Telemarketing Sales Rule Information Collection Activities; Proposed Collection; Comment Request, 22082-22088 [2016-08655]

Agencies

• FEDERAL TRADE COMMISSION

[Federal Register Volume 81, Number 72 (Thursday, April 14, 2016)]
[Notices]
[Pages 22082-22088]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-08655]


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

DATES: Comments must be submitted on or before June 13, 2016.

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 your comment to the following address: Federal Trade 
Commission, Office of the Secretary, 600 Pennsylvania Avenue NW., Suite 
CC-5610 (Annex J), Washington, DC 20580, or deliver your comment to the 
following address: Federal Trade Commission, Office of the Secretary, 
Constitution Center, 400 7th Street SW., 5th Floor, Suite 5610 (Annex 
J), Washington, DC 20024.

FOR FURTHER INFORMATION CONTACT: Requests for additional information or

[[Page 22083]]

copies of the proposed information requirements for the TSR should be 
addressed by mail to Craig Tregillus, Staff Attorney, Division of 
Marketing Practices, Bureau of Consumer Protection, Federal Trade 
Commission, Room CC-8607, 600 Pennsylvania Ave. NW., Washington, DC 
20580, or by telephone to (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 Telemarketing 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 cover 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.\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 survey 
companies.
    \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\
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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.
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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; 
\8\ and (2) added new required disclosures and prohibited 
representations to curb deceptive practices prevalent in the 
telemarketing of debt relief services.\9\
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    \8\ 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.
    \9\ Most recently, the Commission published further amendments 
in 2015 that prohibit the use of certain payment methods in both 
outbound and inbound telemarketing, expand the advance fee ban on 
recovery services, and clarify several provisions to reflect 
Commission enforcement policy. 80 FR 77554 (Dec. 14, 2015). The 
prohibitions on the use of remotely created payment checks, remotely 
created payment orders, cash-to-cash money transfers and cash reload 
mechanisms do not take effect until June 13, 2016. The other 
amendments took effect upon publication. None of the prohibitions 
and clarifications in these amendments result in PRA burden for 
covered entities. 80 FR at 77558.
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    Burden Statement:
    Estimated Annual Hours Burden: 1,238,670 hours.
    The estimated burden for recordkeeping is 14,541 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 
1,223,777 hours for all affected industry members and estimated 
reporting burden is 352 hours. Thus, the total PRA burden is

[[Page 22084]]

1,238,670 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\
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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.
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    In calendar year 2015, 22,401 telemarketing entities accessed the 
Registry. Of these entities, 498 were ``exempt'' entities obtaining 
access to data.\12\ By definition, none of the exempt entities are 
subject to the TSR. In addition, 16,248 sellers and 5,259 telemarketers 
accessed the Registry. Of those, however, 11,250 sellers and 3,612 
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 7,041 telemarketing entities 
(22,401-498-11,250-3,612) are currently subject to the TSR, of which 
4,998 (16,248-11,250) are sellers and 1,647 (5,259-3,612) are 
telemarketers.\14\
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    \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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(a) Recordkeeping Hours

    Staff estimates that the above-noted 7,041 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 7,041 
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 14,541 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 11,952, 11,954 n. 17 (Mar. 20, 2009); 75 FR 
48,458, 48,504 (Aug. 10, 2010); 78 FR 19,483, 19,484 n. 15 (Apr. 1, 
2013).
    \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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(b) 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\ 78 FR at 19,485.
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    Based on previous assumptions, staff estimates that of the 7,041 
telemarketing entities noted above, 3,235 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 might do so only 
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, consistent with its previous analyses, staff estimates 
that, of the 3,235 entities that conduct inbound telemarketing, 
approximately one-third (1,078) 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 3,235 ((7,041 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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    Consistent with its past practice, 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 (2001-2012). 
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,

