[Federal Register Volume 71, Number 13 (Friday, January 20, 2006)]
[Notices]
[Pages 3302-3305]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-627]


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FEDERAL TRADE COMMISSION


Agency Information Collection Activities; Proposed Collection; 
Comment Request; Extension

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

ACTION: Notice.

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SUMMARY: The FTC is seeking public comments on its proposal to extend 
through February 28, 2009 the current Paperwork Reduction Act (``PRA'') 
clearance for information collection requirements contained in its 
Telemarketing Sales Rule, 16 CFR part 435 (``TSR'' or ``Rule''). That 
clearance expires on February 28, 2006.

DATES: Comments must be received on or before March 21, 2006.

ADDRESSES: Interested parties are invited to submit written comments. 
Comments should refer to ``Telemarketing Sales Rule: FTC File No. 
P994414'' 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, with two complete copies, 
to the following address: Federal Trade Commission, Room H 135 (Annex 
J), 600 Pennsylvania Ave., NW., Washington, DC 20580. Because paper 
mail in the Washington area and at the Commission is subject to delay, 
please consider submitting your comments in electronic form, (in ASCII 
format, WordPerfect, or Microsoft Word) as part of or as an attachment 
to e-mail messages directed to the following e-mail box: 
[email protected]. However, if the comment contains any material 
for which confidential treatment is requested, it must be filed in 
paper form, and the first page of the document must be clearly labeled 
``Confidential.'' \1\
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    \1\ 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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    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 will be 
considered by the Commission and will be available to the public on the 
FTC Web site, to the extent practicable, at http://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: Requests for additional information or 
copies of the proposed information requirements should be sent to 
Catherine Harrington-McBride, Attorney, Division of Marketing 
Practices, Bureau of Consumer Protection, Federal Trade Commission, 600 
Pennsylvania Ave., NW., Washington, DC 20580, (202) 326-2452.

SUPPLEMENTARY INFORMATION: Under the Paperwork Reduction Act (``PRA''), 
44 U.S.C. 3501-3520, federal agencies must obtain approval from OMB for 
each collection of information they conduct or sponsor. ``Collection of 
information'' means agency requests or requirements that members of the 
public submit reports, keep records, or provide information to a third 
party. 44 U.S.C. 3502(3); 5 CFR 1320.3(c). As required by section 
3506(c)(2)(A) of the PRA, the FTC is providing this opportunity for 
public comment before requesting that OMB extend the existing paperwork 
clearance for the regulations noted herein.
    The FTC invites comments on: (1) Whether the proposed collection of 
information is necessary for the proper performance of the functions of 
the agency, including whether the information will have practical 
utility; (2) the accuracy of the agency's estimate of the burden of the 
proposed collection of information, including the validity of the 
methodology and assumptions used; (3) ways to enhance the quality, 
utility, and clarity of the information to be collected; and (4) ways 
to minimize the burden of the collection 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, e.g., permitting electronic 
submission of responses. All comments should be filed as prescribed in 
the ADDRESSES section above, and must be received on or before March 
21, 2006.
    The TSR implements the Telemarketing and Consumer Fraud and Abuse 
Prevention Act, 15 U.S.C. 6101-6108 (``Act''), as amended by the 
Uniting and Strengthening America by Providing Appropriate Tools 
Required to Intercept and Obstruct Terrorism Act (``USA PATRIOT Act''), 
Pub. L. 107056 (Oct. 25, 2001). The Act seeks to prevent deceptive or 
abusive telemarketing practices in telemarketing, which, pursuant to 
the USA PATRIOT Act,

[[Page 3303]]

includes calls made to solicit charitable contributions. It mandates 
certain disclosures by telemarketers, and directs the Commission to 
consider including recordkeeping requirements in promulgating a 
telemarketing rule to address such practices. As required by the Act, 
the TSR mandates certain disclosures regarding telephone sales and 
requires telemarketers to retain certain records regarding advertising, 
sales, and employees. The disclosures provide consumers with 
information necessary to make informed purchasing decisions. The 
records are available for inspection by the Commission and other law 
enforcement personnel to determine compliance with the Rule. Records 
may also yield information helpful to measuring and redressing consumer 
injury stemming from Rule violations.
    The Supporting Statement for Information Collection Provisions of 
the Telemarketing Sales Rule (OMB Control No. 3084-0097) (``2003 
Supporting Statement''), submitted to OMB following the 2003 amendment 
of the TSR, includes substantial analysis in support of the burden 
estimates included in that document.\2\ Those estimates differ, in some 
ways significantly, from previous burden estimates for two reasons: (1) 
The amended TSR has increased scope and application to new entities; 
and (2) industry members provided, for the first time, statistical 
information on the telemarketing industry pursuant to the request for 
comments in the rulemaking proceeding.
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    \2\ The 2003 Supporting Statement is available at http://www.ftc.gov/bcp/rulemaking/tsr/tsrrulemaking/tsrss2003.pdf.
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    The figures used in this notice are based on those from the 2003 
Supporting Statement, updated when necessary and when newer figures are 
available.

