[Federal Register Volume 74, Number 53 (Friday, March 20, 2009)]
[Notices]
[Pages 11952-11958]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-6035]


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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''). The FTC 
is seeking public comments on its proposal to extend through May 31, 
2012, the current PRA clearance for information collection requirements 
contained in its Telemarketing Sales Rule (``TSR'' or ``Rule''). On 
November 26, 2008, OMB granted the FTC's request for a short-term 
extension of this clearance to May 31, 2009, which focused on recent 
amendments to the Rule.

DATES: Comments must be received on or before May 19, 2009.

ADDRESSES: Interested parties are invited to submit written comments 
electronically or in paper form. Comments should refer to 
``Telemarketing Sales Rule: FTC File No. P994414'' to facilitate the 
organization of comments. Please note that your comment--including your 
name and your state--will be placed on the public record of this 
proceeding, including on the publicly accessible FTC website, at 
(http://www.ftc.gov/os/publiccomments.shtm).
    Because comments will be made public, they should not include any 
sensitive personal information, such as an individual's Social Security 
Number; date of birth; driver's license number or other state 
identification number, or foreign country equivalent; passport number; 
financial account number; or credit or debit card number. Comments also 
should not include any sensitive health information, such as medical 
records or other individually identifiable health information. In 
addition, comments should not include any ``[t]rade secret or any 
commercial or financial information which is obtained from any person 
and which is privileged or confidential. . . .,'' as provided in 
Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and Commission Rule 
4.10(a)(2), 16 CFR 4.10(a)(2). Comments containing material for which 
confidential treatment is requested must be filed in paper form, must 
be clearly labeled ``Confidential,'' and must comply with FTC Rule 
4.9(c).\1\
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    \1\ FTC 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 FTC Rule 4.9(c), 16 CFR 4.9(c).
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    Because paper mail addressed to the FTC is subject to delay due to 
heightened security screening, please consider submitting your comments 
in electronic form. Comments filed in electronic form should be 
submitted by using the following weblink: (https://secure.commentworks.com/ftc-TSRPRA) (and following the instructions on 
the web-based form). To ensure that the Commission considers an 
electronic comment, you must file it on the web-based form at the 
weblink (https://secure.commentworks.com/ftc-TSRPRA). If this Notice 
appears at (http://www.regulations.gov/search/index.jsp), you may also 
file an electronic comment through that website. The Commission will 
consider all comments that regulations.gov forwards to it. You may also 
visit the FTC website at http://www.ftc.gov to read the Notice and the 
news release describing it.
    A comment filed in paper form should include the ``Telemarketing 
Sales Rule: FTC File No. P994414'' 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 H-135 
(Annex J), 600 Pennsylvania Avenue, NW, Washington, DC 20580. 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.
    The FTC Act and other laws the Commission administers permit the 
collection of public comments to consider and use in this proceeding as 
appropriate. The Commission will consider all timely and responsive 
public comments that it receives, whether filed in paper or electronic 
form. Comments received will be available to the public on the FTC 
website, to the extent practicable, at (http://www.ftc.gov/os/publiccomments.shtm). As a matter of discretion, the Commission 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.shtm).

FOR FURTHER INFORMATION CONTACT: Requests for additional information or 
copies of the proposed information requirements should be sent to Craig 
Tregillus, Attorney, Division of Marketing Practices, Bureau of 
Consumer Protection, Federal Trade Commission, 600 Pennsylvania Ave., 
N.W., Room H-238, Washington, D.C. 20580, (202) 326-2970.

SUPPLEMENTARY INFORMATION: Under the PRA, 44 U.S.C. 3501-3521, 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

[[Page 11953]]

