[Federal Register Volume 64, Number 19 (Friday, January 29, 1999)]
[Notices]
[Pages 4655-4659]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-2174]
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FEDERAL TRADE COMMISSION
Submission for OMB Review; Comment Request
AGENCY: Federal Trade Commission.
ACTION: Notice.
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SUMMARY: The Federal Trade Commission (FTC) has submitted to the Office
of Management and Budget (OMB) for review and clearance under the
Paperwork Reduction Act information collection requirements associated
with five rules issued and enforced by the Commission. OMB had
provisionally extended the expiration for these clearances from
September 30, 1998 to March 31, 1999. The FTC proposes that OMB extend
its approval for the clearances an additional three years from the
prior expiration date of September 30, 1998.
DATES: Comments must be submitted on or before March 1, 1999.
ADDRESSES: Send written comments to Gary M. Greenfield, Attorney,
Office of the General Counsel, Federal Trade Commission, Washington,
D.C. 20580. All comments should be identified as responding to this
notice.
FOR FURTHER INFORMATION CONTACT: Requests for additional information
[[Page 4656]]
should be addressed to Gary M. Greenfield, Attorney, Office of the
General Counsel, Federal Trade Commission, Washington, D.C. 20580, 202-
326-2753.
SUPPLEMENTARY INFORMATION: The FTC has submitted a request to OMB to
extend the existing clearance to collect information associated with
the five rules described below. A Federal Register Notice with a 60-day
comment period soliciting comments on this collection of information
was published on November 16, 1998 (63 FR 63731). No comments were
received.
The relevant information collection requirements are as follows: 1.
The Funeral Rule, 16 C.F.R. Part 453 (OMB Control Number: 3084-0025),
ensures that consumers who are purchasing funeral goods and services
have accurate information about the terms and conditions (especially
prices) for such goods and services. The Rule requires that funeral
providers disclose this information to consumers and maintain records
to facilitate enforcement of the Rule.
Estimated annual hours burden: The estimated burden associated with
the collection of information required by the Rule is 22,300 hours for
recordkeeping and 57,900 hours for disclosures, for a total of 80,200
hours. This estimate is based on the number of funeral providers
(approximately 22,300), the number of funerals annually (approximately
2.3 million), and the time needed to fulfill the information collection
tasks required by the Rule.
Recordkeeping: The Rule requires that funeral providers retain
copies of price lists and statements of funeral goods and services
selected by consumers. Based on an average burden of one hour per
provider per year for this task, the total burden for the 22,300
providers is 22,300 hours. This estimate is unchanged from 1995.
Disclosure: The Rule requires that funeral providers (1) maintain
current price lists for funeral goods and services, (2) provide written
documentation of the funeral goods and services selected by consumers
making funeral arrangements, and (3) provide information about funeral
prices in response to telephone inquiries.
Maintaining current price lists requires that funeral providers
revise their price lists from time to time through the year to reflect
price changes. Based on an average burden of two hours per provider per
year for this task, the total burden for 22,300 providers is 44,600
hours. This estimate is unchanged from the FTC's previous estimate in
1995.
The original rulemaking record indicated that 87 percent of funeral
providers provided written documentation of funeral arrangements, even
in the absence of the Rule's requirements.\1\ Accordingly, the Rule
imposes a disclosure burden on 2,899 providers (13 percent of 22,300
providers). These providers are typically the smallest funeral homes.
The disclosure requirement can be satisfied through the use of a
standard form (an example of which is available to the industry in the
Compliance Guide to the Funeral Rule). Based on an estimation that
these smaller homes arrange, on average, approximately 20 funerals per
year, and that it would take each of them about 3 minutes to record
prices for each consumer on the standard form, FTC staff estimates that
the total burden associated with this disclosure requirement is one
hour per provider not already in compliance, for a total of 2,899
hours.
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\1\ The original version of the Funeral Rule required that
funeral providers retain a copy of and give each customer a separate
``Statement of Funeral Goods and Services Selected.'' The 1994
amendments to the Rule eliminated that requirement, allowing instead
for such disclosures to be incorporated into a written contract,
bill of sale, or other record of a transaction that providers use to
memorialize sales agreements with customers.
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The Funeral Rule also requires funeral providers to answer
telephone inquiries about the provider's offerings or prices. Industry
data indicate that only about nine percent of funeral purchasers make
telephone inquiries, with each call lasting an estimated three minutes.
