[Federal Register Volume 78, Number 62 (Monday, April 1, 2013)]
[Notices]
[Pages 19483-19488]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-07427]


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FEDERAL TRADE COMMISSION


Telemarketing Sales Rule Information Collection Activities; 
Proposed Collection; Comment Request

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

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 August 31, 
2016, the current PRA clearance for information collection requirements 
in its Telemarketing Sales Rule (``TSR''). That clearance expires on 
August 31, 2013.

DATES: Comments must be submitted on or before May 31, 2013.

ADDRESSES: Interested parties may file a comment online or on paper, by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Write ``TSR PRA Comment, FTC 
File No. P094400'' on your comment, and file your comment online at 
https://ftcpublic.commentworks.com/ftc/tsrrulepra by following the 
instructions on the web-based form. If you prefer to file your comment 
on paper, mail or deliver your comment to the following address: 
Federal Trade Commission, Office of the Secretary, Room H-113 (Annex 
J), 600 Pennsylvania Avenue NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: Requests for additional information or 
copies of the proposed information requirements for the Franchise Rule 
should be addressed to Craig Tregillus, Staff Attorney, Division of 
Marketing Practices, Bureau of Consumer Protection, Federal Trade 
Commission, Room H-238, 600 Pennsylvania Ave. NW., Washington, DC 
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 clearance for 
the TSR, 16 CFR part 310 (OMB Control Number 3084-0097).
    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 
Terrorism Act (``USA PATRIOT Act''), Public Law 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 
for 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 \1\ (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

[[Page 19484]]

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.\2\ Accordingly, under the TSR, most 
sellers and telemarketers are required to refrain from calling 
consumers who have placed their numbers on the Registry.\3\ Moreover, 
sellers and telemarketers must periodically access the Registry to 
remove from their telemarketing lists the telephone numbers of those 
consumers who have registered.\4\
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    \1\ 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'').
    \2\ 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.
    \3\ 16 CFR 310.4(b)(1)(iii)(B).
    \4\ 16 CFR 310.4(b)(3)(iv). Effective January 1, 2005, the 
Commission amended the TSR to require telemarketers to access the 
Registry at least once every 31 days. See 69 FR 16368 (Mar. 29, 
2004).
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    In 2008, the Commission promulgated amendments to the TSR regarding 
prerecorded calls, 16 CFR 310.4(b)(1)(v), and call abandonment rate 
calculations, 16 CFR 310.4(b)(4)(i).\5\ The amendment regarding 
prerecorded calls added certain information collection requirements.\6\ 
Specifically, the amendment expressly authorized sellers and 
telemarketers to place outbound prerecorded telemarketing calls to 
consumers only 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.\7\ 
Although the opt-out mechanism requirement took effect on December 1, 
2008, the written agreement requirement did not take effect until 
September 1, 2009.\8\
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    \5\ See 73 FR 51164 (Aug. 29, 2008).
    \6\ By contrast, the revised standard for measuring the call 
abandonment rate did not impose any new or affect any existing 
reporting, recordkeeping or third-party disclosure requirements 
within the meaning of the PRA. That amendment relaxed 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.
    \7\ The prerecorded call amendment provided the first ever 
explicit authorization in the TSR for sellers and telemarketers to 
place prerecorded telemarketing calls to consumers. The pre-
amendment 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 
requirements apply not only to prerecorded calls that are answered 
by a consumer, but also to prerecorded messages left on consumers' 
answering machines or voicemail services.
    \8\ See 73 FR 51164, 51166.
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    In 2010, the Commission published additional amendments taking 
effect that year to require specific new disclosures in the sale of a 
``debt relief service,'' as that term is defined in Section 310.2(m) to 
include for-profit credit counseling services, debt settlement, and 
debt negotiation services. The amendments result in PRA burden for all 
covered entities--both new and existing respondents--that engage in 
telemarketing of these services. The amendments, among other things: 
(1) Applied the TSR to inbound telemarketing of debt relief services; 
\9\ and (2) added new required disclosures and prohibited 
representations to curb deceptive practices prevalent in the 
telemarketing of debt relief services.
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    \9\ While the TSR already covered outbound calls by debt relief 
service providers, the amendments also brought inbound debt-relief 
calls within the TSR's reach.
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Burden Statement

