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Agency Information Collection Activities; Proposed Collection; Comment Request; Extension

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Federal Trade Commission (“FTC” or “Commission”).




The FTC is seeking public comments on its proposal to extend through February 28, 2009 the current Paperwork Reduction Act (“PRA”) clearance for information collection requirements contained in its Telemarketing Sales Rule, 16 CFR part 435 (“TSR” or “Rule”). That clearance expires on February 28, 2006.


Comments must be received on or before March 21, 2006.


Interested parties are invited to submit written comments. Comments should refer to “Telemarketing Sales Rule: FTC File No. P994414” to facilitate the organization of comments. A comment filed in paper form should include this reference both in the text and on the envelope and should be mailed or delivered, with two complete copies, to the following address: Federal Trade Commission, Room H 135 (Annex J), 600 Pennsylvania Ave., NW., Washington, DC 20580. Because paper mail in the Washington area and at the Commission is subject to delay, please consider submitting your comments in electronic form, (in ASCII format, WordPerfect, or Microsoft Word) as part of or as an attachment to e-mail messages directed to the following e-mail box: However, if the comment contains any material for which confidential treatment is requested, it must be filed in paper form, and the first page of the document must be clearly labeled “Confidential.” [1]

The FTC Act and other laws the Commission administers permit the collection of public comments to consider and use in this proceeding as appropriate. All timely and responsive public comments will be considered by the Commission and will be available to the public on the FTC Web site, to the extent practicable, at As a matter of discretion, the FTC makes every effort to remove home contact information for individuals from the public comments it receives before placing those comments on the FTC Web site. More information, including routine uses permitted by the Privacy Act, may be found in the FTC's privacy policy at​ftc/​privacy.htm.

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Requests for additional information or copies of the proposed information requirements should be sent to Catherine Harrington-McBride, Attorney, Division of Marketing Practices, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Ave., NW., Washington, DC 20580, (202) 326-2452.

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Under the Paperwork Reduction Act (“PRA”), 44 U.S.C. 3501-3520, 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 regulations noted herein.

The FTC invites comments on: (1) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission of responses. All comments should be filed as prescribed in the ADDRESSES section above, and must be received on or before March 21, 2006.

The TSR implements the Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C. 6101-6108 (“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, Start Printed Page 3303includes calls made to solicit charitable contributions. It mandates certain disclosures by telemarketers, and directs the Commission to consider including recordkeeping requirements in promulgating a telemarketing rule to address such practices. As required by the Act, the TSR mandates certain disclosures regarding telephone sales and requires telemarketers to retain certain records regarding advertising, sales, and employees. The disclosures provide consumers with information necessary to make informed purchasing decisions. The records are available for inspection by the Commission and other law enforcement personnel to determine compliance with the Rule. Records may also yield information helpful to measuring and redressing consumer injury stemming from Rule violations.

The Supporting Statement for Information Collection Provisions of the Telemarketing Sales Rule (OMB Control No. 3084-0097) (“2003 Supporting Statement”), submitted to OMB following the 2003 amendment of the TSR, includes substantial analysis in support of the burden estimates included in that document.[2] Those estimates differ, in some ways significantly, from previous burden estimates for two reasons: (1) The amended TSR has increased scope and application to new entities; and (2) industry members provided, for the first time, statistical information on the telemarketing industry pursuant to the request for comments in the rulemaking proceeding.

The figures used in this notice are based on those from the 2003 Supporting Statement, updated when necessary and when newer figures are available.

Burden Statement

Estimated annual hours burden: 2,475,000 hours (rounded to nearest thousand).

The estimated recordkeeping burden is 45,000 hours for all industry members affected by the Rule. The estimated burden related to the disclosures that the Rule requires is 2,430,000 hours (rounded to nearest thousand) for all affected industry members, for a total of 2,475,000 burden hours.

Recordkeeping: Following the publication of the amended TSR in 2003, the Commission estimated that there were 7,400 telemarketing firms that were potentially subject to the Rule. This estimate was based on the limited input the Commission received in response to the Original User Fee NPRM, 67 FR 37,362 (May 29, 2002), regarding the number of firms that would likely access the National Do Not Call Registry as well as further staff assumptions applied to the information received. Since that time, the Commission has begun operation of the National Do Not Call Registry, and, in calendar year 2004, 60,611 entities accessed the registry. Of these, 552 were “exempt” entities obtaining access to data for more than one state.[3] By definition, none of the “exempt” entities are subject to the TSR. Additionally, 46,113 were non-exempt entities obtaining data for only a single state. Staff assumes that these entities are operating solely intrastate, and thus are exempt from the TSR.[4] Thus, staff estimates that 14,000 entities, rounded to the nearest thousand, [60,611−552−46,113 = 13,946] are currently subject to the TSR.

