[Federal Register Volume 67, Number 103 (Wednesday, May 29, 2002)]
[Proposed Rules]
[Pages 37362-37369]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-13320]
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FEDERAL TRADE COMMISSION
16 CFR Part 310
Telemarketing Sales Rule User Fees
AGENCY: Federal Trade Commission.
ACTION: Notice of proposed rulemaking; request for public comment.
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SUMMARY: The Federal Trade Commission (the ``Commission'' or ``FTC'')
is issuing a Notice of Proposed Rulemaking (``NPR'') to amend the FTC's
Telemarketing Sales Rule (``TSR''). This new rule would impose user
fees on telemarketers, and their seller or telemarketer clients, for
their access to the national do-not-call registry, if one is
implemented. This NPR invites written comments on the issues raised by
the proposed changes, and seeks answers to the specific questions set
forth in section VIII of the NPR.
DATES: Written comments will be accepted until June 28, 2002. Time is
of the essence to promulgate the proposed user fees, if a national
registry is adopted. Thus, the Commission does not anticipate providing
any extension to this comment period.
ADDRESSES: Six paper copies of each written comment should be submitted
to the Office of the Secretary, Room 159, Federal Trade Commission, 600
Pennsylvania Avenue, NW., Washington, DC 20580. To encourage prompt and
efficient review and dissemination of the comments to the public, all
comments should also be submitted, if possible, in electronic form, on
either a 5\1/4\ or a 3\1/2\ inch computer disk, with a label on the
disk stating the name of the commenter and the name and version of the
word processing program used to create the document. (Programs based on
DOS are preferred. Files from other operating systems should be
submitted in ASCII text format to be accepted.) Individual members of
the public filing comments need not submit multiple copies or comments
in electronic form.
Alternatively, the Commission will accept comments submitted to the
following email address: [email protected]. All comments and any
electronic versions (i.e., computer disks) should be identified as
``Telemarketing Rulemaking--User Fee Comment. FTC File No. R411001.''
The Commission will make this NPR and, to the extent possible, all
comments received in electronic form in response to this NPR, available
to the public through the Internet at the following address:
www.ftc.gov.
Comments on proposed revisions bearing on the Paperwork Reduction
Act should additionally be submitted to: Office of Information and
Regulatory Affairs, Office of Management and Budget, New Executive
Office Building, Room 10102, Washington, D.C. 20503, ATTN.: Desk
Officer for the Federal Trade Commission, as well as to the FTC
Secretary at the address above.
FOR FURTHER INFORMATION CONTACT: David M. Torok, (202) 326-3075 (email:
[email protected]), Division of Marketing Practices, Bureau of Consumer
Protection, Federal Trade Commission, 600 Pennsylvania Avenue, NW.,
Washington, DC 20580.
SUPPLEMENTARY INFORMATION:
I. Background
On January 30, 2002, the FTC published in the Federal Register a
NPR to amend the FTC's TSR and to request public comment on the
proposed changes. 67 FR 4492 (Jan. 30, 2002) (``the Rule NPR''). Among
other provisions, the Rule NPR proposed to establish a national ``do-
not-call'' registry, maintained by the FTC. The proposal, if adopted,
would permit consumers who prefer not to receive telemarketing calls to
contact one centralized registry to effectuate this preference.
Telemarketers would be required to refrain from calling consumers who
have placed their telephone numbers on this registry. The Rule NPR
anticipates that telemarketers would need to access the do-not-call
registry on at least a monthly basis in order to remove from their
telemarketing lists those consumers who have placed themselves on the
national registry.
The Commission has not made a final determination regarding whether
to establish a do-not-call registry. However, it is necessary to
consider the funding for the registry at this time so that if the
Commission ultimately decides to establish the registry, it can be
implemented without undue delay.
The current NPR proposes user fees to fund the development and
operation of the proposed national registry, if one is implemented. In
developing this proposal, the Commission is guided by the Independent
Offices Appropriations Act of 1952, codified at 31 U.S.C. 9701 (``the
User Fee Statute''), which states:
[[Page 37363]]
(a) It is the sense of Congress that each service or thing of
value provided by an agency * * * to a person * * * is to be self-
sustaining to the extent possible.
(b) The head of each agency * * * may prescribe regulations
establishing the charge for a service or thing of value provided by
the agency. Regulations prescribed by the heads of executive
agencies are subject to policies prescribed by the President and
shall be as uniform as practicable. Each charge shall be--(1) fair;
and
(2) based on--(A) the costs to the Government; (B) the value of
the thing to the recipient; (C) public policy or interest served;
and (D) other relevant facts.
The Commission is also guided by the Office of Management and
Budget (``OMB'') Circular No. A-25, which ``establishes Federal policy
regarding fees assessed for Government services.'' Id. at [para] 1. It
states that user fees ``will be sufficient to recover the full cost to
the Federal Government * * * of providing the service, * * * will be
based on market prices * * * [and] will be collected in advance of, or
simultaneously with, the rendering of services.'' Id. at [para]
6(a)(2).
In accordance with the User Fee Statute and OMB Circular A-25, the
Commission now proposes to charge user fees to all telemarketers that
access or obtain data from the national do-not-call registry, if such a
registry is, in fact, implemented. If a do-not-call registry is
implemented, the Commission will be providing a ``thing of value'' to
telemarketers; namely, a list of all United States consumers who have
indicated a preference not to receive certain telemarketing calls.
