Mitor - Ss - 2022 - Final

Supporting Statement For
Mail, Internet, or Telephone Order Merchandise
Rule, C.F.R. Part 435
(OMB Control No. 3084-0106)
Overview of Information Collection
This is a request for approval of a three-year extension of an existing clearance. The
Mail Order Merchandise Trade Regulation Rule (“MITOR”), 16 C.F.R. Part 435 (OMB
Control Number 3084-0106), requires a seller (or merchant) to: (1) have a reasonable basis
for any express or implied shipment representation made in soliciting the sale (if no express
time period is promised, the implied shipment representation is 30 days); (2) notify the
buyer (or consumer) and obtain the buyer’s consent to any delay in shipment; and (3) make
prompt and full refunds when the buyer exercises a cancellation option or the seller is
unable to meet the Rule’s other requirements. There is no change in the instrument
collection.
(1) Necessity for Collecting the Information
Under authority of the FTC Act, 15 U.S.C. § 41 et seq., the Federal Trade
Commission (“FTC” or “Commission”) promulgated the Mail Order Merchandise Trade
Regulation Rule, 16 C.F.R. Part 435, the original title of the Rule, on October 22, 1975 (40
Fed. Reg. 49,492). The Rule became effective on February 2, 1976 (40 Fed. Reg. at
49,494). In 1993, the Commission amended the Rule under authority of Section 18 of the
FTC Act, 15 U.S.C. § 57a, to include sellers (or merchants) who solicited orders for
merchandise by telephone (including by telefax or by computer through the use of a
modem), and renamed it the Mail or Telephone Order Merchandise Rule. 58 Fed. Reg.
49,096 (September 21, 1993). The amended Rule took effect on March 1, 1994. 58 Fed.
Reg. at 49,123. In 2014, Commission amended the Rule, effective December 8, 2014, to
clarify that it covers all Internet merchandise orders and permits flexibility in making
refunds and refund notices, as well as clarifying refund obligations for non-enumerated
payments. 79 Fed. Reg. 55,615 (Sept. 17, 2014). The Rule was also renamed the Mail,
Internet, or Telephone Order Merchandise Trade Regulation Rule (“MITOR” or “Rule”).
The MITOR implements Section 5 of the FTC Act, 15 U.S.C. § 45, and is designed
to prevent interstate direct marketers from unilaterally changing the shipment time in a
merchandise sales contract, a material term. Without the Rule, buyers (or consumers)
would be faced with unexplained delays or failures of direct marketers to ship mail,
Internet or telephone order merchandise, or failures to provide refunds for unshipped mail,
Internet or telephone merchandise.
The MITOR requires sellers to disclose to customers when shipment is delayed and,
absent customer consent to delayed shipment, to refund customer payments for unshipped

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merchandise.1 The MITOR also requires the seller, without being asked, to cancel the
order and make a full and prompt refund whenever: (1) the seller determines that it will
never be able to ship the merchandise; (2) the seller fails to provide a required notice of
delay within the originally promised shipment time or within any revised shipment time; (3)
the buyer exercises any cancellation option before the seller ships; or (4) the seller is unable
to ship and the buyer fails to agree to delayed shipment within the time required for
expressly agreeing to delay. The seller discloses the refund by the reimbursement itself
(where the merchandise was paid for originally by cash, check or money order), or by
notifying the buyer that any charge to the buyer’s charge account will be reversed or that the
seller will take no action that will result in acharge.
The MITOR contains no recordkeeping requirements per se. It establishes,
however, a rebuttable presumption against sellers who lack documentary proof of
mechanisms to assure timely shipments. Similarly, absent supportive records, it is
presumed that a seller has failed to comply with the Rule’s requirements for timely delay
option notices and refunds. See 16 C.F.R. §§ 435.2(a)(4) and 435.2(d).
Prudent industry members keep records of procedures for: (1) estimating buyer
demand for and securing adequate sources of supply for each item of merchandise offered
for sale by mail, Internet or telephone; (2) receiving and fulfilling orders; (3) accurately
recording information relating to each order; and (4) assuring automated communications
with buyers about any changing fulfillment circumstances to comply with the notice and
refund provisions of the MITOR. Sellers customarily keep such records in the ordinary
course of business, however; consequently, their retention of these documents does not
constitute a “collection of information” under OMB’s regulations that implement the
Paperwork Reduction Act (“PRA”). See 5 C.F.R. § 1320.3(b)(2).
(2) Use of the Information
The primary purpose of the Rule’s disclosure requirements is to provide buyers
timely information on the shipment status of their orders, and to afford them the power to
consent to any changed shipment time or to rescind the contract and promptly obtain the
return of their money. Using this information, buyers can seek alternative sources of the
merchandise and make time-effective purchasing decisions. The Rule’s rebuttable
presumption against sellers who lack documentary proof of mechanisms to assure timely
shipments provides grounds for possible Commission enforcement action for noncompliance and incentivizes sellers to maintain systems to demonstrate compliance with the
Rule.
(3) Use of Information Technology
Apart from notifications concerning “prompt refunds” (16 C.F.R. § 435.1(b)),
1

