Fur SS - 2012 - FINAL_mtd

Supporting Statement for Information Collection
Provisions of Rules and Regulations Under the
Fur Products Labeling Act
16 C.F.R. § 301
(OMB Control # 3084-0099)
1.

Necessity for Collecting the Information

The purpose of the Fur Products Labeling Act (“Fur Act” or “Act”), 15 U.S.C. § 69 et
seq., and its implementing Fur Act Rules and Regulations, 16 C.F.R. § 301 (“Fur Rules” or
“Rules”), is to protect consumers and others against misbranding, false advertising, and false
invoicing of fur products and furs.1
The sections of the Rules that provide for the collection of information fall into the
following categories. These category designations will be used throughout this supporting
statement.
Labeling and Invoicing
(e.g., 16 C.F.R. §§ 301.2, 301.27, 301.29, 301.30, and 301.37)
Section 301.2 generally provides that: “Each and every fur product . . . shall be labeled
and invoiced in conformity with the requirements of the act and rules and regulations” (emphasis
added); and, “[e]ach and every fur shall be invoiced in conformity with the requirements of the
act and rules and regulations.”
The various rules require covered products to be labeled/invoiced in a prescribed manner
to disclose: fur content, animal name, country of origin of imported furs, whether the product is
composed of natural or dyed fur, name or registered identification number of the manufacturer or
other marketer, and certain other related information. These rules merely implement provisions
of the Fur Act. The disclosures are deemed necessary because they provide material information
about the products. Lacking this information, potential purchasers could not make informed
buying decisions.
Recordkeeping
(e.g., 16 C.F.R. §§ 301.35, 301.39, 301.41, and 301.44)
Section 8(d)(1) of the Fur Act states: “Every manufacturer or dealer in fur products or
furs shall maintain proper records showing the information required by this Act with respect to
all fur products or furs handled by him, and shall preserve such records for at least three years.”

1

The Fur Act states: “The Commission is authorized and directed to prescribe rules and
regulations governing the manner and form of disclosing information required by this Act, and
such further rules and regulations as might be necessary to and proper for purposes of
administration and enforcement of this Act.” 15 U.S.C. § 69f(b).
Dated: March 2012

1

The various sections in this category merely implement this and other specific provisions of the
Act. For example, Sections 301.35 and 301.41 require manufacturers and other marketers who
substitute labels to maintain records, invoices, and other documents that will readily identify
each fur and fur product and reflect all required information (e.g., animal name, country of origin
of imported fur, whether the product is dyed or natural, item number assigned, etc.). In addition,
Section 301.44(e) requires retail furriers and others who make price savings claims in
advertisements to maintain records disclosing the facts upon which the representations are based.
These recordkeeping requirements are necessary to establish a continuous line of product
composition from raw material through sale of finished product in order to provide
substantiation for representations about the fur product, and to support price savings claims
made in advertisements.
Disclosure in Advertisements
(16 C.F.R. § 301.38)
Section 301.38, pursuant to Sections 3 and 5(a) of the Fur Act, requires manufacturers
and other marketers of covered fur products to disclose certain information in advertising. The
information must be disclosed in a prescribed manner and is necessary in order to properly
inform prospective purchasers and avoid deception.
Petition for Exemption
(16 C.F.R. § 301.19)
Section 301.19 provides that processors (e.g., dressers, dyers) of fur pelts are required to
mark each pelt in a manner indicating whether it is natural or dyed. Subsection (k), however,
allows an exemption for pelts that are always dyed or always natural where the pelts cannot be
marked or stamped as the section requires. In this case, the processor may file an affidavit with
the Commission requesting an exemption.
2.

Use of the Information
Labeling and Invoicing

Potential purchasers, both consumers and businesses, rely upon the disclosed information
to make informed buying decisions in the marketplace. Disclosure of company identification is
used by the Commission for enforcement purposes, i.e., to identify the manufacturer of a
misbranded item. It is also used by other companies seeking to identify the manufacturer or
distributor of a particular item for business purposes.
Recordkeeping
The information collected pursuant to the recordkeeping sections is used by
manufacturers and other marketers of covered products to support claims made on labels and
invoices, and to support price savings representations made in advertisements. The records may
Dated: March 2012

2

be inspected by Commission staff for law enforcement purposes.
Advertising
Consumers and other potential purchasers rely upon information contained in
advertisements; these disclosures are necessary to preclude misinformation and misleading
representations. The records may be inspected by Commission staff for law enforcement
purposes.
Petition for Exemption
The Commission would use the information in the affidavit to determine whether the
public interest would be served by allowing the exemption.
3.