Only about half of that additional time is attributable to disclosures
required solely by the Rule, since many providers would provide the
requested information even without the Rule. Thus, assuming that the
average purchaser makes two calls per funeral to compare prices, the
estimated burden is 10,350 hours [(\1/2\ x 3 minute call x 2 calls/
funeral) x 207,000 funerals (nine percent of 2,300,000 funerals/
year)]. This burden likely will decline over time as consumers
increasingly rely on the Internet for funeral price information.
In sum, the disclosure total is 57,849 hours (44,600 + 2,899 +
10,350), rounded to 57,900 hours. The total estimated hours burden
associated with the Rule for both recordkeeping and disclosure
requirements is 80,200 (Recordkeeping: 22,300 hours + Disclosure:
57,900 hours).
Estimated annual cost burden: $3,900,000, rounded ($3,560,000 in
labor costs and $340,300 in non-labor costs).
Labor costs: Labor costs are derived by applying appropriate hourly
cost figures to the burden hours described above. The hourly rates used
below are averages.
Clerical personnel, at an hourly rate of $10, can perform the
recordkeeping tasks required under the Rule. Based on the estimated
hour burden of 22,300 hours, the estimated cost burden for
recordkeeping is $223,000 ($10 x 22,300 hours).
The two hours required of each provider, on average, to update
price lists should consist of approximately 1.5 hours of managerial or
professional time, at $75 per hour, and .5 hours of clerical time, at
$10 per hour, for a total of $117.50 per provider. Thus, the estimated
total cost burden for maintaining price lists is $2,620,250 ($117.50
x 22,300 providers) (rounded to $2,620,000). The cost of providing
written documentation of the goods and services selected by the
consumer is 2,899 hours of managerial or professional time at
approximately $75 per hour, or $217,425 (rounded to $217,000). The cost
of responding to telephone inquiries about offerings or prices is
10,350 hours of managerial or professional time at $75, or $776,250
(rounded to $776,000).
The total labor cost of the three disclosure requirements imposed
by the Funeral Rule is $3,613,000 ($2,620,000 + $217,000 + $776,000).
The total labor cost for recordkeeping and disclosures is $3,836,000
($223,000 for recordkeeping + $3,613,000 for disclosures).
Capital or other non-labor costs: The Rule imposes minimal capital
costs and no current start-up costs. Most funeral homes already have
access, for other business purposes, to the ordinary office equipment
needed for compliance.
Compliance with the Rule however, does entail some expense to
funeral providers for printing and duplication of price lists. Based on
a rough estimate of 300 pages per year per provider for copies of the
various price lists, at 5 cents per page, and 22,300 providers, the
total cost burden associated with printing and copying is $334,500. In
addition, the estimated 2,899 providers not already providing written
documentation of funeral arrangements apart from the Rule will incur
additional printing and copying costs. Assuming that those providers
use the standard two-page form shown in the Compliance Guide, at 5
cents per page, at an average of 20 funerals per year, the added cost
burden would be $5,798, rounded to $5,800. Thus, estimated non-labor
costs are $340,300.
[[Page 4657]]
The cost of training associated with Rule compliance is generally
included in continuing education requirements for licensing and
voluntary certification programs. Moreover, the FTC has provided its
Compliance Guide to all funeral providers at no cost, and additional
copies are available on the FTC web site or by mail. Accordingly, the
Rule imposes no additional training costs.
2. The Used Car Rule, 16 CFR Part 455 (OMB Control Number: 3084-
0108), facilitates informed purchasing decisions by consumers by
requiring used car dealers to disclose information about warranty
coverage, if any, and the mechanical condition of used cars they offer
for sale.
Estimated annual hours burden: The FTC is requesting approval for
an estimated burden of 1,925,000 hours relating solely to disclosure
requirements.\2\ This estimate is based on the number of used car
dealers (approximately 80,000, according to industry sources \3\), the
number of used cars sold by dealers annually (approximately 30,000,000,
according to industry data), and the time needed to fulfill the
information collection tasks required by the Rule.\4\ The current
estimated annual burden reflects a decrease from the prior estimate,
attributable to a more accurate estimate of the number of used cars
sold by dealers, and recent industry input to more accurately reflect
the time it takes used car dealers to enter data on Buyers Guides.
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\2\ The Used Car Rule does not impose any recordkeeping
requirement.
