[Federal Register Volume 68, Number 64 (Thursday, April 3, 2003)]
[Proposed Rules]
[Pages 16238-16247]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-7932]



[[Page 16238]]

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FEDERAL TRADE COMMISSION

16 CFR Part 310


Telemarketing Sales Rule Fees

AGENCY: Federal Trade Commission.

ACTION: Revised notice of proposed rulemaking and request for public 
comment.

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SUMMARY: The Federal Trade Commission (the ``Commission'' or ``FTC'') 
is issuing a Revised Notice of Proposed Rulemaking (``Revised Fee 
NPRM'') to amend the FTC's Telemarketing Sales Rule (``TSR'') by adding 
a new section that would impose fees on entities accessing the national 
do-not-call registry. This Revised Fee NPRM invites written comments on 
the issues raised by the proposed changes, and seeks answers to the 
specific questions set forth in Section X.
    The Commission is also announcing that full compliance with Sec.  
310.4(b)(1)(iii)(B), the ``do-not-call'' registry provision of the 
Amended TSR, will be required on October 1, 2003.

DATES: Written comments will be accepted until May 1, 2003. Time is of 
the essence to promulgate the proposed fees. Thus, the Commission does 
not anticipate providing any extension to this comment period.

ADDRESSES: The Commission encourages comments to be submitted 
electronically to the following e-mail address: [email protected]. 
Alternatively, commenters may submit an original plus two paper copies 
of their comments 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 paper comments should also be submitted, if 
possible, in electronic form, on 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 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.
    All comments and any electronic versions (i.e., computer disks) 
should be identified as ``Telemarketing Rulemaking--Revised Fee NPRM 
Comment. FTC File No. R411001.'' The Commission will make this NPRM 
and, to the extent possible, all comments received in electronic form 
in response to this NPRM, available to the public through the Internet 
at the following address: http://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, DC 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, 
Division of Marketing Practices, Bureau of Consumer Protection, Federal 
Trade Commission, 600 Pennsylvania Avenue, NW, Washington, DC 20580.

SUPPLEMENTARY INFORMATION:

 Background

    On January 30, 2002, the FTC published a Notice of Proposed 
Rulemaking to amend the FTC's TSR and to request public comment on the 
proposed changes. 67 FR 4492 (Jan. 30, 2002) (``the Rule NPRM''). Among 
other provisions, the Rule NPRM proposed to establish a national do-
not-call registry, to be maintained by the FTC, that would permit 
consumers who prefer not to receive telemarketing calls to contact one 
centralized registry to effectuate this preference. On May 29, 2002, 
the FTC published another Notice of Proposed Rulemaking to further 
amend the TSR by imposing user fees on sellers and telemarketers for 
their access to the proposed national do-not-call registry. 67 FR 37362 
(May 29, 2002) (``the User Fee NPRM''). In issuing the User Fee NPRM, 
the Commission was guided by the Independent Offices Appropriations Act 
of 1952, 31 U.S.C. 9701, and the Office of Management and Budget 
Circular No. A-25. The Commission received 34 comments submitted in 
response to the User Fee NPRM.\1\
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    \1\ A list of commenters to the User Fee NPRM and the Rule NPRM, 
and the acronyms used to identify those entities, was included in 
Attachment B to the Statement of Basis and Purpose for the 
Amendments to the TSR, 68 FR 4677-78 (Jan. 29, 2003) (``TSR SBP''). 
Comments submitted in response to the User Fee NPRM will be cited in 
this Notice as ``[Name of Commenter]-User Fee at [page number].'' 
Comments submitted in response to the Rule NPRM will be cited as 
``[Name of commenter]-Rule NPRM at [page number].''
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    The Commission issued final amendments to the TSR on December 18, 
2002. 68 FR 4580 (Jan. 29, 2003). Among the changes made to the TSR, 
the Commission adopted the proposal to establish a national do-not-call 
registry, permitting consumers to register, via either a toll-free 
telephone number or the Internet, their preference not to receive 
telemarketing calls. When full compliance with the do-not-call 
provisions of the Amended TSR is required, on October 1, 2003, 
telemarketers will be required to refrain from calling consumers who 
have placed their numbers on this registry. 16 CFR 310.4(b)(1)(iii)(B). 
To ensure compliance with this requirement, telemarketers will be 
required to access the national registry at least once every three 
months in order to remove from their telemarketing lists those 
consumers who have placed their telephone numbers on the national 
registry. 16 CFR 310.4(b)(3)(iv). When it issued the Amended TSR, the 
Commission reserved its decision on the issues raised in the User Fee 
NPRM, stating that it would issue a revised Notice of Proposed 
Rulemaking to seek further comment on the issues raised in that 
proceeding. See 68 FR 4580, 4640 n. 716.
    On February 20, 2003, the President signed into law the 
Consolidated Appropriations Resolution of 2003, Public Law 108-7 (2003) 
(``the Appropriations Act''), which appropriated funds for the 
operation of the FTC during fiscal year 2003. In the same Act, Congress 
also authorized the agency to collect fees sufficient to implement and 
enforce the do-not-call provisions of the TSR. Congress further 
estimated the costs for fiscal year 2003 at $18,100,000. Id. at 
Division B, Title II. See also The Do-Not-Call Implementation Act, 
Public Law 108-10 (2003) (``the Implementation Act'') at section 2. 
Pursuant to the Appropriations Act and the Implementation Act, as well 
as the Telemarketing Fraud and Abuse Prevention Act, 15 U.S.C. 6101-08 
(``the Telemarketing Act''), the FTC is issuing this Revised Fee 
NPRM.\2\
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    \2\ Many commenters to the User Fee NPRM claimed that the FTC 
lacked the authority to impose a user fee based on the Independent 
Offices Appropriations Act of 1952. See, e.g., ABA-User Fee at 1-3; 
Ameriquest-User Fee at 1-5; Discover-User Fee at 1-4; DMA-User Fee 
at 1-7 (``If the FTC wants to collect fees for its regulation of 
non-deceptive and non-abusive telemarketing, it must obtain approval 
from Congress to do so''). DMA's comments were supported by ERA, 
PMA, and MPA. Other commenters suggested that consumers should be 
charged the fee necessary to implement the national registry. See, 
e.g., ARDA-User Fee at 1-4; ATA-User Fee at 3-6; Idaho Realtors-User 
Fee at 1-2; Infocision-User Fee at 4; ITC-User Fee at 3-5; MBNA-User 
Fee at 3; NEMA-User Fee at 2-3; SBC-User Fee at 2-5. But see NASUCA-
User Fee at 2; NCL-User Fee at 1; TRA-User Fee at 3. Still other 
commenters suggested that the User Fee NPRM was premature, and that 
they had insufficient information available to properly comment on 
the proposal. See, e.g., CBA-User Fee at 1; Household-User Fee at 3; 
MasterCard-User Fee at 1-3. With the passage of the Appropriations 
Act, the Implementation Act, and the Amended TSR, these comments are 
moot.

