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Federal Communications Commission

  1. 1. 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
  2. 2. 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
  3. 3. 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
  4. 4. 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
  5. 5. 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
  6. 6. 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
  7. 7. 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
  8. 8. 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
  9. 9. 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