Consideration to Use Improved Information Technology to Reduce Burden

For the most part, the Rules merely set forth certain performance standards. For
example, labels must disclose certain required information in a prescribed format; however,
companies may avail themselves of any improved technology (e.g., in the areas of
mechanization, typesetting, and printing) in meeting these performance standards.
Disclosing fur content and other required information to consumers, however, entails
labeling of fur products. As such, providing an option for electronic disclosure pursuant to the
Government Paperwork Elimination Act, Pub. L. No. 105-277, Title XVII, 112 Stat. 2681-749
(GPEA), is impracticable. Nonetheless, the Rules comply with GPEA by permitting invoicing to
be accomplished (see § 301.37) and necessary records to be kept (see Sections 301.35, 301.39,
301.41, 301.44) without regard to format, so that a regulated entity, if it chooses, may conduct
these activities electronically.
4.

Efforts to Identify Duplication/Availability of Similar Information

There is no other Federal law or regulation that requires the collection of information
contained in the Fur Act or the Rules.
The Act and the Rules were promulgated because companies were not voluntarily
providing material product information in a meaningful standardized format which facilitated
informed buying decisions in the marketplace. It should be noted that the collection and
recordkeeping provisions simply require retention of information which most covered companies
would routinely retain in the normal course of business, and recordkeeping burden for PRA
purposes excludes records that would otherwise be kept in the normal course of business. 5
C.F.R. § 1320.3(b)(2).
5.

Efforts to Minimize Burden on Small Businesses
There is no specific exemption or differential treatment for small organizations under

Dated: March 2012

3

either the Fur Act or Rules. Small businesses (e.g., retailers and dealers) can, however, rely on
invoices and other information provided by the manufacturer or other source in order to comply
with the labeling, invoicing, advertising, and recordkeeping requirements of the Act. The Act, as
recently amended by the Truth in Fur Labeling Act (“TFLA”), provides a new exemption for
furs sold directly by trappers and hunters to customers in certain face-to-face transactions.2
6.

Consequences of Conducting Collection Less Frequently

The disclosure of information required by the labeling and invoicing rules applies to each
covered fur product in the marketplace. If disclosures were not required in every case, the
objective of informing purchasers of material information would be defeated.
Recordkeeping requirements apply to manufacturers and those who substitute labels
(e.g., resellers) and require them to record and retain substantiation for the labeling claims made.
Without such records, it would be impossible to trace the chain of fur content from raw material
to finished product, so that an important deterrent against misbranding would be removed.
Advertising disclosure requirements apply to all advertisements for fur products. Less
frequent disclosure would impede the objective of preventing misinformation and
misrepresentation.
7.

Circumstances Requiring Collection Inconsistent with Guidelines
This collection of information is consistent with the guidelines contained in 5 C.F.R.§

1320.5.
8.

Consultation Outside the Agency

Commission staff responsible for the administration and enforcement of these rules has
had repeated contact with industry members and their trade associations, such as the American
Apparel and Footwear Association and the Fur Information Council of America. Based on
recurring contacts with covered companies and the FTC’s own experience (e.g., from conducting
routine compliance investigations), Commission staff concludes that: companies are aware of
the Rules; they are aware that the FTC will freely provide copies of the Fur Act and Rules and
additional explanatory materials upon request; and they consider the Rules to be clear and
reasonable.
As it has in the past, Commission staff sought public comment in connection with its
latest PRA clearance request for these Rules, in accordance with 5 C.F.R. § 1320.8(d). See 76
Fed. Reg. 77,230 (December 12, 2011) (no comments were received). Consistent with 5 C.F.R.
§ 1320.12(c), it is doing so again contemporaneous with this submission.

2

Pub. L. No. 111-313. This exemption is codified at 15 U.S.C. § 69a(g).

Dated: March 2012

4

The Commission has also initiated a review of the Fur Rules under its regulatory review
program. See 76 Fed. Reg. 13550 (March 13, 2011). Among other things, the Commission
seeks comment on the overall costs, benefits, necessity, and regulatory and economic impact of,
and possible modifications to, the Fur Rules. In December 2011, the Commission held a public
hearing on whether and how to revise the Rules’ Fur Products Name Guide, an issue the TFLA
directed the Commission to address.3
During the review, the Commission is also planning to implement the TFLA, which
amends the Fur Act by: (1) eliminating the Commission’s discretion to exempt fur products of
relatively small quantity or value from disclosure requirements; and (2) providing that the Fur
Act will not apply to certain fur products obtained through trapping or hunting and sold in faceto-face transactions (“hunter/trapper exemption”).4 Comments filed in the review provide
information on how the end of the exemption described in (1) above will affect compliance
costs, as explained in item #15 below.
9.