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[[Page 16239]]

II. Access to the Do-Not-Call Registry

A. Entities That Are Allowed Access

    In the User Fee NPRM, the Commission proposed limiting access to 
the national do-not-call registry to telemarketers in order to maintain 
the security of the information included in the registry.\3\ In 
addition, because the proposed amendments to the TSR prohibited the use 
of information in the national registry for any purpose other than 
compliance with the do-not-call provisions of the Proposed Rule, the 
Commission believed that only telemarketers would need to access that 
information.
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    \3\ User Fee NPRM at 37365 and proposed Sec.  310.9(c).
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    A number of commenters stated that broader access to the national 
registry is necessary. In particular, some commenters suggested that 
sellers \4\ should be allowed to gain access to evaluate telemarketing 
campaigns run on their behalf and to evaluate telemarketers' Rule 
compliance.\5\ Others suggested that ``outside compliance firms'' and 
``list scrubbers'' should be given access, since they provide a 
valuable service for telemarketers.\6\ Still others stated that 
telemarketers and sellers who are exempt from the FTC's jurisdiction 
would have no access to the list even if they want to voluntarily 
suppress calls. These commenters suggested that the FTC make the 
registry available to any entity provided that the information in the 
registry is used solely for the purpose of preventing telephone calls 
to numbers on that list.\7\
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    \4\ The Amended TSR defines a ``seller'' as ``any person who, in 
connection with a telemarketing transaction, provides, offers to 
provide, or arranges for others to provide goods or services to the 
customer in exchange for consideration.'' 16 CFR 310.2(z).
    \5\ See CBA-User Fee at 4; Discover-User Fee at 4-5; MasterCard-
User Fee at 5.
    \6\ See ARDA-User Fee at 5; NEMA-User Fee at 4.
    \7\ See Discover-User Fee at 4-5; Household-User Fee at 5-6; 
MBNA-User Fee at 3.
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    The Commission agrees that broader access to the national do-not-
call registry may be necessary to effectuate more fully the primary 
purpose of the do-not-call regulations; namely, to enable consumers to 
stop unwanted telemarketing calls. Limiting access only to 
telemarketers, as defined by the Amended TSR, would prevent those 
entities that are exempt from the FTC's jurisdiction, but that want to 
scrub their calling lists as a matter of customer service, from 
obtaining the information necessary to do so. Such limited access also 
may prevent sellers from engaging in thorough Rule compliance, and may 
unnecessarily hinder the services provided to the telemarketing 
industry by list brokers and others. At the same time, the Commission 
agrees with the comment of NASUCA that the information in the national 
registry should be used for no other purpose than to stop unwanted 
telemarketing calls.\8\ As a result, the Commission now proposes, at 
Section 310.8(e), to allow access to the national registry by 
telemarketers, sellers, others engaged in or causing others to engage 
in telephone calls for commercial purposes, and service providers 
acting on behalf of such persons.\9\ Prior to gaining such access, a 
person would be required to certify, under penalty of law, that the 
person is accessing the registry solely to comply with the provisions 
of this Rule or to otherwise prevent calls to telephone numbers on the 
registry.
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    \8\ See NASUCA-User Fee at 7-8.
    \9\ Proposed Section 310.8(e) also permits access to the 
national registry by any government agency that has the authority to 
enforce a federal or state do-not-call statute or regulation. Such 
agencies will access information in the national registry through a 
dedicated, secure website available only to them.
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B. Entities That Are Required To Pay the Fee

    The User Fee NPRM proposed requiring telemarketers who gained 
access to the national do-not-call registry to pay for that access. In 
addition, the User Fee NPRM proposed requiring telemarketers who engage 
in telemarketing on behalf of sellers or other telemarketers, or who 
use the information included in the registry to remove telephone 
numbers from the telemarketing lists of sellers and other 
telemarketers, to pay a fee for each such seller or telemarketer.\10\
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    \10\ User Fee NPRM at 37363 and proposed Sec.  310.9(a).
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    A number of commenters criticized this provision, claiming that it 
would result in sellers, telemarketers, and list brokers paying the 
proposed user fee multiple times for the same information.\11\ Some 
commenters pointed out that many sellers use more than one telemarketer 
in any given year, and such sellers would be required to purchase 
access to the national registry many times over.\12\ As one commenter 
stated, a ``seller who uses only one telemarketer all year for 
nationwide telemarketing campaigns should not be more favorably treated 
than another who uses several telemarketers to conduct similar 
campaigns.''\13\ Other commenters maintained that telemarketers calling 
on behalf of multiple clients ``should pay only one user fee and not a 
fee for every client on whose behalf they perform this service.''\14\ 
On the other hand, NCL commented that if list brokers are allowed 
access to the registry, their payments should be based upon the number 
of clients they represent. ``Charging them only for the total number of 
area codes they obtain would be unfair to telemarketers that do not use 
list brokers and would undermine the economic viability of the 
registry.''\15\
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    \11\ DMA also maintained that the payment structure proposed in 
the User Fee NPRM may violate the Paperwork Reduction Act, 44 U.S.C. 
3506 et seq. (``PRA''), which prohibits federal agencies from 
restricting or regulating the use, resale, or re-dissemination of 
public information by the public, and Section 105 of the Copyright 
Act, 17 U.S.C. 105, which expressly bars the federal government from 
copyrighting its own works. The Commission disagrees with the DMA's 
interpretations of these laws. First, the registry list of telephone 
numbers of consumers who express a preference not to be called by 
telemarketers is not ``public information,'' as that term is used in 
the PRA. In fact, dissemination of the list to the public is a 
violation of the Amended TSR. See 16 CFR 310.4(b)(2). Second, the 
Commission is in no way attempting to copyright the information 
contained in the national registry.
    \12\ See, e.g., MasterCard-User Fee at 5; CBA-User Fee at 4; 
Discover-User Fee at 4; Household-User Fee at 6; VISA-User Fee at 2.
    \13\ CBA-User Fee at 4. See also ITC-User Fee at 6 (``Service 
bureaus like our company typically represent multiple clients. It is 
also typical for our clients to use multiple telemarketing companies 
as vendors. Therefore, several telemarketing companies would end up 
paying the fee several times for the same seller.'')
    \14\ MBNA-User Fee at 3-4. See also ABA-User Fee at 3-4 
(separate fees for both sellers and telemarketers unnecessarily 
complicates the payment schedule); ARDA-User Fee at 4 (there is ``no 
legitimate reason for each seller that uses a single telemarketer to 
pay the same fee for scrubbing against the same list'').
    \15\ NCL-User Fee at 1.
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    The Commission does not intend to charge the same company multiple 
times for access to the national registry, and has gained much relevant 
and important information from comments on its original proposal. At 
the same time, the Commission is now guided by congressional authority 
permitting it to cover the costs of implementing and enforcing the do-
not-call provisions of the Amended TSR, estimated at $18.1 million this 
fiscal year. The Commission seeks to raise those funds as equitably as 
possible, to ensure that the burden of the fees is fairly divided among 
the entire business community that benefits from the making of outbound 
telephone calls.
    To avoid billing entities twice for the same information, and to 
divide the fees among the industry in an equitable manner, the 
Commission is now proposing that each seller must pay, on an annual 
basis, the appropriate fee for accessing the national registry prior to 
initiating, or causing a telemarketer to initiate, an outbound 
telephone call.\16\

[[Page 16240]]

