Agency Information Collection Activities; Proposed Collection; Comment Request; Extension, 44140-44144 [E7-15328]

Download as PDF jlentini on PROD1PC65 with NOTICES 44140 Federal Register / Vol. 72, No. 151 / Tuesday, August 7, 2007 / Notices involved only a single brand, a single form of packaging, and no advertising, the estimated time to prepare the plans is very modest. Staff anticipates that the companies that submit initial plans covering packaging alone will spend no more than 40 hours each to prepare the plans, and possibly considerably less. This estimate is conservative. Like other estimates stated herein, this is based on the total number of plans submitted to the FTC over the past five years, rather than annually. Finally, staff estimates that over the next three years, up to four amendments will be filed by companies other than the five largest smokeless tobacco manufacturers. Over the past five years, the Commission has received four such plans. Each of the amendments involved very modest changes to the existing plans. Staff estimates that four companies submitting similar amended plans will spend no more than 20 to 40 hours each to prepare the amendments, for an additional burden estimate of no more than 160 hours. As above, this is conservatively based on the total number of plans submitted to the FTC over the past five years, rather than annually. Estimated total annual hours burden: 1,000 hours Based on these assumptions, the total annual hours should not exceed 1,000 hours. [(5 companies x 40 hours each) + (4 companies x 60 hours each) + (4 companies x 40 hours each) + (4 companies x 40 hours each) = 760 total hours, rounded to one thousand hours] Estimated labor costs: $203,000 The total annualized labor cost to these companies should not exceed $203,000. This is based on the assumption that management or attorneys will account for 80% of the estimated 1,000 hours required to draft initial or amended plans, at an hourly rate of $250 per hour, and that clerical support will account for the remaining time (20%) at an hourly rate of $15. [Management and attorneys’ time (1,000 hours x 0.80 x $250 = $200,000) + clerical time (1,000 hours x 0.20 x $15 = $3,000) = $203,000] Estimated annual non-labor cost burden: $0 or minimal The applicable requirements impose minimal start-up costs. The companies may keep copies of their plans to ensure that labeling and advertising complies with the requirements of the Smokeless Tobacco Act. Such recordkeeping would require the use of office supplies, e.g., file folders and paper, all of which the companies should have on hand in the ordinary course of their business. While companies submitting initial plans may incur one-time capital VerDate Aug<31>2005 15:56 Aug 06, 2007 Jkt 211001 expenditures for equipment used to print package labels in order to include the statutory health warnings or to prepare acetates for advertising, the warnings themselves disclose information completely supplied by the federal government. As such, the disclosure does not constitute a ‘‘collection of information’’ as it is defined in the regulations implementing the PRA, nor, by extension, do the financial resources expended in relation to it constitute paperwork ‘‘burden.’’ See 5 CFR 1320.3(c)(2). Moreover, any expenditures relating to the statutory health warning requirements would likely be minimal in any event. For companies that have already submitted approved plans, there are no capital expenditures. After the Commission approves a plan for the rotation and display of the warnings required by the Smokeless Tobacco Act, the companies are required to make additional submissions to the Commission only if they choose to change the way they display the warnings. Once companies have prepared the artwork for printing the required warnings on package labels, there are no additional start-up costs associated with the display of the warnings on packaging. Similarly, once companies have prepared artwork and possibly acetates for the display of the warnings in advertising, there are no additional start-up costs associated with printing the warnings in those materials. William Blumenthal General Counsel [FR Doc. E7–15326 Filed 8–7–07: 8:45 am] BILLING CODE 6750–01–S FEDERAL TRADE COMMISSION Agency Information Collection Activities; Proposed Collection; Comment Request; Extension Federal Trade Commission (‘‘FTC’’ or ‘‘Commission’’). ACTION: Notice. AGENCY: 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. The FTC is seeking public comments on its proposal to extend through November 30, 2010 the current OMB clearance for the information collection requirements contained in the Commission’s Rule Concerning Disclosure of Written Consumer Product Warranty Terms and Conditions. The clearance is scheduled to expire on November 30, 2007. The FTC is also seeking public comments on its PO 00000 Frm 00065 Fmt 4703 Sfmt 4703 proposal to extend through December 31, 2010 the current OMB clearances for the information collection requirements contained in the Commission’s Rule Governing Pre-Sale Availability of Written Warranty Terms and the Informal Dispute Settlement Procedures Rule. Those clearances are scheduled to expire on December 31, 2007. DATES: Comments must be filed by October 9, 2007. ADDRESSES: Interested parties are invited to submit written comments. Comments should refer to ‘‘Warranty Rules: Paperwork Comment, FTC File No. P044403’’ 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, Room H-135, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. Because paper mail in the Washington area and at the Commission is subject to delay, please consider submitting your comments in electronic form, as prescribed below. 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 The FTC is requesting that any comment filed in paper form be sent by courier or overnight service, if possible. Comments filed in electronic form should be submitted by using the following weblink: https:// secure.commentworks.com/ftcwarranrtypra (and following the instructions on the Web-based form). To ensure that the Commission considers an electronic comment, you must file it on the Web-based form at the weblink: https://secure.commentworks.com/ftcwarranrtypra. If this notice appears at www.regulations.gov, you may also file an electronic comment through that Web site. The Commission will consider all comments that regulations.gov forwards to it. 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 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). E:\FR\FM\07AUN1.SGM 07AUN1 jlentini on PROD1PC65 with NOTICES Federal Register / Vol. 72, No. 151 / Tuesday, August 7, 2007 / Notices 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 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 http://www.ftc.gov/ftc/ privacy.htm. FOR FURTHER INFORMATION CONTACT: Requests for additional information or copies of the proposed information requirements should be addressed to Allyson Himelfarb, Investigator, Division of Marketing Practices, Bureau of Consumer Protection, Federal Trade Commission, Room H-292, 600 Pennsylvania Ave., N.W., Washington, D.C. 20580, (202) 326-2505. SUPPLEMENTARY INFORMATION: Under the Paperwork Reduction Act (‘‘PRA’’), 44 U.S.C. 3501-3520, 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 clearances for the FTC’s (1) Rule Concerning Disclosure of Written Consumer Product Warranty Terms and Conditions (OMB Control Number 30840111); (2) Rule Governing Pre-Sale Availability of Written Warranty Terms (OMB Control Number 3084-0112); and (3) Informal Dispute Settlement Procedures Rule (OMB Control Number 3084-0113) (collectively, ‘‘Warranty Rules’’). 