Access to such a list will permit telemarketers to focus their
telemarketing sales on those consumers who have no objection to
receiving such solicitations. Ultimately, it may be more profitable for
telemarketers to call only those consumers who are receptive to being
called. In addition, assuming the TSR is amended as proposed by the
Rule NPR, telemarketers will be required to access the national
registry to remain in compliance with the TSR and to engage in
telemarketing lawfully. Thus, access to the registry will enable
telemarketers to engage in their chosen business.\1\ We believe
telemarketers should be charged appropriately for obtaining this
information.
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\1\ Courts have long recognized that agencies may charge
regulated companies for the cost of administering their regulations,
since the companies receive a specialized value from the agencies by
complying with the regulations and gaining the ability to remain in
business. See, e.g., Mississippi Power & Light Co. v. United States
Nuclear Regulatory Comm'n, 601 F.2d 223, 229 (5th Cir. 1979), cert.
denied, 444 U.S. 1102 (1980); National Cable Television Ass'n v.
United States, 554 F.2d 1094, 1101-02 (D.C. Cir. 1976); Electronic
Indus. Ass'n v. F.C.C., 554 F.2d 1109, 1114 (D.C. Cir. 1976).
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To maintain the fairness of the fee structure and to keep the fees
to individual firms as reasonable as possible, it is critical that all
firms that derive a benefit from the registry pay for that benefit. The
Commission understands that telemarketers may undertake telemarketing
campaigns on behalf of other sellers or telemarketers. Based on our
discussions with officials who run State do-not-call registries, the
Commission also anticipates that sellers and telemarketers may use the
information included in the registry to ``scrub'' the telemarketing
lists of other firms.\2\ The Commission proposes requiring that any
telemarketer who engages in telemarketing or ``list scrubbing'' on
behalf of its clients will be required to pay the user fee set forth
below on behalf of each such entity.
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\2\ Section 310.4(b)(iv) of the Proposed Rule states that it is
an abusive practice for a telemarketer, or for a seller to cause a
telemarketer, to sell, purchase or use the national do-not-call
registry for any purpose except compliance with the Rule's do-not-
call provisions. The Commission believes that this provision does
not preclude a telemarketer from using the national registry to
scrub the calling lists of other telemarketers or sellers, since
such usage is assisting others in maintaining compliance with the
Rule.
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The Commission also has considered charging consumers directly for
adding their telephone numbers to the registry. The Commission proposes
that no such fees be imposed, however, for the following reasons.
First, while registering their telephone number may be perceived as a
benefit to consumers, at this time the Commission does not believe that
it would be appropriate to charge consumers who seek to avail
themselves of the protections of the Telemarketing Consumer Fraud and
Abuse Prevention Act, 15 U.S.C. 6101-08 (``the Telemarketing Act'').
Specifically, the proposed national registry would prohibit
telemarketers from undertaking ``a pattern of unsolicited telephone
calls which the reasonable consumer would consider coercive or abusive
of such consumer's right to privacy.'' 15 U.S.C. 6102(a)(3)(A). The
Commission does not wish to charge consumers to protect their privacy
from unwanted and abusive telemarketing calls. Second, even if the
Commission found that charging consumers was appropriate, the costs of
collecting what, under the constraints of the User Fee Statute,
necessarily would be a very small fee from each consumer who elected to
list his or her number in the registry could be greater than the fee
itself.\3\ OMB Circular A-25 states that agencies need not impose user
fees when ``the cost of collecting the fees would represent an unduly
large part of the fee for the activity.'' Id. at [para] 6.c.2. Thus,
the Commission does not believe that the imposition of consumer user
fees is appropriate at this time.
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\3\ States that have setablished statewide ``do-not-call''
registries have experienced consumer registration levels ranging
from a few percent of the telephone lines in use within the State,
to over 40 percent of all lines. Thus, a national registry may
ultimately include over 60 million telephone numbers. Even if all
those consumers do not register in the first year, raising the
estimated $3 million in necessary fees from that large a pool of
possible registrants would require an extremely small fee (possibly
as small as $0.05 per consumer), the collection costs of which could
not be justified.
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II. User Fee Calculation
To establish the appropriate fees to charge telemarketers and their
clients for information obtained from the registry, the Commission,
guided by OMB Circular A-25, will endeavor to recover the full cost of
creating and implementing the registry. Based on initial market
research, including potential vendor responses to the Request for
Information (``RFI'') that was issued by the FTC on February 28,
2002,\4\ it is estimated that the cost to develop and implement a
national registry will be approximately $5 million in the first year.
The President's Budget proposes that $5 million of the agency's total
funding be used for the proposed national registry, of which $3 million
will come from user fees. Thus, user fees of approximately $3 million
will be needed in Fiscal Year 2003 (``FY 03''), the first year of the
potential operation of the registry.\5\ Moreover, those fees must be
raised during FY 03, which runs from October 1, 2002, through September
30, 2003, even though the registry may be in operation for a period of
time shorter than twelve months.\6\
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\4\ See www.ftc.gov/procurement. Responses to the RFI are not
part of the public record and are legally exempt from public
disclosure to the extent they constitute confidential and
proprietary business information. See Section 6(f) of the FTC Act,
15 U.S.C. 46(f); Exemption 4 of the Freedom of Information Act, 5
U.S.C. 552(b)(4).
