Agency Information Collection Activities; Proposed Collection; Comment Request

Published date19 March 2019
Citation84 FR 10072
Record Number2019-05081
SectionNotices
CourtFederal Trade Commission
Federal Register, Volume 84 Issue 53 (Tuesday, March 19, 2019)
[Federal Register Volume 84, Number 53 (Tuesday, March 19, 2019)]
                [Notices]
                [Pages 10072-10074]
                From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
                [FR Doc No: 2019-05081]
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                FEDERAL TRADE COMMISSION
                Agency Information Collection Activities; Proposed Collection;
                Comment Request
                AGENCY: Federal Trade Commission (FTC or Commission).
                ACTION: Notice.
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                SUMMARY: The FTC plans to ask the Office of Management and Budget
                (``OMB'') to extend for an additional three years the current Paperwork
                Reduction Act (``PRA'') clearance for information collection
                requirements contained in the Mail, internet, or Telephone Order
                Merchandise Rule (MITOR). That clearance expires on May 31, 2019.
                DATES: Comments must be received on or before May 20, 2019.
                ADDRESSES: Interested parties may file a comment online or on paper by
                following the instructions in the Request for Comments part of the
                SUPPLEMENTARY INFORMATION section below. Write ``Paperwork Reduction
                Act: FTC File No. P072108'' on your comment, and file your comment
                online at https://www.regulations.gov by following the instructions on
                the web-based form. If you prefer to file your comment on paper, mail
                your comment to the following address: Federal Trade Commission, Office
                of the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 (Annex J),
                Washington, DC 20580, or deliver your comment to the following address:
                Federal Trade Commission, Office of the Secretary, Constitution Center,
                400 7th Street SW, 5th Floor, Suite 5610 (Annex J), Washington, DC
                20024.
                FOR FURTHER INFORMATION CONTACT: Jock Chung, 202-326-2984, Attorney,
                Enforcement Division, Bureau of Consumer Protection, 600 Pennsylvania
                Avenue NW, Mail Drop CC-9528, Washington, DC 20580.
                SUPPLEMENTARY INFORMATION: Originally known as the Mail Order
                Merchandise Rule, the MITOR, 16 CFR part 435 was promulgated in 1975 in
                response to consumer complaints that many merchants were failing to
                ship merchandise ordered by mail on time, failing to ship at all, or
                failing to provide prompt refunds for unshipped merchandise. The
                Commission amended the Rule, effective on March 1, 1994, to include
                merchandise ordered by telephone, including by telefax or by computer
                through the use of a modem (e.g., internet sales), and renamed it the
                ``Mail or Telephone Order Merchandise Rule.'' In 2014, the Commission
                amended the Rule, effective December 8, 2014, to clarify that the Rule
                covers all internet merchandise orders and permits flexibility in
                making refunds and refund notices, including refund obligations for
                non-enumerated payments. 79 FR 55615 (Sept. 17, 2014).
                 Generally, the MITOR requires a merchant to: (1) Have a reasonable
                basis for any express or implied shipment representation made in
                soliciting the sale (if no express time period is promised, the implied
                shipment representation is 30 days); (2) notify the consumer and obtain
                the consumer's consent to any delay in shipment; and (3) make prompt
                and full refunds when the consumer exercises a cancellation option or
                the merchant is unable to meet the Rule's other requirements.\1\
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                 \1\ The MITOR does not impose a recordkeeping requirement per
                se. Title 16 CFR 435.1(d) provides, however, that in an action for
                noncompliance, the absence of records that establish that a
                respondent-seller uses systems and procedures to assure compliance
                will create a rebuttable presumption that the seller was not
                compliant. Merchants customarily keep records regarding their
                systems and procedures in the ordinary course of business, but their
                retention of these documents does not constitute a ``collection of
                information'' under OMB's regulations that implement the PRA. See 5
                CFR 1320.3(b)(2).
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                 Under the PRA, 44 U.S.C. 3501-3521, Federal agencies must get OMB
                approval for each collection of information they conduct or sponsor.
                ``Collection of information'' includes agency requests or requirements
                to submit reports, keep records, or provide information to a third
                party. 44 U.S.C. 3502(3); 5 CFR 1320.3(c). The FTC is seeking renewed
                clearance for the information collection requirements associated with
                the Commission's rules and regulations under the MITOR (OMB Control
                Number 3084-0106).
                Burden Estimates
                 Estimated total annual hours burden: 2,692,350 hours.
                 In its 2016 PRA-related Federal Register Notices \2\ and
                corresponding submission to OMB, FTC staff estimated that established
                companies each spend an average of 50 hours per year on compliance with
                the Rule, and that new industry entrants spend an average of 230 hours
                (an industry estimate) for compliance measures associated with start-
                up.\3\ Thus, the total estimated hours burden was calculated by
                multiplying the estimated number of established companies x 50 hours,
                multiplying the estimated number of new entrants x 230 hours, and
                adding the two products.