\3\ Source: 1997 Used Car Market Report (``ADT Market Report''),
published by ADT Automotive, 435 Metroplex Drive, Nashville,
Tennessee 37211.
\4\ A relatively small number of dealers opt to contract with
outside companies to perform the various tasks associated with
complying with the Rule. Staff assumes that outside contractors
would require about the same amount of time and incur similar cost
as dealers to perform these tasks. Accordingly, the hours and cost
burden totals shown, while referring to ``dealers,'' incorporate the
time and cost borne by outside companies in performing the tasks
associated with the Rule.
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The Rule requires that used car dealers display a one-page, double-
sided Buyers Guide in the window of each used car they offer for
sale.The component tasks associated with this requirement include (1)
ordering and stocking Buyers Guide forms, (2) entering applicable data
on Buyers Guides, (3) posting the Buyers Guides on vehicles, and (4)
making any necessary revisions in Buyers Guides.
Dealers should need no more than an average of one hour per year to
obtain Buyers Guide forms, which are readily available from many
commercial printers or could be produced by an office word-processing
or desk-top publishing system. Based on a universe of 80,000 dealers,
the annual hours burden for producing or obtaining and stocking Buyers
Guides is 80,000 hours.
For used cars sold ``as is,'' copying vehicle-specific data from
dealer inventories to the Buyers Guide forms and checking off the ``no
warranty'' box may take up to two minutes per vehicle if done by hand,
and only seconds for those dealers who have automated the process.
Staff conservatively assumes that this task, on average, will require
1.5 minutes. For used cars sold under warranty, checking off the
warranty box and adding warranty information may take an additional one
minute, i.e., 2.5 minutes, Based on input from industry sources, staff
estimates that approximately 60% of used cars sold by dealers are sold
``as is,'' with the remainder sold under warranty. Thus, staff
estimates the time required to enter data for used cars sold without
warranty is 450,000 hours (30,000,000 x 60% x 1.5 minutes
60 minutes/hour) and 500,000 hours for used cars sold under warranty
(30,000,000 x 40% x 2.5 minutes 60 minutes/hour), for an
overall total of 950,000 hours.
Although there will be substantial variance in the time required to
post the Buyers Guides on each used car, FTC staff estimates that, on
average, dealers will spend 1.75 minutes per vehicle to match the
correct Buyers Guide to the vehicle and place it in or on the vehicle.
For the 30,000,000 vehicles sold, the burden associated with this task
is 875,000 hours. To the extent dealers are able to integrate this
process into other activities performed in their ordinary course of
business, this estimate likely overstates the actual burden.
If negotiations between buyer and seller over warranty coverage
produce a sale on terms other than those originally entered on the
Buyers Guide, the dealer must revise the Guide to reflect the actual
terms of sale. According to the rulemaking record, bargaining over
warranty coverage rarely occurs. Allowing for revision in 2% of sales,
at two minutes per revision, staff estimates that dealers will spend
20,000 hours annually revising Buyers Guides.
Estimated annual cost burden: $28,250,000, consisting of
$19,250,000 in labor costs and $9,000,000 in non-labor costs.
Labor costs: Labor costs are derived by applying appropriate hourly
cost figures to the burden hours described above. Staff has determined
that all of the tasks associated with ordering forms, entering data on
Buyers Guides, posting Buyers Guides on vehicles, and revising them as
needed are typically done by clerical or low-level administrative
personnel. Using a clerical cost rate of $10 per hour and an estimate
of 1,925,000 burden hours for disclosure requirements, the total labor
cost burden would be approximately $19,250,000.
Capital or other non-labor costs: The cost of the Buyers Guide form
itself is estimated to be 30 cents per form, so that forms for 30
million vehicles would cost dealers $9,000,000. In making this
estimate, staff conservatively assumes that all dealers will purchase
preprinted forms instead of producing them internally, although dealers
may produce them at minimal expense using currently office automation
technology. Capital and start-up costs associated with the Rule are de
minimis.
3. The Consumer Product Warranty Rule, 16 CFR Part 701 (OMB Control
Number: 3084-0111), prevents deception by providing consumers with
information to assess written warranty terms. The Rule requires that
written warranties disclose certain material facts regarding their
terms and conditions.
