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 (the Rule or Rule 703), which sets minimum standards for informal dispute settlement mechanisms (IDSM) established to resolve consumer warranty disputes. The purpose of the Rule is to carry out Congress's 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 prior 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 prior resort requirement.
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 mechanism's 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 of burden has increased from 7,841 hours in 2017 to 9,055 hours estimated in 2020. Although the Ruleâs information collection requirements have not changed since 2017, staff adjusted its previous estimates because the annual audits filed by the two IDSMs currently operating under the Rule indicate that, on average, more disputes were handled since the previous submission to OMB (10,727 disputes/year in 2017; 12,241 disputes/year in 2020). This factor results in an increased annual hours burden estimate for the IDSMs. Because the annual burden hours has increased, the associated labor costs have also increased, from the estimated $159,265 in 2017 to $209,595 in 2020.
The estimate of the total capital and non-labor costs has increased slightly from $312,759 in 2017 to $314,566 in 2020. This new estimate retains the previous estimate of $300,000 in capital and start-up costs, but increases the copying costs from $12,759 in 2017 to 14,566 in 2020. The increase is due primarily to a increase in the number of estimated disputes filed each year (from 2,145 in 2017 to 2,448 in 2020).
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.
Informal Dispute Settlement Procedures Rule - SS - 2020 - FINAL.pdf
Recordkeeping for disputes