rule, contact Steven Toporoff, Attorney, Division 
of Marketing Practices, Bureau of Consumer Protection, Federal Trade 
Commission, 600 Pennsylvania Ave., NW., Washington, DC 20580, (202) 
326-3135.
    For the R-Value Rule, contact Hampton Newsome, Attorney, Division 
of Enforcement, Bureau of Consumer Protection, Federal Trade 
Commission, 600 Pennsylvania Ave., NW., Washington, DC 20580, (202) 
326-2889.
    For the Administrative Activities clearance, contact J. Ronald 
Brooke Jr., Attorney, Division of Planning and Information, Bureau of 
Consumer Protection, Federal Trade Commission, 600 Pennsylvania Ave., 
NW., Washington, DC 20580, (202) 326-3484.

SUPPLEMENTARY INFORMATION: On May 19, 2005, the FTC sought comment on 
the information collection requirements associated with the Negative 
Option Rule, 16 CFR part 425 (OMB Control Number 3084-0104); the 
Amplifier Rule, 16 CFR part 432 (OMB Control Number 3084-0105); the 
Franchise Rule, 16 CFR part 436 (OMB Control Number 3084-0107); the R-
Value Rule, 16 CFR part 460 (OMB Control Number 3084-0109); and the 
clearance covering the FTC's administrative activities (OMB Control 
Number 3084-0047). 70 FR 28937. As discussed below, one comment 
relating to the clearance for administrative activities was received. 
Pursuant to the OMB regulations that implement the PRA (5 CFR part 
1320), the FTC is providing this second opportunity for public comment 
while seeking OMB approval to extend the existing paperwork clearance 
for the rule. All comments should be filed as prescribed in the 
ADDRESSES section above, and must be received on or before September 
30, 2005.

1. The Negative Option Rule, 16 CFR Part 425 (OMB Control Number: 3084-
0104)

    The Negative Option Rule governs the operation of prenotification 
subscription plans. Under these plans, sellers ship merchandise, such 
as books, compact discs, or tapes, automatically to their subscribers 
and bill them for the merchandise if consumers do not expressly reject 
the merchandise within a prescribed time. The Rule protects consumers 
by: (a) requiring that promotional materials disclose the terms of 
membership clearly and conspicuously; and (b) establishing procedures 
for the administration of such ``negative option'' plans.
    Estimated annual hours burden: 15,000 hours.

[[Page 51818]]

    Staff estimates that approximately 190 existing clubs require 
annually about 75 hours each to comply with the Rule's disclosure 
requirements, for a total of 14,250 hours (190 clubs x 75 hours). These 
clubs should be familiar with the Rule, which has been in effect since 
1974, with the result that the burden of compliance has declined over 
time. Moreover, a substantial portion of the existing clubs likely 
would make these disclosures absent the Rule because they have helped 
foster long-term relationships with consumers.
    Approximately 5 new clubs come into being each year. These clubs 
require approximately 120 hours to comply with the Rule, including 
start- up time. Thus, cumulative PRA burden for new clubs is about 600 
hours. Combined with the estimated burden for established clubs, total 
burden is 14,850 hours or 15,000, rounded to the nearest thousand.
    Estimated annual cost burden: $490,000, rounded to the nearest 
thousand (solely related to labor costs).
    Based on recent data from the Bureau of Labor Statistics, the 
average compensation for advertising managers is approximately $36 per 
hour. Compensation for clerical personnel is approximately $13 per 
hour. Assuming that managers perform the bulk of the work, while 
clerical personnel perform associated tasks (e.g., placing 
advertisements and responding to inquiries about offerings or prices), 
the total cost to the industry for the Rule's paperwork requirements 
would be approximately $489,750 [(65 hours managerial time x 190 
existing negative option plans x $36 per hour) + (10 hours clerical 
time x 190 existing negative option plans x $13 per hour) + (110 hours 
managerial time x 5 new negative option plans x $36 per hour) + (10 
hours clerical time x 5 new negative option plans x $13)].
    Because the Rule has been in effect since 1974, the vast majority 
of the negative option clubs have no current start-up costs. For the 
few new clubs that enter the market each year, the costs associated 
with the Rule's disclosure requirements, beyond the additional labor 
costs discussed above, are de minimis. Negative option clubs already 
have access to the ordinary office equipment necessary to achieve 
compliance with the Rule. Similarly, the Rule imposes few, if any, 
printing and distribution costs. The required disclosures generally 
constitute only a small addition to the materials that a prospective 
subscriber sends to the seller to solicit enrollment in a negative 
option plan. Because printing and distribution expenditures are 
incurred regardless of the Rule to market the product, adding the 
required disclosures to them would result in marginal incremental 
expense.