Sellers must seek customer consent for delayed shipment if they cannot ship within the time
initially stated or, if not stated, for delays exceeding 30 days after receiving a properly completed
order from the buyer or, regarding seller-financed orders, delays beyond 50 days thereafter. 16
C.F.R. § 435.2(a)(1)(i)- (ii).

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nothing in the Rule prescribes that disclosures be made, records filed or kept, or signatures
executed, on paper or in any particular format that would preclude the use of electronic
methods to comply with the Rule's requirements.
Information processing hardware and software can be a part of the “systems and
procedures which assure the shipment of merchandise in the ordinary course of business”
and ensures compliance with the Rule. Most sellers record inventory and buyer order
information in computers programmed to generate packing slips and address labels in time
for shipment. For goods that computer systems identify as being on back order, the
systems may generate rule-compliant delay notices or refunds within the times required
by the Rule. Additionally, many sellers and fulfillment houses have acquired and
integrated with their information processing technology bar code scanner capabilities that
provide information in real time on the status of each order, from generating the packing
slip to placing the order in the shipper’s hands. Thus, computerized records of order
receipt and timely shipment or delay notification or refund are the seller’s primary
evidence of rule compliance.
Under the Commission’s rule review program, patterned loosely after the Regulatory
Flexibility Act, 5 U.S.C. § 601 et seq. (“RFA”), the Commission periodically solicits
comments on ways to minimize the recordkeeping burden demonstrating rule compliance
through the use of automated collection techniques and other forms of information
technology. For example, on September 21, 1993, the Commission, in response to input
from the direct marketing industry, eliminated provisions in the MOR that created
rebuttable presumptions of non-compliance if the seller used means other than first class
mail to provide rule-required delay option notices to buyers. Through the Rule amendment,
the Commission facilitated more convenient means to provide required shipping delay
notification, such as by telephone, 58 Fed. Reg. 49,096, 49,111-12. As Internet sales have
exponentially increased, so too has the use of the Internet by businesses to provide these
rule-required notifications to buyers.
(4)

Non-Duplication

The original version of the Rule has been in effect since February 2, 1976. Since
that time, FTC staff have worked closely with the industry. Staff attorneys practicing in
this area verify that the disclosure and substantiation requirements of the rule do not
duplicate any other requirements.
(5)

Burden on Small Businesses

The Rule’s disclosure and substantiation requirements are designed to impose
minimal burden on affected members of the industry, regardless of size. The Commission’s
1986 RFA review of the Rule found that, based on an industry-wide survey of direct
marketers, nearly half of all small and large firms surveyed reported no incremental
compliance costs and that an additional 27% reported compliance expenditures less than
$500 annually. Among affected entities, 81% of small businesses and 65% of large
businesses reported that eliminating the Rule would not alter their business practices

4 

because “[m]ost mail order firms, large and small, feel the concept of the [Mail Order] rule
is sound business practice that enhances the growth and development of a mail order
business and they do not wish to have the Rule eliminated.” See 51 Fed. Reg. 1516, 1517
(Jan. 14, 1986). Moreover, in promulgating the 2014 amendments, the Commission found
during its related RFA analysis of the then proposed amendments that the amended Rule
would not have a significant impact upon a substantial number of small entities. See 79
Fed. Reg. at 55,619.
As part of an ongoing review of its rules, the Commission continues to examine the
MITOR to determine, among other things, whether new technology or changes in technology
can be used to reduce regulatory burdens that the Rule may impose.
(6) Less Frequent Collection
The substantiation requirements of the Rule ensure that buyers are provided
reliable shipment information in the seller’s solicitation of order sales and in
required notifications of delay. The disclosure and refund requirements ensure that
buyers are notified of delays and empowered to cancel orders and obtain prompt
refunds in delayed shipment situations. Doing less would circumvent the Rule’s
purpose.
(7)

