[Federal Register Volume 71, Number 248 (Wednesday, December 27, 2006)]
[Proposed Rules]
[Pages 77634-77635]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-22144]


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FEDERAL TRADE COMMISSION

16 CFR Part 310

RIN 3084-0098


Telemarketing Sales Rule; Extension Beyond January 2, 2007, of 
the Previously Announced Forbearance Policy in Enforcement of the 
Prohibition of Prerecorded Calls in the Telemarketing Sales Rule 
(``TSR'')

AGENCY: Federal Trade Commission.

ACTION: Proposed rule.

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SUMMARY: In a Federal Register document published on October 4, 2006, 
71 FR 58716, the FTC denied a request for creation of a new safe harbor 
in the TSR for prerecorded calls by sellers and their telemarketers to 
consumers with whom the seller has an ``established business 
relationship,'' and proposed an amendment to the TSR that would make 
explicit the prohibition on prerecorded calls that is now implicit in 
the TSR's call abandonment provisions. The Commission accordingly also 
announced the revocation of a previously announced policy of forbearing 
from enforcement of the TSR's call abandonment prohibition effective 
January 2, 2007. In response to a request for an extension of the 
forbearance policy, the Commission has determined that the forbearance 
policy should remain in effect until the conclusion of the prerecorded 
call amendment proceeding.

DATES: Effective January 2, 2007, the Commission will continue its 
previously announced policy of forbearing from enforcing the 
prohibition of prerecorded calls in the TSR's call abandonment 
provisions, until the conclusion of the prerecorded call amendment 
proceeding.

FOR FURTHER INFORMATION CONTACT: Craig Tregillus, (202) 326-2970, 
Division of Marketing Practices, Bureau of Consumer Protection, Room H-
288, Federal Trade Commission, 600 Pennsylvania Avenue, NW., 
Washington, DC 20580.

SUPPLEMENTARY INFORMATION: In a Federal Register document published on 
October 4, 2006, 71 FR 58716, the FTC denied a request for creation of 
a new safe harbor in the TSR for prerecorded calls by sellers and their 
telemarketers to consumers with whom the seller has an ``established 
business relationship,'' and proposed an amendment to the TSR that 
would make explicit the prohibition on prerecorded calls that is now 
implicit in the TSR's call abandonment provisions. The Commission 
accordingly also announced the revocation of a previously announced 
policy of forbearing from enforcement of the TSR's call abandonment 
prohibition effective January 2, 2007.
    On November 29, 2006, the Direct Marketing Association (``DMA'') 
filed a petition seeking an extension of the Commission's enforcement 
forbearance policy on prerecorded calls beyond the announced revocation 
date of January 2, 2007. A petition filed by medSage Technologies LLC 
on November 30, and petitions filed by Minutepoll, LLC (``Minutepoll 
petition'') and jointly by Silverlink Communications Inc. and the Eliza 
Corporation (``Silverlink petition'') on December 1, also requested 
extensions of the revocation date. Both the DMA and Silverlink 
petitions ask for an extension until the conclusion of the rulemaking 
proceeding, while the medSage and Minutepoll petitions seek an 
extension until six months after the conclusion of the rulemaking to 
allow companies sufficient time to comply.\1\
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    \1\ The Commission believes that the medSage and Minutepoll 
requests for additional time after a final rule is promulgated for 
businesses to bring themselves into compliance is premature, since 
this issue can be addressed best when the final rule is issued.
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    DMA argues that, if the policy were revoked as announced effective 
January 2, 2007, even prerecorded messages that consumers 
``affirmatively requested would need to be discontinued'' because 
businesses would not have had sufficient time during their busy holiday 
season ``to obtain the proposed prior written consents.'' \2\ Moreover, 
DMA believes that because the TSR's present call abandonment 
provisions, unlike the proposed amendment, lack any express provision 
allowing prerecorded calls to established customers who have given 
their written consent, that failure to extend the forbearance policy 
would have the effect of ``a flat prohibition on prerecorded 
messages.'' \3\
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    \2\ DMA petition at 1-2.
    \3\Id. at 1.
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    DMA advances two additional reasons for extending the forbearance 
policy until completion of the amendment proceeding. The first is that 
failure to continue the forbearance policy ``effectively prejudges the 
outcome of the proceeding,'' contrary to the intended statutory purpose 
``of the Notice and Comment process.''\4\ The second is that an 
extension will maintain the status quo for consumers who have listed 
their numbers on the Do Not Call Registrybecause it simply continues 
the existing forbearance policy.\5\
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    \4\ Id. at 2.
    \5\ Id. at 3.
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    The Minutepoll petition emphasizes the ``irreparable harm smaller 
businesses'' engaged in telemarketing would incur unless the 
forbearance policy is extended.\6\ Minutepoll says that it and many 
other small telemarketers that place prerecorded calls otherwise would 
be forced to shut down their operations on January 2, 2007, since they 
cannot be ``cost competitive'' with large call centers in placing live 
telemarketing calls.\7\
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    \6\ Minutepoll petition at 2.
    \7\ Id.
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    The medSage and Silverlink petitions come from companies under 
contract with HMO's and other health care providers, pursuant to 
regulations issued by the Department of Health and Human Services under 
the Health Insurance Portability and Accountability Act of 1996, to 
place interactive ``reminder'' calls to the providers' medical 
patients, urging them to get flu shots, childhood immunizations, 
routine mammograms and colonoscopies, prescription refills, and the 
like.\8\ Both petitions argue that there is insufficient time before 
January 2 for the providers they serve to obtain written consent from 
the 10 to 20 million patients the Silverlink petition estimates receive 
such calls annually.\9\
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    \8\ These calls are ``telemarketing'' calls covered by the TSR 
because they induce the purchase of medical goods or services.
    \9\ Silverlink petition at 2; medSage petition at 3.
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    Thus, the medSage petition contends that the company would be faced 
with

