Federal Communications Commission

Friday, July 25, 2003 Part II Federal Communications Commission 47 CFR Parts 64 and 68 Rules and Regulations Implementing the Telephone Consumer Protection Act (TCPA) of 1991; Final Rule VerDate Jan<31>2003 15:31 Jul 24, 2003 Jkt 200001 PO 00000 Frm 00001 Fmt 4717 Sfmt 4717 E:FRFM25JYR2.SGM 25JYR2

44144 Federal Register / Vol. 68, No. 143 / Friday, July 25, 2003 / Rules and Regulations FEDERAL COMMUNICATIONS SUPPLEMENTARY INFORMATION: This is a liable for the transmission of unlawful COMMISSION summary of the Commission’s Report facsimile advertisements. and Order (Order) in CG Docket No. 02– 47 CFR Parts 64 and 68 National Do-Not-Call List 278, FCC 03–153, adopted on June 26, [CG Docket No. 02–278, FCC 03–153] 2003 and released July 3, 2003. The full 2. Section 227. The TCPA requires the text of this document is available at the Commission to protect residential Rules and Regulations Implementing Commission’s Web site (http:// telephone subscribers’ privacy rights to the Telephone Consumer Protection www.fcc.gov) on the Electronic avoid receiving telephone solicitations Act (TCPA) of 1991 Comment Filing System and for public to which they object. In so doing, 47 inspection and copying during regular U.S.C. 227(c)(1) directs the Commission AGENCY: Federal Communications business hours in the FCC Reference to ‘‘compare and evaluate alternative Commission. Center, Room CY–A257, 445 12th Street, methods and procedures’’ including the ACTION: Final rule. SW., Washington, DC 20554. The use of electronic databases and other complete text may be purchased from alternatives in protecting such privacy SUMMARY: In this document, we revise the Commission’s copy contractor, rights. Pursuant to 47 U.S.C. 227(c)(3), the current Telephone Consumer Qualex International, 445 12th Street, the Commission ‘‘may require the Protection Act of 1991 (TCPA) rules, SW., Room CY–B402, Washington, DC establishment and operation of a single and adopt new rules to provide 20554. To request materials in national database to compile a list of consumers with several options for accessible formats for people with telephone numbers of residential avoiding unwanted telephone disabilities (braille, large print, subscribers who object to receiving solicitations. These new rules establish electronic files, audio format), send an telephone solicitations, and to make that a national do-not-call registry, set a email to fcc504@fcc.gov or call the compiled list and parts thereof available maximum rate on the number of Consumer & Governmental Affairs for purchase.’’ If the Commission abandoned calls, require telemarketers Bureau at (202) 418–0531 (voice) or determines that adoption of a national to transmit caller ID information, and (202) 418–7365 (tty). database is warranted, 47 U.S.C. modify the Commission’s unsolicited Paperwork Reduction Act: The Report 227(c)(3) enumerates a number of facsimile advertising requirements. and Order contains either new and/or specific statutory requirements that DATES: Effective August 25, 2003, except modified information collections. The must be satisfied. Additionally, 47 for § 64.1200(c)(2), which contains the Commission, as part of its continuing U.S.C. 227(c)(4) requires the national do-not-call rules, and will effort to reduce paperwork burdens, Commission to consider the different become effective on October 1, 2003; invites the general public to comment needs of telemarketers operating on a § 64.1200(a)(5) and (a)(6), which contain on the information collection(s) local or regional basis and small the call abandonment rules, and will contained in this Report and Order as businesses. In addition to our general become effective on October 1, 2003; required by the PRA. Public and agency authority over interstate § 64.1601(e), which contains the caller comments are due September 23, 2003. communications, section 2(b) of the ID rules, and will become effective on Synopsis Communications Act specifically January 29, 2004; and provides the Commission with the §§ 64.1200(a)(3)(i), (d)(1), (d)(3), (d)(6), 1. We revise the TCPA rules and adopt new rules to provide consumers authority to apply section 227 to (f)(3), and (g)(1), which contain intrastate communications. information collection requirements with several options for avoiding unwanted telephone solicitations. 3. We conclude that the record under the Paperwork Reduction Act compiled in this proceeding supports Specifically, we establish with the (PRA) that have not been approved by the establishment of a single national Federal Trade Commission (FTC) a the Office of Management and Budget. database of telephone numbers of national do-not-call registry for The Commission will publish a residential subscribers who object to consumers who wish to avoid unwanted document in the Federal Register receiving telephone solicitations. telemarketing calls. The national do-not- announcing the effective date for these Consistent with the mandate of call registry will supplement the current sections. Written comments by the Congress in the Do-Not-Call company-specific do-not-call rules for public on the new and modified Implementation Act (Do-Not-Call Act), those consumers who wish to continue information collections are due the national do-not-call rules that we requesting that particular companies not September 23, 2003. call them. To address the more establish in this order ‘‘maximize ADDRESSES: In addition to filing prevalent use of predictive dialers, we consistency’’ with those of the FTC. The comments with the Office of the have determined that a telemarketer record clearly demonstrates widespread Secretary, a copy of comments on the may abandon no more than three consumer dissatisfaction with the information collection(s) contained percent of calls answered by a person effectiveness of the current rules and herein should be submitted to Leslie and must deliver a prerecorded network technologies available to Smith, Federal Communications identification message when protect consumers from unwanted Commission, Room 1–A804, 445 12th abandoning a call. The new rules will telephone solicitations. Indeed, many Street SW., Washington, DC 20554, or also require all companies conducting consumers believe that with the advent via the Internet to Leslie.Smith@fcc.gov. telemarketing to transmit caller of such technologies as predictive FOR FURTHER INFORMATION CONTACT: identification (caller ID) information, dialers that the vices of telemarketing Erica H. McMahon or Richard D. Smith when available, and prohibit them from have become inherent, while its virtues at 202–418–2512, Consumer & blocking such information. The remain accidental. We have compared Governmental Affairs Bureau. For Commission has revised its earlier and evaluated alternative methods to a additional information concerning the determination that an established national do-not-call list for protecting information collection(s) contained in business relationship constitutes consumer privacy rights and conclude this document, contact Les Smith at express invitation or permission to that these alternatives are costly and/or 202–418–0217 or via the Internet at receive an unsolicited fax, and we have ineffective for both telemarketers and Leslie.Smith@fcc.gov. clarified when fax broadcasters are consumers. See 47 U.S.C. 227(c)(1)(A). VerDate Jan<31>2003 15:31 Jul 24, 2003 Jkt 200001 PO 00000 Frm 00002 Fmt 4701 Sfmt 4700 E:FRFM25JYR2.SGM 25JYR2

Federal Register / Vol. 68, No. 143 / Friday, July 25, 2003 / Rules and Regulations 44145 4. A national do-not-call registry that not-call registry that will provide unwanted solicitation calls as petty is supplemented by the amendments residential consumers with a one-step annoyances and suggest that consumers made to our existing rules will provide option to prohibit unwanted telephone purchase certain technologies to block consumers with a variety of options for solicitations. This registry will be unwanted calls, the evidence in this managing telemarketing calls. maintained by the FTC. Consistent with record leads us to believe the Consumers may now: (1) Place their the FTC’s determination, the national cumulative effect of these disruptions in number on the national do-not-call list; registry will become effective on the lives of millions of Americans each (2) continue to make do-not-call October 1, 2003. Subject to certain day is significant. As a result, we requests of individual companies on a exemptions, telemarketers will be conclude that adoption of a national do- case-by-case basis; and/or (3) register on prohibited from contacting those not-call list is now warranted. We the national list, but provide specific consumers that register their telephone believe that consumers should, at a companies with express permission to numbers on the national list. In reaching minimum, be given the opportunity to call them. Telemarketers may continue this conclusion, we agree with the vast determine for themselves whether or not to call individuals who do not place majority of consumers in this they wish to receive telephone their numbers on a do-not-call list and proceeding and the FTC that a national solicitation calls in their homes. The consumers with whom they have an do-not-call registry is necessary to national do-not-call list will serve as an established business relationship. We enhance the privacy interests of those option for those consumers who have believe this result is consistent with consumers that do not wish to receive found the company-specific list and Congress’ directive in the TCPA that telephone solicitations. In response to other network technologies ineffective. ‘‘[i]ndividuals’’ privacy rights, public the widespread consumer The telephone network is the primary safety interests, and commercial dissatisfaction with telemarketing means for many consumers to remain in freedoms of speech and trade must be practices, Congress has recently contact with public safety organizations balanced in a way that protects the affirmed its support of a national do- and family members during times of privacy of individuals and permits not-call registry in approving funding illness or emergency. Consumer legitimate telemarketing practices.’’ See for the FTC’s national database. See H.R. frustration with telemarketing practices TCPA, Section 2(9), reprinted in 7 FCC J. Res. 2, 108th Congress at 96 (2003). has reached a point in which many Rcd at 2744. See also H.R. REP. NO. 108–8 at 3 consumers no longer answer their 5. We agree with Congress that (2003), reprinted in 2003 U.S.C.C.A.N. telephones while others disconnect consistency in the underlying 688, 670 (‘‘[i]t is the strongly held view their phones during some hours of the regulations and administration of the of the Committee that a national do-not- day to maintain their privacy. We agree national do-not-call registry is essential call list is in the best interest of with consumers that incessant to avoid consumer confusion and consumers, businesses and consumer telephone solicitations are especially regulatory uncertainty in the protection authorities. This legislation is burdensome for the elderly, disabled, telemarketing industry. In so doing, we an important step toward a one-stop and those that work non-traditional emphasize that there will be one solution to reducing telemarketing hours. Persons with disabilities are centralized national do-not-call database abuses.’’). In so doing, Congress has often unable to register do-not-call of telephone numbers. The FTC has set indicated that this Commission should requests on many company-specific lists up and will maintain the national adopt rules that ‘‘maximize because many telemarketers lack the database, while both agencies will consistency’’ with those of the FTC. The equipment necessary to receive that coordinate enforcement efforts pursuant record in this proceeding is replete with request. Given the record evidence, to a forthcoming Memorandum of examples of consumers that receive along with Congress’s recent affirmative Understanding. The states will also play numerous unwanted calls on a daily support for a national do-not-call an important role in the enforcement of basis. The increase in the number of registry, we adopt a national do-not-call the do-not-call rules. The FTC has telemarketing calls over the last decade registry. We are mindful of the need to received funding approval from combined with the widespread use of balance the privacy concerns of Congress to begin implementation of the such technologies as predictive dialers consumers with the interests of national do-not-call registry. Because has encroached significantly on the legitimate telemarketing practices. the FTC lacks jurisdiction over certain privacy rights of consumers. For Therefore, we have provided for certain entities, including common carriers, banks, insurance companies, and example, the effectiveness of the exemptions to the national do-not-call airlines, those entities would be allowed protections afforded by the company- registry. to continue calling individuals on the specific do-not-call rules have been 8. While we agree that concerns FTC’s list absent FCC action exercising reduced significantly by dead air and regarding the cost, accuracy, and our broad authority given by Congress hang-up calls that result from predictive privacy of a national do-not-call over telemarketers. In addition, the dialers. In these situations, consumers database remain relevant, we believe FTC’s jurisdiction does not extend to have no opportunity to invoke their do- that circumstances have changed intrastate activities. Action by this not-call rights and the Commission significantly since the Commission first Commission to adopt a national do-not- cannot pursue enforcement actions. reviewed this issue over a decade ago call list, as permitted by the TCPA, Such intrusions have led many such that they no longer impose a requires all commercial telemarketers to consumers to disconnect their phones substantial obstacle to the comply with the national do-not-call during portions of the day or avoid implementation of a national registry. requirements, thereby providing more answering their telephones altogether. As several commenters in this comprehensive protections to The adoption of a national do-call-list proceeding note, advances in computer consumers and consistent treatment of will be an important tool for consumers technology and software now make the telemarketers. that wish to exercise control over the compilation and maintenance of a increasing number of unwanted national database a more reasonable National Do-Not-Call Registry telephone solicitation calls. proposition. In addition, considerable 6. Pursuant to our authority under 47 7. Although some industry experience has been gained through the U.S.C. 227(c), we adopt a national do- commenters attempt to characterize implementation of many state do-not- VerDate Jan<31>2003 15:31 Jul 24, 2003 Jkt 200001 PO 00000 Frm 00003 Fmt 4701 Sfmt 4700 E:FRFM25JYR2.SGM 25JYR2

44146 Federal Register / Vol. 68, No. 143 / Friday, July 25, 2003 / Rules and Regulations call lists. In 1992, it was estimated by sellers will receive from the national wireless subscribers may not participate some commenters that the cost of registry is the registrant’s telephone in the do-not-call list. Nextel Comments establishing such a list in the first year number. This is the minimum amount at 19. Nextel states we should define could be as high as $80 million. of information that can be provided to ‘‘residential subscribers’’ to mean Congress has recently reviewed and implement the national registry. We ‘‘telephone service used primarily for approved the FTC’s request for $18.1 note that the majority of telephone communications in the subscriber’s million to fund the national do-not-call numbers are publicly available through residence.’’ However, Nextel’s list. We believe that the advent of more telephone directories. To the extent that application would result in ‘‘[a]t most, efficient technologies and the consumers have an unlisted number, the the Commission [having the] authority experience acquired in dealing with consumer will have to make a choice as to regulate solicitations to wireless similar databases at the state level is to whether they prefer to register on a subscribers in those circumstances responsible for this substantial national do-not-call list or maintain where wireless service actually has reduction in cost. complete anonymity. We reiterate, displaced a residential land line, and 9. Similarly, we believe that however, that the only information that functions as a consumer’s primary technology has become more proficient will be provided to the telemarketer is residential telephone service.’’ Nextel in ensuring the accuracy of a national the telephone number of the consumer. Comments at 21. database. The FTC indicates that to The ‘‘seller’’ and ‘‘telemarketer’’ may be 13. Nextel’s definition of ‘‘residential guard against the possibility of the same entity or separate entities. subscribers’’ is far too restrictive and including disconnected or reassigned Each entity on whose behalf the inconsistent with the intent of section telephone numbers, technology will be telephone call is being made must 227. Specifically, there is nothing in employed on a monthly basis to check purchase access to the do-not-call section 227 to suggest that only a all registered telephone numbers against database. No corresponding name or customer’s ‘‘primary residential national databases, and remove those address information will be provided. telephone service’’ was all that Congress numbers that have been disconnected or We believe that this approach reduces sought to protect through the TCPA. In reassigned. The length of time that the privacy concerns of such consumers addition, had Congress intended to registrations remain valid also directly to the greatest extent possible. As an exclude wireless subscribers from the affects the accuracy of the registry as additional safeguard, we find that benefits of the TCPA, it knew how to telephone numbers change hands over restrictions should be imposed on the address wireless services or consumers time. We conclude that the retention use of the national list. Consistent with explicitly. For example, in section period for both the national and the FTC’s determination and 47 U.S.C. 227(b)(1), Congress specifically company-specific do-not-call requests 227(c)(3)(K), we conclude that no prohibited calls using automatic will be five years. See FTC Order, 68 FR person or entity may sell, rent, lease, telephone dialing systems or artificial or 4580 at 4640 (January 29, 2003). Our purchase, or use the national do-not-call prerecorded voice to telephone numbers rules previously required a company- database for any purpose except assigned to ‘‘paging service [or] cellular specific do-not-call request to be compliance with section 227 and any telephone service * * *.’’ Moreover, honored for ten years. See 47 CFR such state or federal law to prevent under Nextel’s definition, even 64.1200(e)(2)(vi). Five years is telephone solicitations to telephone consumers who use their wireless consistent with the FTC’s determination numbers on such list. See 47 U.S.C. telephone service in their homes to and our own record that reveals that the 227(c)(3)(K). See also 16 CFR supplement their residential wireline current ten-year retention period for 310.4(b)(2). We conclude that these service, such as by using their wireless company-specific requests is too long safeguards adequately protect the telephone service to make long distance given changes in telephone numbers. privacy rights of those consumers who phone calls to avoid wireline toll Consumers must also register their do- choose to register on the national do- charges, would be excluded from the not-call requests from either the not-call list. protections of the TCPA. Such an telephone number of the phone that 11. We conclude that the national interpretation is at odds even with they wish to register or via the Internet. database should allow for the Nextel’s own reasoning for its The FTC will confirm the accuracy of registration of wireless telephone definition—that the TCPA’s goal is ‘‘to such registrations through the use of numbers, and that such action will curb the ‘pervasive’ use of telemarketing automatic number identification (ANI) better further the objectives of the TCPA ‘to market goods and services to the and other technologies. The term ‘‘ANI’’ and the Do-Not-Call Act. In so doing, we home’.’’ Nextel Comments at 20. It is refers to the delivery of the calling agree with the FTC and several well established that wireless party’s billing number by a local commenters that wireless subscribers subscribers often use their wireless exchange carrier to any interconnecting should not be excluded from the phones in the same manner in which carrier for billing or routing purposes, protections of the TCPA, particularly they use their residential wireline and to the subsequent delivery of such the option to register on a national do- phones. Indeed, as even Nextel number to end users. 47 CFR 64.1600(b). not-call list. Congress has indicated its recognizes, there is a growing number of We believe that a five-year registration intent to provide significant protections consumers who no longer maintain period coupled with a monthly purging under the TCPA to wireless users. 47 wireline phone service, and rely only on of disconnected telephone numbers U.S.C. 227(b)(1)(iii). Allowing wireless their wireless telephone service. Thus, adequately balances the need to subscribers to register on a national do- we are not persuaded by Nextel’s maintain accuracy in the national not-call list furthers the objectives of the arguments. registry with any burden imposed on TCPA, including protection for wireless 14. Moreover, we believe it is more consumers to re-register periodically subscribers from unwanted telephone consistent with the overall intent of the their telephone numbers. solicitations for which they are charged. TCPA to allow wireless subscribers to 10. We conclude that appropriate 12. Nextel Communications, Inc. benefit from the full range of TCPA action has been taken to ensure the (Nextel) argues, however, that, because protections. Congress afforded wireless privacy of those registering on the the ‘‘TCPA only authorizes the subscribers particular protections in the national list. Specifically, the only Commission to regulate solicitations to context of autodialers and prerecorded consumer information telemarketers and ‘residential telephone subscribers,’ ’’ calls. 47 U.S.C. 227(b)(1)(A)(iii). In VerDate Jan<31>2003 15:31 Jul 24, 2003 Jkt 200001 PO 00000 Frm 00004 Fmt 4701 Sfmt 4700 E:FRFM25JYR2.SGM 25JYR2

Federal Register / Vol. 68, No. 143 / Friday, July 25, 2003 / Rules and Regulations 44147 addition, although Congress expressed national do-not-call rules will also not documenting this process; and (v) any concern with residential privacy, it also prohibit calls to businesses and persons subsequent call otherwise violating the was concerned with the nuisance, with whom the marketer has a personal do-not-call rules is the result of error. expense and burden that telephone relationship. Telemarketers may We acknowledge that the three-month solicitations place on consumers. continue to contact all of these safe harbor period for telemarketers may Therefore, we conclude that wireless consumers despite the adoption of a prove to be too long to benefit some subscribers may participate in the national do-not-call list. Furthermore, consumers. The national do-not-call list national do-not-call list. As a practical we decline to adopt more restrictive do- has the capability to process new matter, since determining whether any not-call requirements on telemarketers registrants virtually instantaneously and particular wireless subscriber is a as suggested by several commenters. For telemarketers will have the capability to ‘‘residential subscriber’’ may be more example, we decline to adopt an ‘‘opt- download the list at any time at no extra fact-intensive than making the same in’’ approach that would ban cost. The Commission intends to determination for a wireline subscriber, telemarketing to any consumer who has monitor carefully the impact of this we will presume wireless subscribers not expressly agreed to receive requirement pursuant to its annual who ask to be put on the national do- telephone solicitations. We believe that report to Congress and may consider a not-call list to be ‘‘residential establishing such an approach would be shorter time frame in the future. subscribers.’’ This presumption is only overly restrictive on the telemarketing 17. As required by 47 U.S.C. for the purposes of section 227 and is industry. We also decline to extend the 227(c)(1)(A), we have compared and not in any way indicative of any attempt national do-not-call requirements to tax- evaluated the advantages and to classify or regulate wireless carriers exempt nonprofit organizations or disadvantages of certain alternative for purposes of other parts of Title II. entities that telemarket on behalf of methods to protect consumer privacy Such a presumption, however, may nonprofit organizations. including the use of network require a complaining wireless 16. We agree with the FTC that a safe technologies, special directory subscriber to provide further proof of harbor should be established for markings, and company-specific lists in the validity of that presumption should telemarketers that have made a good adopting a national do-not-call database. we need to take enforcement action. faith effort to comply with the national The effectiveness of the company- 15. We emphasize that it is not our do-not-call rules. A seller or specific approach has significantly intent in adopting a national do-not-call telemarketer acting on behalf of the eroded as a result of hang-up and ‘‘dead list to prohibit legitimate telemarketing seller that has made a good faith effort to provide consumers with an air’’ calls from predictive dialers. practices. We believe that industry opportunity to exercise their do-not-call Consumers in these circumstances have commenters present a false choice rights should not be liable for violations no opportunity to assert their do-not- between the continued viability of the that result from an error. Consistent call rights. We believe that, as a stand- telemarketing industry and the adoption with the FTC, we conclude that a seller alone option, the company-specific of a national do-not-call list. We are not or the entity telemarketing on behalf of approach no longer provides consumers persuaded that the adoption of a the seller will not be liable for violating with sufficient privacy protections. We national do-not-call list will unduly the national do-not-call rules if it can also conclude that the availability of interfere with the ability of demonstrate that, as part of the seller’s certain network technologies to reduce telemarketers to contact consumers. or telemarketer’s routine business telephone solicitations is often Many consumers will undoubtedly take practice: (i) It has established and ineffective and costly for consumers. advantage of the opportunity to register implemented written procedures to Although technology has improved to on the national list. Several industry comply with the do-not-call rules; (ii) it assist consumers in blocking unwanted commenters suggest, however, that has trained its personnel, and any entity calls, it has also evolved in such a way consumers derive substantial benefits assisting in its compliance, in the as to assist telemarketers in making from telephone solicitations. If so, many procedures established pursuant to the greater numbers of calls and even such consumers will choose not to do-not-call rules; (iii) the seller, or circumventing such blocking register on the national do-not-call list telemarketer acting on behalf of the technologies. Millions of consumers and will opt instead to make do-not-call seller, has maintained and recorded a continue to register on state do-not-call requests on a case-by-case basis or give list of telephone numbers the seller may lists despite the availability of such express permission to be contacted by not contact; (iv) the seller or technologies. Several commenters note specific companies. In addition, we telemarketer uses a process to prevent that they continue to receive unwanted have provided for certain exemptions to telemarketing to any telephone number calls despite paying for technologies to the do-not-call registry in recognition of on any list established pursuant to the reduce telephone solicitations. Several legitimate telemarketing business do-not-call rules employing a version of commenters also note that telemarketers practices. For example, sellers of goods the do-not-call registry obtained from routinely block transmission of caller or services via telemarketing may the administrator of the registry no more ID. In particular, we are concerned that continue to contact consumers on the than three months prior to the date any the cost of technologies such as caller national list with whom they have an call is made, and maintains records ID, call blocking, and other such tools established business relationship. We in an effort to reduce telemarketing calls also note that calls that do not fall Moreover, responding to such a ‘‘survey’’ does not fall entirely on the consumer. We within the definition of ‘‘telephone constitute express permission or establish a believe that reliance on a solution that solicitation’’ as defined in section business relationship exemption for purposes of a places the cost of reducing the number 227(a)(3) will not be precluded by the subsequent telephone solicitation. See H.R. Rep. of unwanted solicitation calls entirely national do-not-call list. These may No. 102–317 at 13 (‘‘[T]he Committee does not intend the term ‘‘telephone solicitation’’ to include on the consumer is inconsistent with include surveys, market research, public opinion polling, consumer or market Congress’ intent in the TCPA. For the political or religious speech calls.1 The surveys, or other survey research conducted by reasons outlined in the 1992 TCPA telephone. A call encouraging purchase, rental, or 1 Such calls may be prohibited if they serve as a investment would fall within the definition, Order, we also decline to adopt special pretext to an otherwise prohibited advertisement or however, even though the caller purports to be area codes or prefixes for telemarketers. a means of establishing a business relationship. taking a poll or conducting a survey.’’). We believe this option is costly for VerDate Jan<31>2003 15:31 Jul 24, 2003 Jkt 200001 PO 00000 Frm 00005 Fmt 4701 Sfmt 4700 E:FRFM25JYR2.SGM 25JYR2