Paperwork Reduction Act Guidelines

The collection of information in the Rule is consistent with all applicable guidelines
contained in 5 C.F.R. § 1320.5(d)(2).
(8)

Consultation and Public Comments

For this current PRA clearance request, the FTC sought public comment on the
Rule’s information collection requirements and on the associated estimates of PRA
burden. See 87 Fed. Reg. 15,995 (March 21, 2022). The Commission received no
germane comments during the public comment period. Pursuant to the OMB regulations
that implement the PRA (5 C.F.R. § 1320), the FTC is providing a second opportunity for
public comment while seeking OMB approval to extend the existing paperwork clearance
for the Rule.
(9)

Gifts or Payments
Not applicable. The Rule contains no provisions for payments or gifts to respondents.

(10)-(11) Privacy & Confidentiality/Sensitive Questions
To the extent that the Commission collects information for law enforcement
purposes under the Rule’s recordkeeping provisions, the confidentiality measures of
Section 21 of the FTC Act, 15 U.S.C. § 57b-2, will apply.

5 

(12)

Burden Estimate
Estimated total annual hours burden: 3,117,410 hours.

In its 2019 PRA-related Federal Register Notices2 and corresponding submission to
OMB, FTC staff estimated that established companies each spend an average of 50 hours
per year on compliance with the Rule, and that new industry entrants spend an average of
230 hours (an industry estimate) for compliance measures associated with start-up.3 Thus,
the total estimated hours burden was calculated by multiplying the estimated number of
established companies x 50 hours, multiplying the estimated number of new entrants x 230
hours, and adding the two products.
No substantive provisions in the Rule have been amended or changed since staff’s
2019 submission to OMB. Thus, the Rule’s disclosure requirements remain the same.
Moreover, the Commission received no public comments regarding the above-noted
estimates; thus, staff will apply them to the current PRA burden analysis.
Since the prior submission to OMB, however, the number of businesses engaged in
the sale of merchandise subject to the MITOR has increased. The most currently available
data from the U.S. Census Bureau indicates that, between 2005 and 2019, the number of
businesses subject to the MITOR grew from 15,924 to 43,465, or an average increase of
1,967 new businesses a year [(43,465 businesses in 2019 – 15,924 businesses in 2005) ÷ 14
years].4 Assuming this growth rate continues from 2022 through 2025, the average number
of established businesses during the three-year period for which OMB clearance is sought
for the Rule would be 53,300:5

2

84 Fed. Reg. 10,072 (Mar. 19, 2019); 84 Fed. Reg. 24,512 (May 28, 2019).
Most of the estimated start-up time relates to the development and installation of computer
systems geared to more efficiently handle customer orders.
4
Conceptually, this might understate the number of new entrants. Given the virtually unlimited
diversity of retail establishments, it is very unlikely that there is a reliable external measure. For
example, many online marketplace sellers that use Amazon.com’s marketplace to sell to customers
have agreements that provide that Amazon handles packaging and shipping the products to
customers. Whether Amazon.com is also the entity responsible for sending customers delay notices
when necessary could affect which entity is subject to MITOR disclosure requirements, Amazon or
the individual marketplace seller.
5
As noted above, the existing OMB clearance for the Rule expires on July 31, 2022, and the FTC
is seeking to extend the clearance for three years.
3

6 

Year:

Established Businesses

New Entrants

2022-23

51,333

1,967

2023-24

53,300

1,967

2024-25

55,267

1,967

Average:

53,300

1,967

In an average year during the three-year OMB clearance period, staff estimates that
established businesses and new entrants will devote 3,117,410 hours to comply with the MITOR
[(53,300 established businesses x 50 hours) + (1,967 new entrants x 230 hours) = 3,117,410].
The estimated PRA burden per seller to comply with the MITOR is likely overstated because
much of the estimated time burden for disclosure-related compliance would arguably be incurred
even absent the Rule. Over the years, industry trade associations and individual witnesses have
consistently taken the position that providing buyers with notice about the status of their orders
fosters buyer loyalty and encourages repeat purchases, which are important to marketers’
success. In recent years, the demands of the Internet’s online marketplace and its leading retailers
such as Amazon.com, Walmart.com, and Ebay.com have driven many businesses to upgrade the
information management systems to track and ship orders more effectively.6 These upgrades
were primarily prompted by the industry’s need to deal with growing buyer demand for
merchandise that is timely shipped. Accordingly, most companies now provide updated order
information of the kind required by the Rule in their ordinary course of business to meet buyer
expectations regarding timely shipment, notification of delay, and prompt and full refunds.7

