Agency Information Collection Activities; Submission for OMB Review; Comment Request, 25540-25546 [E9-12414]

Agencies

• FEDERAL TRADE COMMISSION

[Federal Register Volume 74, Number 101 (Thursday, May 28, 2009)]
[Notices]
[Pages 25540-25546]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-12414]


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FEDERAL TRADE COMMISSION


Agency Information Collection Activities; Submission for OMB 
Review; 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''). This is 
the second of two notices required under the PRA in which 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''). That 
clearance expires on May 31, 2009.

DATES: Comments must be submitted on or before June 29, 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 comments will be placed on 
the public record of this proceeding--including on the publicly 
accessible FTC website, at (https://www.ftc.gov/os/publiccomments.shtm)--and therefore should not include any sensitive or 
confidential information. In particular, comments 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 secrets and 
commercial or financial information obtained from a person and 
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\ 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 (https://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.
    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.
    Comments on any proposed filing, recordkeeping, or disclosure 
requirements that are subject to paperwork burden review under the

[[Page 25541]]

Paperwork Reduction Act should additionally be submitted to: Office of 
Information and Regulatory Affairs, Office of Management and Budget 
(``OMB''), Attention: Desk Officer for Federal Trade Commission. 
Comments should be submitted via facsimile to (202) 395-5167 because 
U.S. postal mail at the OMB is subject to delays due to heightened 
security precautions.
    The FTC Act and other laws the Commission administers permit the 
collection of public comments to consider and use in this proceeding as 
appropriate. 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 (https://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 (https://www.ftc.gov/ftc/privacy.shtm).

FOR FURTHER INFORMATION CONTACT: Requests for additional information or 
requirements for the TSR should be addressed to Craig Tregillus, 
Attorney, Division of Marketing Practices, Bureau of Consumer 
Protection, Federal Trade Commission, Room H-288, 600 Pennsylvania 
Ave., N.W., Washington, D.C. 20580, (202) 326-2970.

SUPPLEMENTARY INFORMATION: On March 20, 2009, the FTC sought comment on 
the information collection requirements associated with the TSR, 16 CFR 
Part 310 (Control Number: 3084-0097).\2\ One comment was received (see 
www.ftc.gov/os/comments/tsrpra60day/index.shtm). Pursuant to the OMB 
regulations, 5 CFR Part 1320, that implement the PRA, 44 U.S.C. 3501-
3521, the FTC is providing this second opportunity for public comment 
while seeking OMB approval to extend the existing paperwork clearance 
for this Rule. All comments should be filed as prescribed in the 
ADDRESSES, section above, and must be received on or before June 29, 
2009.
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    \2\ 74 FR 11952 (July 7, 2008).
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    The TSR implements the Telemarketing and Consumer Fraud and Abuse 
Prevention Act, 15 U.S.C. 6101-6108 (``Telemarketing Act''), as amended 
by the Uniting and Strengthening America by Providing Appropriate Tools 
Required to Intercept and Obstruct Terrorism Act (``USA PATRIOT Act''), 
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 consider including 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\3\ (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.\4\ 
Accordingly, under the TSR, most sellers and telemarketers are required 
to refrain from calling consumers who have placed their numbers on the 
Registry.\5\ Moreover, sellers and telemarketers must periodically 
access the Registry to remove from their telemarketing lists the 
telephone numbers of those consumers who have registered.\6\
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    \3\ 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'').
    \4\ 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.
    \5\ 16 CFR Sec.  310.4(b)(1)(iii)(B).
    \6\ 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).\7\ The amendment regarding 
prerecorded calls added certain information collection requirements.\8\ 
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.\9\ 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

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1, 2009, one year from its promulgation, to afford time for an orderly 
phase-in.\10\ 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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    \7\ See 73 FR 51164 (Aug. 29, 2008).
    \8\ 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.
    \9\ 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.
    \10\ See 73 FR 51164, 51166.
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Burden Statement:

Estimated Annual Hours Burden: 1,634,347 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 1,611,575 
hours for all affected industry members. Thus, the total PRA burden is 
1,634,347 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 amendments.\11\ 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.\12\ The following estimates have 
been adjusted accordingly.
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    \11\ Telemarketers and telefunders must comply, however, with 
the abandoned call provisions of the TSR, and the opt out provisions 
of the 2008 amendments.
    \12\ 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.\13\ 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.\14\ 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.\15\
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    \13\ 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.
    \14\ 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.
    \15\ 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.\16\
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    \16\ 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.\17\ 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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    \17\ 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.\18\ 
Thus, annualized for an ``average'' year over the prospective 3-

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year PRA clearance (May 31, 2009-May 31, 2012), this amounts to 937 
hours per year.
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    \18\ 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.\19\
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    \19\ 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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    Based on previous assumptions, staff estimates that of the 14,335 
telemarketing entities noted above, 7,342 conduct inbound 
telemarketing.\20\ Inbound calls from consumers in response to direct 
mail solicitations that make certain required disclosures are exempt 
from the TSR.\21\ Although inbound calls are generally 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 as well. 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 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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    \20\ 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)).
    \21\ 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)-(4); 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,\22\ and 
that there are 2.8 billion inbound sales from inbound calls subject to 
FTC jurisdiction. Staff retains its longstanding estimate that, in a 
telemarketing call involving the sale of goods or services, it takes 7 
seconds\23\ for telemarketers to disclose the required outbound call 
information orally plus 3 additional seconds\24\ 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.\25\
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    \22\ 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.
    \23\ 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).
    \24\ 71 FR 3302, 3304 (Jan. 20, 2006); 71 FR 28698, 28700.
    \25\ 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.\26\ 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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    \26\ 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 1,086,389 
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\27\ = 1,086,389 hours].
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    \27\ See supra note 19 and accompanying text.
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    The TSR also requires further disclosures in telemarketing sales 
calls before the customer pays for goods or services. These disclosures 
include the total costs of the offered goods or services; all material 
restrictions; and all material terms and conditions of the