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 May 19, 
2009.
    The TSR, 16 CFR 310, 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 Terroism 
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, includes calls 
made to solicit charitable contributions by third-party telemarketers. 
The Telemarketing Act mandated certain disclosures by telemarketers, 
and directed the Commission to include recordkeeping requirements in 
promulgating a rule to prohibit such practices. As required by the 
Telemarketing Act, the TSR mandates certain disclosures regarding 
telephone sales and requires telemarketers to retain certain records 
regarding advertising, sales, and employees. The required disclosures 
provide consumers with information necessary to make informed 
purchasing decisions. The required records are to be made available for 
inspection by the Commission and other law enforcement personnel to 
determine compliance with the Rule. Required records may also yield 
information helpful to measuring and redressing consumer injury 
stemming from Rule violations.
    In 2003, the Commission amended the TSR to include certain new 
disclosure requirements and to expand the Rule in other ways. See 68 FR 
4580 (Jan. 29, 2003). Specifically, the Rule was amended to cover 
upsells\2\ (not only in outbound calls, but also in inbound calls) and 
additional transactions were included under the Rule's purview. For 
example, the Rule was extended to the solicitation by telephone of 
charitable donations by third-party telemarketers in response to the 
mandate of the USA PATRIOT Act. Finally, the amendments established the 
National Do Not Call Registry (``Registry''), permitting consumers to 
register, via either a toll-free telephone number or the Internet, 
their preference not to receive certain telemarketing calls.\3\ 
Accordingly, under the TSR, most sellers and telemarketers are required 
to refrain from calling consumers who have placed their numbers on the 
Registry.\4\ Moreover, sellers and telemarketers must periodically 
access the Registry to remove from their telemarketing lists the 
telephone numbers of those consumers who have registered.\5\
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    \2\ An ``upsell'' is the solicitation in a single telephone call 
of the purchase of goods or services after an initial transaction 
occurs. 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'').
    \3\ 68 FR 4580 (Jan. 29, 2003). The Registry applies to any 
plan, program, or campaign to sell goods or services through 
interstate phone calls. This includes telemarketers who solicit 
consumers, often on behalf of third party sellers. It also includes 
sellers who provide, offer to provide, or arrange to provide goods 
or services to consumers in exchange for payment. It does not limit 
calls by political organizations, charities, or telephone surveyors.
    \4\ 16 CFR Sec.  310.4(b)(1)(iii)(B).
    \5\ 16 CFR Sec.  310.4(b)(3)(iv). Effective January 1, 2005, the 
TSR was amended to require telemarketers to access the Registry at 
least once every 31 days. See 69 Fed. Reg. 16368 (Mar. 29, 2004).
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    In 2008, the Commission promulgated amendments to the TSR regarding 
pre-recorded calls, 16 CFR 310.4(b)(1)(v), and call abandonment rate 
calculations, 16 CFR 310.4(b)(4)(i).\6\ The amendment regarding 
prerecorded calls added certain information collection requirements.\7\ 
Specifically, the amendment expressly authorized sellers and 
telemarketers to place outbound prerecorded telemarketing calls to 
consumers if: (1) the seller has obtained written agreements from those 
consumers to receive prerecorded telemarketing calls after a clear and 
conspicuous disclosure of the purpose of the agreement; and (2) the 
call discloses and provides an automated telephone keypress or voice-
activated opt-out mechanism at the outset of the call.\8\ Although the 
opt-out mechanism requirement took effect on December 1, 2008, the 
Commission deferred the compliance date for the written agreement 
requirement until September 1, 2009, one year from its promulgation, to 
afford time for an orderly phase-in.\9\ Thus affected entities may 
still be taking steps toward compliance. Accordingly, with 
implementation of the opt-out mechanism presumably now satisfied by 
affected entities, the relevant focus going forward in estimating PRA 
burden centers on: (1) the establishment of recordkeeping and 
disclosure systems for the express agreement requirement of the 
prerecorded call amendment; and (2) the remaining provisions of the TSR 
that impose recordkeeping and disclosure obligations.
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    \6\ See 73 FR 51164 (Aug. 29, 2008).
    \7\ By contrast, the revised standard for measuring the call 
abandonment rate does not impose any new or affect any existing 
reporting, recordkeeping or third-party disclosure requirements 
within the meaning of the PRA. That amendment relaxes the prior 
requirement that the abandonment rate be calculated on a ``per day 
per campaign'' basis by permitting, but not requiring, its 
calculation over a 30-day period, as industry requested. Sellers and 
telemarketers already had established automated recordkeeping 
systems to document their compliance with the prior standard. The 
amendment likely reduces their overall compliance burden. The prior 
``per day'' requirement effectively forced telemarketers to turn off 
their predictive dialers on the many occasions when spikes in call 
abandonment rates occur late in the day, thereby preventing 
realization of the cost savings that predictive dialers provide.
    \8\ The prerecorded call amendment provides the first ever 
explicit authorization in the TSR for sellers and telemarketers to 
place prerecorded telemarketing calls to consumers. The pre-amended 
call abandonment prohibition of the TSR implicitly barred such calls 
by requiring that all telemarketing calls be connected to a sales 
representative, rather than a recording, within two seconds of the 
completed greeting of the person who answers. The amendment applies 
not only to prerecorded calls that are answered by a consumer, but 
also to prerecorded messages left on consumers' answering machines 
or voicemail services.
    \9\ See 73 FR 51164, 51166.

