[Federal Register Volume 71, Number 95 (Wednesday, May 17, 2006)]
[Notices]
[Pages 28698-28701]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-4630]


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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 information collection requirements described below will 
be submitted to the Office of Management and Budget (``OMB'') for 
review, as required by the Paperwork Reduction Act (``PRA'') (44 U.S.C. 
3501-3520). The FTC is seeking public comments on its proposal to 
extend through May 31, 2009 the current PRA clearance for information 
collection requirements contained in its Telemarketing Sales Rule, 16 
CFR 435 (``TSR'' or ``Rule''). On February 2, 2006, the OMB granted the 
FTC's request for a short-term extension of this clearance to May 31, 
2006.

DATES: Comments must be received on or before June 16, 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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    Comments should also be submitted to: Office of Management and 
Budget, Attention: Desk Officer for the Federal Trade Commission. 
Comments should be submitted via facsimile to (202) 395-6974 because 
U.S. Postal Mail is subject to lengthy delays due to heightened 
security precautions.
    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 website. 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 Gary 
Ivens, Attorney, Division of Marketing Practices, Bureau of Consumer 
Protection, Federal Trade Commission, 600 Pennsylvania Ave., NW., 
Washington, DC 20580, (202) 326-2330.

SUPPLEMENTARY INFORMATION: On January 20, 2006, the FTC sought comment 
on the information collection requirements associated with the TSR, 16 
CFR 435 (OMB Control Number: 3084-0097). See 71 FR 3302. No comments 
were received. Pursuant to the OMB regulations that implement the PRA 
(5 CFR 1320), the FTC is providing this second opportunity for public 
comment while seeking OMB approval to extend the existing paperwork 
clearance for the Rule. All comments should be filed as prescribed in 
the ADDRESSES section above, and must be received on or before June 16, 
2006.
    The TSR implements the Telemarketing and Consumer Fraud and Abuse 
Prevention Act, 15 U.S.C. 6101-6108 (``Telemarketing Act''), as amended 
by the Uniting and Strengthening America by Providing Appropriate Tools 
Required to Intercept and Obstruct Terrorism Act (``USA PATRIOT Act''), 
Public Law 107056 (Oct. 25, 2001). The Telemarketing Act seeks to 
prevent deceptive or abusive telemarketing practices in telemarketing, 
which, pursuant to the

[[Page 28699]]

USA PATRIOT Act, 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. The 
TSR, implementing the Telemarketing Act, 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.
    On January 29, 2003, the Commission issued final amendments to the 
TSR, which, inter alia, established the National Do Not Call Registry 
(``National Registry''), permitting consumers to register, via either a 
toll-free telephone number or the Internet, their preference not to 
receive certain telemarketing calls.\2\ Accordingly, under the TSR, 
most telemarketers are required to refrain from calling consumers who 
have placed their numbers on the National Registry.\3\ Telemarketers 
must periodically access the National Registry to remove from their 
telemarketing lists the telephone numbers of those consumers who have 
registered.\4\ Other than the minimal burden associated with supplying 
basic identifying information to the operator of the National Registry, 
which is discussed below, the amendments to the Rule associated with 
the National Registry do not impact PRA burden.
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    \2\ 68 FR 4580 (Jan. 29, 2003).
    \3\ 16 CFR 310.4(b)(1)(iii)(B).
    \4\ 16 CFR 310.4(b)(3)(iv). The TSR requires telemarketers to 
access the National Registry at least once every 31 days, effective 
January 1, 2005. See 69 FR 16368 (Mar. 29, 2004). The Commission has 
recently proposed to revise the fees charged to entities who must 
pay for access to the National Registry. See 71 FR 25512 (May 1, 
2006).
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    The Supporting Statement for Information Collection Provisions of 
the TSR (``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.\5\ The figures used in 
this Notice are based on those from the 2003 Supporting Statement, 
updated when necessary and when newer figures are available.
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    \5\ The 2003 Supporting Statement is available at http://www.ftc.gov/bcp/rulemaking/tsr/tsrrulemaking/tsrss2003.pdf.
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Burden Statement