44148 Federal Register / Vol. 68, No. 143 / Friday, July 25, 2003 / Rules and Regulations telemarketers that would be required to for the administration of the national agreement between the consumer and change their telephone numbers and list only for the FTC, this Commission the seller which states that the administratively burdensome to would be forced to stay implementation consumer agrees to be contacted by this implement. We also decline to adopt of any national list should the plaintiffs seller, including the telephone number special directory markings of area white prevail in one of those proceedings. to which the calls may be placed. For page directories because it would purposes of this exemption, the term Exemptions require telemarketers to purchase and ‘‘signed’’ shall include an electronic or review thousands of local telephone 20. Established Business Relationship. digital form of signature, to the extent directories, at great cost to the We agree with the majority of industry that such form of signature is recognized telemarketers. We also note that commenters that an exemption to the as a valid signature under applicable telemarketers often compile solicitation national do-not-call list should be federal or state contract law. Consumers lists from many sources other than local created for calls to consumers with registered on the national list may wish telephone directories. In addition, such whom the seller has an established to have the option to be contacted by directories do not include unlisted or business relationship. We note that 47 particular entities. Therefore, we unregistered telephone numbers and are U.S.C. 227(a)(3) excludes from the conclude that sellers may obtain the often updated infrequently. We also definition of telephone solicitation calls express written agreement to call such note that the record in this proceeding made to any person with whom the consumers. The express agreement provides little support for this option. caller has an established business between the parties shall remain in 18. We now review the other relationship. We believe the ability of effect as long as the consumer has not requirements of 47 U.S.C. 227(c)(1). As sellers to contact existing customers is asked to be placed on the seller’s required by section 227(c)(1)(B), we an important aspect of their business company-specific do-not-call list. If the have evaluated AT&T Government plan and often provides consumers with consumer subsequently requests not to Solutions, the entity selected by the FTC valuable information regarding products be called, the seller must cease calling to administer the national database, and or services that they may have the consumer regardless of whether the conclude that it has the capacity to purchased from the company. For consumer continues to do business with establish and administer the national example, magazines and newspapers the seller. We also note that database. Congress has reviewed and may want to contact customers whose telemarketers may not call consumers approved funding for the subscriptions have or soon will expire on the national do-not-call list to implementation of that database. We and offer new subscriptions. This request their written permission to be believe that it is unnecessary to evaluate conclusion is consistent with that of the called unless they fall within some any other such entities at this time. We FTC and the majority of states that have other exemption. We believe that to have considered whether different adopted do-not-call requirements and allow such calls would circumvent the methods and procedures should apply considered this issue. We revise the purpose of this exemption. Prior express for local telephone solicitations and definition of an established business permission must be obtained by some small businesses as required by section relationship so that it is limited in other means such as direct mailing. 227(c)(1)(C). We conclude that the duration to eighteen (18) months from 23. Tax-Exempt Nonprofit national do-not-call database takes into any purchase or transaction and three Organizations. We agree with those consideration the costs of those (3) months from any inquiry or commenters that contend that the conducting telemarketing on a local or application. national do-not-call requirements regional basis, including many small 21. To the extent that some consumers should not be extended to tax-exempt businesses. In particular, we note that oppose this exemption, we find that nonprofit organizations or calls made by the national do-not-call database will once a consumer has asked to be placed independent telemarketers on behalf of permit access to five or fewer area codes on the seller’s company-specific do-not- tax-exempt nonprofit organizations. We at no cost to the seller. Pursuant to call list, the seller may not call the note that 47 U.S.C. 227(a)(3) specifically section 227(c)(1)(D), we have considered consumer again regardless of whether excludes calls made by tax-exempt whether there is a need for additional the consumer continues to do business nonprofit organizations from the authority to further restrict telephone with the seller. We believe this definition of telephone solicitation. In solicitations. We conclude that no such determination constitutes a reasonable so doing, we believe Congress clearly authority is required at this time. balance between the interests of intended to exclude tax-exempt Pursuant to the Do-Not-Call Act, the consumers that may object to such calls nonprofit organizations from Commission must report to Congress on with the interests of sellers in contacting prohibitions on telephone solicitations an annual basis the effectiveness of the their customers. This conclusion is also under the TCPA. The legislative history do-not-call registry. Should the consistent with that of the FTC. indicates that commercial calls Commission determine that additional 22. Prior Express Permission. In constitute the bulk of all telemarketing authority is required over telephone addition to the established business calls. A number of commenters and the solicitations as part of that analysis; the relationship exemption, we conclude FTC agree with Congress’ conclusion as Commission will propose specific that sellers may contact consumers it relates to a national do-not-call list. restrictions pursuant to that report. As registered on a national do-not-call list For this reason, we decline to extend the required by section 227(c)(1)(E), we if they have obtained the prior express national do-not-call requirements to tax- have developed regulations to permission of those consumers. We note exempt nonprofit organizations. A few implement the national do-not-call that section 227(a)(3) excludes from the commenters seek clarification that database in the most effective and definition of telephone solicitation calls requests for blood donations will be efficient manner to protect consumer to any person with ‘‘that person’s prior exempt from the national do-not-call privacy needs while balancing express invitation or permission.’’ list. When such requests are made by legitimate telemarketing interests. Consistent with the FTC’s tax-exempt nonprofit organizations, 19. The FTC’s decision to adopt a determination, we conclude that for they will fall within the exemption for national do-not-call list is currently purposes of the national do-not-call list tax-exempt nonprofit organizations. under review in federal district court. such express permission must be 24. Others. We decline to create Because Congress has approved funding evidenced only by a signed, written specific exemptions to the national do- VerDate Jan<31>2003 15:31 Jul 24, 2003 Jkt 200001 PO 00000 Frm 00006 Fmt 4701 Sfmt 4700 E:FRFM25JYR2.SGM 25JYR2

Federal Register / Vol. 68, No. 143 / Friday, July 25, 2003 / Rules and Regulations 44149 not-call requirements for entities such persons with whom the marketer has a business or entity making a ‘‘de as newspapers, magazines, regional personal relationship. Accordingly, we minimis’’ number of calls. telemarketers, or small businesses. We find that these calls do not represent the 28. In response to the Rules and find unpersuasive arguments that type of ‘‘telephone solicitations to Regulations Implementing the application of the national do-not-call which [telephone subscribers] object’’ Telephone Consumer Protection Act of database adopted herein will result in discussed in 47 U.S.C. 227(c)(1). 1991, Further Notice of Proposed severe economic consequences for these Moreover, we conclude that the Rulemaking, CG Docket No. 02–278, entities. In particular, we note the Commission also has authority to FCC 03–62 published at 68 FR 16250, exemptions adopted for calls made to recognize this limited carve-out April 3, 2003 (FNPRM) a few consumers with whom the seller has an pursuant to 47 U.S.C. 227(c)(1)(E). This commenters contend that any new rules established business relationship and subsection provides the Commission the Commission adopts would not apply those that have provided express with discretion in implementing rules to to entities engaged in the business of agreement to be called. As noted, many protect consumer privacy to ‘‘develop insurance, because such rules would consumers may also determine not to proposed regulations to implement the conflict with the McCarran-Ferguson register on the national database. methods and procedures that the Act. The McCarran-Ferguson Act Telemarketers may continue to contact Commission determines are the most provides that ‘‘[t]he business of all of these consumers. We believe these effective and efficient to accomplish the insurance * * * shall be subject to the exemptions provide telemarketers with purpose of this section.’’ 47 U.S.C. laws of the * * * States which relate to a reasonable opportunity to conduct 227(c)(1)(E). To the extent that any the regulation * * * of such business.’’ their business while balancing consumer objects to such calls, the 15 U.S.C. 1012(a). The McCarran- consumer privacy interests. Although consumer may request to be placed on Ferguson Act further provides that ‘‘[n]o we agree that newspapers and other the telemarketer’s company’s company- Act of Congress shall be construed to entities may often provide useful specific do-not-call list. We intend to invalidate, impair, or supersede any law information and services to the public, monitor these rules and caution that any enacted by any State for the purpose of given our conclusion that adoption of individual or entity relying on personal regulating the business of insurance the national do-not-call list will not relationships abusing this exemption * * * unless such Act specifically unduly interfere with the ability of may be subject to enforcement action. relates to the business of insurance.’’ 15 telemarketers to reach consumers, we do 26. In addition, we decline to extend U.S.C. 1012(b). American Council of not find this to be a compelling basis to Life Insurers (ACLI) explains that this approach beyond persons that have exempt these entities. insurers’ marketing activities are a personal relationship with the extensively regulated at the state level. 25. We find that the national do-not- marketer. For example, Vector urges the The Commission’s proposal, ACLI call rules do not apply to calls made to Commission to adopt an exemption that argues, ‘‘intrudes upon the insurance persons with whom the marketer has a covers ‘‘face-to-face’’ appointment calls regulatory framework established by the personal relationship. As discussed to anyone known personally to the states’’ and, therefore, should not be herein, a ‘‘personal relationship’’ refers ‘‘referring source.’’ We note that such applicable to insurers under McCarran- to an individual personally known to relationships become increasingly Ferguson. the telemarketer making the call. In tenuous as they extend to individuals 29. The McCarran-Ferguson Act does such cases, we believe that calls to not personally known to the marketer not operate to exempt insurance family members, friends and and thus such calls are more likely to be companies wholesale from liability acquaintances of the caller will be both unexpected to the recipient and more under the TCPA. It applies only when expected by the recipient and limited in voluminous. Accordingly, referrals to their activities constitute the ‘‘business number. In determining whether a persons that do not have a personal of insurance,’’ the state has enacted laws telemarketer is considered a ‘‘friend’’ or relationship with the marketer will not ‘‘for the purpose of regulating’’ the ‘‘acquaintance’’ of a consumer, we will fall within the category of calls business of insurance, and the TCPA look at, among other things, whether a discussed above. would ‘‘impair, invalidate, or reasonable consumer would expect calls 27. We also decline to establish an supersede’’ such state laws. See 15 from such a person because they have exemption for calls made to set ‘‘face-to- U.S.C. 1012(b). In the one case cited by a close or, at least, firsthand face’’ appointments per se. We conclude commenters as addressing the interplay relationship. If a complaining consumer that such calls are made for the purpose between McCarran-Ferguson and the were to indicate that a relationship is of encouraging the purchase of goods TCPA, a federal district court dismissed not sufficiently personal for the and services and therefore fall within a claim brought against two insurance consumer to have expected a call from the statutory definition of telephone companies under the TCPA for sending the marketer, we would be much less solicitation. We find no reason to unsolicited facsimile advertisements. likely to find that the personal conclude that such calls are somehow The Chair King, Inc. v. Houston Cellular relationship exemption is applicable. less intrusive to consumers than other Corp., 1995 WL 1760037 (S.D. Tex. While we do not adopt a specific cap on commercial telephone solicitations. The 1995), vacated for lack of subject matter the number of calls that a marketer may FTC has reviewed this issue and jurisdiction 131 F.3d 507 (5th Cir. 1997). make under this exemption, we reached the same conclusion. In The Chair King court found that the underscore that the limited nature of the addition, we decline to exempt entities TCPA conflicted with a Texas law that exemption creates a strong presumption that make a ‘‘de minimis’’ number of prohibited untrue, deceptive, or against those marketers who make more commercial telemarketing calls. In misleading advertising by insurers and than a limited number of calls per day. contrast to Congress’ rationale for their agents. In its analysis, the court Therefore, the two most common exempting nonprofit organizations, we determined that insurance advertising sources of consumer frustration believe that such commercial calls was part of the ‘‘business of insurance,’’ associated with telephone continue to be unexpected to consumers and that the Texas law in question was solicitations—high volume and even if made in low numbers. We do not enacted for the purpose of regulating the unexpected solicitations—are not likely believe the costs to access the national business of insurance. The court then present when such calls are limited to database is unreasonable for any small concluded that because the TCPA VerDate Jan<31>2003 15:31 Jul 24, 2003 Jkt 200001 PO 00000 Frm 00007 Fmt 4701 Sfmt 4700 E:FRFM25JYR2.SGM 25JYR2

44150 Federal Register / Vol. 68, No. 143 / Friday, July 25, 2003 / Rules and Regulations ‘‘prohibits unsolicited insurance small entities to make a significant further evaluation, the FTC selected advertising by facsimile while the Texas number of solicitation calls, we believe AT&T Government Solutions as the [laws] permit [such] advertising * * * that to do so would undermine the successful vendor for the national do- so long as the advertisements are effectiveness of the national do-not-call not-call database on March 1, 2003. truthful and not misleading,’’ the TCPA rules in protecting consumer privacy Congress has approved the necessary conflicts with the Texas law and is and create consumer confusion and funding for implementation of the preempted under McCarran-Ferguson. frustration. In so doing, we conclude national database. See 47 U.S.C. 227(b)(1)(C) and (a)(4). that the approach adopted herein 34. Pursuant to sections 227(c)(3)(B) 30. To the extent that any state law satisfies section 227(c)(4)’s requirement through (c)(3)(C), we require each regulates the ‘‘business of insurance’’ that the Commission, in developing common carrier providing telephone and the TCPA is found to ‘‘invalidate, procedures for gaining access to the exchange service to inform subscribers impair, or supersede’’ such state law, it database, consider the different needs of for telephone exchange service of the is possible that a particular activity telemarketers conducting business on a opportunity to provide notification that involving the business of insurance national, regional, State, or local level such subscriber objects to receiving would not fall within the reach of the and develop a fee schedule for telephone solicitations. Each telephone TCPA. Any determination about the recouping the cost of such database that subscriber shall be informed, by the applicability of McCarran-Ferguson, recognizes such differences. The common carrier that provides local however, requires an analysis of the national database will be available for exchange service to that subscriber, of particular activity and State law purchase by sellers on an area-code-by- (i) the subscriber’s right to give or regulating it. In addition, McCarran- area-code basis. The cost to access the revoke a notification of an objection to Ferguson applies only to federal statutes database will vary depending on the receiving telephone solicitations that ‘‘invalidate, impair, or supersede’’ number of area codes requested. Sellers pursuant to the national database and state insurance regulation. Courts have need only purchase those area codes in (ii) the methods by which such rights held that duplication of state law which the seller intends to telemarket. may be exercised by the subscriber. prohibitions by a federal statute do not In fact, sellers that request access to five Pursuant to section 227(c)(3)(C), we ‘‘invalidate, impair, or supersede’’ state or fewer area codes will be granted conclude that, beginning on January 1, laws regulating the business of access to those area codes at no cost. We 2004, such common carriers shall insurance. Nor is the mere presence of note that thirty-three states currently provide an annual notice, via an insert a regulatory scheme enough to show have five or fewer area codes. Thus, in the customer’s bill, to inform their that a state statute is ‘‘invalidated, telemarketers or sellers operating on a subscribers of the opportunity to register impaired or superseded.’’ ‘‘local’’ or ‘‘regional’’ basis within one of or revoke registrations on the national 31. We believe that the TCPA, which these thirty-three states will have access do-not-call database. Although we do was enacted to protect consumer to all of that state’s national do-not-call not specify the exact description or form privacy interests, is compatible with registrants at no cost. In addition, the that such notification should take, such states’ regulatory interests. In fact, the national database will provide a single notification must be clear and TCPA permits States to enforce the number lookup feature whereby a small conspicuous. At a minimum, it must provisions of the TCPA on behalf of number of telephone numbers can be include the toll-free telephone number residents of their State. 47 U.S.C. entered on a web page to determine and Internet address established by the 227(f)(1). In addition, we believe that whether any of those numbers are FTC to register or revoke registrations uniform application of the national do- included on the national registry. We on the national do-not-call database. not-call registry to all entities that use believe this fee structure adequately 35. Section 227(c)(3)(D) requires the the telephone to advertise best serves reflects the needs of regional Commission to specify the methods by the goals of the TCPA. To exempt the telemarketers, small business and those which registrations shall be collected insurance industry from liability under marketing on a de minimis level. For and added to the database. Consumers the TCPA would likely confuse these reasons, we conclude that this will be able to add their telephone consumers and interfere with the approach will not place any numbers to the national do-not-call protections provided by Congress unreasonable costs on small businesses. registry either through a toll-free through the TCPA. Therefore, to the 47 U.S.C. 227(c)(4)(B)(iii). telephone call or over the Internet. extent that the operation of McCarran- Consumers who choose to register by Ferguson on the TCPA is unclear, we Section 227(c)(3) Requirements phone will have to call the registration will raise this issue in our Report to 33. We conclude that the national do- number from the telephone line that Congress as required by the Do-Not-Call not-call database adopted jointly by this they wish to register. Their calls will be Act. Commission and the FTC satisfies each answered by an Interactive Voice 32. We conclude that the national do- of the statutory requirements outlined in Response (IVR) system. The consumers not-call mechanism established by the 47 U.S.C. 227(c)(3)(A) through (c)(3)(L). will be asked to enter on their telephone FTC and this Commission adequately We now discuss each such requirement. keypad the telephone number from takes into consideration the needs of Section 227(c)(3)(A) requires the which the consumer is calling. This small businesses and entities that Commission to specify the method by number will be checked against the ANI telemarket on a local or regional basis in which an entity to administer the that is transmitted with the call. If the gaining access to the national database. national database will be selected. On number entered matches the ANI, then As required by 47 U.S.C. 227(c)(1)(C), August 2, 2002, the FTC issued a the consumer will be informed that the we have considered whether different Request for Quotes (RFQ) to selected number has been registered. Consumers procedures should apply for local vendors on GSA schedules seeking who choose to register over the Internet solicitations and small businesses. We proposals to develop, implement, and will go to a Web site dedicated to the decline, however, to exempt such operate the national registry. After registration process where they will be entities from the national do-not-call evaluating those proposals, the FTC asked to enter the telephone number requirements. Given the large number of selected a competitive range of vendors they wish to register. We encourage the entities that solicit by telephone, and and issued an amended RFQ to those FTC to notify consumers in the IVR the technological tools that allow even vendors on November 25, 2002. After message that the national registry will VerDate Jan<31>2003 15:31 Jul 24, 2003 Jkt 200001 PO 00000 Frm 00008 Fmt 4701 Sfmt 4700 E:FRFM25JYR2.SGM 25JYR2

Federal Register / Vol. 68, No. 143 / Friday, July 25, 2003 / Rules and Regulations 44151 prevent most, but not all, telemarketing maximum annual fee of $7,250 for and requires the Commission to specify calls. Specifically, we believe access to the entire national database. methods for protection of the privacy consumers should be informed that the Sellers may request access to five or less rights of persons whose numbers are do-not-call registry does not apply to area codes for free. Each entity on included in such database. Consistent tax-exempt nonprofit organizations and whose behalf the telephone solicitation with the determination of the FTC, we companies with whom consumers have is being made must pay this fee via conclude that any law enforcement an established business relationship. credit card or electronic funds transfer. agency that has responsibility to enforce The effectiveness and value of the After payment is processed, the federal or state do-not-call rules or national registry depends largely on an telemarketer will be given an account regulations will be permitted to access informed public. Therefore, we also number and permitted to access the the appropriate information in the intend to emphasize in our educational appropriate portions of the registry. national registry. This information will materials and on our Web site the Telemarketers will be permitted to be obtained through a secure Internet purpose and scope of the new rules. access the registry as often as they wish Web site. Such law enforcement access 36. Section 227(c)(3)(E) prohibits any for no additional cost, once the annual to data in the national registry is critical residential subscriber from being fee is paid. to enable state Attorneys General, public charged for giving or revoking 38. Section 227(c)(3)(I) requires the utility commissions or an official or notification to be included on the Commission to specify the frequency agency designated by a state, and other national do-not-call database. with which the national database will appropriate law enforcement officials to Consumers may register or revoke do- be updated and specify the method by gather evidence to support enforcement not-call requests either by a toll-free which such updates will take effect for of the do-not-call rules under the state telephone call or over the Internet. No purposes of compliance with the do-not- and federal law. In addition, we have charge will be imposed on the call regulations. Because the registration imposed restrictions on the use of the consumer. Section 227(c)(3)(F) prohibits process will be completely automated, national list. Consistent with the FTC’s any person from making or transmitting updates will occur continuously. determination, we have concluded that a telephone solicitation to the telephone Consumer registrations will be added to no person or entity may sell, rent, lease, number of any subscriber included on the registry at the same time they purchase, or use the national do-not-call the national database. Subject to the register—or at least within a few hours database for any purpose except exemptions, we adopt rules herein that after they register. The safe harbor compliance with section 227 and any will prohibit telephone solicitations to provision requires telemarketers to such state or federal law to prevent those consumers that have registered on employ a version of the registry telephone solicitations to telephone the national database. See also 16 CFR obtained not more than three months numbers on such list. We specifically 310.4(b)(1)(iii)(B). before any call is made. Thus, prohibit any entity from purchasing this 37. Section 227(c)(3)(G) requires the telemarketers will be required to update list from any entity other than the Commission to specify (i) the methods their lists at least quarterly. Instead of national do-not-call administrator or by which any person deciding to make making the list available on specific dispensing the list to any entity that has telephone solicitations will obtain dates, the registry will be available for not paid the required fee to the access to the database, by area code or downloading on a constant basis so that administrator. The only information that local exchange prefix, and (ii) the costs telemarketers can access the registry at will be made available to telemarketers to be recovered from such persons. any time. As a result, each is the telephone number of consumers Section 227(c)(3)(H) requires the telemarketer’s three-month period may registered on the list. Given the Commission to specify the methods for begin on different dates. Appropriate restrictions imposed on the use of the recovering, from the persons accessing state and federal regulators will be the database, the costs involved in the national database and the limited capable of verifying when the operations of the database. To comply amount of information provided, we telemarketer last accessed the list. In with the national do-not-call rules, believe that adequate privacy addition, the administrator will check telemarketers must gain access to the protections have been established for all telephone numbers in the do-not-call telephone numbers in the national consumers. registry each month against national database. Telemarketers will have databases, and those numbers that have 40. Section 227(c)(3)(L) requires each access to the national database by means been disconnected or reassigned will be common carrier providing services to of a fully-automated, secure Web site removed from the registry. We any person for the purpose of making dedicated to providing information to encourage parties that may have specific telephone solicitations to notify such these entities. The first time a recommendations on ways to improve person of the requirements of the telemarketer accesses the system, the the overall accuracy of the database in national do-not-call rules and the company will be asked to provide removing disconnected and reassigned regulations thereunder. We therefore certain limited identifying information, telephone numbers to submit such require common carriers, beginning such as name and address, contact proposals to our attention and to the January 1, 2004, to make a one-time person, and contact person’s telephone FTC directly. notification to any person or entity number and address. If a telemarketer is 39. Section 227(c)(3)(J) requires that making telephone solicitations that is accessing the registry on behalf of a the Commission’s regulations be served by that carrier of the national do- client seller, the telemarketer will also designed to enable states to use the not-call requirements. We do not specify need to identify that client. When a database for purposes of administering the exact description or form that such telemarketer first submits an application or enforcing state law. In fact, 47 U.S.C. notification should take. At a minimum, to access registry information, the 227(e)(2) prohibits states from using any it must include a citation to the relevant company will be asked to specify the database that does not include the part federal do-not-call rules as set forth in area codes they want to access. An of the national database that relates to 47 CFR 64.1200 and 16 CFR part 310, annual fee will be assessed based upon such state. Section 227(c)(3)(K) respectively. Although we recognize the number of area codes requested. The prohibits the use of the database for any that carriers may not be capable of FTC has proposed that sellers be purpose other than compliance with the identifying every person or entity charged $29 per area code with a do-not-call rules and any such state law engaged in telephone solicitations VerDate Jan<31>2003 15:31 Jul 24, 2003 Jkt 200001 PO 00000 Frm 00009 Fmt 4701 Sfmt 4700 E:FRFM25JYR2.SGM 25JYR2

44152 Federal Register / Vol. 68, No. 143 / Friday, July 25, 2003 / Rules and Regulations served by that carrier, we require speech into their homes and that the regulations that address this problem carriers to make reasonable efforts to government may protect this freedom.’’ serve a substantial government interest. comply with this requirement. We note Frisby v. Schultz, 487 U.S. 474, 485. See 45. Under Central Hudson’s second that failure to give such notice by the also Federal Communications prong, we find that the Commission’s common carrier to a telemarketer served Commission v. Pacifica Foundation, 438 regulations directly advance the by that carrier will not excuse the U.S. 726, 748 (1978) (‘‘[I]n the privacy substantial government interest. Under telemarketer from violations of the of the home, * * * the individual’s this prong, the government must Commission’s rules. right to be left alone plainly outweighs demonstrate that ‘‘the harms it recites the First Amendment rights of an are real and that its restriction will in Constitutionality fact alleviate them to a material degree.’’ intruder.’’). 41. We conclude that a national do- 43. In particular, the government has Florida Bar v. Went For It, Inc., 515 U.S. not-call registry is consistent with the an interest in upholding the right of 618, 626 (1995) (citations omitted). It First Amendment. We believe, like the may justify the restrictions on speech residents to bar unwanted speech from FTC, that our regulations satisfy the ‘‘based solely on history, consensus, and their homes. In Rowan v. United States criteria set forth in Central Hudson Gas ‘‘simple common sense. ’’ Id. at 628 Post Office, the Supreme Court upheld & Elec. v. Pub. Serv. Comm. of N.Y., in (citation omitted). Creating and a statute that permitted a person to which the Supreme Court established implementing a national do-not-call require that a mailer remove his name the applicable analytical framework for registry will directly advance the from its mailing lists and stop all future determining the constitutionality of a government’s interest in protecting mailings to the resident: regulation of commercial speech. residential privacy from unwanted Central Hudson Gas & Elec. v. Pub. The Court has traditionally respected the telephone solicitations. Congress, Serv. Comm. of N.Y., 447 U.S. 557 right of a householder to bar, by order or consumers, state governments and the (1980). See Kathryn Moser v. Federal notice, solicitors, hawkers, and peddlers from FTC have reached the same conclusion. his property. In this case the mailer’s right to Communications Commission, 46 F.3d The history of state administered do- communicate is circumscribed only by an 970 (9th Cir. 1995) (Moser) cert. denied, affirmative act of the addressee giving notice not-call lists demonstrates that such do- 515 U.S. 1161 (1995) (upholding ban on that he wishes no further mailings from that not-call programs have a positive impact prerecorded telephone calls); State of mailer. * * * In effect, Congress has erected on the ability of many consumers to Missouri v. American Blast Fax, 323 a wall—or more accurately permits a citizen protect their privacy by reducing the F.3d 649 (8th Cir. 2003) (American Blast to erect a wall—that no advertiser may number of unwanted telephone Fax), pet. for rehearing pending penetrate without his acquiescence. solicitations that they receive each day. (upholding ban on unsolicited fax Congress has reviewed the FTC’s Rowan v. United States Post Office, 397 advertising) and Destination Ventures v. decision to establish a national do-not- U.S. 728 at 737–738 (1970). Federal Communications Commission, call list and concluded that the do-not- 46 F.3d 54 (9th Cir.1995) (Destination 44. Here, the record supports that the call initiative will provide significant Ventures) (upholding ban on unsolicited government has a substantial interest in benefits to consumers throughout the fax advertising). Our conclusion is also regulating telemarketing calls. In 1991, United States. We reject the arguments consistent with every Court of Appeals Congress held numerous hearings on that because our do-not-call registry decision that has considered First telemarketing, finding, among other provisions do not apply to tax-exempt Amendment challenges to the TCPA. things, that ‘‘[m]ore than 300,000 nonprofit organizations, our regulations 42. Under the framework established solicitors call more than 18,000,000 do not directly and materially advance in Central Hudson, a regulation of Americans every day’’ and the government interest of protecting commercial speech will be found ‘‘[u]nrestricted telemarketing can be an residential privacy. ‘‘Government [need compatible with the First Amendment if intrusive invasion of privacy and, when not] make progress on every front before (1) there is a substantial government an emergency or medical assistance it can make progress on any front.’’ interest; (2) the regulation directly telephone line is seized, a risk to public United States v. Edge Broadcasting advances the substantial government safety.’’ Our record, like the FTC’s, Company, 509 U.S. 418, 434 (1993). See interest; and (3) the proposed demonstrates that telemarketing calls also Moser v. FCC, 46 F.3d at 975 regulations are not more extensive than are even more of an invasion of privacy (‘‘Congress may reduce the volume of necessary to serve that interest. Central than they were in 1991. The number of telemarketing calls without completely Hudson, 447 U.S. at 566. Specifically, daily calls has increased five fold (to an eliminating the calls.’’). the Court found that ‘‘[f]or commercial estimated 104 million), due in part to 46. We believe that the facts here are speech to come within the First the use of new technologies, such as easily distinguishable from those in Amendment, it at least must concern predictive dialers. An overwhelming Rubin v. Coors Brewing Company, 514 lawful activity and not be misleading. number of consumers in the U.S. 476 (1995) and City of Cincinnati Next, it must be determined whether the approximately 6,500 commenters in this v. Discovery Network, 507 U.S. 410 asserted governmental interest to be proceeding support the adoption and (1993). In Coors, the Court struck down served by the restriction on commercial implementation of a national do-not-call a prohibition against disclosure of speech is substantial. If both inquiries registry. In addition to citing concerns alcoholic content on labels or in yield positive answers, it must then be about the numerous and ever-increasing advertising that applied to beer but not decided whether the regulation directly number of calls, they complain about to wine or distilled spirits, finding that advances the governmental interest the inadequacies of the company- ‘‘the irrationality of this unique and asserted, and whether it is not more specific approach, the burdens of such puzzling regulatory framework ensures extensive than is necessary to serve that calls on the elderly and people with that the labeling ban will fail to achieve interest.’’ Id. at 557. Under the first disabilities, and the costs of acquiring [the Government’s interest in combating prong, we find that there is a substantial technologies to reduce the number of strength wars.]’’ In Discovery Network, governmental interest in protecting unwanted calls. Accordingly, we believe the Court struck down an ordinance residential privacy. The Supreme Court that the record demonstrates that which banned 62 newsracks containing has ‘‘repeatedly held that individuals telemarketing calls are a substantial commercial publications but did not are not required to welcome unwanted invasion of residential privacy, and ban 1,500–2,000 newsracks containing VerDate Jan<31>2003 15:31 Jul 24, 2003 Jkt 200001 PO 00000 Frm 00010 Fmt 4701 Sfmt 4700 E:FRFM25JYR2.SGM 25JYR2