2. The Amplifier Rule, 16 CFR Part 432 (OMB Control Number: 3084-0105)

    The Amplifier Rule assists consumers by standardizing the 
measurement and disclosure of power output and other performance 
characteristics of amplifiers in stereos and other home entertainment 
equipment. The Rule also specifies the test conditions necessary to 
make the disclosures that the Rule requires.
    Estimated annual hours burden: 450 hours (300 testing-related 
hours; 150 disclosure-related hours).
    The Rule's provisions require affected entities to test the power 
output of amplifiers in accordance with a specified FTC protocol. The 
staff estimates that approximately 300 new amplifiers and receivers 
come on the market each year. High fidelity manufacturers routinely 
conduct performance tests as part of any new product development. As a 
result, the Rule imposes incremental costs only to the extent that the 
FTC protocol is more time-consuming than alternative testing 
procedures. Specifically, a warm up (``precondition'') period that the 
Rule requires before measurements are taken may add approximately one 
hour to the time testing entails. Thus, staff estimates that the Rule 
imposes approximately 300 hours (1 hour x 300 new products) of added 
testing burden annually.
    The Rule requires disclosures if a media advertisement makes a 
power output claim or if a manufacturer specification sheet and product 
brochure for a covered product make a power output claim. This 
requirement does not impose any additional costs on manufacturers 
because, absent the Rule, media advertisements, as well as manufacturer 
specification sheets and product brochures, simply would contain a 
power specification obtained using an alternative to the Rule-required 
testing protocol. The Rule, though, also requires disclosure of 
harmonic distortion, power bandwidth, and impedance ratings in 
manufacturer specification sheets and product brochures. The staff's 
research suggests that approximately 300 new amplifiers and receivers 
are introduced each year. The cost of disclosing the ancillary 
distortion, bandwidth, and impedance information in the potentially 600 
new specification sheets and brochures produced each year for those 
products (300 x 2) is limited to the time needed to draft and review 
the language pertaining to the aforementioned specifications. Because 
this Rule became effective in 1974 and because members of the industry 
are familiar with its requirements, compliance is less burdensome 
today. Accordingly, staff continues to estimate the time involved for 
this task to be a maximum of \1/4\ hour for each new specification 
sheet and brochure (600 x .25 hours), for a total annual burden of 150 
hours. The total annual burden imposed by the Rule, therefore, is 
approximately 450 burden hours for testing and disclosures.
    Estimated annual cost burden: $16,000, rounded to the nearest 
thousand (solely relating to labor costs).
    Based on recent data from the Bureau of Labor Statistics, the 
average hourly compensation for electronics engineers is about $36, and 
the average hourly compensation for advertising and promotions managers 
is about $36. Generally, electronics engineers perform the testing of 
amplifiers and receivers (300 hours x $36 = $10,800), and advertising 
or promotions managers prepare product brochures and manufacturer 
specification sheets (including required disclosures) (150 hours x $36 
= $5,400). Based on this information, staff estimates industry labor 
costs associated with the Rule of approximately $16,000 per year, 
rounded to the nearest thousand.
    The Rule imposes no capital or other non-labor costs because its 
requirements are incidental to testing and advertising done in the 
ordinary course of business.

3. The Franchise Rule, 16 CFR Part 436 (OMB Control Number: 3084-0107)

    The Franchise Rule requires franchisors and franchise brokers to 
furnish to prospective investors a disclosure document that provides 
information relating to the franchisor, the franchisor's business, the 
nature of the proposed franchise relationship, as well as additional 
information about any claims concerning actual or potential sales, 
income, or profits for a prospective franchisee (``financial 
performance claims''). The franchisor must also preserve the 
information that forms a reasonable basis for such claims. The FTC is 
seeking to extend the PRA clearance for the existing Rule. In addition, 
the FTC is seeking PRA clearance for the rule changes that have been 
proposed in the ongoing rulemaking proceeding.
    Estimated annual hours burden for existing Franchise Rule: 33,500 
hours.
    The Rule's required disclosure document provides franchisees with 
information on broad-ranging subjects that affect franchisors and the 
nature of the proposed franchise relationship.

[[Page 51819]]