    Estimated Annual Hours Burden: 1,319,984 hours.
    The estimated burden for recordkeeping is 15,610 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 those regarding prerecorded calls is 
1,304,374 hours for all affected industry members. Thus, the total PRA 
burden is 1,319,984 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 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 disclosure requirements.\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.\11\
    In calendar year 2012, 28,601 telemarketing entities accessed the 
Registry. Of these entities, 641 were ``exempt'' entities obtaining 
access to data.\12\ By definition, none of the exempt entities are 
subject to the TSR. In addition, 22,321 sellers and 5,639 telemarketers 
accessed the Registry. Of those, however, 15,854 sellers and 3,996 
telemarketers 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 8,110 telemarketing entities 
(28,601--641--15,854--3,996) are currently subject to the TSR, of which 
6,467 (22,321--15,854) are sellers and 1,643 (5,639--3,996) are 
telemarketers.\14\
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    \10\ Telemarketers and telefunders must comply, however, with 
the abandoned call provisions of the TSR and the opt-out 
requirements 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.
    \12\ An exempt entity is one that, although not subject to the 
TSR, voluntarily chooses to 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, including the requirement that entities 
engaged in intrastate telephone solicitations access the Registry.
    \14\ For purposes of these calculations, staff assumes that 
telemarketers making prerecorded calls download telephone numbers 
listed on the Registry, rather than conduct online searches, because 
the latter may consume much 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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Recordkeeping Hours

    Staff estimates that the above-noted 8,110 telemarketing entities 
subject to the Rule each require approximately one hour per year to 
file and store records required by the TSR for an annual total of 8,110 
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.\15\ 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 those offering debt relief services and making 
prerecorded calls,\16\ is 15,610 hours.
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    \15\ This figure includes new entrants making prerecorded calls 
and offering debt relief services, based on prior estimates that 
neither would require more than 100 hours to comply with those 
requirements. See 74 FR 11952, 11954 n.17 (Mar. 20, 2009); 75 FR 
48458, 48504 (Aug. 10, 2010).
    \16\ The recordkeeping requirements for prerecorded calls are de 
minimis, and are subsumed within the PRA estimates above for 
existing and new telemarketing entities. As in its prior estimates, 
staff continues to believe that any ongoing incremental burden on 
sellers to create and retain electronic records of written 
agreements by new customers to receive prerecorded calls should not 
be material since the agreements may be obtained and recorded 
electronically pursuant to the Electronic Signatures In Global and 
National Commerce Act (commonly, ``E-SIGN''). Although telemarketers 
(and telefunders) that place prerecorded calls on behalf of sellers 
or charities 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 obligation extends both to 
live and prerecorded telemarketing calls, and is also subsumed 
within the PRA estimates above.

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[[Page 19485]]