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    Burden Statement:

    Estimated Annual Hours Burden: 1,655,455 hours

    The estimated burden for recordkeeping is 22,772 hours for all 
industry members affected by the Rule. The estimated burden for the 
disclosures that the Rule requires for both the live telemarketing call 
provisions of the TSR and the prerecorded call amendments is 1,632,683 
hours (rounded to the nearest thousand) for all affected industry 
members. Thus, the total PRA burden is 1,655,455 hours. These estimates 
are explained below.
    Number of Respondents: As a preliminary matter, only telemarketers 
and sellers, not telefunders (third-party telemarketers soliciting 
contributions on behalf of charities), are subject to the

[[Page 11954]]

Registry provisions of the Rule, and only sellers, not telemarketers or 
telefunders, are subject to the new express agreement obligations 
attributable to the prerecorded call amendments.\10\ The Registry data 
does not separately account for telefunders; they are a subset of the 
overall number of telemarketing entities known to access the Registry 
for any given year. Thus, past FTC estimates that separately accounted 
for telefunders over-counted them.\11\ The following estimates have 
been adjusted accordingly.
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    \10\ Telemarketers and telefunders must comply, however, with 
the abandoned call provisions of the TSR, and the opt out provisions 
of the 2008 amendments.
    \11\ For the sake of simplicity and to err conservatively, FTC 
staff's burden estimates for provisions less likely to be applicable 
to telefunders (e.g., prize promotion disclosure obligations for 
outbound live calls, under 16 CFR 310.4(d)), will not be reduced by 
a separate estimate for the subset of telemarketers that are 
telefunders. Conversely, estimates of the number of new-entrant 
telemarketers will incorporate new-entrant telefunders.
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    In calendar year 2008, 50,245 telemarketing entities accessed the 
Registry. Of these entities, 1,158 were ``exempt'' entities obtaining 
access to data.\12\ By definition, none of the exempt entities are 
subject to the TSR. In addition, 38,815 sellers and 10,272 
telemarketers accessed the Registry. Of those, however, 25,574 sellers 
and 7,178 telemarketing entities with independent access to the 
Registry obtained data for just one state. Staff assumes that these 
entities are operating solely intrastate, and thus would not be subject 
to the TSR.\13\ Applying this Registry data, staff estimates that 
14,335 telemarketing entities (50,245 - 1,158 - 34,752) are currently 
subject to the TSR, of which 11,241 (38,815 - 27,574) are sellers and 
3,094 (10,272 - 7,178) are telemarketers.\14\
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    \12\ An exempt entity is one that, although not subject to the 
TSR, chooses to voluntarily scrub its calling lists against the data 
in the Registry.
    \13\ These entities would nonetheless likely be subject to the 
Federal Communications Commission's (``FCC'') Telephone Consumer 
Protection Act regulations (``FCC regulations''), including the 
requirement that entities engaged in intrastate telephone 
solicitations access the Registry.
    \14\ Staff assumes, for purposes of these calculations, that 
those telemarketers that make prerecorded calls download telephone 
numbers listed on the Registry, rather than conduct online searches, 
as the latter may consume considerably more time. Other 
telemarketers not placing the high-volume of automated prerecorded 
calls may elect to search online, rather than to download.
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    Absent information to the contrary, staff retains its prior 
estimate that 25 new-entrant telefunders per year would need to set up 
recordkeeping systems that comply with the TSR.

Recordkeeping Hours:

A. Live Telemarketing Call Provisions of the TSR
    Staff estimates that the above-noted 14,335 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 14,335 
burden hours. 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 TSR 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, including the effects of the prerecorded call amendment, is 
21,835 hours.
B. Prerecorded Call Amendment
    As noted above, after September 1, 2009, no prerecorded call may be 
placed by or on behalf of a seller unless the seller has obtained a 
written agreement from the person called to receive such calls. Thus, 
the recordkeeping obligations of the prerecorded call amendment fall on 
sellers rather than telemarketers.\15\
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    \15\ Although telemarketers that place prerecorded telemarketing 
calls on behalf of sellers must capture and transmit to the seller 
any requests they receive to place a consumer's telephone number on 
the seller's entity-specific do-not-call list, this de minimis 
obligation extends both to live and prerecorded telemarketing calls, 
and is subsumed within the PRA estimates shown above.
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    In view of its phase-in and the prerecorded call amendment's 
clarification allowing written agreements to be created and maintained 
electronically pursuant to the Electronic Signatures In Global and 
National Commerce Act (commonly, ``E-SIGN''), any initial burden caused 
by the transition from the previously required records of an 
established business relationship to the newly required records of a 
written agreement should not be material. Once the necessary systems 
and procedures are in place, any ongoing incremental burden to create 
and retain electronic records of agreements by new customers to receive 
prerecorded calls should be minimal.\16\ Accordingly, staff estimates 
that existing sellers subject to the prerecorded call amendment will 
require approximately 1 hour to prepare and maintain records required 
by the amendment, and an estimated 75 new entrant-telemarketers 
(including telefunders) per year would require the same. This reflects 
a one-time modification of existing customer databases to include an 
additional field to record consumer agreements.
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    \16\ If it is not feasible to obtain a written agreement at the 
point of sale after the written agreement requirement takes effect, 
sellers could, for example, obtain a customer's email address and 
request an agreement via email to receive prerecorded calls.
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    Most of the 11,241 existing sellers, however, in anticipation of 
the September 1, 2009 compliance deadline, presumably will have set up 
already the necessary systems and procedures by or before the May 31, 
2009 expiration of the PRA clearance for the TSR. At that point, 
sellers will have had 9 months' advance notice, with just 3 months 
remaining between the expiring clearance and the compliance deadline. 
Allowing for this apportionment, 2,810 remaining existing sellers 
(i.e., 3/12 of the 11,241 existing sellers) would still be setting up 
compliant systems between May 31,2009 and the September 1, 2009 
compliance deadline, with no further set-up burden thereafter.\17\ 
Thus, annualized for an ``average'' year over the prospective 3-year 
PRA clearance (May 31, 2009 - May 31, 2012), this amounts to 937 hours 
per year.
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    \17\ Staff has already attributed 100 hours for each new-entrant 
seller to develop a recordkeeping system compliant with the TSR, 
which would also factor in the time to create and retain electronic 
records of agreements by customers to receive prerecorded calls.
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Disclosure Hours

A. Live Telemarketing Call Provisions of the TSR
    Staff believes that in the ordinary course of business a 
substantial majority of sellers and telemarketers make 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 as 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 3-year 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 has 
continued to estimate that the hours burden for most of the Rule's 
disclosure requirements is 25 percent of the total hours associated 
with disclosures of the type the TSR requires.
    Based on previous assumptions, staff estimates that of the 14,335

[[Page 11955]]