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                 \2\ 81 FR 2860 (Jan. 19, 2016); 81 FR 21549 (Apr. 12, 2016).
                 \3\ Most of the estimated start-up time relates to the
                development and installation of computer systems geared to more
                efficiently handle customer orders.
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                 No substantive provisions in the Rule have been amended or changed
                since staff's 2016 submission to OMB. Thus, the Rule's disclosure
                requirements remain the same. Moreover, the Commission received no
                public comments regarding the above-noted estimates; thus, staff will
                apply them to the current PRA burden analysis.
                 Since the prior submission to OMB, however, the number of
                businesses engaged in the sale of merchandise subject to the MITOR has
                increased. The most currently available data from the U.S. Census
                Bureau indicates that, between 2005 and 2016, the number of businesses
                subject to the MITOR grew from 15,924 to 37,206, or an average increase
                of 1,935 new businesses a year [(37,206 businesses in 2016-15,924
                businesses in 2005) / 11 years].\4\ Assuming this growth rate continues
                in 2019 through 2022, the average number of established businesses
                during the three-year period for which OMB
                [[Page 10073]]
                clearance is sought for the Rule would be 44,946: \5\
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                 \4\ Conceptually, this might understate the number of new
                entrants. Given the virtually unlimited diversity of retail
                establishments, it is very unlikely that there is a reliable
                external measure; nonetheless, as in the past, the Commission
                invites public comment that might better inform these estimates. For
                example, many online marketplace sellers that use Amazon.com Inc's
                marketplace to sell to customers have agreements which provide that
                Amazon handles packaging and shipping the products to customers.
                Whether Amazon.com is also the entity responsible for sending
                customers delay notices when necessary could affect which entity is
                subject to MITOR disclosure requirements, Amazon or the individual
                marketplace seller.
                 \5\ As noted above, the existing OMB clearance for the Rule
                expires on May 31, 2019, and the FTC is seeking to extend the
                clearance for three years.
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                 Established
                 Year: businesses New entrants
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                2019-20................................. 43,011 1,935
                2020-21................................. 44,946 1,935
                2021-22................................. 46,881 1,935
                Average:................................ 44,946 1,935
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                 In an average year during the three-year OMB clearance period,
                staff estimates that established businesses and new entrants will
                devote 2,692,350 hours to comply with the MITOR [(44,946 established
                businesses x 50 hours) + (1,935 new entrants x 230 hours) = 2,692,350].
                 The estimated PRA burden per merchant to comply with the MITOR is
                likely overstated because much of the estimated time burden for
                disclosure-related compliance would arguably be incurred even absent
                the Rule. Over the years, industry trade associations and individual
                witnesses have consistently taken the position that providing consumers
                with notice about the status of their orders fosters consumer loyalty
                and encourages repeat purchases, which are important to marketers'
                success. In recent years, the demands of the internet's online
                marketplace and its leading retailers such as Amazon.com, Walmart.com,
                and Ebay.com have driven many businesses to upgrade the information
                management systems to track and ship orders more effectively.\6\ These
                upgrades were primarily prompted by the industry's need to deal with
                growing consumer demand for merchandise that is timely shipped.
                Accordingly, most companies now provide updated order information of
                the kind required by the Rule in their ordinary course of business to
                meet consumer expectations regarding timely shipment, notification of
                delay, and prompt and full refunds.\7\
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                 \6\ Brian Baskin, ``Amazon's Free Shipping Pushes Small
                Retailers, Delivery Firms to Compete,'' The Wall Street Journal,
                Apr. 8, 2017, available at https://www.wsj.com/articles/amazons-free-shipping-pushes-small-retailers-delivery-firms-to-compete-1491649203.
                 \7\ Under the OMB regulation implementing the PRA, burden is
                defined to exclude any effort that would be expended regardless of
                any regulatory requirement. 5 CFR 1320.3(b)(2).
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                 Estimated labor costs: $63,862,542.
                 FTC staff derived labor costs by applying appropriate hourly cost
                figures to the burden hours described above. According to the most
                recent data available from the Bureau of Labor and Statistics,\8\ the
                mean hourly income for workers in sales and related occupations was
                $23.72/hour. The bulk of the burden of complying with the MITOR is
                borne by clerical personnel along with assistance from sales personnel.
                Staff believes that the mean hourly income for workers in sales and
                related occupations is an appropriate measure of a direct marketer's
                average labor cost to comply with the Rule. Thus, the total annual
                labor cost to new and established businesses for MITOR compliance
                during the three-year period for which OMB approval is sought would be
                approximately $63,862,542 (2,692,350 hours x $23.72/hr.). Relative to
                direct industry sales, this total is negligible.\9\
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                 \8\ See Table 1, National employment and wage data from the
                Occupational Employment Statistics survey by occupation, May 2017,
                at https://www.bls.gov/news.release/ocwage.t01.htm.