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 VerDate Aug<31>2005 15:56 Aug 06, 2007 Jkt 211001 techniques or other forms of information technology, e.g., permitting electronic submission of responses. All comments should be filed as prescribed in the ADDRESSES section above, and must be received on or before October 9, 2007. The Warranty Rules implement the Magnuson-Moss Warranty Act, 15 U.S.C. 2301 et seq. (‘‘Warranty Act’’ or ‘‘Act’’), which required the FTC to issue three rules relating to warranties on consumer products: the disclosure of written warranty terms and conditions; pre-sale availability of warranty terms; and rules establishing minimum standards for informal dispute settlement mechanisms that are incorporated into a written warranty.2 Consumer Product Warranty Rule (‘‘Warranty Rule’’): The Warranty Rule, 16 CFR 701, specifies the information that must appear in a written warranty on a consumer product costing more than $15. The Rule tracks Section 102(a) of the Warranty Act,3 specifying information that must appear in the written warranty and, for certain disclosures, mandates the exact language that must be used.4 Neither the Warranty Rule nor the Act requires that a manufacturer or retailer warrant a consumer product in writing, but if they choose to do so, the warranty must comply with the Rule. The Rule Governing Pre-Sale Availability of Written Warranty Terms (‘‘Pre-Sale Availability Rule’’): The PreSale Availability Rule, 16 CFR 702, requires sellers and warrantors to make the text of any written warranty on a consumer product costing more than $15 available to the consumer before sale. Among other things, the Rule requires sellers to make the text of the warranty readily available either by (1) displaying it in close proximity to the product or (2) furnishing it on request and posting signs in prominent locations advising consumers that the warranty is available. The Rule requires warrantors to provide materials to enable sellers to comply with the Rule’s requirements and also sets out the methods by which warranty information can be made available before the sale if the product is sold through catalogs, mail order, or door-to-door sales. Informal Dispute Settlement Rule: The Informal Dispute Settlement Rule, 16 CFR 703, specifies the minimum standards which must be met by any informal dispute settlement mechanism that is incorporated into a written consumer product warranty and which the consumer must use before pursuing legal remedies in court. In enacting the Warranty Act, Congress recognized the potential benefits of consumer dispute mechanisms as an alternative to the judicial process. Section 110(a) of the Act sets out the Congressional policy to ‘‘encourage warrantors to establish procedures whereby consumer disputes are fairly and expeditiously settled through informal dispute settlement mechanisms’’ (‘‘IDSMs’’) and erected a framework for their establishment.5 As an incentive to warrantors to establish IDSMs, Congress provided in Section 110(a)(3) that warrantors may incorporate into their written consumer product warranties a requirement that a consumer must resort to an IDSM before pursuing a legal remedy under the Act for breach of warranty.6 To ensure fairness to consumers, however, Congress also directed that, if a warrantor were to incorporate such a ‘‘prior resort requirement’’ into its written warranty, the warrantor must comply with the minimum standards set by the Commission for such IDSMs.7 Section 110(a)(2) of the Act directed the Commission to establish those minimum standards.8 The Informal Dispute Settlement Rule contains standards for IDSMs, including requirements concerning the mechanism’s structure (e.g., funding, staffing, and neutrality), the qualifications of staff or decision makers, the mechanism’s procedures for resolving disputes (e.g., notification, investigation, time limits for decisions, and follow-up), recordkeeping, and annual audits. The Rule requires that warrantors establish written operating procedures and provide copies of those procedures upon request. The Informal Dispute Settlement Rule applies only to those firms that choose to be bound by it by requiring consumers to use an IDSM. Neither the Rule nor the Act requires warrantors to set up IDSMs. A warrantor is free to set up an IDSM that does not comply with the Informal Dispute Settlement Rule as long as the warranty does not contain a prior resort requirement. Warranty Rule Burden Statement: Total annual hours burden: 107,000 hours, rounded to the nearest thousand. In its 2004 submission to OMB,9 the FTC estimated that the information collection burden of including the disclosures required by the Warranty Rule was approximately 34,000 hours 15 U.S.C. 2310(a). 15 U.S.C. 2310(a)(3). 7 Id. 8 15 U.S.C. 2310(a)(2). 9 69 FR 60877 (Oct. 13, 2004). 5 6 40 FR 60168 (December 31, 1975). 15 U.S.C. 2302(a). 4 40 FR 60168, 60169-60170. 2 3 PO 00000 Frm 00066 Fmt 4703 Sfmt 4703 44141 E:\FR\FM\07AUN1.SGM 07AUN1 44142 Federal Register / Vol. 72, No. 151 / Tuesday, August 7, 2007 / Notices jlentini on PROD1PC65 with NOTICES per year. Although the Rule’s information collection requirements have not changed, this estimate increases the number of manufacturers subject to the Rule based on recent Census data. Nevertheless, because most warrantors would now disclose this information even if there were no statute or rule requiring them to do so, staff’s estimates likely overstate the PRA-related burden attributable to the Rule. Moreover, the Warranty Rule has been in effect since 1976, and warrantors have long since modified their warranties to include the information the Rule requires. Based on conversations with various warrantors’ representatives over the years, staff has concluded that eight hours per year is a reasonable estimate of warrantors’ PRA-related burden attributable to the Warranty Rule. This estimate takes into account ensuring that new warranties and changes to existing warranties comply with the Rule. Based on recent Census data, staff now estimates that there are 134 large manufacturers and 13,235 small manufacturers covered by the Rule.10 This results in an annual burden estimate of approximately 106,952 hours (13,369 total manufacturers x 8 hours of burden per year). Total annual labor costs: $14,118,000, rounded to the nearest thousand Labor costs are derived by applying appropriate hourly cost figures to the burden hours described above. The work required to comply with the Warranty Rule—ensuring that new warranties and changes to existing warranties comply with the Rule— requires a mix of legal analysis and clerical support. Staff estimates that half of the total burden hours (53,476 hours) requires legal analysis at an average hourly wage of $250 for legal professionals,11 resulting in a labor cost of $13,369,000. Assuming that the remaining half of the total burden hours requires clerical work at an average hourly wage of $14, the resulting labor cost is approximately $748,664. Thus, the total annual labor cost is approximately $14,117,664 ($13,369,000 for legal professionals + $748,664 for clerical workers). Total annual capital or other nonlabor costs: $0 10 Because some manufacturer likely make products that are not priced above $15 or not intended for household use—and thus would not be subject to the Rules—this figure is likely an overstatement. 11 Staff has derived an hourly wage rate for legal professionals based upon industry knowledge. The remaining wage rates used throughout this Notice reflect recent data from the Bureau of Labor Statistics National Compensation Survey. VerDate Aug<31>2005 15:56 Aug 06, 2007 Jkt 211001 The Rule imposes no appreciable current capital or start-up costs. As stated above, warrantors have already modified their warranties to include the information the Rule requires. Rule compliance does not require the use of any capital goods, other than ordinary office equipment, which providers would already have available for general business use. Pre-Sale Availability Rule Burden Statement: Total annual hours burden: 2,328,000 hours, rounded to the nearest thousand. In its 2004 submission to OMB, FTC staff estimated that the information collection burden of making the disclosures required by the Pre-Sale Availability Rule was approximately 2,760,000 hours per year. Although there has been no change in the Rule’s information collection requirements since 2004, staff has adjusted its previous estimate of the number of manufacturers subject to the Rule based on recent Census data. As discussed above, staff now estimates that there are approximately 134 large manufacturers and 13,235 small manufacturers subject to the Rule. Census data suggests that the number of retailers subject to the Rule has remained largely unchanged since 2004. Therefore, staff continues to estimate that there are 6,552 large retailers and 422,100 small retailers impacted by the Rule. Since 2001, online retailers have been posting warranty information on their web sites, reducing their burden of providing the required information.12 While some online retailers make warranty information directly available on their web sites, the majority of them instead provide consumers with instructions on how to obtain that information. Moreover, some online retailers provide warranty information electronically in response to a consumer’s request for such information. After reviewing the 20 top online retailers’ websites for availability of warranty information, staff determined that a significant percentage of retailers (40% of the sample size) have begun to incorporate online methods of complying with the Rule— either by posting warranty information online or sending that information to consumers electronically. Accordingly, staff estimates that retailers’ annual hourly burden has decreased by twenty percent.13 Staff took note of this change in 2004 but, due to the small number of retailers engaging in the practice at that time, declined to make an adjustment to its burden estimate. 