After paying the appropriate fee each annual period,\17\ the seller 
will be provided with a unique account number, and can use that number 
to gain direct access to the national registry at any time during its 
annual period. In addition, the seller can provide its account number 
to any telemarketer or list broker with which it does business, which 
in turn will permit that telemarketer or list broker to gain access to 
the information to which the seller has subscribed.\18\ The Commission 
proposes that such a revised fee structure is more appropriate than its 
original proposal. Under this revised fee structure, each seller would 
be charged only one time annually for access to the information 
included in the national registry, and would be allowed to transfer its 
ability to access the national registry to whatever telemarketers or 
list brokers it wishes to employ on its behalf.
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    \16\ The TSR defines an ``outbound telephone call'' as ``a 
telephone call initiated by a telemarketer to induce the purchase of 
goods or services or to solicit a charitable contribution.'' 16 CFR 
310.2(u). A ``telemarketer,'' in turn, is ``any person who, in 
connection with telemarketing, initiates or receives telephone calls 
to or from a customer or donor.'' 16 CFR 310.2(bb). Finally, 
``telemarketing'' is defined as a ``plan, program, or campaign which 
is conducted to induce the purchase of goods or services or a 
charitable contribution, by use of one or more telephones, and which 
involves more than one interstate telephone call.'' 16 CFR 
310.2(cc). Thus, sellers engaging in a plan, program, or campaign 
involving only intrastate telemarketing calls would not be required 
to pay a fee or access the national registry pursuant to the TSR. In 
addition, solicitations to induce charitable contributions via 
outbound telephone calls are not covered by the do-not-call 
requirements of the TSR. 16 CFR 310.6(a). As a result, sellers 
involved only in such solicitations similarly would not be required 
to pay a fee or access the national registry. Of course, entities 
engaged in conducting surveys are not seeking to induce the purchase 
of goods or services and therefore are not engaged in 
``telemarketing'' nor subject to the TSR. Similarly, political fund 
raising is not ``telemarketing'' and is not covered.
    \17\ The fee that would be charged for access to the national 
registry is discussed in Section III.D, below. A seller's ``annual 
period'' is discussed in Section IV, below.
    \18\ VISA suggested a similar type of pricing structure, in 
which the FTC could ``license'' the registry to individual sellers, 
which in turn could employ a telemarketer to use the registry, if 
they desire, subject to confidentiality and use restrictions. VISA-
User Fee at 2.
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    In a further effort to avoid requiring an entity to pay twice for 
access to the same information, the Commission now proposes that 
telemarketers who are not also sellers--i.e., entities that engage in 
telemarketing only on behalf of others--should not have to pay a 
separate fee for their access to the national registry.\19\ Charging 
such ``pure'' telemarketers for access in effect would cause their 
seller-clients to pay twice for access to the national registry. 
Instead, under the instant proposal, such telemarketers would be 
required to ensure that their seller-clients have paid for access to 
the national do-not-call registry prior to initiating outbound 
telephone calls on their behalf. Telemarketers would gain this 
assurance by obtaining and using the seller's unique account number to 
the national registry.
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    \19\ Similarly, list brokers who develop and/or scrub the 
calling lists for their seller-clients would not have to pay for 
their individual access to the national registry. Instead, they also 
would have to certify that their seller-clients have paid for access 
to the national registry prior to gaining access to the national 
registry.
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    As previously stated, the Commission seeks to spread the fee burden 
equitably across all entities that engage in telemarketing. Sellers are 
the ultimate beneficiaries of telemarketing campaigns, and all covered 
sellers must access the national registry to remain in compliance with 
the do-not-call provisions of the Amended TSR. As a result, all sellers 
should pay an appropriate fee for that access, but should pay that fee 
only one time during each annual period. The Commission does not agree 
with those commenters that suggested the agency should charge only 
telemarketers, and not their clients, for access to the national 
registry.\20\ By only charging telemarketers for access to the national 
registry, and charging them only once for their access on behalf of 
multiple clients, the fee structure would unfairly benefit those 
sellers that employ a telemarketer with multiple clients, since those 
sellers would pay less of a fee for access to the same information than 
sellers that engage in their own telemarketing without hiring a 
telemarketer. Thus, the Commission is proposing to charge sellers and 
not telemarketers or list brokers for access to the national 
registry.\21\
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    \20\ See, e.g., ABA-User Fee at 3-4; MBNA-User Fee at 3-4; ITC-
User Fee at 6.
    \21\ ABA stated that a single fee to telemarketers would enhance 
the privacy and security of the national registry by discouraging 
seller-clients from accessing the national registry individually in 
order to scrub their calling lists. Instead, sellers would allow 
their telemarketers to access the registry on their behalf. ABA-User 
Fee at 3-4. As stated above, the Commission believes that charging 
only telemarketers would be inequitable. The Commission also 
believes that the certification required of sellers who access the 
national registry, as discussed in Section II.A, above, will help to 
address the security and privacy concerns raised by ABA. Moreover, 
telemarketers would still be allowed to access the registry on 
behalf of their seller-clients under the current proposal, using 
their seller-clients' account number.
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    Proposed Sec.  310.8(a) of the Rule would make sellers directly 
liable for initiating, or causing a telemarketer to initiate, an 
outbound telephone call without first paying the appropriate fee for 
access to the national registry. Proposed Section 310.8(b) would make 
telemarketers directly liable for initiating an outbound telephone call 
on behalf of a seller without first ensuring that their seller-clients 
have paid for up-to-date access to the national do-not-call registry. 
The Commission proposes to impose this liability under the authority of 
the Appropriations Act and the Implementation Act, in addition to the 
Telemarketing Act, which provides the authority for the other portions 
of the Amended TSR. The Commission believes such direct liability on 
sellers and telemarketers is necessary to effectuate fairly the mandate 
of the Appropriations Act and the Implementation Act, which authorize 
the Commission to collect fees sufficient to cover the costs of 
implementing and enforcing the do-not-call provisions of the Amended 
TSR. Without such direct liability, the Commission is concerned that 
not all entities that obtain information from the national registry 
will pay their fair share of the fees for that registry, resulting in 
increased fees for those entities that do pay. As a result of the 
proposed imposition of this direct liability, the failure of a seller 
to pay the appropriate fee prior to initiating or causing another 
entity to initiate an outbound telephone call, and the failure of a 
telemarketer to ensure that a seller has paid the appropriate fee prior 
to initiating an outbound telephone call on its behalf, would be a 
violation of the Amended TSR, subject to all remedies available for 
such violations.

C. Corporate Divisions, Subsidiaries, and Affiliates

    In the User Fee NPRM, the Commission proposed following the 
compliance guide for the original TSR by requiring that distinct 
corporate divisions of a single corporation be considered separate 
sellers for the purposes of payment of the annual fees. Factors used to 
determine if corporate divisions would be treated as separate sellers 
would 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.
    In response to this proposal, some commenters suggested that the 
Commission treat divisions of the same corporation as one seller and 
allow the sharing of the registry among them.\22\ Another suggested the 
same treatment for a ``family'' of affiliated companies.\23\ Wells 
Fargo stated that this treatment would allow a company to purchase a

[[Page 16241]]

single copy of the list to maintain ``a centralized scrub service that 
would be available to its affiliates. While this may reduce revenues 
somewhat, it would greatly increase compliance. \24\
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    \22\ See, e.g., ARDA-User Fee at 5; CBA-User Fee at 4.
    \23\ Household-User Fee at 2.
    \24\ Wells Fargo-User Fee at 2.
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    The Commission is concerned that any such treatment of corporate 
divisions, subsidiaries, or affiliates could greatly diminish the 
number of entities that will pay for access to the national registry, 
provide an unfair advantage to larger, multi-divisional corporations, 
and potentially increase the fees required to be paid by smaller, less 
complex corporate entities. As a result, the Commission proposes to 
treat each separate division, subsidiary, or affiliate of a corporation 
as a separate seller for purposes of Sec.  310.8. The Commission notes 
that such treatment will not diminish the effectiveness of corporate 
``centralized scrub services.'' In effect, such centralized services 
can still be performed, provided that each corporate division, 
subsidiary, or affiliate has paid the appropriate fee for access to the 
national registry. It should be noted that divisions, subsidiaries, or 
affiliates of a seller that must pay for access to the national 
registry need not individually download the information in the registry 
on their own behalf. They need to pay only for the requisite access, 
and would be able to provide their unique account number to another 
division, subsidiary, or affiliate to perform the actual downloading of 
information and corporate list scrubbing. See section IV, below, for 
further discussion of the proposed operation of the fee collection 
system.

