[Federal Register Volume 60, Number 121 (Friday, June 23, 1995)]
[Notices]
[Pages 32682-32683]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-15186]



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FEDERAL TRADE COMMISSION


Telemarketing Sales Rule; Information Collection Under OMB Review

AGENCY: Federal Trade Commission (``FTC'').

ACTION: Notice of amended application to the Office of Management and 
Budget (``OMB'') under the Paperwork Reduction Act (44 U.S.C. 3501 et 
seq.) for clearance of information collection requirements contained in 
a revised proposed trade regulation rule pursuant to the Telemarketing 
and Consumer Fraud and Abuse Prevention Act.

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SUMMARY: The FTC is seeking OMB clearance for information collection 
requirements contained in revised proposed regulations implementing the 
Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C. 
6101-6108 (``Telemarketing Act'' or ``the Act'').
    The Telemarketing Act requires the Commission to issue a rule 
prohibiting deceptive and abusive telemarketing acts and practices. In 
accordance with the statutory directive, the Commission issued a Notice 
of Proposed Rulemaking on February 14, 1995 (60 FR 8313). Since that 
time, the Commission has made revisions to the recordkeeping and 
disclosure requirements contained in the initially proposed rule.
    Specifically, the Commission has reviewed the public comments and 
has incorporated many of the suggestions received from industry on how 
to minimize the recordkeeping burden. The revised proposed rule 
requires the following records to be kept for a twenty-four month 
period: advertising and promotional materials, and telemarketing 
scripts; information regarding prize recipients and prize distribution; 
sales information; and information regarding employees directly 
involved in telephone sales. The recordkeeping provisions will be 
helpful in preserving evidence of compliance with the rule.
    Absent the recordkeeping requirements, Commission staff believes 
that this is the type of information that would be retained by these 
entities in any event during the normal course of business because this 
information would be useful in resolving private, non-governmental 
inquiries and disputes. The definition of ``burden'' for OMB purposes 
excludes any effort that would be expended regardless of a regulatory 
requirement. 5 C.F.R. Sec. 1320.7(b)(1). Further, the revised proposed 
rule clarifies that records kept in the ordinary course of business 
need not be duplicated or separately maintained. Thus, the only burden 
would be for retaining the records for an additional period of time.
    Nonetheless, the Commission is increasing the estimate of burden 
hours imposed by the recordkeeping requirements to take into account 
any time necessary to develop, modify, construct, or assemble any 
materials or equipment. Staff estimates that approximately 40,000 
industry members could be affected by these recordkeeping requirements. 
Staff further estimates that no more than 100 companies would find it 
necessary to develop, modify, construct, or assemble materials or 
equipment in order to comply with the proposed rule. Staff further 
estimates that it would take these 100 entities approximately 100 hours 
each during the first year of [[Page 32683]] compliance to assemble the 
necessary equipment, for a total of 10,000 burden hours. Staff also 
estimates that the companies that already have recordkeeping systems 
would require only one hour to comply with the proposed recordkeeping 
requirements, for a total burden estimate of 49,900 hours. The 
Commission is requesting that this figure be rounded up to 50,000 
hours. A burden estimate of 50,000 hours, which is a yearly estimate, 
would allow approximately 100 new companies to enter the industry 
during each succeeding year without requiring the Commission to modify 
the burden estimate.
    The Commission's February 14, 1995 Application to OMB did not 
request clearance for the various disclosure requirements contained in 
the proposed Telemarketing Rule. The Commission is now submitting these 
disclosure requirements to OMB for clearance. The primary purpose of 
the rule's disclosure requirements is to assist in preventing deceptive 
and abusive telemarketing acts or practices by ensuring that customers 
are informed of the purpose of the call and the terms and conditions of 
the potential sale.
    Specifically, the revised proposed rule requires sellers or 
