Section 110(a)(2) of the Magnuson-Moss Warranty Act (15 U.S.C. Section 2301, et seq.) directed the Commission to prescribe rules setting forth the minimum requirements for any informal dispute settlement procedure that the warrantor requires the consumer to use before pursuing any legal action in court. On December 31, 1975, the Commission issued its Rule on Informal Dispute Settlement Procedures, 16 C.F.R. 703 (Âthe Rule or ÂRule 703Â), which sets minimum standards for informal dispute settlement mechanisms (ÂIDSMÂ) established to resolve consumer warranty disputes. The purpose of the Rule is to carry out CongressÂs intent to encourage the fair and expeditious handling of consumer disputes through the use of alternative dispute resolution methods.
Rule 703 applies only to those warrantors who (1) provide a written warranty, (2) on a consumer product, and (3) place a Âprior resort requirement in their warranty (i.e., require consumers to use a dispute resolution mechanism before exercising their legal remedies in court). Neither the Act nor Rule 703 requires warrantors to set up IDSMs. Furthermore, a warrantor is free to set up an IDSM that does not comply with Rule 703 as long as the warranty does not contain a Âprior resort requirement.Â
Rule 703 contains procedural standards that must be followed by every IDSM that is incorporated, through a prior resort clause, into the terms of a written consumer product warranty. These standards include requirements concerning the mechanismÂs structure, the qualifications of staff or decision makers, the mechanismÂs procedures for resolving disputes, recordkeeping, and annual audits.
There are no program changes. The estimated total annual hours burden has decreased to 8,318 hours in 2014 from the 13,000 hours estimated in 2011. Although the Rule's information collection requirements have not changed since 2011, staff adjusted its previous estimates because the annual audits filed by the two IDSMs currently operating under the Rule indicate that, on average, fewer disputes were handled since the previous submission to OMB (18,227 disputes/year in 2011; 11,514 disputes/year in 2014). This factor results in a decreased annual hours burden estimate for the IDSMs. Because the annual burden hours has decreased, the associated labor costs have also decreased, from the estimated $264,600 in 2011 to $161,220 in 2014.
The estimate of the total capital and non-labor costs has decreased slightly from $321,684 in 2007 to $313,707. This new estimate retains the previous estimate of $300,000 in capital and start-up costs, but decreases the copying costs from $21,684 in 2011 to $13,707 in 2014. The decrease is due primarily to a decrease in the number of estimated disputes filed each year (from 3,645 in 2011 to 2,303 in 2014).
On behalf of this Federal agency, I certify that the collection of information encompassed by this request complies with 5 CFR 1320.9 and the related provisions of 5 CFR 1320.8(b)(3).
The following is a summary of the topics, regarding the proposed collection of information, that the certification covers:
(i) Why the information is being collected;
(ii) Use of information;
(iii) Burden estimate;
(iv) Nature of response (voluntary, required for a benefit, or mandatory);
(v) Nature and extent of confidentiality; and
(vi) Need to display currently valid OMB control number;
If you are unable to certify compliance with any of these provisions, identify the item by leaving the box unchecked and explain the reason in the Supporting Statement.
IDSP Rule - SS - 2014 -FINAL.pdf
Recordkeeping for disputes