This includes not only generally available information, such as the 
official name and address and principal place of business of the 
franchisor, but also less commonly available information, such as, 
among other things, the previous five years business experience of a 
franchisor's current directors and executive officers and whether any 
of these individuals have been convicted of a felony or fraud or have 
filed for bankruptcy or been adjudged bankrupt during the previous 
seven years. All information in the disclosure statement must be 
updated and revised according to the express time requirements set 
forth in the Rule.
    Based on a review of the trade publications and information from 
state regulatory authorities, staff believes that, on average, from 
year to year, there are approximately 5,000 American franchise systems, 
consisting of 2,500 business format franchises and 2,500 business 
opportunity sellers, with approximately 500 (or 10%) of the total 
reflecting new entrants who have replaced departing businesses. Staff 
has calculated burden based on the above estimates. Some franchisors, 
however, for various reasons, are not covered by the Rule in certain 
situations (e.g., when a franchisee buys bona fide inventory but pays 
no franchisor fees). Moreover, fifteen states have franchise disclosure 
laws similar to the Rule. These states use a disclosure document format 
known as the Uniform Franchise Offering Circular (``UFOC''). In order 
to ease compliance burdens on the franchisor, the Commission has 
authorized use of the UFOC in lieu of its own disclosure format to 
satisfy the Rule's disclosure requirements. Staff estimates that about 
95 percent of all franchisors use the UFOC format. When that format is 
used, the franchisor is not required to prepare an additional federal 
disclosure document. The burden hours stated below reflect staff's 
estimate of the incremental burden that the Franchise Rule may impose 
beyond information requirements imposed by states and/or followed by 
franchisors who use the UFOC.
    Staff estimates that the 500 or so new franchisors (including 
business opportunity ventures) require approximately 30 hours each to 
develop a Rule-compliant disclosure document. Staff additionally 
estimates that the remaining 4,500 established franchisors require no 
more than approximately 3 hours each to update the disclosure document. 
The combined cumulative burden is 28,500 hours.
    The franchisor may need to maintain additional documentation for 
the sale of franchises in non-registration states, which could take up 
to an additional hour of recordkeeping per year. This yields a 
cumulative total of 5,000 hours per year for affected entities.
    Estimated annual cost burden for existing rule: $7,190,000.
    Labor costs are determined by applying applicable wage rates to 
associated burden hours. Staff assumes that an attorney likely would 
prepare or update the disclosure document. Accordingly, staff's 
estimate of the labor costs attributed to those tasks are as follows: 
(500 new franchisors x $250 per hour x 30 hours per franchisor) + 
(4,500 established franchisors x $250 per hour x 3 hours per 
franchisor) = $7,125,000.
    Staff anticipates that recordkeeping would be performed by clerical 
staff at approximately $13 per hour. At 5,000 hours per year for all 
affected entities, this would amount to a total cost of $65,000. Thus, 
combined labor costs for recordkeeping and disclosure is approximately 
$7,190,000.
    Estimated increase in annual hours burden for proposed rule 
amendments: 2750 hours.
    The Commission is conducting a rulemaking proceeding to amend the 
Franchise Rule. 64 FR 57294 (1999) (Notice of Proposed Rulemaking). The 
Staff Report on the Proposed Revised Franchise Rule (Aug. 25, 2004) 
(``Staff Report''), which is available online at https://www.ftc.gov, 
sets forth the staff's recommendations to the Commission on various 
proposed amendments to the Franchise Rule. The Commission did not 
review or approve the staff report prior to its issuance. See 69 FR 
53661 (2004) (Notice Announcing Publication of Staff Report). Among 
other things, the Rule amendments discussed in the Staff Report would 
accomplish five goals. First, the staff has recommended that the 
amended Rule address the sale of business format and product franchises 
exclusively. The existing requirements for business opportunity 
ventures would be renumbered as a separate rule limited to business 
opportunities only. See Staff Report at 13 and n.42. Accordingly, the 
burden for business opportunity ventures will remain the same.
    Second, the amended Rule would reduce inconsistencies between 
federal and state disclosure requirements. Fifteen states have 
franchise disclosure laws similar to the Rule. These states use a 
disclosure document format known as the Uniform Franchise Offering 
Circular (``UFOC''). Staff estimates that about 95 percent of all 
franchisors use the UFOC format. The amended Rule would incorporate 
nearly all of the UFOC disclosures, thereby harmonizing federal and 
state disclosure laws.
    Third, the amended Rule would require the disclosure of more 
information on the quality of the franchise relationship. Among other 
things, franchisors would disclose litigation initiated against 
franchisees involving the franchise relationship and franchisee-
specific trademark associations.
    Fourth, the amended Rule would update the rule to address new 
technologies. Specifically, it would permit franchisors to furnish 
disclosures electronically. This includes transmission via CD ROM, e-
mail, and access to a Web site.
    Finally, the amended Rule would reduce compliance costs by 
expanding exemptions from disclosure. Specifically, the amended Rule 
would create new exemptions for sophisticated investors and for sales 
to managers and others within the franchise system who are already 
familiar with the franchise system's operations.
    At the same time, the amended Rule would increase franchisors' 
recordkeeping obligations. Specifically, a franchisor would be required 
to retain copies of receipts for disclosure documents, as well as 
materially different versions of its disclosure documents. Such 
recordkeeping requirements are consistent with, or less burdensome, 
than those imposed by the states.
    Staff estimates the increase in burden attributable to the proposed 
Rule amendments as follows: Each year, approximately 250 new 
franchisors will require 32 hours each (2 hours more than under the 
existing Rule) to develop a Rule-compliant disclosure document 
(increase of 500 hours). Staff also estimates that during the first 
year that the amended Rule is effective, the remaining 2250 established 
franchisors will require approximately 6 hours each (3 hours more than 
under the existing Rule) to update their existing disclosure document 
to comply with the amended Rule (increase of 6750 hours for the first 
year). After the first year, however, the time required should be the 
same as under the existing Rule, as the new disclosure format becomes 
familiar. Accordingly, the increase in the annual disclosure burden, 
averaged over the three-year clearance period, will be 2750 hours (500 
hours per year for new franchisors + 2250 hours per year for 
established franchisors).
    Estimated increase in annual cost burden for proposed rule 
amendments: $688,000, rounded to the nearest thousand.

