[Federal Register Volume 69, Number 30 (Friday, February 13, 2004)]
[Proposed Rules]
[Pages 7330-7333]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-3287]



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Part IV





Federal Trade Commission





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16 CFR Part 310



Telemarketing Sales Rule; Proposed Rule

  Federal Register / Vol. 69, No. 30 / Friday, February 13, 2004 / 
Proposed Rules  

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FEDERAL TRADE COMMISSION

16 CFR Part 310

RIN 3084-0098


Telemarketing Sales Rule

AGENCY: Federal Trade Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: In this document, the Federal Trade Commission (``FTC'' or 
``Commission''), pursuant to a directive in the Consolidated 
Appropriations Act of 2004, seeks comment on amendment of the 
Telemarketing Sales Rule (``TSR'') to require sellers and 
telemarketers, in complying with the Do Not Call provisions of the TSR, 
to use a version of the National Do Not Call Registry obtained from the 
Commission no more than thirty (30) days prior to the date any call is 
made.

DATES: Written comments will be accepted until February 26, 2004. Due 
to the time constraints of this rulemaking procedure, the Commission 
does not contemplate any extensions of this comment period or any 
additional periods for written comments or rebuttal comment. Comments 
that are not timely submitted and directly responsive to the specific 
questions set forth in Section G of this document may not be 
considered.

ADDRESSES: Interested parties are invited to submit written comments. 
Comments should refer to ``Monthly Registry Access, Project No. 
R411001'' to facilitate the organization of comments. A comment filed 
in paper form should include this reference both in the text and on the 
envelope, and should be mailed or delivered to the following address: 
Federal Trade Commission/Office of the Secretary, Room 159-H (Annex D), 
600 Pennsylvania Avenue, NW., Washington, DC 20580. Comments containing 
confidential material must be filed in paper form, as explained in the 
Supplementary Information section. The FTC is requesting that any 
comment filed in paper form be sent by courier or overnight service, if 
possible, because U.S. postal mail in the Washington area and at the 
Commission is subject to delay due to heightened security precautions.
    An electronic comment can be filed by (1) clicking on http://www.regulations.gov; (2) selecting ``Federal Trade Commission'' at 
``Search for Open Regulations;'' (3) locating the summary of this 
Notice; (4) clicking on ``Submit a Comment on this Regulation;'' and 
(5) completing the form. For a given electronic comment, any 
information placed in the following fields--``Title,'' ``First Name,'' 
``Last Name,'' ``Organization Name,'' ``State,'' ``Comment,'' and 
``Attachment''--will be publicly available on the FTC Web site. The 
fields marked with an asterisk on the form are required in order for 
the FTC to fully consider a particular comment. Commenters may choose 
not to fill in one or more of those fields, but if they do so, their 
comments may not be considered.
    The FTC Act and other laws the Commission administers permit the 
collection of public comments to consider and use in this proceeding as 
appropriate. All timely and responsive public comments, whether filed 
in paper or electronic form, will be considered by the Commission, and 
will be available to the public on the FTC Web site, to the extent 
practicable, at www.ftc.gov. As a matter of discretion, the FTC makes 
every effort to remove home contact information for individuals from 
the public comments it receives before placing those comments on the 
FTC Web site. More information, including routine uses permitted by the 
Privacy Act, may be found in the FTC's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.

FOR FURTHER INFORMATION CONTACT: Catherine Harrington-McBride, (202) 
326-2452, Division of Marketing Practices, Bureau of Consumer 
Protection, Federal Trade Commission, 600 Pennsylvania Avenue, NW., 
Washington, DC 20580.