III. Calculation of Fees

A. Number of Entities Accessing the National Registry

    To establish the appropriate fees to charge entities that access 
consumer telephone numbers included in the national registry, the 
Commission must first estimate the number of such entities that would 
be required to pay the proposed fee. As stated in the User Fee NPRM, 
this step is among the most difficult, given the dearth of information 
about the number of sellers currently in the marketplace who make 
outbound telemarketing calls to consumers.\25\ In the User Fee NPRM, 
the Commission determined, after examining relevant industry literature 
and the record in this and past TSR rulemaking proceedings, that the 
most pertinent information for determining the number of firms that 
would be required to pay the proposed user fee would be the number of 
firms that access state do-not-call registries. At that time, the most 
telemarketing firms that accessed any individual state registry was 
2,932. Thus, in order to propose a realistic fee structure that would 
ensure sufficient funds would be collected to cover the costs of a 
national registry, the Commission estimated in the User Fee NPRM that 
3,000 entities would pay for access to the information in the national 
registry.\26\ The Commission sought comment and evidence to determine 
whether this estimate was realistic and appropriate.
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    \25\ See User Fee NPRM at 37363-64.
    \26\ The Commission previously had estimated, in the notice of 
amended application to the OMB under the Paperwork Reduction Act, 44 
U.S.C. 3501, et seq., that there were 40,000 telemarketing industry 
members affected by the TSR in the United States. See the Rule NPRM, 
67 FR at 4534. As explained in the User Fee NPRM, the Commission 
does not believe that prior estimate is representative in the 
instant context. See User Fee NPRM at 37364, n. 7.
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    Only one of the 34 comments received in response to the User Fee 
NPRM provided any information relevant to this inquiry.\27\ That 
commenter, DialAmerica Marketing, Inc. (``DialAmerica''), stated that 
it has 700 clients for which it would have to obtain access to the 
entire national do-not-call registry.\28\ In other words, DialAmerica's 
client base would comprise over 23 percent of all entities that the 
Commission estimated would be required to access the national 
registry.\29\ This information casts doubt on the original estimate. 
The Commission is therefore proposing a new estimate of the number of 
firms that will access the national registry, developed through a 
calculation using the limited information provided in the comments, 
combined with relevant industry-wide data that the Commission has been 
able to identify. This calculation makes a number of significant 
assumptions based on the best information available to the agency at 
this time. In Section X, below, the Commission asks specific questions 
about each of these assumptions, seeking information as to their 
reliability. The Commission asks commenters to provide any information 
they can about any and all of these assumptions, including company-
specific information and data that could help the agency to refine its 
estimates of the number of firms that will need to access the national 
registry.
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    \27\ The Commission also received some company-specific 
information from another commenter in response to the Rule NPRM. 
CDI-Rule NPRM at 1.
    \28\ DialAmerica-User Fee at 2. According to Customer 
Inter@ction Solutions, a monthly magazine of the teleservices 
industry, DialAmerica is the second-largest outbound teleservices 
agency in the United States. See http://www.tmcnet.com/cis/0302/0302top50a.htm (visited 4 February, 2003).
    \29\ Moreover, DialAmerica stated that its annual fees for 
obtaining access on behalf of all of its clients would result in 
that company alone paying for 70 percent of the total amount that 
was to be raised by the User Fee NPRM.
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    Since scrubbing against the do-not-call registry is only required 
on outbound calls made to consumers,\30\ the Commission begins its 
calculation with the assumption that DialAmerica has 700 clients for 
which it makes these types of calls. According to the Winterberry 
Group, DialAmerica has revenues of $300 million per year, and outbound 
calls account for 90 percent of its call volume.\31\ Assuming that 
DialAmerica's revenues per call are the same for inbound and outbound 
calls, its revenues from outbound calls would total $270 million (90 
percent of $300 million).
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    \30\ See 16 CFR Sec. Sec.  310.4(b)(1)(iii)(B); 310.6(b)(7).
    \31\ Winterberry Group, Industry Map: Teleservice Industry--
Multi-Channel Marketing Drives Universal Call Centers 16 (January 
2001)(``Winterberry Group''). The Winterberry Group is a consulting 
firm that works with the direct marketing industry. See http://www.winterberrygroup.com (visited 25 March 2003).
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    According to Customer Inter@ction Solutions, 85 percent of 
DialAmerica's business involves sales to consumers.\32\ If the 
Commission assumes that the 85 percent of DialAmerica's business that 
involves sales to consumers is 90 percent outbound, consumer outbound 
sales calls would account for $229.5 million in revenue (85 percent of 
$270 million). If DialAmerica receives $229.5 million in revenue from 
its 700 clients for whom it does outbound calling to consumers, this 
implies that the average revenue per client is about $328,000 ($229.5 
million/700).
---------------------------------------------------------------------------

    \32\ Customer Inter@ction Solutions: Outsourcing, http://www.tmcnet.com/cis/0302/0302top50a.htm (visited 4 February, 2003).
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    According to the Winterberry Group, total expenditures on 
teleservices were $147.7 billion in 2000. Of this, 48.1 percent was 
spent on outbound calling, and 49.6 percent was spent on sales calls to 
consumers.\33\ Assuming that the same percentage of expenditures on 
calls to businesses and calls to consumers are for outbound calls would 
imply that just under 24 percent of the total spent on teleservices is 
spent on outbound calls to consumers (48.1 percent x 49.6 percent = 
23.9 percent).
---------------------------------------------------------------------------

    \33\ Winterberry Group at 2, 8, 9.
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    Also, according to the Winterberry Group, total expenditures on 
third-party teleservices providers amounted to $19.2 billion--13 
percent of the $147.7 billion total expenditures on such services--in 
2000.\34\ If the Commission

[[Page 16242]]

assumes that, as with overall expenditures on teleservices, roughly 24 
percent of expenditures on third-party providers was for outbound 
calling to consumers, expenditures on third-party outbound calls to 
consumers would total $4.59 billion (23.9 percent of $19.2 billion).
---------------------------------------------------------------------------

    \34\ Id. at 9.
---------------------------------------------------------------------------

    If the Commission assumes that the DialAmerica figure of $328,000 
in revenues per client is representative of third-party providers of 
outbound calls to consumers in general, this would imply that there are 
approximately 14,000 such telemarketer-client relationships ($4.59 
billion/$328,000 = 13,994).\35\
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    \35\ The only other comment providing any information of 
assistance in determining the number of entities that would pay a 
fee to access the national registry came from CDI. CDI stated that 
it specializes in outbound calling for daily and weekly newspapers 
ranging in size from 5,000 subscribers to over 1 million 
subscribers, makes calls on behalf of 140 different clients each 
month, and employs over 400 people. CDI-Rule NPRM at 1. Unlike 
DialAmerica, however, the Commission was unable to discover any 
information about CDI's revenues, making its company-specific 
information less useful in formulating assumptions regarding the 
number of industry members. owever, by comparing CDI's 400 employees 
to the 11,000 people employed by DialAmerica (approximately 3.6 
percent of the size of DialAmerica), and assuming that sales per 
employee are the same for the two firms, one might estimate CDI's 
revenues are around $11 million (approximately 3.6 percent of 
DialAmerica's $300 million in annual revenue). If CDI has revenues 
around $11 million and calls on behalf of 140 clients during the 
entire year, their per-client revenues would be only about $78,500 
per year. (Of course, the fact that CDI calls on behalf of 140 
clients each month does not mean that they have only 140 clients 
during the entire year. They may have different clients each month, 
which would make the revenue per client even lower.) If the figures 
for CDI are representative of a significant share of the 
telemarketing industry and if, as a result, the average revenue per 
firm is significantly lower than what DialAmerica realizes, the 
estimated number of telemarketer-client relationships would increase 
proportionally. This NPRM is specifically seeking information and 
comment about these figures from the industry.
---------------------------------------------------------------------------