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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 before any 
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), consistent with past estimates, staff has continued to 
calculate 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 industry data and further FTC extrapolations,\21\ staff 
estimates that 2.3 billion outbound telemarketing calls are subject to 
FTC jurisdiction, that 450 million of these calls result in direct 
sales,\22\ and that there are 1.8 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 \23\ for telemarketers to recite the required pre-sale 
disclosures 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 allow for only 2 seconds of disclosures.\25\
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    \21\ Staff employs the methodology, assumptions, and studies it 
has consistently used since their development for the 2003 TSR 
amendments to determine, indirectly from external sales data and the 
relative percentages of inbound and outbound calls, the number of 
telemarketing calls and resulting number of sales because no call or 
sales number totals are otherwise available. Staff relies on its own 
prior estimates that of the $134.7 billion of sales from outbound 
calls to consumers in 2012 (DMA 2013 Statistical Fact Book, at 5), 
92.8% of those sales, or $125 billion, are subject to FTC 
jurisdiction, with the average value of a sale being $85, and 20% of 
outbound calls resulting in a sale.
    \22\ 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 450 
million is based on an estimated 1.5 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 only known available outside direct 
sales data for telephone marketing to consumers. See DMA Statistical 
Fact Book (2001), p. 301.
    \23\ See, e.g., 60 FR 32,682, 32,683 (June 23, 1995); 63 FR 
40,713, 40,714 (July 30, 1998); 66 FR 33,701, 33,702 (June 25, 
2001); 71 FR 28,698, 28,700 (May 17, 2006); 74 FR 11,952, 11,955 
(Mar. 20, 2009); 78 FR at 19,485.
    \24\ 71 FR 3302, 3304 (Jan. 20, 2006); 71 FR at 28,700; 78 FR at 
19,485.
    \25\ See, e.g., 60 FR at 32,683; 78 FR at 19,485.
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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, absent 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 
826,389 hours per year: [(2.3 billion outbound calls x 40% lasting the 
duration x 7 seconds of full pre-sale disclosures / 3,600 (conversion 
of minutes to hours) x 25% burden = 447,222 hours) + (2.3 billion 
outbound calls x 60% terminated after 2 seconds of disclosures / 3,600 
x 25% burden = 191,667 hours) + (450 million outbound calls resulting 
in direct sales x 40% upsell conversions x 3 seconds of related 
disclosures / 3,600 x 25% burden = 37,500 hours) + (1.8 billion inbound 
calls x 40% upsell conversions x 3 seconds / 3,600 x 25% burden = 
150,000 hours)] = 826,389 hours).
    The TSR also requires several general sales disclosures in 
telemarketing calls before the customer pays for goods or services.\27\ 
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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    \27\ 16 CFR 310.3(a)(1)(i)-(iii).
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    Staff estimates that the general sales disclosures for 
telemarketing calls require 352,695 hours annually. This figure 
includes the burden for written disclosures (1,078 inbound 
telemarketing entities estimated to use direct mail \28\ x 10 hours 
\29\ per year x 25% burden = 2,695 hours), as well as the figure for 
oral disclosures [450 million outbound calls x 8 seconds / 3,600 x 25% 
burden = 250,000 hours) + (450 million outbound calls x 40% upsell 
attempts x 20% sales conversion x 8 seconds / 3,600 x 25% burden = 
20,000 hours) + (1.8 billion inbound calls x 40% upsell attempts x 20% 
sales conversion x 8 seconds / 3,600 x 25% burden = 80,000 hours)] = 
352,695 hours.\30\
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    \28\ See supra text preceding note 20.
    \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 believes this estimate remains reasonable.
    \30\ 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.\31\ Employing that analysis, as modified in 
response to a public comment to account for inbound debt relief 
sales,\32\ 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.\33\ 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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    \31\ 75 FR at 48,504-05.
    \32\ 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.
    \33\ 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 162,016,000 
decision-making units.\34\ Of these,