Estimated annual hours burden: In 1995, FTC staff estimated that
the required disclosures imposed an average annual burden of 8 hours on
each of approximately 4,241 warrantors of products. Because there have
been no changes to the Rule's requirements, staff has no reason to
believe that this estimate requires revision. Based on this assumption,
the total compliance burden relating to disclosures is approximately
34,000 hours (rounded from 33,928).5 Nonetheless, this
estimate likely overstates substantially the actual burden because most
warrantors would disclose the terms and conditions of their warranties
even in the absence of the Rule.
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\5\ The Consumer Product Warranty Rule imposes no recordkeeping
requirement.
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Estimated annual cost burden: $340,000, consisting solely of labor
costs.
Labor costs: The work required to comply with the Rule is
predominantly clerical. Based on an average hourly rate of $10 for
clerical employees and the total hours burden of 34,000 hours, the
annual labor cost is approximately $340,000.
Capital or other non-labor costs: The Rule imposes no appreciable
current capital or start-up costs. The vast majority of warrantors have
already modified their warranties to include the information required
by the Rule. Rule compliance does not require the use of any capital
goods other than ordinary
[[Page 4658]]
office equipment, which providers would already have available for
general business use.
4. The Pre-Sale Availability Rule, 16 C.F.R. Part 702 (OMB Control
Number: 3084-0112), ensures that consumers can make informed purchasing
decisions by requiring that the terms of written warranties for
consumer products be made available to consumers prior to purchase. The
Rule requires retailers to make warranty information available to
consumers and requires warrantors (i.e., manufacturers) to provide
retailers with the materials necessary to do so. The Rule also requires
catalog and door-to-door sellers to make warranty information
available.
Estimated annual hours burden: The FTC is seeking approval for an
estimated disclosure burden of 2,760,000 hours.\6\ This estimate is
based on the number of large and small retailers and manufacturers,
according to census data, and the estimated scope of the compliance
burden for businesses by type. FTC staff first calculated burden
estimates by type of business in the early 1980s. Staff believes that
estimates remain valid for manufacturers, and that subsequent
amendments to the Rule to allow more flexibility have reduced the
burden on retailers by approximately 50 percent.\7\ Approximately 6,552
large retailers and 422,100 small retailers spend an annual average of
26 hours and 6 hours, respectively, to comply with the Rule, for a
cumulative combined total of 2,702,952 hours for retailers.
Approximately 146 large manufacturers and 4,095 small manufacturers
spend an annual average of 52 hours and 12 hours, respectively, for a
cumulative total of 56,732 hours for manufacturers. Thus, the combined
cumulative total for retailers and manufacturers is 2,759,684 hours,
rounded to 2,760,000 hours.
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\6\ The Pre-Sale Availability Rule does not impose any
recordkeeping requirement.
\7\ To comply with Rule 702, sellers need only maintain specimen
copies of the warranties provided to them by manufacturers. The Rule
allows sellers substantial flexibility in how to maintain those
copies, since the Rule states only that the warranty must be made
readily available upon request. If the warrantor prints the warranty
on the product's package, for example, the retailer has no further
obligation since consumers can readily review the warranty by
looking at the package.
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Estimated annual cost burden: $27,600,000, consisting sole of labor
costs.
Labor costs: Most of Rule 702's disclosure requirements involve
simple clerical functions such as maintaining copies of the warranties
at the retail level and, at the manufacturer level, ensuring that
copies of warranties are provided to retailers. Assuming a clerical
labor cost rate of $10/hour and an estimate of 2,760,000 burden hours
for disclosures, the total annual labor cost burden is approximately
$27,600,000.
Capital or other non-labor costs: The capital or start-up costs
imposed by the Rule are 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 simply
filing warranties in binders and posting an inexpensive sign indicating
warranty availability.\8\ Manufacturer compliance entails providing
retailers with a copy of the warranties included with their products.
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\8\ Although some retailers may choose to display a more
elaborate or expensive sign, that is not required by the Rule.
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5. The Informal Dispute Settlement Procedure Rule, 16 C.F.R. Part
703 (OMB Control Number: 3084-0113), helps to ensure that consumers are
fully informed regarding informal dispute settlement procedures in
product warranties. The Rule imposes certain requirements when a
warrantor requires, as part of a written warranty, that consumers first
use an informal dispute settlement mechanism (IDSM) to seek resolution
of a warranty dispute before pursuing remedies in court. The Rule
requires that affected warrantors disclose certain information to
consumers. It also requires that warrantors, through IDSMs, retain (1)
individual records for each dispute, (2) indexes that categorize
disputes by product model and show the extent to which the warrantor
has abided by decisions of the resolution process, and (3) statistical
summaries that classify disputes according to various status and final
disposition categories. Affected entities must conduct an annual audit
of their dispute resolution procedures and report to the FTC.