\5\ If, during the appropriations process, the amount of user
fees which the agency is required to collect were to change, the fee
structure proposed in this NPR would have to be adjusted
accordingly.
\6\ Given the time needed to complete the procurement process to
hire a contractor, and for that contractor to develop and implement
any proposed national registry, it is unlikely the registry will be
available at the start of FY 03. In fact, it may be some months into
the fiscal year before user fees can first be collected.
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The first step in calculating an appropriate user fee is also
potentially the most difficult--determining the number of telemarketers
and sellers that would be required to pay the proposed fee. The
Commission has examined
[[Page 37364]]
relevant industry literature, as well as the record in this and past
rulemaking proceedings concerning the TSR. The Commission believes the
more pertinent information for determining the number of firms that
would be required to pay the proposed user fee may be the number of
firms that access State do-not-call registries. Currently, sixteen
States have do-not-call registries in place. Most of those States have
fewer than 1,000 telemarketing firms requesting access to their
registries. Some have fewer than 100 firms requesting access. The most
telemarketing firms that currently access any individual State registry
is 2,932. Thus, in order to propose a realistic fee structure that
would ensure sufficient funds are collected to cover the costs of a
national registry, the Commission estimates that 3,000 telemarketers or
sellers may pay for access to the information in the national
registry.\7\ The Commission is seeking comment and evidence to
determine whether this estimate is realistic and appropriate.
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\7\ The Commission previously has estimated that there are
40,000 ``telemarketers'' in the United states. See the Rule NPR at
67 FR 4492, 4534 (notice of amended application to the OMB under the
Paperwork Reduction Act, 44 U.S.C. 3501, et seq.). However, of all
the companies that engage in telemarketing, only those telemarketers
that engage in ``outbound telephone calls'' would be required to
access the national registry and pay the required user fee to scrub
their calling lists. Moreover, the number of telemarketers and
sellers who will be required to pay the fee is further limited by
certain exemptions to the Rule, set forth at 16 CFR 310.6, as well
as by the inherent limitations of the FTC's jurisdiction. Thus, the
Commission does not believe its prior estimate is representative in
the instant context.
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The next step in calculating the appropriate user fee is to
determine the information for which the user would be charged. In
accordance with OMB Circular A-25, the Commission is proposing a user
fee structure that most closely approximates the cost of operating the
national registry. The primary operational cost to the Commission for
the proposed national registry, once the basic database infrastructure
is in place, would be each toll-free call consumers make to register
their telephone numbers with the system. Thus, system costs increase
with each additional consumer registrant.
At the same time, the Commission anticipates that not all
telemarketers or sellers would want access to all of the telephone
numbers listed in the national registry. Many telemarketers and sellers
engage in regional rather than nationwide calling campaigns, and
therefore would not need consumer registration data for the entire
nation. To address this business need, the Commission anticipates
providing telemarketers with access to the national registry by area
code. Thus, telemarketers would be able to access those portions of the
registry covered by as little as one area code, to as many as all area
codes nationwide. The Commission also anticipates enabling
telemarketers to access the national database at any time, through a
secure Internet website.\8\
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\8\ The proposed amendments to the TSR state that telemarketers
must access the proposed national registry on at least a monthly
basis to remain in compliance. See 16 C.F.R. 310.4(b)(2)(iii)
(proposed), 67 FR 4543.
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In order to most closely approximate the Commission's costs to
operate the national registry, and to address telemarketers' and
sellers' needs for regional lists, the Commission proposes a fee
structure based on the number of different area codes of data that the
telemarketer or seller wishes to use annually. Under the proposed fee,
telemarketers and their clients would be charged a rate of $12 per year
for each area code of data they use.
The Commission proposes that no charge be imposed for firms to
obtain data from only one to five area codes. Such free data would be
available to any business regardless of its size, although the
Commission notes that small businesses that telemarket only within such
a limited range of area codes are likely to benefit the most from this
provision.\9\ The Commission believes this approach would be less
burdensome than a fee structure that would require payment no matter
how few area codes are used. In addition, the Commission proposes to
cap the maximum annual fee at $3,000, which would be charged for using
250 area codes of data or more.\10\ Thus, for example, there would be
no charge for obtaining only five area codes of data; six area codes of
data would cost $72; twenty-five area codes would cost $300; two
hundred area codes would cost $2,400; and access to the data from all
area codes would be capped at $3,000 annually.
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\9\ In this regard, the Commission believes its proposal is
consistent with the mandate of the Regulatory Flexibility Act, 5
U.S.C. 601, which requires that to the extent, if any, a rule is
expected to have a significant economic impact on a substantial
number of small entities, agencies consider regulatory alternatives
to minimize such impact.
\10\ Currently, there are approximately 270 area codes that
would be included in the proposed national registry.
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These proposed fees obviously are based on certain assumptions and
estimates. The Commission anticipates that whatever fees may be adopted
would be reexamined periodically and would likely need to be adjusted,
in future rulemaking proceedings, to reflect the costs of providing the
national do-not-call registry. Moreover, the Commission bases these fee
assumptions on the need to raise $3 million in FY 03, which is subject
to change. The Commission anticipates the need to revise this fee
proposal for future fiscal years.
