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Telemarketing Sales Rule

Document Details

Information about this document as published in the Federal Register.

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This document has been published in the Federal Register. Use the PDF linked in the document sidebar for the official electronic format.

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AGENCY:

Federal Trade Commission.

ACTION:

Stay of compliance date.

SUMMARY:

In this document, the Federal Trade Commission (“FTC” or “Commission”) announces that in response to supplemental petitions from the Direct Marketing Association (“DMA”) and the American Teleservices Association (“ATA”), the Commission has decided to extend the date by which it will require full compliance with the amended Telemarketing Sales Rule (“amended TSR” or “amended Rule”), until October 1, 2003.

DATES:

The rule amending the TSR, published January 29, 2003 (68 FR 4580), became effective March 31, 2003. The Commission will require full compliance with §§ 310.4(b)(1)(iv) and § 310.4(b)(4) on October 1, 2003.

ADDRESSES:

Requests for copies of the amended Rule and this document should be sent to Public Reference Branch, Room 130, Federal Trade Commission, 600 Pennsylvania Avenue, NW., Washington, DC 20580.

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FOR FURTHER INFORMATION CONTACT:

Catherine Harrington-McBride, (202) 326-2452, Karen Leonard, (202) 326-3597, Michael Goodman, (202) 326-3071, or Carole Danielson, (202) 326-3115, Division of Marketing Practices, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Ave., NW., Washington, DC 20580.

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SUPPLEMENTARY INFORMATION:

On January 29, 2003, the Federal Trade Commission published the amended TSR, 16 CFR part 310, and its Statement of Basis and Purpose in the Federal Register.[1] The document stated that the Amended Rule would become effective March 31, 2003; that full compliance with § 310.4(a)(7), the caller identification transmission provision, would be required by January 29, 2004; and that the Commission would announce at a future time the date by which full compliance with § 310.4(b)(1)(iii)(B), the “do-not-call” registry provision, would be required.

In response to petitions filed February 27, 2003, by DMA and February 27, 2003, by ATA, the Commission determined to extend the date by which it will require full compliance with § 310.4(b)(4)(iii) (the recording requirement of the call abandonment safe harbor provision) until October 1, 2003. The Commission also stayed until October 1, 2003, the date by which it will require full compliance with the safe harbor record retention requirement, § 310.4(b)(4)(iv), to the extent it would require record keeping to document the use of a recorded message in instances of call abandonment.

At that time, the Commission determined not to stay the requirement of full compliance with the prohibition on call abandonment (§ 310.4(b)(1)(iv)) or the other requirements of the call abandonment safe harbor provision (§§ 310.4(b)(4)(i), (ii) & (iv)) because the petitioners had not demonstrated that telemarketers would be unable to comply with these call abandonment provisions.

Subsequently, on March 25, 2003, DMA renewed its request to stay the compliance date of the call abandonment provisions.[2] DMA submitted numerous affidavits from manufacturers and users of predictive dialers containing information not previously submitted to the Commission, either in the rulemaking proceeding or in the initial petitions to stay various provisions of the amended TSR. These affidavits stated that, as a practical matter, compliance with the call abandonment safe harbor by March 31, 2003, would be very difficult or impossible for some telemarketers. Specifically, these affidavits stated that it is difficult if not impossible to set some predictive dialer equipment currently in use to a maximum abandonment rate of 3% of answered calls, as required by § 310.4(b)(4)(i). According to the DMA petition and supporting affidavits, this equipment incorporates hardware or software designed to calculate the abandonment rate on the basis of all calls placed, not all calls answered. This means that the equipment cannot, or cannot easily, be set to abandon no more than 3% of all calls answered by the called consumer, as required by § 310.4(b)(i). According to DMA, additional time is therefore necessary for some telemarketers to comply with § 310.4(b)(4)(i), given this limitation on their current predictive dialer equipment. The ATA supplemental petition echoes similar arguments.