    If the Commission assumes that the average firm that uses third-
party service providers uses three different providers for different 
campaigns over the course of a year, there would only be about 4,650 
firms using such third-party providers (13,965 firms/3 = 4,655), and 
the average firm that uses third-party telemarketers would spend an 
average of $984,000 per year on outbound telemarketing to consumers 
($328,000 x 3).
    None of these figures accounts for firms that do their calling 
using their own staff and their own in-house equipment, which account 
for $128.5 billion--87 percent of total expenditures--spent on 
teleservices.\36\ Again assuming that roughly 24 percent of 
expenditures by companies using their own resources to make calls are 
for outbound calling to consumers, total expenditures on these services 
would be $30.71 billion (23.9 percent of $128.5 billion). These firms 
are probably larger on average--and probably do more telemarketing--
than the firms that use third-party service providers. If the 
Commission assumes that they spend, on average, five times as much as 
firms that use third-party telemarketers, they would be spending $4.92 
million per firm ($984,000 x 5). This would suggest that there are 
another 6,250 firms who do their own telemarketing ($30.71 billion/
$4.92 million = 6,242 firms).
---------------------------------------------------------------------------

    \36\ See Winterbery Group at 2.
---------------------------------------------------------------------------

    In total, this would suggest that there are some 10,900 firms doing 
outbound calling to consumers--4,650 firms using third-party 
telemarketers, plus 6,250 doing their own calling. Of course, some of 
these firms would not be required to scrub against the FTC list because 
they are either engaged in charitable solicitations or are calling on 
behalf of an industry that is exempt from FTC regulation. Other firms 
that make only intrastate calls would likewise not need to obtain the 
list. The firms that only make intrastate calls are likely to be the 
smaller firms that tend to use third-party providers to make their 
calls.
    If the Commission assumes that 40 percent of firms that use third-
party providers and 25 percent of firms that do their own telemarketing 
are exempt from coverage,\37\ approximately 2,800 firms that use third 
party providers (60 percent of 4,655 = 2,793) and 4,700 firms that do 
their own telemarketing (75 percent of 6,231 = 4,682) would be required 
to access the national do-not-call registry. Thus, the total number of 
firms accessing the registry would be 7,500.
---------------------------------------------------------------------------

    \37\ Firms that are exempt from coverage include those engaged 
only in intrastate telemarketing or in making solicitations to 
induce charitable contributions. See footnote 16, above. In 
addition, firms outside of the FTC's jurisdiction that make their 
own telemarketing calls, such as common carriers, banks, savings and 
loans, as well as companies that engage in the business of 
insurance, are also exempt from coverage and not included in our 
estimate of the number of firms that will have to access the 
national registry.
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B. Amount of Information for Which an Entity Would Be Charged

    In the User Fee NPRM, the Commission proposed a fee structure based 
on the number of different area codes of data that an entity wished to 
use annually.\38\ The Commission proposed charging for access to the 
registry per area code because that charge most closely approximated 
the cost of operating the national registry. The Commission also 
determined that many telemarketers and sellers engage in regional 
rather than nationwide calling campaigns, and therefore would not need 
consumer registration data for the entire nation.
---------------------------------------------------------------------------

    \38\ See User Fee NPRM at 37364.
---------------------------------------------------------------------------

    A number of commenters that addressed this issue supported using 
area codes as a basis for assessing the fee.\39\ In fact, SBA noted 
that the flexibility inherent in allowing entities to access the 
national registry by area code ``would be beneficial to small 
businesses.'' \40\ On the other hand, other commenters suggested that 
imposing fees based on the number of area codes accessed, rather than 
imposing a flat fee, would create ``unnecessary administrative 
complications.'' \41\ However, the Commission has determined that it is 
not overly complex, from a system implementation prospective, to 
provide access to and collect fees for the national registry by area 
code. In fact, providing the entire national registry to every entity 
that seeks access, even if that entity will not need all of that 
information, would put a significantly larger strain on the resources 
necessary to deliver that information, resulting in an unnecessary 
increase in system costs. Another commenter stated that the 
``management of tracking user fees for area codes that each individual 
client calls for a sales campaign would be an extremely burdensome task 
for larger telemarketers.'' \42\ The Commission acknowledges that 
charging for access to the national registry by area code may entail 
some complexity for large telemarketers. On balance, however, the 
Commission believes that the countervailing benefits of allowing access 
to the registry by area code outweigh any potential costs. As a result, 
the Commission continues to propose providing access to the national 
registry based on the number of area codes of information sought.\43\
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    \39\ See ARDA-User Fee at 4; NCL-User Fee at 1; AARP-User Fee at 
2.
    \40\ SBA-User Fee at 4.
    \41\ ABA-User Fee at 3. Accord Household-User Fee at 4; ITC-User 
Fee at 6; MBNA-User Fee at 2; TRA-User Fee at 3.
    \42\ DialAmerica-User Fee at 2.
    \43\ One commenter requested clarification that if access to the 
entire registry is requested, the requestor will not have to input a 
list of all area codes. Household at 6. That is correct. An entity 
seeking access to the entire national registry will simply have to 
check a box indicating that preference, without having to list any 
area codes. In addition, the registry will offer the same access 
capabilities for the area codes within each state, so that entities 
will be able to select all area codes within a certain state simply 
by requesting access to information for that state.

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[[Page 16243]]

C. Small Business Access

    In the User Fee NPRM, the Commission proposed providing free 
registry access to any firm wishing to obtain data from only one to 
five area codes.\44\ The Commission proposed such free access to limit 
the burden placed on small businesses that only require access to a 
small portion of the national registry. The Commission noted that its 
proposal was 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 should consider regulatory alternatives to 
minimize such impact.\45\
---------------------------------------------------------------------------

    \44\ See User Fee NPRM at 37364.
    \45\ But see section IX, below, where the Commission determines 
that the instant proposed Rule would not have a significant economic 
impact on a substantial number of small entities.
---------------------------------------------------------------------------

    A number of commenters supported this small business exemption.\46\ 
Others opposed it for various reasons. Household stated that any fee 
should be assessed to all entities obtaining access to the national 
registry because there is no rational basis to do otherwise, and 
``telemarketers and sellers should not have to subsidize the 
telemarketing activities of other telemarketers or sellers, regardless 
of their size.''\47\ ITC stated that the number of area codes purchased 
is a poor indicator of the extent of actual use, and a structure 
without exemptions is simpler and easier to administer.\48\ TRA stated 
that ``the area or population served by five or fewer area codes could 
be enormous,'' and that all telemarketers should be required to help 
defray the cost of the national registry.\49\ SBSC maintained that the 
five area code exemption does not provide sufficient protections for 
small businesses, since many small businesses are located in geographic 
areas with many area codes, and some small businesses may actually be 
national in scope.\50\ Finally, NASUCA expressed concern that 
telemarketers may ``game'' the system to avoid paying for access--
especially by treating ``distinct corporate divisions of a single 
corporation'' as separate entities, thus allowing each division to 
gather five area codes and pool the numbers among themselves. NASUCA 
also stated that there can be variations in the number of customers 
within an area code and the number of area codes within a state, 
creating inconsistencies in the amount of data for which a telemarketer 
will be paying.\51\
---------------------------------------------------------------------------