In accordance with OMB Circular A-25, the Proposed Rule requires
telemarketers to pay these fees prior to gaining access to the
registry.\11\ They would be able to access data as often as they like
during the course of one year (defined as their ``annual period'') for
those area codes that are selected with the payment of the related
annual fee. For telemarketers who work on behalf of multiple clients,
the telemarketer would pay to access a separate list of area codes of
data for each client, and the annual period would run from the date of
payment for access to each separate list of area codes.
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\11\ Section 310.9(c) of the Proposed Rule would require each
telemarketer to provide any identifying information deemed necessary
by the operator of the registry to collect the user fee.
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If, during the course of the year, telemarketers need to access
data from more area codes than those initially selected, either for
themselves or on behalf of their clients, they would be required to pay
for access to those additional area codes. For purposes of these
additional payments, the annual period is divided into two semi-annual
periods of six months each. Obtaining additional data from the registry
during the first semi-annual, six month period will require a payment
of $12 for each new area code. During the second semi-annual, six month
period, the charge of obtaining additional data is $6 for each new area
code. These payments for additional data would provide telemarketers
access to those additional areas of data for the remainder of their
initial annual term. As noted above, should a telemarketer obtain a new
client, it would have to pay the appropriate user fee for the area
codes of data needed by that new client, and a new annual period for
that client would begin on the first month when that data is accessed
by the telemarketer.
The following is an example of how this proposed payment system
would work. A telemarketer requests access to the registry for the
first time in August 2003. After completing an application form, the
telemarketer pays $600 for access to 50 area codes of data (50 area
codes times $12 per area code equals $600). The telemarketer indicates
which area codes it wishes to access, and is
[[Page 37365]]
then provided that information from the registry. The same telemarketer
may continue to access updates to the data from those 50 originally
selected area codes at any time until the end of its annual period,
which in this example would be the end of July, 2004. If, during
December 2003 (i.e., within the first six months of its annual period),
the telemarketer needs to access 10 additional area codes, the
telemarketer would need to pay an additional $120 to access that data
(10 area codes times $12 per area code equals $120). The telemarketer
may then continue to access the data from those additional 10 area
codes (as well as the original 50 area codes) until the end of July
2004. If, during March 2004 (i.e., within the second six months of its
annual period) the telemarketer needs to access another 10 previously
unselected area codes, the telemarketer would need to pay an additional
$60 to access that data (10 area codes times $6 per area code equals
$60). At that point, the telemarketer would be able to access the data
from 70 area codes (the original 50, plus 10 acquired in December, plus
10 acquired in March) until the end of July, 2004. In August, 2004, the
telemarketer would need to pay another annual fee for access to any
portion of the registry.
If, however, the telemarketer acquires a new client during November
2003, and the new client needs access to 20 area codes of data, the
telemarketer would need to pay $240 on behalf of that client (20 area
codes times $12 per area code equals $240). That new client's annual
period would run from November 1, 2003, through October 31, 2004.
During that annual period, the telemarketer could access information
from the 20 area codes selected on behalf of that client at any time.
The Commission considered charging these user fees on a monthly,
rather than annual basis. However, given the necessity of raising $3
million during FY 03 (even though the registry will be available for
only a portion of that fiscal year), the Commission has tentatively
determined that an annual fee, to be paid in advance, is necessary to
raise the required funds during that fiscal year. The Commission seeks
comment whether an annual or a monthly fee would be a more preferable,
efficient and appropriate method of fee collection in the future.
III. Telemarketer Access to the Proposed National Registry
The proposed amendments to the TSR would prohibit the use of
information in the national registry for any purpose other than
compliance with the do-not-call provisions of the Proposed Rule. See 16
CFR 310.4(b)(iv) (proposed). As a result, the Commission proposes, in
Section 310.9(d), to limit access to the registry to telemarketers
working on their own behalf or working on behalf of other sellers or
telemarketers. In order to maintain the security of the registry and to
track its usage, the Proposed Rule also would require telemarketers to
certify, under penalty of law, that they are accessing the registry
solely to comply with the provisions of the TSR. If they are accessing
the registry on behalf of other sellers or telemarketers, they also
would be required to identify each of the other sellers or
telemarketers on whose behalf they are accessing the registry. In
addition, they would be required to certify that the other sellers or
telemarketers will be using the information gathered from the list
solely to comply with the provisions of the TSR. Submitting a false
certification to the government would not only be a Rule violation, but
also would be actionable criminally as a false statement or claim to
the Federal government. See, e.g., 18 U.S.C. 287, 1001; 31 U.S.C. 3729.
The Commission recognizes that additional guidance may be necessary
to more accurately define the relationships for which the applying
telemarketer will have to report and pay. For example, in the
compliance guide to the original TSR, the Commission stated that
distinct corporate divisions of a single corporation are considered
separate sellers for purposes of the Rule. Factors used to determine if
corporate divisions will be treated as separate sellers include whether
there is substantial diversity between the operational structure of the
divisions, and whether the goods or services sold by the divisions are
substantially different from each other. The Commission proposes that
these same distinctions would apply to the payment of the proposed
annual user fee. This NPR includes specific questions on this issue in
Section VIII, and seeks answers to those questions in the comments.