The staff estimates that these 14,000 telemarketing entities subject to the Rule each require approximately 2.3 hours per year to file and store records required by the TSR for an annual total of 32,000 burden hours (rounded to the nearest thousand). The Commission also estimates that 75 new entrants per year would need to spend 100 hours each developing a recordkeeping system that complies with the Rule for an annual total of 7,500 burden hours. These figures, based on prior estimates, are not contradicted by further research conducted by Commission staff. Thus, the total estimated annual recordkeeping burden for new and existing telemarketing entities is 40,000 hours (rounded to the nearest thousand).

In the 2003 Supporting Statement, the Commission estimated that 2,500 telefunder firms—professional telefunders soliciting on behalf of charities—would also be subject to the Rule, which was amended to include calls to solicit charitable contributions pursuant to the USA PATRIOT Act. Staff estimated that the recordkeeping burden per entity per year would be no more than one hour for a cumulative total of approximately 2,500 hours. Staff also estimated that 25 new telefunding entrants per year would require 100 hours each to set up recordkeeping systems that would comply with the TSR. Thus, the cumulative recordkeeping burden for telefunder firms was 5,000 hours. No new data suggests that these estimates have changed; therefore, the Commission retains these estimates.

The cumulative annual recordkeeping burden for all entities subject to the TSR—both telefunder and telemarketing firms alike—is 45,000 hours.

Disclosure: Staff believes that a substantial majority of telemarketers now make in the ordinary course of business 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 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 Commission last sought OMB clearance, staff estimates that the disclosures the Rule requires would be made in at least 75 percent of telemarketing calls even absent the Rule.

Accordingly, staff determined that the hours burden estimate for the Rule's disclosure requirements is 25 percent of the total hours associated with disclosures of the type the TSR requires. Staff estimates the portion attributable to the Rule to be 2,430,000 (rounded to the nearest thousand). The components of this total are detailed in the immediately following paragraphs that address hours burden.

Staff estimates that the 14,000 telemarketing entities subject to the Rule make 6.2 billion calls per year, or 443,000 calls per year per company (rounded to the nearest thousand). The TSR provides that if an industry member chooses to solicit inbound calls from consumers by advertising media other than direct mail or by using direct mail solicitations that make certain required disclosures (providing for an inbound telephone call as a possible response), that member is exempted from complying with the Rule's oral disclosures. Based on previous estimates, staff estimates that of the 14,000 telemarketing entities, 11,800 firms conduct inbound telemarketing, and that of these, 4,000 will choose to adopt marketing methods that exempt them from complying with the Rule's verbal disclosure requirements.

The Commission staff retains its estimate that, in a telemarketing call involving the sale of goods or services, Start Printed Page 3304it takes 7 seconds for telemarketers to disclose the required outbound call information orally plus 3 additional seconds to disclose the information required in the case of an upsell. Staff also retains its estimate that at least 60 percent of sale calls result in “hang-ups” before the telemarketer can make all the required disclosures and that “hang-up” calls consume only 2 seconds. Accordingly, staff estimates that the total time associated with these disclosure requirements is approximately 1.1 million hours per year [((1.2 billion non-hangup calls [2.9 billion outbound calls x 40%] × 7 seconds) + (1.7 billion hangup calls [2.9 billion × 60%] × 2 seconds) + (570 million calls × 40% [estimated upsell conversion] × 3 seconds) + (3.3 billion inbound calls × 40% [estimated upsell conversion] × 3 seconds)) × 25% burden] or 79 hours per firm [1.1 million hours/14,000 firms].

The TSR also requires further disclosures in telemarketing sales calls before the customer pays for goods or services. These disclosures include the total costs of the offered goods or services; all material restrictions; and all material terms and conditions of the seller's refund, cancellation, exchange, or repurchase policies (if a representation about such a policy is a part of the sales offer). Additional specific disclosures are required if the call involves a prize promotion, the sale of credit card loss protection products or an offer with a negative option feature.

Staff estimates that the general sales disclosures require 499,000 hours annually. This figure includes the burden for written disclosures [(4,000 firms [estimated using direct mail] × 10 hours per year × 25% burden) = 10,000 hours, as well as the figure for oral disclosures [(570 million calls × 8 seconds × 25% burden) + (570 million outbound calls × 40% (upsell conversion) × 20% sales conversion × 25% burden × 8 seconds) + (3.3 billion inbound calls × 40% upsell conversion × 20% sales conversion + 25% burden × 8 seconds) ].

