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Federal Trade Commission Washingto , D.C UN ITED STATES OF AMERICA FEDERAL TRADE COMMISSION WASHINGTO , D.C. 20580 OFFICE OF TH E CHAIRWOMAN December 8, 2016 The Honorable David Vitter Chairman Committee on Small Business and Entrepreneurship United States Senate Washington, DC 20510 Dear Chairman Vitter: We submit this ninth annual report in accordance with Section 212(a)(6) of the amended Small Business Regulatory Enforcement Fairness Act (the "Act"). 1 This statute requires agencies to publish guides to assist small entities in complying with rules that significantly affect them. The Federal Trade Commission ("Commission" or "FTC") has a longstanding and effective business education program,2 and only a small fraction of our business education library is discussed in this report. From July 1, 2015 to July 1, 2016, the FTC issued no final rules that are subject to Section 212 of the Act.3 Over that time period, the Commission also certified to the Small Business Administration that certain other final regulations issued would not have a significant economic impact on a substantial number of small business entities. Nonetheless, the Commission has either made available or is preparing updated compliance materials for small businesses for several ofthese rulemakings, although not required to do so by the Act. Some examples are set out below: • Telemarketing Sales Rule ("TSR"), 16 C.F.R. § 310: Following a public comment period, the Commission amended the TSR to define and prohibit the use of certain payment methods in all telemarketing transactions; expand the scope ofthe advance fee ban for recovery services; and clarify certain provisions of the Rule. 80 Fed. Reg. 77,520 (Dec. 14, 2015). Some amendments were effective on February 12, 2016, with the others effective on June 13, 2016. The Commission updated its guidance "Complying with the Telemarketing Sales Rule" in June 2016 (enclosed). 1 5 U.S.C. § 601 note. 2 From FY2002-FY2015, the FTC's "Compliance Assistance" under the Act was rated an "A" by the Small Business Administration's National Ombudsman. We anticipate the same grade when the National Ombudsman submits its FY2016 Report for all agencies. 3 Section 212 requires agencies to publish a "small entity compliance guide" for any new rule for which an agency is required to prepare a final regulatory flexibility analysis under section 3(a) ofthe Regulatory Flexibility Act, which is codified at 5 U.S.C. § 604. The Honorable David Vitter - Page 2 • Automotive Fuel Ratings, Certification and Posting Rule ("Fuel Rating Rule"), 16 C.F.R. § 306: First issued in 1979, the Fuel Rating Rule enables consumers to buy gasoline with an appropriate octane rating and establishes standard procedures for determining, certifying, and posting octane ratings. On January 14, 2016, the Commission published final amendments requiring that fuel marketers rate and certify all ethanol blends with ethanol content ranging from above 10 percent to 83 percent and that retailers post labels with ethanol percentage disclosures and with the statement: "Use only in Flex-Fuel Vehicles/May Harm Other Engines." 81 Fed. Reg. 2,054. The amendments were effective on July 14, 2016. The Commission updated its guidance "Complying with the FTC Fuel Rating Rule" in October ( enclosed). • Consumer Warranty Rules, 16 C.F.R. §§ 701-703: On July 20, 2015, the Commission concluded its review ofthe Interpretations, Rules, and Guides under the Magnuson-Moss Warranty Act and announced it would keep the Rules and Guides in their present form (Rules at 16 CPR§§ 701-703; Guides at 16 C.F.R. § 239) while modifying the Interpretations (16 C.F.R. §§ 700.10, 700.11 (a)). See 80 Fed. Reg. 42,710 (July 20, 2015) (Final Rule); 76 Fed. Reg. 52,596 (Aug. 23 , 2011) (Rule Review; Request for Comments). The Commission revised Part 700.10 ofthe Interpretations to clarify that implied tying - warranty language that implies to a consumer that warranty coverage is conditioned on the use ofselect parts or service - is deceptive. It also revised Part 700.10 to state that, to the extent that the Warranty Act's service contract provisions apply to the insurance business, they are effective ifthey do not interfere with state laws regulating the business ofinsurance. Finally, the Commission also updated the citation format in the Interpretations and Rules. The Commission updated its guidance "Businessperson' s Guide to Federal Warranty Law" in May 2015 (enclosed). The Honorable David Vitter - Page 3 For many years, the FTC has had a highly effective program ofp roviding compliance assistance to small businesses.o4 We plan to continue to refine and improve these efforts. If you have any questions, please contact Christian S. White, the Deputy General Counsel for Ethics and Professional Responsibility and Small Business Coordinator at the Commission, at (202) 326-2476.o Respectfully,o /signed/ Edith Ramirez Chairwoman Enclosures cc: The Honorable Steve Chabot Chairman Committee on Small Business