Disclosure Hours

    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.\17\ 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.
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    \17\ 75 FR 48504; 74 FR 11954.
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    Based on previous assumptions, staff estimates that of the 8,110 
telemarketing entities noted above, 3,726 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 choosing 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 that make written disclosures in order to 
qualify for the inbound direct mail exemption. Accordingly, staff 
estimates that, of the 3,726 entities that conduct inbound 
telemarketing, approximately one-third (1,242) will choose to 
incorporate written disclosures in their direct mail solicitations that 
exempt them from complying with the Rule.\20\
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    \18\ While staff does not have information directly stating the 
number of inbound telemarketers, data last appearing in the DMA 2009 
Statistical Fact Book (February 2009), p. 18, shows that 17% of all 
direct marketing in 2008 was by inbound telemarketing and 20% was by 
outbound telemarketing. Accordingly, based on such relative 
weighting, staff estimates that the number of inbound telemarketers 
is approximately 3,726 ((8,110 x 17) / (17 + 20)).
    \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 or Business Opportunity Rule, advertisements 
involving goods or services described in 310.3(a)(1)(vi), 
advertisements involving goods or services described in 310.4(a)(2)-
(4); and any instances of upselling included in such telephone 
calls.
    \20\ Since only ``sellers,'' and not ``telemarketers,'' would 
make the written disclosures, and this estimate includes both, it 
conservatively overstates the number of entities subject to the 
requirement.
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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 (2001-2010). 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 volume 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 2.4 billion outbound 
telemarketing calls are subject to FTC jurisdiction, that 484 million 
of these calls result in direct sales,\21\ and that there are 1.9 
billion inbound calls that result in direct sales. Staff retains its 
longstanding estimate that, in a telemarketing call involving the sale 
of goods or services, it takes 7 seconds \22\ for telemarketers to 
recite the required pre-sale disclosures plus 3 additional seconds \23\ 
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 allow for only 2 
seconds of disclosures.\24\
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    \21\ For staff's PRA burden calculations, only direct sales 
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 transactions total of 484 
million is based on an estimated 1.6 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 derived from the most recent available direct sales data 
for telephone marketing to consumers. See DMA Statistical Fact Book 
(2001), p. 301.
    \22\ 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); 74 FR 11952, 11955 (Mar. 20, 2009).
    \23\ 71 FR 3302, 3304 (Jan. 20, 2006); 71 FR 28698, 28700.
    \24\ See, e.g., 60 FR 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.\25\ 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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    \25\ 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 pre-sale disclosure requirements is 
865,333 hours per year: (2.4 billion outbound calls x 40% lasting the 
duration x 7 seconds of full pre-sale disclosures = 1,866,667) + (2.4 
billion outbound calls x 60% terminated after 2 seconds of disclosures 
= 800,000) + (484 million outbound calls resulting in direct sales x 
40% upsell conversions x 3 seconds of related disclosures = 161,333) + 
(1.9 billion inbound calls x 40% upsell

[[Page 19486]]