    \46\ See, e.g., NCL-User Fee at 1; SBA-User Fee at 1, 4; AARP-
User Fee at 2.
    \47\ Household-User Fee at 3-4.
    \48\ ITC-User Fee at 6.
    \49\ TRA-User Fee at 6.
    \50\ Small Business Survival Committee (``SBSC'')-User Fee at 2.
    \51\ NASUCA-User Fee at 3-6.
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    After evaluating these comments, the Commission still believes that 
it is appropriate to provide access to a small portion of the data in 
the national registry for free. The Commission agrees with the comments 
that stated the imposition of fees may be unduly burdensome, and could 
have a disproportionate impact, on small businesses.\52\ The Commission 
is attempting to alleviate that burden to the greatest extent possible, 
while still collecting the necessary fees in as equitable manner as 
possible. By providing free access to a small portion of the national 
registry, the Commission is attempting to alleviate some of the 
disproportionally heavier burdens faced by small businesses. The 
Commission recognizes that not all small businesses will be able to 
enjoy the benefits of this proposal, since some small businesses may 
engage in telemarketing in a geographic area larger than five area 
codes. However, the Commission believes that most entities that will 
benefit from this proposal will be small businesses. Moreover, 
providing this free access does not significantly increase the 
complexity of implementing the national registry.\53\
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    \52\ See ICTA-User Fee at 1-2; Ameriquest-User Fee at 6; 
Celebrity Prime Foods-User Fee at 1.
    \53\ In the Commission's view, an alternative approach that 
would provide small business with exemptive relief more directly 
tied to size status would not balance the private and public 
interests at stake any more equitably or reasonably than the 
approach currently proposed by the Commission. For example, an 
across-the-board exemption from all fees for small businesses, no 
matter how many area codes they access, would shift the entire cost 
of the registry to larger businesses and require assessing them even 
higher access fees, while giving the small business community access 
to the registry without any cost-sharing responsibility whatsoever. 
Compared to the Commission's current proposal, which requires small 
businesses that telemarket beyond five area codes to pay access 
fees, a categorical small-business exemption would not be as 
consistent with the general legislative mandate that the Commission 
recover the registry's costs from those telemarketing entities 
obtaining access to the registry. Alternatively, it might be argued 
that allowing small businesses to pay reduced rates across the 
entire fee schedule could achieve substantially the same level and 
balance of exemptive relief and cost recoupment as the current 
proposal to provide free access to five area codes or fewer. A 
reduced fee schedule based on small business size, however, would 
still ultimately require a certification and determination of that 
status to implement and enforce, and thus would present greater 
administrative, technical, and legal costs and complexities than the 
Commission's current exemptive proposal, which does not require any 
proof or verification of that status.
---------------------------------------------------------------------------

    The Commission also believes its proposal will prevent companies 
from ``gaming'' the system to gain free access on a large scale. It 
would be a violation of the proposed fee rule for a telemarketer, or a 
seller to cause a telemarketer, to initiate outbound telephone calls in 
an area of the country for which it did not pay for access to the 
national registry. Thus, distinct corporate divisions of the same 
company that acquire only five area codes of data could not make 
outbound telephone calls outside of those five area codes without 
violating the proposed rule. As a practical matter, it is unlikely that 
any company would organize its divisions by limiting each division's 
telemarketing to five area codes, just to avoid the proposed fee. The 
Commission believes that the costs associated with trying to ``game'' 
the system in such a manner would be much larger than the benefits of 
avoiding the proposed fees.
    While the Proposed Rule provides free access to a small portion of 
the national registry, the Commission continues to seek comment on 
other alternatives that would balance the burdens faced by small 
businesses with the need to raise appropriate fees to fund the registry 
in an equitable manner.
    As for the appropriate level of free access, the Commission 
continues to seek comment on this issue as well.\54\ Absent evidence to 
the contrary, the Commission believes that five area codes is an 
appropriate compromise between the goals of equitably and adequately 
funding the national registry, on the one hand, and providing 
appropriate relief for small businesses, on the other. While the 
Commission understands that five area codes could provide free access 
to a significant geographic area, the Commission also is attempting to 
address those small businesses that work in large metropolitan areas, 
which often have multiple area codes within a relatively small 
geographic area. Furthermore, while the Commission is mindful of the 
possible variations in the number of telephone numbers included in each 
area code, the Commission believes the only more equitable way to 
divide access to the national registry, other than by area code, might 
be by individual telephone number. Such a fine gradation, assuming its 
feasibility,

[[Page 16244]]

would significantly increase the complexity of the system, both in 
terms of accessing and delivering the data. The Commission believes the 
increase in the complexity weighs against such an approach. Thus, the 
Commission continues to propose that access to five or fewer area codes 
of data in the national registry be provided for free.
---------------------------------------------------------------------------

    \54\ SBA commented that it had insufficient information to 
determine whether five area codes is an appropriate level of free 
access, and recommended that the FTC contact small telemarketers to 
inquire how many area codes they commonly access in a given year 
during the course of business. SBA-User Fee at 4. ICTA suggested 
that the number of area codes of data that could be acquired without 
paying a fee be increased from five to ten, but provided no 
rationale for this suggestion. ICTA-User Fee at 1-2.
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D. Fees for Access

    As previously discussed, both the Appropriations Act and the 
Implementation Act authorize the Commission to raise fees sufficient to 
cover the costs of implementing and enforcing the do-not-call 
provisions of the Amended TSR, estimated at $18.1 million for fiscal 
year 2003. The Commission anticipates that it will need to raise the 
entire estimated $18.1 million authorized to cover the costs associated 
with those efforts in this fiscal year. Costs fall primarily in three 
broad categories. First are the actual estimated contract costs along 
with associated agency costs to develop and operate the do-not-call 
registry. These cover things like the registration procedures and 
handling of complaints, the transfer of registration information from 
state lists to the registry, telemarketer access to the registration 
information, and the management and operation of law enforcement access 
to appropriate information. The second category of costs relates to 
enforcement efforts. These costs will include law enforcement 
initiatives, both domestic and international, to identify targets and 
challenge alleged violators. Enforcement costs also include consumer 
and business education, which are critical complements to enforcement 
in securing compliance with the do-not-call provisions. The third 
category of costs covers agency infrastructure and administration 
costs, including information technology structural supports. In 
particular, the Consumer Sentinel system (the agency's repository for 
all consumer fraud-related complaints) and its attendant infrastructure 
must be upgraded to handle the anticipated increased demand from state 
law enforcers for access to do-not-call complaints. Further, the 
Consumer Sentinel system will require substantial changes so that it 
may handle the significant additional volume of complaints that are 
expected.
    In order to raise $18.1 million this fiscal year, and assuming that 
7,500 firms will pay for that access, the Commission proposes charging 
an annual fee of $29 for each area code of data accessed.\55\ There 
would be no fee charged for access to five or fewer area codes of data. 
In addition, the Commission continues to propose placing a cap on the 
maximum annual fee that would be charged an entity that wants access to 
the entire national database. That maximum fee would be $7,250, which 
would be charged for using 250 area codes of data or more. As a result 
of this revised proposed fee schedule, there would be no charge for 
obtaining only five area codes of data; six area codes of data would 
cost $174; twenty-five area codes would cost $725; two hundred area 
codes would cost $5,800; and access to the data from all area codes 
would be capped at $7,250 annually.
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    \55\ Only two commenters responded to questions in the User Fee 
NPRM as to whether an annual or a monthly fee would be a more 
preferable, efficient, and appropriate method of fee collection. 
Both supported the use of an annual fee, as opposed to monthly one. 
See Household-User Fee at 4; MBNA-User Fee at 4.
---------------------------------------------------------------------------

    As stated above, these proposed fees are based on certain 
assumptions and estimates.\56\ 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 
actual experience with operating the registry.
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    \56\ In addition to the assumptions set forth in Section III.A, 
above, concerning the number of firms that will access the national 
registry, the Commission continues to assume that, on average, 
sellers will pay to obtain information from 83 area codes in the 
national registry. See User Fee NPRM at 37368, question 5.
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IV. Operation of the National Registry for the Telemarketing Industry

    The Commission is developing a fully-automated, secure Web site 
dedicated to providing members of the telemarketing industry with 
access to the registry's list of telephone numbers, sorted by area 
code. The first time a company accesses the system, it will be asked to 
provide certain limited identifying information, such as company name 
and address, company contact person, and the contact person's telephone 
number and e-mail address. If an entity is accessing the registry on 
behalf of a client-seller, the entity will also need to identify that 
client.
    The only consumer information that companies will receive from the 
national registry is a registrant's telephone number.\57\ Those 
telephone numbers will be sorted and available by area code. Companies 
will be able to access as many area codes as desired, by selecting, for 
example, all area codes within a certain state. Of course, companies 
will also be able to access the entire national registry, if desired. 
In addition, after providing the required identifying information and 
paying the appropriate fee, if any, companies will be allowed to check, 
via interactive Internet pages, a small number of telephone numbers 
(less than ten) at a time to permit small volume callers to observe the 
do-not-call requirements of the TSR without having to download a 
potentially large list of all telephone numbers within a particular 
area.
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    \57\ In fact, that is the only personal identifying information 
submitted by consumers that will be maintained in the national 
registry. The registry will also maintain other information about 
the registration for law enforcement purposes, such as the date and 
method of registration, but that information will not be available 
to companies accessing the registry.
---------------------------------------------------------------------------

