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###### Federal Trade Commission

# AGENCY:

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

# ACTION:

Notice.

# SUMMARY:

                        The FTC intends to conduct two exploratory studies 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. This notice seeks comments on the Fraud Susceptibility Internet Panel Study, one of the two studies. The Commission is also seeking comments on the other study in a separate                         **Federal Register**                         notice. Comments will be considered before the FTC submits a request for Office of Management and Budget (OMB) review under the Paperwork Reduction Act (PRA).                    

# DATES:

Comments must be submitted on or before August 10, 2009.

# ADDRESSES:

                        Interested parties are invited to submit written comments electronically or in paper form. Comments should refer to “Fraud Susceptibility Internet Panel Study, FTC File No. P095500” 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

                        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://secure.commentworks.com/​ftc-fraudinternetpanel*) (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://secure.commentworks.com/​ftc-fraudinternetpanel*). If this Notice appears at (                        *http://www.regulations.gov/​search/​index.jsp*), you may also file an electronic comment through that website. The Commission will consider all comments that regulations.gov forwards to it. You may also visit the FTC Website at                         *http://www.ftc.gov*                         to read the Notice and the news release describing it.                    

A comment filed in paper form should include the reference Fraud Susceptibility Internet Panel Study, FTC File No. P095500” 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*).                    

# FOR FURTHER INFORMATION CONTACT:

                        Requests for additional information should be addressed to Keith B. Anderson, Economist, Bureau of Economics, Federal Trade Commission, 600 Pennsylvania Avenue, NW, Mail Stop NJ-4136, Washington, DC 20580. Telephone: (202) 326-3428; e-mail:                         *fraudinternetpanel@ftc.gov*.                    

# SUPPLEMENTARY INFORMATION:

      ( print page 27797)    

## I. Background

                    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 from fraud. The Commission hosted a Fraud Forum2                     on February 25-26, 2009 to examine fraud in the market place. The Commission 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.3                     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. Any 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 being 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.                

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. In the study announced in this notice, FTC staff proposes to conduct a survey using an Internet survey protocol to examine whether susceptibility to consumer fraud is related to these types of decision biases. Study results also might shed light on whether consumers with certain behavioral traits are more or less likely to be skeptical about advertisements and whether there is a relationship between ad skepticism and the likelihood of having been a victim of fraud.

## II. Paperwork Reduction Act

As required by Section 3506(c)(2)(A) of the PRA, 44 U.S.C. 3501-21, the FTC is providing this opportunity for public comment before 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).

                    Specifically, the FTC invites comments on: (1) whether the proposed collection of information is necessary for the proper performance of the functions of the FTC, including whether the information will have practical utility; (2) the accuracy of the FTC’s estimate of the burden of the proposed collection of information; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of collecting information on those who 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. All comments should be filed as prescribed in the                     **ADDRESSES**                     section above, and must be received on or before August 10, 2009.                

### A. Description of the Collection of Information and Proposed Use

                    The FTC proposes to conduct a survey which will include approximately 5,000 interviews with individuals representing a large spectrum of the U.S. adult population. The survey will be conducted over the Internet, and participants will be drawn from an Internet survey panel maintained by a commercial survey firm that operates such panels. While the sample will not be nationally representative, it will still provide useful insights into consumer susceptibility to fraud.4

                    The study will examine whether participants have been the victim of certain forms of consumer fraud in the recent past. In addition, staff may attempt to measure consumer skepticism about advertisements, as well as consumer knowledge, risk attitudes, and impulsivity using existing methods from economics and psychological research. Staff may measure consumer knowledge using consumer literacy and financial literacy surveys 5                     in order to test subjects’ marketplace understanding and sophistication. Staff seeks to determine if the presence of such knowledge and behavioral characteristics affects the likelihood a person will have been a victim of fraud.                

                    The study will measure subjects’ risk attitudes through a series of choices between smaller certain amounts of money and larger risky amounts.6                     The study’s design may describe the product to some subjects as creating benefits, while presenting to other subjects nearly identical information depicted as a reduction in harm. Staff would then test whether fraud victims tend to be less likely to be risk-averse and/or loss-averse than non-victims. Staff also may seek to determine whether risk-averse and/or loss-averse subjects are particularly susceptible to fraudulent claims framed as opportunities to escape losses.7                     The study may measure subjects’ impulsivity through a series of choices between smaller monetary amounts received sooner and larger amounts received later.8                     Staff then would test to see if impulsive subjects are more likely to have been victims of fraud and/or are more susceptible to fraudulent claims. The study also may measure participants’ optimism 9                     and                           ( print page 27798)                        skepticism 10                     to determine how these characteristics affect the likelihood that someone becomes a victim of consumer fraud. In addition, staff anticipates collecting demographic information from the surveyed subjects.                

### B. Estimated Burden Hours

The FTC plans to seek information from approximately 5,000 respondents using a questionnaire that should take no more than 30 minutes to complete. Prior to that, a pre-test of up to 100 participants will be conducted. Allowing for an extra two minutes for questions unique to the pretest, the pretest should total no more than 32 minutes to complete. Accordingly, the information collection burden of the Internet Panel study should total no more than 2,553 hours. Finally, the cost per respondent should be negligible. Participants will be compensated for their participation in the study using the contractor’s standard method of rewarding members of its Internet panel for survey participation. Participation is voluntary and will not require start-up, capital, or labor expenditures by respondents.

By direction of the Commission.

Donald S. Clark,

Secretary

# 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).                        
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2.                             Information on the Fraud Forum is available at: (                        *http://www.ftc.gov/​bcp/​workshops/​fraudforum/​index.shtm*).                    
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3.                             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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4.                             The FTC recognizes, of course, that a sample drawn from an Internet panel does not represent a random sample of the U.S. population. However, the purpose of this study is to compare the experiences and attitudes of people with different characteristics rather than to estimate the percentage or number of U.S. consumers who have particular characteristics or experiences. As such, using an Internet panel should not pose significant problems.                    
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5.                                                      *See*                         Annamaria Lusardi,                         *Financial Literacy: An Essential Tool for Informed Consumer Choice?*, Working Paper, Joint Center for Housing Studies, Harvard University (2008), for examples of financial literacy questions similar to those the FTC is considering.                    
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6.                             Staff anticipates using 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. Some changes may be made to the questions and question sequence since participants in this study will not receive actual cash payments reflecting the results of their decisions.                    
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7.                             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 may 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.                    
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8.                             Staff anticipates using methodology similar to that in Stephan Meier and Charles Sprenger,                         *Impatience and Credit Behavior: Evidence from a Field Experiment*, Working Papers 07-3, Federal Reserve Bank of Boston (2007).                    
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9.                             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.                    
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10.                             Staff may 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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[FR Doc. E9-13643 Filed 6-10-09: 8:45 am]

[BILLING CODE 6750-01-S]