Burden Statement

    Estimated annual hours burden: 2,475,000 hours (rounded to nearest 
thousand).
    The estimated recordkeeping burden is 45,000 hours for all industry 
members affected by the Rule. The estimated burden related to the 
disclosures that the Rule requires is 2,430,000 hours (rounded to 
nearest thousand) for all affected industry members, for a total of 
2,475,000 burden hours.
    Recordkeeping: Following the publication of the amended TSR in 
2003, the Commission estimated that there were 7,400 telemarketing 
firms that were potentially subject to the Rule. This estimate was 
based on the limited input the Commission received in response to the 
Original User Fee NPRM, 67 FR 37,362 (May 29, 2002), regarding the 
number of firms that would likely access the National Do Not Call 
Registry as well as further staff assumptions applied to the 
information received. Since that time, the Commission has begun 
operation of the National Do Not Call Registry, and, in calendar year 
2004, 60,611 entities accessed the registry. Of these, 552 were 
``exempt'' entities obtaining access to data for more than one 
state.\3\ By definition, none of the ``exempt'' entities are subject to 
the TSR. Additionally, 46,113 were non-exempt entities obtaining data 
for only a single state. Staff assumes that these entities are 
operating solely intrastate, and thus are exempt from the TSR.\4\ Thus, 
staff estimates that 14,000 entities, rounded to the nearest thousand, 
[60,611-552-46,113 = 13,946] are currently subject to the TSR.
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    \3\ An exempt entity is one that, although not subject to the 
TSR, chooses to voluntarily scrub its calling lists against the data 
in the National Do Not Call Registry.
    \4\ These entities would nonetheless likely be subject to the 
Federal Communication Commission's Telephone Consumer Protection Act 
regulations, including the requirement that entities engaged in 
intrastate telephone solicitations access the National Do Not Call 
Registry.
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    The staff estimates that these 14,000 telemarketing entities 
subject to the Rule each require approximately 2.3 hours per year to 
file and store records required by the TSR for an annual total of 
32,000 burden hours (rounded to the nearest thousand). The Commission 
also estimates that 75 new entrants per year would need to spend 100 
hours each developing a recordkeeping system that complies with the 
Rule for an annual total of 7,500 burden hours. These figures, based on 
prior estimates, are not contradicted by further research conducted by 
Commission staff. Thus, the total estimated annual recordkeeping burden 
for new and existing telemarketing entities is 40,000 hours (rounded to 
the nearest thousand).
    In the 2003 Supporting Statement, the Commission estimated that 
2,500 telefunder firms--professional telefunders soliciting on behalf 
of charities--would also be subject to the Rule, which was amended to 
include calls to solicit charitable contributions pursuant to the USA 
PATRIOT Act. Staff estimated that the recordkeeping burden per entity 
per year would be no more than one hour for a cumulative total of 
approximately 2,500 hours. Staff also estimated that 25 new telefunding 
entrants per year would require 100 hours each to set up recordkeeping 
systems that would comply with the TSR. Thus, the cumulative 
recordkeeping burden for telefunder firms was 5,000 hours. No new data 
suggests that these estimates have changed; therefore, the Commission 
retains these estimates.
    The cumulative annual recordkeeping burden for all entities subject 
to the TSR--both telefunder and telemarketing firms alike--is 45,000 
hours.
    Disclosure: Staff believes that a substantial majority of 
telemarketers now make in the ordinary course of business the 
disclosures the Rule requires because to do so constitutes good 
business practice. To the extent this is so, the time and financial 
resources needed to comply with disclosure requirements do not 
constitute ``burden.'' 16 CFR 1320.3(b)(2). Moreover, many state laws 
require the same or similar disclosures the Rule mandates. Thus, the 
disclosure hours burden attributable solely to the Rule is far less 
than the total number of hours associated with the disclosures overall. 
As when the Commission last sought OMB clearance, staff estimates that 
the disclosures the Rule requires would be made in at least 75 percent 
of telemarketing calls even absent the Rule.
    Accordingly, staff determined that the hours burden estimate for 
the Rule's disclosure requirements is 25 percent of the total hours 
associated with disclosures of the type the TSR requires. Staff 
estimates the portion attributable to the Rule to be 2,430,000 (rounded 
to the nearest thousand). The components of this total are detailed in 
the immediately following paragraphs that address hours burden.
    Staff estimates that the 14,000 telemarketing entities subject to 
the Rule make 6.2 billion calls per year, or 443,000 calls per year per 
company (rounded to the nearest thousand). The TSR provides that if an 
industry member chooses to solicit inbound calls from consumers by 
advertising media other than direct mail or by using direct mail 
solicitations that make certain required disclosures (providing for an 
inbound telephone call as a possible response), that member is exempted 
from complying with the Rule's oral disclosures. Based on previous 
estimates, staff estimates that of the 14,000 telemarketing entities, 
11,800 firms conduct inbound telemarketing, and that of these, 4,000 
will choose to adopt marketing methods that exempt them from complying 
with the Rule's verbal disclosure requirements.
    The Commission staff retains its estimate that, in a telemarketing 
call involving the sale of goods or services,

