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###### Federal Trade Commission

# AGENCY:

Federal Trade Commission.

# ACTION:

Notice.

# SUMMARY:

The Federal Trade Commission (“FTC” or “Commission”) is seeking public comments on its proposal to extend for an additional three years the current Paperwork Reduction Act (“PRA”) clearance for information collection requirements contained in the FTC's trade regulation rule entitled “Use of Prenotification Negative Option Plans” (“Negative Option Rule” or “Rule”). That clearance expires on January 31, 2024.

# DATES:

Comments must be filed by October 30, 2023.

# ADDRESSES:

                        Interested parties may file a comment online or on paper, by following the instructions in the Request for Comment part of the                         **SUPPLEMENTARY INFORMATION**                         section below. Write “Negative Option Rule; PRA Comment: 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.                    

# FOR FURTHER INFORMATION CONTACT:

Katherine Johnson, Attorney, Division of Enforcement, Federal Trade Commission, Room CC-9528, 600 Pennsylvania Avenue NW, Washington, DC 20580, (202) 326-2185.

# SUPPLEMENTARY INFORMATION:

*Title:*                     Use of Prenotification Negative Option Plans (Negative Option Rule or Rule), 16 CFR part 425.[1] 

*OMB Control Number:*                     3084-0104.                

*Type of Review:*                     Extension without change of currently approved collection.                

*Abstract:*                     The Negative Option Rule governs the operation of prenotification subscription plans. Under these types of plans—which can include things such as a book of the month club, food of the month club, or clothing items of the month club—a seller provides a consumer with automatic shipments of merchandise unless the consumer affirmatively notifies the seller they do not want the shipment. The Rule requires that a seller notify a member that they will automatically ship merchandise to the member and bill the member for the merchandise if the subscriber fails to expressly reject the merchandise beforehand within a prescribed time. The Rule protects consumers by: (1) requiring that promotional materials disclose the terms of membership clearly and conspicuously; and (2) establishing procedures for the administration of such “negative option” plans.                

*Affected Public:*                     Private Sector: Sellers of prenotification subscription plans.                

*Estimated Annual Burden Hours:*                     2,500 hours.                

*Estimated Annual Labor Costs:*                     $152,350 (solely related to labor costs).                

*Estimated Annual Non-Labor Costs:*                     $0 or                     *de minimis.*

As required by section 3506(c)(2)(A) of the PRA, 44 U.S.C. 3506(c)(2)(A), the FTC is providing this opportunity for public comment before requesting that OMB extend the existing clearance for the information collection requirements contained in the Rule.

## Burden Statement

*Estimated Annual Burden Hours:*                     2,500.                

                    Based on industry input, FTC staff estimates that approximately 25 clubs are subject to the disclosure requirements contained in the Rule.[2]                                          FTC staff further estimates that each club will require annually about 100 hours to comply with the Rule's disclosure requirements. This yields a total annual burden of 2,500 hours (25 clubs × 100 hours).                

*Estimated Annual Cost Burden:*                     $152,350 (solely related to labor costs).                

                    Based on recent data from the Bureau of Labor Statistics, the mean hourly wage for advertising and promotion managers is approximately $70.70 per hour;[3]                                          compensation for office and administrative support personnel is approximately $21.90 per hour.                    4      ( print page 59923)                        Assuming that managers perform the bulk of the work, and clerical personnel perform associated tasks (                    *e.g.,*                     placing advertisements and responding to inquiries about offerings or prices), the total cost to the industry for the Rule's information collection requirements would be approximately $152,350 [(80 hours managerial time × 25 clubs × $70.70 per hour) + (20 hours clerical time × 25 clubs × $21.90 per hour)].                

                    Because the Rule has been in effect since 1974, the vast majority of the negative option clubs have no current start-up costs. For new clubs entering the market, the costs associated with the Rule's disclosure requirements, beyond the additional labor costs discussed above, are                     *de minimis.*                     Negative option clubs already have access to the ordinary office equipment necessary to comply with the Rule. Similarly, the Rule imposes few, if any, printing and distribution costs. The required disclosures generally constitute only a small addition to the advertising for negative option plans. Because printing and distribution expenditures are incurred to market the product regardless of the Rule, adding the required disclosures results in marginal incremental expense.                

## Request for Comment

Pursuant to section 3506(c)(2)(A) of the PRA, the FTC invites comments on: (1) whether the disclosure and recordkeeping requirements are necessary, including whether the information will be practically useful; (2) the accuracy of our burden estimates, including whether the methodology and assumptions used are valid; (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.

                    For the FTC to consider a comment, we must receive it on or before October 30, 2023. Your comment, including your name and your state, will be placed on the public record of this proceeding, including the                     *https://www.regulations.gov*                     website.                

                    You can file a comment online or on paper. Due to heightened security screening, postal mail addressed to the Commission will be subject to delay. We encourage you to submit your comments online through the                     *https://www.regulations.gov*                     website.                

If you file your comment on paper, write “Negative Option Rule; PRA Comment: FTC File No. P072108” on your comment and on the envelope, and mail it to the following address: Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 (Annex J), Washington, DC 20580.

                    Because your comment will become publicly available at                     *https://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 (1) be filed in paper form, (2) be clearly labeled “Confidential,” and (3) 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 October 30, 2023. For information on the Commission's privacy policy, including routine uses permitted by the Privacy Act, see                     *https://www.ftc.gov/​site-information/​privacy-policy.*

Josephine Liu,

Assistant General Counsel for Legal Counsel.

# Footnotes

1.                             The Commission recently published a Notice of Proposed Rulemaking seeking comment on proposed amendments to the Commission's Negative Option Rule. 88 FR 24716 (Apr. 24, 2023). The present PRA Notice is not part of that proceeding and merely seeks comment on the existing burden estimates for the current Rule, which applies only to “prenotification” negative option plans.                    
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2.                             According to industry input, many firms previously covered have transitioned to a subscription-based approach. Thus, the current estimate is lower than past estimates. Additionally, industry sources have indicted in the past that a substantial portion of the existing clubs would make these disclosures absent the Rule because they help foster long-term relationships with consumers.                    
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3.                                                     *See*                         Occupational Employment and Wages—May 2022, Table 1, at                         *https://www.bls.gov/​news.release/​ocwage.t01.htm*                         (mean hourly wage rate for advertising and promotion managers).                    
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4.                                                     *See id.*                         (mean hourly wage rate for office and administrative support occupations).                    
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[FR Doc. 2023-18769 Filed 8-29-23; 8:45 am]

BILLING CODE 6750-01-P