[[Page 51820]]

    Labor costs are determined by applying applicable wage rates to 
associated burden hours. Staff assumes that an attorney likely would 
prepare the disclosure document. Accordingly, staff's estimate of the 
increase in labor costs that would be attributable to the proposed Rule 
amendments, averaged over the three-year clearance period, is as 
follows: (500 hours per year for new franchisors x $250 per hour) + 
(2250 hours per year for established franchisors x $250) = $687,500.

4. R-Value Rule, 16 CFR Part 460 (OMB Control Number: 3084-0109)

    The R-value Rule establishes uniform standards for the 
substantiation and disclosure of accurate, material product information 
about the thermal performance characteristics of home insulation 
products. The R-value of an insulation signifies the insulation's 
degree of resistance to the flow of heat. This information tells 
consumers how well a product is likely to perform as an insulator and 
allows consumers to determine whether the cost of the insulation is 
justified.
    Estimated annual hours burden: 121,000 hours.
    The Rule's requirements include product testing, recordkeeping, and 
third-party disclosures on labels, fact sheets, advertisements, and 
other promotional materials. Based on information provided by members 
of the insulation industry, staff estimates that the Rule affects: (1) 
150 insulation manufacturers and their testing laboratories; (2) 1,615 
installers who sell home insulation; (3) 125,000 new home builders/
sellers of site-built homes and approximately 5,500 dealers who sell 
manufactured housing; and (4) 25,000 retail sellers who sell home 
insulation for installation by consumers.
    Under the Rule's testing requirements, manufacturers must test each 
insulation product for its R-value. The test takes approximately 2 
hours. Approximately 15 of the 150 insulation manufacturers in 
existence introduce one new product each year. The total annual testing 
burden is therefore approximately 30 hours (15 manufacturers x 2 hours 
per test).
    Staff further estimates that most manufacturers require an average 
of approximately 20 hours per year with regard to third-party 
disclosure requirements in advertising and other promotional materials. 
Only the five or six largest manufacturers require additional time, 
approximately 80 hours each. Thus, the annual third-party disclosure 
burden for manufacturers is approximately 3,360 hours [(144 
manufacturers x 20 hours) + (6 manufacturers x 80 hours)].
    While the Rule imposes recordkeeping requirements, most 
manufacturers and their testing laboratories keep their testing-related 
records in the ordinary course of business. Staff estimates that no 
more than one additional hour per year per manufacturer is necessary to 
comply with this requirement, for an annual recordkeeping burden of 
approximately 150 hours (150 manufacturers x 1 hour).
    Installers are required to show the manufacturers' insulation fact 
sheet to retail consumers before purchase. They must also disclose 
information in contracts or receipts concerning the R-value and the 
amount of insulation to install. Staff estimates that two minutes per 
sales transaction is sufficient to comply with these requirements. 
Approximately 1,520,000 retrofit insulations are installed by 
approximately 1,615 installers per year, and, thus, the related annual 
burden total is approximately 50,667 hours (1,520,000 sales 
transactions x 2 minutes). Staff anticipates that one hour per year per 
installer is sufficient to cover required disclosures in advertisements 
and other promotional materials. Thus, the burden for this requirement 
is approximately 1,615 hours per year (1,615 installers x 1 hour). In 
addition, installers must keep records that indicate the substantiation 
relied upon for savings claims. The additional time to comply with this 
requirement is minimal--approximately 5 minutes per year per 
installer--for a total of approximately 135 hours (1,615 installers x 5 
minutes).
    New home sellers must make contract disclosures concerning the 
type, thickness, and R-value of the insulation they install in each 
part of a new home. Staff estimates that no more than 30 seconds per 
sales transaction is required to comply with this requirement, for a 
total annual burden of approximately 14,167 hours (1.7 million new home 
sales x 30 seconds). New home sellers who make energy savings claims 
must also keep records regarding the substantiation relied upon for 
those claims. Because few new home sellers make these claims, and the 
ones that do would likely keep these records regardless of the R-value 
Rule, staff believes that the 30 seconds covering disclosures would 
also encompass this recordkeeping element.\2\
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    \2\ In previous requests for clearance under the PRA, the FTC 
staff assumed that the requirements related to new home sales 
contracts require one minute per sales transaction. See, e.g., 67 FR 
21243, 21246 (April 30, 2002). The FTC staff now estimates that the 
inclusion of such information should take no more than 30 seconds 
per sales transaction because of increased automation, the wide-
spread use of standard contracts, and the prevalence of large firms 
in the housing market. In addition, there was a calculation error in 
the previous requests that significantly overestimated the total 
burden imposed by new home sale contract disclosures.
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    The Rule requires that the approximately 25,000 retailers who sell 
home insulation make fact sheets available to consumers before 
purchase. This can be accomplished by, for example, placing copies in a 
display rack or keeping copies in a binder on a service desk with an 
appropriate notice. Replenishing or replacing fact sheets should 
require no more than approximately one hour per year per retailer, for 
a total of 25,000 annual hours, industry-wide.
    The Rule also requires specific disclosures in advertisements or 
other promotional materials to ensure that the claims are fair and not 
deceptive. This burden is very minimal because retailers typically use 
advertising copy provided by the insulation manufacturer, and even when 
retailers prepare their own advertising copy, the Rule provides some of 
the language to be used. Accordingly, approximately one hour per year 
per retailer should suffice to meet this requirement, for a total 
annual burden of approximately 25,000 hours.
    Retailers who make energy savings claims in advertisements or other 
promotional materials must keep records that indicate the 
substantiation they are relying upon. Because few retailers make these 
types of promotional claims and because the Rule permits retailers to 
rely on the insulation manufacturer's substantiation data for any 
claims that are made, the additional recordkeeping burden is de 
minimis. The time calculated for disclosures, above, would be more than 
adequate to cover any burden imposed by this recordkeeping requirement.
    To summarize, staff estimates that the Rule imposes a total of 
120,624 burden hours, as follows: 150 recordkeeping and 3,390 testing 
and disclosure hours for manufacturers; 135 recordkeeping and 52,282 
disclosure hours for installers; 14,667 disclosure hours for new home 
sellers; and 50,000 disclosure hours for retailers. Rounded to the 
nearest thousand, the total burden is 121,000 burden hours.
    Estimated annual cost burden: $2,738,000, rounded to the nearest 
thousand (solely related to labor costs).
    The total annual labor costs for the Rule's information collection 
requirements is $2,737,902, derived as follows: $690 for testing, based 
on 30 hours for manufacturers (30 hours x $23 per hour for skilled 
technical