conversions x 3 seconds = 633,333)] x an estimated 25% of affected 
entities not already making such disclosures independent of the TSR = 
865,333 hours.
    The TSR also requires several general sales disclosures in 
telemarketing calls before the customer pays for goods or services.\26\ 
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).
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    \26\ 16 CFR 310.3(a)(1)(i)-(iii).
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    Staff estimates that the general sales disclosures for outbound 
calls require 377,949 hours annually. This figure includes the burden 
for written disclosures (1,242 inbound telemarketing entities estimated 
to use direct mail \27\ x 10 hours \28\ per year x 25% burden = 3,105 
hours), as well as the figure for oral disclosures [(484 million 
outbound calls x 8 seconds x 25% burden = 268,889 hours) + (484 million 
outbound calls x 40% (upsell conversion) x 20% sales conversion x 8 
seconds x 25% burden = 21,511 hours) + (1.9 billion inbound calls x 40% 
upsell conversion x 20% sales conversion x 8 seconds x 25% burden = 
84,444 hours)] = 377,949 hours.\29\
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    \27\ See supra text preceding note 20.
    \28\ 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 believes this estimate remains reasonable.
    \29\ The percentage and unit of time measurements are FTC staff 
estimates.
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    To estimate the time required to provide the general sales 
disclosures for calls offering debt relief services, staff employs 
different assumptions and calculations set forth when the debt relief 
amendments were issued.\30\ Employing that analysis, as modified in 
response to a public comment to account for inbound debt relief 
sales,\31\ staff continues to assume that outbound calls to sell and 
inbound calls to buy debt relief services are made only to consumers 
who are delinquent on one or more credit cards.\32\ For simplicity, and 
lacking specific information or prior comment to the contrary, staff 
further assumes that each such consumer will receive one outbound call 
and place one inbound call for these services.
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    \30\ 75 FR 48504-05.
    \31\ Debt relief sales in outbound calls have always been 
subject to the general sales disclosure requirements, and are 
subsumed in the outbound general sales disclosure totals.
    \32\ By extension upsells on these initial calls would not be 
applicable. Moreover, staff believes that few, if any, upsells on 
initial outbound and inbound calls would be for debt relief.
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    To estimate the number of consumers who are delinquent on one or 
more credit cards, staff assumes that couples constitute a single 
decision-making unit, as do single adults (widowed, divorced, 
separated, never married) within each household. According to the most 
current U.S. Census Bureau data available, there are 157,356,000 
decision-making units.\33\ Of these, 113,611,032 have one or more 
credit cards,\34\ and there are 3,101,581 decision-making units with at 
least one delinquent credit card account.\35\
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    \33\ U.S. Census Bureau, Income, Poverty, and Health Insurance 
in the United States: 2011, (September 2012), p. 6, available at 
http://www.census.gov/prod/2012pubs/p60-243.pdf (reflecting 
119,927,000 households in 2010); U.S. Census Bureau, Sharing a 
Household: Household Composition and Economic Well Being: 2007-2010 
(June 2012), p. 4, available at www.census.gov/hhes/www/poverty/publications/P60-242.pdf (reflecting 37,429,000 adults living with a 
householder that is neither a spouse nor cohabiting partner in 
2010).
    \34\ The estimate of consumers with one or more credit cards is 
derived by multiplying the estimated decision making units 
(157,356,000) by the percentage of consumers with one or more credit 
cards (72.2%). Federal Reserve Bank of Boston, Consumer Payments 
Research Center, The 2009 Survey of Consumer Payment Choice (April 
2011), p. 8, available at www.bostonfed.org/economic/ppdp/2011/ppdp1101.pdf.
    \35\ The estimate of consumers with a delinquent account is 
derived by multiplying the estimate of consumers with one or more 
credit cards (113,611,032) by the delinquency rate for credit cards 
(2.73%). Board of Governors of the Federal Reserve System, Charge 
Off and Delinquency Rates on Loans and Leases at Commercial Banks, 
available at http://www.federalreserve.gov/releases/chargeoff/delallsa.htm (reporting a 2.73% delinquency rate for credit cards 
for the fourth quarter of 2012).
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    Accordingly, since reciting the general sales disclosures takes 
eight seconds, staff estimates that the general sales disclosure burden 
for inbound debt relief calls is 1,723 hours (3,101,581 inbound debt 
relief calls x 8 seconds x 25% burden / 3,600).
    The general sales disclosures required by Sec.  310.3(a)(1)(i)-
(iii) must also be made by sellers and telemarketers for some inbound 
calls that are excluded from the general media and direct mail 
exemptions from the TSR for inbound calls; \36\ namely, calls in 
response to ads for investment opportunities, certain business 
opportunities,\37\ credit card loss protection (``CCLP''),\38\ credit 
repair,\39\ loss recovery services,\40\ and advance fee loans.\41\
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    \36\ 16 CFR 310.6(b)(5) (general media) and 310.6(b)(6) (direct 
mail).
    \37\ Staff has previously accounted only for the business 
opportunity exclusion, which so significantly overstated the number 
of complaints not covered by the Franchise Rule or Business 
Opportunity Rule that it served as a proxy for all the other 
exclusions. See infra note 46. With the recent burgeoning increase 
in advance fee loan complaints, that may no longer be the case, and 
staff accordingly now accounts for all the exclusions, even though 
some may seem trivial.
    \38\ 16 CFR 310.3(a)(1)(vi).
    \39\ 16 CFR 310.4(a)(2).
    \40\ 16 CFR 310.4(a)(3).
    \41\ 16 CFR 310.4(a)(4).
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    Staff's estimates for each of these types of inbound calls begins 
by comparing the number of complaints reported to the FTC's Consumer 
Sentinel system in the most recent year to the total number of reported 
fraud complaints for the year. The resulting percentage of total fraud 
complaints must be adjusted to reflect the fact that only a relatively 
small percentage of telemarketing calls are fraudulent. To extrapolate 
the percentage of fraudulent telemarketing calls, staff divides a 
Congressional estimate of annual consumer injury from telemarketing 
fraud ($40 billion) \42\ by the most recent available total of consumer 
and business-to-business telemarketing sales ($332.4 billion in 
2010),\43\ or 12%. The two percentages are then multiplied together to 
determine the percentage of the 1.9 billion annual inbound 
telemarketing calls represented by each type of fraud complaint.
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    \42\ The FBI believes that this estimate now overstates 
telemarketing fraud losses as a result of its investigations and 
closings of once massive telemarketing boiler room operations. See 
FBI, A Byte Out of History: Turning the Tables on Telemarketing 
Fraud (Dec. 8, 2010), available at www.fbi.gov/news/stories/2010/december/telemarketing_120810/telemarketing_120810.
    \43\ DMA 2010 Statistical Fact Book (January 2010), p. 5, 
available at http://www.ftc.gov/sentinel/reports/sentinel-annual-reports/sentinel-cy2012.pdf.
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    Thus, for the 7,117 Sentinel complaints about investment 
opportunities in 2012,\44\ or 0.7% of the 1,074,937 total fraud 
complaints reported,\45\ the general sales disclosure burden is 4,222 
hours (1.9 billion inbound calls x 0.001 [0.007 x 0.12] x 8 seconds / 
3,600). Likewise, the burden for business opportunity sales (17,231 
including complaints for multi-level marketing/pyramids/chain letters) 
is 8,444 hours (1.9 billion x 0.002 [0.016 x 0.12] x 8 seconds / 
3,600); \46\ for advance fee loan sales (38,885 complaints), 16,888 
hours (1.9 billion x 0.004 [0.036 x 0.12] x 8 seconds / 3,600); for 
credit repair sales (2,094