telemarketing entities noted above, 7,342 conduct inbound 
telemarketing.\18\ Inbound calls from consumers in response to direct 
mail solicitations that make certain required disclosures are exempt 
from the TSR.\19\ Although such calls are exempt from the Rule, the 
Commission believes it is likely that industry members who choose to 
make the requisite disclosures in direct mail solicitation may do so in 
an effort to qualify for the exemption. Thus, Commission staff believes 
it is appropriate to include in the relevant burden hour calculation 
both the burden for compliance with the Rule's oral disclosures and the 
burden incurred by entities who make written disclosures in order to 
qualify for the inbound direct mail exemption. Accordingly, staff 
estimates that, of the 7,342 entities that conduct inbound 
telemarketing, approximately one-third (2,447) will choose to 
incorporate disclosures in their direct mail solicitations that exempt 
them from complying with the Rule.
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    \18\ While staff does not have information directly stating the 
number of inbound telemarketers, it notes that, according to the DMA 
21% of all direct marketing in 2007 was by inbound telemarketing and 
20% was by outbound telemarketing. See DMA Statistical Fact Book 
(30th ed. 2008) at p. 17. Accordingly, based on such relative 
weighting, staff estimates that the number of inbound telemarketers 
is approximately 7,342 (14,335 x 21 / (20 + 21)).
    \19\ Some exceptions to this broad exemption exist, including 
solicitations regarding prize promotions, investment opportunities, 
business opportunities other than business arrangements covered by 
the Franchise Rule, advertisements involving goods or services 
described in Sec.  310.3(a)(1)(vi), advertisements involving goods 
or services described in Sec.  310.4(a)(2)-(5); and any instances of 
upselling included in such telephone calls.
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    Staff necessarily has made additional assumptions in estimating 
burden. From the total volume of outbound and inbound calls, staff 
first calculated disclosure burden for initial transactions that 
resulted in sales, derived from external data and/or estimates drawn 
from a range of calendar years (2001-2008). Staff recognizes that 
disclosure burdens may still be incurred regardless of whether or not a 
call results in a sale. Conversely, a substantial percentage of 
outbound calls result in consumers hanging up before the seller or 
telemarketer makes the required disclosure(s). However, because the 
requirements in Sec.  310.3(a)(1) for certain disclosures before a 
consumer pays for a telemarketing purchase apply only to sales, early 
call cessation (i.e., consumers hanging up pre-disclosure or before 
full disclosure) is excluded from staff's burden estimates for Sec.  
310.3(a)(1).
    For transactions in which a sale is not a precursor to a required 
disclosure, i.e., the upfront disclosures required in all outbound 
telemarketing calls and outbound or inbound ``upsell'' calls by Sec.  
310.4(d) , staff has calculated burden for initial transactions based 
on estimates of the total volumes of outbound and inbound calls, 
discounted for anticipated early hang-ups. For transactions in which a 
sale is a precursor to required disclosure, i.e., Sec.  310.3(a)(1), 
the calculation is based on the volume of direct sales.
    Based on the most recently available applicable industry data and 
further FTC extrapolations, staff estimates that 2.9 billion outbound 
calls are subject to FTC jurisdiction and attributable to direct 
orders, that 570 million of these calls result in direct sales,\20\ and 
that there are 2.8 billion inbound calls. Staff retains its 
longstanding estimate that, in a telemarketing call involving the sale 
of goods or services, it takes 7 seconds\21\ for telemarketers to 
disclose the required outbound call information orally plus 3 
additional seconds\22\ to disclose the information required in the case 
of an upsell. Staff also retains its longstanding estimates that at 
least 60 percent of sales calls result in ``hang-ups'' before the 
telemarketer can make all the required disclosures and that ``hang-up'' 
calls consume only 2 seconds.\23\
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    \20\ For staff's PRA burden calculations, only direct orders by 
telephone are relevant. That is, sales generated through leads or 
customer traffic are excluded from these calculations because such 
sales are not subject to the TSR's recordkeeping and disclosure 
provisions. The direct sales total of 570 million is based on an 
estimated 1.9 billion sales transactions from outbound calls being 
subject to FTC jurisdiction reduced by an estimated 30 percent 
attributable to direct orders. This percentage estimate is drawn 
from DMA published data last appearing in the DMA Statistical Fact 
Book (2001), at p. 301.
    \21\ See, e.g., 60 FR 32682, 32683 (June 23, 1995); 63 FR 40713, 
40714 (July 30, 1998); 66 FR 33701, 33702 (June 25, 2001); 71 FR 
28698, 28700 (May 17, 2006).
    \22\ 71 FR 3302, 3304 (Jan. 20, 2006); 71 FR 28698, 28700.
    \23\ See, e.g., 60 FR at 32683.
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    Staff bases all ensuing upsell calculations on the volume of 
additional sales after an initial sale, with the assumption that a 
consumer is unlikely to be predisposed to an upsell if he or she 
rejects an initial offer--whether through an outbound or an inbound 
call. Using industry information, staff assumes an upsell conversion 
rate of 40% for inbound calls as well as outbound calls.\24\ Moreover, 
staff assumes that consumers who agree to an upsell will not terminate 
an upsell before the seller or telemarketer makes the full required 
disclosures.
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    \24\ This assumption originated with industry response to the 
Commission's 2003 Final Amended TSR. See 68 FR 4580, 4597 n.183 
(Jan. 29, 2003). Although it was posited specifically regarding 
inbound calls, FTC staff will continue to apply this assumption to 
outbound calls as well, barring the receipt of any information to 
the contrary.
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    Based on the above inputs and assumptions, staff estimates that the 
total time associated with these disclosure requirements is 
approximately 1.10 million hours per year [(2.9 billion outbound calls 
x 40% lasting the duration x 7 seconds of full disclosures = 2,255,556) 
+ (2.9 billion outbound calls x 60% terminated after 2 seconds of 
disclosures = 966,667) + (570 million outbound calls resulting in 
direct sales x 40% upsell conversions x 3 seconds of related 
disclosures = 190,000) + (2.8 billion inbound calls x 40% upsell 
conversions x 3 seconds = 933,333) x an estimated 25% of affected 
entities not already making such disclosures independent of the TSR = 
1,086,389 hours].
    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 472,562 
hours annually. This figure includes the burden for written disclosures 
[(2,447 inbound telemarketing entities estimated to use direct mail\25\ 
x 10 hours\26\ per year x 25% burden) = 6,118 hours], as well as the 
figure for oral disclosures [(570 million calls x 8 seconds x 25% 
burden = 316,667 hours) + (570 million outbound calls x 40% (upsell 
conversion) x 20% sales conversion x 25% burden x 8 seconds = 25,333 
hours) + (2.8 billion inbound calls x 40% upsell conversion x 20% sales 
conversion x 25% burden x 8 seconds) = 124,444 hours].\27\
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    \25\ See the discussion in the text immediately following note 
19.
    \26\ FTC staff believes a typical firm will spend approximately 
10 hours per year engaged in activities ensuring compliance with 
this provision of the Rule; this, too, has been stated in prior FTC 
notices inviting comment on PRA estimates. No comments were 
received, and staff continues to believe this estimate remains 
reasonable.
    \27\ The percentage and unit of time measurements are FTC 
staff's estimates.
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    Staff also estimates that the specific sales disclosures require 
48,162 hours annually [(570 million calls x 5% [estimate for outbound 
calls involving

