[Federal Register Volume 75, Number 109 (Tuesday, June 8, 2010)]
[Notices]
[Pages 32470-32472]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-13691]
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FEDERAL TRADE COMMISSION
Agency Information Collection Activities; Submission for OMB
Review; Comment Request
AGENCY: Federal Trade Commission (``FTC'' or ``Commission'').
ACTION: Notice.
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SUMMARY: The FTC intends to conduct an exploratory study on consumer
susceptibility to fraudulent and deceptive marketing. This research
will be conducted to further the FTC's mission of protecting consumers
from unfair and deceptive marketing. Before gathering this information,
the FTC is seeking public comments on its proposed research. The
information collection requirements described below are being submitted
to the Office of Management and Budget (``OMB'') for review, as
required by the Paperwork Reduction Act (``PRA'').
DATES: Comments must be submitted on or before July 8, 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://public.commentworks.com/ftc/fraudexperiment2) and following the instructions on the web-based
form). Comments filed in paper form should refer to ``Fraud
Susceptibility Experiment, FTC File No. P095501,'' 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 H-135
(Annex J), 600 Pennsylvania Avenue, N.W., Washington, DC 20580, in the
manner detailed in the SUPPLEMENTARY INFORMATION section below.
All comments should additionally be submitted to: Office of
Information and Regulatory Affairs, Office of Management and Budget,
Attention: Desk Officer for the Federal Trade Commission. Comments
should be submitted via facsimile to (202) 395-5167 because U.S. postal
mail at the OMB is subject to delays due to heightened security
precautions.
FOR FURTHER INFORMATION CONTACT: Requests for additional information
should be addressed to Patrick McAlvanah, Economist, Bureau of
Economics, Federal Trade Commission, 600 Pennsylvania Avenue NW, Mail
Stop NJ-4136, Washington, DC 20580. Telephone: (202) 326-2974; e-mail:
([email protected]).
SUPPLEMENTARY INFORMATION:
Request for Comments:
Interested parties are invited to submit written comments
electronically or in paper form. Comments should refer to ``Fraud
Susceptibility Experiment, FTC File No. P095501'' 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 Website, at
(http://www.ftc.gov/os/publiccomments.shtm).
Because comments will be made public, they should not include any
sensitive personal information, such as an 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 any ``[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 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), 16 CFR 4.9(c).\1\
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\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).
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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 by using the following weblink: (https://public.commentworks.com/ftc/fraudexperiment2) (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://public.commentworks.com/ftc/fraudexperiment2).
If this Notice
[[Page 32471]]
appears at (http://www.regulations.gov/search/Regs/home.html#home), you
may also file an electronic comment through that website. The
Commission will consider all comments that regulations.gov forwards to
it.
A comment filed in paper form should include the ``Fraud
Susceptibility Experiment, FTC File No. P095501'' 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 H-135 (Annex J), 600 Pennsylvania Avenue, NW, Washington, DC
20580. 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.
The FTC Act and other laws 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
Website, to the extent practicable, at (http://www.ftc.gov/os/publiccomments.shtm). As a matter of discretion, the Commission 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.shtm).
On June 11, 2009, the FTC sought comment on the information
collection requirements associated with the proposed Fraud
Susceptibility Experiment study.\2\ No comments were received. Pursuant
to the OMB regulations, 5 CFR Part 1320, that implement the PRA, 44
U.S.C. 3501-3521, the Commission is providing this second opportunity
for public comment. All comments should be filed as prescribed in the
ADDRESSES section above, and must be received on or before July 8,
2010.
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\2\ 74 FR 27794.
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Background Information:
As part of its consumer protection mission, the FTC has brought
hundreds of cases targeting fraud, and has committed significant
resources to educational initiatives designed to protect consumers. The
Commission hosted a Fraud Forum\3\ on February 25-26, 2009 to examine
fraud in the market place. The Commission has also conducted telephone
surveys in 2003 and 2005 designed to measure the proportion of the U.S.
adult population that has fallen victim to various consumer frauds.\4\
Despite this, surprisingly little is known about what determines
consumers' susceptibility to fraud. For example, the 2003 and 2005 FTC
consumer fraud surveys found that education was not a significant
predictor of fraud victimization. Understanding when and why people are
vulnerable to fraud would better inform the FTC's substantial, ongoing
efforts to fight fraud through law enforcement and consumer education.
Additional insights into how and why people fall victim to fraud could
also help improve any future fraud surveys the Commission may
undertake. The study announced in this notice is a preliminary and
exploratory step toward facilitating those efforts. The study is not
intended to lead to enforcement actions; rather, study results may aid
the FTC's efforts to better target its enforcement actions and consumer
education initiatives, and improve future fraud surveys.
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\3\ Information on the Fraud Forum is available at: (http://www.ftc.gov/bcp/workshops/fraudforum/index.shtm).
\4\ The Commission has published two staff reports describing
the results of these surveys - Consumer Fraud in the United States:
An FTC Survey (published August 2004 and available at (http://www.ftc.gov/reports/consumerfraud/040805confraudrpt.pdf) and
Consumer Fraud in the United States: The Second FTC Survey
(published in October 2007 and available at (http://www.ftc.gov/opa/2007/10/fraud.pdf).
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Economic and psychological experiments have identified several
decision-making biases, such as impulsivity, over-confidence, over-
optimism, and loss aversion, that can cause inaccurate assessments of
the risks, costs, and benefits of various choices. FTC staff proposes
to conduct an economic laboratory experiment to study whether these
types of decision biases are related to consumer susceptibility to
fraudulent or deceptive marketing claims. Staff intends to study
consumers' assessment of potentially deceptive advertisements, in
addition to their assessment of non-deceptive advertisements. Staff
seeks to understand which characteristics of individuals and
advertisements predict consumers' ability to differentiate between
apparently fraudulent materials and apparently legitimate materials.