[[Page 19487]]

complaints), 844 hours (1.9 billion x 0.0002 [0.002 x 0.12] x 8 seconds 
/ 3,600); and 422 hours for loss recovery services (612 complaints) 
(1.9 billion x 0.0001 [0.001 x 0.12] x 8 seconds / 3,600). The 
exemptions therefore add an additional 30,820 hours to the general 
sales disclosure burden. Altogether, the general sales disclosure 
burden thus is 410,492 hours (377,949 for outbound sales + 1,723 for 
debt relief inbound sales + 30,820 for non-exempt inbound sales).
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    \44\ FTC, Consumer Sentinel Data Book for January-December 2012 
(February 2013) (``Sentinel Data''), Appendix B3, p. 83.
    \45\ Sentinel Data at 7.
    \46\ Sentinel Data at 7, 80. While this total excludes 
``Franchises/Distributorships'' covered by the Franchise Rule and 
thus not subject to the TSR, the data cannot additionally be 
segregated to omit ``Work-At-Home'' opportunities now covered by the 
Business Opportunity Rule and thus also not subject to the TSR. 
Staff therefore believes this total significantly overstates the 
opportunities subject to the TSR.
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    Additional specific disclosures are required if the call involves a 
prize promotion,\47\ the sale of credit card loss protection 
products,\48\ an offer with a negative option feature,\49\ or the sale 
of a debt relief service.\50\ Staff estimates that the specific sales 
disclosures other than for debt relief services will require 23,971 
hours annually [(484 million calls x 5% [estimate for outbound calls 
involving prize promotions] x 3 seconds x 25% burden = 5,042 hours) + 
(484 million calls x 0.1% [estimate for outbound calls involving CCLP] 
x 4 seconds x 25% burden = 134 hours) + (484 million calls x 40% upsell 
conversions x 20% sales conversions x 0.1% [estimate for outbound calls 
involving CCLP upsells] x 4 seconds x 25% burden = 11 hours) + (1.9 
billion inbound calls x 40% upsell conversion x 20% sales conversion x 
0.1% [estimate for inbound calls involving CCLP upsells] x 4 seconds x 
25% burden = 42 hours) + (484 million calls x 10% [estimate for 
outbound calls involving negative options] x 4 seconds x 25% burden = 
13,444 hours) + (484 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 = 1,076 hours) + (1.9 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 = 4,222 hours).
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    \47\ 16 CFR 310.3(a)(1)(iv)-(v).
    \48\ 16 CFR 310.3(a)(1)(vi).
    \49\ 16 CFR 310.3(a)(1)(vii).
    \50\ 16 CFR 310.3(a)(1)(viii).
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    Staff estimates that reciting the debt relief disclosures in each 
sales call will take ten seconds, and therefore the disclosure burden 
associated with the debt relief disclosures is 4,308 hours (3,101,581 
outbound debt relief calls x 10 seconds x 25% burden = 2,154 hours) + 
(3,101,581 inbound debt relief calls x 10 seconds x 25% burden = 2,154 
hours). Thus, the total specific sales disclosure burden is 28,279 
hours annually (23,971 for non-debt-relief calls) + 4,308 (for debt 
relief calls).
    Cumulatively, therefore, the total annual burden for all of the 
sales disclosures is 438,771 hours (410,492 general + 28,279 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), 54 hours annually 
per firm (438,771 / 8,110).
    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.\51\ Based on the number of entities accessing the 
Registry that are subject to the TSR, this requirement will result in 
270 burden hours (8,110 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 
135 burden hours. Accordingly, accessing the Registry will impose a 
total burden of approximately 405 hours per year.
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    \51\ 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 foregoing components, disclosure burden for new 
and existing telemarketing entities, including those making prerecorded 
calls,\52\ is 1,304,374 hours (865,333 [pre-sale disclosures] + 410,492 
[general sales disclosures] + 28,279 [specific sales disclosures] + 270 
[Registry access]). Thus, the total recordkeeping and disclosure burden 
is 1,319,983 hours (15,610 + 1,304,374).
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    \52\ The required opt-out disclosure for all prerecorded calls 
mandated by the 2008 amendments would not require any material time 
expenditure, and arguably less time than a pre-existing and now 
identical FCC disclosure requirement. 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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    Estimated Annual Labor Cost: $15,593,528.
    Estimated Annual Non-Labor Cost: $5,101,246.