Federal Register / Vol. 68, No. 143 / Friday, July 25, 2003 / Rules and Regulations 44153 newspapers, finding that ‘‘the In Florida Bar, the Supreme Court national do-not-call registry. The record distinction bears no relationship found that a prohibition against lawyers clearly demonstrates widespread whatsoever to the particular [aesthetic] using direct mail to solicit personal consumer dissatisfaction both with the interests that the city has asserted.’’ injury or wrongful death clients within effectiveness of the current company- Here, Congress’ decision to exclude tax- 30 days of an accident was not more specific rules that are currently in place exempt nonprofit organizations from the extensive than necessary to ‘‘protect and the effectiveness and expense of definition of telemarketing in the TCPA * * * the privacy and tranquility of certain technological alternatives to was both rational and related to its personal injury victims and their loved reduce telephone solicitations. We also interest in protecting residential ones against intrusive, unsolicited note that many of the ‘‘burdens’’ of the privacy. The House Report finds that contact by lawyers.’’ Id. at 624. national do-not-call registry—issues ‘‘the record suggests that most Similarly, the Ninth Circuit has found concerning its costs, accuracy, and unwanted telephone solicitations are that the TCPA’s ban on prerecorded privacy—have been addressed by commercial in nature. * * *[T]he telemarketing calls constitutes a advances in computer technology and Committee also reached the conclusion, ‘‘reasonable fit’’ with the government’s software over the last ten years. Thus, based on the evidence, that ‘‘ calls [from legitimate interest in protecting we find that our regulations tax-exempt nonprofit organizations] are residential privacy. Moser, 46 F.3d at implementing the national do-not-call less intrusive to consumers because they 975. registry are consistent with the First are more expected. Consequently, the 49. Here, we find that our regulations Amendment and the framework two main sources of consumer problems meet the requirements of Central established in Central Hudson. ‘‘ high volume of solicitations and 50. Furthermore, we reject the Hudson’s third prong. Pursuant to our unexpected solicitations—are not arguments that the Central Hudson regulations, we adopt a single, national present in solicitations by nonprofit framework is not appropriate and that do-not-call database that we will enforce organizations.’’ H.R. Rep. No. 102–317, strict scrutiny is required because the jointly with the FTC. Our rules mandate at 16 (1991). regulations implementing the national that common carriers providing 47. Commenters in our record also do-not-call list are content-based, due to telephone exchange service shall inform express the concern that subjecting tax- the TCPA’s exemptions for non-profit their subscribers of their right to register exempt nonprofit organizations to the organizations and established business on the database either through a toll-free national do-not-call requirements may relationships. For support, commenters telephone call or over the Internet. cite to Discovery Network, 507 U.S. 410, sweep too broadly because it would Furthermore, telemarketers and sellers in which the Court struck down prompt some consumers to accept must gain access to telephone numbers Cincinnati’s ordinance which banned blocking of non-commercial, charitable in the national database and will be able newsracks containing commercial calls to which they might not otherwise to do so by means of a fully automated, publications but did not ban newsracks object as an undesired effect of secure Web site dedicated to providing containing newspapers. The Court registering on the national database to information to these entities. In found that the regulation could neither stop unwanted commercial solicitation addition, sellers will be assessed an be justified as a restriction on calls. Both the Eighth and the Ninth annual fee based upon the number of commercial speech under Central Circuits in American Blast Fax and area codes they want to assess, with the Hudson, nor could it be upheld as a Destination Ventures found that the maximum annual fee capped at $7,250. valid time, place, or manner restriction provisions of the TCPA, which bans Our rules also provide that the national on protected speech. City of Cincinnati unsolicited commercial faxes but not database will be updated continuously, v. Discovery Network Inc. et al., 507 U.S. non-commercial faxes, directly advance and telemarketers must update their 410 at 430 (1993). The Court explained a substantial government interest, and lists quarterly. We find that our that ‘‘the government may impose we believe that the same distinction regulations are a reasonable fit between reasonable restrictions on the time, may be applied to the national do-not- the ends and means and are not as place or manner of engaging in call registry. restrictive as the bans upheld in the protected speech provided that they are 48. We find under the third prong of cases cited. In Florida Bar, the Supreme adequately justified ‘‘without reference the Central Hudson test that our Court upheld an absolute ban against to the content of the regulated speech’.’’ proposed regulations are not more lawyers using direct mail to solicit Id. at 428 (citation omitted). In this case, extensive than necessary to protect personal injury or wrongful death the Court held that the City’s ban which residential privacy. The Supreme Court clients within 30 days of an accident. covered commercial publications but has made clear that with respect to this Similarly, the Ninth Circuit has upheld not newspapers was content-based. Id. prong, ‘‘the differences between the TCPA’s absolute ban on prerecorded at 429. ‘‘It is the absence of a neutral commercial speech and noncommercial telemarketing calls, and both the Eighth justification for its selective ban on speech are manifest.’’ Florida Bar, 515 and Ninth Circuit have upheld the newsracks that prevents the city from U.S. 618, 632. The Court held that: TCPA’s absolute ban on unsolicited defending its newsrack policy as [T]he least restrictive means test has no faxes. Here, our regulations do not content neutral.’’ Id. at 429–30. role in the commercial speech context. What absolutely ban telemarketing calls. 51. Here, however, there was a neutral our decisions require, instead, is a fit Rather, they provide a mechanism by justification for Congress’ decision to between the legislature’s ends and the means which individual consumers may exclude non-profit organizations. chosen to accomplish those ends, a fit that choose not to receive telemarketing Congress found that ‘‘the two sources of is not necessarily perfect, but reasonable; that calls. We also note that there are many consumer problems—high volume of represents not necessarily the single best other ways available to market products solicitations and unexpected disposition but one whose scope is in to consumers, such as newspapers, solicitations—are not present in proportion to the interest served * * * [T]he existence of numerous and obvious less- television, radio advertising and direct solicitations by nonprofit burdensome alternatives to the restriction on mail. See Florida Bar, 515 U.S. at 633– organizations.’’ H.R. Rep. No. 102–317, commercial speech is certainly a relevant 34. In addition, there simply are not at 16 (1991). Congress also made a consideration in determining whether the fit ‘‘numerous and obvious less- similar finding with respect to between the ends and means is reasonable. burdensome alternatives’’ to the solicitations based on established VerDate Jan<31>2003 15:31 Jul 24, 2003 Jkt 200001 PO 00000 Frm 00011 Fmt 4701 Sfmt 4700 E:FRFM25JYR2.SGM 25JYR2

44154 Federal Register / Vol. 68, No. 143 / Friday, July 25, 2003 / Rules and Regulations business relationships. Id. at 14. call rules. In fact, the TCPA specifically regulators will benefit from the Consumers are more likely to anticipate outlines a role for the states in this efficiencies derived from the creation of contacts from companies with whom process. See 47 U.S.C. 227(e) and (f). In a single do-not-call database. We they have an existing relationship and an effort to reconcile the state and encourage states to work diligently the volume of such calls will most likely federal roles, we have conducted several toward this goal. We recognize that a be lower. Furthermore, as the Eighth meetings with the states and FTC. We reasonable transition period may be Circuit noted when it distinguished the expect such coordination to be ongoing required to incorporate the state Discovery Network case in upholding in an effort to promote the continued registrations in a few states into the the TCPA’s ban on unsolicited faxes that effectiveness of the national do-not-call national database. We therefore adopt applies to commercial speech but not to program. We clarify the respective an 18-month transition period for states noncommercial speech, ‘‘the governmental roles in this process to download their state lists into the government may regulate one aspect of under the TCPA. We intend to develop national database. Having an 18-month a problem without regulating all a Memorandum of Understanding with transition period will allow states that others.’’ Missouri ex rel. v. American the FTC in the near future outlining the do not have full-time legislatures to Blast Fax, 323 F.3d at 656 n.4 (citing respective federal responsibilities under complete a legislative cycle and create United States v. Edge Broad. Co., 509 the national do-not-call rules. We note laws that would authorize the use of a U.S. 418 at 434). Thus, we believe it is that a few commenters have expressed national list. In addition, this transition clear that our do-not-call registry concern that the FTC and this period is consistent with the amount of regulations may apply to commercial Commission may adopt separate time that the FTC anticipates it would solicitations without applying to tax- national do-not-call lists. We reiterate take to incorporate the states’ lists into exempt nonprofit solicitations, and that here that there will be only one national the national database. Although we do such regulations are not subject to a database. not preempt or require states to higher level of scrutiny. Indeed, we 54. Use of a Single Database. We discontinue the use of their own agree with the FTC that regulation of conclude that the use of a single databases at this time, once the national non-profit solicitations are subject to a national do-not-call database, do-not-call registry goes into effect, higher level of scrutiny than administered by the vendor selected by states may not, in their ‘‘regulation of solicitations of commercial speech FTC the FTC, will ultimately prove the most telephone solicitations, require the use Order, 68 FR at 4636, n. 675, quoting efficient and economical means for of any database, list, or listing system from Metromedia v. San Diego, 453 U.S. consumer registrations and access by that does not include the part of [the 490, 513 (1981) and citing Watchtower telemarketers and regulators. The national do-not-call registry] that relates Bible and Tract Soc’y v. Village of establishment of a single database of to [each] State.’’ See 47 U.S.C. 227(e)(2). Stratton, 122 S.Ct. 2080, and ‘‘greater registrants will allow consumers to We believe that there are significant care must be given [both] to ensuring register their requests not to be called in advantages and efficiencies to be that the governmental interest is a single transaction with one derived from the creation and use of a actually advanced by the regulatory governmental agency. In addition, single database for all parties, including remedy, and [to] tailoring the regulation telemarketers may access consumer states, and we strongly encourage states narrowly so as to minimize its impact registrations for purposes of compliance to assist in this effort. The Commission on First Amendment rights.’’ FTC with the do-not-call rules through one intends to work diligently with the Order, 68 FR at 4636. visit to a national database. This will states and FTC in an effort to establish substantially alleviate the potential for Consistency With State and FTC Do- a single do-not-call database. consumer confusion and administrative Not-Call Rules burden on telemarketers that would 56. Interplay of State and Federal Do- 52. We conclude that harmonization exist if required to access multiple Not-Call Regulations. In the Rules and of the various state and federal do-not- databases. In addition, we note that Regulations Implementing the call programs to the greatest extent section 227(e)(2) prohibits states, in Telephone Consumer Protection Act of possible will reduce the potential for regulating telephone solicitations, from 1991, Notice of Proposed Rulemaking consumer confusion and regulatory using any database, list, or list system and Memorandum Opinion and Order, burdens on the telemarketing industry. that does not include the part of such 17 FCC Rcd 17459, CG Docket No. 02– An underlying concern expressed by single national database that relates to 278 and CC Docket No. 92–90 (2002) many commenters in this proceeding is that state. Thus, pursuant to this (2002 Notice), we generally raised the the potential for duplication of effort requirement, any individual state do- issue of the interplay of state and federal and/or inconsistency in the rules not-call database must include all of the do-not-call statutes and regulations. In relating to the state and federal do-not- registrants on the national database for response, several parties argued that call programs. Congress has indicated a that state. We determine that the state regulations must or should be similar concern in requiring the administrator of the national database preempted in whole, or at least in part, Commission to ‘‘maximize consistency’’ shall make the numbers in the database and several other parties argued that the with the FTC’s rules. We find that the available to the states as required by the Commission cannot or should not use of a single national database of do- TCPA. preempt. For example, several industry not-call registrants will ultimately prove 55. We believe the most efficient way commenters contend that the TCPA the most efficient and economical to create a single national database will provides the Commission with the means for consumer registrations and be to download the existing state authority to preempt state do-not-call access for compliance purposes by registrations into the national database. regulations. These commenters contend telemarketing entities and regulators. The FTC has indicated that the national that Congress intended the TCPA to 53. The states have a long history of database is designed to allow the states occupy the field or, at the very least, regulating telemarketing practices, and to download into the national registry— intended to preempt state regulation of we believe that it is critical to combine at no cost—the telephone numbers of interstate telemarketing. Many state and the resources and expertise of the state consumers that have registered with consumer commenters note, however, and federal governments to ensure their state do-not-call lists. We believe that the TCPA contemplates a role for compliance with the national do-not- that consumers, telemarketers, and the states in regulating telemarketing VerDate Jan<31>2003 15:31 Jul 24, 2003 Jkt 200001 PO 00000 Frm 00012 Fmt 4701 Sfmt 4700 E:FRFM25JYR2.SGM 25JYR2

Federal Register / Vol. 68, No. 143 / Friday, July 25, 2003 / Rules and Regulations 44155 and specifically prohibits preemption of under the TCPA. Thus, telemarketers 62. We therefore believe that any state state law in certain instances. States and must comply with the federal do-not- regulation of interstate telemarketing consumers note that state do-not-call call rules even if the state in which they calls that differs from our rules almost regulations have been a successful are telemarketing has adopted an certainly would conflict with and initiative in protecting consumer otherwise applicable exemption. frustrate the federal scheme and almost privacy rights. In addition, several Because the TCPA applies to both certainly would be preempted. We will commenters note the importance of intrastate and interstate consider any alleged conflicts between federal and state cooperation in communications, the minimum state and federal requirements and the enforcing the national do-not-call requirements for compliance are need for preemption on a case-by-case regulations. The record also indicates therefore uniform throughout the basis. Accordingly, any party that that states have historically enforced nation. We believe this resolves any believes a state law is inconsistent with their own state statutes within, as well potential confusion for industry and section 227 or our rules may seek a as across state lines. The statute also consumers regarding the application of declaratory ruling from the Commission. contains a savings clause for state less restrictive state do-not-call rules. We reiterate the interest in uniformity— proceedings to enforce civil or criminal 60. Second, pursuant to 47 U.S.C. as recognized by Congress—and statutes, and at least one federal court 227(e)(1), we recognize that states may encourage states to avoid subjecting has found that the TCPA does not adopt more restrictive do-not-call laws telemarketers to inconsistent rules. preempt state regulation of autodialers governing intrastate telemarketing. With 63. National Association of Attorneys that are not in actual conflict with the limited exceptions, the TCPA General (NAAG) contends that states TCPA. Van Bergen v. Minnesota, 59 specifically prohibits the preemption of have historically enforced telemarketing F.3d 1541, 1547–48 (8th Cir. 1995). any state law that imposes more 57. The main area of difference laws, including do-not-call rules, restrictive intrastate requirements or within, as well as across, state lines between the state and federal do-not-call regulations. Section 227(e)(1) further programs relates to the exemptions pursuant to ‘‘long-arm’’ statutes. limits the Commission’s ability to According to NAAG, these state actions created from the respective do-not-call preempt any state law that prohibits regulations. Some state regulations are have been met with no successful certain telemarketing activities, challenges from telemarketers. We note less restrictive by adopting exemptions including the making of telephone that are not recognized under federal that such ‘‘long-arm’’ statutes may be solicitations. This provision is protected under section 227(f)(6) which law. For example, some states have ambiguous, however, as to whether this adopted exemptions for insurance provides that ‘‘nothing contained in this prohibition applies both to intrastate subsection shall be construed to agents, newspapers, or small businesses. and interstate calls, and is silent on the prohibit an authorized State official In addition, a few states have enacted issue of whether state law that imposes from proceeding in State court on the laws that are more restrictive than the more restrictive regulations on interstate basis of an alleged violation of any federal regulations by not recognizing telemarketing calls may be preempted. general civil or criminal statute of such federal exemptions such as the We caution that more restrictive state state.’’ 47 U.S.C. 227(f)(6). Nothing that established business relationship. Most efforts to regulate interstate calling we do in this order prohibits states from states, however, exempt nonprofit would almost certainly conflict with our enforcing state regulations that are organizations and companies with rules. consistent with the TCPA and the rules whom the consumer has an established business relationship in some manner 61. We recognize that states established under this order in state consistent with federal regulations. traditionally have had jurisdiction over court. 58. At the outset, we note that many only intrastate calls, while the Commission has had jurisdiction over Company Specific Do-Not-Call Lists states have not adopted any do-not-call rules. The national do-not-call rules will interstate calls. Here, Congress enacted Efficacy of the Company-Specific Rules govern exclusively in these states for section 227 and amended section 2(b) to both intrastate and interstate telephone give the Commission jurisdiction over 64. We conclude that retention of the solicitations. Pursuant to 47 U.S.C. both interstate and intrastate company-specific do-not-call rules will 227(f)(1), all states have the ability to telemarketing calls. Congress did so complement the national do-not-call enforce violations of the TCPA, based upon the concern that states lack registry by providing consumers with an including do-not-call violations, in jurisdiction over interstate calls. additional option for managing federal district court. Thus, we conclude Although section 227(e) gives states telemarketing calls. We believe that that there is no basis for conflict authority to impose more restrictive providing consumers with the ability to regarding the application of do-not-call intrastate regulations, we believe that it tailor their requests not to be called, rules in those states that have not was the clear intent of Congress either on a case-by-case basis under the adopted do-not-call regulations. generally to promote a uniform company do-not-call approach or more 59. For those states that have adopted regulatory scheme under which broadly under the national registry, will do-not-call regulations, we make the telemarketers would not be subject to best balance individual privacy rights following determinations. First, we multiple, conflicting regulations. We and legitimate telemarketing practices. conclude that, by operation of general conclude that inconsistent interstate As a result, those consumers that wish conflict preemption law, the federal rules frustrate the federal objective of to prohibit telephone solicitations from rules constitute a floor, and therefore creating uniform national rules, to avoid only certain marketers will continue to would supersede all less restrictive state burdensome compliance costs for have the option to do so. In addition, do-not-call rules. We believe that any telemarketers and potential consumer consumers registered on the national such rules would frustrate Congress’ confusion. The record in this do-not-call registry will have the purposes and objectives in promulgating proceeding supports the finding that opportunity to request that they not be the TCPA. Specifically, application of application of inconsistent rules for called by entities that would otherwise less restrictive state exemptions directly those that telemarket on a nationwide or fall within the established business conflicts with the federal objectives in multi-state basis creates a substantial relationship exemption by using the protecting consumer privacy rights compliance burden for those entities. option to be placed on the company- VerDate Jan<31>2003 15:31 Jul 24, 2003 Jkt 200001 PO 00000 Frm 00013 Fmt 4701 Sfmt 4700 E:FRFM25JYR2.SGM 25JYR2

44156 Federal Register / Vol. 68, No. 143 / Friday, July 25, 2003 / Rules and Regulations specific lists. This finding is consistent reasonable period to retain consumer requests, this process is now largely with that of the FTC. do-not-call requests. We believe a five- automated. As a result, such requests 65. We agree with those commenters year retention period reasonably can often be honored within a few days that contend that the company-specific balances any administrative burden or weeks. Taking into consideration do-not-call approach has not proven imposed on consumers in requesting not both the large databases of such requests ideal as a stand-alone method to protect to be called with the interests of maintained by some entities and the consumer privacy. In particular, the telemarketers in contacting consumers. limitations on certain small businesses, increase in telemarketing calls over the As noted, a shorter retention period we conclude that a reasonable time to last decade now places an extraordinary increases the accuracy of the database honor such requests must not exceed burden on consumers that do not wish while the national do-not-call option thirty days from the date such a request to receive telephone solicitations. These mitigates the burden on those is made. Consistent with our existing consumers must respond on a case-by- consumers who may believe more rules, such request applies to all case basis to request that they not be frequent company-specific do-not-call telemarketing campaigns of the seller called. The record in this proceeding is requests are overly burdensome. We and any affiliated entities that the replete with examples of consumers that believe any shorter retention period, as consumer reasonably would expect to receive numerous unwanted suggested by a few industry be included given the identification of telemarketing calls each day. In commenters, would unduly increase the the caller and the product being addition, the widespread use of burdens on consumers who would be advertised. 47 CFR 64.1200(e)(2)(v). We predictive dialers now results in many forced to make more frequent renewals note that the Commission’s rules require ‘‘dead air’’ or hang-up calls in which of their company-specific do-not-call that entities must record company- consumers do not even have the requests without substantially specific do-not-call requests and place opportunity to make a do-not-call improving the accuracy of the database. the subscriber’s telephone number on request. Such calls are particularly We therefore amend our rules to require the do-not-call list at the time the burdensome for the elderly and disabled that a do-not-call request be honored for request is made. 47 CFR consumers. We believe, however, that five years from the time the request is 64.1200(e)(2)(iii). Therefore, the measures adopted in this order will made. telemarketers with the capability to enhance the effectiveness of the 67. We decline at this time to require honor such company-specific do-not- company-specific list. For example, the telemarketers to make available a toll- call requests in less than thirty days adoption of a national do-not-call free number or Web site that would must do so. We believe this registry alleviates the concerns of those allow consumers to register company- determination adequately balances the consumers, including elderly and specific do-not-call requests or verify privacy interests of those consumers disabled consumers that may find a that such a request was made with the that have requested not to be called with case-by-case do-not-call option marketer. We also decline to require the interests of the telemarketing particularly burdensome. In addition, telemarketers to provide a means of industry. Consumers expect their restrictions on abandoned calls will confirmation so that consumers may requests not to be called to be honored reduce the number of ‘‘dead air’’ calls. verify their requests have been in a timely manner, and thirty days Caller ID requirements will improve the processed at a later date. Telemarketers should be the maximum administrative ability of consumers to identify and should, however, confirm that any such time necessary for telemarketers to enforce do-not-call rights against request will be recorded at the time the process that request. telemarketers. We also note that request is made by the consumer. In although many commenters question addition, consumers calling to register 69. In addition, we decline to extend the effectiveness of the company- do-not-call requests in response to the company-specific do-not-call rules specific approach, there is little support prerecorded messages should be to entities that solicit contributions on in the record to eliminate those rules processed in a timely manner without behalf of tax-exempt nonprofit based on the adoption of the national being placed on hold for unreasonable organizations. The TCPA excludes calls do-not-call list. We retain the option for periods of time. Although we believe or messages by tax-exempt nonprofit consumers to request on a case-by-case the additional measures discussed organizations from the definition of basis whether they desire to receive above would improve the ability of telephone solicitation. See 47 U.S.C. telephone solicitations. consumers, including consumers with 227(a)(3)(C). The Commission has disabilities, to register do-not-call clarified that telemarketers who solicit Amendments to the Company-Specific on behalf of tax-exempt nonprofit requests, we agree with those Rules organizations are not subject to the rules commenters that contend that such 66. We agree with several industry requirements would be unduly costly to governing telephone solicitations. In the commenters that the retention period for businesses. In particular, we are 2002 Notice, the Commission declined records of those consumers requesting concerned with the costs imposed on to seek further comment on this issue. not to be called should be reduced from small businesses. The Commission will, We acknowledge that this determination the current ten-year requirement to five however, continue to monitor creates an inconsistency with the FTC’s years. As many commenters note, compliance with our company-specific conclusion to extend its company- telephone numbers change hands over do-not-call rules and take further action specific requirements to entities that time and a shorter retention period will as necessary. solicit contributions on behalf of tax- help ensure that only those consumers 68. We conclude that telemarketers exempt nonprofit organizations. The who have requested not to be called are must honor a company-specific do-not- Commission, however, derives its retained on the list. Both telemarketers call request within a reasonable time of authority to regulate telemarketing from and consumers will benefit from a list such request. We disagree, however, the TCPA, which excludes tax-exempt that more accurately reflects those with commenters that suggest that nonprofit organizations from the consumers who have requested not to be periods of up to 90 days are a reasonable definition of telephone solicitation. We called. The FTC has concluded and time required to process do-not-call therefore decline to extend the several commenters in this proceeding requests. Although some administrative company-specific requirements to agree that five years is a more time may be necessary to process such entities that solicit on behalf of tax- VerDate Jan<31>2003 15:31 Jul 24, 2003 Jkt 200001 PO 00000 Frm 00014 Fmt 4701 Sfmt 4700 E:FRFM25JYR2.SGM 25JYR2