U.S. House of Representatives Washington, D.C. 20515 4 The Commission also considers the specific and unique circumstances of a case when enforcing business obligations. Section 223 of the Act requires that agencies establish policies to reduce or waive penalties forsmall entities in appropriate circumstances. In 1997, the Commission issued a small business leniency policy statement that describes factors that may result in a reduction or waiver of penalties. See 62 Fed. Reg. 16,809 (Apr. 8, 1997) (issuing policy); 62 Fed. Reg. 46,363 (Sept. 2, 1997) (responding to comment received). As such cases arise, the Commission considers these leniency factors whenever a civil penalty may be assessed against a small business. In addition, and beyond the Act's requirements, the Commission established corporate leniency policies forviolations of the Textile and Wool Rules, 67 Fed. Reg. 71,566 (Dec. 2, 2002), the Funeral Rule (through the Funeral Rule Offender Program), and the Franchise Rule (through the Franchise Rule Alternative Law Enforcement Program) that have helped in fostering a more collaborative regulatory environment for small entities. These policies have helped increase overall compliance with the rules while minimizing the burden on business of correcting certain minor or inadvertent errors that are not likely to injure consumers. U !TED STATES OF AMERICA FEDERAL TRADE COMMISSION WASH! GTON, D.C. 20580 December 8, 2016 The Honorable Steve Chabot Chairman Committee on Small Business U.S. House of Representatives Washington, DC 20515 Dear Chairman Chabot: We submit this ninth annual report in accordance with Section 212(a)(6) ofthe amended Small Business Regulatory Enforcement Fairness Act (the "Act"). 1 This statute requires agencies to publish guides to assist small entities in complying with rules that significantly affect them. The Federal Trade Commission ("Commission" or "FTC") has a longstanding and effective business education program,2 and only a small fraction of our business education library is discussed in this report. From July 1, 2015 to July 1, 2016, the FTC issued no final rules that are subject to Section 212 ofthe Act.3 Over that time period, the Commission also certified to the Small Business Administration that certain other final regulations issued would not have a significant economic impact on a substantial number of small business entities. Nonetheless, the Commission has either made available or is preparing updated compliance materials for small businesses for several of these rulemakings, although not required to do so by the Act. Some examples are set out below: • Telemarketing Sales Rule ("TSR"), 16 C.F.R. § 310: Following a public comment period, the Commission amended the TSR to define and prohibit the use of certain payment methods in all telemarketing transactions; expand the scope ofthe advance fee ban for recovery services; and clarify certain provisions of the Rule. 80 Fed. Reg. 77,520 (Dec. 14, 2015). Some amendments were effective on February 12, 2016, with the others effective on June 13, 2016. The Commission updated its guidance "Complying with the Telemarketing Sales Rule" in June 2016 (enclosed). 1 5 U.S.C. § 601 note. 2 From FY2002-FY2015, the FTC's "Compliance Assistance" under the Act was rated an "A" by the Small Business Administration's National Ombudsman. We anticipate the same grade when the National Ombudsman submits its FY2016 Report for all agencies. 3 Section 212 requires agencies to publish a "small entity compliance guide" for any new rule for which an agency is required to prepare a final regulatory flexibility analysis under section 3(a) ofthe Regulatory Flexibility Act, which is codified at 5 U.S.C. § 604. The Honorable Steve Chabot - Page 2 • Automotive Fuel Ratings, Certification and Posting Rule ("Fuel Rating Rule"), 16 C.F.R. § 306: First issued in 1979, the Fuel Rating Rule enables consumers to buy gasoline with an appropriate octane rating and establishes standard procedures for determining, certifying, and posting octane ratings. On January 14, 2016, the Commission published final amendments requiring that fuel marketers rate and certify all ethanol blends with ethanol content ranging from above 10 percent to 83 percent and that retailers post labels with ethanol percentage disclosures and with the statement: "Use only in Flex-Fuel Vehicles/May Harm Other Engines." 81 Fed. Reg. 2,054. The amendments were effective on July 14, 2016. The Commission updated its guidance "Complying with the FTC Fuel Rating Rule" in October ( enclosed). • Consumer Warranty Rules, 16 C.F.R. §§ 701-703: On July 20, 2015, the Commission concluded its review ofthe Interpretations, Rules, and Guides under the Magnuson-Moss Warranty Act and announced it would keep the Rules and Guides in their present form (Rules at 16 CFR §§ 701-703; Guides at 16 C.F.R. § 239) while modifying the Interpretations (16 C.F.R. §§ 700.10, 700.11 (a)). See 80 Fed. Reg. 42,710 (July 20, 2015) (Final Rule); 76 Fed.
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