IV. Invitation to Comment
All persons are hereby given notice of the opportunity to submit
written data, views, facts, and arguments concerning these proposed
changes to the Commission's Telemarketing Sales Rule. The Commission
invites written comments to assist it in ascertaining the facts
necessary to reach a determination as to whether to adopt as final the
proposed changes to the Rule. Written comments must be submitted to the
Office of the Secretary, Room 159, FTC, 600 Pennsylvania Avenue, NW.,
Washington, DC 20580, on or before June 28, 2002. Time is of the
essence to promulgate proposed user fees, if a national registry is
adopted. Thus, the Commission does not anticipate providing any
extension to this comment period.
Comments submitted will be available for public inspection in
accordance with the Freedom of Information Act (5 U.S.C. 552) and
Commission Rules of Practice, on normal business days between the hours
of 9 a.m. and 5 p.m. at the Public Reference Section, Room 130, Federal
Trade Commission, 600 Pennsylvania Avenue, NW., Washington, DC 20580.
The Commission will make this NPR and, to the extent possible, all
papers or comments received in electronic form in response to this NPR
available to the public through the Internet at the following address:
www.ftc.gov.
V. Communications by Outside Parties to Commissioners or Their Advisors
Written communications and summaries or transcripts of oral
communications respecting the merits of this proceeding from any
outside party to any Commissioner or Commissioner's advisor will be
placed on the public record. See 16 CFR 1.26(b)(5).
VI. Paperwork Reduction Act
The instant proposed amendments involve certain limited new
collection of information requirements. The Commission will submit
shortly to the Office of Management and Budget a copy of this NPR and
an addendum to its most recent prior clearance request under the
Paperwork Reduction Act, 44 U.S.C. 3501-3517 (``PRA'') that will
account for the incremental PRA effects posed by these newly proposed
TSR amendments.
The Commission proposes to require telemarketers to submit minimal
identifying information that the operator of the proposed national
registry may deem necessary to collect the user fee. The Commission
anticipates that this would include basic information, such as the
name, address and telephone number of the telemarketer, a contact
person for the organization, and information about the matter of
payment. The telemarketer also would need to submit a list of the area
codes of data for which it requests information. In addition, the
telemarketer would have to certify that it is accessing the registry
solely to comply with the provisions of the TSR. If the telemarketer is
accessing the registry on behalf of other seller or telemarketer
clients, it would have to submit basic identifying information
[[Page 37366]]
about those clients, a list of the area codes of data for which it
requests information on their behalf, and a certification that the
clients are accessing the registry solely to comply with the TSR.
The Commission anticipates that each telemarketer would have to
submit all of this information only once each year, at the beginning of
each annual period when the telemarketer would have to pay for access
to the registry, unless the telemarketer needs to acquire information
from more area codes than it originally sought and paid for. In that
instance, the telemarketer may have to submit the same information
again to pay for the additional data.
The Commission estimates that it should take no longer than two
minutes for each telemarketer to submit the basic information described
above.\12\ In addition, as set forth in this NPR, the Commission has
estimated that approximately 3,000 telemarketers and sellers may pay
for access to the information in the proposed national registry. Each
of those telemarketers, either on their own behalf or on behalf of
their clients, would need to submit this information annually,
resulting in approximately 100 burden hours (3,000 telemarketers times
2 minutes per telemarketer equals 6,000 minutes, or 100 hours). In
addition, the Commission estimates that possibly one-half of those
telemarketers may need, during the course of their annual period, to
submit their identifying information more than once in order to obtain
additional area codes of data. This would result in an additional 50
burden hours (1,500 telemarketers times 2 minutes per telemarketer
equals 3,000 minutes, or 50 hours). Thus, the Commission estimates that
the proposed user fee provision will impose a total paperwork burden of
approximately 150 hours per year.
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\12\ This estimate is likely to be conservative for PRA
purposes. OMB regulations exclude from its definition of
``information'' certain inquiries that it considers ``routine'' and
not burdensome to the respondent. This includes disclosures that
require persons to provide facts necessary simply to identify
themselves, e.g., the respondent, the respondent's address, and a
description of the information the respondent seeks in detail
sufficient to facilitate the request. See 5 CFR 1320.3(h)(1).
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The Commission invites comment that will enable it to:
1. Evaluate whether the proposed collections of information are
necessary for the proper performance of the functions of the
Commission, including whether the information will have practical
utility;
2. Evaluate the accuracy of the Commission's estimates of the
burdens of the proposed collections of information, including the
validity of the methodology and assumptions used;
3. Enhance the quality, utility, and validity of the information to
be collected; and
4. Minimize the burden of the collections of information on those
who are to respond, including through the use of appropriate automated,
electronic, mechanical or other technological collection techniques or
other forms of information technology.
VII. Regulatory Flexibility Act
The Regulatory Flexibility Act (``RFA''), 5 U.S.C. 604(a), requires
an agency either to provide an Initial Regulatory Flexibility Analysis
(''IRFA'') with a proposed rule, or certify that the proposed rule will
not have a significant economic impact on a substantial number of small
entities. The FTC does not expect that the final rule concerning user
fees will have the threshold impact on small entities. The NPR
specifically charges no fee for access to data included in the registry
from one to five area codes. As a result, the Commission anticipates
that many, if not all, small telemarketers will be able to access the
national registry without having to pay any annual fee. Thus, there is
likely to be little or no burden on small telemarketers resulting from
the adoption of the proposed user fees.