[[Page 51821]]

personnel); $3,705 for complying with the recordkeeping requirements of 
the Rule, based on 285 hours (285 hours x $13 per hour for clerical 
personnel); $43,680 for manufacturers' compliance with third-party 
disclosure requirements, based on 3,360 hours (3,360 hours x $13 per 
hour for clerical personnel); and $2,689,827 for compliance by 
installers, new home sellers, and retailers (116,949 hours x $23 per 
hour for sales persons).
    There are no significant current capital or other non-labor costs 
associated with this Rule. Because the Rule has been in effect since 
1980, members of the industry are familiar with its requirements and 
already have in place the equipment for conducting tests and storing 
records. New products are introduced infrequently. Because the required 
disclosures are placed on packaging or on the product itself, the 
Rule's additional disclosure requirements do not cause industry members 
to incur any significant additional non-labor associated costs.

5. FTC Administrative Activities (OMB Control Number: 3084-0047)

    This category consists of: (a) applications to the Commission, 
including Applications and notices contained in the Commission's Rules 
of Practice (primarily Parts I, II, and IV); (b) the FTC's consumer 
complaint systems; (c) FTC program evaluation activities and (d) 
Applicant Background Form.
    Estimated annual hours burden: 139,000 hours, rounded to the 
nearest thousand.
    (a) Applications to the Commission, including applications and 
notices contained in the Commission's Rules of Practice: 125 hours.
    Most applications to the Commission generally fall within the ``law 
enforcement'' exception to the Paperwork Reduction Act.\3\ Over the 
last decade, the Commission has received only one application for an 
exemption under the Fair Debt Collection Practices Act provisions. 
Staff has estimated that such a submission can be completed well within 
50 hours. Applications and notices to the Commission contained in other 
rules (generally in Parts I, II, and IV of the Commission's Rule of 
Practice) are also infrequent and difficult to quantify. Nonetheless, 
in order to cover any potential ``collections of information'' for 
which separate clearance has not been sought, staff is projecting 125 
hours as its estimate of the time needed to submit any applicable 
responses.\4\
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    \3\ The ``law enforcement'' exception to the PRA excludes most 
items in this subcategory because they involve collecting 
information during the conduct of a Federal investigation, civil 
action, administrative action, investigation, or audit with respect 
to a specific party, or subsequent adjudicative or judicial 
proceedings designed to determine fines or other penalties. See 44 
U.S.C. 3518(c)(1); 5 CFR 1320.4(a)(1)-(3).
    \4\ This includes Commission Rule of Practice 4.11(e), 16 CFR 
Sec.  4.11(e), which establishes procedures for agency review of 
outside requests for Commission employee testimony, through 
compulsory process or otherwise, in cases or matters to which the 
agency is not a party. The rule requires that a person who seeks 
such testimony submit a statement in support of the request. Staff 
estimates that agency personnel receive roughly 2 such requests per 
month or 24 per year, and conservatively estimates that it would 
require up to 2 hours to prepare the statement, for a cumulative 
total of 24 hours.
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    (b) Complaint Systems: 138,415 hours.