6

Brian Baskin, “Amazon’s Free Shipping Pushes Small Retailers, Delivery Firms to Compete,”The
Wall Street Journal, Apr. 8, 2017, available at https://www.wsj.com/articles/amazons-free-shippingpushes-small-retailers-delivery-firms-to-compete-1491649203.
7
Under the OMB regulation implementing the PRA, burden is defined to exclude any effort that
would be expended regardless of any regulatory requirement. 5 C.F.R. § 1320.3(b)(2).

7 

Estimated labor costs: $80,304,482.
FTC staff derived labor costs by applying appropriate hourly cost figures to the burden
hours described above. According to the most recent data available from the Bureau of Labor
and Statistics,8 the mean hourly income for workers in sales and related occupations was
$25.76/hour. The bulk of the burden of complying with the MITOR is borne by clerical
personnel along with assistance from sales personnel. Staff believes that the mean hourly income
for workers in sales and related occupations is an appropriate measure of a direct marketer’s
average labor cost to comply with the Rule. Thus, the total annual labor cost to new and
established businesses for MITOR compliance during the three-year period for which OMB
approval is sought would be approximately $80,304,482 (3,117,410 hours x $25.76/hour).
Relative to direct industry sales, this total is negligible.9
Explain the reason for any changes to the burden and fill out the tables below (*or another table
that explains the changes, as appropriate).
Changes Due to Adjustment in Agency Estimate:

Requested

Program
Change Due
to New
Statute

Change Due
Program
to
Change Due
Adjustment
to Agency
in Agency
Discretion
Estimate

Change
Due to
Potential Previously
Violation Approved
of the
PRA

Annual Number of
Responses for this 55,267
IC

8,386

46,881

Annual IC Time
Burden (Hours)

3,117,410

425,060

2,692,350

Annual IC Cost
Burden (Dollars)

80,304,482

13,803,437

66,501,045

(13)

Capital and Other Non-labor Costs
Estimated annual non-labor cost burden: $0 or minimal.

8

The hourly wage rates for sales and related workers are updated from the 60-Day Federal Register
notice and are based on mean hourly wages found at https://www.bls.gov/news.release/ocwage.htm
(“Occupational Employment and Wages–May 2021,” U.S. Department of Labor, released March
2022, Table 1 (“National employment and wage data from the Occupational Employment Statistics
survey by occupation, May 2021”).
9
Considering that sales for “electronic shopping and mail order houses” grew from $295 billion in
2011 to $668 billion in 2019, staff estimates the annual mail, Internet, or telephone sales to
consumers in the three year period for which OMB clearance is sought will average $1.1 trillion.
Thus, the projected average labor cost for MITOR compliance by existing and new businesses for
that period would amount to 0.007% of sales.

8 

The applicable requirements impose minimal start-up costs, as businesses subject to
the Rule generally have or obtain necessary equipment for other business purposes, i.e.,
inventory and order management, and customer relations. For the same reason, staff
anticipates printing and copying costs to be minimal, especially given that mail, Internet,
and telephone order merchants have increasingly turned to electronic communications to
notify consumers of delay and to provide cancellation options. Staff believes that the above
requirements necessitate ongoing, regular training so that covered entities stay current and
have a clear understanding of federal mandates, but that this would be a small portion of,
and subsumed within, the ordinary training that employees receive apart from that
associated with the information collected under the Rule.
(14)

Estimated Cost to the Federal Government

The estimated yearly cost to the Federal Government resulting from MITOR
enforcement activities, including benefits and overhead costs, is $270,000, which is based
on the assumption that the Rule’s enforcement will entail one full attorney/economist workyear ($175,000), clerical and other support services ($75,000), and overhead costs
($20,000).
(15)

Program Changes/Adjustments

The increase in annual burden hours [from 2,692,350 (2019) up to 3,117,410 in
2022] is an adjustment resulting from more estimated covered businesses. Also, the
annual labor costs go from $66,501,045 (2019) up to $80,304,482 (2022) in part because
the hourly rate is slightly higher now and in part because the annual hours are higher
because there are more estimated covered businesses.
(16)

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

(17)

Display of the Expiration Date for OMB Approval
Not applicable.

(18)

Exceptions to the “Certification for Paperwork Reduction Act Submissions”
Not applicable.