Pursuant to the OMB regulations, 5 CFR Part 1320, that implement
the PRA, 44 U.S.C. 3501-21, the FTC is providing this opportunity for
public comment while requesting that OMB approve the study. Under the
PRA, federal agencies must obtain OMB approval 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). All comments should be filed as
prescribed in the ADDRESSES section above, and must be received on or
before July 8, 2010.
A. Description of the collection of information and proposed use
The FTC proposes to conduct an experiment in a university's
economics laboratory with 250 subjects drawn from the campus
community.\5\ A sample of 250 persons enables random assignment of
subjects into different experimental conditions of sufficient size for
analytic power. The sample is not intended to be nationally
representative, but will still provide useful insights into consumer
susceptibility to fraud. In addition, five to ten of these subjects
will participate in a pretest. Pretest subjects will participate in an
in-person interview about the clarity and comprehensibility of the
instructions.
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\5\ Staff has contracted with a faculty member of George Mason
University who will recruit the study subjects and oversee and
administer the experiment.
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The study will gauge consumer attitudes towards legitimate and
potentially fraudulent or deceptive advertisements. Staff plans to ask
subjects to examine advertisements for fraudulent products and report
their opinion about the credibility of the advertisements. Staff also
plans to ask participants to rate the credibility of advertisements for
apparently legitimate products to gauge how participants distinguish
between apparently fraudulent product claims and legitimate product
claims. Staff plans to measure consumer knowledge, risk attitudes,
impatience, and skepticism using existing methods from economics and
psychology research. Staff intends to measure consumer knowledge using
consumer literacy, financial literacy, and numeracy questions\6\ in
order to test subjects' marketplace understanding and sophistication.
Staff seeks to determine if people with such knowledge deem fraudulent
advertisements to be less credible than legitimate advertisements.
Staff plans to measure subjects' risk attitudes through
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a series of choices between smaller certain amounts of money or larger
risky amounts.\7\ Staff intends to describe the product to some
subjects as creating benefits, while presenting to other subjects
nearly identical information depicted as a reduction in harm. Staff
intends to then test whether risk-averse and loss-averse subjects are
particularly susceptible to fraudulent claims framed as opportunities
to escape losses.\8\ Staff plans to measure subjects' impatience
through a series of choices between smaller monetary amounts received
sooner or larger amounts but received later.\9\ Staff would then test
to see if impatient subjects are more susceptible to fraudulent claims.
Staff also plans to elicit measures of optimism \10\ and skepticism
\11\ to determine their roles in deeming advertisements, both of
fraudulent and legitimate products, as credible. In addition, staff
intends to collect demographic and background information from the
surveyed subjects. The FTC has contracted with the faculty of a
university-run experimental economics laboratory to locate and recruit
subjects and conduct the experiments.
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\6\ Staff plans to use financial literacy and numeracy measures
such as in James Banks and Zoe Oldfield, Understanding Pensions:
Cognitive Function, Numerical Ability and Retirement Saving, Fiscal
Studies, 2007, 28 (2).
\7\ Staff intends to use standard risk aversion measurement
methodologies akin to those in Charles Holt and Susan Laury, Risk
Aversion and Incentive Effects, American Economic Review, December
2002, 1644-1655.
\8\ Several academic articles report that people are more
willing to take identical risks over monetary gambles if the risk is
presented as an opportunity to escape losses rather than as a chance
to gain. Our ``framing'' methodologies emulate those in Amos Tversky
and Daniel Kahneman, The Framing of Decisions and the Psychology of
Choice, Science, Vol. 211, No. 4481 (Jan. 30, 1981), 453-458.
\9\ Staff intends to use methodology similar to that in Stephan
Meier and Charles Sprenger, Present-Biased Preferences and Credit
Card Borrowing, American Economic Journal: Applied Economics 2010,
2:1, 193-210.
\10\ Staff plans to use standard questions similar to those in
Manju Puri and David Robinson, Optimism and Economic Choice, Journal
of Financial Economics, 2007, Vol. 86, 71-99.
\11\ Staff plans to use the scale developed in Carl Obermiller
and Eric Spangenberg, Development of a Scale to Measure Consumer
Skepticism toward Advertising, Journal of Consumer Psychology, Vol.
7, No. 2, 1998, 159-186.
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Staff will pre-test the experimental procedures with up to ten
subjects to ensure that the instructions provided to participants are
clear and comprehensible, and that the experimental procedures are
workable. Pre-test subjects will be drawn from the same university
subject pool as the experiment's subjects.
B. Estimated Hours Burden
The FTC plans to seek information from up to 250 respondents for
approximately 90 minutes each. Allowing for pre-testing of the
instructions on as many as 10 respondents, at an additional 30 minutes
apiece, cumulative burden, inclusive of the pre-testing, will total
approximately 380 hours.
C. Estimated Costs Burden
The cost per respondent should be negligible. Participation will
not require start-up, capital, or labor expenditures by respondents.
The above-noted contractor will recruit the student and community
member subjects to participate in this study; subjects will be asked to
respond to an initial recruitment email to participate voluntarily.
Staff will compensate all subjects for their participation in the 90-
minute study. Subjects will receive approximately $8 as a show-up fee;
in addition, they will have the opportunity to earn more during the
course of the study based upon their responses to various questions.
Staff expects that subjects will earn an average of $30 each for their
participation in the 90 minute study, and that most subjects will earn
between $20 and $40.
David C. Shonka
Acting General Counsel
[FR Doc. 2010-13691 Filed 6-7-10; 8:45 am]
BILLING CODE 6750-01-S