Recordkeeping Labor and Non-Labor Costs

1. Labor Costs
    Assuming a cumulative burden of 7,500 hours a 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,\53\ labor costs would approximate $187,500 yearly for 
all new telemarketing entities. As indicated above, staff estimates 
that existing telemarketing entities require 8,110 hours, cumulatively, 
to maintain compliance with the TSR's recordkeeping provisions. 
Applying a clerical wage rate of $14/hour,\54\ recordkeeping 
maintenance for existing telemarketing entities would amount to an 
annual cost of approximately $113,540. Thus, the estimated labor cost 
for recordkeeping associated with the TSR for both new and existing 
telemarketing entities, including prerecorded and debt relief calls, is 
$301,040.
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    \53\ This rounded figure is derived from the mean hourly wage 
shown for Computer Support Specialists in the U.S. Department of 
Labor, Bureau of Labor Statistics, May 2011 National Occupational 
Employment and Wage Estimates United States, available at 
www.bls.gov/oes/current/oes_nat.htm#15 0000.
    \54\ This rounded figure is derived from the mean hourly wage 
shown for Office Clerks, General. See id.
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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 for business purposes

[[Page 19488]]

independent 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 may need some storage media such as file folders, 
computer back-up tapes, 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 8,110 telemarketing 
entities 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 for both new and existing 
telemarketing entities, including those making prerecorded calls, of 
$405,500.