13 This conservative estimate takes into account that staff reviewed a limited number of websites. 12 PO 00000 Frm 00067 Fmt 4703 Sfmt 4703 In 2004, staff estimated that large retailers spend an average of 26 hours per year and small retailers spend an average of 6 hours per year to comply with the Rule. Applying a 20% reduction to the FTC’s previous estimates, staff assumes that large retailers spend an average of 20.8 hours per year and small retailers spend an average 4.8 hours per year to comply with the Rule. Accordingly, the total annual burden for retailers is approximately 2,162,362 hours ((6,552 large retailers x 20.8 burden hours) + (422,100 small retailers x 4.8 burden hours)). Staff retains its previous estimate that large manufacturers spend an average of 52 hours per year and small manufacturers spend an average of 12 hours per year to comply with the Rule. Accordingly, the total annual burden incurred by manufacturers is approximately 165,788 hours ((134 large manufacturers x 52 hours) + (13,235 small manufacturers x 12 hours)). Thus, the total annual burden for all covered entities is approximately 2,328,150 hours (2,162,362 hours for retailers + 165,788 hours for manufacturers). Total annual labor cost: $32,594,000, rounded to the nearest thousand. The work required to comply with the Pre-Sale Availability Rule is predominantly clerical, e.g., providing copies of manufacturer warranties to retailers and retailer maintenance of them. Applying a clerical wage rate of $14/hour, the total annual labor cost burden is approximately $32,594,100 (2,328,150 hours x $14 per hour). Total annual capital or other nonlabor costs: De minimis. The vast majority of retailers and warrantors already have developed systems to provide the information the Rule requires. Compliance by retailers typically entails keeping warranties on file, in binders or otherwise, and posting an inexpensive sign indicating warranty availability.14 Manufacturer compliance entails providing retailers with a copy of the warranties included with their products. Informal Dispute Settlement Rule Burden Statement: Total annual hours burden: 17,000 hours, rounded to the nearest thousand. The primary burden from the Informal Dispute Settlement Rule comes from the Moreover, some online retailers also operate ‘‘brickand-mortar’’ operations and still provide paper copies of warranties for review by customers who do not do business online. 14 Although some retailers may choose to display a more elaborate or expensive sign, that is not required by the Rule. E:\FR\FM\07AUN1.SGM 07AUN1 Federal Register / Vol. 72, No. 151 / Tuesday, August 7, 2007 / Notices jlentini on PROD1PC65 with NOTICES recordkeeping requirements that apply to IDSMs, the use of which is incorporated into a consumer product warranty. In its 2004 submission to OMB, staff estimated that the recordkeeping and reporting burden was 24,625 hours per year and 9,235 hours per year for disclosure requirements or, cumulatively, approximately 30,000 hours. Although the Rule’s information collection requirements have not changed since 2004, the audits filed by the IDSMs indicate that on average fewer disputes were handled over the previous three years. In addition, representatives of the IDSMs indicate that relatively few consumers request a copy of their complete case file, and even fewer request a copy of the annual audit. These factors result in a decreased annual hours burden estimate for the IDSMs. The calculations underlying staff’s new estimates follow. Recordkeeping: The Rule requires IDSMs to maintain individual case files. Because maintaining individual case records is a necessary function for any IDSM, much of the burden would be incurred in the ordinary course of the IDSM’s business. Nonetheless, staff retains its previous estimate that maintaining individual case files imposes an additional burden of 30 minutes per case. The amount of work required will depend on the number of dispute resolution proceedings undertaken in each IDSM. The 2005 audit report for the BBB AUTO LINE states that, during calendar year 2005, it handled 23,672 warranty disputes on behalf of 12 manufacturers (including General Motors, Honda, Ford, Saturn, Volkswagen, Isuzu, and Nissan).15 The BBB AUTO LINE audits from calendar years 2004 and 2003 indicate warranty disputes totaling 19,793 and 21,859, respectively. Thus, the average number of disputes filed annually through BBB AUTO LINE over this three-year period is 21,775 disputes.16 According to the 2005 audit report for the BBB AUTO LINE, ten out of the twelve manufacturers reviewed include a ‘‘prior resort’’ requirement in their warranties, and thus are covered by the Informal Dispute Settlement Rule. Therefore, staff assumes that virtually 15 So far as staff is aware, all or virtually all of the IDSMs subject to the Rule are within the auto industry. 16 Because the number of annual disputes filed has fluctuated, staff believes that taking the average number of disputes filed between 2003 and 2005 (the most recent available data) is the best way to project what will happen over the next three years of the OMB clearance for the Rule. VerDate Aug<31>2005 15:56 Aug 06, 2007 Jkt 211001 all of the average 21,775 disputes handled by the BBB fall within the Rule. Apart from the BBB audit report, audit reports were submitted on behalf of the National Center for Dispute Settlement (NCDS), the mechanism that handles dispute resolutions for Toyota, Lexus, DaimlerChrysler, Mitsubishi, and Porsche, all of which are covered by the Rule. The 2005 audit of the NCDS operations show that 2,154 disputes were filed in 2005. In addition, the NCDS audit shows that in 2004 and 2003, it handled 2,246 and 3,722 disputes, respectively. Thus, the NCDS handled an average of 2,707 disputes each year from 2003 through 2005. Based on the above figures, staff estimates that the average number of disputes handled annually by IDSMs covered by the Rule is approximately 24,482 (21,775 disputes handled by BBB AUTO LINE + 2,707 disputes handled by NCDS). Accordingly, staff estimates the total annual recordkeeping burden attributable to the Rule to be approximately 12,241 hours (24,482 disputes x 30 minutes of burden ÷ 60 minutes). Reporting: The Rule requires IDSMs to update indexes, complete semiannual statistical summaries, and submit an annual audit report to the FTC. Staff retains its previous estimate that covered entities spend approximately 10 minutes per case for these activities, resulting in a total annual burden of approximately 4,080 hours (24,482 disputes x 10 minutes of burden ÷ 60 minutes). Disclosure: The Rule requires that information about the IDSM be disclosed in the written warranty. Any incremental costs to the warrantor of including this additional information in the warranty are negligible. The majority of disclosure burden would be borne by the IDSM, which is required to provide to interested consumers upon request copies of the various types of information the IDSM possesses, including annual audits. Consumers who have dealt with the IDSM also have a right to copies of their records. (IDSMs are permitted to charge for providing both types of information.) Based on discussions with representatives of the IDSMs, staff estimates that the burden imposed by the disclosure requirements is approximately 408 hours per year for the existing IDSMs to provide copies of this information. This estimate draws from the average number of consumers who file claims each year with the IDSMs (24,482) and the assumption that twenty percent of consumers individually request copies of the records pertaining to their disputes, or PO 00000 Frm 00068 Fmt 4703 Sfmt 4703 44143 approximately 4,896 consumers. Staff estimates that copying such records would require approximately 5 minutes per consumer, including a negligible number of requests for copies of the annual audit.17 