Consumer Response Center

    Consumers can submit complaints about fraud and other practices to 
the FTC's Consumer Response Center by telephone or through the FTC's 
website. Telephone complaints and inquiries to the FTC are answered 
both by FTC staff and contractors. These telephone counselors ask for 
the same information that consumers would enter on the applicable forms 
available on the FTC's Web site. For telephone inquiries and 
complaints, the FTC staff estimates that it takes 4.5 minutes per call 
to gather information, somewhat less time than the 5 minutes estimated 
for consumers to enter a complaint online.\5\ The burden estimate 
conservatively assumes that all of the phone call is devoted to 
collecting information from consumers, although frequently telephone 
counselors devote a small portion of the call to providing requested 
information to consumers.
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    \5\ Because the fraud-related form is closely patterned after 
the general complaint form, burden estimates per respondent for each 
are the same.
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Complaints Concerning National Do Not Call Registry

    To receive complaints from consumers of possible violations of the 
rules governing the National Do Not Call Registry, 16 CFR 310.4(b), the 
FTC maintains both an online form and a toll free hotline with 
automated voice response system. Consumer complainants must provide 
either the name or telephone number of the company about which they are 
complaining, the phone number that was called and the date of the call; 
they may also provide their name and address so they can be contacted 
for additional information. The FTC staff estimates that the time 
required of consumer complainants is 2.5 minutes for phone complaints 
and 2 minutes for online complaints.
    The FTC received a comment from T-Mobile USA, Inc. (``T-Mobile'') 
contending that the FTC should require more information from consumer 
complainants in order to reduce the burden on companies such as T-
Mobile investigating complaints against them of possible violations of 
the Registry. T-Mobile, which describes itself as a nationwide 
commercial mobile radio service carrier that currently serves more than 
18 million customers as well as the largest carrier-owned Wi-Fi network 
in the world, proposes increasing the burden on each consumer 
submitting a complaint of an unwanted telemarketing call in two ways.
    First, T-Mobile proposes that the FTC require consumers to include 
an ``express description of the goods or services that were offered'' 
or other similar information about what the call was about. T-Mobile 
asserts it is the subject of some consumer complaints for exempt calls 
such as debt collection, customer service inquiries, and other calls 
that do not constitute telemarketing. Indeed, T-Mobile emphasizes that 
it ``does not conduct any outbound telemarketing to anyone other than 
its existing subscribers,'' which suggests it may also receive 
complaints about calls exempt from the Registry due to an established 
business relationship.
    The FTC declines to require this proposed field of additional 
information from all consumer complainants in order to eliminate a 
limited set of complaints about exempt calls against companies like T-
Mobile. Preliminarily, if it is true that T-Mobile is not engaged in 
telemarketing covered by the Registry, T-Mobile's investigation would 
appear to be a relatively simple matter. In addition, the proposed 
solution is not a good fit for the problem asserted. For example, if a 
company such as T-Mobile calls for debt collection or a customer 
service inquiry, the consumer complainant may describe the call as an 
offer about the company's goods or services. Moreover, it is not at all 
clear that this indirect method of reminding consumers that the call 
must be a telemarketing call in order to be covered by the Registry 
would be more effective than the FTC announcements on the online 
complaint form and the toll-free hotline that already inform consumers 
that certain types of calls are permitted by the Registry rules.
    Second, T-Mobile suggests that the FTC require consumers to 
collect, record and provide both the name and telephone number of the 
company about which they are complaining. Because

[[Page 51822]]

consumer complainants may provide both pieces of information, and many 
already do so, T-Mobile's proposal to require both imposes an extra 
requirement on precisely those consumers who are already indicating 
that providing such additional information is burdensome, if not 
impossible. As T-Mobile recognizes in its comment, not all consumers 
have Caller ID and they may not have *69 service. Furthermore, *69 
service may not always identify the phone number from which the call 
originated. Consumers may not record the number from which the call 
originated, particularly if the call is received during dinner or 
another inopportune time, which is precisely when they should be 
protected from unwanted telemarketing. In addition, calls left upon a 
consumer's telephone answering machine or through call waiting service 
may not be the last call received and thus would not be identifiable 
using *69 service. Finally, consumer unfamiliarity with *69 and 
concerns about whether it would result in a charge to the consumer 
would discourage consumers from making complaints at all.
    The FTC, as a law enforcement agency that enforces compliance with 
the Registry, is well aware of the investigatory burden of 
investigating Do Not Call complaints by beginning with the limited 
information that consumers provide. The FTC, as a consumer protection 
agency, is also well aware of the importance of providing consumers 
with a convenient means of submitting complaints. The FTC must not so 
burden consumers so as to discourage the submission of complaints. 
While more information may be helpful in some circumstances, that 
benefit must be balanced against the burden of requiring all consumers 
to submit the additional information in all complaints. The FTC, based 
on its agency experience and familiarity with the financial and 
technical constraints of operating the complaint system, has concluded 
that the current complaint system collects the appropriate amount and 
type of information from consumers. Accordingly, the FTC declines to 
adopt T-Mobile's suggestions at this time. The FTC staff periodically 
considers whether its complaint system can be improved as a part of 
ongoing system upgrades and may make changes at a future date.