[[Page 11956]]

prize promotions] x 3 seconds x 25% burden = 5,937 hours) + (570 
million calls x .1% [estimate for outbound calls involving credit card 
loss protection (``CCLP'')] x 4 seconds x 25% burden = 158 hours) + 
(570 million calls x 40% upsell conversions x 20% sales conversions x 
.1% [estimate for outbound calls involving CCLP upsells] x 4 seconds x 
25% burden = 13 hours) + (2.8 billion inbound calls x 40% upsell 
conversion x 20% sales conversion x .1% [estimate for inbound calls 
involving CCLP] x 4 seconds x 25% burden = 62 hours) + (570 million 
calls x 10% [estimate for outbound calls involving negative options] x 
4 seconds x 25% burden = 15,833 hours) + (570 outbound million calls x 
40% upsell conversion x 20% sales conversions x 10% [estimate for 
outbound calls involving negative option upsells] x 4 seconds x 25% 
burden = 1,267 hours) + (2.8 billion inbound calls x 40% upsell 
conversions x 20% sales conversions x 10% [estimate for inbound calls 
involving negative option upsells] x 4 seconds x 25% burden) = 6,222 
hours] + (2.8 billion inbound calls x .3% [estimate for inbound calls 
involving business opportunities] x 8 seconds = 18,667 hours).\28\
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    \28\ The estimate for Sec.  310.3(a)(1) disclosures in outbound 
calls involving business opportunities is subsumed in the overall 
figure for outbound telemarketing call disclosures in the prior 
paragraph, and the estimate for outbound business opportunity call 
upsells is subsumed in the figures in this paragraph for outbound 
calls involving CCLP upsells.
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    The total annual burden for all of the sales disclosures is 520,724 
hours (472,562 general + 48,162 specific sales disclosures) or, by 
rough approximation (allowing that some entities conducting inbound 
telemarketing will be exempt from oral disclosure if making certain 
written disclosures), 36 hours annually per firm (520,724 hours / 
14,335).
    Finally, any entity that accesses the Registry, regardless whether 
it is paying for access, must submit minimal identifying information to 
the operator of the Registry. This basic information includes the name, 
address, and telephone number of the entity; a contact person for the 
organization; and information about the manner of payment. The entity 
also must submit a list of the area codes for which it requests 
information and certify that it is accessing the Registry solely to 
comply with the provisions of the TSR. If the entity is accessing the 
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 for which it requests information on their behalf, and a 
certification that the clients are accessing the Registry solely to 
comply with the TSR.
    As it has since the Commission's initial proposal to implement user 
fees under the TSR, FTC staff estimates that affected entities will 
require no more than two minutes for each entity to submit this basic 
information, and anticipates that each entity will have to submit the 
information annually.\29\ Based on the number of entities accessing the 
Registry that are subject to the TSR, this requirement will result in 
479 burden hours (14,355 entities x 2 minutes per entity). In addition, 
FTC staff continues to estimate that up to 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. Thus, this would result in an additional 
240 burden hours. Accordingly, accessing the Registry will impose a 
total burden of approximately 719 hours per year.
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    \29\ See 67 FR 37366 (May 29, 2002). The two minute estimate 
likely is conservative. The OMB regulation defining ``information'' 
under the PRA 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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    Cumulative of the above components, disclosure burden for the live 
telemarketing call provisions of the TSR is 1,621,443 hours (1,100,000 
+ 472,562 + 48,162 + 719).
B. Prerecorded Call Amendment
    Staff estimates that the 2,810 sellers\30\ will require, on 
average, 4 hours each--11,240 hours--to implement the incremental 
disclosure requirements mandated by the 2008 TSR amendments. Those 
amendments require the following tasks: (1) one-time creation, 
recording, and implementation of a brief telephone script requesting a 
consumer's agreement via a telephone keypad response;\31\ (2) one-time 
modification of or newly created electronic forms to obtain agreements 
to receive prerecorded calls for use in emails to consumers or on a 
website\32\ (3) one-time revision of any existing paper forms (e.g., 
credit card or loyalty club forms, or printed consumer contracts) to 
include a request for the consumer's agreement to receive prerecorded 
calls;\33\ and (4) related legal consultation, if needed, regarding 
compliance.
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    \30\ See note 18, supra. As noted above, only sellers, not 
telemarketers, will have compliance obligations attributable to the 
2008 TSR amendments.
    \31\ During the initial three months of overall PRA clearance 
sought that will overlap with the remaining phase-in period (May 31 
- August 31, 2009) before the written agreement requirement takes 
effect, the Commission will permit sellers to use prerecorded 
message calls made to existing customers to secure their agreements 
to receive prerecorded calls by pressing a key on their telephone 
keypad. Once a script is written and recorded, it can be used in all 
calls made by or on behalf of the seller to obtain the required 
agreements. Sellers will be able to include the request for the 
agreement in their regular prerecorded calls, thus making the time 
necessary to request the required agreements, and the cost of doing 
so, de minimis during the year-long phase-in that will partly 
overlap with the final year of the current PRA clearance.
    \32\ This figure includes both the minimal time required to 
create the electronic form and the time to encode it in HTML for the 
seller's website.
    \33\ The Commission has provided suggested language for this 
purpose that should minimize the time required to modify any paper 
disclosures. 73 FR at 51181.
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    The required opt-out disclosure for all prerecorded calls mandated 
by the 2008 amendments would not require any greater time increment, 
and arguably less, than the pre-existing FCC disclosure provision.\34\ 
In any event, because the ``opt-out'' disclosure applies only to 
prerecorded calls, which are fully automated, no additional manpower 
hours would be expended in its electronic delivery.
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    \34\ The FCC has required a similar disclosure for all 
prerecorded calls to consumers since 1993. 47 CFR 64.1200(b)(2) 
(requiring disclosure of a telephone number ``[d]uring or after the 
message'' that consumers who receive a prerecorded message call can 
use to assert a company-specific do-not-call request).

