2010-25476. Agency Information Collection Activities; Proposed Collection; Comment Request; Extension

AGENCY:

Federal Trade Commission (“FTC” or “Commission”).

ACTION:

Notice.

SUMMARY:

The information collection requirements described below will be submitted to the Office of Management and Budget (“OMB”) for review, as required by the Paperwork Reduction Act (“PRA”). The FTC is seeking public comments on its proposal to extend through February 28, 2014, the current OMB clearance for information collection requirements contained in its Used Motor Vehicle Trade Regulation Rule (“Used Car Rule” or “Rule”). That clearance expires on February 28, 2011.

DATES:

Comments must be filed by December 13, 2010.

ADDRESSES:

Interested parties are invited to submit written comments electronically or in paper form by following the instructions in the Request for Comments part of the SUPPLEMENTARY INFORMATION section below. Comments in electronic form should be submitted by using the following weblink: https://ftcpublic.commentworks.com/​ftc/​usedcarrulepra (and following the instructions on the web-based form). Comments filed in paper form should be mailed or delivered to the following address: Federal Trade Commission, Office of the Secretary, Room H-135 (Annex J), 600 Pennsylvania Avenue, NW., Washington, DC 20580, in the manner detailed in the SUPPLEMENTARY INFORMATION section below.

FOR FURTHER INFORMATION CONTACT:

Requests for additional information should be addressed to John C. Hallerud, Attorney, Midwest Region, Federal Trade Commission, 55 West Monroe, Suite 1825, Chicago, Illinois 60603, [phone].

SUPPLEMENTARY INFORMATION:

The Used Car Rule facilitates informed purchasing decisions by requiring used car dealers to disclose information about warranty coverage, if any, and the mechanical condition of used cars that they offer for sale. The Rule requires that used car dealers display a form called a “Buyers Guide” on each used car offered for sale that, among other things, discloses information about warranty coverage.

Request for Comments

Under the Paperwork Reduction Act (“PRA”), 44 U.S.C. 3501-3521, Federal agencies must obtain approval from OMB for each collection of information they conduct or sponsor. “Collection of information” means agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. 44 U.S.C. 3502(3); 5 CFR 1320.3(c). As required by section 3506(c)(2)(A) of the PRA, the FTC is providing this opportunity for public comment before requesting that OMB extend the existing paperwork clearance for the regulations noted herein.

The FTC invites comments on: (1) Whether the required collection of information is necessary for the proper performance of the functions of the agency, including whether the information has practical utility; (2) the accuracy of the agency's estimate of the burden of the required 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.

Comments should refer to “Used Car Rule: FTC File No. P067609” to facilitate the organization of comments. Please note that your comment—including your name and your state—will be placed on the public record of this proceeding, including on the publicly accessible FTC Web site, at http://www.ftc.gov/​os/​publiccomments.shtm.

Because comments will be made public, they should not include any sensitive personal information, such as any individual'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. Comments also should not include any sensitive health information, such as medical records or other individually identifiable health information. In addition, comments should not include “[t]rade secret or any commercial or financial information which is obtained from any person and which is privileged or confidential” as provided in Section 6(f) of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2). Comments containing matter 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).^[1]

Because paper mail addressed to the FTC is subject to delay due to heightened security screening, please consider submitting your comments in electronic form. Comments filed in electronic form should be submitted using the following weblink https://ftcpublic.commentworks.com/​ftc/​usedcarrulepra 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://ftcpublic.commentworks.com/​ftc/​usedcarrulepra. If this Notice appears at http://www.regulations.gov/​search/​index.jsp,, 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 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, whether filed in paper or electronic form. Comments received will be available to the public on the FTC Web site, to the extent practicable, at http://www.ftc.gov/​os/​publiccomments.shtm. 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.shtm.

Burden statement

Estimated total annual hours burden: 1,974,589 hours.

The Rule has no recordkeeping requirements. The estimated burden relating solely to disclosure requirements is 1,974,589 hours. As explained in more detail below, this estimate is based on the number of used car dealers (53,735 ^[2] ), the number of used cars sold by dealers annually (approximately 24,531,374 ^[3] ), and the time needed to fulfill the information collection tasks required by the Rule.^[4]

The Rule requires that used car dealers display a one-page, double-sided Buyers Guide on each used car that they offer for sale. The component tasks associated with the Rule's required display of Buyers Guides include: (1) Ordering and stocking Buyers Guides; (2) entering data on Buyers Guides; (3) displaying the Buyers Guides on vehicles; (4) revising Buyers Guides as necessary; and (5) complying with the Rule's requirements for sales conducted in Spanish.

1. Ordering and Stocking Buyers Guides: Dealers should need no more than an average of two hours per year to obtain Buyers Guides, which are readily available from many commercial printers or can be produced by an office word-processing or desk-top publishing system.^[5] Based on a population of 53,735 dealers, the annual hours burden for producing or obtaining and stocking Buyers Guides is 107,470 hours.

2. Entering Data on Buyers Guides: The amount of time required to enter applicable data on Buyers Guides may vary substantially, depending on whether a dealer has automated the process. For used cars sold “as is,” copying vehicle-specific data from dealer inventories to Buyers Guides and checking the “No Warranty” box may take two to three minutes per vehicle if done by hand, and only seconds for those dealers who have automated the process or use pre-printed forms. Staff estimates that this task will require an average of two minutes per Buyers Guide. Similarly, for used cars sold under warranty, the time required to check the “Warranty” box and to add warranty information, such as the additional information required in the Percentage of Labor/Parts and the Systems Covered/Duration sections of the Buyers Guide, will depend on whether the dealer uses a manual or automated process or Buyers Guides that are pre-printed with the dealer's standard warranty terms. Staff estimates that these tasks will take an average of one additional minute; i.e., cumulatively, an average total time of three minutes for each used car sold under warranty.