The Commission reached a similar conclusion in the Rule NPR. See 67
FR 4536. Nonetheless, the Commission has determined that it is
appropriate to publish an IRFA in order to inquire into the impact on
small entities of both the amendments to the TSR proposed in this
document, as well as the proposed amendments to the TSR set forth in
the Rule NPR. Therefore, the Commission has prepared the following
analysis.
A. Reasons for the Proposed Rule
As stated in the Rule NPR, the Commission proposed amendments to
the TSR as a result of the findings of the rule review, conducted
pursuant to the mandate of the Telemarketing and Consumer Fraud and
Abuse Prevention Act, 15 U.S.C. 6101-08 (``Telemarketing Act'').
Certain proposed changes, relating to the solicitation of charitable
contributions through telemarketing, are made pursuant to the mandate
of the USA PATRIOT Act of 2001, Pub. L. 107-56 (Oct. 25, 2001) (``USA
PATRIOT Act''). The proposed amendments are authorized under the
rulemaking authority granted to the Commission by the Telemarketing
Act, as amended by the USA PATRIOT Act, to protect consumers from
deceptive and abusive practices. The Commission believes that the
proposed amendments to the TSR are necessary to ensure that the TSR
continues to protect consumers.
The current proposed rule is intended to fulfill the obligations
imposed by the User Fee Statute and the proposed amendments to the TSR.
This NPR is issued so that the Commission may raise user fees to fund
the development, implementation and operation of a national do-not-call
registry, if such a proposed registry is implemented.
B. Statement of Objectives and Legal Basis
The objectives for the original proposed amendments to the TSR were
set forth in the Rule NPR, 67 FR 4492-4546. The legal basis for the
Rule NPR is the Telemarketing Act, 15 U.S.C. 6101-08, as amended by the
USA PATRIOT Act of 2001, Pub. L. 107-56 (Oct. 25, 2001).
The objectives of the current proposed rule are discussed above.
The legal basis for the current proposed rule is the User Fee Statute
and the proposed amendments to the TSR, 67 FR 4492 (Jan. 30, 2002),
promulgated pursuant to the Telemarketing Act.
C. Description of Small Entities to Which the Rule Will Apply
The Small Business Administration has determined that
``telemarketing bureaus'' with $6 million or less in annual receipts
qualify as small businesses. See 13 CFR 121.201. Similar standards,
i.e., $6 million or less in annual receipts, apply for many retail
businesses which may be ``sellers'' and subject to either the proposed
amendments to the TSR set forth in the Rule NPR, or the proposed user
fee provisions outlined in this NPR. In addition, there may be other
types of businesses, other than retail establishments, that would be
``sellers'' subject to the proposed rule. Determining a precise
estimate of the number of small entities that would be subject to the
proposed amendments to the TSR, or describing those entities, is not
readily feasible. The Commission, therefore, invites comment on this
issue, including information about the number and type of small
business entities that may be subject to the TSR and its proposed
amendments.
D. Projected Reporting, Recordkeeping and Other Compliance Requirements
The Rule NPR proposes to alter some collection of information
requirements included in the TSR. The effect of those requirements on
all businesses was discussed in detail in the Paperwork Reduction Act
section of the Rule NPR, 67 FR 4534-36. The only proposed
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change to the recordkeeping requirement ([sect] 310.5) would extend the
provision's coverage to include charitable solicitations in a non-sales
context, as required by the USA PATRIOT Act. See 67 FR at 4528. All
other proposed amendments described in the Rule NPR relate to the
Rule's disclosure or other compliance requirements, which are necessary
to prevent telemarketing fraud and abuse. The classes of small
entities, if any, affected by the proposed amendments set forth in the
Rule NPR would include telemarketers or sellers engaged in acts or
practices covered by the Rule, as discussed earlier. The types of
professional skills, if any, required to comply with the Rule's
recordkeeping, disclosure, or other requirements would include attorney
or other skilled labor to ensure compliance.
In addition, the proposed user fee rule will, as a practical
matter, require telemarketers to submit certain payment information to
obtain access to the registry. The impact of that reporting requirement
is discussed in Section VI, above. The Commission does not believe that
any professional skills will be necessary to complete the payment
information that would be required to be submitted if the user fee
proposed rule is adopted. As previously noted, the Commission invites
comment on the estimated paperwork burden of these amendments,
including the impact it may have on any small businesses.
E. Identification of Duplicative, Overlapping, or Conflicting Federal
Rules
The FTC has identified no other federal statutes, rules, or
policies that would conflict with the amendments to the TSR proposed in
the Rule NPR, or the user fees proposed in this NPR. As for the
amendments to the TSR proposed in the Rule NPR, the only other federal
statute in this area is the Telephone Consumer Protection Act of 1991
(``TCPA''), 47 U.S.C. 227 et seq., and the Federal Communications
Commission regulations promulgated to enforce the TCPA, 47 CFR
64.1200(e)(2). Neither the TCPA nor the FCC regulations duplicate,
conflict with, or overlap the proposed amendments to the TSR; the
company-by-company do-not-call provision contained in the FCC
regulations and the similar provision in the TSR are consistent with
one another and compliance with both imposes no additional regulatory
burden on companies that conduct telemarketing. The proposed national
do-not-call registry would potentially overlap the current TCPA
company-by-company do-not-call scheme, but would result in a minimal
additional compliance burden to those companies that conduct
telemarketing, including small business entities. The Commission
invites comment on the extent of this additional burden, if any,
including the impact it may have on small businesses.