    Estimated Annual Labor Cost: $22,014,913
    Estimated Annual Non-Labor Cost: $5,837,195

Recordkeeping Labor and Non-Labor Costs:

A. Live Telemarketing Call Provisions of the TSR
1. Labor Costs
    Assuming a cumulative burden of 7,500 hours/year to set up 
compliant recordkeeping systems for new telemarketing entities (75 new 
entrants/year x 100 hours each), and applying to that a skilled labor 
rate of $25/hour,\35\ labor costs would approximate $187,500 yearly for 
all new telemarketing entities. As indicated above, staff estimates 
that existing telemarketing entities require 14,335 hours, 
cumulatively, to maintain compliance with the TSR's recordkeeping 
provisions. Applying a

[[Page 11957]]

clerical wage rate of $14/hour, recordkeeping maintenance for existing 
telemarketing entities would amount to an annual cost of approximately 
$200,690.
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    \35\ This rounded figure is derived from the mean hourly 
earnings shown for computer support specialists found in the 
National Compensation Survey: Occupational Earnings in the United 
States 2007, U.S. Department of Labor released August 2008, Bulletin 
2704, Table 3 (``Full-time civilian workers,'' mean and median 
hourly wages). See http://www.bls.gov/ncs/ncswage2007.htm.
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    Thus, estimated labor cost for recordkeeping associated with the 
TSR for both new and existing entities, including the prerecorded call 
amendment, is $388,190.
2. Non-Labor Costs
    Staff believes 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.
    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 14,335 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 $716,750.
B. Prerecorded Call Amendment
1. Labor Costs
    As noted above, staff estimates that 2,810 existing sellers that 
make use of prerecorded calls will require 937 hours, cumulatively, on 
an annualized basis projected over the anticipated future term of PRA 
clearance, to comply with the amendment's recordkeeping requirements. 
Staff assumes that the aforementioned tasks will be performed by 
managerial and/or professional technical personnel, at an hourly rate 
of $42.\36\ Accordingly, incremental labor cost on an annualized basis 
would total $39,354.
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    \36\ This hourly wage is based on (http://www.bls.gov/ncs/ncswage2007.htm) (National Compensation Survey: Occupational 
Earnings in the United States 2007, U.S. Department of Labor 
released August 2008, Bulletin 2704, Table 3 (``Full-time civilian 
workers,'' mean and median hourly wages), and reflects a blending of 
mean hourly earnings for various managerial subcategories 
(operations, advertising, marketing, sales) and computer systems 
analysts.
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2. Non-Labor Costs
    Other than the initial recordkeeping costs, the amendment's written 
agreement requirement will impose de minimis costs, as discussed above. 
The one possible exception that might arise involves credit card or 
loyalty program agreements that retailers revise to request agreements 
from consumers to receive prerecorded calls. Retailers might have to 
replace any existing supplies of such agreements. Staff believes, 
however, that the one-year phase-in of the written agreement 
requirement will allow retailers to exhaust existing supplies of any 
such preprinted forms, so that no material additional cost would be 
incurred to print revised forms.