    Estimated annual hours burden: 2,500,000 hours.
    The estimated recordkeeping burden is 28,000 hours for all industry 
members affected by the Rule. The estimated burden related to the 
disclosures that the Rule requires is 2,472,000 hours (rounded to 
nearest thousand) for all affected industry members. Thus, the total 
PRA burden is 2,500,000 hours.
    Recordkeeping: Following the publication of the amended TSR in 
2003, the Commission staff 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 
Registry as well as further staff analysis of the information received. 
Since that time, the Commission has begun operation of the National 
Registry, and, in the year March 1, 2005, through February 28, 2006, 
slightly less than 66,200 entities accessed the National Registry.\6\ 
Of these, approximately 1,300 were ``exempt'' entities obtaining access 
to data for more than one state.\7\ By definition, none of the exempt 
entities are subject to the TSR. Additionally, 49,574 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.\8\ Thus, staff estimates that 15,000 entities, rounded to 
the nearest thousand, (66,200 - 1,300 - 49,574 = 15,326) are currently 
subject to the TSR.
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    \6\ The March 2005 through February 2006 time frame differs from 
that used in the January 20, 2006 Notice (which used data from 
calendar year 2004) and the burden estimates herein have been 
adjusted accordingly.
    \7\ An exempt entity is one that, although not subject to the 
TSR and the Federal Communication Commission's Telephone Consumer 
Protection Act regulations, chooses to voluntarily scrub its calling 
lists against the data in the National Registry.
    \8\ 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 Registry.
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    The staff continues to estimate that these 15,000 telemarketing 
entities subject to the Rule each require approximately 1 hour per year 
to file and store records required by the TSR for an annual total of 
15,000 burden hours (rounded to the nearest thousand (15,000 x 1 = 
15,000)).\9\ The Commission staff 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 consistent with 
staff's current knowledge of the industry. Thus, the total estimated 
annual recordkeeping burden for new and existing telemarketing entities 
is 23,000 hours (rounded to the nearest thousand).
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    \9\ The January 20, 2006 Notice erroneously indicated a burden 
of 2.3 hours per entity.
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    In the 2003 Supporting Statement, the Commission staff 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.\10\ 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 are inaccurate; 
therefore, the Commission staff retains these estimates.
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    \10\ Telefunders are not subject to the National Registry 
provisions of the TSR.
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    The cumulative annual recordkeeping burden for all entities subject 
to the TSR--both telefunder and telemarketing firms alike--is 28,000 
hours.
    Disclosures: Staff believes that a substantial majority of 
telemarketers 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 FTC last 
sought OMB clearance for this Rule, staff estimates that most of 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 most of the Rule's

[[Page 28700]]

disclosure requirements is 25 percent of the total hours associated 
with disclosures of the type the TSR requires.
    Staff estimates the total disclosure burden attributable to the 
Rule to be 2,472,000 hours (rounded to the nearest thousand). Based on 
industry data, staff estimates that the 15,000 telemarketing entities 
subject to the Rule make 6.2 billion calls per year, or 413,000 calls 
per year per company (rounded to the nearest thousand).\11\ 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 15,000 
telemarketing entities, 12,656 (27:32) firms conduct inbound 
telemarketing, and that of these, approximately 4,200 (one-third) will 
choose to adopt marketing methods that exempt them from complying with 
the Rule's verbal disclosure requirements.\12\
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    \11\ Staff's estimates are likely to be conservative in light of 
consumer research that has been conducted after implementation of 
the National Registry. For example, one survey conducted by Harris 
Interactive[reg] in January 2004 determined that 92% of consumers 
who signed up for the National Registry received fewer telemarketing 
calls and 25% reported that they had received no telemarketing 
calls. Similarly, another survey conducted by Customer Care Alliance 
found that 60% of consumers who placed their home telephone number 
on the National Registry experienced an 80% reduction in the volume 
of telemarketing calls. Nonetheless, as noted above, the figures 
used in this Notice are based on those from the 2003 Supporting 
Statement, updated when necessary and when newer figures are 
available. Accordingly, due to the lack of precise, verifiable 
information concerning the current volume of telemarketing calls, 
staff continues to rely upon the data released by the Direct 
Marketing Association (``DMA'') in 2001. See The DMA, Statistical 
Fact Book 2001 (23rd ed. 2001).
    \12\ While staff does not have information directly stating the 
number of inbound telemarketers, it notes that, according to the DMA 
27% of all direct marketing in Year 2000 was by inbound 
telemarketing and 32% was by outbound telemarketing. See Statistical 
Fact Book 2001 at p. 25. No new data suggests that these estimates 
have changed. Accordingly, using a 27:32 ratio, staff estimates that 
the number of inbound telemarketers is approximately 12,656 (15,000 
x 27/32).
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    The staff retains its estimate that, in a telemarketing call 
involving the sale of goods or services, 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.\13\ 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 
1.14 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 76 hours 
per firm [1.14 million hours /15,000 firms].
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    \13\ An ``upsell'' is the soliciting of the purchase of goods or 
services after an initial transaction occurs during a single 
telephone call. The solicitation may be made by or on behalf of a 
seller different from the seller in the initial transaction, 
regardless of whether the initial transaction and the subsequent 
solicitation are made by the same telemarketer (``external 
upsell''). Or, it may be made by or on behalf of the same seller as 
in the initial transaction, regardless of whether the initial 
transaction and subsequent solicitation are made by the same 
telemarketer (``internal upsell'').
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    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 499,167 
hours annually. This figure includes the burden for written disclosures 
[(4,200 firms [estimated using direct mail] x 10 hours per year x 25% 
burden) = 10,500 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 x 25% burden x 8 seconds)].
    Staff also estimates that the specific sales disclosures require 
53,348 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 annual burden for all of the sales disclosures is 
553,000 hours (rounded to the nearest thousand) or 37 hours annually 
per firm.
    As noted above, staff retains its prior estimate that 2,500 
telefunder firms are subject to the Rule. The only disclosures that the 
TSR requires in solicitations for charitable contributions are the 
disclosures in Sec.  310.4(e)--that the call is to solicit a charitable 
contribution and the identity of the charitable organization on whose 
behalf the call is being made. 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].
    Finally, any entity that accesses the National Registry, regardless 
of whether it is paying for access, must submit minimal identifying 
information to the operator of the National Registry. This basic 
information includes, the name address and telephone number of the 
entity, a contact person for the organization, and information about 
the matter of payment. The entity also needs to submit a list of the 
area codes of data for which it requests information. In addition, the 
entity has to certify that it is accessing the National Registry solely 
to comply with the provisions of the TSR. If the entity is accessing 
the National Registry on behalf of other seller or telemarketer 
clients, it has to submit basic identifying information about those 
clients, a list of the area codes of data for which it requests 
information on their behalf, and a certification that the clients are 
accessing the National Registry solely to comply with the TSR.
    Commission staff continues to estimate, as it did in the Original 
User Fee NPRM, that it should take no longer than two minutes for each 
entity to submit this basic information, and that each entity would 
have to submit the