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116,975,552 have one or more credit cards,\35\ and there are 3,193,433 
decision-making units with at least one delinquent credit card 
account.\36\
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    \34\ U.S. Census Bureau, Income and Poverty in the United 
States: 2014, (September 2015), p. 6, available at https://www.census.gov/content/dam/Census/library/publications/2015/demo/p60-252.pdf (reflecting 124,587,000 households in 2014); U.S. Census 
Bureau, Sharing a Household: Household Composition and Economic Well 
Being: 2007-2010 (June 2012), Table 2, 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).
    \35\ The estimate of consumers with one or more credit cards is 
derived by multiplying the estimated decision making units 
(162,016,000) 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.
    \36\ The estimate of consumers with a delinquent account is 
derived by multiplying the estimate of consumers with one or more 
credit cards (116,975,552) 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 https://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 1,774 hours (3,193,433 inbound debt 
relief calls to decision-making units with at least one delinquent 
credit card account x 8 seconds / 3,600 x 25% burden).
    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; \37\ namely, calls in 
response to ads for investment opportunities, certain business 
opportunities,\38\ credit card loss protection (``CCLP''),\39\ credit 
repair,\40\ loss recovery services,\41\ and advance fee loans.\42\
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    \37\ 16 CFR 310.6(b)(5) (general media) and Sec.  310.6(b)(6) 
(direct mail).
    \38\ 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 47. 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.
    \39\ 16 CFR 310.3(a)(1)(vi).
    \40\ 16 CFR 310.4(a)(2).
    \41\ 16 CFR 310.4(a)(3).
    \42\ 16 CFR 310.4(a)(4).
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    Staff's estimates for each of these types of non-exempt inbound 
calls begins by comparing the number of complaints reported to the 
FTC's Consumer Sentinel system in the most recent complete year to the 
total number of reported fraud complaints for that 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) \43\ by recent available data on 
total consumer and business-to-business telemarketing sales ($305.1 
billion in 2012),\44\ or 13%. The two percentages are then multiplied 
together to determine the percentage of the 1.8 billion annual inbound 
telemarketing calls represented by each type of fraud complaint.
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    \43\ 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 https://www.fbi.gov/news/stories/2010/december/telemarketing_120810/telemarketing_120810. See also 
Internet Crime Complaint Center, 2009Annual Report on Internet Crime 
(citing $559.7 million of losses claimed in consumer complaints), 
available at https://www.justice.gov/criminal-fraud/mass-marketing-fraud.
    \44\ DMA 2013 Statistical Fact Book (January 2013), p. 5.
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    Thus, for the 7,355 Sentinel complaints in 2015 about investment 
opportunities covered by the TSR,\45\ or 0.6% of the 1,246,849 total 
fraud complaints reported that year,\46\ the general sales disclosure 
burden is 3,200 hours (1.8 billion inbound calls x 0.0008 [0.006 x 
0.13] x 8 seconds / 3,600). Likewise, the burden for business 
opportunity sales (10,059 complaints), including complaints for multi-
level marketing/pyramids/chain letters) is 4,000 hours (1.8 billion x 
.001 [0.008 x 0.13] x 8 seconds / 3,600); \47\ for advance fee loan 
sales (19,908 complaints), 8,000 hours (1.8 billion x 0.002 [0.016 x 
0.13] x 8 seconds / 3,600); for credit repair sales (1,751 complaints), 
400 hours (1.8 billion x 0.0001 [0.001 x 0.13] x 8 seconds / 3,600); 
400 hours for loss recovery services (2,509 complaints) (1.8 billion x 
0.0001 [0.001 x 0.13] x 8 seconds / 3,600); 120 hours for CCLP sales 
(266 complaints) (1.8 billion x 0.00003 [0.0002 x 0.13] x 8 seconds / 
3,600). The exceptions to the TSR's inbound call exemptions therefore 
add an additional 16,120 hours to the general sales disclosure burden.
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    \45\ FTC, Consumer Sentinel Network Data Book for January-
December 2015 (February 2016) (``Sentinel Data''), Appendix B3, p. 
83, available at https://www.ftc.gov/reports/consumer-sentinel-network-data-book-january-december-2015.
    \46\ Sentinel Data at 7.
    \47\ 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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    Altogether, the general sales disclosure burden thus is 370,589 
hours (352,695 hours for outbound sales + 1,774 hours for debt relief 
inbound sales + 16,120 hours for non-exempt inbound sales).
    Additional specific disclosures are required if the call involves a 
prize promotion,\48\ the sale of credit card loss protection 
products,\49\ an offer with a negative option feature,\50\ or the sale 
of a debt relief service.\51\ Staff estimates that the specific sales 
disclosures other than for debt relief services will require 22,363 
hours annually [(450 million direct sales transactions from outbound 
calls x 5% [estimate of percentage of sales transactions involving 
prize promotions] x 3 seconds / 3,600 x 25% burden = 4,688 hours) + 450 
million direct sales transactions from outbound calls x 0.1% [estimate 
of percentage of sales transactions involving CCLP] x 4 seconds / 3,600 
x 25% burden = 125 hours) + (450 million sales transactions from 
outbound calls x 40% attempted upsell conversions x 20% sales 
conversions x 0.1% [estimate of percentage of outbound calls involving 
CCLP upsells] x 4 seconds x 25% burden / 3,600 = 10 hours) + (1.8 
billion inbound calls x 40% attempted upsell conversions x 20% sales 
conversions x 0.1% [estimate of percentage of inbound calls involving 
CCLP upsells] x 4 seconds x 25% burden / 3,600 = 40 hours) + (450 
million sales transactions from outbound calls x 10% [estimate of 
percentage of outbound calls involving negative options] x 4 seconds / 
3,600 x 25% burden = 12,500 hours) + (450 million sales transactions 
from outbound calls x 40% attempted upsell conversions x 20% sales 
conversions x 10% [estimate of percentage of outbound calls involving 
negative option upsells] x 4 seconds x 25% burden / 3,600 = 1,000 
hours) + (1.8 billion inbound calls x 40% attempted upsell conversions 
x 20% sales conversions x 10% [estimate of percentage of inbound calls 
involving negative option upsells] x 4 seconds / 3,600 x 25% burden = 
4000 hours).
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    \48\ 16 CFR 310.3(a)(1)(iv)-(v).
    \49\ 16 CFR 310.3(a)(1)(vi). It is neither staff's understanding 
nor belief that CCLP sales occur through inbound calls. Staff 
anticipates, however, the potential for such sales in an upsell 
following an inbound call.
    \50\ 16 CFR 310.3(a)(1)(vii).
    \51\ 16 CFR 310.3(a)(1)(viii).
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    Staff estimates that reciting the specific sales disclosures in 
each debt relief sales call will take ten seconds, and therefore the 
disclosure burden associated with the debt relief disclosures is 4,436 
hours (3,193,433 outbound debt relief calls x 10 seconds