    When a seller first submits an application to access registry 
information, the company will be asked to specify the area codes that 
it wants to access. As discussed above, each seller accessing the 
registry data will be required to pay an annual fee for that access, 
based on the number of area codes of data the seller accesses. Fees 
will be payable via credit card (which will permit the real-time 
transfer of data) or electronic funds transfer (which will require the 
seller to wait approximately one day for the funds to clear before data 
access will be provided). A seller must pay these fees prior to gaining 
access to the registry.
    Sellers will 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.\58\ If, during the course of the year, sellers need to access data 
from more area codes than those initially selected, 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 $29 for each new area code. During the second 
semi-annual, six-month period, the charge of obtaining data from each 
new area code requested during that six-month period is $15. These 
payments for additional data would provide sellers access to those 
additional areas of data for the remainder of their initial annual 
term.
---------------------------------------------------------------------------

    \58\ To protect system integrity, a company will be permitted to 
download the entire national registry only once in any 24-hour 
period.
---------------------------------------------------------------------------

    After payment is processed, the seller will be given a unique 
account number and permitted access to the appropriate portions of the 
registry. That account number will be used in future visits to

[[Page 16245]]

the Web site, to shorten the time needed to gain access. On subsequent 
visits to the Web site, sellers will be able to download either an 
entire updated list of numbers from their selected area codes, or a 
more limited list, consisting only of additions to or deletions from 
the registry that have occurred since the company's last download. This 
would limit the amount of data that a company needs to download during 
each visit.
    Telemarketers, list brokers, and other entities working on behalf 
of sellers will need to submit their client-seller's account number to 
gain access to the national registry. The extent of their access will 
be limited by the area codes requested and paid for by their client-
sellers. They also will be permitted to access the registry as often as 
they wish for no additional cost, once the annual fee has been paid by 
their client-sellers.\59\ As indicated in the Rule NPRM discussion of 
section 310.4(b)(3)(iv), however, the Rule requires a seller or 
telemarketer to employ a version of the do-not-call registry obtained 
from the Commission no more than three months prior to the date any 
telemarketing call is made.
---------------------------------------------------------------------------

    \59\ Telemarketers, list brokers, and other entities working on 
behalf of sellers will also be limited to downloading the entire 
national registry only once in any 24-hour period.
---------------------------------------------------------------------------

V. Date By Which Full Compliance With the Do-Not-Call Provisions of the 
Amended TSR Will Be Required

    In the Statement of Basis and Purpose to the Amended TSR, the 
Commission stated that it would announce at a future time the date by 
which full compliance with Sec.  310.4(b)(1)(iii)(B), the do-not-call 
registry provision, would be required.\60\ At that time, the Commission 
anticipated that full compliance with the do-not-call provision would 
be required approximately seven months from the date a contract is 
awarded to create the national registry.
---------------------------------------------------------------------------

    \60\ See 68 FR at 4664.
---------------------------------------------------------------------------

    On March 1, 2003, the Commission awarded the contract to create the 
national do-not-call registry to AT&T Government Solutions, Inc. 
Accordingly, the Commission is now announcing that full compliance with 
Sec.  310.4(b)(1)(iii)(B), the ``do-not-call'' registry provision of 
the Amended TSR, will be required on October 1, 2003.
    Companies will be able to begin accessing the national do-not-call 
registry on September 1, 2003. As a result, to remain in compliance 
with the do-not-call provisions of the Amended TSR, all covered sellers 
will be required to access the national registry for the first time 
between September 1-30, 2003. During that same time frame, all covered 
sellers or entities working on their behalf must download the portions 
of the national registry for those areas of the country in which they 
will either initiate an outbound telephone call or cause a telemarketer 
to initiate an outbound telephone call on their behalf.

VI. 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. The Commission encourages comments to be 
submitted electronically to the following e-mail address: 
[email protected]. Alternatively, commenters may submit an original plus 
two paper copies of their comments to the Office of the Secretary, Room 
159, Federal Trade Commission, 600 Pennsylvania Avenue, NW., 
Washington, DC 20580. All comments must be submitted on or before May 
1, 2003. Time is of the essence to promulgate these proposed fees. 
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 NPRM and, to the extent possible, all 
comments received in response to this NPRM, available to the public 
through the Internet at the following address: http://www.ftc.gov.

VII. 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).

VIII. Paperwork Reduction Act

    This Revised Fee NPRM does not involve any new collection of 
information requirements that were not already proposed in the User Fee 
NPRM. However, the Commission has raised its estimate of the number of 
firms subject to this collection of information, which increases 
accordingly the cumulative paperwork burden presented by this proposed 
revision. The Commission informed the Office of Management and Budget 
about this proposed burden increase.
    The Commission continues to propose requiring those firms that 
access the national do-not-call registry to submit minimal identifying 
information that the operator of the registry deems necessary to 
collect the proposed fee, as outlined in section IV, above. The 
information to be collected from those firms, and the frequency of that 
collection, has not changed from the User Fee NPRM.\61\ The Commission 
estimated, in the User Fee NPRM, that it should take no longer than two 
minutes for each firm to submit this basic information, and that each 
firm would have to submit the information annually.\62\ Given current 
estimates that there are approximately 7,500 firms that will have to 
access the information in the national registry, the Commission 
estimates that this revised proposal will result in 250 burden hours 
(7,500 firms x 2 minutes per firm = 15,000 minutes, or 250 hours). In 
addition, the Commission continues to estimate that possibly one-half 
of those firms 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 125 
burden hours (3,750 telemarketers x 2 minutes per telemarketer = 7,500 
minutes, or 125 hours). Thus, the Commission estimates that the revised 
fee provision will impose a total paperwork burden of approximately 375 
hours per year.
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    \61\ See User Fee NPRM at 37365-66.
    \62\ Id. at 37366. As stated in the User Fee NPRM, this estimate 
is likely to be conservative for PRA purposes. The OMB regulation 
defining ``information'' generally excludes 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).
---------------------------------------------------------------------------

    The Commission anticipates that clerical employees (or other low-
level administrative personnel) of affected entities will fulfill the 
function of supplying company-identifying information to the registry 
contractor. Assuming a clerical hourly wage of $10 per hour, the 
cumulative annual labor cost to respondents to provide the requisite 
information is $3,750 (375 hours x $10 per hour).

[[Page 16246]]

    The Commission once again 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.