[[Page 28701]]

information annually.\14\ Based on the number of entities accessing the 
National Registry that are subject to the TSR, this requirement will 
result in 500 burden hours (15,000 entities x 2 minutes per entity). In 
addition, Commission staff continues to estimate that possibly one-half 
of those entities may need, during the course of their annual period, 
to submit their basic identifying information more than once in order 
to obtain additional area codes of data. This would result in an 
additional 250 burden hours (7,500 entities x 2 minutes per entity). 
Thus, Commission staff estimates that accessing the National Registry 
will impose a total burden of approximately 750 hours per year.
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    \14\ See 67 FR 37366 (May 29, 2002). As stated in the Original 
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).
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    Thus, the cumulative annual disclosure burden for all entities 
subject to the TSR--both telefunder and telemarketing firms alike--is 
2,472,000 hours (rounded to the nearest thousand).
    Estimated annual labor cost burden: $37,448,000 (rounded to the 
nearest thousand).\15\
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    \15\ The January 20, 2006 Notice erroneously indicated 
$20,315,000.
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    Recordkeeping: The estimated labor cost for recordkeeping for all 
entities, both telefunders and telemarketing firms, is $375,000. 
Assuming a cumulative burden of 7,500 hours/year to set up compliant 
recordkeeping systems for new telemarketing entities, and applying to 
that a skilled labor rate of $20/hour, labor costs would approximate 
$150,000 yearly for all new telemarketing entities. As indicated above, 
staff estimates that existing telemarketing entities require 15,000 
hours, cumulatively, to maintain compliance with the TSR's 
recordkeeping provisions. Applying a clerical wage rate of $10/hour, 
recordkeeping maintenance for existing telemarketing entities would 
amount to an annual cost of approximately $150,000.
    Based on the estimated cumulative burden of 2,500 hours/year to set 
up compliant recordkeeping systems for new telefunder entities, and 
applying to that a skilled labor rate of $20/hour, cumulative labor 
costs would be approximately $50,000. In addition, the annual estimated 
labor cost for maintaining records relating to solicitations for 
existing telefunder entities would be $25,000 (2,500 burden hours x 
$10/hour).
    Disclosures: The estimated annual labor cost for disclosures for 
all entities, both telefunders and telemarketing firms is $37,073,000 
(rounded to the nearest thousand). This estimate was derived in part by 
applying a wage rate of $15 per hour to: (1) 1,140,000 hours attributed 
to disclosing outbound call information and disclosing the information 
required in the case of an upsell; (2) 553,000 hours attributed to all 
sales disclosures; and (3) 778,000 hours for the disclosure made in 
solicitations for charitable contributions.
    The remaining portion of the labor cost estimate is associated with 
supplying basic identifying information to the National Registry 
operator. Applying a clerical wage of $10 per hour, the cumulative 
annual labor cost for entities that provide the requisite information 
and are subject to the TSR is approximately $7,500 (750 hours x 
$10).\16\
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    \16\ Staff continues to assume that clerical employees will 
submit the minimal identifying information. See 68 FR 16238, 16246 
(April 3, 2003).
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    Estimated annual non-labor cost burden: $12,575,000 (rounded to the 
nearest thousand).\17\
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    \17\ The January 20, 2006 Notice erroneously indicated 
$5,613,000.
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    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 
15,000 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 $750,000. Oral 
disclosure estimates, discussed above, applied to a retained estimated 
commercial calling rate of 6 cents per minute ($3.60 per hour), totals 
$8,899,000 (rounded to the nearest thousand) (2,472,000 hours x $3.60 
per hour) in phone-related costs. Accordingly, the non-labor costs for 
telemarketing entities associated with the Rule's information 
collection provisions is $9,649,000 ($8,899,000 in phone related costs 
+ $750,000 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 costs for all entities subject to the 
TSR is $12,575,000.\18\
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    \18\ 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 4,200 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.

William Blumenthal,
General Counsel.
[FR Doc. 06-4630 Filed 5-16-06; 8:45 am]
BILLING CODE 6750-01-P