SUPPLEMENTARY INFORMATION:

Section A. Background

    On January 23, 2004, the President signed into law the Consolidated 
Appropriations Act of 2004. In enacting this legislation, Congress, 
inter alia, mandated that ``not later than 60 days after the date of 
enactment of this Act, the Federal Trade Commission shall amend the 
Telemarketing Sales Rule to require telemarketers subject to the 
Telemarketing Sales Rule to obtain from the Federal Trade Commission 
the list of telephone numbers on the `do-not-call' registry once a 
month.'' \1\ Accordingly, the Commission proposes to amend the TSR's Do 
Not Call safe harbor provision, 16 CFR 310.4(b)(3)(iv), to substitute 
the phrase ``no more than thirty (30) days prior to the date any call 
is made'' for the phrase that currently appears in that provision, 
which is ``no more than three (3) months prior to the date any call is 
made.'' This proposed amendment would change, from quarterly to every 
thirty (30) days, the frequency with which telemarketers and sellers 
will have to purge from their calling lists numbers appearing on the 
National Do Not Call Registry. It also would enable a consumer to 
assert a valid Do Not Call complaint thirty (30) days after entering 
his or her number on the Registry, rather than waiting three months, as 
is currently the case. The text of section 310.4(b)(3)(iv) 
incorporating the proposed amendment appears at the end of this notice. 
This proposal is made pursuant to the directive of the Appropriations 
Act, and the Commission's authority under the Telemarketing and 
Consumer Fraud and Abuse Prevention Act,\2\ and the Do Not Call 
Implementation Act.\3\
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    \1\ Consolidated Appropriations Act of 2004, Pub. L. 108-199, 
188 Stat. 3. The requirement is in Division B, Title V.
    \2\ 15 U.S.C. 6102.
    \3\ Pub. L. 108-10, 117 Stat. 557.
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Section B. Discussion

    The Commission seeks comment on two specific issues relating to the 
proposed amendment. First, the proposal employs the phrase ``thirty 
(30) days,'' rather than the term used in the statute, ``monthly.'' 
Second, the Commission seeks input on the appropriate effective date 
for the proposed amendment.

1. Thirty (30) Days

    The Commission believes that the term ``thirty (30) days'' achieves 
greater clarity and precision in effectuating Congress's twofold intent 
in the Appropriations Act--to shorten from quarterly to monthly the 
interval for telemarketers and sellers to purge registered telephone 
numbers from their calling lists, and to enable consumers to assert 
valid Do Not Call complaints thirty (30) days after entering their 
numbers on the Registry rather than having to wait three months.
    The ``thirty (30) days'' language removes the ambiguity inherent in 
the term ``monthly.'' This language would obviate questions such as 
whether a provision using the term ``monthly'' requires sellers and 
telemarketers to purge Registry numbers from their call lists every 
calendar month, whether ``scrubbing'' every 30 days would comply even 
if one did not scrub in February, and whether scrubbing in each 
calendar month without regard to the interval since the last scrub 
would comply. This clarification should provide a brighter line for 
industry, making compliance easier to effectuate. Moreover, it will 
prevent subverting the intent of the Registry by such stratagems as 
downloading the Registry at 11 p.m. on the last day of one calendar 
month and again at 12:01 a.m. on the first day

[[Page 7331]]

of the next, thereby technically complying with the requirement, but 
effectively ``scrubbing'' only bi-monthly.

2. Effective Date

    The second issue on which the Commission seeks comment is the 
appropriate effective date for this amendment. Modifying the 
Commission's established Registry system to account for increased 
download traffic and logic changes will take some time. The Commission 
believes that sellers and telemarketers similarly may need an extended 
period to make the necessary modifications in their systems and 
procedures to be able to comply with this amended provision. In this 
regard, the Commission notes that because of similar issues present in 
the Amended TSR's requirement for sellers and telemarketers to transmit 
Caller ID information, it established an effective date for that 
requirement of one year after the Amended Rule was promulgated, and ten 
months after the effective date of most of the other Amended TSR 
provisions.\4\ Similarly, on petition from industry, the Commission 
postponed, for similar periods, the original effective dates of certain 
other provisions, including the provision to use a recorded message 
when the consumer could not be connected to a live sales representative 
within two seconds of answering a telemarketing call.\5\ The Commission 
requests factual information regarding the amount of time it reasonably 
will take sellers and telemarketers to modify their business procedures 
and systems to be able to comply with the amended provision.
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    \4\ 68 FR 4664 (Jan 29, 2003).
    \5\ 68 FR 16414 (Apr. 4, 2003).
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Section C. Invitation To Comment