As for the proposed user fees, no other federal agency is currently
collecting such fees, which are intended to fund a new do-not-call
registry that, if adopted, would be maintained by the FTC. The FTC is
aware of other State statutes and regulations that implement State do-
not-call registries, and is considering the interplay between the State
and proposed federal registries as part of the Rule NPR.
F. Discussion of Significant Alternatives
The Commission has sought, in drafting all of the proposed
amendments to the TSR, to minimize as much as possible the compliance
burden for all affected entities, including small businesses. For
example, the amendments to the disclosure and recordkeeping provisions
of the TSR are generally consistent with the business practices that
most sellers and telemarketers, regardless of any size, would choose to
follow, even absent legal requirements. That being said, each of the
proposed amendments set forth in the Rule NPR is intended to better
protect consumers from deceptive and abusive telemarketing practices,
whether engaged in by entities large or small in size. As to these
provisions, the Commission does not anticipate any disproportionate
impact on small entities from compliance with the proposed Rule.
The Commission has taken care in drafting the proposed amendments
to the Rule to set performance standards, which establish the objective
results that must be achieved by regulated entities, but do not
establish a particular technology that must be employed in achieving
those objectives. For example, the Commission does not specify in what
manner a company will maintain a company-by-company do-not-call list.
Similarly, the proposed recordkeeping provision of the Rule is designed
to afford those subject to the Rule discretion in determining how best
to retain the required records.
As for the user fee rule proposal, the Commission recognizes that
alternatives to the proposed fee are possible. For example, in addition
to a user fee based on the number of area codes that a telemarketer
accesses from the database, access to the registry's database could be
provided, for example, on the basis of a flat fee regardless of the
number of area codes accessed, or a fee that does not permit free
access for one to five area codes. The Commission believes, however,
that those alternatives would likely impose greater costs on small
businesses, to the extent they are more likely to access fewer area
codes than larger entities. Accordingly, the Commission believes its
current proposal is likely to be the least burdensome for small
businesses, while achieving the goal of covering the necessary costs of
operating the registry.
Despite these conclusions, the Commission welcomes comment on any
significant alternatives that would further minimize the impact on
small entities, consistent with the objectives of the Telemarketing
Act, the proposed amendments to the TSR set forth in the Rule NPR, and
the requirements of the User Fee Statute.
VIII. Questions for Comment on the Proposed Rule
The Commission seeks comment on the various aspects of the proposed
revisions to the Telemarketing Sales Rule set forth in this NPR.
Without limiting the scope of issues on which it seeks comment, the
Commission is particularly interested in receiving comments on the
questions that follow. In responding to these questions, include
detailed, factual supporting information whenever possible.
1. The NPR estimates that there are 3,000 ``telemarketers'' or
``sellers,'' as those terms are defined in [sect][sect] 310.2(x) and
(z) of the Proposed Rule, that will be required to pay the proposed
user fee for access to the national registry, if one is implemented. Is
that estimate realistic and appropriate? What evidence, if any, do you
have concerning the number of telemarketers that engage in ``outbound
telephone calls'' that are subject to the Commission's jurisdiction?
What evidence, if any, do you have concerning the number of sellers
that hire other telemarketers to engage in ``outbound telephone calls''
on their behalf? What evidence, if any, do you have concerning the
number of telemarketers who engage in ``list scrubbing'' on behalf of
other sellers or telemarketers?
2. If there is no readily available evidence concerning the number
of telemarketers and sellers, as requested in question 1, is it
appropriate to estimate the number of entities who must pay the
proposed user fee based upon the number of entities that access State
registries? Why or why not? Is there a better estimate?
3. The Commission anticipates that some telemarketers will not want
to gain access to the entire national registry. Is that expectation
realistic? The
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Commission also anticipates providing access to the registry by area
code of the registrant. Is that the best method of sorting the
information in the registry? Given the Commission's expectation that it
will gather only the consumer's telephone number for the national
registry, are there any other sorting capabilities that telemarketers
would find useful to comply with the proposed amended TSR?
4. Is a user fee based on the number of area codes of data accessed
by the telemarketer appropriate? Why or why not? In preparing this
proposal, the Commission considered adopting a simple, flat fee for
every telemarketer that accesses the registry, regardless of whether it
wished to obtain data for all or only part of the country. Based upon
the estimates included in this NPR (3,000 entities paying for access
and the need to raise $3 million in FY 03), that flat fee would have to
be $1,000 for each entity. Is such a flat fee more reasonable and
appropriate that the fee based on the area codes of data accessed?
5. The proposed annual user fee of $12 per area code of data
accessed is based upon the assumption that, on average, the Commission
must raise $1,000 from each of the 3,000 entities that pay to gain
access to the registry data. Thus, the mid-point in the range of area
codes of data for which entities will be charged $12 is approximately
83. That is, the Commission anticipates that the average telemarketer
or seller will pay to obtain the information in 83 area codes of data.
Is this expectation realistic and appropriate?