Staff also estimates that the specific sales disclosures require 53,000 hours annually [(570 million calls × 5% [estimated involving prize promotion] × 3 seconds × 25% burden) + (570 million calls × .1% [estimated involving credit card loss protection (“CCLP”)] × 4 seconds) + (570 million calls × 40% upsell conversions × 20% sales conversions × .1% [estimated involving CCLP] × 4 seconds) + (3.3 billion inbound calls × 40% upsell conversion × 20% sales conversion × .1% [estimated involving CCLP] × 4 seconds) + (570 million calls × 10% [estimated involving negative options] × 4 seconds × 25% burden) + (570 million calls × 40% upsell conversion × 20% sales conversions × 10% [estimated involving negative options] × 4 seconds × 25% burden) + (3.3 billion inbound calls × 40% upsell conversions × 20% sales conversions × 10% [estimated involving negative options] × 4 seconds × 25% burden)] + (3.3 billion inbound calls × .3% [estimated business opportunity] × 8 seconds). The total burden for all of the sales disclosures is 552,000 hours annually or 39 hours annually per firm.

The Commission staff also retains its prior estimate that 2,500 telefunder firms are subject to the Rule. The only disclosure that the TSR requires in solicitations for charitable contributions is the disclosure in § 310.4(e). The total burden for disclosures made in solicitations for charitable contributions is 778,000 hours (rounded to the nearest thousand) [(1.6 billion calls with no early hang up × 4 seconds × 25% burden) + (2.4 billion calls with early hang-up × 2 seconds × 25% burden].

Thus, the cumulative annual disclosure burden for all entities subject to the TSR—both telefunder and telemarketing firms alike—is 2,430,000 hours.

Estimated annual labor cost burden: $20,315,000.

The estimated labor cost for recordkeeping for all entities, both telefunders and telemarketing firms, is $20,315,000. Assuming a cumulative burden of 7,500 hours/year to set up compliant recordkeeping systems for telemarketing entities, and applying to that a skilled labor rate of $20/hour, start-up costs would approximate $150,000 yearly for all new telemarketing entities. Staff also estimates that existing telemarketing industry members require 14,000 hours, cumulatively, to maintain compliance with the TSR's recordkeeping provisions. Applying a clerical cost rate of $10/hour, cumulative recordkeeping maintenance would cost approximately $140,000 annually. The estimated labor cost for sales disclosures is $8,280,000 based on staff's estimate of 552,000 telemarketing disclosure burden hours and a wage rate of $15/hour. Thus, total labor cost, rounded to the nearest thousand, for sales entities is $8,570,000.

Based on the estimated cumulative burden of 2,500 hours/year to set up compliant recordkeeping systems for telefunder entities, and applying to that a skilled labor rate of $20/hour, start-up costs would be approximately $50,000. In addition, the estimated labor cost for maintaining records relating to solicitations for charitable contributions annually would be $25,000 (2,500 burden hours × $10/hour). The estimated labor cost relating to charitable solicitation disclosures is $11,670,000 (778,000 burden hours × $15/hour). Thus, the total labor cost for telefunder entities is $11,745,000.

Thus, the total cumulative labor costs for telefunder and telemarketing entities combined is $20,315,000.

Estimated annual non-labor cost burden: $5,613,000 (rounded to the nearest thousand).

Total capital and start-up costs: Staff estimates 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.

Other non-labor costs: 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 14,000 outbound 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 $700,000. Verbal disclosure estimates, discussed above, applied to a retained estimated commercial calling rate of 6 cents per minute ($3.60 per hour), totals $1,987,200 (552,000 disclosure hours × $3.60 per hour) in phone-related costs. Office supplies for an estimated 14,000 outbound telemarketers @ $50 each = $700,000. Accordingly, the non-labor costs for telemarketing entities associated with the Rule's information collection provisions is $2,687,200 ($1,987,200 in phone related costs + $700,000 for office supplies). Non-labor costs incurred by telefunders for telefunder organizations are estimated to be $2,926,000 (rounded to the nearest thousand) (778,000 estimated hours @ $3.60 per hour + $125,000 in office supply-related costs (2500 telefunders @ $50 each)). Thus, the total non-labor Start Printed Page 3305costs for all entities subject to the TSR is $5,613,200.[5]

Finally, staff believes that the estimated 4,000 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.

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John D. Graubert,

Acting General Counsel.

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1.  Commission Rule 4.2(d), 16 CFR 4.2(d). The comment must be accompanied by an explicit request for confidential treatment, including the factual and legal basis for the request, and must identify the specific portions of the comment to be withheld from the public record. The request will be granted or denied by the Commission's General Counsel, consistent with applicable law and the public interest. See Commission Rule 4.9(c), 16 CFR 4.9(c).

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3.  An exempt entity is one that, although not subject to the TSR, chooses to voluntarily scrub its calling lists against the data in the National Do Not Call Registry.

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4.  These entities would nonetheless likely be subject to the Federal Communication Commission's Telephone Consumer Protection Act regulations, including the requirement that entities engaged in intrastate telephone solicitations access the National Do Not Call Registry.

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5.  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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[FR Doc. E6-627 Filed 1-19-06; 8:45 am]