Thus, the IDSMs currently operating under the Rule have an estimated total disclosure burden of 408 hours (4,896 consumers x 5 minutes of burden ÷ 60 minutes). Accordingly, the total PRA-related annual hours burden attributed to the Rule is approximately 16,729 hours (12,241 hours for recordkeeping + 4,080 hours for reporting + 408 hours for disclosures). Total annual labor cost: $266,000, rounded to the nearest thousand. Recordkeeping: Staff assumes that IDSMs use skilled clerical or technical support staff to comply with the recordkeeping requirements contained in the Rule at an hourly rate of $16. Thus, the labor cost associated with the 12,241 annual burden hours for recordkeeping is approximately $195,856 (12,241 burden hours x $16 per hour). Reporting: Staff assumes that IDSMs also use skilled clerical support staff at an hourly rate of $16 to comply with the reporting requirements. Thus, the labor cost associated with the 4,080 annual burden hours for reporting is approximately $65,280 (4,080 burden hours x $16 per hour). Disclosure: Staff assumes that IDSMs use clerical support at an hourly rate of $12 to reproduce records and, therefore, the labor cost associated with the 408 annual burden hours for disclosures is approximately $4,896 (408 burden hours x $12 per hour). Accordingly, the combined total annual labor cost for PRA-related burden under the Rule is approximately $266,032 ($195,856 for recordkeeping + $65,280 for reporting + $4,896 for disclosures). Total annual capital or other nonlabor costs: $329,000 Total capital and start-up costs: The Rule imposes no appreciable current capital or start-up costs. The vast majority of warrantors have already developed systems to retain the records and provide the disclosures required by the Rule. Rule compliance does not require the use of any capital goods, other than ordinary office equipment, to 17 This estimate includes the additional amount of time required to copy the annual audit upon a consumer’s request. However, because staff has determined that a very small minority of consumers request a copy of the annual audit, this estimate is likely an overstatement. In addition, at least a portion of case files are provided to consumers electronically, which further would reduce the paperwork burden borne by the IDSMs. E:\FR\FM\07AUN1.SGM 07AUN1 jlentini on PROD1PC65 with NOTICES 44144 Federal Register / Vol. 72, No. 151 / Tuesday, August 7, 2007 / Notices which providers would already have access. In addition, according to a representative of one IDSM, it has already developed systems to collect and retain information needed to produce the indexes and statistical summaries required by the Rule, and thus, estimated very low capital or startup costs. The only additional cost imposed on IDSMs operating under the Rule that would not be incurred for other IDSMs is the annual audit requirement. According to representatives of each of the IDSMs currently operating under the Rule, the vast majority of costs associated with this requirement are the fees paid to the auditors and their staffs to perform the annual audit. Representatives of the IDSMs estimated a combined cost of $300,000 for both IDSMs currently operating under the Rule Other non-labor costs: $29,000 in copying costs. This total is based on estimated copying costs of 7 cents per page and several conservative assumptions. Staff estimates that the average dispute-related file is 35 pages long and that a typical annual audit file is approximately 200 pages in length. As discussed above, staff assumes that twenty percent of consumers using an IDSM currently operating under the Rule (approximately 4,896 consumers) request copies of the records relating to their disputes. Staff also estimates that a very small minority of consumers request a copy of the annual audit. This assumption is based on (1) the number of consumer requests actually received by the IDSMs in the past; and (2) the fact that the IDSMs’ annual audits are available online. For example, annual audits are available on the FTC’s web site, where consumers may view and or print pages as needed, at no cost to the IDSM. In addition, the Better Business Bureau makes available on its web site the annual audit of the BBB AUTO LINE. Therefore, staff conservatively estimates that only five percent of consumers using an IDSM covered by the Rule (approximately 1,224 consumers) will request a copy of the IDSM’s audit report. Thus, the total annual copying cost for dispute-related files is approximately $11,995 (35 pages per file x $.07 per page x 4,896 consumer requests) and the total annual copying cost for annual audit reports is approximately $17,136 (200 pages per audit report x $.07 per page x 1,224 consumer requests). Accordingly, the total cost attributed to copying under the Rule is approximately $29,131 and the total non-labor cost under the Rule VerDate Aug<31>2005 15:56 Aug 06, 2007 Jkt 211001 is approximately $329,131 ($300,000 for auditor fees + $29,131 for copying costs). William Blumenthal General Counsel [FR Doc. E7–15328 Filed 8–6–07: 8:45 am] BILLING CODE 6750–01–S FEDERAL TRADE COMMISSION [File No. 051 0044] Colegio de Optometras de Puerto Rico ´ ´ and Edgar Davila Garcıa, O.D., and Carlos Rivera Alonso, O.D.; Analysis of Agreement Containing Consent Order to Aid Public Comment Federal Trade Commission. Proposed Consent Agreement. AGENCY: ACTION: SUMMARY: The consent agreement in this matter settles alleged violations of federal law prohibiting unfair or deceptive acts or practices or unfair methods of competition. The attached Analysis to Aid Public Comment describes both the allegations in the draft complaint and the terms of the consent order—embodied in the consent agreement—that would settle these allegations. Comments must be received on or before August 28, 2007. ADDRESSES: Interested parties are invited to submit written comments. Comments should refer to ‘‘Colegio de Optometras, File No. 051 0044,’’ 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 to the following address: Federal Trade Commission/ Office of the Secretary, Room 135-H, 600 Pennsylvania Avenue, NW., Washington, DC 20580. Comments containing confidential material must be filed in paper form, must be clearly labeled ‘‘Confidential,’’ and must comply with Commission Rule 4.9(c). 16 CFR 4.9(c) (2005).1 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. Comments that do not DATES: 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 Commission Rule 4.9(c), 16 CFR 4.9(c). PO 00000 Frm 00069 Fmt 4703 Sfmt 4703 contain any nonpublic information may instead be filed in electronic form as part of or as an attachment to email messages directed to the following email box: consentagreement@ftc.gov. 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, whether filed in paper or electronic form, will be considered by the Commission, and will be available to the public on the FTC website, to the extent practicable, at 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 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.htm. FOR FURTHER INFORMATION CONTACT: Susan E. Raitt, FTC Northeast Region, 600 Pennsylvania Avenue, NW., Washington, DC 20580, (212) 607-2829. SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and § 2.34 of the Commission Rules of Practice, 16 CFR 2.34, notice is hereby given that the above-captioned consent agreement containing a consent order to cease and desist, having been filed with and accepted, subject to final approval, by the Commission, has been placed on the public record for a period of thirty (30) days. The following Analysis to Aid Public Comment describes the terms of the consent agreement, and the allegations in the complaint. An electronic copy of the full text of the consent agreement package can be obtained from the FTC Home Page (for July 30, 2007), on the World Wide Web, at http://www.ftc.gov/ os/2007/07/index.htm. A paper copy can be obtained from the FTC Public Reference Room, Room 130-H, 600 Pennsylvania Avenue, NW., Washington, DC 20580, either in person or by calling (202) 326-2222. Public comments are invited, and may be filed with the Commission in either paper or electronic form. All comments should be filed as prescribed in the ADDRESSES section above, and must be received on or before the date specified in the DATES section. Analysis of Agreement Containing Consent Order to Aid Public Comment The Federal Trade Commission has accepted, subject to final approval, an agreement containing a proposed E:\FR\FM\07AUN1.SGM 07AUN1