[[Page 22087]]

x 25% burden = 2,218 hours) + (3,193,433 inbound debt relief calls x 10 
seconds x 25% burden = 2,218 hours).
    Thus, the total specific sales disclosure burden is 26,799 hours 
annually (22,363 for non-debt-relief calls) + 4,436 (for debt relief 
calls).
    Cumulatively, therefore, the total annual burden for all of the 
sales disclosures is 397,388 hours (370,589 hours general sales 
disclosures + 26,799 hours specific sales disclosures).

(c) Reporting Hours

    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.\52\ Based on the number of entities accessing the 
Registry that are subject to the TSR, this requirement will result in 
235 burden hours (7,041 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 
117 burden hours. Accordingly, accessing the Registry will impose a 
total burden of approximately 352 hours per year.
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    \52\ See 67 FR 37,366 (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 debt relief 
and prerecorded calls,\53\ is 1,223,777 hours (826,389 hours [pre-sale 
disclosures] + 370,589 hours [general sales disclosures] + 26,799 hours 
[specific sales disclosures]).
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    \53\ 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 worker hours would be expended in its 
electronic delivery.
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    Thus, total recordkeeping, disclosure, and reporting burden is 
1,238,670 hours (14,541 hours + 1,223,777 hours + 352 hours).
    Estimated Annual Labor Cost: $15,893,001.