telemarketers to disclose the identity of the seller; the purpose of 
the call; the nature of goods or services; and that no purchase is 
necessary to win if a prize promotion is offered in conjunction with a 
sales offer of goods or services. If requested, the telemarketer must 
also disclose the no-purchase entry method of the prize promotion.
    Staff estimates that 40,000 industry members make approximately 9 
billion calls per year, or 225,000 calls per year per company. However, 
sections 310.6(d) and (e) provide that if an industry member chooses to 
solicit consumers by using advertising media other than direct mail or 
by using direct mail solicitations that make certain required 
disclosures, they are exempted from complying with other disclosures 
required by the rule. Because the burden of complying with written 
disclosures is much lower than the burden of complying with all the 
rule's provisions, staff estimates that at least 9,000 firms will 
choose to adopt marketing methods that exempt them from oral disclosure 
requirements. Staff estimates that it will take 7 seconds for callers 
to disclose the required information. Staff also estimates that at 
least 60% result in ``hang-ups'' before the seller or telemarketer can 
make all the required oral disclosures. Staff estimates that hang-up 
calls last for only 2 seconds. Accordingly, staff estimates that the 
total disclosure burden of these requirements is approximately 250 
hours per firm or 7.75 million hours.
    The revised proposed rule also requires additional disclosures 
before the customer pays for goods or services. Specifically, the 
sellers or telemarketers must disclose the total costs to purchase, 
receive, or use the offered goods or services; all material 
restrictions; all material terms and conditions of the seller's refund, 
cancellation, exchange, or repurchase policies if a representation 
about the policy is part of the sales offer; and that no purchase is 
necessary to win if a prize promotion is offered in conjunction with a 
sales offer of goods or services. The telemarketer must disclose the 
non-purchase entry method for the prize promotion. Staff estimates that 
approximately 10 seconds is necessary to make these required 
disclosures. However, these disclosures need only be made where a call 
results in an actual sale. Staff estimates that sales occur in 
approximately 6 percent of telemarketing calls. Accordingly, the 
estimated burden for the disclosures is 37.5 hours per firm or 1.163 
million hours.
    Alternately, the disclosures required before the customer pays for 
goods or services may be in writing. As discussed above, staff 
estimates that approximately 9,000 firms will choose to comply with 
this optional written disclosure requirement. Although this burden 
estimate is difficult to quantify, mailing campaigns appear to be much 
less burdensome for firms than are individual oral disclosures. Staff 
also finds that these disclosure requirements are closely consistent 
with the ordinary business practices of most members of the industry. 
Nonetheless, staff has no reliable data from which to conclude that 
there is no separately identifiable burden associated with this 
provision. Therefore, staff estimates that a typical firm will spend 
approximately 10 hours per year engaged in activities ensuring 
compliance with this provision of the rule, for an estimated burden 
estimate of 90,000 hours.

Total Yearly Burden

    Based on these figures, staff estimates the total yearly burden of 
the proposed rule to be 9,053,000 hours (50,000 recordkeeping hours + 
9,003,000 disclosure hours). The basis for this estimate is described 
in more detail in the Supporting Statement submitted with the Amended 
Request for OMB Review.

DATES: Comments on this application must be submitted on or before June 
30, 1995.

ADDRESSES: Send comments both to Office of Information and Regulatory 
Affairs, Office of Management and Budget, New Executive Office 
Building, Room 3228, Washington, DC 20503, ATTN: Desk Officer for the 
Federal Trade Commission, and to the Office of the Secretary, Room 159, 
Federal Trade Commission, Washington, DC 20580. Copies of the 
submission to OMB may be obtained from the Public Reference Section, 
Room 130, Federal Trade Commission, Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: David M. Torok, Attorney, Bureau of 
Consumer Protection, Division of Marketing Practices, Federal Trade 
Commission, Washington, DC 20580, (202) 326-3140.
Donald S. Clark,
Secretary.
[FR Doc. 95-15186 Filed 6-21-95; 8:45 am]
BILLING CODE 6750-01-M