Agencies

[Federal Register Volume 72, Number 151 (Tuesday, August 7, 2007)]
[Notices]
[Pages 44140-44144]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-15328]


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FEDERAL TRADE COMMISSION


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

AGENCY: Federal Trade Commission (``FTC'' or ``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. The FTC is seeking 
public comments on its proposal to extend through November 30, 2010 the 
current OMB clearance for the information collection requirements 
contained in the Commission's Rule Concerning Disclosure of Written 
Consumer Product Warranty Terms and Conditions. The clearance is 
scheduled to expire on November 30, 2007. The FTC is also seeking 
public comments on its proposal to extend through December 31, 2010 the 
current OMB clearances for the information collection requirements 
contained in the Commission's Rule Governing Pre-Sale Availability of 
Written Warranty Terms and the Informal Dispute Settlement Procedures 
Rule. Those clearances are scheduled to expire on December 31, 2007.

DATES: Comments must be filed by October 9, 2007.

ADDRESSES: Interested parties are invited to submit written comments. 
Comments should refer to ``Warranty Rules: Paperwork Comment, FTC File 
No. P044403'' 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, Room H-135, 
600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. Because paper 
mail in the Washington area and at the Commission is subject to delay, 
please consider submitting your comments in electronic form, as 
prescribed below. 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\ The FTC is requesting that any comment filed in 
paper form be sent by courier or overnight service, if possible.
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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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    Comments filed in electronic form should be submitted by using the 
following weblink: https://secure.commentworks.com/ftc-warranrtypra 
(and following the instructions on the Web-based form). To ensure that 
the Commission considers an electronic comment, you must file it on the 
Web-based form at the weblink: https://secure.commentworks.com/ftc-
warranrtypra. If this notice appears at www.regulations.gov, you may 
also file an electronic comment through that Web site. The Commission 
will consider all comments that regulations.gov forwards to it.
    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

[[Page 44141]]

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 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 http://www.ftc.gov/ftc/
privacy.htm.

FOR FURTHER INFORMATION CONTACT: Requests for additional information or 
copies of the proposed information requirements should be addressed to 
Allyson Himelfarb, Investigator, Division of Marketing Practices, 
Bureau of Consumer Protection, Federal Trade Commission, Room H-292, 
600 Pennsylvania Ave., N.W., Washington, D.C. 20580, (202) 326-2505.