Federal Register / Vol. 68, No. 143 / Friday, July 25, 2003 / Rules and Regulations 44157 exempt nonprofit organizations. We customers via telemarketing. Carriers allow them to contact customers on a note that some tax-exempt nonprofit will be able to contact customers with do-not-call list with the CPNI notice in organizations have determined to honor whom they have an established business the manner that AT&T Wireless voluntarily specific do-not-call requests. relationship via the telephone, unless describes. However, we do allow Other organizations may find it the customer has placed her name on carriers to combine in the same advantageous to follow this example. the company’s do-not-call list; whether document CPNI notice with a request 70. Finally, to make clear our the customer has consented to the use for express written consent to call determination that a company must of her CPNI does not impact the carrier’s customers on a do-not-call list, provided cease making telemarketing calls to a ability to contact the customer via that such notices and opportunities for customer with whom it has an telemarketing. consumer consent are separate and established business relationship when 73. We are not persuaded by the distinct. That is, consumers must have that customer makes a do-not-call arguments of those commenters who distinct choices regarding both whether request, we amend the company- urge the Commission to find that CPNI to allow use of their CPNI and whether specific do-not-call rules to apply to any consent should trump a customer’s to allow calls after registering a do-not- call for telemarketing purposes. We also request to be placed on a do-not-call list call request, but carriers may combine adopt a provision stating that a or similarly, that CPNI consent equates those requests for approval in the same consumer’s do-not-call request to permission to market ‘‘without notice document. Finally, we find a terminates the established business restriction.’’ We note that the Concerned distinction based on the type of CPNI relationship for purposes of Telephone Companies assert that CPNI consent unnecessary here, as carriers telemarketing calls even if the consumer consent equates to ‘‘consent to market can avail themselves of the established continues to do business with the seller. without restriction based on business relationship exception to [customers’] CPNI.’’ Concerned contact their existing customers, Interplay of Sections 222 and 227 Telephone Companies Comments at 2 irrespective of the type of CPNI consent 71. We first note that the fact that a (emphasis added). The Commission obtained. telecommunications carrier has current finds no support for this assertion in 77. Similarly, we agree with those CPNI about a particular consumer any Commission order or statutory commenters who advise against using a indicates that the consumer is a provision and, we specifically time element to determine whether a customer of that carrier. In that determine that CPNI approval does not customer’s do-not-call request takes situation, there exists an established equate to unlimited consent to market precedence over the customer’s opt-in business relationship between the without restriction. approval to use her CPNI, because customer and the carrier. See 47 CFR 74. Similarly, a number of adding a time element would 64.1200(f)(4). The established business commenters argue that a customer’s unnecessarily complicate carrier relationship is an exception to the CPNI authorization ‘‘covers a number of compliance and allow carriers to game national do-not-call registry. However, forms of marketing, including the system. In particular, the New York based on the evidence in the record and telemarketing.’’ AT&T Wireless Reply State Consumer Protection Board as supported by numerous commenters, Comments at 26–27. However, such (NYSCPB) argues that ‘‘enrollment on a we confirm our tentative conclusion assertions ignore the plain fact that national do-not-call list should take that if a customer places her name on CPNI approval deals specifically with a precedence over the prior implied a carrier’s do-not-call list, that request carrier’s use of a customer’s personal consent through the ‘opt-out’ procedure, must be honored even though the information, and only indirectly but that the latest in time should prevail customer may also have provided pertains to or arguably ‘‘authorizes’’ regarding ‘opt-in’ consents.’’ NYSCPB consent to use her CPNI under section marketing to the customer. Do-not-call Comments at 5. Because we determine 222. By doing so, we maximize the lists, on the other hand, speak directly that carriers can contact consumers with protections and choices available to to customers’ preferences regarding whom they have established business consumers, while giving maximum telemarketing contacts. Accordingly, we relationships, irrespective of those effect to the language of both statutes. At are convinced that a customer’s do-not- consumers’ CPNI preferences, we find the outset, the average consumer seems call request demonstrates more directly this proposed methodology unnecessary rather unlikely to appreciate the her willingness (or lack thereof) to in determining whether a customer’s interrelationship of the Commission’s receive telemarketing calls, as opposed CPNI consent should trump her do-not- CPNI and do-not-call rules. Allowing to any indirect inference that can be call request. Additionally, we note that CPNI consent to trump a do-not-call drawn from her CPNI approval. this proposal could be manipulated by request would, therefore, thwart most 75. Additionally, we disagree with carriers to overcome consumers’ do-not- consumers’ reasonable expectations those commenters who claim that call preferences, by allowing carriers to about how a company-specific do-not- allowing CPNI approval to trump a send CPNI notices to customers that are call list functions. Equally important, consumer’s request to be on a national intentionally timed to ‘‘overcome’’ permitting a consumer’s CPNI consent or state do-not-call list gives consumers previously expressed do-not-call to supercede a consumer’s express do- greater flexibility. A carrier’s established requests. not call request might undermine the business relationship with a customer 78. Finally, although it was not carrier’s do-not-call database as the first exempts the carrier from honoring the directly raised in the 2002 Notice, some source of information about the customer’s national do-not-call request. commenters raised the issue of whether consumer’s telemarketing preferences. However, as stated above, CPNI consent any type of do-not-call request revokes 72. Because we retain the exemption is not deemed to trump a carrier-specific or limits a carrier’s ability to use CPNI for calls and messages to customers with do-not-call list request. For similar in a manner other than telemarketing. whom the carrier has an established reasons, we decline to make a To the degree such affirmation is business relationship, the determination distinction based on what type of CPNI necessary, we agree with those that a customer’s CPNI approval does consent (opt-in versus opt-out) received, commenters who maintain that a not trump her inclusion on a do-not-call as some commenters urge. carrier’s ability to use CPNI is not list should have no impact on carriers’ 76. We do not allow carriers to impacted by a customer’s inclusion on ability to communicate with their combine the express written consent to a do-not-call list, except as noted. VerDate Jan<31>2003 15:31 Jul 24, 2003 Jkt 200001 PO 00000 Frm 00015 Fmt 4701 Sfmt 4700 E:FRFM25JYR2.SGM 25JYR2

44158 Federal Register / Vol. 68, No. 143 / Friday, July 25, 2003 / Rules and Regulations 79. Constitutional Implications. We exemption focuses on the relationship See amended 47 CFR 64.1200(f)(3). The disagree with those commenters who between the sender of the message and 18-month time period runs from the argue that our decision that a customer’s the consumer, rather than on the date of the last payment or transaction CPNI approval does not trump her content of the message. It appears that with the company, making it more request to be on a do-not-call list consumers have come to expect calls likely that a consumer would expect a violates the First Amendment rights of from companies with whom they have call from a company with which they carriers and customers. Commenters cite such a relationship, and that, under have recently conducted business. The no authority to support their arguments, certain circumstances, they may be amended definition permits the and we do not believe the fact that willing to accept these calls. Finally, we relationship, once begun, to exist for customers have given their approval for believe that while consumers may find eighteen (18) months in the case of carriers to use their CPNI implicates any prerecorded voice messages intrusive, purchases or transactions and three (3) additional First Amendment issues such messages do not necessarily months in the case of inquiries or beyond those discussed. Accordingly, impose the same costs on the recipients applications, unless the consumer or the we find our rules implementing the do- as, for example, unsolicited facsimile company ‘‘terminates’’ it. We emphasize not-call registry are consistent with the messages. Therefore, we retain the here that the termination of an First Amendment as applied to any exemption for established business established business relationship is consumer, including those who have relationship calls from the ban on significant only in the context of previously given their approval to prerecorded messages. Telemarketers solicitation calls. We also note that the carriers to use their CPNI, pursuant to that claim their prerecorded messages act of ‘‘terminating’’ an established section 222. Furthermore, we believe are delivered pursuant to an established business relationship will not hinder or that the exception which allows carriers business relationship must be prepared thwart creditors’ attempts to reach to call consumers with whom they to provide clear and convincing debtors by telephone, to the extent that necessarily have an established business evidence of the existence of such a debt collection calls constitute neither relationship renders commenters’ relationship. telephone solicitations nor include arguments moot, as carriers necessarily unsolicited advertisements. Therefore, have an established business Definition of Established Business consistent with the language in the relationship with any customer from Relationship definition, a company’s prior whom they solicit CPNI approval. relationship with a consumer entitles 81. We conclude that the Established Business Relationship Commission’s current definition of the company to call that consumer for ‘‘established business relationship’’ eighteen (18) months from the date of 80. We conclude that, based on the should be revised. We are convinced the last payment or financial record, an established business that consumers are confused and even transaction, even if the company does relationship exemption is necessary to frustrated more often when they receive not currently provide service to that allow companies to communicate with calls from companies they have not customer. For example, a consumer who their existing customers. The contacted or done business with for once had telephone service with a ‘‘established business relationship,’’ or many years. The legislative history particular carrier or a subscription with EBR, permits telemarketers to call suggests that it was Congress’s view that a particular newspaper could expect to consumers registered on the national the relationship giving a company the receive a call from those entities in an do-not-call list and to deliver prerecorded messages to consumers. right to call becomes more tenuous over effort to ‘‘win back’’ or ‘‘renew’’ that The ‘‘established business relationship,’’ time. In addition, we believe that this is consumer’s business within eighteen however, is not an exception to the an area where consistency between the (18) months. In the context of company-specific do-not-call rules. FCC rules and FTC rules is critical for telemarketing calls, a consumer’s ‘‘prior Companies that call their EBR both consumers and telemarketers. We or existing relationship’’ continues for customers must maintain company- conclude that, based on the range of eighteen (18) months (3 months in the specific do-not-call lists and record any suggested time periods that would meet case of inquiries and applications) or do-not-call requests as required by the needs of industry, along with until the customer asks to be placed on amended 47 CFR 64.1200(d). The consumers’ reasonable expectations of that company’s do-not-call list. Commission has also reversed its prior who may call them and when, eighteen 82. Inquiries. The Commission asked conclusion that an ‘‘established (18) months strikes an appropriate whether we should clarify the type of business relationship’’ provides the balance between industry practices and consumer inquiry that would create an necessary permission to deliver consumers’ privacy interests. Therefore, ‘‘established business relationship’’ for unsolicited facsimile advertisements. the Commission has modified the purposes of the exemption. Some Companies maintain that the exemption definition of established business consumers and consumer groups allows them to make new offers to relationship to mean: maintain that a consumer who merely existing customers, such as mortgage inquires about a product should not be A prior or existing relationship formed by refinancing, insurance updates, and a voluntary two-way communication subjected to subsequent telemarketing subscription renewals. They suggest that between a person or entity and a residential calls. Industry commenters, on the other customers benefit from calls that inform subscriber with or without an exchange of hand, believe that companies should be them in a timely manner of new consideration, on the basis of the subscriber’s permitted to call consumers who have products, services and pricing plans. purchase or transaction with the entity made inquiries about their products and American Express contends that its within the eighteen (18) months immediately services, and that consumers have come financial advisors have a fiduciary duty preceding the date of the telephone call or on to expect such calls. The legislative to their customers, requiring them to the basis of the subscriber’s inquiry or history suggests that Congress contact customers with time-sensitive application regarding products or services contemplated that an inquiry by a information. We are persuaded that offered by the entity within the three (3) consumer could be the basis of an eliminating this EBR exemption would months immediately preceding the date of established business relationship, but possibly interfere with these types of the call, which relationship has not been that such an inquiry should occur business relationships. Moreover, the previously terminated by either party. within a reasonable period of time. VerDate Jan<31>2003 15:31 Jul 24, 2003 Jkt 200001 PO 00000 Frm 00016 Fmt 4701 Sfmt 4700 E:FRFM25JYR2.SGM 25JYR2

Federal Register / Vol. 68, No. 143 / Friday, July 25, 2003 / Rules and Regulations 44159 While we do not believe any The Commission agrees with the would expect them to be included given communication would amount to an majority of industry commenters that the identification of the caller and the established business relationship for the EBR should not be limited by product advertised. See 47 CFR purposes of telemarketing calls, we do product or service. In today’s market, 64.1200(e)(2)(v). not think the definition should be many companies offer a wide variety of 86. Other Issues. The Commission narrowed to only include situations services and products. Restricting the clarifies that the established business where a purchase or transaction is EBR by product or service could relationship exemption does not permit completed. The nature of any inquiry interfere with companies’ abilities to companies to make calls based on must, however, be such to create an market them efficiently. Many referrals from existing customers and expectation on the part of the consumer telecommunications and cable clients, as the person referred that a particular company will call companies, for example, market presumably does not have the required them. As confirmed by several industry products and services in packages. As business relationship with the company commenters, an inquiry regarding a long as the company identifies itself that received the referral. An EBR is business’s hours or location would not adequately, a consumer should not be similarly not formed when a wireless establish the necessary relationship as surprised to receive a telemarketing call subscriber happens to use another defined in Commission rules. By from that company, regardless of the carrier’s services through roaming. In making an inquiry or submitting an product being offered. If the consumer such a situation, the consumer has not application regarding a company’s does not want any further calls from made the necessary purchase or inquiry products or services, a consumer might that company, he or she may request that would constitute an EBR or reasonably expect a prompt follow-up placement on its do-not-call list. provided prior express consent to telephone call regarding the initial receive telemarketing calls from that 85. Affiliated Entities. In the Rules inquiry or application, not one after an company. We recognize that companies and Regulations Implementing the extended period of time. Consistent often hire third party telemarketers to Telephone Consumer Protection Act of with the FTC’s conclusion, the market their services and products. In 1991, CC Docket No. 92–90, Report and Commission believes three months general, those telemarketers may rely on Order, 7 FCC Rcd 8752 (1992) (1992 should be a reasonable time in which to the seller’s EBR to call an individual TCPA Order), the Commission found respond to a consumer’s inquiry or consumer to market the seller’s services that a consumer’s established business application. Thus, we amend the and products. However, we disagree relationship with one company may with Nextel that a consumer’s EBR with definition of ‘‘established business also extend to the company’s affiliates a third party telemarketer, including a relationship’’ to permit telemarketing and subsidiaries. See 1992 TCPA Order, retail store or independent dealer, calls within three (3) months of an 7 FCC Rcd at 8770–71, para. 34. extends to a seller simply because the inquiry or application regarding a Consumer advocates maintain that the seller has a contractual relationship product or service offered by the EBR exemption should not with that telemarketer. The seller would company. 83. We emphasize here that the automatically extend to affiliates of the only be entitled to call a consumer definition of ‘‘established business company with whom a consumer has a under the EBR exemption based on its relationship’’ requires a voluntary two- business relationship. Industry members own EBR with a consumer. We also way communication between a person argue that it should apply to affiliates disagree with WorldCom, Inc. or entity and a residential subscriber that provide reasonably-related products (WorldCom) that the EBR should extend regarding a purchase or transaction or services. The Commission finds that, to marketing partners for purposes of made within eighteen (18) months of the consistent with the FTC’s amended telemarketing joint offers, to the extent date of the telemarketing call or Rule, affiliates fall within the the ‘‘partner’’ companies have no EBR regarding an inquiry or application established business relationship with the consumer. within three (3) months of the date of exemption only if the consumer would reasonably expect them to be included Telecommunications Common Carriers the call. Any seller or telemarketer using the EBR as the basis for a telemarketing given the nature and type of goods or 87. In the 2002 Notice, we asked what call must be able to demonstrate, with services offered and the identity of the effect the established business clear and convincing evidence, that they affiliate. This definition offers flexibility relationship exemption might have on have an EBR with the called party. to companies whose subsidiaries or the telecommunications industry, if a 84. Different Products and Services. affiliates also make telephone national do-not-call list is established. The Commission also invited comment solicitations, but it is based on According to WorldCom, telephone on whether to consider modifying the consumers’ reasonable expectations of solicitations are the primary mechanism definition of ‘‘established business which companies will call them. As the for, and the means by which consumers relationship’’ so that a company that has American Teleservices Association are accustomed to, purchasing a relationship with a customer based on (ATA) and other commenters explain, competitive telecommunications one type of product or service may not consumers often welcome calls from services. WorldCom argues that with the call consumers on the do-not-call list to businesses they know. A call from a advent of competition in the formerly advertise a different service or product. company with which a consumer has monopolized local telephone markets, Industry commenters believe an EBR not formed a business relationship and the entry of the Regional Bell with a consumer should not be directly, or does not recognize by name, Operating Companies into the long restricted by product or service, but would likely be a surprise and possibly distance market, carriers need to be able rather, should permit them to offer the an annoyance. This determination is to market effectively their new services. full range of their services and products. also consistent with current WorldCom argues that a national do- Consumer advocates who commented Commission rules on the applicability not-call list that exempts calls to on the issue maintain that a company of do-not-call requests made to affiliated persons with whom a company has that has a relationship based on one persons or entities. Under those rules, a established business relationships will service or product should not be residential subscriber’s do-not-call favor incumbent providers. According allowed to use that relationship to request will not apply to affiliated to WorldCom, incumbent local market a different service or product. entities unless the consumer reasonably exchange carriers maintain most of the VerDate Jan<31>2003 15:31 Jul 24, 2003 Jkt 200001 PO 00000 Frm 00017 Fmt 4701 Sfmt 4700 E:FRFM25JYR2.SGM 25JYR2

44160 Federal Register / Vol. 68, No. 143 / Friday, July 25, 2003 / Rules and Regulations local customer base, and therefore permit common carriers to call list, as long as a consumer has not asked would be able to telemarket new consumers with whom they have no to be placed on the company’s do-not- services to all those customers, existing relationships and who have call list. Once the consumer asks to be regardless of whether they were on the expressed a desire not to be called by placed on the company-specific do-not- national do-not-call registry, because of registering with the national do-not-call call list, the company may not call the the established business relationship list, would likely confuse consumers consumer again regardless of whether exemption. New competitors, on the and interfere with their ability to the consumer continues to do business other hand, would be restricted from manage and monitor the telemarketing with the company. This will apply to all calling those same consumers. calls they receive. services and products offered by that 88. One approach would be to narrow 91. We further note that with the company. If the consumer continues to the ‘‘established business relationship’’ establishment of a national do-not-call do business with the telemarketer after for telecommunications carriers, so that registry, carriers will still be permitted asking not to be called (by, for example, a carrier doing business with customers to contact competitors’ customers who continuing to hold a credit card, based on one type of service may not have not placed their numbers on the subscribing to a newspaper, or making call those customers registered with the national list. In addition, carriers will be a subsequent purchase), the consumer national do-not-call list to advertise a able to call their prior and existing cannot be deemed to have waived his or different service. We find, however, that customers for 18 months to market new her company-specific do-not-call the record does not support such an products and services, such as long request. In some instances, however, a approach in the context of telemarketing distance, local, or DSL services, as long consumer may grant explicit consent to calls. Along with the majority of as those customers have not placed be called during the course of a industry commenters in this proceeding, themselves on that carrier’s company- subsequent purchase or transaction. We WorldCom maintains that companies specific do-not-call list. For the amend the company-specific do-not-call ‘‘must have flexibility in remaining consumers with whom rules to apply to ‘‘any call for communicating with their customers common carriers have no established telemarketing purposes’’ to make clear not only about their current services, business relationship and who are that a company must cease making but also to discuss available alternative registered with the do-not-call list, telemarketing calls to any customer who services or products. * * * ’’ WorldCom carriers may market to them using has made a do-not-call request, Comments at 15. Limiting a common different advertising methods, such as regardless of whether they have an EBR carrier’s ‘‘established business direct mail. Therefore, we find that with that customer. We also adopt a relationship’’ by product or service treating common carriers like other provision stating that a consumer’s do- might harm competitors’’ efforts to entities that use the telephone to not-call request terminates the EBR for market new goods or services to existing advertise, best furthers the goals of the purposes of telemarketing calls even if customers, and would not be in the TCPA to protect consumer privacy the consumer continues to do business public interest. interests and to avoid interfering with with the seller. 89. WorldCom proposes instead that existing business relationships. the Commission revise the definition of Tax-Exempt Nonprofit Organization established business relationship so that Interplay Between Established Business Exemption all providers of a telecommunications Relationship and Do-Not-Call Request 93. We reaffirm the determination that service—incumbents and new entrants 92. In the 2002 Notice, we sought calls made by a for-profit telemarketer alike—are deemed to have an comment on the effect of a do-not-call hired to solicit the purchase of goods or established business relationship with request on an established business services or donations on behalf of a tax- all consumers. Alternatively, WorldCom relationship. We noted the legislative exempt nonprofit organization are suggests that the definition of an history on this issue, which suggests exempted from the rules on telephone established business relationship be that despite an established business solicitation. We again reiterate that calls revised to exclude a company whose relationship, a company that has been that do not fall within the definition of relationship with a consumer is based asked by a consumer not to call again, ‘‘telephone solicitation’’ as defined in solely on a service for which the must honor that request and avoid 47 U.S.C. 227(a)(3) will not be company has been a dominant or further calls to that consumer. precluded by the national do-not-call monopoly provider of the service, until Consumer advocates who discussed the list. These may include calls regarding such time as competitors for that service interplay between the established surveys, market research, and calls have sufficiently penetrated the market. business relationship and a do-not-call involving political and religious 90. Although we take seriously request maintained that a do-not-call discourse. In crafting the TCPA, WorldCom’s concerns about the request should ‘‘trump’’ an established Congress sought primarily to protect potential effects of a national do-not-call business relationship, and that telephone subscribers from unrestricted list on competition in the consumers should not be required to commercial telemarketing activities, telecommunications marketplace, we terminate business relationships in finding that most unwanted telephone decline to expand the definition of order to stop unwanted telemarketing solicitations are commercial in nature. ‘‘established business relationship’’ so calls. The majority of industry In light of the record before us, the that common carriers are deemed to commenters also supported the notion Commission believes that there has been have relationships with all consumers that companies should honor requests no change in circumstances that warrant for purposes of making telemarketing from individual consumers not to be distinguishing those calls made by a calls. Broadening the scope of the called, regardless of whether there is a professional telemarketer on behalf of a established business relationship in business relationship. Companies will tax-exempt nonprofit organization from such a way would be inconsistent with be permitted to call consumers with those made by the tax-exempt nonprofit Congress’s mandate ‘‘to protect whom they have an established business itself. The Commission recognizes that residential telephone subscribers’ relationship for a period of 18 months charitable and other nonprofit entities privacy rights to avoid receiving from the last payment or transaction, with limited expertise, resources and telephone solicitations to which they even when those consumers are infrastructure, might find it object.’’ See 47 U.S.C. 227(c)(1). To registered on the national do-not-call advantageous to contract out its VerDate Jan<31>2003 15:31 Jul 24, 2003 Jkt 200001 PO 00000 Frm 00018 Fmt 4701 Sfmt 4700 E:FRFM25JYR2.SGM 25JYR2

Federal Register / Vol. 68, No. 143 / Friday, July 25, 2003 / Rules and Regulations 44161 fundraising efforts. Consistent with sales person is available to take the call. a given set of numbers would lead to an section 227, a tax-exempt nonprofit The principal feature of predictive unintended result. Calls to emergency organization that conducts its own dialing software is a timing function, numbers, health care facilities, and fundraising campaign or hires a not number storage or generation. wireless numbers would be permissible professional fundraiser to do it, will not Household Financial Services states that when the dialing equipment is paired be subject to the restrictions on these machines are not conceptually with predictive dialing software and a telephone solicitations. If, however, a different from dialing machines without database of numbers, but prohibited for-profit organization is delivering its the predictive computer program when the equipment operates own commercial message as part of a attached. independently of such lists and software telemarketing campaign (i.e., 95. The TCPA defines an ‘‘automatic packages. We believe the purpose of the encouraging the purchase or rental of, or telephone dialing system’’ as requirement that equipment have the investment in, property, goods, or ‘‘equipment which has the capacity (A) ‘‘capacity to store or produce telephone services), even if accompanied by a to store or produce telephone numbers numbers to be called’’ is to ensure that donation to a charitable organization or to be called, using a random or the prohibition on autodialed calls not referral to a tax-exempt nonprofit sequential number generator; and (B) to be circumvented. See 47 U.S.C. organization, that call is not by or on dial such numbers.’’ 47 U.S.C. 227(a)(1). 227(a)(1). Therefore, the Commission behalf of a tax-exempt nonprofit The statutory definition contemplates finds that a predictive dialer falls within organization. Such calls, whether made autodialing equipment that either stores the meaning and statutory definition of by a live telemarketer or using a or produces numbers. It also provides ‘‘automatic telephone dialing prerecorded message, would not be that, in order to be considered an equipment’’ and the intent of Congress. entitled to exempt treatment under the ‘‘automatic telephone dialing system,’’ Because the statutory definition does TCPA. Similarly, an affiliate of a tax- the equipment need only have the not turn on whether the call is made for exempt nonprofit organization that is ‘‘capacity to store or produce telephone marketing purposes, we also conclude itself not a tax-exempt nonprofit is not numbers (emphasis added) * * *.’’ It is that it applies to modems that have the exempt from the TCPA rules when it clear from the statutory language and ‘‘capacity (A) to store or produce makes telephone solicitations. We the legislative history that Congress telephone numbers to be called, using a emphasize here, as we did in the 2002 anticipated that the FCC, under its random or sequential number generator; Notice, that the statute and our rules TCPA rulemaking authority, might need and (B) to dial such numbers.’’ See 47 clearly apply already to messages that to consider changes in technologies. In U.S.C. 227(a)(1). are predominantly commercial in the past, telemarketers may have used dialing equipment to create and dial 10- 97. Predictive Dialers as Customer nature, and that we will not hesitate to Premises Equipment. A few commenters consider enforcement action should the digit telephone numbers arbitrarily. As one commenter points out, the maintain that predictive dialers are provider of an otherwise commercial Customer Premises Equipment (CPE) message seek to immunize itself by evolution of the teleservices industry has progressed to the point where using over which the Communications Act simply inserting purportedly ‘‘non- gives the FCC exclusive jurisdiction. commercial’’ content into that message. lists of numbers is far more cost effective. The basic function of such The ATA and Direct Marketing A call to sell debt consolidation Association (DMA) urge the services, for example, is a commercial equipment, however, has not changed— the capacity to dial numbers without Commission to assert exclusive call regardless of whether the consumer authority over CPE and, in the process, is also referred to a tax-exempt human intervention. We fully expect automated dialing technology to preempt state laws governing predictive nonprofit organization for counseling dialers. They contend that, in the services. Similarly, a seller that calls to continue to develop. 96. The legislative history also absence of a single national policy on advertise a product and states that a predictive dialer use, telemarketers will suggests that through the TCPA, portion of the proceeds will go to a be subject to the possibility of Congress was attempting to alleviate a charitable cause or to help find missing conflicting state standards. In the past, particular problem—an increasing children must still comply with the CPE was regulated as a common carrier number of automated and prerecorded TCPA rules on commercial calls. service based on the Commission’s calls to certain categories of numbers. Automated Telephone Dialing The TCPA does not ban the use of jurisdiction and statutory Equipment technologies to dial telephone numbers. responsibilities over carrier-provided It merely prohibits such technologies equipment. The Commission long ago Predictive Dialers deregulated CPE, finding that the CPE from dialing emergency numbers, health 94. Automated Telephone Dialing care facilities, telephone numbers market was becoming increasingly Equipment. The record demonstrates assigned to wireless services, and any competitive, and that in order to that a predictive dialer is equipment other numbers for which the consumer increase further the options that that dials numbers and, when certain is charged for the call. Such practices consumers had in obtaining equipment, computer software is attached, also were determined to threaten public it would require common carriers to assists telemarketers in predicting when safety and inappropriately shift separate the provision of CPE from the a sales agent will be available to take marketing costs from sellers to provision of telecommunications calls. The hardware, when paired with consumers. Coupled with the fact that services. As part of its review of CPE certain software, has the capacity to autodialers can dial thousands of regulations, the Commission pointed store or produce numbers and dial those numbers in a short period of time, calls out that it had never regarded the numbers at random, in sequential order, to these specified categories of numbers provision of terminal equipment in or from a database of numbers. As are particularly troublesome. Therefore, isolation as an activity subject to Title commenters point out, in most cases, to exclude from these restrictions II regulation. While the Commission telemarketers program the numbers to equipment that use predictive dialing recognized that such equipment is be called into the equipment, and the software from the definition of within the FCC’s authority over wire dialer calls them at a rate to ensure that ‘‘automated telephone dialing and radio communications, it found that when a consumer answers the phone, a equipment’’ simply because it relies on the equipment, by itself, is not a VerDate Jan<31>2003 15:31 Jul 24, 2003 Jkt 200001 PO 00000 Frm 00019 Fmt 4701 Sfmt 4700 E:FRFM25JYR2.SGM 25JYR2