Payments or Gifts to Respondents
Not applicable.

10. & 11.

Assurances of Confidentiality and Matters of a Sensitive Nature

The records involved do not concern matters of a sensitive nature.
12.

Burden Estimate

Estimated annual hours burden: 168,098 hours (51,870 hours for recordkeeping +
116,228 hours for disclosure).
Recordkeeping:
The Fur Rules require that retailers, manufacturers, processors, and importers of furs and
fur products keep certain records in addition to those they may keep in the ordinary course of
business. Staff estimates that 1,230 retailers incur an average recordkeeping burden of about 13
hours per year (15,990 hours total); 90 manufacturers incur an average recordkeeping burden of
about 52 hours per year (4,680 hours total); and 1,200 importers of furs and fur products incur an
average recordkeeping burden of 26 hours per year (31,200 hours total). The combined
recordkeeping burden for the industry is approximately 51,870 hours annually.

3

See http://www.ftc.gov/opa/2011/11/furlabeling.shtm.

4

See note 2.

Dated: March 2012

5

Disclosure:
Staff estimates that 1,320 respondents (90 manufacturers + 1,230 retail sellers of fur
garments) each require an average of 26 hours per year to determine label content (34,320 hours
total), and an average of seven hours per year to draft and order labels (9,240 hours total). Staff
estimates that the total number of garments subject to the fur labeling requirements annually is
approximately 1,336,000.5 Staff estimates that for approximately 50 percent of these garments
(668,000) labels are attached manually, requiring approximately four minutes per garment for a
total of 44,533 hours annually. For the remaining 668,000, the process of attaching labels is
semi-automated and requires an average of approximately five seconds per item, for a total of
928 hours. Thus, the total burden for attaching labels is 45,461 hours, and the total burden for
labeling garments is 89,021 hours per year (34,320 hours to determine label content +9,240
hours to draft and order labels + 45,461 hours to attach labels).
Staff estimates that the incremental burden associated with the Fur Rules’ invoice
disclosure requirement, beyond the time that would be devoted to preparing invoices in the
absence of the Rules, is approximately one minute per invoice for garments and thirty seconds
per invoice for pelts.6 The invoice disclosure requirement applies to fur garments, which are
generally sold individually, and fur pelts, which are generally sold in groups of at least 50, on
average. Assuming invoices are prepared for sales of 1,336,000 garments, the invoice disclosure
requirement entails an estimated burden of 22,267 hours (1,336,000 invoices x one minute).
Based on information from the International Trade Commission and the Fur Commission USA,
staff estimates total sales of 7,498,000 pelts annually. Assuming invoices are prepared for sales
of 149,960 groups (derived from an estimated 7,498,000 million pelts ÷ 50) of imported and
domestic pelts, the invoice disclosure requirement entails an estimated total burden of 1,250
hours (149,960 total invoices x thirty seconds). Thus, the total burden for invoice disclosures is
23,517 hours.
Staff estimates that the Fur Rules’ advertising disclosure requirements impose an average
burden of three hours per year for each of the approximately 1,230 domestic fur retailers, or a
total of 3,690 hours.
The hunter/trapper exemption created by the TFLA will likely reduce the number of fur
products subject to the Rules. The Commission does not have any data on the size of this
reduction; however, the Commission does not have any reason to believe that a significant
number of products will fall under this narrow exemption. Thus, this exemption does not seem

5

The total number of imported fur garments, fur-trimmed garments, and fur accessories is
estimated to be approximately 1,156,000 based on International Trade Commission data.
Estimated domestic production totals 180,000.
6

The invoice disclosure burden for PRA purposes excludes the time that respondents
would spend for invoicing, apart from the Fur Rules, in the ordinary course of business. See 5
C.F.R. 1320.3(b)(2).
Dated: March 2012

6

likely to affect overall compliance costs significantly.
In addition, any revision to the Rules’ Fur Products Name Guide that may result from the
Commission’s regulatory review would not likely affect compliance costs significantly. Any
such revision to the Guide would most likely result in a slight wording change on fur labels
without increasing labeling costs.
Thus, staff estimates the total disclosure burden to be approximately 116,228 hours
(89,021 hours for labeling + 23,517 hours for invoices + 3,690 hours for advertising).
Estimated annual cost burden: $2,806,665 (solely relating to labor costs). The chart below
summarizes the total estimated costs.
Task