(a) Recordkeeping Labor Cost

    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 $26.92/hour,\54\ labor costs would approximate $201,900 yearly 
for all new telemarketing entities. As indicated above, staff estimates 
that existing telemarketing entities require 7,041 hours, cumulatively, 
to maintain compliance with the TSR's recordkeeping provisions. 
Applying a clerical wage rate of $15.33/hour,\55\ recordkeeping 
maintenance for existing telemarketing entities would amount to an 
annual cost of approximately $107,939. 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 
$309,839.
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    \54\ This figure is derived from the mean hourly wage shown for 
``Computer Support Specialist.'' ``Occupational Employment and 
Wages--May 2015,'' Bureau of Labor Statistics, U.S. Department of 
Labor, released March 30, 2016, Table 1 (``National employment and 
wage data from the Occupational Employment Statistics survey by 
occupation, May 2014''), available at https://www.bls.gov/news.release/ocwage.t01.htm.
    \55\ This figure is derived from the mean hourly wage shown for 
Office Clerks, General. See id.
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(b) Disclosure Labor Cost

    The estimated annual labor cost for disclosures for all 
telemarketing entities is $15,578,681. This total is the product of 
applying an assumed hourly wage rate of $12.73 \56\ to the earlier 
stated estimate of 1,223,777 hours pertaining to the pre-sale, general 
and specific disclosures.
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    \56\ This figure is derived from the mean hourly wage shown for 
Telemarketers. See supra note 54. It is applied additionally to the 
ensuing calculation of reporting labor cost regarding the Registry 
operator.
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(c) Reporting Labor Cost

    Estimated labor cost supplying basic identifying information to the 
Registry operator is $4,481 (352 hours x $12.73 per hour).
    Thus, cumulatively for both new and existing telemarketing 
entities, including prerecorded and debt relief calls, total labor 
costs are $15,893,001 [($309,839, recordkeeping) + ($15,578,681 
disclosure) + ($4,481, reporting)].
    Estimated Annual Non-Labor Cost: $4,757,647.

(a) Recordkeeping

    Staff believes that the capital and start-up costs associated with 
the TSR's recordkeeping provisions are de minimis. They mandate that 
companies maintain records, but not in any particular form. While the 
requirements necessitate that affected entities have a means of 
storage, industry members should have that already for business 
purposes 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.
    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, consistent with its prior analyses, staff estimates that the 
estimated 7,041 telemarketing entities subject to the Rule continue to 
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 $352,050.

(b) Disclosure

    Consistent with its past practice of applying the disclosure 
estimates discussed above, and totaling 1,223,777 hours, to a retained 
estimated commercial calling rate of 6 cents per minute ($3.60 per 
hour), staff estimates a total of $4,405,597 in telephone charges.\57\
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    \57\ Staff believes that other non-labor costs would be incurred 
largely by affected entities in the ordinary course of business and, 
beyond that, would not materially exceed those ordinary costs.

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[[Page 22088]]

    Staff believes that the inbound telemarketing entities choosing to 
comply with the Rule by making 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 disclosures 
required by the direct mail exemption 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 capital 
and/or other non-labor costs are $4,757,647 ($352,050 (office supplies) 
+ $4,405,597 (telephone charges)).
    Request for Comment: Pursuant to section 3506(c)(2)(A) of the PRA, 
the FTC invites comments on: (1) Whether the disclosure, recordkeeping, 
and reporting requirements are necessary, including whether the 
resulting 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 June 13, 2016.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before June 13, 2016. 
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 https://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), 16 CFR 
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).\58\ Your comment will be kept confidential only if 
the FTC General Counsel grants your request in accordance with the law 
and the public interest.
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    \58\ 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/tsrrulepra, by following the instructions on the web-based form. 
When this Notice appears at https://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, mail your 
comment to the following address: Federal Trade Commission, Office of 
the Secretary, 600 Pennsylvania Avenue NW., Suite CC-5610 (Annex J), 
Washington, DC 20580, or deliver your comment to the following address: 
Federal Trade Commission, Office of the Secretary, Constitution Center, 
400 7th Street SW., 5th Floor, Suite 5610 (Annex J), Washington, DC 
20024. If possible, submit your paper comment to the Commission by 
courier or overnight service.
    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 June 13, 2016. 
For information on the Commission's privacy policy, including routine 
uses permitted by the Privacy Act, see https://www.ftc.gov/ftc/privacy.htm.

David C. Shonka,
Acting General Counsel.
[FR Doc. 2016-08655 Filed 4-13-16; 8:45 am]
 BILLING CODE 6750-01-P