44162 Federal Register / Vol. 68, No. 143 / Friday, July 25, 2003 / Rules and Regulations ‘‘communication’’ service, and therefore automated or prerecorded telephone 64.1200(c)(2) so that the prohibition there was no mandate that it be calls * * * to be a nuisance and an expressly applies to messages that regulated. None of the commenters who invasion of privacy.’’ TCPA, Section constitute ‘‘telephone solicitations,’’ as argue this point describe a change in 2(10), reprinted in 7 FCC Rcd at 2744. well as to those that include or circumstances that would warrant It also found that ‘‘[b]anning such introduce an ‘‘unsolicited reevaluating the Commission’s earlier automated or prerecorded telephone advertisement.’’ The current rule determination and risk disturbing the calls to the home, except when the exempts from the prohibition any call competitive balance the Commission receiving party consents to receiving the that is made for a commercial purpose deemed appropriate in 1980. In call or when such calls are necessary in but does not include the transmission of addition, it is not the equipment itself an emergency situation affecting the any unsolicited advertisement. See 47 that states are considering regulating; it health and safety of the consumer, is the CFR 64.1200(c)(2). We amend the rule to is the use of such equipment that has only effective means of protecting exempt a call that is made for a caught the attention of some state telephone consumers from this nuisance commercial purpose but does not legislatures. We believe it is preferable and privacy invasion.’’ TCPA, Section include or introduce an unsolicited at this time to regulate the use of 2(12), reprinted in 7 FCC Rcd at 2744– advertisement or constitute a telephone predictive dialers under the TCPA’s 45. Congress determined that such solicitation. See amended rule at 47 CFR specific authority to regulate prerecorded messages cause greater 64.1200(a)(2)(iii). We agree with those telemarketing practices. Therefore, we harm to consumers’ privacy than commenters who suggest that decline to preempt state laws governing telephone solicitations by live application of the prerecorded message the use of predictive dialers and telemarketers. The record reveals that rule should turn, not on the caller’s abandoned calls or to regulate consumers feel powerless to stop characterization of the call, but on the predictive dialers as CPE. prerecorded messages largely because purpose of the message. Amending the they are often delivered to answering rule to apply to messages that constitute ‘‘War Dialing’’ machines and because they do not ‘‘telephone solicitations,’’ is consistent 98. In the 2002 Notice, the always provide a means to request with the goals of the TCPA and Commission sought comment on the placement on a do-not-call list. addresses the concerns raised by practice of using autodialers to dial 100. Additionally, the term commenters about purported ‘‘free large blocks of telephone numbers in ‘‘unsolicited advertisement’’ means offers.’’ In addition, we believe the order to identify lines that belong to ‘‘any material advertising the amended rule will afford consumers a telephone facsimile machines. Of those commercial availability or quality of any greater measure of protection from commenters who weighed in on ‘‘war property, goods, or services which is unlawful prerecorded messages and dialing’’ (using automated equipment to transmitted to any person without that better inform the business community dial telephone numbers, generally person’s prior express invitation or about the general prohibition on such sequentially, and software to determine permission.’’ 47 U.S.C. 227(a)(4); 47 messages. whether each number is associated with CFR 64.1200(f)(5). The TCPA’s definition does not require a sale to be 102. The so-called ‘‘dual purpose’’ a fax line or voice line), there was calls described in the record—calls from unanimous support for a ban on the made during the call in order for the message to be considered an mortgage brokers to their clients practice. Commenters explained that notifying them of lower interest rates, ringing a telephone for the purpose of advertisement. Offers for free goods or services that are part of an overall calls from phone companies to determining whether the number is customers regarding new calling plans, associated with a fax or voice line is an marketing campaign to sell property, goods, or services constitute or calls from credit card companies invasion of consumers’ privacy interests offering overdraft protection to existing and should be prohibited. Moreover, ‘‘advertising the commercial availability or quality of any property, goods, or customers—would, in most instances, they asserted there is no free speech constitute ‘‘unsolicited advertisements,’’ issue when the caller has no intention services.’’ See 47 U.S.C. 227(a)(4). Therefore, the Commission finds that regardless of the customer service of speaking with the called party. The element to the call. The Commission TCPA prohibits the transmission of prerecorded messages containing free offers and information about goods and explained in the 2002 Notice that such unsolicited facsimile advertisements messages may inquire about a absent the consent of the recipient. The services that are commercially available are prohibited to residential telephone customer’s satisfaction with a product Commission agrees that because the already purchased, but are motivated in purpose of ‘‘war dialing’’ is to identify subscribers, if not otherwise exempted. For example, a prerecorded message part by the desire to sell ultimately those numbers associated with facsimile additional goods or services. If the call machines, the practice serves few, if that contains language describing a new product, a vacation destination, or a is intended to offer property, goods, or any, legitimate business interests and is services for sale either during the call, company that will be in ‘‘your area’’ to an intrusive invasion of consumers’ or in the future (such as in response to perform home repairs, and asks the privacy. Therefore, the Commission a message that provides a toll-free consumer to call a toll-free number to adopts a rule that prohibits the practice number), that call is an advertisement. ‘‘learn more,’’ is an ‘‘unsolicited of using any technology to dial any Similarly, a message that seeks people advertisement’’ under the TCPA if sent telephone number for the purpose of to help sell or market a business’ without the called party’s express determining whether the line is a fax or products, constitutes an advertisement invitation or permission. See 47 U.S.C. voice line. if the individuals called are encouraged 227(a)(4). However, as long as the Artificial or Prerecorded Voice message is limited to identification to purchase, rent, or invest in property, Messages information only, such as name and goods, or services, during or after the telephone number, it will not be call. However, the Commission points Offers for Free Goods or Services; considered an ‘‘unsolicited out that, if the message is delivered by Information-Only Messages advertisement’’ under our rules. a company that has an established 99. Congress found that ‘‘residential 101. In addition, we amend the business relationship with the recipient, telephone subscribers consider prerecorded message rule at 47 CFR it would be permitted under our rules. VerDate Jan<31>2003 15:31 Jul 24, 2003 Jkt 200001 PO 00000 Frm 00020 Fmt 4701 Sfmt 4700 E:FRFM25JYR2.SGM 25JYR2

Federal Register / Vol. 68, No. 143 / Friday, July 25, 2003 / Rules and Regulations 44163 We also note that absent an established individual. With respect to the caller’s time warrant the adoption of new rules. business relationship, the telemarketer name, the prerecorded message must Few commenters in this proceeding must first obtain the prior express contain, at a minimum, the legal name described either receiving such consent of the called party in order to under which the business, individual or messages or that they were particularly lawfully initiate the call. Purporting to entity calling is registered to operate. problematic. The few commenters who obtain consent during the call, such as The Commission recognizes that some addressed the issue were split on requesting that a consumer ‘‘press 1’’ to businesses use ‘‘d/b/as’’ or aliases for whether such messages fall within the receive further information, does not marketing purposes. The rule does not TCPA’s definition of ‘‘unsolicited constitute the prior consent necessary to prohibit the use of such additional advertisement’’ and are thus subject to deliver the message in the first place, as information, provided the legal name of the restrictions on their delivery. We the request to ‘‘press 1’’ is part of the the business is also stated. The rule also conclude that if the purpose of the telemarketing call. requires that the telephone number message is merely to invite a consumer stated in the message be one that a to listen to or view a broadcast, such Identification Requirements consumer can use during normal message is permitted under the current 103. The TCPA rules require that all business hours to ask not to be called rules as a commercial call that ‘‘does not artificial or prerecorded messages again.2 If the number provided in the include the transmission of any delivered by an automatic telephone message is that of a telemarketer hired unsolicited advertisement’’ and under dialing system identify the business, to deliver the message, the company on the amended rules as ‘‘a commercial call individual, or other entity initiating the whose behalf the message is sent is that does not include or introduce an call, and the telephone number or nevertheless liable for failing to honor unsolicited advertisement or constitute address of such business, individual or any do-not-call request. This is a telephone solicitation.’’ See amended other entity. See 47 CFR 64.1200(d). consistent with the rules on live 47 CFR 64.1200(a)(2)(iii). However, Additionally, the Commission’s rules solicitation calls by telemarketers. If a messages that encourage consumers to contain identification requirements that consumer asks not to be called again, listen to or watch programming, apply without limitation to ‘‘any the telemarketer must record the do-not- including programming that is telephone solicitation to a residential call request, and the company on whose retransmitted broadcast programming telephone subscriber.’’ 47 CFR behalf the call was made must honor for which consumers must pay (e.g., 64.1200(e)(2)(iv). The term ‘‘telephone that request. cable, digital satellite, etc.), would be solicitation’’ is defined to mean ‘‘the considered advertisements for purposes initiation of a telephone call or message Radio Station and Television of our rules. The Commission reiterates, for the purpose of encouraging the Broadcaster Calls however, that messages that are part of purchase or rental of * * * property, 105. The TCPA prohibits the delivery an overall marketing campaign to goods, or services * * *’’ (emphasis of prerecorded messages to residential encourage the purchase of goods or added). 47 CFR 64.1200(f)(3). We sought telephone lines without the prior services or that describe the commercial comment, however, on whether we express consent of the called party. 47 availability or quality of any goods or should modify our rules to state U.S.C. 227(b)(1)(B). Commission rules services, are ‘‘advertisements’’ as expressly that the identification exempt from the prohibition calls that defined by the TCPA. Messages need requirements apply to otherwise lawful are made for a commercial purpose but not contain a solicitation of a sale artificial or prerecorded messages, as do not include any unsolicited during the call to constitute an well as to live solicitation calls. advertisement. 47 CFR 64.1200(c)(2). advertisement. 104. The vast majority of consumer The Commission sought comment on and industry commenters support prerecorded messages sent by radio Abandoned Calls modifying the rules to provide expressly stations or television broadcasters that 106. Given the arguments raised on that telemarketers must comply with the encourage telephone subscribers to tune both sides of this issue as well as the identification requirements when in at a particular time for a chance to FTC’s approach to the problem, the delivering prerecorded messages. Some win a prize or similar opportunity. We Commission has determined to adopt a consumers urge the Commission to asked whether the Commission should rule to reduce the number of abandoned require specifically that companies specifically address these kinds of calls, calls consumers receive. Under the new provide the name of the company under and if so, how. The record reveals that rules, telemarketers must ensure that which it is registered to do business. such calls by radio stations and any technology used to dial telephone They explain that a company will often television broadcasters do not at this numbers abandons no more than three use a ‘‘d/b/a’’ (‘‘doing business as’’) or (3) percent of calls answered by a ‘‘alias’’ in the text of the prerecorded 2 This would be 9 a.m.–5 p.m., Monday through person, measured over a 30-day period. message, making it difficult to identify Friday, during the particular telemarketing A call will be considered abandoned if campaign. A seller or telemarketer’s telephone the company calling. The Commission number must permit consumers to make their do- it is not transferred to a live sales agent recognizes that adequate identification not-call requests in a timely manner. Therefore, the within two (2) seconds of the recipient’s information is vital so that consumers seller or telemarketer must staff the ‘‘do-not-call completed greeting. When a call is can determine the purpose of the call, number’’ sufficiently or use an automated system abandoned within the three (3) percent for processing requests in such a way that possibly make a do-not-call request, and consumers are not placed on hold or forced to wait maximum allowed, a telemarketer must monitor compliance with the TCPA for an agent to answer the connection for an deliver a prerecorded identification rules. Therefore, we are amending our unreasonable length of time. We also reiterate the message containing only the rules to require expressly that all Commission’s determination in its 1995 TCPA telemarketer’s name, telephone number, Reconsideration Order that any number provided prerecorded messages, whether for identification purposes may not be a number and notification that the call is for delivered by automated dialing that requires the recipient of a solicitation to incur ‘‘telemarketing purposes.’’ To allow equipment or not, identify the name of more than nominal costs for making a do-not-call time for a consumer to answer the the business, individual or other entity request (i.e., for which charges exceed costs for phone, the telemarketer must allow the transmission of local or ordinary station-to-station that is responsible for initiating the call, long distance calls). See 1995 TCPA phone to ring for fifteen seconds or four along with the telephone number of Reconsideration Order, 10 FCC Rcd 12391, 12409, rings before disconnecting any such business, other entity, or para. 38. See also amended 47 CFR 64.1200(b)(2). unanswered call. Finally, telemarketers VerDate Jan<31>2003 15:31 Jul 24, 2003 Jkt 200001 PO 00000 Frm 00021 Fmt 4701 Sfmt 4700 E:FRFM25JYR2.SGM 25JYR2

44164 Federal Register / Vol. 68, No. 143 / Friday, July 25, 2003 / Rules and Regulations using predictive dialers must maintain disconnected calls, and that used instead by telemarketers to records that provide clear and telemarketers are permitted to manage transmit prerecorded messages to convincing evidence that the dialers their calling campaigns effectively answering machines; in such used comply with the three (3) percent under the new rules on abandoned calls. circumstances, calls that reach live call abandonment rate, ‘‘ring time’’ and Although we recognize that this rate of persons are disconnected. It is unclear two-second-transfer rule. measurement differs from the FTC’s from the record how prevalent the use rule, we believe a rate measured over a of AMD is in the telemarketing industry. Maximum Rate on Abandoned Calls longer period of time will allow for One commenter stated that the 107. The Commission believes that variations in telemarketing campaigns elimination of AMD would put establishing a maximum call such as calling times, number of ‘‘consumer-oriented’’ telemarketing abandonment rate is the best option to operators available, number of firms out of business. However, other reduce effectively the number of hang- telephone lines used by the call centers, industry members acknowledge that ups and ‘‘dead air’’ calls consumers and other similar factors. The record AMD contributes significantly to the experience. We recognize that industry also suggests that an abandonment rate amount of ‘‘dead air’’ consumers generally advocates a five percent measured over a 30-day period will experience, and one large telemarketing abandonment rate, claiming that a rate allow telemarketers to more easily firm maintains that AMD should be lower than five percent would reduce comply with the recordkeeping banned completely. The Commission efficiencies the technology provides. requirements associated with the use of believes that the record does not Some industry commenters indicate that predictive dialers. warrant a ban on the use of AMD. a 3 percent rate still obtains Instead, if the AMD technology is productivity benefits. However, the Two-Second-Transfer Rule deployed in such a way that the delay Commission is not convinced that a five 109. The record confirms that many in transfer time to a sales agent is percent rate will lead to a reasonable consumers are angered by the ‘‘dead limited to two seconds, then its reduction in the number of abandoned air’’ they often face when answering the continued use should not adversely calls. The DMA’s current guideline, telephone. Running to the telephone affect consumers’ privacy interests. cited by many commenters, calls for an only to be met by silence can be abandonment rate of no higher than five frustrating and even frightening, if the Prerecorded Message for Identification percent. And several telemarketers caller cannot be identified. To address 111. The FTC’s ‘‘safe harbor’’ maintain that they now utilize an the problem of ‘‘dead air’’ produced by provisions require that, when a sales abandonment rate of five percent or dialing technologies, the Commission agent is unavailable to speak to a person lower in their calling campaigns. has determined that a call will be answering the phone, marketers deliver Consumers nevertheless report receiving considered abandoned if the a prerecorded message that states the as many as 20 dropped calls per day telemarketer fails to connect the call to name and telephone number of the that interrupt dinners, interfere with a sales representative within two (2) seller on whose behalf the call was home business operations, and seconds of the person’s completed made. The Commission has similarly sometimes frighten the elderly and greeting. Calls disconnected because determined that when a telemarketer parents with young children. A rule that they were never answered (within the abandons a call under the three (3) is consistent with the FTC’s will required 15 seconds or 4 rings) or percent rate allowed, the telemarketer effectively create a national standard because they received busy signals will must deliver a prerecorded message with which telemarketers must comply not be considered abandoned. Calls that containing the name of the business, and should lead to fewer abandoned reach voicemail or an answering individual or other entity initiating the calls, while permitting telemarketers to machine will not be considered call, as well as the telephone number of continue to benefit from such ‘‘answered’’ by the called party. such business, individual or other technology. It is also responsive to Therefore, a call that is disconnected entity. The message must also state that Congress’ mandate in the Do-Not-Call upon reaching an answering machine the call is for ‘‘telemarketing purposes.’’ Act to maximize consistency with the will not be considered an abandoned By requiring such notice, we believe FTC’s rules. call. This requirement is consistent with consumers will be less likely to return 108. The three percent abandonment the FTC’s rule. the call simply to learn the purpose of rate will be measured over a 30-day 110. Answering Machine Detection. the call and possibly incur unnecessary period, a standard supported by several Opposition from industry to the two- charges. We recognize that many industry commenters. Industry members second-transfer requirement appears to consumers are frustrated with maintain that measuring the be based largely on its implications for prerecorded messages. However, the abandonment rate on a per day basis use of Answering Machine Detection record also reveals that consumers are would severely curtail the efficiencies (AMD). Some industry members explain frightened and angered by ‘‘dead air’’ gained from the use of predictive that AMD is used by telemarketers to calls and repeated hang-ups. A dialers, and may be overly burdensome detect answering machines, and thereby prerecorded message, limited to to smaller telemarketers. A per day avoid leaving messages on them. The identification information only, should measurement, they argue, would not ATA and DMA maintain that if mitigate the harms that result from account for short-term fluctuations in telemarketers are required to connect to ‘‘dead air,’’ as consumers will know marketing campaigns. They further a sales agent or message within 1–2 who is calling them. And, they will argue that the impact of abandoned calls seconds, a large percentage of calls more easily be able to make a do-not- on consumers depends more on the reaching answering machines will be call request of a company by calling the aggregate number of contacts made by a transferred to sales agents, thereby number provided in the message. We telemarketer over time and not on the reducing the efficiencies gained from note that such messages sent in excess number in any given day. The AMD. According to these commenters, of the three (3) percent allowed under Commission believes that a three (3) 1–2 seconds is often insufficient for the call abandonment rate, will be percent abandonment rate measured AMD to determine accurately if the call considered abandoned calls, unless over a 30-day period will ensure that has reached an answering machine. otherwise permitted by our rules. The consumers consistently receive fewer Other commenters explain that AMD is content of the message must be limited VerDate Jan<31>2003 15:31 Jul 24, 2003 Jkt 200001 PO 00000 Frm 00022 Fmt 4701 Sfmt 4700 E:FRFM25JYR2.SGM 25JYR2

Federal Register / Vol. 68, No. 143 / Friday, July 25, 2003 / Rules and Regulations 44165 to name and telephone number, along to current DMA guidelines, and used by October 1, 2003, which is consistent with a notice to the called party that the some telemarketers already. One with the date that telemarketers must call is for ‘‘telemarketing purposes.’’ industry commenter asserted that comply with the FTC’s call The message may not be used to deliver telemarketers often set the predictive abandonment rules. This should permit an unsolicited advertisement. As long as dialers to ring for a very short period of telemarketers to make any modifications the message is limited to identification time before disconnecting the call; in to their autodialing equipment or information only, it will not be such cases, the predictive dialer does purchase any new software to enable considered an ‘‘unsolicited not record the call as having been them to comply with the three (3) advertisement’’ under our rules. We abandoned. The practice of ringing and percent call abandonment rate, the caution that additional information in then disconnecting the call before the prerecorded message requirement and the prerecorded message constituting an consumer has an opportunity to answer the two-second-transfer rule. unsolicited advertisement would be a the phone is intrusive of consumer violation of our rules, if not otherwise privacy and serves only to increase Wireless Telephone Numbers permitted under 47 CFR 64.1200(a)(2). efficiencies for telemarketers. Moreover, Telemarketing Calls to Wireless in discussing the interplay between the Numbers Established Business Relationship FTC’s rules with the Commission’s 116. We affirm that under the TCPA, 112. While the TCPA prohibits rules, very few commenters opposed the telephone calls to residential phone it is unlawful to make any call using an ‘‘ring time’’ requirement adopted by the automatic telephone dialing system or lines using an artificial or prerecorded FTC, or raised any particular concerns voice to deliver a message without the an artificial or prerecorded message to about how it might work in the TCPA prior express consent of the called any wireless telephone number. See 47 framework. Therefore, given the party, the Commission determined that U.S.C. 227(b)(1). Both the statute and substantial interest in protecting the TCPA permits an exemption for our rules prohibit these calls, with consumers’ privacy interests, as well as established business relationship calls limited exceptions, ‘‘to any telephone Congress’s direction to maximize from the restriction on artificial or number assigned to a paging service, consistency with the FTC’s rules, we prerecorded message calls to residences. cellular telephone service, specialized have determined to adopt the 15 second The record reveals that an established mobile radio service, or other common or four (4) ring requirement. business relationship exemption is 114. Finally, consistent with the carrier service, or any service for which necessary to allow companies to contact FTC’s rules, the Commission has the called party is charged.’’ 47 U.S.C. their existing customers. Companies determined that telemarketers must 227(b)(1)(A)(iii). This encompasses both currently use prerecorded messages, for maintain records establishing that the voice calls and text calls to wireless example, to notify their customers about technology used to dial numbers numbers including, for example, short new calling plans, new mortgage rates, complies with the three (3) percent call message service calls, provided the call and seasonal services such as chimney abandonment rate, ‘‘ring time,’’ and is made to a telephone number assigned sweeping and lawn care. Therefore, two-second rule on connecting to a live to such service. Congress found that prerecorded messages sent by sales agent. Telemarketers must provide automated or prerecorded telephone companies to customers with whom such records in order to demonstrate calls were a greater nuisance and they have an established business compliance with the call abandonment invasion of privacy than live solicitation relationship will not be considered rules. Only by adopting a recordkeeping calls. Moreover, such calls can be costly ‘‘abandoned’’ under the revised rules, if requirement will the Commission be and inconvenient. The Commission has they are delivered within two (2) able to enforce adequately the rules on long recognized, and the record in this seconds of the person’s completed the use of predictive dialers. proceeding supports the same greeting. Similarly, any messages 115. The TCPA seeks primarily to conclusion, that wireless customers are initiated with the called party’s prior protect subscribers from unrestricted charged for incoming calls whether they express consent and delivered within commercial telemarketing calls, and pay in advance or after the minutes are two (2) seconds of the called person’s therefore exempts calls or messages by used. Wireless subscribers who completed greeting are not ‘‘abandoned’’ tax-exempt nonprofit organizations from purchase a large ‘‘bucket’’ of minutes at calls under the new rules. Such the definition of telephone solicitation. a fixed rate nevertheless are charged for messages must identify the business, Therefore, the Commission has those minutes, and for any minutes that individual or entity making the call and determined not to extend the call exceed the ‘‘bucket’’ allowance. This contain a telephone number that a abandonment rules to tax-exempt ‘‘bucket’’ could be exceeded more consumer may call to request placement nonprofit organizations in the absence quickly if consumers receive numerous on a do-not-call list. We recognize that of further guidance from Congress. unwanted telemarketing calls. the established business relationship Because this will result in an Moreover, as several commenters point exception to the prohibition on inconsistency with the FTC’s rules, we out, telemarketers have no way to prerecorded messages conflicts with the will discuss the call abandonment rules determine how consumers are charged FTC’s amended rule. However, for the in the report due to Congress within 45 for their wireless service. reasons described above, we believe the days after the promulgation of final 117. Although the same economic and current exception is necessary to avoid rules. See Do-Not-Call Act, Section 4. safety concerns apply to all telephone interfering with ongoing business However, the call abandonment rules solicitation calls received by wireless relationships. will apply to all other companies subscribers, the Commission has engaged in telemarketing, and the determined not to prohibit all live Ring Duration existence of an established business telephone solicitations to wireless 113. The Commission also adopts a relationship between the telemarketer numbers. We note, however, that the requirement that telemarketers allow the and consumer will not be an exception TCPA already prohibits live solicitation phone to ring for 15 seconds or four (4) to these rules. For these entities, the call calls to wireless numbers using an rings before disconnecting any abandonment rules will become autodialer. See 47 U.S.C. 227(b)(1). The unanswered call. This standard is effective on October 1, 2003. We decline national do-not-call database will allow consistent with that of the FTC, similar to establish an effective date beyond for the registration of wireless telephone VerDate Jan<31>2003 15:31 Jul 24, 2003 Jkt 200001 PO 00000 Frm 00023 Fmt 4701 Sfmt 4700 E:FRFM25JYR2.SGM 25JYR2