Identity theft

    To handle complaints about identity theft, the FTC must obtain more 
detailed information than is required of other complainants. Identity 
theft complaints generally require more information (such as a 
description of actions complainants have taken with credit bureaus, 
companies, and law enforcement, and the identification of multiple 
suspects) than general consumer complaints and fraud complaints. In 
addition, the FTC is considering expanding the information required on 
its online complaint form (such as collecting additional information 
about the fraudulent activity at affected companies and creating an 
attachment summarizing all of the fraudulent account activity as well 
as all fraudulent information on the consumer's credit report). 
Consumers would be able to print out a copy of the revised form and use 
it to assist them in completing a police report, if appropriate, and, 
as also may be necessary, an ID Theft report. See 16 CFR 603.3 
(defining the term ``identity theft report''). The FTC estimates that 
the revised form would take consumers up to 13 minutes to complete 
(instead of the 7.5 minutes estimated for the current online form).
    The FTC is also planning to make some revisions in the information 
it collects from consumers who call the Consumer Response Center (CRC) 
with identity theft complaints. Staff estimates that it will take 9 
minutes per call to obtain identity-theft related information (instead 
of the 8 minutes estimated for the current call procedure). A 
substantial portion of identity theft-related calls typically consists 
of counseling consumers on other steps they should consider taking to 
obtain relief (which may include directing consumers to a revised 
online complaint form). The time needed for counseling is excluded from 
the estimate.

Surveys

    Consumer customer satisfaction surveys give the agency information 
about the overall effectiveness and timeliness of the Consumer Response 
Center (CRC). The CRC surveys roughly 1 percent of complainants who 
file IDT or general consumer complaints. Subsets of consumers contacted 
throughout the year are questioned about specific aspects of CRC 
customer service. Each consumer surveyed is asked several questions 
chosen from a list prepared by staff. The questions are designed to 
elicit information from consumers about the overall effectiveness of 
the call center. Half of the questions ask consumers to rate CRC 
performance on a scale or require a yes or no response. The second half 
of the survey asks more open-ended questions seeking a short written or 
verbal answer. Staff estimates that each respondent will require 4 
minutes to answer the questions (approximately 20-30 seconds per 
question).
    Finally, Consumer Sentinel user surveys give the agency information 
about the overall effectiveness of its Consumer Sentinel Network. 
Consumer Sentinel allows federal, state and local law enforcement 
organizations common access to a secure database containing over two 
million complaints from victims of consumer fraud and identity theft. 
To date, Consumer Sentinel has over 1200 members, including law 
enforcement agencies from Canada and Australia. FTC staff plan to 
survey roughly 50% (approximately 2,500 respondents) of Consumer 
Sentinel users each year about such things as overall satisfaction, 
performance, and possible improvements. Generally, the surveys should 
take approximately 10 minutes per respondent (417 hours total).
    What follows are staff's estimates of burden for these various 
collections of information, including the surveys. The figures for the 
online forms and consumer hotlines are an average of annualized volume 
for the respective programs including both current and projected 
volumes over the 3-year clearance period sought and are rounded to the 
nearest thousand.

----------------------------------------------------------------------------------------------------------------
                                                               Number of         Number of
                         Activity                             respondents    minutes/ activity    Total  hours
----------------------------------------------------------------------------------------------------------------
Miscellaneous and fraud-related consumer complaints                 315,000                4.5            23,625
 (phone)*................................................
Miscellaneous and fraud-related consumer complaints                 135,000                5              11,250
 (online)**..............................................
IDT complaints (phone)*..................................           380,000                9              57,000
IDT complaints (online)**................................           128,000               13              27,733
Do-Not-Call related consumer complaints (phone)..........            82,000                2.5             3,417
Do-Not-Call related consumer complaints (online).........           430,000                2              14,333
Customer Satisfaction Questionnaire......................             9,600                4                 640

[[Page 51823]]

 
Consumer Sentinel User Surveys...........................             2,500               10                 417
                                                          -------------------
    Totals...............................................         1,482,100  .................          138,415
----------------------------------------------------------------------------------------------------------------
\*\ Number of consumer calls calculated by projecting over the 3-year clearance period sought 5% annual growth
  and a telephone contractor response rate of 95% (contracted level of service) with regard to consumers who
  call the toll free lines and opt to talk to a counselor.
\**\ Number of online collections projected from number of consumers who use the FTC's online complaint forms
  noted in the text above. These figures also assume 5% annual growth for miscellaneous and fraud-related
  complaints, and 8% annual growth for ID Theft online complaints, over the 3-year clearance period requested.

    Annual cost burden:
    The cost per respondent should be negligible. Participation is 
voluntary and will not require any labor expenditures by respondents. 
There are no capital, start-up, operation, maintenance, or other 
similar costs to the respondents.
    (c) Program Evaluations: 355 hours.

Review of Divestiture Orders

    The Commission issues, on average, approximately 10-15 orders in 
merger cases per year that require divestitures. As a result of a 1999 
study authorized by the OMB and conducted by the staffs of the Bureau 
of Competition and the Bureau of Economics,\6\ the Bureau of 
Competition (``BC'') intends to enhance its monitoring of these 
required divestitures by interviewing representatives of the 
Commission-approved buyers of the divested assets within the first year 
after the divestiture is completed. For the first several years of this 
new evaluation process, however, BC staff will be focusing on older 
orders and thus anticipates reviewing up to 40 divestitures per year.
---------------------------------------------------------------------------

    \6\ The Staff of the Bureau of Competition of the Federal Trade 
Commission compiled its findings from the study in its report: A 
Study of the Commission's Divestiture Process, 1999, available at 
https://www.ftc.gov/os/1999/08/divestiture.pdf.
---------------------------------------------------------------------------