Estimated annual hours burden: The FTC is requesting approval for
an estimated burden of 4,333 recordkeeping hours and 1,625 disclosure
hours, for a total burden estimate of approximately 6,000 hours. This
estimate is based on the number of warranty disputes handled by IDSMs
and the average time needed to fulfill the information collection tasks
required by the Rule.
Recordkeeping: Since maintenance of individual case records is
necessary in the ordinary course of business, the Rule imposes little
additional recordkeeping burden. FTC staff estimates that retaining
additional information that would not otherwise be kept adds a burden
of 30 minutes per case. Staff also estimates that IDSMs require an
additional 10 minutes per case for compilation of the indexes,
statistical summaries, and the annual audit required by the Rule,
resulting in a total recordkeeping requirement of 40 minutes per case.
Finally, staff estimates that the two IDSMs affected by the Rule
handle, combined, about 6,500 covered disputes annually. Thus, the
total recordkeeping burden associated with the Rule is approximately
4,333 hours.
Disclosure: The Rule requires that affected warrantors disclose
information about the dispute settlement mechanism in the written
warranty, and that IDSMs disclose certain information upon request. The
incremental cost of a warrantor's required disclosure is negligible.
IDSMs must provide certain information, such as their annual audits, to
anyone who requests it. In addition, on request, IDSMs must also
provide consumers who have a dispute before them with a copy of records
relating to their disputes. FTC staff estimates that the average hour
burden of copying and producing this information is approximately 15
minutes for each dispute handled by an IDSM. Based on an estimate of
6,500 disputes annually, the hour burden associated with copying and
providing these disclosures is 1,625 hours.
Estimateed annul cost burden: $281,000, consisting of $81,000 in
labor costs and $200,000 in non-labor costs.
Labor costs: Assuming that IDSMs would use skilled clerical
personnel or technical support staff, at an hourly rate of $15, to
compile and maintain the records required by the Rule the labor cost of
the 4,333 recordkeeping burden hours is approximately $64,995. Assuming
that IDSMs would use less-skilled labor, at an hourly rate of $10, to
reproduce records, the labor costs of the 1,625 hours disclosure burden
hours is approximately $16,250. The combined total labor cost for
recordkeeping and disclosures is $81,245, rounded to $81,000.
Capital or other non-labor 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 which
providers would already have access.
The only additional cost imposed on IDSMs operating under the Rule
that would not be incurred for other IDSMs is the annual audit
requirement. One of the two IDSMs currently operating
[[Page 4659]]
under the Rule estimates the total annual costs of this requirement to
be less than $100,000. Since there are two IDSMs operating under the
Rule, the total cost imposed by them is an estimated $200,000.\9\ This
total includes copying costs of roughly $20,000, which is based on
estimated copying costs of 5 cents per page and several conservative
assumptions or estimates. Staff estimates that the ``average'' dispute-
related file is about 25 pages long and that a typical annual audit
file is about 200 pages in length. For purposes of estimating copying
costs, staff conservatively assumes that every consumer complainant
requests a copy of the file relating to his or her dispute. Staff also
assumes that, for 1,000 of the estimated 6,500 disputes each year,
consumers request copies of warrantors' annual audit reports (although,
based on requests for audit reports made directly to the FTC, the
indications are that considerably less requests are actually made).
Thus, the estimated total annual copying costs for average-sized files
would be approximately $8,125 (25 pages/file x .05 x 6,500
requests) and $10,000 for copies of annual audits (200 pages/audit
report x .05 x 1,000 requests), rounded to a total of $20,000.
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\9\ The commenter did not break down this estimate by cost item.
Staff conservatively included the entire $100,000 in its estimate of
capital and other non-labor costs, even though some of this burden
is likely already accounted for as labor costs.
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Combined with estimated annual labor cost of $81,000, total
estimated annual cost burden is $281,000 ($200,000+$81,000).
John D. Graubert,
Acting General Counsel.
[FR Doc. 99-2174 Filed 1-28-99; 8:45 am]
BILLING CODE 6750-01-M