Hourly Rate

Burden Hours

Labor Cost

Determine label content

$

23.00

34,320

$789,360

Draft and order labels

$

18.00

9,240

$166,320

Attach labels

$

9.007

45,461

$409,149

Invoice disclosures

$

18.00

23,517

$423,306

Prepare advertising disclosures

$

23.00

3,690

$84,870

Recordkeeping

$

18.00

51,870

$933,660

TOTAL

$2,806,665

Staff believes that there are no current start-up costs or other capital costs associated with
the Fur Rules. Because the labeling of fur products has been an integral part of the
manufacturing process for decades, manufacturers have in place the capital equipment necessary
to comply with the Rules’ labeling requirements.8 Industry sources indicate that much of the
information required by the Fur Act and Rules would be included on the product label even
absent the Rules. Similarly, invoicing, recordkeeping, and advertising disclosures are tasks
performed in the ordinary course of business so that covered firms would incur no additional
capital or other non-labor costs as a result of the Act or the Rules.

7

Per industry sources, most fur labeling is done in the United States. This rate is
reflective of an average domestic hourly wage for such tasks, which is derived from recent BLS
statistics.
8

Although items previously exempt from the labeling requirements must now be labeled
regarding their fur content, the Textile and Wool Rules already required many such items to
have fiber content labels. Hence, manufacturers likely have in place the equipment needed to
comply with the labeling requirements.
Dated: March 2012

7

13.

Estimated Capital or Other Non-Labor Costs

Staff believes that there are no current start-up costs or other capital costs associated with
the Fur Rules. Because the labeling of fur products has been an integral part of the
manufacturing process for decades, manufacturers have in place the capital equipment necessary
to comply with the labeling requirements. Industry sources indicate that much of the
information required by the Fur Act and Rules would be included on the product label even
absent the Rules. Similarly, invoicing, recordkeeping, and advertising disclosures are tasks
performed in the ordinary course of business so that covered firms would incur no additional
capital or other non-labor costs as a result of the Act.
14.

Estimated Cost to the Federal Government

Staff estimates that a representative year’s cost of administering the rule during the
3-year clearance period sought will be approximately $50,000. Attorney, clerical, and other
support staff costs are included in this estimate, as are employee benefits.
15.

Program Changes or Adjustments

The Federal Trade Commission is requesting a change from its burden estimate of
121,000 hours under its current OMB clearance up to 168,098 hours. The increase of 47,098
hours is mostly attributable to a program change, which is an increase of 39,024 hours derived
from recent statutory amendments. There is a separate increase of 8,424 hours for an adjustment
in agency estimates derived from changing market conditions and a revised burden estimate for
the automatic attachment of labels (which increased from 2 seconds to 5 seconds).
Amendments to the Fur Act in 2010 are expected to increase the cost of complying with
the Fur Rules. Congress eliminated the Commission's power to exempt from the labeling
requirements items where either the cost of the fur trim to the manufacturer or the manufacturer's
selling price for the finished product is less than $150. As a result, more garments will be
subject to the Fur Act and Rules, which will impose higher recordkeeping and labeling costs on
manufacturers, importers, and retailers. Because the requirements started to apply to the
previously exempted garments last year, the Commission has only limited information on the
extent to which compliance costs will increase
The Commission has some evidence that aggregate costs will rise substantially due to the
end of the exemption.9 For example, the Humane Society of the United States explained in its
comment filed in the regulatory review of the Fur Rules that “as many fur-trimmed garments are
sold today as full-length fur coats, and the fur industry has predicted that the use of fur for trim
in the United States could surpass the use of fur for full-length apparel, if it hasn’t already.”10

9

See http://www.ftc.gov/os/comments/furlabeling/00016-59947.pdf.

10

See http://www.ftc.gov/os/comments/furlabeling/00017-59948.pdf.

Dated: March 2012

8

This suggests that the end of the exemption will increase significantly the number of products
subject to the labeling requirements in the Rules, depending on the percentage of fur-trimmed
apparel that would have been exempted had the exemption remained in effect.11 Deckers
Outdoor Corporation commented that the elimination of the exemption required it to spend about
$1 million to label previously exempted footwear that had left the factory.
16.

Statistical Use of Information
There are no plans to publish any information for statistical use.

17.

Display of Expiration Date for OMB Approval
Not applicable.

18.

Exceptions to the Certification for Paperwork Reduction Act Submissions

Not applicable.

11

The exemption also has certain exceptions. For example, it does not apply if the
marketer makes representations regarding the fur.
Dated: March 2012

9