SUPPLEMENTARY INFORMATION: Under the Paperwork Reduction Act (``PRA''), 
44 U.S.C. 3501-3520, 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 
clearances for the FTC's (1) Rule Concerning Disclosure of Written 
Consumer Product Warranty Terms and Conditions (OMB Control Number 
3084-0111); (2) Rule Governing Pre-Sale Availability of Written 
Warranty Terms (OMB Control Number 3084-0112); and (3) Informal Dispute 
Settlement Procedures Rule (OMB Control Number 3084-0113) 
(collectively, ``Warranty Rules'').
    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. All comments should be filed as prescribed in 
the ADDRESSES section above, and must be received on or before October 
9, 2007.
    The Warranty Rules implement the Magnuson-Moss Warranty Act, 15 
U.S.C. 2301 et seq. (``Warranty Act'' or ``Act''), which required the 
FTC to issue three rules relating to warranties on consumer products: 
the disclosure of written warranty terms and conditions; pre-sale 
availability of warranty terms; and rules establishing minimum 
standards for informal dispute settlement mechanisms that are 
incorporated into a written warranty.\2\
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    \2\ 40 FR 60168 (December 31, 1975).
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    Consumer Product Warranty Rule (``Warranty Rule''): The Warranty 
Rule, 16 CFR 701, specifies the information that must appear in a 
written warranty on a consumer product costing more than $15. The Rule 
tracks Section 102(a) of the Warranty Act,\3\ specifying information 
that must appear in the written warranty and, for certain disclosures, 
mandates the exact language that must be used.\4\ Neither the Warranty 
Rule nor the Act requires that a manufacturer or retailer warrant a 
consumer product in writing, but if they choose to do so, the warranty 
must comply with the Rule.
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    \3\ 15 U.S.C. 2302(a).
    \4\ 40 FR 60168, 60169-60170.
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    The Rule Governing Pre-Sale Availability of Written Warranty Terms 
(``Pre-Sale Availability Rule''): The Pre-Sale Availability Rule, 16 
CFR 702, requires sellers and warrantors to make the text of any 
written warranty on a consumer product costing more than $15 available 
to the consumer before sale. Among other things, the Rule requires 
sellers to make the text of the warranty readily available either by 
(1) displaying it in close proximity to the product or (2) furnishing 
it on request and posting signs in prominent locations advising 
consumers that the warranty is available. The Rule requires warrantors 
to provide materials to enable sellers to comply with the Rule's 
requirements and also sets out the methods by which warranty 
information can be made available before the sale if the product is 
sold through catalogs, mail order, or door-to-door sales.
    Informal Dispute Settlement Rule: The Informal Dispute Settlement 
Rule, 16 CFR 703, specifies the minimum standards which must be met by 
any informal dispute settlement mechanism that is incorporated into a 
written consumer product warranty and which the consumer must use 
before pursuing legal remedies in court. In enacting the Warranty Act, 
Congress recognized the potential benefits of consumer dispute 
mechanisms as an alternative to the judicial process. Section 110(a) of 
the Act sets out the Congressional policy to ``encourage warrantors to 
establish procedures whereby consumer disputes are fairly and 
expeditiously settled through informal dispute settlement mechanisms'' 
(``IDSMs'') and erected a framework for their establishment.\5\ As an 
incentive to warrantors to establish IDSMs, Congress provided in 
Section 110(a)(3) that warrantors may incorporate into their written 
consumer product warranties a requirement that a consumer must resort 
to an IDSM before pursuing a legal remedy under the Act for breach of 
warranty.\6\ To ensure fairness to consumers, however, Congress also 
directed that, if a warrantor were to incorporate such a ``prior resort 
requirement'' into its written warranty, the warrantor must comply with 
the minimum standards set by the Commission for such IDSMs.\7\ Section 
110(a)(2) of the Act directed the Commission to establish those minimum 
standards.\8\
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    \5\ 15 U.S.C. 2310(a).
    \6\ 15 U.S.C. 2310(a)(3).
    \7\ Id.
    \8\ 15 U.S.C. 2310(a)(2).
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    The Informal Dispute Settlement Rule contains standards for IDSMs, 
including requirements concerning the mechanism's structure (e.g., 
funding, staffing, and neutrality), the qualifications of staff or 
decision makers, the mechanism's procedures for resolving disputes 
(e.g., notification, investigation, time limits for decisions, and 
follow-up), recordkeeping, and annual audits. The Rule requires that 
warrantors establish written operating procedures and provide copies of 
those procedures upon request.
    The Informal Dispute Settlement Rule applies only to those firms 
that choose to be bound by it by requiring consumers to use an IDSM. 
Neither the Rule nor the Act requires warrantors to set up IDSMs. A 
warrantor is free to set up an IDSM that does not comply with the 
Informal Dispute Settlement Rule as long as the warranty does not 
contain a prior resort requirement.

Warranty Rule Burden Statement:

    Total annual hours burden: 107,000 hours, rounded to the nearest 
thousand.
    In its 2004 submission to OMB,\9\ the FTC estimated that the 
information collection burden of including the disclosures required by 
the Warranty Rule was approximately 34,000 hours

[[Page 44142]]

per year. Although the Rule's information collection requirements have 
not changed, this estimate increases the number of manufacturers 
subject to the Rule based on recent Census data. Nevertheless, because 
most warrantors would now disclose this information even if there were 
no statute or rule requiring them to do so, staff's estimates likely 
overstate the PRA-related burden attributable to the Rule. Moreover, 
the Warranty Rule has been in effect since 1976, and warrantors have 
long since modified their warranties to include the information the 
Rule requires.
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    \9\ 69 FR 60877 (Oct. 13, 2004).
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    Based on conversations with various warrantors' representatives 
over the years, staff has concluded that eight hours per year is a 
reasonable estimate of warrantors' PRA-related burden attributable to 
the Warranty Rule. This estimate takes into account ensuring that new 
warranties and changes to existing warranties comply with the Rule. 
Based on recent Census data, staff now estimates that there are 134 
large manufacturers and 13,235 small manufacturers covered by the 
Rule.\10\ This results in an annual burden estimate of approximately 
106,952 hours (13,369 total manufacturers x 8 hours of burden per 
year).
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    \10\ Because some manufacturer likely make products that are not 
priced above $15 or not intended for household use--and thus would 
not be subject to the Rules--this figure is likely an overstatement.
---------------------------------------------------------------------------

    Total annual labor costs: $14,118,000, rounded to the nearest 
thousand
    Labor costs are derived by applying appropriate hourly cost figures 
to the burden hours described above. The work required to comply with 
the Warranty Rule--ensuring that new warranties and changes to existing 
warranties comply with the Rule--requires a mix of legal analysis and 
clerical support. Staff estimates that half of the total burden hours 
(53,476 hours) requires legal analysis at an average hourly wage of 
$250 for legal professionals,\11\ resulting in a labor cost of 
$13,369,000. Assuming that the remaining half of the total burden hours 
requires clerical work at an average hourly wage of $14, the resulting 
labor cost is approximately $748,664. Thus, the total annual labor cost 
is approximately $14,117,664 ($13,369,000 for legal professionals + 
$748,664 for clerical workers).
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    \11\ Staff has derived an hourly wage rate for legal 
professionals based upon industry knowledge. The remaining wage 
rates used throughout this Notice reflect recent data from the 
Bureau of Labor Statistics National Compensation Survey.
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    Total annual capital or other non-labor costs: $0
    The Rule imposes no appreciable current capital or start-up costs. 
As stated above, warrantors have already modified their warranties to 
include the information the Rule requires. Rule compliance does not 
require the use of any capital goods, other than ordinary office 
equipment, which providers would already have available for general 
business use.