Staff estimates that approximately fifty percent of used cars sold by dealers are sold “as is,” with the other half sold under warranty. Therefore, staff estimates that the overall time required to enter data on Buyers Guides consists of 408,856 hours for used cars sold without a warranty (24,531,374 vehicles × 50% × 2 minutes per vehicle) and 613,284 hours for used cars sold under warranty (24,531,374 vehicles × 50% × 3 minutes per vehicle) for a cumulative estimated total of 1,022,140 hours.

3. Displaying Buyers Guides on Vehicles: Although the time required to display the Buyers Guides on each used car may vary substantially, FTC staff estimates that dealers will spend an average of 1.75 minutes per vehicle to match the correct Buyers Guide to the vehicle and to display it on the vehicle. The estimated burden associated with this task is approximately 715,498 hours for the 24,531,374 vehicles sold in 2009 (24,531,374 vehicles × 1.75 minutes per vehicle).

4. Revising Buyers Guides as Necessary: If negotiations between the 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 Buyers Guide to reflect the actual terms of sale. According to the original rulemaking record, bargaining over warranty coverage rarely occurs. Staff notes that consumers often do not need to negotiate over warranty coverage because they can find vehicles that are offered with the desired warranty coverage online or in other ways before ever contacting a dealer. Accordingly, staff assumes that the Buyers Guide will be revised in no more than two percent of sales, with an average time of two minutes per revision. Therefore, staff estimates that dealers annually will spend approximately 16,354 hours revising Buyers Guides (24,531,374 vehicles × 2% × 2 minutes per vehicle).

5. Spanish Language Sales: The Rule requires that contract disclosures be made in Spanish if a sale is conducted in Spanish.^[6] The Rule permits displaying both an English and a Spanish language Buyers Guide to comply with this requirement.^[7] Many dealers with large numbers of Spanish-speaking customers likely will post both English and Spanish Buyers Guides to avoid potential compliance violations.

Calculations from United States Census Bureau surveys indicate that approximately 6.5 percent of the United States population speaks Spanish at home, without also speaking fluent English.^[8] Staff therefore projects that approximately 6.5 percent of used car sales will be conducted in Spanish. Dealers will incur the additional burden of completing and displaying a second Buyers Guide in 6.5 percent of sales assuming that dealers choose to comply with the Rule by posting both English and Spanish Buyers Guides. The annual burden hours associated with completing and posting Buyers Guides is 1,737,638 hours (1,022,140 hours for entering data on Buyers Guides plus 715,498 hours for displaying Buyers Guides). Therefore, staff estimates that the additional burden caused by the Rule's requirement that dealers display Spanish language Buyers Guides when conducting sales in Spanish is 112,947 hours (1,737,638 hours × 6.5%). The other components of the annual hours burden, i.e., purchasing Buyers Guides and revising them for changes in warranty coverage, remain unchanged.

Estimated annual cost burden: $26,301,525 in labor costs and $4,906,275 in non-labor costs

1. 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, including the corresponding tasks associated with Spanish Buyers Guides, are typically done by clerical or low-level administrative personnel. Using a clerical cost rate of $13.32 per hour ^[9] and an estimated burden of 1,974,589 hours for disclosure requirements, the total labor cost burden would be approximately $26,301,525.

2. Capital or other non-labor costs: Although the cost of Buyers Guides can vary considerably, based on industry input staff estimates that the average cost of each Buyers Guide is twenty cents. The estimated cost of Buyers Guides for the 24,531,374 used cars sold by dealers in 2009 is approximately $4,906,275. 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 current office automation technology. Capital and start-up costs associated with the Rule are minimal.

Christian S. White,

Acting General Counsel.

Footnotes

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 FTC Rule 4.9(c), 16 CFR 4.9(c).

2.  CNW Marketing Research, Inc. As of July 2010, CNW lists 15,631 new vehicle franchised outlets with used car operations and 38,104 independent used car outlets, for a total of 53,735 used car dealers.

3.  Id. This figure reflects total used car sales by franchised and independent dealers in 2009, the most recent complete annual figures available.

4.  Some dealers opt to contract with outside contractors 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 hour 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. In addition, the time estimates that follow repeat those that the FTC published in the 2007 PRA clearance renewal-related Federal Register notices (72 FR 46487 (Aug. 20, 2007); 72 FR 71911-71912 (Dec. 19, 2007)) without receiving public comment. Absent prospective specific industry estimates to the contrary, staff will continue to apply these estimates, which staff believes are reasonable.

5.  Buyers Guides are also available online from the FTC's Web site, www.ftc.gov,, as links to A Dealer's Guide to the Used Car Rule at http://www.ftc.gov/​bcp/​edu/​pubs/​business/​autos/​bus13.shtm.

6.  16 CFR 455.5.

7.  Id.

8.  U.S. Census Bureau, Table S1601. Language Spoken at Home. 2008 American Community Survey 1-Year Estimates, available at: http://factfinder.census.gov/​servlet/​STTable?​_​bm=​y&​-qr_​name=​ACS_​2008_​1YR_​G00_​S1601&​-geo_​id=​01000US&​-ds_​name=​ACS_​2008_​1YR_​G00_​&​-_​lang=​en&​-redoLog=​false&​-CONTEXT=​st. The table indicates that 12.2% of the United States population 5 years or older speaks Spanish or Spanish Creole in the home and 46.7% of these in-home Spanish speakers speak English less than “very well.”

9.  The hourly rate is based on Bureau of Labor Statistics estimate of the mean hourly wage for office clerks, general, No. 43-9061. Occupational Employment and Wages, May 2009, available at http://www.bls.gov/​oes/​current/​oes439061.htm#nat.