44166 Federal Register / Vol. 68, No. 143 / Friday, July 25, 2003 / Rules and Regulations numbers for those subscribers who wish telemarketers use to avoid making Caller Identification to avoid live telemarketing calls to their prohibited calls to wireless numbers. 124. The Commission has determined wireless phones. Wireless subscribers 121. LNP and pooling do not make it to require all sellers and telemarketers thus have a simple means of preventing impossible for telemarketers to comply to transmit caller ID information, most live telemarketing calls if they so with the TCPA. The record regardless of their calling systems. In desire. Registration on the do-not-call demonstrates that information is addition, any person or entity engaging database will not prevent calls from available from a variety of sources to in telemarketing is prohibited from entities that have an established assist telemarketers in determining blocking the transmission of caller ID business relationship with a wireless which numbers are assigned to wireless information. Caller ID information must subscriber. Wireless subscribers who carriers. For example, NeuStar, Inc. as include either ANI or Calling Party receive such live calls can easily make the North American Numbering Plan Number (CPN) and, when available by a company-specific do-not-call request. Administrator, the National Pooling the telemarketer’s carrier, the name of Moreover, relying on the do-not-call Administrator, and the LNP the telemarketer. If the information database to control live telephone Administrator makes information required is not passed through to the solicitations recognizes that prohibiting available that can assist telemarketers in consumer, through no fault of the such calls to wireless numbers may identifying numbers assigned to telemarketer originating the call, then unduly restrict telemarketers’ ability to wireless carriers. Also, other the telemarketer will not be held liable contact those consumers who do not commercial enterprises such as for failure to comply with the rules. In object to receiving telemarketing calls Telcordia, the owner-operator of the such a circumstance, the telemarketer and use their wireless phones as either Local Exchange Routing Guide maintain must provide clear and convincing their primary or only phone. information that can assist telemarketers 118. The Commission’s rules provide evidence that the caller ID information in identifying numbers assigned to could not be transmitted. However, the that companies making telephone wireless carriers. We acknowledge that solicitations to residential telephone Commission concurs with the FTC that beginning November 24, 2003, numbers caller ID information can be transmitted subscribers must comply with time of previously used for wireline service day restrictions and must institute cost effectively for the vast majority of could be ported to wireless service calls made by telemarketers. Caller ID procedures for maintaining do-not-call providers and that telemarketers will lists. See 47 CFR 64.1200(e). We allows consumers to screen out need to take the steps necessary to unwanted calls and to identify conclude that these rules apply to calls identify these numbers. We also note made to wireless telephone numbers. companies that they wish to ask not to that there are various solutions that will call again. Knowing the identity of the We believe that wireless subscribers enable telemarketers to identify wireless should be afforded the same protections caller is also helpful to consumers who numbers in a pooling and number feel frightened or threatened by hang-up as wireline subscribers. portability environment. We decline to and ‘‘dead air’’ calls. We disagree with Wireless Number Portability and mandate a specific solution, but rather those commenters who argue that caller Pooling rely on the telemarketing industry to ID information only benefits those 119. Based on the evidence in the select solutions that best fit consumers who subscribe to caller ID record, we find that it is not necessary telemarketers’ needs. The record services. Consumers can also use the to add rules to implement the TCPA as demonstrates that telemarketers have *69 feature to obtain caller ID a result of the introduction of wireless found adequate methods in the past to information transmitted by a Local Number Portability (LNP) and comply with the TCPA’s prohibition on telemarketer. The *69 feature, available thousands-block number pooling. The telephone calls using an autodialer or an through many subscribers’ telephone TCPA rules prohibiting telemarketers artificial or prerecorded voice message service providers, provides either: (1) from placing autodialed and to any telephone number assigned to a Information regarding the last incoming prerecorded message calls to wireless cellular telephone service, a paging call, and the option to dial the caller numbers have been in place for twelve service, or any service for which the back, or (2) the ability to return the last years. Further, the Commission’s called party is charged for the call. We incoming call. Call information, pooling requirements have been in place expect telemarketers to continue to however, would not be available for an for several years and the porting make use of the tools available in the incoming call, if the caller failed to requirements have been in place for marketplace in order to ensure transmit caller ID information or over five years. Accordingly, continued compliance with the TCPA. blocked such information. Caller ID also telemarketers have received sufficient 122. Moreover, the record indicates should increase accountability and notice of these requirements in order to that telemarketing to wireless phones is provide an important resource for the develop business practices that will not a significant problem, indicating FCC and FTC in pursuing enforcement allow them to continue to comply with that the industries’ voluntary efforts actions against TCPA and TSR violators. the TCPA. have been successful. Commenters 125. We conclude that while SS7 120. Additionally, telemarketers have further declare that the wireless and capability is not universally available, taken measures in the past to identify telemarketing industries have been the vast majority of the United States wireless numbers, and there is no actively working together to ensure that has access to SS7 infrastructure. The indication that these measures would telemarketing does not become a SS7 network contains functionality to not continue to be effective for problem for wireless customers. transmit both the CPN and the charge identifying wireless numbers affected by 123. Finally, we reject proposals to number. ‘‘Charge number’’ is defined in pooling and porting. As noted above, create a good faith exception for 47 CFR 64.1600(d) and refers to the the industry currently makes use of a inadvertent autodialed or prerecorded delivery of the calling party’s billing variety of tools to enable it to avoid calls to wireless numbers and proposals number by a local exchange carrier for making prohibited calls. The record to create implied consent because we billing or routing purposes, and to the provides a sampling of methods, find that there are adequate solutions in subsequent delivery of such number to including the DMA’s ‘‘Wireless the marketplace to enable telemarketers end users. Under the Commission’s Telephone Suppression Service,’’ that to identify wireless numbers. rules, with certain limited exceptions, VerDate Jan<31>2003 15:31 Jul 24, 2003 Jkt 200001 PO 00000 Frm 00024 Fmt 4701 Sfmt 4700 E:FRFM25JYR2.SGM 25JYR2

Federal Register / Vol. 68, No. 143 / Friday, July 25, 2003 / Rules and Regulations 44167 common carriers using SS7 and offering Consumer Advocates, the Commission’s 129. The TCPA seeks primarily to or subscribing to any service based on rules exempt from the current caller ID protect subscribers from unrestricted SS7 functionality are required to rules, PBX and Centrex systems which commercial telemarketing calls. transmit the CPN associated with an lack the capability to pass CPN Therefore, the Commission has interstate call to connecting carriers. See information. Regardless of whether a determined not to extend the caller ID 47 CFR 64.1600, 64.1601. Regardless of call is made using a typical T–1 trunk requirements to tax-exempt nonprofit whether SS7 is available, a LEC at the or an ISDN trunk, ANI is transmitted to organizations. However, the caller ID originating end of a call must receive the Local Exchange Carrier for billing rules will apply to all other companies and be able to transmit the ANI to the purposes. With both PBX and Centrex engaged in telemarketing, and the connecting carrier, as the ANI is the systems, the carrier can determine the existence of an established business number transmitted through the billing number from the physical line relationship between the telemarketer network that identifies the calling party being used to make a call, even if the and the consumer shall not be an for billing purposes. The term ‘‘ANI’’ billing number is not transmitted along exception to these rules. For all covered refers to the delivery of the calling that line to the carrier. We are cognizant entities, the effective date of the caller party’s billing number by a local of the fact that with PBX and Centrex ID requirements will be January 29, exchange carrier to any interconnecting systems, the billing number could be 2004. This will provide telemarketers a carrier for billing or routing purposes, associated with multiple outgoing lines. reasonable period of time to obtain or and to the subsequent delivery to end Nevertheless, telemarketers using PBX update any equipment or systems to users. See 47 CFR 64.1600(b). ANI is or Centrex systems are required under enable them to transmit caller ID generally inferred by the switch. Each the new rules not to block ANI, at a information. We decline to extend the line termination on the telco switch minimum, for caller ID purposes. effective date beyond January 29, 2004, corresponds to a different phone 127. We recognize that ISDN which is consistent with the date on number for ANI. Thus, we determine technology is preferred, as it presents which telemarketers are required to that telemarketers must ensure that the opportunity to transmit both CPN comply with the FTC’s caller ID either CPN or ANI is made available for and ANI. However, in situations where provision. all telemarketing calls in order to satisfy existing technology permits only the Unsolicited Facsimile Advertisements their caller ID requirements. Whenever transmission of the ANI or charge possible, CPN is the preferred number number, then the ANI or charge number Prior Express Invitation or Permission and should be transmitted. Provision of will satisfy the Commission’s rules, 130. The Commission has determined Caller ID information does not obviate provided it allows a consumer to make that the TCPA requires a person or the requirement for a caller to verbally a do-not-call request during regular entity to obtain the prior express supply identification information business hours. By allowing invitation or permission of the recipient during a call. See 47 CFR 64.1200(e)(iv). transmission of ANI or charge number before transmitting an unsolicited fax Consistent with the FTC’s rules, CPN to satisfy the caller ID requirement, we advertisement. This express invitation can include any number associated with believe that carriers need not incur or permission must be in writing and the telemarketer or party on whose significant costs to upgrade T–1 and include the recipient’s signature. The behalf the call is made, that allows the ISDN switches. For these same reasons, term ‘‘signature’’ in the amended rule consumer to identify the caller. This we also believe that mandating caller ID shall include an electronic or digital includes a number assigned to the will not create a competitive advantage form of signature, to the extent that such telemarketer by its carrier, the specific towards particular carriers. As typical form of signature is recognized as a number from which a sales T–1 technology is upgraded to ISDN valid signature under applicable federal representative placed a call, the number technology, we expect that law or state contract law. The recipient for the party on whose behalf the telemarketers will increasingly be able must clearly indicate that he or she telemarketer is making the call, or the to transmit the preferred CPN instead of consents to receiving such faxed seller’s customer service number. Any ANI or charge number. advertisements from the company to number supplied must permit an 128. Finally, the record strongly which permission is given, and provide individual to make a do-not-call request supports a prohibition on blocking the individual or business’s fax number during regular business hours for the caller ID information. Both National to which faxes may be sent. duration of the telemarketing Consumers League and National 131. Established Business campaign.3 Association of State Utility Consumer Relationship. The TCPA does not act as 126. Some commenters state that it is Advocates state that there is no valid a total ban on fax advertising. Persons not technically feasible for telemarketers reason why a telemarketer should be and businesses that wish to advertise to transmit caller ID information when allowed to intentionally block the using faxes may, under the TCPA, do so using a private branch exchange (PBX) transmission of caller ID. We conclude with the express permission of the and typical T–1 trunks. As noted by that the caller ID requirements for recipients. In the 2002 Notice, we National Association of State Utility commercial telephone solicitation calls sought comment on whether an 3 This would mean 9 a.m.–5 p.m. Monday do not implicate the privacy concerns established business relationship through Friday. A seller or telemarketer calling on associated with blocking capability for between a fax sender and recipient behalf of a seller must be able to record do-not-call individuals. See 47 CFR 64.1601(b). We establishes the requisite consent to requests at the number transmitted to consumers as recognize that absent a prohibition on receive telephone facsimile caller ID. Therefore, if the person answering the blocking, a party could transmit CPN in advertisements. The majority of calls at this number is not the sales representative who made the call or an employee of the seller or accordance with the new rules and industry commenters support the telemarketer who made the call, or if the simultaneously transmit a request to finding that facsimile transmissions telemarketer is using an automated system to block transmission of caller ID from persons or entities that have an answer the calls, the seller is nevertheless information. Thus, the Commission has established business relationship with responsible for ensuring that any do-not-call request is recorded and the consumer’s name, if provided, determined to prohibit any request by a the recipient can be deemed to be and telephone number are placed on the seller’s do- telemarketer to block caller ID invited or permitted by the recipient. not-call list at the time the request is made. information or ANI. These commenters maintain that VerDate Jan<31>2003 15:31 Jul 24, 2003 Jkt 200001 PO 00000 Frm 00025 Fmt 4701 Sfmt 4700 E:FRFM25JYR2.SGM 25JYR2

44168 Federal Register / Vol. 68, No. 143 / Friday, July 25, 2003 / Rules and Regulations eliminating the EBR exemption for advertisements. Such an opt-out list association), it was appropriate to treat facsimile advertisements would would require the recipient to possibly the issue of consent in any complaint interfere with ongoing business bear the cost of the initial facsimile and regarding unsolicited facsimile relationships, raise business costs, and inappropriately place the burden on the advertisements on a case-by-case basis. limit the flow of valuable information to recipient to contact the sender and In the 2002 Notice, we sought comment consumers. They urge the Commission request inclusion on a ‘‘do-not-fax’’ list. specifically on the issue of membership to amend the rules to provide expressly 134. Instead, Congress determined in a trade association or similar group for the EBR exemption. Conversely, the that companies that wish to fax and asked whether publication of one’s majority of consumer advocates argue unsolicited advertisements to customers fax number in an organization’s that the TCPA requires companies to must obtain their express permission to directory constitutes an invitation or obtain express permission from do so before transmitting any faxes to permission to receive an unsolicited fax. consumers—even their existing them. See 47 U.S.C. 227(b)(1)(C) and The American Business Media argued customers—before transmitting a fax to (a)(4). Advertisers may obtain consent that those willing to make fax numbers a consumer. Some consumer advocates for their faxes through such means as available in directories released to the maintain that the Commission erred in direct mail, Web sites, and interaction public do so with an expectation that its 1992 determination that a consumer, with customers in their stores. Under such fax numbers will be used for by virtue of an established business the new rules, the permission to send advertising. Consumer advocates, relationship, has given his or her fax advertisements must be provided in however, contend that publicly listing a express invitation or permission to writing, include the recipient’s fax number is not a broad invitation to receive faxes from that company. They signature and facsimile number, and send commercial faxes. TOPUC asserted urge the Commission to eliminate the cannot be in the form of a ‘‘negative that businesses often publish their fax EBR exemption, noting that Congress option.’’ A facsimile advertisement numbers for the convenience of their initially included in the TCPA an EBR containing a telephone number and an customers, clients and other trade exemption for faxes, but removed it instruction to call if the recipient no association members, not for the benefit from the final version of the statute. longer wishes to receive such faxes, of telemarketers. 132. We now reverse our prior would constitute a ‘‘negative option.’’ 136. The Commission agrees that fax conclusion that an established business This option (in which the sender numbers are published and distributed relationship provides companies with presumes consent unless advised for a variety of reasons, all of which are the necessary express permission to otherwise) would impose costs on usually connected to the fax machine send faxes to their customers. As of the facsimile recipients unless or until the owner’s business or other personal and effective date of these rules, the EBR recipient were able to ask that such private interests. The record shows that will no longer be sufficient to show that transmissions be stopped. For example, they are not distributed for other an individual or business has given a company that requests a fax number companies’ advertising purposes. Thus, their express permission to receive on an application form could include a a company wishing to fax ads to unsolicited facsimile advertisements. clear statement indicating that, by consumers whose numbers are listed in The record in this proceeding reveals providing such fax number, the a trade publication or directory must consumers and businesses receive faxes individual or business agrees to receive first obtain the express permission of they believe they have neither solicited facsimile advertisements from that those consumers. Express permission to nor given their permission to receive. company. Such statement, if receive a faxed ad requires that the Recipients of these faxed advertisements accompanied by the recipient’s consumer understand that by providing assume the cost of the paper used, the signature, will constitute the necessary a fax number, he or she is agreeing to cost associated with the use of the prior express permission to send receive faxed advertisements. We facsimile machine, and the costs facsimile advertisements to that believe the burden on companies to associated with the time spent receiving individual or business. We believe that obtain express permission is warranted a facsimile advertisement during which even small businesses may easily obtain when balanced against the need to the machine cannot be used by its permission from existing customers who protect consumers and businesses from owner to send or receive other facsimile agree to receive faxed advertising, when bearing the advertising costs of those transmissions. customers patronize their stores or companies. Finally, the Commission 133. The legislative history indicates provide their contact information. The affirms that facsimile requests for that one of Congress’ primary concerns Commission believes that given the cost permission to transmit faxed ads, was to protect the public from bearing shifting and interference caused by including toll-free opt-out numbers, the costs of unwanted advertising. unsolicited faxes, the interest in impose unacceptable costs on the Certain practices were treated protecting those who would otherwise recipients. This kind of ‘‘negative differently because they impose costs on be forced to bear the burdens of option’’ is contrary to the statutory consumers. For example, under the unwanted faxes outweighs the interests requirement for prior express TCPA, calls to wireless phones and of companies that wish to advertise via permission or invitation. numbers for which the called party is fax. charged are prohibited in the absence of 135. Membership in a Trade Fax Broadcasters an emergency or without the prior Association. In its 1995 Reconsideration 137. The Commission explained in express consent of the called party. See Order, the Commission determined that the 2002 Notice that some fax 47 U.S.C. 227(b)(1). Because of the cost mere distribution or publication of a broadcasters, who transmit other shifting involved with fax advertising, telephone facsimile number is not the entities’ advertisements to a large Congress similarly prohibited equivalent of prior express permission number of telephone facsimile machines unsolicited faxes without the prior to receive faxed advertisements. The for a fee, maintain lists of facsimile express permission of the recipient. 47 Commission also found that given the numbers that they use to direct their U.S.C. 227(b)(1)(C) and (a)(4). Unlike the variety of circumstances in which such clients’ advertisements. We noted that do-not-call list for telemarketing calls, numbers may be distributed (business this practice, among others, indicates a Congress provided no mechanism for cards, advertisements, directory listings, fax broadcaster’s close involvement in opting out of unwanted facsimile trade journals, or by membership in an sending unlawful fax advertisements VerDate Jan<31>2003 15:31 Jul 24, 2003 Jkt 200001 PO 00000 Frm 00026 Fmt 4701 Sfmt 4700 E:FRFM25JYR2.SGM 25JYR2

Federal Register / Vol. 68, No. 143 / Friday, July 25, 2003 / Rules and Regulations 44169 and may subject such entities to a high degree of involvement or actual which a subscriber (a fax broadcaster or enforcement action under the TCPA and notice on the part of the broadcaster. other individual, business, or entity) our existing rules. We then sought The new rules provide that if the fax sends an unsolicited facsimile message, comment on whether the Commission broadcaster supplies the fax numbers that common carrier will not be liable should address specifically in the rules used to transmit the advertisement, the for the facsimile. the activities of fax broadcasters. fax broadcaster will be liable for any 140. Nextel urges the Commission to Companies and organizations whose unsolicited advertisement faxed to clarify that section 217 of the members hire fax broadcasters to consumers and businesses without their Communications Act does not impose a transmit their messages argue that the prior express invitation or permission. higher level of liability on common fax broadcaster should be liable for We agree, however, that if the company carriers than on other entities for violations of the TCPA’s faxing whose products are advertised has violations of the TCPA. Section 217 prohibition. American International supplied the list of fax numbers, that provides that ‘‘[i]n construing and Automobile Dealers Association company is in the best position to enforcing the provisions of this Act, the maintains this should be the case, even ensure that recipients have consented to act, omission, or failure of any officer, if the fax broadcaster uses the list of fax receive the faxes and should be liable agent, or other person acting for or numbers provided by the company for violations of the prohibition. employed by any common carrier or doing the advertising. Nextel argues that Therefore, the fax broadcaster will not user, acting within the scope of his liability ought to lie with the party be responsible for the ads, in the employment, shall in every case be also controlling the destination of the fax; absence of any other close involvement, deemed to be the act, omission, or that fax broadcasters who actively such as determining the content of the failure of such carrier or user as well as compile and market databases of fax faxed message. A high degree of that of the person.’’ 47 U.S.C. 217. The numbers are the major perpetrators of involvement might be demonstrated by Commission declines to address the TCPA fax violations. Nextel specifically a fax broadcaster’s role in reviewing and scope of section 217 in this rulemaking, urges the Commission to find that assessing the content of a facsimile which was not raised in the 2002 Notice companies whose products are message. In such circumstances where or in subsequent notices in this advertised by independent retailers both the fax broadcaster and advertiser proceeding. should not be liable for TCPA violations demonstrate a high degree of Fax Servers when they have no knowledge of such involvement, they may be held jointly 141. The TCPA makes it unlawful for activities. Fax broadcasters disagree that and severally liable for violations of the any person to use any telephone they should be liable for unlawful faxes, unsolicited facsimile provisions. In facsimile machine, computer, or other maintaining that many of them do not adopting this rule, the Commission device to send an unsolicited exercise any editorial control or focuses on the nature of an entity’s advertisement to a telephone facsimile discretion over the content of the activity rather than on any label that the machine. 47 U.S.C. 227(b)(1)(C). The messages, and do not provide the list of entity may claim. We believe the rule TCPA defines the term ‘‘telephone fax numbers to which the ads are will better inform the business facsimile machine’’ to mean ‘‘equipment transmitted. Many industry as well as community about the prohibition on which has the capacity (A) to transcribe consumer commenters agree that only unsolicited fax advertising and the text or images, or both, from paper into those fax broadcasters who are closely liability that attaches to such faxing. an electronic signal and to transmit that involved in the transmission of the fax And, it will better serve consumers who signal over a regular telephone line, or should be subject to liability. Reed are often confused about which party is (B) to transcribe text or images (or both) asserts that liability should rest with the responsible for unlawful fax advertising. from an electronic signal received over entity on whose behalf a fax is sent; that For the same reasons, the new rules a regular telephone line onto paper.’’ 47 fax broadcasters are not in a position to define ‘‘facsimile broadcaster’’ to mean U.S.C. 227(a)(2). The Commission know firsthand whether, for example, a person or entity that transmits sought comment on any developing an established business relationship messages to telephone facsimile technologies, such as computerized fax exists between the company and machines on behalf of another person or servers, that might warrant revisiting consumer. entity for a fee. See 47 CFR these rules. 138. The Commission’s rulings clearly 64.1200(f)(4). 142. Commenters who addressed this indicate that a fax broadcaster’s 139. Some commenters ask the issue were divided on whether fax exemption from liability is based on the Commission to clarify the extent of servers should be subject to the type of activities it undertakes, and only common carriers’ liability for the unsolicited facsimile provisions. Some exists ‘‘[i]n the absence of ‘a high degree transmission of unsolicited faxes. Cox industry representatives urged the of involvement or actual notice of an specifically urges the Commission to Commission to clarify that the TCPA illegal use and failure to take steps to distinguish the obligations of fax does not prohibit the transmission of prevent such transmissions.’’’ 1992 broadcasters from ‘‘traditional common unsolicited fax advertisements to fax TCPA Order, 7 FCC Rcd at 8780, para. carriers.’’ As noted above, the servers and personal computers because 54 (quoting Use of Common Carriers, 2 Commission has stated that ‘‘[i]n the these transmissions are not sent to a FCC Rcd 2819, 2820 (1987)). The absence of ‘a high degree of involvement ‘‘telephone facsimile machine,’’ as Commission believes that, based on the or actual notice of an illegal use and defined in the statute. Nextel maintains record and our own enforcement failure to take steps to prevent such that such faxes do not implicate the experience, addressing the activities of transmissions,’ common carriers will harms Congress sought to redress in the fax broadcasters will better inform both not be held liable for the transmission TCPA, as they are not reduced to paper consumers and businesses about the of a prohibited facsimile message.’’ 1992 and can be deleted from one’s inbox prohibition on unsolicited fax TCPA Order, 7 FCC Rcd at 8780, para. without being opened or examined. advertising. The Commission has 54 (quoting Use of Common Carriers, 2 Other commenters disagree, noting that determined to amend the rules to state FCC Rcd 2819, 2820 (1987)). We there are other costs associated with explicitly that a fax broadcaster will be reiterate here that if a common carrier faxes sent to computers and fax servers. liable for an unsolicited fax if there is is merely providing the network over They note that the TPCA only requires VerDate Jan<31>2003 15:31 Jul 24, 2003 Jkt 200001 PO 00000 Frm 00027 Fmt 4701 Sfmt 4700 E:FRFM25JYR2.SGM 25JYR2

44170 Federal Register / Vol. 68, No. 143 / Friday, July 25, 2003 / Rules and Regulations that the equipment have the capacity to that the recipients’ requested faxes are advertisements when there is a high transcribe text or messages onto paper, not timely received. Such faxes may degree of involvement on the part of the and that computer fax servers and increase labor costs for businesses, fax broadcaster. Commenters suggested personal computers have that capacity. whose employees must monitor faxes to the Commission clarify what constitutes 143. We conclude that faxes sent to determine which ones are junk faxes an adequate identification header. personal computers equipped with, or and which are related to their Consistent with our amended attached to, modems and to company’s business. Finally, because a identification rules for telemarketing computerized fax servers are subject to sender of a facsimile message has no calls, senders of fax advertisements will the TCPA’s prohibition on unsolicited way to determine whether it is being be required under the new rules to use faxes. However, we clarify that the sent to a number associated with a the name under which they are prohibition does not extend to facsimile stand-alone fax machine or to one officially registered to conduct business. messages sent as email over the Internet. associated with a personal computer or Use of a ‘‘d/b/a’’ (‘‘doing business as’’) The record confirms that a conventional fax server, it would make little sense to or other more widely recognized name stand-alone telephone facsimile apply different rules based on the is permissible; however, the official machine is just one device used for this device that ultimately received it. identification of the business, as filed purpose; that developing technologies with state corporate registration offices permit one to send and receive facsimile Identification Requirements or comparable regulatory entities, must messages in a myriad of ways. Today, a 146. The TCPA and Commission rules be included, at a minimum. modem attached to a personal computer require that any message sent via a allows one to transmit and receive telephone facsimile machine contain the Private Right of Action electronic documents as faxes. ‘‘Fax date and time it is sent and an 147. The Commission declines to servers’’ enable multiple desktops to identification of the business, other make any determination about the send and receive faxes from the same or entity, or individual sending the specific contours of the TCPA’s private shared telephony lines. message and the telephone number of right of action. Congress provided 144. The TCPA’s definition of the sending machine or of such consumers with a private right of action, ‘‘telephone facsimile machine’’ broadly business, other entity, or individual. 47 ‘‘if otherwise permitted by the laws or applies to any equipment that has the U.S.C. 227(d)(1)(B); 47 CFR 68.318(d). In rules of court of a State.’’ 47 U.S.C. capacity to send or receive text or the 2002 Notice, the Commission asked 227(c)(5). This language suggests that images. The purpose of the requirement whether these rules have been effective Congress contemplated that such legal that a ‘‘telephone facsimile machine’’ at protecting consumers’ rights to action was a matter for consumers to have the ‘‘capacity to transcribe text or enforce the TCPA. The Commission pursue in appropriate state courts, images’’ is to ensure that the prohibition determined in its Rules and Regulations Implementing the Telephone Consumer subject to those courts’ rules. The on unsolicited faxing not be Protection Act of 1991, CC Docket No. Commission believes it is for Congress, circumvented. Congress could not have 92–90, Order on Further not the Commission, to either clarify or intended to allow easy circumvention of its prohibition when faxes are Reconsideration, 12 FCC Rcd 4609, limit this right of action. (intentionally or not) transmitted to 4613, para. 6 (1997) (1997 TCPA Informal Complaint Rules personal computers and fax servers, Reconsideration Order) that a facsimile rather than to traditional stand-alone broadcast service must ensure that the 148. In the 2002 Notice, the facsimile machines. As the House identifying information of the entity on Commission noted that it had released Report accompanying the TCPA whose behalf the provider sent messages another Notice of Proposed Rulemaking explained, ‘‘facsimile machines are appear on facsimile messages. In its in February of 2002, seeking comment designed to accept, process and print all discussion, the Commission clarified on whether to extend the informal messages which arrive over their that the sender of a facsimile message is complaint rules to entities other than dedicated lines. The fax advertiser takes the creator of the content of the common carriers. We sought comment advantage of this basic design by message, finding that Section 227(d)(1) in this proceeding on whether the sending advertisements to available fax of the TCPA mandates that a facsimile Commission should amend these numbers, knowing that it will be include the identification of the informal complaint rules to apply to received and printed by the recipient’s business, other entity, or individual telemarketers. We will review this issue machine.’’ H.R. Rep. No. 102–317 at 10 creating or originating a facsimile as part of the Informal Complaints (1991). However, Congress also took message, and not the entity that proceeding. All comments filed in this account of the ‘‘interference, transmits the message. The Commission proceeding that address the interruptions, and expense’’ resulting believes that if a fax broadcaster is applicability of the informal complaint from junk faxes, emphasizing in the responsible for the content of the rules to telemarketers will be same Report that ‘‘[i]n addition to the message or for determining the incorporated into CI Docket No. 02–32. costs associated with the fax destination of the message (i.e., Time of Day Restrictions advertisements, when a facsimile supplying the list of facsimile numbers machine is receiving a fax, it may to which the faxes are sent), it should 149. Commission rules restrict require several minutes or more to be identified on the facsimile, along telephone solicitations between the process and print the advertisement. with the entity whose products are hours of 8 a.m. and 9 p.m. local time at During that time, the fax machine is advertised. Therefore, we amend the the called party’s location. 47 CFR unable to process actual business rules to require any fax broadcaster that 64.1200(e)(1). As part of our review of communications. H.R. Rep. No. 102–317 demonstrates a high degree of the TCPA rules, we sought comment on at 25 (1991).’’ involvement in the transmission of such how effective these time restrictions 145. Facsimile messages sent to a facsimile message to be identified on the have been at limiting objectionable computer or fax server may shift the facsimile, along with the identification solicitation calls. The Commission also advertising costs of paper and toner to of the sender. This will permit asked whether more restrictive calling the recipient, if they are printed. They consumers to hold fax broadcasters times could work in conjunction with a may also tie up lines and printers so accountable for unlawful fax national registry to better protect VerDate Jan<31>2003 15:31 Jul 24, 2003 Jkt 200001 PO 00000 Frm 00028 Fmt 4701 Sfmt 4700 E:FRFM25JYR2.SGM 25JYR2