Pre-Sale Availability Rule Burden Statement:

    Total annual hours burden: 2,328,000 hours, rounded to the nearest 
thousand.
    In its 2004 submission to OMB, FTC staff estimated that the 
information collection burden of making the disclosures required by the 
Pre-Sale Availability Rule was approximately 2,760,000 hours per year. 
Although there has been no change in the Rule's information collection 
requirements since 2004, staff has adjusted its previous estimate of 
the number of manufacturers subject to the Rule based on recent Census 
data. As discussed above, staff now estimates that there are 
approximately 134 large manufacturers and 13,235 small manufacturers 
subject to the Rule. Census data suggests that the number of retailers 
subject to the Rule has remained largely unchanged since 2004. 
Therefore, staff continues to estimate that there are 6,552 large 
retailers and 422,100 small retailers impacted by the Rule.
    Since 2001, online retailers have been posting warranty information 
on their web sites, reducing their burden of providing the required 
information.\12\ While some online retailers make warranty information 
directly available on their web sites, the majority of them instead 
provide consumers with instructions on how to obtain that information. 
Moreover, some online retailers provide warranty information 
electronically in response to a consumer's request for such 
information. After reviewing the 20 top online retailers' websites for 
availability of warranty information, staff determined that a 
significant percentage of retailers (40% of the sample size) have begun 
to incorporate online methods of complying with the Rule--either by 
posting warranty information online or sending that information to 
consumers electronically. Accordingly, staff estimates that retailers' 
annual hourly burden has decreased by twenty percent.\13\
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    \12\ Staff took note of this change in 2004 but, due to the 
small number of retailers engaging in the practice at that time, 
declined to make an adjustment to its burden estimate.
    \13\ This conservative estimate takes into account that staff 
reviewed a limited number of websites. Moreover, some online 
retailers also operate ``brick-and-mortar'' operations and still 
provide paper copies of warranties for review by customers who do 
not do business online.
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    In 2004, staff estimated that large retailers spend an average of 
26 hours per year and small retailers spend an average of 6 hours per 
year to comply with the Rule. Applying a 20% reduction to the FTC's 
previous estimates, staff assumes that large retailers spend an average 
of 20.8 hours per year and small retailers spend an average 4.8 hours 
per year to comply with the Rule. Accordingly, the total annual burden 
for retailers is approximately 2,162,362 hours ((6,552 large retailers 
x 20.8 burden hours) + (422,100 small retailers x 4.8 burden hours)).
    Staff retains its previous estimate that large manufacturers spend 
an average of 52 hours per year and small manufacturers spend an 
average of 12 hours per year to comply with the Rule. Accordingly, the 
total annual burden incurred by manufacturers is approximately 165,788 
hours ((134 large manufacturers x 52 hours) + (13,235 small 
manufacturers x 12 hours)).
    Thus, the total annual burden for all covered entities is 
approximately 2,328,150 hours (2,162,362 hours for retailers + 165,788 
hours for manufacturers).
    Total annual labor cost: $32,594,000, rounded to the nearest 
thousand.
    The work required to comply with the Pre-Sale Availability Rule is 
predominantly clerical, e.g., providing copies of manufacturer 
warranties to retailers and retailer maintenance of them. Applying a 
clerical wage rate of $14/hour, the total annual labor cost burden is 
approximately $32,594,100 (2,328,150 hours x $14 per hour).
    Total annual capital or other non-labor costs: De minimis.
    The vast majority of retailers and warrantors already have 
developed systems to provide the information the Rule requires. 
Compliance by retailers typically entails keeping warranties on file, 
in binders or otherwise, and posting an inexpensive sign indicating 
warranty availability.\14\ Manufacturer compliance entails providing 
retailers with a copy of the warranties included with their products.
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    \14\ Although some retailers may choose to display a more 
elaborate or expensive sign, that is not required by the Rule.
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Informal Dispute Settlement Rule Burden Statement:

    Total annual hours burden: 17,000 hours, rounded to the nearest 
thousand.
    The primary burden from the Informal Dispute Settlement Rule comes 
from the

[[Page 44143]]