IX. 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 fees 
will have the threshold impact on small entities. As discussed in 
section III.C, above, this NPRM specifically proposes charging no fee 
for access to data included in the registry from one to five area 
codes. As a result, the Commission anticipates that many small 
businesses will be able to access the national registry without having 
to pay any annual fee. Thus, it is unlikely that there will be a 
significant burden on small businesses resulting from the adoption of 
the proposed fees.
    The Commission reached a similar conclusion in the User Fee 
NPRM.\63\ Nonetheless, the Commission determined that it was 
appropriate to publish an IRFA in the User Fee NPRM, in order to 
inquire into the impact on small entities of both the amendments to the 
TSR proposed in the User Fee NPRM, as well as the proposed amendments 
to the TSR set forth in the Rule NPRM. The Commission welcomed 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 NPRM, and 
the requirements of the User Fee Statute.
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    \63\ See User Fee NPRM at 37366-67.
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    In response to this request for comment, SBA commended the FTC on 
its regulatory flexibility analysis and supported permitting small 
firms to access a limited number of area codes per year without a 
charge, but noted that overlapping federal and state do-not-call 
registries may create undue burdens for small businesses.\64\ SBA 
included a number of suggestions to minimize the impact of multiple do-
not-call registries on small businesses.\65\ As indicated in the TSR 
SBP, the Commission is working with the states to develop a single, 
national do-not-call registry--a ``one-stop shop'' for consumers to 
register their preference not to receive telemarketing calls, and for 
sellers and telemarketers to gain access to that registration 
information.\66\ To further those goals, the Commission will allow all 
states, and the DMA if it so desires, to download into the national 
registry--at no cost to the states or the DMA--the telephone numbers of 
consumers who have registered with them their preference not to receive 
telemarketing calls. Telemarketers and sellers will be allowed to 
access that data through the national registry as the information is 
received. Such harmonization will decrease significantly any burdens 
imposed by the multiple do-not-call registries that currently exist.
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    \64\ See SBA-User Fee at 1. See also Section III.C, above, for a 
discussion of other comments the Commission received on its approach 
to minimizing the impact of this rulemaking on small businesses.
    \65\ Id. at 5-6. SBA also responded to our request for 
information concerning the number of small businesses that might be 
subject to the proposed User Fee Rule by provided information from 
the North American Industry Classification System (``NAICS''). 
According to the NAICS, there are 2,305 firms identified as 
``Telemarketing Bureaus'' (NAICS Code 561422), 1,279 of which 
qualify as a small business (one with annual receipts of $5 million 
or less). SBA also noted ``that 1,127 telecommunications firms have 
receipts under $1 million, which makes them particularly small and 
vulnerable to burdensome costs of Federal regulations.'' Id. at 3. 
The FTC appreciates this information. However, as discussed in 
Section II.B, above, ``telemarketing bureaus'' no longer would be 
required to pay a fee to access the national registry. Instead, 
sellers would be required to pay the fee. Therefore, to determine 
the number of small businesses affected by the instant NPRM, the 
Commission is seeking information on the number of small business 
sellers that engage in outbound telemarketing and that are subject 
to the FTC's jurisdiction. Unfortunately, the NAICS does not provide 
this level of detailed industry classification.
    \66\ See TSR SBP at 4641.
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    The Commission continues to welcome comment on any significant 
alternatives to those proposed in the instant NPRM that would further 
minimize the impact on small entities, consistent with the objectives 
stated herein and with the Amended TSR, the Appropriations Act, and 
Implementation Act.

X. Questions for Comment on the Proposed Rule

    The Commission seeks comment on the various aspects of the proposed 
revisions to the TSR set forth in this NPRM. 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. This Revised Fee NPRM estimates that there are 7,500 firms that 
will access the national do-not-call registry. Is that estimate 
realistic and appropriate? What evidence, if any, do you have 
concerning the number of sellers that either directly engage in, or 
hire telemarketers to engage in, ``outbound telephone calls'' to 
consumers?
    2. In estimating the number of firms that will access the national 
do-not-call registry, the Commission made a number of assumptions, 
including the following:
    a. The average revenue per client for telemarketers making outbound 
telemarketing calls to consumers is about $328,000;
    b. It is reasonable to estimate the level of expenditures on 
outbound calls to consumers by taking the product of published figures 
on the percentage of total telemarketing expenditures that involve 
outbound calls--including both calls to consumers and to businesses--
and published figures on the percentage of expenditures that are for 
calls to consumers--including both inbound and outbound calling. This 
figure, approximately 24 percent, can then be used to estimate the 
level of outbound calling to consumers both by (1) firms that use 
third-party telemarketers to do their calling and (2) those firms that 
do their own calling;
    c. Sellers that use third-party telemarketers on average employ 
three different telemarketers to make outbound calls to consumers over 
the course of a year;
    d. Sellers using their own resources to make telemarketing calls 
spend, on average, five times as much on telemarketing as do firms that 
use third-party telemarketers;
    e. Approximately 40 percent of sellers that use third-party 
telemarketers and 25 percent of sellers that engage in their own 
telemarketing will not be required to access the national do-not-call 
registry, either because they are engaged in charitable solicitations, 
are making

[[Page 16247]]

only intrastate calls, or are calling on behalf of an industry that is 
exempt from FTC jurisdiction.
    Are these estimates, and others used in arriving at a figure for 
the number of firms that will be required to access to the national do-
not-call registry, realistic and appropriate? What evidence can you 
provide to support the view that these estimates are reasonable or that 
they should be different?
    3. How many area codes of data will the average firm accessing the 
national do-not-call registry purchase? How many firms will require 
access to 250 of more area codes of data? How many will need access to 
5 or fewer area codes?
    4. Is it appropriate to require each separate corporate division, 
subsidiary, and affiliate that engages in outbound telemarketing to pay 
a separate fee to access the national registry? Why or why not? If a 
separate fee is not appropriate, what is a better way to differentiate 
between large and small enterprises? Would that alternative method 
maintain the fairness of the fee collection system while not 
significantly decreasing the number of entities that will pay for 
access to the national registry?

List of Subjects in 16 CFR Part 310

    Telemarketing, Trade practices.

XI. 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 Sec.  310.8 to read as follows:


Sec.  310.8  Fee for access to do-not-call registry.

    (a) It is a violation of this Rule for any seller to initiate, or 
cause any telemarketer to initiate, an outbound telephone call to any 
person whose telephone number is within a given area code unless such 
seller first has paid the annual fee, required by Sec.  310.8(c), for 
access to telephone numbers within that area code that are included in 
the national do-not-call registry maintained by the Commission under 
Sec.  310.4(b)(1)(iii)(B).
    (b) It is a violation of this Rule for any telemarketer, on behalf 
of any seller, to initiate an outbound telephone call to any person 
whose telephone number is within a given area code unless that seller 
first has paid the annual fee, required by Sec.  310.8(c), for access 
to the telephone numbers within that area code that are included in the 
national do-not-call registry.
    (c) The annual fee, which must be paid prior to obtaining access to 
the do-not-call registry, is $29 per area code of data accessed, up to 
a maximum of $7,250; provided, however, that if a seller obtains no 
more than five (5) area codes of data annually, there shall be no 
charge for this information.
    (d) After a seller pays the fees set forth in Sec.  310.8(a), the 
seller will be provided a unique account number which will allow that 
seller, or an entity designated by that seller, to 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 seller 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 seller must 
first pay $29 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 seller must first pay $15 
for each additional area code of data not initially selected. The 
payment of the additional fee will permit the seller or the seller's 
designee to access the additional area codes of data for the remainder 
of the annual period.
    (e) Access to the do-not-call registry is limited to telemarketers, 
sellers, others engaged in or causing others to engage in telephone 
calls for commercial purposes, service providers acting on behalf of 
such persons, and any government agency that has the authority to 
enforce a federal or state do-not-call statute or regulation. Prior to 
accessing the do-not-call registry, a person must provide the 
identifying information required by the operator of the registry to 
collect the fee, and must certify, under penalty of law, that the 
person is accessing the registry solely to comply with the provisions 
of this Rule or to otherwise prevent telephone calls to telephone 
numbers on the registry. If the person is accessing the registry on 
behalf of other sellers, that person also must identify each of the 
other sellers on whose behalf it is accessing the registry, must 
provide each seller's unique account number for access to the national 
registry, and must certify, under penalty of law, that the other 
sellers will be using the information gathered from the registry solely 
to comply with the provisions of this Rule or otherwise to prevent 
telephone calls to telephone numbers on the registry.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 03-7932 Filed 4-2-03; 8:45 am]
BILLING CODE 6750-01-P