[[Page 3304]]

it takes 7 seconds for telemarketers to disclose the required outbound 
call information orally plus 3 additional seconds to disclose the 
information required in the case of an upsell. Staff also retains its 
estimate that at least 60 percent of sale calls result in ``hang-ups'' 
before the telemarketer can make all the required disclosures and that 
``hang-up'' calls consume only 2 seconds. Accordingly, staff estimates 
that the total time associated with these disclosure requirements is 
approximately 1.1 million hours per year [((1.2 billion non-hangup 
calls [2.9 billion outbound calls x 40%] x 7 seconds) + (1.7 billion 
hangup calls [2.9 billion x 60%] x 2 seconds) + (570 million calls x 
40% [estimated upsell conversion] x 3 seconds) + (3.3 billion inbound 
calls x 40% [estimated upsell conversion] x 3 seconds)) x 25% burden] 
or 79 hours per firm [1.1 million hours/14,000 firms].
    The TSR also requires further disclosures in telemarketing sales 
calls before the customer pays for goods or services. These disclosures 
include the total costs of the offered goods or services; all material 
restrictions; and all material terms and conditions of the seller's 
refund, cancellation, exchange, or repurchase policies (if a 
representation about such a policy is a part of the sales offer). 
Additional specific disclosures are required if the call involves a 
prize promotion, the sale of credit card loss protection products or an 
offer with a negative option feature.
    Staff estimates that the general sales disclosures require 499,000 
hours annually. This figure includes the burden for written disclosures 
[(4,000 firms [estimated using direct mail] x 10 hours per year x 25% 
burden) = 10,000 hours, as well as the figure for oral disclosures 
[(570 million calls x 8 seconds x 25% burden) + (570 million outbound 
calls x 40% (upsell conversion) x 20% sales conversion x 25% burden x 8 
seconds) + (3.3 billion inbound calls x 40% upsell conversion x 20% 
sales conversion + 25% burden x 8 seconds) ].
    Staff also estimates that the specific sales disclosures require 
53,000 hours annually [(570 million calls x 5% [estimated involving 
prize promotion] x 3 seconds x 25% burden) + (570 million calls x .1% 
[estimated involving credit card loss protection (``CCLP'')] x 4 
seconds) + (570 million calls x 40% upsell conversions x 20% sales 
conversions x .1% [estimated involving CCLP] x 4 seconds) + (3.3 
billion inbound calls x 40% upsell conversion x 20% sales conversion x 
.1% [estimated involving CCLP] x 4 seconds) + (570 million calls x 10% 
[estimated involving negative options] x 4 seconds x 25% burden) + (570 
million calls x 40% upsell conversion x 20% sales conversions x 10% 
[estimated involving negative options] x 4 seconds x 25% burden) + (3.3 
billion inbound calls x 40% upsell conversions x 20% sales conversions 
x 10% [estimated involving negative options] x 4 seconds x 25% burden)] 
+ (3.3 billion inbound calls x .3% [estimated business opportunity] x 8 
seconds). The total burden for all of the sales disclosures is 552,000 
hours annually or 39 hours annually per firm.
    The Commission staff also retains its prior estimate that 2,500 
telefunder firms are subject to the Rule. The only disclosure that the 
TSR requires in solicitations for charitable contributions is the 
disclosure in Sec.  310.4(e). The total burden for disclosures made in 
solicitations for charitable contributions is 778,000 hours (rounded to 
the nearest thousand) [(1.6 billion calls with no early hang up x 4 
seconds x 25% burden) + (2.4 billion calls with early hang-up x 2 
seconds x 25% burden].
    Thus, the cumulative annual disclosure burden for all entities 
subject to the TSR--both telefunder and telemarketing firms alike--is 
2,430,000 hours.
    Estimated annual labor cost burden: $20,315,000.
    The estimated labor cost for recordkeeping for all entities, both 
telefunders and telemarketing firms, is $20,315,000. Assuming a 
cumulative burden of 7,500 hours/year to set up compliant recordkeeping 
systems for telemarketing entities, and applying to that a skilled 
labor rate of $20/hour, start-up costs would approximate $150,000 
yearly for all new telemarketing entities. Staff also estimates that 