    All persons are hereby given notice of the opportunity to submit 
written data, views, facts, and arguments addressing the issues raised 
by this Notice. The Commission notes that the Appropriations Act 
provides no discretion in the matter of whether to amend the TSR as 
described above. Comment going to that issue would not be responsive to 
this notice and will not be considered. Written comments must be 
submitted on or before February 26, 2004. Comments should refer to 
``Monthly Registry Access, Project No. R411001'' to facilitate the 
organization of comments. A comment filed in paper form should include 
this reference both in the text and on the envelope, and should be 
mailed or delivered to the following address: Federal Trade Commission/
Office of the Secretary, Room 159-H (Annex D), 600 Pennsylvania Avenue, 
NW., Washington, DC 20580. If the comment contains any material for 
which confidential treatment is requested, it must be filed in paper 
(rather than electronic) form, and the first page of the document must 
be clearly labeled ``Confidential.'' \6\ The FTC is requesting that any 
comment filed in paper form be sent by courier or overnight service, if 
possible, because U.S. postal mail in the Washington area and at the 
Commission is subject to delay due to heightened security precautions.
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    \6\ Commission Rule 4.2(d), 16 CFR 4.2(d). The comment must be 
accompanied by an explicit request for confidential treatment, 
including the factual and legal basis for the request, and must 
identify the specific portions of the comment to be withheld from 
the public record. The request will be granted or denied by the 
Commission's General Counsel, consistent with applicable law and the 
public interest. See Commission Rule 4.9(c), 16 CFR 4.9(c).
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    An electronic comment can be filed by (1) clicking on http://www.regulations.gov; (2) selecting ``Federal Trade Commission'' at 
``Search for Open Regulations;'' (3) locating the summary of this 
Notice; (4) clicking on ``Submit a Comment on this Regulation;'' and 
(5) completing the form. For a given electronic comment, any 
information placed in the following fields--``Title,'' ``First Name,'' 
``Last Name,'' ``Organization Name,'' ``State,'' ``Comment,'' and 
``Attachment''--will be publicly available on the FTC Web site. The 
fields marked with an asterisk on the form are required in order for 
the FTC to fully consider a particular comment. Commenters may choose 
not to fill in one or more of those fields, but if they do so, their 
comments may not be considered.
    The FTC Act and other laws the Commission administers permit the 
collection of public comments to consider and use in this proceeding as 
appropriate. All timely and responsive public comments, whether filed 
in paper or electronic form, will be considered by the Commission, and 
will be available to the public on the FTC Web site, to the extent 
practicable, at www.ftc.gov. As a matter of discretion, the FTC makes 
every effort to remove home contact information for individuals from 
the public comments it receives before placing those comments on the 
FTC Web site. More information, including routine uses permitted by the 
Privacy Act, may be found in the FTC's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.

Section D. 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).

Section E. Paperwork Reduction Act

    The information collection requirements contained in the TSR were 
reviewed by OMB under the Paperwork Reduction Act and cleared on July 
24, 2003, under OMB Control Number 3084-0097. The proposed rule 
amendment, as discussed above, changes the interval at which entities 
covered by the TSR must obtain data from the National Do Not Call 
Registry from every three (3) months to every thirty (30) days. Thus, 
the proposed rule amendment does not impose any new, or affect any 
existing, record submission, recordkeeping, or public disclosure 
requirement that would be subject to review and approval by the Office 
of Management and Budget pursuant to the Paperwork Reduction Act, 44 
U.S.C. 3501-3520.

Section F. Regulatory Flexibility Act

    The Regulatory Flexibility Act (``RFA''), 5 U.S.C. 601-612, 
requires an agency to provide an Initial Regulatory Flexibility 
Analysis (``IRFA'') with a proposed rule and a Final Regulatory 
Flexibility Analysis (``FRFA'') with the final rule, if any, unless the 
agency certifies that the rule will not have a significant economic 
impact on a substantial number of small entities. See 5 U.S.C. 603-605.
    As discussed above, the Appropriations Act expressly mandates the 
modification, and, therefore, any associated economic impact. 
Nonetheless, the Commission has determined that it is appropriate to 
publish an IRFA in order to inquire into the impact of the proposed 
rule on small entities. Therefore, the Commission has prepared the 
following analysis.