recordkeeping requirements that apply to IDSMs, the use of which is 
incorporated into a consumer product warranty. In its 2004 submission 
to OMB, staff estimated that the recordkeeping and reporting burden was 
24,625 hours per year and 9,235 hours per year for disclosure 
requirements or, cumulatively, approximately 30,000 hours. Although the 
Rule's information collection requirements have not changed since 2004, 
the audits filed by the IDSMs indicate that on average fewer disputes 
were handled over the previous three years. In addition, 
representatives of the IDSMs indicate that relatively few consumers 
request a copy of their complete case file, and even fewer request a 
copy of the annual audit. These factors result in a decreased annual 
hours burden estimate for the IDSMs. The calculations underlying 
staff's new estimates follow.
    Recordkeeping: The Rule requires IDSMs to maintain individual case 
files. Because maintaining individual case records is a necessary 
function for any IDSM, much of the burden would be incurred in the 
ordinary course of the IDSM's business. Nonetheless, staff retains its 
previous estimate that maintaining individual case files imposes an 
additional burden of 30 minutes per case.
    The amount of work required will depend on the number of dispute 
resolution proceedings undertaken in each IDSM. The 2005 audit report 
for the BBB AUTO LINE states that, during calendar year 2005, it 
handled 23,672 warranty disputes on behalf of 12 manufacturers 
(including General Motors, Honda, Ford, Saturn, Volkswagen, Isuzu, and 
Nissan).\15\ The BBB AUTO LINE audits from calendar years 2004 and 2003 
indicate warranty disputes totaling 19,793 and 21,859, respectively. 
Thus, the average number of disputes filed annually through BBB AUTO 
LINE over this three-year period is 21,775 disputes.\16\ According to 
the 2005 audit report for the BBB AUTO LINE, ten out of the twelve 
manufacturers reviewed include a ``prior resort'' requirement in their 
warranties, and thus are covered by the Informal Dispute Settlement 
Rule. Therefore, staff assumes that virtually all of the average 21,775 
disputes handled by the BBB fall within the Rule.
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    \15\ So far as staff is aware, all or virtually all of the IDSMs 
subject to the Rule are within the auto industry.
    \16\ Because the number of annual disputes filed has fluctuated, 
staff believes that taking the average number of disputes filed 
between 2003 and 2005 (the most recent available data) is the best 
way to project what will happen over the next three years of the OMB 
clearance for the Rule.
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    Apart from the BBB audit report, audit reports were submitted on 
behalf of the National Center for Dispute Settlement (NCDS), the 
mechanism that handles dispute resolutions for Toyota, Lexus, 
DaimlerChrysler, Mitsubishi, and Porsche, all of which are covered by 
the Rule. The 2005 audit of the NCDS operations show that 2,154 
disputes were filed in 2005. In addition, the NCDS audit shows that in 
2004 and 2003, it handled 2,246 and 3,722 disputes, respectively. Thus, 
the NCDS handled an average of 2,707 disputes each year from 2003 
through 2005.
    Based on the above figures, staff estimates that the average number 
of disputes handled annually by IDSMs covered by the Rule is 
approximately 24,482 (21,775 disputes handled by BBB AUTO LINE + 2,707 
disputes handled by NCDS). Accordingly, staff estimates the total 
annual recordkeeping burden attributable to the Rule to be 
approximately 12,241 hours (24,482 disputes x 30 minutes of burden / 60 
minutes).
    Reporting: The Rule requires IDSMs to update indexes, complete 
semi-annual statistical summaries, and submit an annual audit report to 
the FTC. Staff retains its previous estimate that covered entities 
spend approximately 10 minutes per case for these activities, resulting 
in a total annual burden of approximately 4,080 hours (24,482 disputes 
x 10 minutes of burden / 60 minutes).
    Disclosure: The Rule requires that information about the IDSM be 
disclosed in the written warranty. Any incremental costs to the 
warrantor of including this additional information in the warranty are 
negligible. The majority of disclosure burden would be borne by the 
IDSM, which is required to provide to interested consumers upon request 
copies of the various types of information the IDSM possesses, 
including annual audits. Consumers who have dealt with the IDSM also 
have a right to copies of their records. (IDSMs are permitted to charge 
for providing both types of information.)
    Based on discussions with representatives of the IDSMs, staff 
estimates that the burden imposed by the disclosure requirements is 
approximately 408 hours per year for the existing IDSMs to provide 
copies of this information. This estimate draws from the average number 
of consumers who file claims each year with the IDSMs (24,482) and the 
assumption that twenty percent of consumers individually request copies 
of the records pertaining to their disputes, or approximately 4,896 
consumers. Staff estimates that copying such records would require 
approximately 5 minutes per consumer, including a negligible number of 
requests for copies of the annual audit.\17\ Thus, the IDSMs currently 
operating under the Rule have an estimated total disclosure burden of 
408 hours (4,896 consumers x 5 minutes of burden / 60 minutes).
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    \17\ This estimate includes the additional amount of time 
required to copy the annual audit upon a consumer's request. 
However, because staff has determined that a very small minority of 
consumers request a copy of the annual audit, this estimate is 
likely an overstatement. In addition, at least a portion of case 
files are provided to consumers electronically, which further would 
reduce the paperwork burden borne by the IDSMs.
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    Accordingly, the total PRA-related annual hours burden attributed 
to the Rule is approximately 16,729 hours (12,241 hours for 
recordkeeping + 4,080 hours for reporting + 408 hours for disclosures).
    Total annual labor cost: $266,000, rounded to the nearest thousand.
    Recordkeeping: Staff assumes that IDSMs use skilled clerical or 
technical support staff to comply with the recordkeeping requirements 
contained in the Rule at an hourly rate of $16. Thus, the labor cost 
associated with the 12,241 annual burden hours for recordkeeping is 
approximately $195,856 (12,241 burden hours x $16 per hour).
    Reporting: Staff assumes that IDSMs also use skilled clerical 
support staff at an hourly rate of $16 to comply with the reporting 
requirements. Thus, the labor cost associated with the 4,080 annual 
burden hours for reporting is approximately $65,280 (4,080 burden hours 
x $16 per hour).
    Disclosure: Staff assumes that IDSMs use clerical support at an 
hourly rate of $12 to reproduce records and, therefore, the labor cost 
associated with the 408 annual burden hours for disclosures is 
approximately $4,896 (408 burden hours x $12 per hour).
    Accordingly, the combined total annual labor cost for PRA-related 
burden under the Rule is approximately $266,032 ($195,856 for 
recordkeeping + $65,280 for reporting + $4,896 for disclosures).
    Total annual capital or other non-labor costs: $329,000
    Total capital and start-up costs: The Rule imposes no appreciable 
current capital or start-up costs. The vast majority of warrantors have 
already developed systems to retain the records and provide the 
disclosures required by the Rule. Rule compliance does not require the 
use of any capital goods, other than ordinary office equipment, to

[[Page 44144]]

which providers would already have access. In addition, according to a 
representative of one IDSM, it has already developed systems to collect 
and retain information needed to produce the indexes and statistical 
summaries required by the Rule, and thus, estimated very low capital or 
start-up costs.
    The only additional cost imposed on IDSMs operating under the Rule 
that would not be incurred for other IDSMs is the annual audit 
requirement. According to representatives of each of the IDSMs 
currently operating under the Rule, the vast majority of costs 
associated with this requirement are the fees paid to the auditors and 
their staffs to perform the annual audit. Representatives of the IDSMs 
estimated a combined cost of $300,000 for both IDSMs currently 
operating under the Rule
    Other non-labor costs: $29,000 in copying costs. This total is 
based on estimated copying costs of 7 cents per page and several 
conservative assumptions. Staff estimates that the average dispute-
related file is 35 pages long and that a typical annual audit file is 
approximately 200 pages in length. As discussed above, staff assumes 
that twenty percent of consumers using an IDSM currently operating 
under the Rule (approximately 4,896 consumers) request copies of the 
records relating to their disputes.
    Staff also estimates that a very small minority of consumers 
request a copy of the annual audit. This assumption is based on (1) the 
number of consumer requests actually received by the IDSMs in the past; 
and (2) the fact that the IDSMs' annual audits are available online. 
For example, annual audits are available on the FTC's web site, where 
consumers may view and or print pages as needed, at no cost to the 
IDSM. In addition, the Better Business Bureau makes available on its 
web site the annual audit of the BBB AUTO LINE. Therefore, staff 
conservatively estimates that only five percent of consumers using an 
IDSM covered by the Rule (approximately 1,224 consumers) will request a 
copy of the IDSM's audit report.
    Thus, the total annual copying cost for dispute-related files is 
approximately $11,995 (35 pages per file x $.07 per page x 4,896 
consumer requests) and the total annual copying cost for annual audit 
reports is approximately $17,136 (200 pages per audit report x $.07 per 
page x 1,224 consumer requests). Accordingly, the total cost attributed 
to copying under the Rule is approximately $29,131 and the total non-
labor cost under the Rule is approximately $329,131 ($300,000 for 
auditor fees + $29,131 for copying costs).

William Blumenthal
General Counsel
[FR Doc. E7-15328 Filed 8-6-07: 8:45 am]
BILLING CODE 6750-01-S