    BC staff will interview representatives of the buyers to ask 
whether all assets required to be divested were, in fact, divested;\7\ 
whether the buyer has used the divested assets to enter the market of 
concern to the Commission and, if so, the extent to which the buyer is 
participating in the market; whether the divestiture met the buyer's 
expectations; and whether the buyer believes the divestiture has been 
successful. BC staff may also interview other participants, including 
customers or trustee monitors, as appropriate. In all these interviews, 
staff will seek to learn about pricing and other basic facts regarding 
competition in the markets of concern to the agency.
---------------------------------------------------------------------------

    \7\ To the extent that the staff interviews focus on a law 
enforcement activity (whether the party to the order complied with 
all its obligations), the interviews are not subject to the 
requirements of the Paperwork Reduction Act. See supra note 3.
---------------------------------------------------------------------------

    Participation by the buyers will be voluntary. Each responding 
company will designate the company representative most likely to have 
the necessary information; in all likelihood, it will be a company 
executive and a lawyer for the company may also be present. BC staff 
estimates that each interview will take approximately one hour to 
complete, with no more than an hour's preparation required by each of 
the participants. In some instances, staff may do additional interviews 
with customers of the responding company or the monitor. Staff 
conservatively estimates that for each interview, two individuals (a 
company executive and a lawyer) will devote two hours each to 
responding to our questions for a total of four hours. In addition, for 
approximately half of the divestitures, staff will seek to question two 
additional respondents, adding four participants (a company executive 
and a lawyer for each of the two additional respondents) devoting two 
hours each, for a total of eight additional hours. Assuming that staff 
evaluates up to 40 divestitures per year during the three-year 
clearance period, the total hours burden for the responding companies 
will be approximately 320 hours per year ((40 x 4 hours) + (20 x 8 
hours)).
    Using the burden hours estimated above, staff estimates that the 
total annual labor cost, based on a conservative estimated average of 
$425/hour for executives' and attorneys' wages, would be approximately 
$136,000 (320 hours x $425).

Review of Competition Advocacy Program

    The FTC's competition advocacy program draws on the Commission's 
expertise in competition and consumer protection matters to encourage 
federal and state legislators, courts and other state and federal 
agencies to consider the competitive effects of their proposed actions. 
Since June of 2001, the FTC Office of Policy Planning (``OPP'') has 
sent out 51 letters or written comments to different government 
officials, which have advocated the passage or repeal of various laws 
or regulations based on their likely competitive effects. OPP intends 
to evaluate the effectiveness of these advocacy comments.
    The evaluation will target the recipients of each of the 51 written 
comments, as well as 18 sponsors of the relevant legislation, by means 
of a written questionnaire. Most of the questions ask the respondent to 
agree or disagree with a statement concerning the advocacy comment that 
they received. Specifically, these questions inquire as to the 
applicability, value, persuasive influence, public effect, and 
informative value of the FTC's comments. The questionnaire also 
provides respondents with an opportunity to provide additional remarks 
related either to the written comments received or the FTC's advocacy 
program in general. Participation is voluntary.
    OPP staff estimates that on average, respondents will take 30 
minutes or less to complete the questionnaire. OPP staff does not 
intend to conduct any follow-up activities that would involve the 
respondents' participation. If all respondents complete the 
questionnaire, the total hours burden for the evaluation will be 
approximately 35 hours (69 respondents x .5 hours). OPP staff estimates 
a conservative hourly labor cost of $250 for the time of the survey 
participants (primarily state representatives and senators). Thus, the 
total annual labor cost would be approximately $8750 (35 hours x $250).
    (d) Applicant Tracking Form: 400 hours.
    The FTC's Human Resources Management Office intends to survey job 
applicants on their ethnicity, race, and disability status in order to 
determine if recruitment is effectively reaching all aspects of the 
relevant labor pool, in compliance with management directives from the 
Equal Opportunity Employment Commission. Response by applicants is 
optional. The information obtained will be used for evaluating 
recruitment only and plays no part in the selection of who is hired. 
The information is not provided to selecting officials. Instead, the 
information is used in summary form to determine

[[Page 51824]]

trends over many selections within a given occupational or 
organizational area. The information is treated in a confidential 
manner. No information from the form is entered into the official 
personnel file of the individual selected and all forms are destroyed 
after the conclusion of the selection process. The format of the 
questions on ethnicity and race are compliant with OMB requirements and 
comparable to those used by other agencies.
    The FTC staff estimates that up to 5,000 applicants will submit the 
form as part of the new online application process and that the form 
will require 5 minutes to complete, for an annual burden total of 
approximately 400 hours.
    Annual cost burden:
    The cost per respondent should be negligible. Participation is 
voluntary and will not require any labor expenditures by respondents. 
There are no capital, start-up, operation, maintenance, or other 
similar costs to the respondents.

Christian S. White,
Acting General Counsel.
[FR Doc. 05-17326 Filed 8-30-05; 8:45 am]
BILLING CODE 6750-01-P