1. Reasons for the Proposed Rule

    The proposed modification of the TSR, discussed above, is pursuant 
to the directive of the Appropriations Act of 2004, which mandates that 
``not later than 60 days after the date of enactment of th[at] Act, the 
Federal Trade Commission shall amend the Telemarketing Sales Rule to 
require telemarketers subject to the Telemarketing Sales Rule to obtain 
from the Federal Trade Commission the list

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of telephone numbers on the ``do-not-call'' registry once a month.'' 
\7\
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    \7\ Consolidated Appropriations Act of 2004, Pub. L. 108-199, 
188 Stat. 3. The requirement is in Division B, Title V.
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2. Statement of Objectives and Legal Basis

    The objectives of the proposed rule are discussed above. The legal 
basis for the proposed rule is the Appropriations Act of 2004, as 
discussed in F.1., above.

3. Description of and, Where Feasible, an Estimate of the Number of 
Small Entities to Which the Proposed Rule Will Apply

    This proposed rule will primarily impact sellers that make 
interstate telephone calls to consumers (outbound calls) in an attempt 
to sell their products or services. Also affected may be firms that 
provide telemarketing services to others on a contract basis. In the 
proceedings to amend the TSR to include National Do Not Call Registry 
provisions, the Commission sought public comment and information on the 
number of small business sellers and telemarketers that would be 
impacted by those amendments.\8\ In its requests, the Commission noted 
the lack of publicly available data regarding the number of small 
entities. As the Commission received no further information in response 
to this request, the number of firms making outbound calls cannot be 
reliably estimated.\9\
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    \8\ See 68 FR 4580, 4667 (Jan. 29, 2003); 68 FR 45134, 45143 
(July 31, 2003) (noting, in the final amended rules, that comment 
was requested, but not received, regarding the number of small 
entities subject to the National Do Not Call Registry provisions of 
the amended TSR).
    \9\ 68 FR 4580, 4667 (Jan. 29, 2003) (noting that Census data on 
small entities conducting telemarketing does not distinguish between 
those entities that conduct exempt calling, such as survey calling, 
those that receive inbound calls, and those that conduct outbound 
calling campaigns. Moreover, sellers who act as their own 
telemarketers are not accounted for in in the Census data.).
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4. Description of the Projected Reporting, Recordkeeping, and Other 
Compliance Requirements of the Proposed Rule, Including an Estimate of 
the Classes of Small Entities That Will Be Subject to the Requirement 
of Obtaining Data From the National Do Not Call Registry Every Thirty 
(30) Days and the Type of Professional Skills That Will Be Necessary To 
Comply

    The proposed rule does not impose any new, or affect any existing, 
reporting, disclosure, or specific recordkeeping requirements within 
the meaning of the Paperwork Reduction Act. The Commission does not 
believe that the modification requiring sellers and telemarketers to 
obtain data from the National Registry at a more frequent interval will 
create a significant burden on sellers or telemarketers that have 
already established systems to comply with the requirement in the 
existing TSR that requires accessing the Registry database on a 
quarterly basis. There will likely be additional costs, however, 
incurred to access the Registry every thirty days (effectively twelve 
(12) times per year) versus the current requirement of every three 
months (effectively four (4) times per year). As noted in the Statement 
of Basis and Purpose for the final amended TSR, the cost of accessing 
the National Do Not Call Registry to purge the numbers it contains from 
a company's calling list (separate from the fee paid to obtain the 
list) is around $100. Given this estimate, sellers and telemarketers 
seeking to comply with the proposed rule modification would pay $1200 
per year ($100 per scrub x 12 scrubs per year) rather than $400 per 
year ($100 per scrub x 4 scrubs per year).
    As noted below, the Commission seeks further comment on the 
professional skills that will be needed to implement the proposed rule, 
the actual costs or expenditures, if any, of more frequent scrubbing, 
and the extent to which these costs may differ or vary for small 
entities.

5. Identification of Other Duplicative, Overlapping, or Conflicting 
Federal Rules

    The FTC has not identified any other federal statutes, rules, or 
policies that would conflict with the requirement that sellers and 
telemarketers employ a version of the National Do Not Call Registry 
obtained from the Commission no more than thirty (30) days prior to the 
date any call is made. Although the Federal Communications Commission's 
(``FCC'') rules pursuant to the Telephone Consumer Protection Act 
closely mirror the existing TSR language requiring scrubbing every 
three (3) months, they would not be in conflict with the proposed 
amendment. Rather, entities subject only to the FCC's telemarketing 
rules would be required to obtain information from the National 
Registry every three (3) months, while those entities subject to the 
FTC's rules would have to do so every thirty (30) days.
    The Commission is requesting comment about any Federal, State, or 
local statutes or rules that may duplicate, overlap with, or conflict 
with the proposed rule.