[[Page 25544]]

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\28\ 
x 10 hours\29\ 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].\30\
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    \28\ See the discussion in the text immediately following note 
21.
    \29\ 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.
    \30\ 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 
48,160 hours annually [(570 million calls x 5% [estimate for outbound 
calls involving prize promotions\31\ ] x 3 seconds x 25% burden = 5,938 
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\32\ ] 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 upsells] x 4 seconds x 25% 
burden = 62 hours) + (570 million outbound 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\33\ x 25% burden) = 6,222 hours] + (2.8 billion inbound calls 
x .3% [estimate for inbound calls involving business opportunities\34\ 
] x 8 seconds = 18,667 hours).
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    \31\ Since the purpose of prize promotions is to induce an 
initial sale, staff believes such promotions are unlikely to occur 
in upsells. Accordingly, the ensuing estimates do not provide for 
prize promotion upsells.
    \32\ It is staff's understanding and belief that CCLP sales 
rarely, if ever, prompt inbound calls, but instead may occur as 
upsells after an inbound call for another transaction.
    \33\ This includes the added required disclosure, particular to 
CCLP, of the limits on a cardholder's liability for unauthorized use 
of a credit card. See 16 CFR 310.3(a)(1)(vi).
    \34\ 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. Staff does not 
believe that business opportunities would likely be offered as 
upsells; at most, their incidence would be very infrequent and, 
accordingly, the associated disclosure burden de minimis.
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    The total annual burden for all of the sales disclosures is 520,722 
hours (472,562 general + 48,160 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 (520,722 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.\35\ Based on the number of entities accessing the 
Registry that are subject to the TSR, this requirement will result in 
478 burden hours (14,335 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 
239 burden hours. Accordingly, accessing the Registry will impose a 
total reporting burden of approximately 717 hours per year.
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    \35\ 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 (1,086,389 + 472,562 
+ 48,160 = 1,607,111 hours) and reporting burden (717 hours) for the 
live telemarketing call provisions of the TSR is 1,607,828 hours.

B. Prerecorded Call Amendment

    Staff estimates that the 2,810 sellers\36\ 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;\37\ (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\38\ (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

[[Page 25545]]

prerecorded calls;\39\ and (4) related legal consultation, if needed, 
regarding compliance. Annualized for an ``average'' year over the 
prospective 3-year PRA clearance (May 31, 2009--May 31, 2012), this 
amounts to 3,747 hours per year.
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    \36\ See supra text accompanying note 18. As noted above, only 
sellers, not telemarketers, will have compliance obligations 
attributable to the 2008 TSR amendments.
    \37\ 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.
    \38\ 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.
    \39\ 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.\40\ 
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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    \40\ 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).
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Estimated Annual Labor Cost: $21,498,863

Estimated Annual Non-Labor Cost: $6,502,350

    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,\41\ 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 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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    \41\ 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 (https://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.\42\ Accordingly, incremental labor cost on an annualized basis 
would total $39,354.
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    \42\ This hourly wage is based on (https://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 $20,901,764. This total is the product of 
applying an assumed hourly wage rate of $13\43\ to the earlier stated 
estimate of 1,607,828 hours pertaining to general and specific 
disclosures in initial calls, upsells, and supplying basic identifying 
information to the Registry operator.
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    \43\ 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 
(https://www.bls.gov/ncs/ncswage2007.htm).
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2. Non-Labor Costs
    Oral disclosure estimates, discussed above, totaling 1,607,111 
hours, applied to a retained estimated commercial calling rate of 6 
cents per minute ($3.60 per hour), amounts to $5,785,600 in phone-
related costs.\44\ This excludes the 717 hours of reporting hour burden 
applicable to entities submitting identifying information to access the 
Registry, which is done online and, for which, non-labor costs would be 
de minimis.
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    \44\ 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

[[Page 25546]]

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.\45\
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    \45\ 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 
(https://www.bls.gov/ncs/ncswage2007.htm).
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    Thus, of the 3,747 total estimated disclosure burden hours, 2,810 
hours would be attributable to managerial and/or professional technical 
personnel, with the remaining 937 hours attributable to legal staff. 
This yields $118,020 and $51,535, respectively, in labor costs--in 
total, $169,555.
2. Non-Labor Costs
    The amendment requires sellers seeking written agreements from 
consumers to disclose clearly and conspicuously that the purpose of the 
agreement is to authorize the seller to place prerecorded calls to 
them. Other than the initial recordkeeping costs, this disclosure 
requirement will impose de minimis costs, for the reasons discussed 
above.
    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.\46\ 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 material capital or other non-labor costs on telemarketers.
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    \46\ See, e.g., Comment by IAC/InterActiveCorp & HSN LLC, 
525547-00600 (Dec. 18, 2006), at 3, available at (https://www.ftc.gov/os/comments/tsrrevisedcallabandon/index.shtm) (Comment 
No. 278 of 631).
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    Thus, cumulatively for the live telemarketing call provisions of 
the TSR and the prerecorded call amendment, total labor costs are 
$21,498,863 ($388,190 + $39,354 + $20,901,764 + $169,555); total 
capital and other non-labor costs are $6,502,350 (office supplies and 
phone-related costs).

David C. Shonka,
Acting General Counsel.
[FR Doc. E9-12414 Filed 5-27-09: 8:45 am]
BILLING CODE 6750-01-S