existing telemarketing industry members require 14,000 hours, 
cumulatively, to maintain compliance with the TSR's recordkeeping 
provisions. Applying a clerical cost rate of $10/hour, cumulative 
recordkeeping maintenance would cost approximately $140,000 annually. 
The estimated labor cost for sales disclosures is $8,280,000 based on 
staff's estimate of 552,000 telemarketing disclosure burden hours and a 
wage rate of $15/hour. Thus, total labor cost, rounded to the nearest 
thousand, for sales entities is $8,570,000.
    Based on the estimated cumulative burden of 2,500 hours/year to set 
up compliant recordkeeping systems for telefunder entities, and 
applying to that a skilled labor rate of $20/hour, start-up costs would 
be approximately $50,000. In addition, the estimated labor cost for 
maintaining records relating to solicitations for charitable 
contributions annually would be $25,000 (2,500 burden hours x $10/
hour). The estimated labor cost relating to charitable solicitation 
disclosures is $11,670,000 (778,000 burden hours x $15/hour). Thus, the 
total labor cost for telefunder entities is $11,745,000.
    Thus, the total cumulative labor costs for telefunder and 
telemarketing entities combined is $20,315,000.
    Estimated annual non-labor cost burden: $5,613,000 (rounded to the 
nearest thousand).
    Total capital and start-up costs: Staff estimates that the capital 
and start-up costs associated with the TSR's information collection 
requirements are de minimis. The Rule's recordkeeping requirements 
mandate that companies maintain records but not in any particular form. 
While those requirements necessitate that affected entities have a 
means of storage, industry members should have that already regardless 
of the Rule. Even if an entity finds it necessary to purchase a storage 
device, the cost is likely to be minimal, especially when annualized 
over the item's useful life. The Rule's disclosure requirements require 
no capital expenditures.
    Other non-labor costs: Affected entities need some storage media 
such as file folders, computer diskettes, or paper in order to comply 
with the Rule's recordkeeping requirements. Although staff believes 
that most affected entities would maintain the required records in the 
ordinary course of business, staff estimates that the approximately 
14,000 outbound telemarketers subject to the Rule spend an annual 
amount of $50 each on office supplies as a result of the Rule's 
recordkeeping requirements, for a total recordkeeping cost burden of 
$700,000. Verbal disclosure estimates, discussed above, applied to a 
retained estimated commercial calling rate of 6 cents per minute ($3.60 
per hour), totals $1,987,200 (552,000 disclosure hours x $3.60 per 
hour) in phone-related costs. Office supplies for an estimated 14,000 
outbound telemarketers @ $50 each = $700,000. Accordingly, the non-
labor costs for telemarketing entities associated with the Rule's 
information collection provisions is $2,687,200 ($1,987,200 in phone 
related costs + $700,000 for office supplies). Non-labor costs incurred 
by telefunders for telefunder organizations are estimated to be 
$2,926,000 (rounded to the nearest thousand) (778,000 estimated hours @ 
$3.60 per hour + $125,000 in office supply-related costs (2500 
telefunders @ $50 each)). Thus, the total non-labor

[[Page 3305]]

costs for all entities subject to the TSR is $5,613,200.\5\
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    \5\ Staff believes that remaining non-labor costs would largely 
be incurred by affected entities, regardless, in the ordinary course 
of business and/or marginally be above such costs.
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    Finally, staff believes that the estimated 4,000 inbound 
telemarketing entities choosing to comply with the Rule through written 
disclosures incur no additional capital or operating expenses as a 
result of the Rule's requirements because they are likely to provide 
written information to prospective customers in the ordinary course of 
business. Adding the required disclosures to that written information 
likely requires no supplemental non-labor expenditures.

John D. Graubert,
Acting General Counsel.
[FR Doc. E6-627 Filed 1-19-06; 8:45 am]
BILLING CODE 6750-01-P