Federal Register / Vol. 68, No. 143 / Friday, July 25, 2003 / Rules and Regulations 44171 consumers from telephone solicitations notably, the FTC’s adoption of a unnecessarily duplicative enforcement to which they object. nationwide do-not-call registry, the actions. 150. Industry members that related Do-Not-Call Act, and finally our 155. In determining enforcement commented on the calling time adoption of requirements that maximize priorities under the new telemarketing restrictions unanimously asserted that consistency with those adopted by the rules, we contemplate that the the current calling times should be FTC create an overlap in federal Enforcement Bureau will continue its retained. Some explained that any regulations governing major policy of reviewing FCC and FTC restrictions on calls made during the telemarketing activities. There are other consumer complaint data and conferring early evening hours, in particular, overlapping regulations such as with appropriate state and federal would interfere with telemarketers’ provisions governing abandoned calls, agencies to detect both egregious ability to reach their customers. transmission of caller ID, and time-of- violations and patterns of violations, Consumers, on the other hand, urged day restrictions. We hereby direct and will act accordingly. The the Commission to adopt tighter Commission staff to negotiate with FTC Enforcement Bureau has in place restrictions on the times that staff a Memorandum of Understanding effective procedures to review aggregate telemarketers may call them. Some between the respective staffs to achieve complaint information to determine the object to calls at the end of the day and an efficient and effective enforcement general areas that merit enforcement during the dinner hour; others prefer strategy that will promote compliance actions, and to identify both particular that telemarketers not be able to begin with federal telemarketing regulations. violators and the individual consumers calling until later in the morning. Some 153. The FCC’s jurisdiction over who may be able to assist the staff in suggest the calling times should parallel telemarketing is significantly broader pursuing enforcement actions against local noise ordinances. EPIC advocated than the FTC’s. First, as noted above, such violators. Enforcement action allowing consumers to specify the hours the FTC does not have authority over could include, for example, forfeiture they wish to receive calls. telemarketing calls made by in-house proceedings under section 503(b),4 151. The Commission declines to employees of common carriers, banks, cease and desist proceedings under revise the restrictions on calling times. credit unions, savings and loans, section 312(c), injunctions under Instead, we retain the current calling insurance companies, and airlines. In section 401, and revocation of common times, which are consistent with the addition, the FTC’s telemarketing rules carrier section 214 operating authority. FTC’s rules. We believe the current pertain only to interstate transmissions. calling times strike the appropriate In contrast, the FCC’s telemarketing Other Issues balance between protecting consumer rules apply without exception to any Access to TCPA Inquiries and privacy and not unduly burdening entity engaged in any of the Complaints industry in their efforts to conduct telemarketing activities targeted by the 156. The Commission stated that the legitimate telemarketing. We also TCPA and the Commission’s related 2002 Notice was ‘‘prompted, in part, by believe that Commission rules that rules, including those that involve the increasing number and variety of diverge from the FTC’s calling purely intrastate activities. 47 U.S.C. inquiries and complaints involving our restrictions will lead to confusion for 152(b). Given the substantial gaps in the rules on telemarketing and unsolicited consumers. Moreover, consumers who FTC’s authority over the full range of want to block unwanted calls during fax advertisements.’’ A few commenters telemarketing activities, we contemplate certain times will now have the option maintain that the Commission should that our enforcement staff will focus of placing their telephone numbers on not consider final rules until parties particularly on those activities and the national do-not-call registry. They have had an opportunity to analyze the entities that fall outside the FTC’s will have the additional option of giving consumer complaints referenced in the reach—airlines, banks, credit unions, express verifiable authorization to only 2002 Notice. Other commenters contend savings and loans, insurance companies, those companies from which they wish and common carriers, as well as that the number of complaints received to hear. The Commission declines at intrastate transmissions by any entity. by the Commission does not necessarily this time to require companies to adhere 154. Nevertheless, we do not demonstrate a problem that demands to consumers’ calling preferences, contemplate Commission enforcement government intervention. The ATA filed including ‘‘acceptable’’ calling times. that targets only those activities, a Freedom of Information Act (FOIA) The Commission encourages any seller entities, or transmissions that are request with the Commission on or telemarketer to comply with outside the FTC’s jurisdiction. The October 16, 2002, seeking access to the consumers’ requests not to be called TCPA creates a statutory expectation for TCPA-related informal complaints. The during certain times of the day. We FCC enforcement in the telemarketing FOIA generally provides that any person believe that the costs of monitoring area. See 47 U.S.C. 227(f)(3), (7). has a right to obtain access to federal calling times for individual consumers Moreover, the TCPA’s detailed agency records, subject to enumerated could be substantial for many standards pertaining to do-not-call exemptions from disclosure. The FOIA companies, particularly small matters evince Congressional intent that requirements do not apply to records businesses. the FCC assume a prominent role in that contain ‘‘personnel and medical federal regulation of this aspect of files and similar files the disclosure of Enforcement Priorities telemarketing, a mandate that is not which would constitute a clearly 152. TCPA enforcement has been a altered by the Do-Not-Call Act. unwarranted invasion of personal Commission priority over the past Accordingly, even with the FTC’s new privacy.’’ See 5 U.S.C. 552(b)(6). Many several years, and we intend that it do-not-call regulations, including its of the complaints sought by the ATA remain so. In guiding our future administration of a national do-not-call contain personal private information. In enforcement plans, we recognize that registry, we emphasize that the addition, the complaints are part of a the FTC’s recent rule changes expand Commission must stand ready to 4 Before initiating a forfeiture proceeding against that agency’s regulation of telemarketing enforce each of our telemarketing rules most entities that do not hold an FCC authorization, activities and require coordination to in appropriate cases. For reasons of the violator must have received a Commission ensure consistent and non-redundant efficiency and fairness, our staff will citation and then engaged in an additional federal enforcement in this area. Most work closely with the FTC to avoid violation. 47 U.S.C. 503(b)(5). VerDate Jan<31>2003 15:31 Jul 24, 2003 Jkt 200001 PO 00000 Frm 00029 Fmt 4701 Sfmt 4700 E:FRFM25JYR2.SGM 25JYR2

44172 Federal Register / Vol. 68, No. 143 / Friday, July 25, 2003 / Rules and Regulations system of records subject to the Privacy promulgation of final rules in this clarify Commission rules governing Act. 5 U.S.C. 552(a); 47 CFR 0.551 et proceeding, and annually thereafter. By unwanted telephone solicitations, the seq. For these reasons, the Commission this Order, the Commission delegates its use of automatic telephone dialing agreed to release the complaints on a authority to the Chief, Consumer & systems, prerecorded or artificial voice rolling basis only after personal Governmental Affairs Bureau, to issue messages, telephone facsimile information was redacted. In response all such reports. machines, the effectiveness of company- to ATA’s FOIA request, the Commission specific do-not-call lists, and the Procedural Issues has thus far provided approximately appropriateness of establishing a 2,420 redacted complaints. Final Regulatory Flexibility Analysis national do-not-call list. In addition, in 157. We agree with commenters that 159. As required by the Regulatory the IRFA, the Commission sought the increasing number of inquiries and Flexibility Act of 1980, as amended comments on the effect the proposed complaints about telemarketing (RFA), 5 U.S.C. 603,5 an Initial policies and rules would have on small practices should not form the basis Regulatory Flexibility Analysis (IRFA) business entities. upon which we revise or adopt new was incorporated in the 2002 Notice 162. In this Order the Commission rules under the TCPA. Rather, such released by the Commission on revises the current TCPA rules and information can be considered in September 18, 2002. The Commission adopts new rules to provide consumers determining whether to seek comment sought written public comments on the with additional options for avoiding on the effectiveness of any of its rules. proposals contained in the 2002 Notice, unwanted telephone solicitations. We Other considerations included: the including comments on the IRFA. On establish a national do-not-call registry Commission’s own enforcement March 25, 2003, the Commission for consumers who wish to avoid most experience; the amount of time that had released the FNPRM, seeking comments unwanted telemarketing calls. This passed since the Commission undertook on the requirements contained in the national do-not-call registry will a broad review of the TCPA rules, Do-Not-Call Act which was signed into supplement the current company- during which time telemarketing law on March 11, 2003. None of the specific do-not-call rules, which will practices have changed significantly; comments filed in this proceeding were continue to permit consumers to request and the actions by the FTC to consider specifically identified as comments that particular companies not call them. changes to its telemarketing rules, The Commission also adopts a new addressing the IRFA; however, including the establishment of a provision to permit consumers comments that address the impact of the national do-not-call registry. We note registered with the national do-not-call proposed rules and policies on small that, even in the absence of any such list to provide permission to call to entities are discussed below. This complaints, the Commission is required specific companies by an express present Final Regulatory Flexibility by the Do-Not-Call Act to complete the written agreement. The TCPA rules Analysis (FRFA) conforms to the RFA. TCPA rulemaking commenced last year. exempt from the ‘‘do-not-call’’ See 5 U.S.C. 604. We disagree with commenters who requirements nonprofit organizations suggest that parties must have access to A. Need for, and Objectives of, the and companies with whom consumers all of the complaints referenced in the Order have an established business NPRM in order to be able to have a 160. Since 1992, when the relationship. The definition of meaningful opportunity to participate in Commission adopted rules pursuant to ‘‘established business relationship’’ has this proceeding. It is not the existence the TCPA, telemarketing practices have been amended so that it is limited to 18 of the complaints, or the number of changed significantly. New technologies months from any purchase or financial complaints, that led the Commission to have emerged that allow telemarketers transaction with the company and to institute this proceeding to consider to better target potential customers and three months from any inquiry or revision of its TCPA rules. Rather, our make marketing using telephones and application from the consumer. Any TCPA rules have been in place for more facsimile machines more cost-effective. company that is asked by a consumer, than ten years. We opened this At the same time, these new including an existing customer, not to proceeding to determine ‘‘whether the telemarketing techniques have call again must honor that request for Commission’s rules need to be revised five years. We retain the current calling heightened public concern about the in order to more effectively carry out time restrictions of 8 a.m. until 9 p.m. effect telemarketing has on consumer 163. To address the use of predictive Congress’s directives in the TCPA.’’ privacy. A growing number of states dialers, we have determined that a 2002 Notice, 17 FCC Rcd at 17461, para. have passed, or are considering, telemarketer must abandon no more 1. In any event, since September 2002, legislation to establish statewide do-not- than three percent of calls answered by consumers, industry, and state call lists, and the FTC has decided to a person, must deliver a prerecorded governments have filed over 6,000 establish a national do-not-call registry. identification message when comments in this proceeding, during Congress provided in the TCPA that abandoning a call, and must allow the which time the Commission extended ‘‘individuals’ privacy rights, public telephone to ring for 15 seconds or four the comment periods twice and released safety interests, and commercial rings before disconnecting an an FNPRM in order to ensure that freedoms of speech and trade must be unanswered call. The new rules also parties had ample opportunity to balanced in a way that protects the require all companies conducting comment on possible FCC action. The privacy of individuals and permits telemarketing to transmit caller substantial record compiled in this legitimate telemarketing practices.’’ See identification information when proceeding, along with the TCPA, Section 2(9), reprinted in 7 FCC available, and they prohibit companies Commission’s own enforcement Rcd 2736 at 2744. from blocking such information. The experience, provides the basis for the 161. The 2002 Notice sought actions we take here today. Commission has revised its earlier comments on whether to revise or determination that an established Reports to Congress business relationship constitutes 5 The RFA, see 5 U.S.C. 601–612, has been 158. The Do-Not-Call Act requires the amended by the Small Business Regulatory express invitation or permission to Commission to transmit reports to Enforcement Fairness Act of 1996 (SBREFA), Public receive an unsolicited facsimile Congress within 45 days after the Law 104–121, Title II, 110 Stat. 857 (1996). advertisement. We find that the VerDate Jan<31>2003 15:31 Jul 24, 2003 Jkt 200001 PO 00000 Frm 00030 Fmt 4701 Sfmt 4700 E:FRFM25JYR2.SGM 25JYR2

Federal Register / Vol. 68, No. 143 / Friday, July 25, 2003 / Rules and Regulations 44173 permission to send fax ads must be in 166. National Do-Not-Call List. As because small businesses benefit writing, include the recipient’s discussed more extensively in the tremendously by advertising in yellow signature, and clearly indicate the Order, some commenters opposed the pages and on-line. However, other recipient’s consent to receive such ads. adoption of a national do-not-call commenters requested that small In addition, we have clarified when fax registry, stating that company-specific businesses be allowed to include their broadcasters are liable for the do-not-call lists adequately protect telephone numbers on the national do- transmission of unlawful fax consumer privacy. Other commenters not-call list. One small business advertisements. supported the establishment of a commenter stated that ’’* * * 164. We believe the rules the national do-not-call registry, arguing telemarketing * * * interferes with Commission adopts in the Order strike that ‘‘further regulation is needed business operations, especially small an appropriate balance between because the current system does little or business operations * * *.’’ maximizing consumer privacy nothing to protect privacy in the home.’’ Mathemaesthetics, Inc. protections and avoiding imposing See Privacy Rights Clearinghouse (Mathemaesthetics) Comments at 6. undue burdens on telemarketers. In (Privacy Rights) at 2. National Another commenter argued that ‘‘people addition, the Commission must comply Federation of Independent Business that work from home * * * should not with the Do-Not-Call Act, which (NFIB) ‘‘believes that significant have to be bothered with telemarketing requires the Commission to file an burdens are being placed upon calls that would impact their job annual report to the House Committee businesses of all sizes in order to performance and potentially their on Energy and Commerce and the comply with the regulations * * *, but ability to make a living.’’ David T. Senate Committee on Commerce, that small businesses bear the brunt of Piekarski Comments (Docket No. 03–62) Science and Transportation. This report those burdens.’’ NFIB Comments at 1. at 1–2. Finally, some have assured the is to include: (1) An analysis of the NFIB suggested that women, minorities Commission that a national do-not-call effectiveness of the registry; (2) the and small businesses will be affected list would be manageable and feasible to number of consumers included on the disproportionately by any new maintain. NCS Pearson, Inc. (NCS), for registry; (3) the number of persons restrictions. And, some commenters example, maintained that even accessing the registry and the fees maintained that businesses, including extremely small telemarketers could collected for such access; (4) a small businesses, will suffer a reduction gain access to the do-not-call list at a description of coordination with state in telemarketing sales as a result of the reasonable cost using the Internet. do-not-call registries; and, lastly, (5) a establishment of a national do-not-call 169. Web site or Toll-Free Number to description of coordination of the list. Small Business Survival Committee Access Company-Specific Lists and to registry with the Commission’s (SBSC), while opposed to a national do- Confirm Requests. The Commission enforcement efforts. not-call list, nevertheless offered a sought comment on whether to consider recommendation that would make such any modifications that would allow B. Summary of Significant Issues Raised a list less onerous for small businesses. consumers greater flexibility to register by Public Comments in Response to the SBSC suggested exempting local calls on company-specific do-not-call lists. IRFA that might result in a face-to-face We specifically asked whether 165. There were no comments filed in transaction from the do-not-call list companies should be required to direct response to the IRFA. Some requirements. National Association of provide a toll-free number and/or Web commenters, however, raised issues and Insurance & Financial Advisors also site that consumers can access to questions about the impact the proposed encouraged exempting calls which register their names on do-not-call lists. rules and policies would have on small result in face-to-face meetings and Some commenters argued that it would entities. Telemarketers maintained that recommended an exemption for those be costly if small, local businesses were ‘‘telemarketing is used to introduce businesses that make a de minimis required to design and maintain Web consumers to novel and competitive number of calls. sites or provide toll-free numbers for products and services,’’ often offered by 167. The Commission received consumers to make do-not-call requests. small businesses. Some commenters comments arguing that a national do- In addition, they maintained that insisted that business-to-business not-call list ‘‘would be cumbersome’’ businesses should not be required to telemarketing is essential for small and too expensive for small businesses confirm registration of a consumer’s businesses. They indicated that they to use. Direct Selling Association name on a company’s do-not-call list. rely on fax broadcasting as a cost- specifically indicated that a national do- Confirmations by mail, they stated, effective form of advertising. On the not-call list would increase businesses’ would be expensive for a business and other hand, other small businesses have start-up costs if they were required to probably perceived by the consumer as requested that the Commission allow purchase the list. In addition, Mortgage ‘‘junk mail.’’ their telephone numbers to be included Bankers Association of America (MBA) 170. Established Business on any national do-not-call list and maintained that many small lenders use Relationship. One issue raised by urged the Commission to adopt rules referrals from existing customers, not commenters as particularly burdensome protecting them from unsolicited faxes. large lists, to attract new business. Such for small business was monitoring The rules adopted herein reflect not referrals, MBA suggested, will be existing business relationships and do- only the difficult balancing of difficult to scrub against a national do- not-call requests. NFIB stated that individuals’ privacy rights against the not-call list. Some commenters members have found requests by protections afforded commercial speech, suggested that an option to help reduce existing customers to cease contacting but the difficult balancing of the the cost of a national do-not-call list for them ‘‘unwieldy and difficult * * * to interests of small businesses that rely on small businesses would be to offer translate as a business practice.’’ NFIB telemarketing against those that are smaller pieces of the list to small Comments at 2. ‘‘An individual who harmed by unwanted telephone calls businesses. continues to interact with a [sic] these and facsimile transmissions. The 168. Yellow Pages Integrated Media small businesses following a ‘do not amended rules should reduce burdens Association urged the Commission to contact’ request does not sever the on both consumers and businesses, continue to exempt business-to-business business relationship de facto * * *’’. including small businesses. calls from a national do-not-call list, NFIB Comments at 2. According to VerDate Jan<31>2003 16:35 Jul 24, 2003 Jkt 200001 PO 00000 Frm 00031 Fmt 4701 Sfmt 4700 E:FRFM25JYR2.SGM 25JYR2

44174 Federal Register / Vol. 68, No. 143 / Friday, July 25, 2003 / Rules and Regulations NFIB, it should be the right of the business, including via facsimile the rules adopted herein. The RFA business to continue to call that advertising. In addition, NFIB indicated generally defines the term ‘‘small customer. They argued that it should be that businesses engaged in facsimile entity’’ as having the same meaning as the responsibility of the customer to advertising should not be required to the terms ‘‘small business,’’ ‘‘small terminate the relationship with that identify themselves, and that customers organization,’’ and ‘‘small governmental business affirmatively. should be required to notify the jurisdiction.’’ 5 U.S.C. 601(6). In 171. National Automobile Dealers business that they do not wish to addition, the term ‘‘small business’’ has Association (NADA) indicated that there receive such faxes. NADA agreed that the same meaning as the term ‘‘small has been no significant change that the Commission should ‘‘preserve its business concern’’ under the Small would warrant a revision of the determination that a prior business Business Act. 5 U.S.C. 601(3) established business relationship relationship between a fax sender and (incorporating by reference the exemption. In fact, NADA stated that recipient establishes the requisite definition of ‘‘small-business concern’’ ‘‘narrowing the exemption would consent to receive fax advertisements.’’ in the Small Business Act, 15 U.S.C. unnecessarily deprive small businesses NADA Comments at 2. According to 632). Under the Small Business Act, a of a cost-effective marketing NADA, changing these rules would ‘‘small business concern’’ is one that: (1) opportunity.’’ NADA Comments at 2. deprive small businesses of a marketing Is independently owned and operated; According to NADA, small businesses tool upon which they have come to rely. (2) is not dominant in its field of must maximize their marketing 175. Other commenters disagreed, operation; and (3) satisfies any resources and the best way to do so is explaining that numerous small additional criteria established by the to direct their marketing efforts toward businesses are burdened by the Small Business Administration (SBA). their existing customers. intrusion of ringing telephones and fax 15 U.S.C. 632. 172. While no commenter specifically machines, the receipt of advertisements 178. The Commission’s rules on addressed the effect of time limits on in which they are not interested, the telephone solicitation and the use of small businesses, several entities depletion of toner and paper, and the autodialers, artificial or prerecorded discussed time limits for the established time spent dealing with these unwanted messages and telephone facsimile business relationship rule in general. faxes. A few home-based businesses and machines apply to a wide range of DMA indicated the difficulty in other companies maintain that facsimile entities, including all entities that use establishing a ‘‘clock’’ that ‘‘will apply advertisements interfere with the receipt the telephone or facsimile machine to across all the industries that use the of faxes connected to their own advertise. 47 CFR 64.1200. That is, our phone to relate to their customers.’’ business, and that the time spent action affects the myriad of businesses DMA Comments at 20. DMA continued collecting and sorting these faxes throughout the nation that use by stating ‘‘[d]ifferent business models increases their labor costs. In fact, NFIB telemarketing to advertise. For instance, require different periods of time.’’ DMA has received complaints from its own funeral homes, mortgage brokers, Comments at 20. This concept was members ‘‘who * * * failed to realize automobile dealers, newspapers and supported by Nextel, ‘‘the FTC’s that their membership entitles them to telecommunications companies could eighteen-month limit on its EBR rule the receipt of such information via fax.’’ all be affected. Thus, we expect that the would be inappropriate for the NFIB Comments at 2 (emphasis added). rules adopted in this proceeding could telecommunications industry’’ and 176. Caller ID Requirements. In have a significant economic impact on would ‘‘dramatically increase response to the Commission’s proposal a substantial number of small entities. administrative burdens and costs for all to require telemarketers to transmit 179. Nationwide, there are a total of businesses as they would be forced to caller ID or prohibit the blocking of such 22.4 million small businesses, according monitor and record every customer information, NYSCPB favored to SBA data. And, as of 1992, inquiry and purchasing pattern to prohibiting the intentional blocking of nationwide there were approximately ensure compliance with the FCC’s caller ID information, but acknowledged 275,801 small organizations [not-for- rules.’’ Nextel Reply Comments 12–13. that requiring the transmission of caller profit]. 173. Unsolicited Facsimile ID may be inappropriate for smaller 180. Again, we note that our action Advertising and ‘‘War Dialing’’. Privacy firms. NYSCPB stated that ‘‘[w]hile affects an exhaustive list of business Rights commented that the practice of mandatory transmission of caller ID types and varieties. We will mention dialing large blocks of numbers to information would undoubtedly with particularity the intermediary identify facsimile lines, i.e., ‘‘war facilitate do-not-call enforcement * * * groups that engage in this activity. SBA dialing,’’ should be prohibited, we would not want to impose onerous has determined that ‘‘telemarketing especially because such calls cannot be burdens on smaller, less technically bureaus’’ with $6 million or less in characterized as telemarketing. It argued sophisticated firms * * *.’’ NYSCPB- annual receipts qualify as small that ‘‘this practice is particularly Other Than National DNC List businesses. See 13 CFR 121.201, NAICS troubling for small business owners who Comments at 9. In addition, NYSCPB code 561422. For 1997, there were 1,727 often work out of home offices’’ because suggested that smaller businesses that firms in the ‘‘telemarketing bureau’’ it deprives the small business owner of lack the capability to transmit caller ID category, total, which operated for the the use of the equipment, creates an be exempt from providing caller ID entire year. Of this total, 1,536 reported annoyance and interrupts business calls. information until the business installs annual receipts of less than $5 million, Privacy Rights Comments at 4–5. new equipment with caller ID and an additional 77 reported receipts 174. NFIB advocated on behalf of its capabilities. of $5 million to $9,999,999. Therefore, small business members that ‘‘the the majority of such firms can be ability to fax information to their C. Description and Estimate of the considered to be small businesses. established customers is an essential Number of Small Entities to Which the commercial tool.’’ NFIB Comments at 3– Rules Will Apply D. Description of Projected Reporting, 4. Any customer who provides contact 177. The RFA directs agencies to Recordkeeping, and Other Compliance information when patronizing a provide a description of, and where Requirements for Small Entities business is providing express feasible, an estimate of the number of 181. The rules contained herein permission to be contacted by that small entities that may be affected by require significant recordkeeping VerDate Jan<31>2003 15:31 Jul 24, 2003 Jkt 200001 PO 00000 Frm 00032 Fmt 4701 Sfmt 4700 E:FRFM25JYR2.SGM 25JYR2