6. Discussion of Significant Alternatives to the Proposed Rule That 
Would Accomplish the Stated Objectives of the Appropriations Act and 
That Would Minimize Any Significant Economic Impact of the Proposed 
Rule on Small Entities

    The Appropriations Act of 2004 provides the Commission no 
discretion in the matter of whether to amend the TSR as described 
above. However, as noted above in Section B.2. of this Notice, the 
Commission requests factual information regarding the amount of time it 
reasonably will take sellers and telemarketers, including small 
businesses, to modify their business procedures and systems to be able 
to comply with the amended provision. Toward that end, the Commission 
has included in Section G below questions regarding alternatives to 
minimize the economic impact of the rule on small entities and 
questions requesting information that would assist it in determining 
the appropriate effective date for this provision.

Section G. Specific Issues for Comment

    The Commission seeks comment on the proposed rule as set forth in 
this Notice. The Commission is particularly interested in receiving 
comments on the questions that follow. In responding to these 
questions, include detailed and factual supporting information whenever 
possible.
    1. Is the term ``thirty (30) days'' more precise than the term 
``monthly,'' and would the former term serve as a more meaningful 
guideline for telemarketers and sellers as they seek to comply with 
this provision?
    2. Will use of the term ``thirty (30) days'' rather than 
``monthly'' prevent sellers and telemarketers from attempting to 
subvert the intent of the Registry by such stratagems as downloading 
the Registry and ``scrubbing'' their call lists on the last day of a 
month, and then immediately doing it again on the first day of the 
succeeding month?
    3. Does the use of the precise standard, embodied in the phrase 
``thirty (30) days,'' make clear the requisite interval at which data 
must be obtained from the National Do Not Call Registry? Is there some 
other standard that would accomplish this better?
    4. What, if any, differences exist in the compliance burdens on 
industry resulting from use of the term ``thirty (30) days'' rather 
than ``monthly''? Why? What, if any, differences exist in the benefits 
for consumers resulting from use of the term ``thirty (30) days'' 
rather than ``monthly''? Why?

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    5. What should be the effective date of the proposed amendment? 
Why? What, if any, factors might necessitate a particular amount of 
lead time for industry to be able to comply with the proposed 
amendment? With respect to any particular recommended effective date, 
what are the relative costs and benefits for industry and consumers?
    6. Please describe what effect the proposed rule will have on small 
entities that engage in outbound telemarketing and are not exempt from 
the National Do Not Call Registry provision of the TSR.
    7. Please describe what costs will be incurred by small entities to 
``implement and comply'' with the rule, including expenditures of time 
and money for: any employee training; acquiring additional professional 
skills; attorney, computer programmer, or other professional time; and 
preparing and processing relevant materials.
    8. Are there ways the proposed rule could be modified to reduce the 
costs or burdens for small entities while still being consistent with 
the mandate of the Appropriations Act?
    9. Please identify any relevant Federal, State, or local statutes 
or rules that may duplicate, overlap or conflict with the proposed 
rule.

Section H. Proposed Rule

    Accordingly, the Commission proposes to amend title 16, 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. Amend Sec. 310.4 by revising paragraph (b)(3)(iv) to read as 
follows:


Sec. 310.4  Abusive telemarketing acts or practices.

* * * * *
    (b) * * *
    (3) * * *
    (iv) The seller or a telemarketer uses a process to prevent 
telemarketing to any telephone number on any list established pursuant 
to Sec.Sec. 310.4(b)(3)(iii) or 310.4(b)(1)(iii)(B), employing a 
version of the ``do-not-call'' registry obtained from the Commission no 
more than thirty (30) days prior to the date any call is made, and 
maintains records documenting this process;
* * * * *

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 04-3287 Filed 2-12-04; 8:45 am]
BILLING CODE 6750-01-P