[[Page 77635]]

``a Hobson's choice'' of violating the TSR or failing to deliver 
``medically necessary prerecorded messages,'' and that ``[n]either 
choice makes any sense.'' \10\ Similarly, the Silverlink petition 
argues that if an extension is not granted, patients would be deprived 
of calls that improve healthcare services and patient outcomes.\11\
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    \10\ medSage petition at 4.
    \11\ Silverlink petition at 6-7 & nn.14-16.
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    The Commission rejects DMA's argument that revoking its previously 
announced non-enforcement policy can reasonably be seen as in any way 
prejudging the outcome of the amendment proceeding. Nevertheless, in 
recognition of the reasons presented by the petitions and in order to 
preserve the status quo, the Commission has determined that, pending 
completion of this proceeding, the Commission will continue ``to 
forbear from bringing any enforcement action for violation of the TSR's 
call abandonment prohibition, 16 CFR 310.4(b)(1)(iv), against a seller 
or telemarketer that places telephone calls to deliver prerecorded 
telemarketing messages to consumers with whom the seller on whose 
behalf the telemarketing call is placed has an established business 
relationship, as defined in the TSR, provided the seller or 
telemarketer conducts this activity in conformity with the [following] 
terms:'' \12\

    \12\ 69 FR 67287, 67290 (Nov. 17, 2004).
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     (i) The seller or telemarketer, for each such 
telemarketing call placed, allows the telephone to ring for at least 
fifteen (15) seconds or four (4) rings before disconnecting an 
unanswered call;
     (ii) Within two (2) seconds after the person's 
completed greeting, the seller or telemarketer promptly plays a 
prerecorded message that:
     (A) Presents an opportunity to assert an entity-
specific Do Not Call request pursuant to Sec.  310.4(b)(1)(iii)(A) 
at the outset of the message, with only the prompt disclosures 
required by Sec.  310.4(d) or (e) preceding such opportunity; and
     (B) Complies with all other requirements of this Part 
[16 CFR Part 310] and other applicable federal and state laws.'' 
\13\

    \13\ 69 FR at 67294 (noting that ``This provision does not 
affect any seller's or telemarketer's obligation to comply with 
relevant state and federal laws, including but not limited to the 
TCPA, 47 U.S.C. 227, and 47 CFR part 64.1200.'')
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    The Commission has stated its belief that, as the foregoing 
criteria indicate, ``an interactive feature (pressing a button during 
the message to connect to a sales representative or an automated system 
to make a Do Not Call request) would be ideal . . . to protect 
consumers' Do Not Call rights under the TSR.'' \14\ The Commission 
emphasizes that its forbearance policy applies only to prerecorded 
telemarketing calls that comply completely with all of the foregoing 
criteria.
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    \14\ 69 FR 67289.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. E6-22144 Filed 12-26-06; 8:45 am]
BILLING CODE 6750-01-P