                 \9\ Considering that sales for ``electronic shopping and mail
                order houses'' grew from $295 billion in 2011 to $434 billion in
                2015 (according to ``Estimated Annual U.S. Retail Trade Sales--Total
                and E-commerce: 1998-2015,'' available at https://www.census.gov/data/tables/2015/econ/arts/annual-report.html, staff estimates the
                annual mail, internet, or telephone sales to consumers in the three-
                year period for which OMB clearance is sought will average $607
                billion. Thus, the projected average labor cost for MITOR compliance
                by existing and new businesses for that period would amount to 0.01%
                of sales.
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                 Estimated annual non-labor cost burden: $0 or minimal.
                 The applicable requirements impose minimal start-up costs, as
                businesses subject to the Rule generally have or obtain necessary
                equipment for other business purposes, i.e., inventory and order
                management, and customer relations. For the same reason, staff
                anticipates printing and copying costs to be minimal, especially given
                that mail, internet, and telephone order merchants have increasingly
                turned to electronic communications to notify consumers of delay and to
                provide cancellation options. Staff believes that the above
                requirements necessitate ongoing, regular training so that covered
                entities stay current and have a clear understanding of federal
                mandates, but that this would be a small portion of, and subsumed
                within, the ordinary training that employees receive apart from that
                associated with the information collected under the Rule.
                Request for Comments
                 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.
                 You can file a comment online or on paper. For the FTC to consider
                your comment, we must receive it on or before May 20, 2019. Write
                ``Paperwork Reduction Act: FTC File No. P072108'' on your comment.
                Postal mail addressed to the Commission is subject to delay due to
                heightened security screening. As a result, we encourage you to submit
                your comments online, or to send them to the Commission by courier or
                overnight service. To make sure that the Commission considers your
                online comment, you must file it through the https://www.regulations.gov website by following the instructions on the web-
                based form. Your comment--including your name and your state--will be
                placed on the public record of this proceeding, including, including
                the https://www.regulations.gov website. As a matter of discretion, the
                Commission tries to remove individuals' home contact information from
                comments before placing them on www.regulations.gov.
                 If you file your comment on paper, write ``Paperwork Reduction Act:
                FTC File No. P072108'' on your comment and on the envelope, and mail
                your comment to the following address: Federal Trade Commission, Office
                of the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 (Annex J),
                Washington, DC 20580, or deliver your
                [[Page 10074]]
                comment to the following address: Federal Trade Commission, Office of
                the Secretary, Constitution Center, 400 7th Street SW, 5th Floor, Suite
                5610 (Annex J), Washington, DC 20024. If possible, submit your paper
                comment to the Commission by courier or overnight service.
                 Because your comment will be placed on the publicly accessible FTC
                website at www.regulations.gov, you are solely responsible for making
                sure that your comment does not include any sensitive or confidential
                information. In particular, your comment should not include any
                sensitive personal information, such as your or anyone else's Social
                Security number; date of birth; driver's license number or other state
                identification number, or foreign country equivalent; passport number;
                financial account number; or credit or debit card number. You are also
                solely responsible for making sure that your comment does not include
                any sensitive health information, such as medical records or other
                individually identifiable health information. In addition, your comment
                should not include any ``trade secret or any commercial or financial
                information which . . . . is privileged or confidential''--as provided
                by Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule
                4.10(a)(2), 16 CFR 4.10(a)(2)--including in particular competitively
                sensitive information such as costs, sales statistics, inventories,
                formulas, patterns, devices, manufacturing processes, or customer
                names.
                 Comments containing material for which confidential treatment is
                requested must be filed in paper form, must be clearly labeled
                ``Confidential,'' and must comply with FTC Rule 4.9(c). In particular,
                the written request for confidential treatment that accompanies the
                comment must include the factual and legal basis for the request, and
                must identify the specific portions of the comment to be withheld from
                the public record. See FTC Rule 4.9(c). Your comment will be kept
                confidential only if the General Counsel grants your request in
                accordance with the law and the public interest. Once your comment has
                been posted publicly at www.regulations.gov, we cannot redact or remove
                your comment unless you submit a confidentiality request that meets the
                requirements for such treatment under FTC Rule 4.9(c), and the General
                Counsel grants that request.
                 The FTC Act and other laws that the Commission administers permit
                the collection of public comments to consider and use in this
                proceeding as appropriate. The Commission will consider all timely and
                responsive public comments that it receives on or before May 20, 2019.
                You can find more information, including routine uses permitted by the
                Privacy Act, in the Commission's privacy policy, at https://www.ftc.gov/site-information/privacy-policy.
                Heather Hippsley,
                Deputy General Counsel.
                [FR Doc. 2019-05081 Filed 3-18-19; 8:45 am]
                BILLING CODE 6750-01-P
                

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