Based on information newly submitted by DMA, together with information obtained from other sources, the Commission has determined that full compliance with the requirement in the call abandonment safe harbor that no more than 3% of all calls answered by a consumer be abandoned (§ 310.4(b)(4)(i)) by March 31, 2003, may constitute an undue burden on some telemarketers and sellers, who need to Start Printed Page 16415reprogram or purchase software for their equipment, or replace their current equipment.

The Commission weighs the burden on industry against the reasons for implementing the amended Rule provisions. Evidence on the record establishes that abandoned calls “frighten consumers, invade their privacy, cause some of them to struggle to answer the phone only to be hung up on, and waste the time and resources of consumers working from home.” 68 FR 4580, 4642 (Jan. 29, 2003) (footnotes omitted). The Commission therefore determined that the abandoned call provisions of the amended TSR are necessary to remedy the abusive practice of call abandonment that can result from the use of predictive dialers.

Given the information on the record, however, the Commission concludes that the economic harm to industry that is likely to occur narrowly outweighs the harm to consumers of a brief delay in implementing the abandoned call provision. Therefore, the Commission has determined to extend the date by which it will require full compliance with §§ 310.4(b)(1)(iv) and § 310.4(b)(4) until October 1, 2003.[3]

Given the impact on consumers of abandoned calls, the Commission encourages the industry to use its best efforts to come into full compliance with the abandoned call provisions as soon as possible. After six months (i.e., October 1, 2003), the Commission believes that the balance of equities weighs in favor of preventing further consumer harm by requiring compliance with the abandoned call provisions; and, therefore, it is unlikely that the Commission will provide a further stay of their implementation. The additional six months should give industry ample time to make the changes in their operations necessary to comply with the recording requirement of the call abandonment safe harbor.

The Commission has now announced that it will require full compliance on October 1, 2003 with: (1) § 310.4(b)(1)(iv) (the prohibition on abandoned calls); (2) § 310.4(b)(4) (the safe harbor for call abandonment) as well as any record keeping requirements associated with the safe harbor; and (3) § 310.4(b)(1)(iii)(B) (the national “do-not-call” registry provisions of the amended Rule). The Commission will require full compliance on January 29, 2004 with § 310.4(a)(7) (the caller identification provisions). Full compliance with all other provisions of the amended TSR will be required by the date on which the amended Rule is effective, March 31, 2003.

By direction of the Commission.

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Donald S. Clark,

Secretary.

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Footnotes

1.  68 FR 4580 (Jan. 29, 2003).

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2.  On March 26, 2003, the United States District Court for the Western District of Oklahoma denied petitioner DMA's motion for a preliminary injunction based on the same arguments and facts presented here. U.S. Security v. FTC, Case No. CIV-03-122-W. Although the Commission believes that this was the correct decision under the legal standards for obtaining a preliminary injunction, the Commission notes that it has broad discretionary authority to grant a stay where it believes that the goals of the rule making will be served.

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3.  The decision to stay the requirement of full compliance with two key components of the safe harbor provision (§§ 310.4(b)(4)(i) & (iii)) as well as the record keeping component of the safe harbor insofar as it would require records of compliance with the two stayed components, compels that full compliance with the prohibition on call abandonment, § 310.4(b)(1)(iv) also be stayed. Otherwise, industry members would be liable for a rule violation if they abandoned any calls and would have no safe harbor enabling them to continue use of predictive dialers. As noted in the Statement of Basis and Purpose, “a total ban on abandoned calls, which would amount to a ban on predictive dialers, would not strike the proper balance between addressing an abusive practice and allowing for the use of a technology that provides substantially reduced costs for telemarketers.” 68 FR 4643 (Jan. 29, 2003). Further, having stayed the requirement of full compliance with the prohibition on call abandonment, the final element of the safe harbor, § 310.4(b)(4)(ii) (requiring that the seller or telemarketer allow the telephone to ring for at least fifteen seconds or four rings before disconnecting an unanswered call) would have no application. The requirement of full compliance with the entire safe harbor provision, § 310.4(b)(4), is therefore stayed until October 1, 2003.

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[FR Doc. 03-8233 Filed 4-3-03; 8:45 am]

BILLING CODE 6750-01-P