Federal Register / Vol. 68, No. 143 / Friday, July 25, 2003 / Rules and Regulations 44175 requirements on the part of businesses, it has considered in developing its consumer privacy. In addition, we including small business entities. First, approach, which may include the declined to permit businesses to register while the national do-not-call list will following four alternatives (among their numbers on the national do-not- be developed and maintained by the others): ‘‘(1) The establishment of call registry, despite the requests of FTC, all businesses that engage in differing compliance or reporting numerous small business owners to do telemarketing will be responsible for requirements or timetables that take into so. The TCPA expressly contemplates obtaining the list of telephone numbers account the resources available to small that a national do-not-call database on the national do-not-call list and entities; (2) the clarification, includes residential telephone scrubbing their calling lists to avoid consolidation, or simplification of subscribers’ numbers. Although calling those numbers. They must also compliance or reporting requirements business numbers will not be included continue to be responsible for under the rule for such small entities; in the national do-not-call database, a maintaining their own company-specific (3) the use of performance rather than business could nevertheless request that do-not-call lists; however, this is not a design standards; and (4) an exemption its number be added to a company’s do- new requirement, but a continuation of from coverage of the rule, or any part not-call list. the Commission’s existing rules. The thereof, for such small entities.’’ 5 188. The Commission considered the Commission has reduced the period of U.S.C. 603(c)(1) through (c)(4). costs to small businesses of purchasing time that businesses must retain 186. There were five specific areas in the national do-not-call list. In an company-specific do-not-call requests which the Commission considered attempt to minimize the cost for small from 10 years to five years. In addition, alternatives for small businesses. These businesses, we have considered an for those businesses, including small areas were: (1) Establishing a National alternative and determined that businesses, that wish to call consumers Do-Not-Call List ((a) providing a portion businesses will be allowed to obtain up under the ‘‘established business of the national do-not-call list (five area to five area codes free of charge. Since relationship’’ exemption, they must codes) for free, (b) providing businesses many small businesses telemarket continue to maintain customer lists in with 30 days to process do-not-call within a local area, providing five area the normal course of business. Because requests, and (c) reducing the do-not- codes at no cost should help to reduce of the time limits associated with this call record retention rate from 10 years or eliminate the costs of purchasing the rule, businesses will need to monitor to five years); (2) maintaining the national registry for small businesses. and record consumer contacts to assure current established business rule Furthermore, as suggested by NCS, that they are complying with the 18- exemption and adopting the FTC’s time small businesses should be able to gain month and three-month provisions in limits of 18 months and three months; access to the national list in an efficient, the rule. Businesses that want to call (3) establishing a call abandonment rate cost-effective manner via the Internet. consumers with whom they have no of three percent, rather than zero 189. As discussed extensively in the relationship, but who are listed on the percent, and measuring the rate over a Order, many businesses, including national do-not-call list, must obtain a 30-day period, rather than on a per day small business entities, requested consumer’s express permission to call. basis; (4) continuing to prohibit specific exemptions from the This permission must be evidenced by facsimile advertising to residential and requirements of a national do-not-call a signed, written agreement. business numbers; and (5) declining to list. In order to minimize potential 182. Second, all businesses that use require businesses to maintain a Web confusion for both consumers and autodialers, including predictive site or toll-free number for do-not-call businesses alike, we declined to create dialers, to sell goods or services, will be requests or confirmation of such specific exemptions for small required to maintain records requests by consumers. Small businesses. We believe the exemptions documenting compliance with the call businesses presented arguments on both adopted for calls made to consumers abandonment rules. Such records sides of each of these issues. with whom a seller has an established should demonstrate the telemarketers’ 187. National Do-Not-Call List. This business relationship and those that compliance with a call abandonment Order establishes a national do-not-call have provided express agreement to be rate of no less than three percent list for those residential telephone called provide businesses with a measured over a 30-day period, with the subscribers who wish to avoid most reasonable opportunity to conduct their two-second-transfer rule, and with the unwanted telephone solicitations. business while protecting consumer ring duration requirement. Although many businesses, including privacy interests. 183. Third, with the exception of tax- small businesses, objected to a national 190. The Commission also considered exempt nonprofit organizations, all do-not-call registry, the Commission modifying for small businesses the time businesses that engage in telemarketing determined that a national do-not-call frames for (1) processing consumers’ do- will be required to transmit caller ID list was necessary to carry out the not-call requests; (2) retaining consumer information. directives in the TCPA. We agreed with do-not-call records; and (3) scrubbing 184. Fourth, businesses that advertise those commenters who maintained that calling lists against the national do-not- by fax will be required to maintain the company-specific approach to call registry. In doing so, we recognized records demonstrating that recipients concerns about unwanted telephone the limitations on small businesses of have provided express permission to solicitations does not alone adequately processing requests in a timely manner. send fax advertisements. Such protect individuals’ privacy interests. Therefore, we determined to require that permission must be given in writing, We declined to exempt local both large and small businesses must and businesses must document that they solicitations and small businesses from honor do-not-call requests within 30 have obtained the required permission. the national do-not-call list. Given the days from the date such a request is numerous entities that solicit by made, instead of requiring that E. Steps Taken To Minimize the telephone, and the technological tools businesses honor requests in less time. Significant Economic Impact on Small that allow even small entities to make Although some commenters suggested Entities, and Significant Alternatives a significant number of solicitation periods of up to 60 to 90 days to process Considered calls, we believe that to do so would do-not-call requests, we determined that 185. The RFA requires an agency to undermine the effectiveness of the such an inconsistency in the rules describe any significant alternatives that national do-not-call rules in protecting would lead to confusion for consumers. VerDate Jan<31>2003 15:31 Jul 24, 2003 Jkt 200001 PO 00000 Frm 00033 Fmt 4701 Sfmt 4700 E:FRFM25JYR2.SGM 25JYR2

44176 Federal Register / Vol. 68, No. 143 / Friday, July 25, 2003 / Rules and Regulations Consumers might not easily recognize described their frustration over hang-up businesses, which are inundated with that the telemarketer calling represented calls that interrupt their work and with unwanted fax advertisements. a small business and that they must answering the phone ‘‘only to find 196. Web site or Toll-Free Number to then allow a longer period of time for complete silence on the other end.’’ Access Company-Specific Lists and to their do-not-call requests to be Mathemaesthetics Comments at 6. Most Confirm Requests. Lastly, the processed. industry members encouraged the Commission has determined not to 191. The Commission also determined Commission to adopt an abandonment require businesses to provide a Web site to reduce the retention period of do-not- rate of no less than five percent, or toll-free number for consumers to call records from 10 years to five years. claiming that this rate ‘‘minimizes request placement on company-specific This modification should benefit abandoned calls, while still allowing for do-not-call lists or to respond businesses that are concerned about the substantial benefits achieved by affirmatively to do-not-call requests or telephone numbers that change hands predictive dialers.’’ WorldCom Reply at otherwise provide some means of over time. They argue that a shorter 18–19. The Commission has determined confirmation that consumers have been retention requirement will result in do- that a three percent maximum rate on added to a company’s do-not-call list. not-call lists that more accurately reflect abandoned calls balances the interests Several commenters indicated that such those consumers who have requested of businesses that derive economic requirements would be costly to small not to be called. Finally, we considered benefits from predictive dialers and businesses. Although we believe these allowing small businesses additional consumers who find intrusive those measures would improve the ability of time to scrub their customer call lists calls delivered by predictive dialers. We consumers to register do-not-call against the national do-not-call believe that this alternative, a rate of requests, we agree that such database. The FTC’s rules require three percent, will also benefit small requirements would be potentially telemarketers to scrub their lists every businesses that are affected by costly to businesses, particularly small 90 days. For the sake of consistency, interruptions from hang-ups and ‘‘dead businesses. Instead, we believe that the and to avoid confusion on the part of air’’ calls. national do-not-call registry will consumers and businesses, the 194. The three percent rate will be provide consumers with a viable Commission determined to require all measured over a 30-day period, rather alternative if they are concerned that businesses to access the national than on a per day basis. Industry their company-specific do-not-call registry and scrub their calling lists of members maintained that a per day requests are not being honored. In numbers in the registry every 90 days. measurement would not account for addition, consumers may pursue a 192. Established Business short-term fluctuations in marketing private right of action if there is a Relationship. We have modified the campaigns and may be overly violation of the do-not-call rules. This current definition of ‘‘established burdensome to smaller telemarketers. alternative should reduce, for small business relationship’’ so that it is We believe that measuring the three businesses who engage in telemarketing, limited in duration to 18 months from percent rate over a longer period of time both the potential cost and resource any purchase or transaction and three will still reduce the overall number of burdens of maintaining company- months from any inquiry or application. abandoned calls, yet permit specific lists. The revised definition is consistent with telemarketers to manage individual 197. Report to Congress: The the definition adopted by the FTC. We calling campaigns effectively. It will Commission will send a copy of the concluded that regulating the duration also permit telemarketers to more easily Order, including this FRFA, in a report of an established business relationship comply with the recordkeeping to be sent to Congress pursuant to the is necessary to minimize confusion and requirements associated with the use of Congressional Review Act, 5 U.S.C. frustration for consumers who receive predictive dialers. 801(a)(1)(A). In addition, the calls from companies they have not 195. Unsolicited Facsimile Commission will send a copy of the contacted or patronized for many years. Advertising. The record reveals that Order, including this FRFA, to the Chief There was little consensus among facsimile advertising can both benefit Counsel for Advocacy of the SBA. A industry members about how long an and harm small businesses with limited copy of the Order and FRFA (or established business relationship should resources. The small businesses and summaries thereof) will also be last following a transaction between the organizations that rely upon faxing as a published in the Federal Register. consumer and seller. We believe the 18- cost-effective way to advertise insist that Ordering Clauses month timeframe strikes an appropriate the Commission allow facsimile balance between industry practices and advertising to continue. Other small 198. Accordingly, pursuant to the consumer privacy interests. Although businesses contend that facsimile authority contained in Sections 1–4, businesses, including small businesses advertising interferes with their daily 222, 227, and 303(r) of the must monitor the length of relationships operations, increases labor costs, and Communications Act of 1934, as with their customers to determine wastes resources such as paper and amended; 47 U.S.C. 151–154, 222 and whether they can lawfully call a toner. The Commission has reversed its 227; and 47 CFR 64.1200 of the customer, we believe that a rule prior conclusion that an established Commission’s rules, and the Do-Not- consistent with the FTC’s will benefit business relationship provides Call Implementation Act, Public Law businesses by creating one uniform companies with the necessary express 108–10, 117 Stat. 557, the Report and standard with which businesses must permission to send faxes to their Order in CG Docket No. 02–278 IS comply. customers. Under the amended rules, a ADOPTED, and Parts 64 and 68 of the 193. Call Abandonment. In the 2002 business may advertise by fax with the Commission’s rules, 47 CFR Parts Notice, the Commission requested prior express permission of the fax 64.1200, 64.1601, and 68.318, are information on the use of predictive recipient, which must be in writing. amended as set forth in the attached dialers and the harms that result when Businesses may obtain such written Rule Changes. Effective August 25, predictive dialers abandon calls. In permission through direct mail, Web 2003, except for 47 CFR 64.1200(c)(2), response, some small businesses urged sites, or during interaction with which contains the national do-not-call the Commission to adopt a maximum customers in their stores. This rules, which will go into effect on rate of zero on abandoned calls. They alternative will benefit those small October 1, 2003; 47 CFR 64.1200(a)(5) VerDate Jan<31>2003 15:31 Jul 24, 2003 Jkt 200001 PO 00000 Frm 00034 Fmt 4701 Sfmt 4700 E:FRFM25JYR2.SGM 25JYR2

Federal Register / Vol. 68, No. 143 / Friday, July 25, 2003 / Rules and Regulations 44177 and (6) which contain the call § 64.1200 Delivery restrictions. (5) Disconnect an unanswered abandonment rules, which will go into (a) No person or entity may: (1) telemarketing call prior to at least 15 effect on October 1, 2003; 47 CFR Initiate any telephone call (other than a seconds or four (4) rings. 64.1601(e), which contains the caller ID call made for emergency purposes or (6) Abandon more than three percent rules, which will go into effect on made with the prior express consent of of all telemarketing calls that are January 29, 2004; and §§64.1200(a)(3)(i), the called party) using an automatic answered live by a person, measured (d)(1), (d)(3), (d)(6), (f)(3) and (g)(1), telephone dialing system or an artificial over a 30-day period. A call is which contain information collection or prerecorded voice, ‘‘abandoned’’ if it is not connected to a requirements under the Paperwork (i) To any emergency telephone line, live sales representative within two (2) Reduction Act (PRA) that have not been including any 911 line and any seconds of the called person’s approved by the Office of Management emergency line of a hospital, medical completed greeting. Whenever a sales and Budget (OMB). The Commission physician or service office, health care representative is not available to speak will publish a document in the Federal facility, poison control center, or fire with the person answering the call, that Register announcing the effective date protection or law enforcement agency; person must receive, within two (2) for those sections. (ii) To the telephone line of any guest seconds after the called person’s 199. The comments addressing the room or patient room of a hospital, completed greeting, a prerecorded applicability of the informal complaint health care facility, elderly home, or identification message that states only rules to telemarketers ARE similar establishment; or the name and telephone number of the INCORPORATED into CI Docket 02–32. (iii) To any telephone number business, entity, or individual on whose 200. The Commission’s Consumer & assigned to a paging service, cellular behalf the call was placed, and that the Governmental Affairs Bureau shall have telephone service, specialized mobile call was for ‘‘telemarketing purposes.’’ authority to issue any reports to radio service, or other radio common The telephone number so provided Congress as required by the Do-Not-Call carrier service, or any service for which must permit any individual to make a Implementation Act. the called party is charged for the call. do-not-call request during regular 201. The Commission’s Consumer & (2) Initiate any telephone call to any business hours for the duration of the Governmental Affairs Bureau, Reference residential line using an artificial or telemarketing campaign. The telephone Information Center, SHALL SEND a prerecorded voice to deliver a message number may not be a 900 number or any copy of this Report and Order, including without the prior express consent of the other number for which charges exceed the Final Regulatory Flexibility called party, unless the call, local or long distance transmission Analysis, to the Chief Counsel for (i) Is made for emergency purposes, charges. The seller or telemarketer must (ii) Is not made for a commercial maintain records establishing Advocacy of the Small Business purpose, compliance with paragraph (a)(6) of this Administration. (iii) Is made for a commercial purpose section. List of Subjects in 47 CFR Parts 64 and but does not include or introduce an (i) A call for telemarketing purposes 68 unsolicited advertisement or constitute that delivers an artificial or prerecorded a telephone solicitation, voice message to a residential telephone Telephone. (iv) Is made to any person with whom line that is assigned to a person who Federal Communications Commission. the caller has an established business either has granted prior express consent William F. Caton, relationship at the time the call is made, for the call to be made or has an Deputy Secretary. or established business relationship with (v) Is made by or on behalf of a tax- the caller shall not be considered an Final Rules exempt nonprofit organization. abandoned call if the message begins s For the reasons discussed in the (3) Use a telephone facsimile within two (2) seconds of the called preamble, the Federal Communications machine, computer, or other device to person’s completed greeting. Commission amends parts 64 and 68 of send an unsolicited advertisement to a (ii) Calls made by or on behalf of tax- the Code of Federal Regulations as telephone facsimile machine, exempt nonprofit organizations are not follows: (i) For purposes of paragraph (a)(3) of covered by paragraph (a)(6) of this this section, a facsimile advertisement is section. PART 64—MISCELLANEOUS RULES not ‘‘unsolicited’’ if the recipient has (7) Use any technology to dial any RELATING TO COMMON CARRIERS granted the sender prior express telephone number for the purpose of invitation or permission to deliver the determining whether the line is a s 1. The authority citation for part 64 advertisement, as evidenced by a facsimile or voice line. continues to read: signed, written statement that includes (b) All artificial or prerecorded Authority: 47 U.S.C. 154, 254(k); secs. the facsimile number to which any telephone messages shall: 403(b)(2)(B), (c), Public Law 104–104, 110 advertisements may be sent and clearly (1) At the beginning of the message, Stat. 56. Interpret or apply 47 U.S.C. 201, indicates the recipient’s consent to state clearly the identity of the business, 218, 225, 226, 228, and 254(k) unless receive such facsimile advertisements individual, or other entity that is otherwise noted. from the sender. responsible for initiating the call. If a s 2. Subpart L is amended by revising (ii) A facsimile broadcaster will be business is responsible for initiating the the subpart heading to read as follows: liable for violations of paragraph (a)(3) call, the name under which the entity is * * * * * of this section if it demonstrates a high registered to conduct business with the degree of involvement in, or actual State Corporation Commission (or Subpart L—Restrictions on notice of, the unlawful activity and fails comparable regulatory authority) must Telemarketing and Telephone to take steps to prevent such facsimile be stated, and Solicitation transmissions. (2) During or after the message, state (4) Use an automatic telephone clearly the telephone number (other * * * * * dialing system in such a way that two than that of the autodialer or s 3. Section 64.1200 is revised to read as or more telephone lines of a multi-line prerecorded message player that placed follows: business are engaged simultaneously. the call) of such business, other entity, VerDate Jan<31>2003 15:31 Jul 24, 2003 Jkt 200001 PO 00000 Frm 00035 Fmt 4701 Sfmt 4700 E:FRFM25JYR2.SGM 25JYR2

44178 Federal Register / Vol. 68, No. 143 / Friday, July 25, 2003 / Rules and Regulations or individual. The telephone number administrator of the national database request not to be called to a party other provided may not be a 900 number or and does not participate in any than the person or entity on whose any other number for which charges arrangement to share the cost of behalf a telemarketing call is made or an exceed local or long distance accessing the national database, affiliated entity. transmission charges. For telemarketing including any arrangement with (4) Identification of sellers and messages to residential telephone telemarketers who may not divide the telemarketers. A person or entity subscribers, such telephone number costs to access the national database making a call for telemarketing purposes must permit any individual to make a among various client sellers; or must provide the called party with the do-not-call request during regular (ii) It has obtained the subscriber’s name of the individual caller, the name business hours for the duration of the prior express invitation or permission. of the person or entity on whose behalf telemarketing campaign. Such permission must be evidenced by the call is being made, and a telephone (c) No person or entity shall initiate a signed, written agreement between the number or address at which the person any telephone solicitation, as defined in consumer and seller which states that or entity may be contacted. The paragraph (f)(9) of this section, to: the consumer agrees to be contacted by telephone number provided may not be (1) Any residential telephone this seller and includes the telephone a 900 number or any other number for subscriber before the hour of 8 a.m. or number to which the calls may be which charges exceed local or long after 9 p.m. (local time at the called placed; or distance transmission charges. party’s location), or (iii) The telemarketer making the call (5) Affiliated persons or entities. In (2) A residential telephone subscriber has a personal relationship with the the absence of a specific request by the who has registered his or her telephone recipient of the call. subscriber to the contrary, a residential number on the national do-not-call (d) No person or entity shall initiate subscriber’s do-not-call request shall registry of persons who do not wish to any call for telemarketing purposes to a apply to the particular business entity receive telephone solicitations that is residential telephone subscriber unless making the call (or on whose behalf a maintained by the federal government. such person or entity has instituted call is made), and will not apply to Such do-not-call registrations must be procedures for maintaining a list of affiliated entities unless the consumer honored for a period of 5 years. Any persons who request not to receive reasonably would expect them to be person or entity making telephone telemarketing calls made by or on behalf included given the identification of the solicitations (or on whose behalf of that person or entity. The procedures caller and the product being advertised. telephone solicitations are made) will instituted must meet the following (6) Maintenance of do-not-call lists. A not be liable for violating this minimum standards: person or entity making calls for requirement if: (1) Written policy. Persons or entities telemarketing purposes must maintain a (i) It can demonstrate that the making calls for telemarketing purposes record of a caller’s request not to receive violation is the result of error and that must have a written policy, available further telemarketing calls. A do-not- as part of its routine business practice, upon demand, for maintaining a do-not- call request must be honored for 5 years it meets the following standards: call list. from the time the request is made. (A) Written procedures. It has (2) Training of personnel engaged in (7) Tax-exempt nonprofit established and implemented written telemarketing. Personnel engaged in any organizations are not required to comply procedures to comply with the national aspect of telemarketing must be with 64.1200(d). do-not-call rules; informed and trained in the existence (e) The rules set forth in paragraph (c) (B) Training of personnel. It has and use of the do-not-call list. and (d) of this section are applicable to trained its personnel, and any entity (3) Recording, disclosure of do-not- any person or entity making telephone assisting in its compliance, in call requests. If a person or entity solicitations or telemarketing calls to procedures established pursuant to the making a call for telemarketing purposes wireless telephone numbers to the national do-not-call rules; (or on whose behalf such a call is made) extent described in the Commission’s (C) Recording. It has maintained and receives a request from a residential Report and Order, CG Docket No. 02– recorded a list of telephone numbers telephone subscriber not to receive calls 278, FCC 03–153, ‘‘Rules and that the seller may not contact; from that person or entity, the person or Regulations Implementing the (D) Accessing the national do-not-call entity must record the request and place Telephone Consumer Protection Act of database. It uses a process to prevent the subscriber’s name, if provided, and 1991.’’ telephone solicitations to any telephone telephone number on the do-not-call list (f) As used in this section: number on any list established pursuant at the time the request is made. Persons (1) The terms automatic telephone to the do-not-call rules, employing a or entities making calls for dialing system and autodialer mean version of the national do-not-call telemarketing purposes (or on whose equipment which has the capacity to registry obtained from the administrator behalf such calls are made) must honor store or produce telephone numbers to of the registry no more than three a residential subscriber’s do-not-call be called using a random or sequential months prior to the date any call is request within a reasonable time from number generator and to dial such made, and maintains records the date such request is made. This numbers. documenting this process; and period may not exceed thirty days from (2) The term emergency purposes (E) Purchasing the national do-not- the date of such request. If such requests means calls made necessary in any call database. It uses a process to ensure are recorded or maintained by a party situation affecting the health and safety that it does not sell, rent, lease, other than the person or entity on whose of consumers. purchase or use the national do-not-call behalf the telemarketing call is made, (3) The term established business database, or any part thereof, for any the person or entity on whose behalf the relationship means a prior or existing purpose except compliance with this telemarketing call is made will be liable relationship formed by a voluntary two- section and any such state or federal law for any failures to honor the do-not-call way communication between a person to prevent telephone solicitations to request. A person or entity making a call or entity and a residential subscriber telephone numbers registered on the for telemarketing purposes must obtain with or without an exchange of national database. It purchases access to a consumer’s prior express permission consideration, on the basis of the the relevant do-not-call data from the to share or forward the consumer’s subscriber’s purchase or transaction VerDate Jan<31>2003 15:31 Jul 24, 2003 Jkt 200001 PO 00000 Frm 00036 Fmt 4701 Sfmt 4700 E:FRFM25JYR2.SGM 25JYR2

Federal Register / Vol. 68, No. 143 / Friday, July 25, 2003 / Rules and Regulations 44179 with the entity within the eighteen (18) (ii) To any person with whom the be a violation of this paragraph to months immediately preceding the date caller has an established business substitute (for the name and phone of the telephone call or on the basis of relationship; or number used in, or billed for, making the subscriber’s inquiry or application (iii) By or on behalf of a tax-exempt the call) the name of the seller on behalf regarding products or services offered nonprofit organization. of which the telemarketing call is placed by the entity within the three months (10) The term unsolicited and the seller’s customer service immediately preceding the date of the advertisement means any material telephone number. The telephone call, which relationship has not been advertising the commercial availability number so provided must permit any previously terminated by either party. or quality of any property, goods, or individual to make a do-not-call request (i) The subscriber’s seller-specific do- services which is transmitted to any during regular business hours. not-call request, as set forth in person without that person’s prior paragraph (d)(3) of this section, express invitation or permission. (2) Any person or entity that engages terminates an established business (11) The term personal relationship in telemarketing is prohibited from relationship for purposes of means any family member, friend, or blocking the transmission of caller telemarketing and telephone solicitation acquaintance of the telemarketer making identification information. even if the subscriber continues to do the call. (3) Tax-exempt nonprofit business with the seller. (g) Beginning January 1, 2004, organizations are not required to comply (ii) The subscriber’s established common carriers shall: with this paragraph. business relationship with a particular (1) When providing local exchange business entity does not extend to service, provide an annual notice, via an PART 68—CONNECTION OF affiliated entities unless the subscriber insert in the subscriber’s bill, of the TERMINAL EQUIPMENT TO THE would reasonably expect them to be right to give or revoke a notification of TELEPHONE NETWORK included given the nature and type of an objection to receiving telephone goods or services offered by the affiliate solicitations pursuant to the national s 5. The authority citation for part 68 and the identity of the affiliate. do-not-call database maintained by the continues to read: (4) The term facsimile broadcaster federal government and the methods by means a person or entity that transmits which such rights may be exercised by Authority: 47 U.S.C. 154, 303. messages to telephone facsimile the subscriber. The notice must be clear machines on behalf of another person or and conspicuous and include, at a s 6. Section 68.318 is amended by entity for a fee. minimum, the Internet address and toll- revising paragraph (d) to read as follows: (5) The term seller means the person free number that residential telephone or entity on whose behalf a telephone subscribers may use to register on the § 68.318 Additional limitations. call or message is initiated for the national database. * * * * * purpose of encouraging the purchase or (2) When providing service to any (d) Telephone facsimile machines; rental of, or investment in, property, person or entity for the purpose of Identification of the sender of the goods, or services, which is transmitted making telephone solicitations, make a message. It shall be unlawful for any to any person. one-time notification to such person or person within the United States to use (6) The term telemarketer means the entity of the national do-not-call a computer or other electronic device to person or entity that initiates a requirements, including, at a minimum, telephone call or message for the send any message via a telephone citation to 47 CFR 64.1200 and 16 CFR purpose of encouraging the purchase or facsimile machine unless such person 310. Failure to receive such notification rental of, or investment in, property, clearly marks, in a margin at the top or will not serve as a defense to any person goods, or services, which is transmitted bottom of each transmitted page of the or entity making telephone solicitations to any person. from violations of this section. message or on the first page of the (7) The term telemarketing means the (h) The administrator of the national transmission, the date and time it is sent initiation of a telephone call or message do-not-call registry that is maintained and an identification of the business, for the purpose of encouraging the by the federal government shall make other entity, or individual sending the purchase or rental of, or investment in, the telephone numbers in the database message and the telephone number of property, goods, or services, which is available to the States so that a State the sending machine or of such transmitted to any person. may use the telephone numbers that business, other entity, or individual. If (8) The term telephone facsimile relate to such State as part of any a facsimile broadcaster demonstrates a machine means equipment which has database, list or listing system high degree of involvement in the the capacity to transcribe text or images, maintained by such State for the sender’s facsimile messages, such as or both, from paper into an electronic regulation of telephone solicitations. supplying the numbers to which a signal and to transmit that signal over a s 4. Section 64.1601 is amended by message is sent, that broadcaster’s name, regular telephone line, or to transcribe adding paragraph (e) to read as follows: under which it is registered to conduct text or images (or both) from an business with the State Corporation electronic signal received over a regular § 64.1601 Delivery requirements and Commission (or comparable regulatory telephone line onto paper. privacy restrictions. authority), must be identified on the (9) The term telephone solicitation * * * * * facsimile, along with the sender’s name. means the initiation of a telephone call (e) Any person or entity that engages Telephone facsimile machines or message for the purpose of in telemarketing, as defined in section manufactured on and after December 20, encouraging the purchase or rental of, or 64.1200(f)(7) must transmit caller 1992, must clearly mark such investment in, property, goods, or identification information. identifying information on each services, which is transmitted to any (1) For purposes of this paragraph, transmitted page. person, but such term does not include caller identification information must * * * * * a call or message: include either CPN or ANI, and, when (i) To any person with that person’s available by the telemarketer’s carrier, [FR Doc. 03–18766 Filed 7–24–03; 8:45 am] prior express invitation or permission; the name of the telemarketer. It shall not BILLING CODE 6712–01–P VerDate Jan<31>2003 15:31 Jul 24, 2003 Jkt 200001 PO 00000 Frm 00037 Fmt 4701 Sfmt 4700 E:FRFM25JYR2.SGM 25JYR2

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Federal Communications Commission — Document Transcript