6. Given the potential need to raise $3 million within FY 03, even
though the registry may not be available for the entire fiscal year,
are there any alternatives to charging the user fee on an annual basis,
in advance of any access to the registry?
7. Is it appropriate not to charge telemarketers or sellers that
obtain information from only one to five area codes of data from the
registry? Why or why not? Should more than five area codes of data be
offered free of charge? How many? If, instead of the current proposal,
the Commission would charge a flat fee for every telemarketer that
accesses the registry, regardless of the amount of data they access,
would it still be appropriate not to charge telemarketers or sellers
that obtain information from only one to five area codes of data?
8. Is the ``buy-up'' provision (permitting telemarketers to buy
access to additional area codes of data) included in proposed section
310.9(b), reasonable and appropriate? Does it make the user fee too
complex? What alternatives would you offer?
9. Is it problematic to require telemarketers to identify the
particular area codes of data they need to access from the national
registry, and to limit their access during the entire one-year term to
those area codes? Why or why not? Does the ``buy-up'' provision solve
any potential problems caused by such identification?
10. The NPR states that only telemarketers will be permitted access
to the national registry, since the information in the registry cannot
be used for any purpose other than compliance with the do-not-call
provisions of the Proposed Rule. Is that limitation appropriate and
workable? Would there ever be a need for an entity other than a
telemarketer to gain access to the national registry? (The Commission
anticipates providing appropriate law enforcement access to the
national registry.)
11. Should list brokers be given access to the national registry in
order to ``scrub'' the telemarketing lists of other firms? Why or why
not?
12. Is it appropriate to require the telemarketer that gains access
to the national registry on behalf of other sellers or telemarketers to
pay the required user fee for those other entities? Why or why not? If
the telemarketer does not pay this fee, who, if anyone, should pay? If
list brokers are allowed access to the national registry, should they
be required to pay the required user fee for all of their clients on
whose behalf they are obtaining access? If telemarketers or list
brokers are not required to pay this fee, what would prevent only a few
firms from gaining access to the national registry, and passing the
information they obtain on to many other entities? If that happened,
wouldn't the annual fee need to be raised significantly? Is this fair
to the entities who do access the registry?
13. Are the certification requirements included in Section 310.9(d)
reasonable and appropriate?
14. Identify any instances when it would be difficult or impossible
for a telemarketer that gains access to the national registry to
identify the other ``sellers'' or ``telemarketers'' on whose behalf
they are working. For example, how should this provision operate as to
a telemarketer working on behalf of numerous subsidiaries of the same
company?
15. The Commission anticipates that if a seller changes
telemarketers during the course of the year, the newly hired
telemarketer will have to pay the appropriate user fee for that seller
in order to gain access to the registry on its behalf. Is this
reasonable and appropriate? If not, identify other alternatives that
could be used to ensure that the seller pays the appropriate user fee.
List of Subjects in 16 CFR Part 310
Telemarketing, Trade practices.
IX. Proposed Rule
Accordingly, for the reasons set forth in the preamble, the
Commission proposes to amend part 310 of title 16 of the Code of
Federal Regulations as follows:
PART 310--TELEMARKETING SALES RULE
1. The authority citation for part 310 continues to read as
follows:
Authority: 15 U.S.C. 6101-6108
2. Add a new [sect] 310.9 to read as follows:
[sect] 310.9 Fee for access to do-not-call registry.
(a) Telemarketers who obtain access to the do-not-call registry,
maintained by the Commission under [sect] 310.4(b)(1)(iii)(B), shall
pay an annual fee, prior to obtaining such access, of $12.00 per area
code of data they access. Telemarketers may obtain access to five or
fewer area codes of data for no fee. The maximum annual fee is
$3,000.00, which will provide access to 250 or more area codes of data.
Any telemarketer who engages in telemarketing on behalf of other
sellers or telemarketers, or who uses the information included in the
registry to remove telephone numbers from the telemarketing lists of
other sellers or telemarketers, shall pay this fee for each such seller
or telemarketer.
(b) After a telemarketer pays the fees set forth in paragraph (a)
of this section, the telemarketer may access the registry data for the
selected area codes at any time for twelve months following the first
day of the month in which the telemarketer paid the fee (``the annual
period''). To obtain access to additional area codes of data during the
first six months of the annual period, the telemarketer must first pay
$12 for each additional area code of data not initially selected. To
obtain access to additional area codes of data during the second six
months of the annual period, the telemarketer must first pay $6 for
each additional area code of data not initially selected. The payment
of the additional fee will permit the telemarketer to access the
additional area codes of data for the remainder of the annual period.
(c) Access to the do-not-call registry is limited to telemarketers
working on
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their own behalf or working on behalf of other sellers or
telemarketers. Prior to accessing the do-not-call registry, a
telemarketer must provide the identifying information required by the
operator of the registry to collect the user fee, and must certify,
under penalty of law, that the telemarketer is accessing the registry
solely to comply with the provisions of this rule. If the telemarketer
is accessing the registry on behalf of other sellers or telemarketers,
that telemarketer also must identify each of the other sellers or
telemarketers on whose behalf it is accessing the registry, and it must
certify, under penalty of law, that the other sellers or telemarketers
will be using the information gathered from the registry solely to
comply with the provisions of this rule.
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 02-13320 Filed 5-28-02; 8:45 am]
BILLING CODE 6750-01-P