Disclosure Burden Labor & Non-Labor Costs

1. Labor Costs
    The estimated annual labor cost for disclosures for all 
telemarketing entities is $15,652,488. This total is the product of 
applying an assumed hourly wage rate of $12 \55\ to the earlier stated 
estimate of 1,304,374 hours pertaining to the pre-sale, general and 
specific disclosures and supplying basic identifying information to the 
Registry operator.
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    \55\ This rounded figure is derived from the mean hourly wage 
shown for Telemarketers. See supra note 56.
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2. Non-Labor Costs
    Oral disclosure estimates, discussed above, and totaling-1,304,374 
hours, applied to a retained estimated commercial calling rate of 6 
cents per minute ($3.60 per hour), amounts to $4,695,746 in phone-
related costs.\56\
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    \56\ Staff believes that remaining non-labor costs would be 
incurred largely by affected entities in the ordinary course of 
business and would not materially exceed those ordinary costs.
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    Staff believes that the estimated 1,242 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.
    Thus, cumulatively for both new and existing telemarketing 
entities, including prerecorded and debt relief calls, total labor 
costs are $15,593,528 ($301,040 (recordkeeping) + $15,652,488 
(disclosure)); total capital and other non-labor costs are $5,101,246 
($405,500 (office supplies) + $4,695,746 (telephone charges)).
    Request for Comment: Pursuant to Section 3506(c)(2)(A) of the PRA, 
the FTC invites comments on: (1) Whether the disclosure requirements 
are necessary, including whether the information will be practically 
useful; (2) the accuracy of our burden estimates, including whether the 
methodology and assumptions used are valid; (3) how to improve the 
quality, utility, and clarity of the disclosure requirements; and (4) 
how to minimize the burden of providing the required information to 
consumers. All comments should be filed as prescribed in the ADDRESSES 
section above, and must be received on or before May 31, 2013. You can 
file a comment online or on paper. For the Commission to consider your 
comment, we must receive it on or before May 31, 2013. Write ``TSR PRA 
Comment, FTC File No. P094400'' on your comment.
    Your comment--including your name and your state--will be placed on 
the public record of this proceeding, including to the extent 
practicable, on the public Commission Web site, at http://www.ftc.gov/os/publiccomments.shtm. As a matter of discretion, the Commission tries 
to remove individuals' home contact information from comments before 
placing them on the Commission Web site.
    Because your comment will be made public, you are solely 
responsible for making sure that your comment does not include any 
sensitive personal information, like anyone'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. You are also solely 
responsible for making sure that your comment does not include any 
sensitive health information, like medical records or other 
individually identifiable health information. In addition, do not 
include any ``[t]rade secret or any commercial or financial information 
which is * * * privileged or confidential'' as provided in Section 6(f) 
of the FTC Act 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16CFR 
4.10(a)(2). In particular, do not include competitively sensitive 
information such as costs, sales statistics, inventories, formulas, 
patterns devices, manufacturing processes, or customer names.
    If you want the Commission to give your comment confidential 
treatment, you must file it in paper form, with a request for 
confidential treatment, and you have to follow the procedure explained 
in FTC Rule 4.9(c).\57\ Your comment will be kept confidential only if 
the FTC General Counsel, in his or her sole discretion, grants your 
request in accordance with the law and the public interest.
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    \57\ In particular, the written request for confidential 
treatment that accompanies the comment must include the factual and 
legal basis for the request, and must identify the specific portions 
of the comment to be withheld from the public record. See FTC Rule 
4.9(c), 16 CFR 4.9(c).
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    Postal mail addressed to the Commission is subject to delay due to 
heightened security screening. As a result, we encourage you to submit 
your comments online. To make sure that the Commission considers your 
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/infofurnishersrulepra, by following the instructions on the web-
based form. If this Notice appears at http://www.regulations.gov/#!home, you also may file a comment through that Web site.
    If you file your comment on paper, write ``TSR PRA Comment, FTC 
File No. P094400'' on your comment and on the envelope, and mail or 
deliver it to the following address: Federal Trade Commission, Office 
of the Secretary, Room H-113 (Annex J), 600 Pennsylvania Avenue NW., 
Washington, DC 20580. If possible, submit your paper comment to the 
Commission by courier or overnight service.
    Visit the Commission Web site at www.ftc.gov to read this Notice. 
The FTC Act and other laws that 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 on or before May 31, 2013. You can 
find more information, including routine uses permitted by the Privacy 
Act, in the Commission's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.

David C. Shonka,
Acting General Counsel.
[FR Doc. 2013-07427 Filed 3-29-13; 8:45 am]
BILLING CODE 6750-01-P