Disclosure Burden Labor & Non-labor Costs

A. Live Telemarketing Call Provisions of the TSR
1. Labor Costs
    The estimated annual labor cost for disclosures for all 
telemarketing entities is $21,078,759. This total is the product of 
applying an assumed hourly wage rate of $13\37\ to the earlier stated 
estimate of 1,621,443 hours pertaining to general and specific 
disclosures in initial calls, upsells, and supplying basic identifying 
information to the Registry operator.
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    \37\ This rounded figure is derived from the mean hourly 
earnings shown for telemarketers found in the National Compensation 
Survey: Occupational Earnings in the United States 2007, U.S. 
Department of Labor released August 2008, Bulletin 2704, Table 3 
(``Full-time civilian workers,'' mean and median hourly wages). See 
(http://www.bls.gov/ncs/ncswage2007.htm).
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2. Non-Labor Costs
    Oral disclosure estimates, discussed above, and totaling 1,621,443 
hours, applied to a retained estimated commercial calling rate of 6 
cents per minute ($3.60 per hour), amounts to $5,837,195 in phone-
related costs.\38\
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    \38\ 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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    Staff believes that the estimated 2,447 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.
B. Prerecorded call amendment
1. Labor Costs
    Staff estimates that approximately 75% of the disclosure-related 
tasks previously noted would be performed by managerial and/or 
professional technical personnel, again, at an hourly rate of $42, with 
25% allocable to legal staff, at an hourly rate of $55.\39\
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    \39\ This rounded figure is derived from the mean hourly 
earnings shown for lawyers found in the National Compensation 
Survey: Occupational Earnings in the United States 2007, U.S. 
Department of Labor released August 2008, Bulletin 2704, Table 3 
(``Full-time civilian workers,'' mean and median hourly wages). See 
(http://www.bls.gov/ncs/ncswage2007.htm).
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    Thus, of the 11,240 total estimated disclosure burden hours, 8,430 
hours would be attributable to managerial and/or professional technical 
personnel, with the remaining 2,810 hours attributable to legal staff. 
This yields $354,060 and $154,550, respectively, in labor costs--in 
total, $508,610.
2. Non-Labor Costs
    Other than the initial recordkeeping costs, the amendment's written 
agreement requirement will impose de minimis costs, as discussed above. 
The one possible exception that might arise involves credit card or 
loyalty program agreements that retailers revise to request agreements 
from consumers to receive prerecorded calls. Retailers might have to 
replace any existing supplies of such agreements. Staff believes, 
however, that the one-year phase-in of the written agreement 
requirement will allow retailers to exhaust existing supplies of any 
such preprinted forms, so that no material additional cost would be 
incurred to print revised forms.
    Similarly, staff has no reason to believe that the amendment's 
requirement of an automated interactive opt-out mechanism will impose 
other than de minimis costs, for the reasons discussed above. The 
industry comments on the amendment uniformly support the view that 
automated interactive keypress technologies are now affordable, cost-
effective, and widely available.\40\ Moreover, most, if not all of the 
industry telemarketers who commented, including many small business 
telemarketers, said they are currently using interactive keypress 
mechanisms. Thus, it does not appear that this requirement will impose 
any

[[Page 11958]]

material capital or other non-labor costs on telemarketers.
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    \40\ See, e.g., Comment by IAC/InterActiveCorp & HSN LLC 
(December 18,2006), at 3, available at (http://www.ftc.gov/os/comments/tsrrevisedcallabandon/525547-00600.pdf.)
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    Thus, cumulatively for the live telemarketing call provisions of 
the TSR and the prerecorded call amendment, total labor costs are 
$22,014,913 ($388,190 + $39,354 + $21,078,759 + $508,610); total 
capital and other non-labor costs are $5,837,195 (phone-related costs).

David C. Shonka,
Acting General Counsel.
[FR Doc. E9-6035 Filed 3-19-09: 8:45 am]
[BILLING CODE 6750-01-S]