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    Federal Trade Commission Federal Trade Commission Document Transcript

    • Wednesday, October 4, 2006 Part III Federal Trade Commission 16 CFR Part 310 Denial of Petition for Proposed Rulemaking; Revised Proposed Rule With Request for Public Comments; Revocation of Non-enforcement Policy; Proposed Rule rmajette on PROD1PC67 with PROPOSALS2 VerDate Aug<31>2005 15:07 Oct 03, 2006 Jkt 211001 PO 00000 Frm 00001 Fmt 4717 Sfmt 4717 E:FRFM04OCP2.SGM 04OCP2
    • 58716 Federal Register / Vol. 71, No. 192 / Wednesday, October 4, 2006 / Proposed Rules FEDERAL TRADE COMMISSION U.S. postal mail in the Washington area by telemarketers and business trade and at the Commission is subject to associations representing numerous 16 CFR Part 310 delay due to heightened security members, and the balance from precautions. Comments filed in consumers and consumer advocates. RIN: 3084–0098 electronic form should be submitted by Section 310.4(b)(1)(iv) of the TSR Telemarketing Sales Rule (‘‘TSR’’) visiting the Web site at https:// prohibits telemarketers from secure.commentworks.com/ftc-tsr and abandoning calls. An outbound AGENCY: Federal Trade Commission. following the instructions on the Web- telemarketing call is ‘‘abandoned’’ if the ACTION: Denial of petition for proposed based form. telemarketer does not connect the call to rulemaking; revised proposed rule with To ensure that the Commission a sales representative within two request for public comments; revocation considers an electronic comment, you seconds of the completed greeting of the of non-enforcement policy. must file it on the Web-based form at person who answers. Call abandonment the https://secure.commentworks.com/ is an unavoidable consequence of the SUMMARY: In this document, the Federal ftc-tsr Web site. You may also visit use of ‘‘predictive dialers’’— Trade Commission (‘‘FTC’’ or http://www.regulations.gov to read this telemarketing equipment that increases ‘‘Commission’’) announces decisions on Proposed Rule, and may file an the productivity of telemarketers by four issues involving the Telemarketing electronic comment through that Web placing multiple calls for each available Sales Rule (‘‘TSR’’): the denial of a site. The Commission will consider all sales representative. Predictive dialers petition submitted by Voice Mail comments that regulations.gov forwards maximize the amount of time Broadcasting Corporation (‘‘VMBC’’) to it. representatives spend speaking with requesting creation of a new safe harbor The FTC Act and other laws the consumers and minimize the time they for the TSR that would permit the use Commission administers permit the spend waiting to speak to a prospective of prerecorded messages in calls to collection of public comments to customer. An inevitable side effect of established customers; a new proposal consider and use in this proceeding as this functionality, however, is that the to amend the TSR by expressly appropriate. The Commission will dialer will reach more consumers than prohibiting unsolicited prerecorded consider all timely and responsive can be connected to available sales telemarketing calls without the public comments that it receives, representatives. In these situations, the consumer’s prior written agreement; whether filed in paper or electronic dialer either disconnects the call revocation of the Commission’s form. Comments received will be (resulting in a ‘‘hang-up’’ call) or keeps previously announced policy of available to the public on the FTC Web the consumer connected with no one on forbearance from bringing enforcement site, to the extent practicable, at http:// the other end of the line in case a sales actions against sellers and telemarketers www.ftc.gov. As a matter of discretion, representative becomes available who make prerecorded telemarketing the FTC makes every effort to remove (resulting in ‘‘dead air’’). The call calls to established customers effective home contact information for abandonment prohibition, added to the January 2, 2007; and a new proposal to individuals from public comments it TSR pursuant to the Telemarketing and amend the prescribed method for receives before placing those comments Consumer Fraud and Abuse Prevention measuring the maximum allowable call on the FTC Web site. More information, Act (‘‘Telemarketing Act’’),2 is designed abandonment rate in the TSR’s existing including routine uses permitted by the to remedy these abusive practices.3 safe harbor provision, in response to a Privacy Act, may be found in the FTC’s Notwithstanding the prohibition on petition from the Direct Marketing privacy policy, at http://www.ftc.gov/ call abandonment, § 310.4(b)(4) of the Association, Inc. (‘‘DMA’’). The ftc/Privacy.htm. TSR contains a safe harbor designed to Commission is requesting public FOR FURTHER INFORMATION CONTACT: preserve telemarketers’ ability to use comment on the proposed amendments Craig Tregillus, Staff Attorney, (202) predictive dialers, subject to four during a comment period ending 326–2970; Division of Marketing conditions. The safe harbor is available November 6, 2006. Practices, Bureau of Consumer if the telemarketer or seller: (1) Protection, Federal Trade Commission, DATES: Written comments must be Abandons no more than three percent of 600 Pennsylvania Avenue, NW., received on or before November 6, 2006. all calls answered by a person (as Washington, DC 20580. ADDRESSES: Interested parties are opposed to an answering machine); (2) SUPPLEMENTARY INFORMATION: allows the telephone to ring for fifteen invited to submit written comments. Comments should refer to ‘‘TSR I. Background seconds or four rings; (3) plays a Prerecorded Call Prohibition and Call This document sets out the reasons prerecorded message stating the name Abandonment Standard Modification, for the Commission’s decision to deny and telephone number of the seller on Project No. R411001’’ to facilitate the VMBC’s petition for amendment of the whose behalf the call was placed organization of comments. A comment TSR’s call abandonment provisions to whenever a sales representative is filed in paper form should include this add a new safe harbor, and to seek unavailable within two seconds of the reference both in the text and on the public comment on amendments the 2 15 U.S.C. 6101 et seq. This and other envelope, and should be mailed or Commission is now proposing in amendments to the original TSR resulting from a delivered to the following address: response to the record created by the rule review mandated by the Telemarketing Act, 15 Federal Trade Commission/Office of the VMBC and DMA petitions. These U.S.C. 6108, took effect on March 31, 2003. TSR Secretary, Room H–159 (Annex K), 600 actions are based on a careful analysis Statement of Basis and Purpose (‘‘TSR SBP’’), 68 FR Pennsylvania Avenue, NW., 4580 (Jan. 29, 2003). of the public comments received in 3 TSR SBP, 68 FR at 4641–45. The Telemarketing Washington, DC 20580. Comments rmajette on PROD1PC67 with PROPOSALS2 response to a Notice of Proposed Act directed the Commission to prescribe rules containing confidential material must be Rulemaking (‘‘NPRM’’) published in the prohibiting deceptive and abusive telemarketing filed in paper form, as explained in the Federal Register on November 17, acts or practices, including ‘‘a requirement that SUPPLEMENTARY INFORMATION section. 2004.1 The NPRM generated nearly telemarketers may not undertake a pattern of unsolicited telephone calls which the reasonable The FTC is requesting that any comment 13,600 unique comments—23 submitted consumer would consider coercive or abusive of filed in paper form be sent by courier or such consumer’s right to privacy.’’ 15 U.S.C. overnight service, if possible, because 1 69 FR 67287 (Nov. 17, 2004). 6102(a)(3)(A). VerDate Aug<31>2005 15:07 Oct 03, 2006 Jkt 211001 PO 00000 Frm 00002 Fmt 4701 Sfmt 4702 E:FRFM04OCP2.SGM 04OCP2
    • Federal Register / Vol. 71, No. 192 / Wednesday, October 4, 2006 / Proposed Rules 58717 completed greeting of the person number that would connect to a sales Finally, VMBC argued that a new safe answering the call; and (4) maintains representative. Finally, as indicated harbor for prerecorded messages is records documenting compliance.4 above, the prerecorded messages would necessary to conform the FTC’s TSR to Thus, to comply with this provision of be delivered exclusively to consumers the rules and regulations issued by the the TSR, at least 97 percent of a who have an ‘‘established business Federal Communications Commission telemarketer’s calls that are answered by relationship’’ 6 with the seller on whose (‘‘FCC’’) 9 pursuant to the Telephone a person (rather than an answering behalf the calls are made. Consumer Protection Act of 1991 machine) must be connected to a sales (‘‘TCPA’’).10 VMBC pointed out that the A. VMBC’s Rationale for a Safe Harbor representative. A telemarketing FCC’s rules—which largely parallel the campaign that consists solely of VMBC advanced three primary Do Not Call and certain other of the prerecorded messages, therefore, would reasons for adding a new safe harbor to TSR’s provisions—since the early 1990s violate § 310.4(b)(1)(iv) and would not the TSR’s call abandonment prohibition have permitted prerecorded message meet the safe harbor requirements. to permit calls delivering such telemarketing to consumers with whom VMBC submitted a request for an prerecorded messages to consumers a seller has an established business advisory opinion requesting an with whom the seller has an established relationship. In most other additional safe harbor for prerecorded business relationship. First, VMBC circumstances, however, the FCC’s rules message telemarketing to consumers asserted that the harms that prompted under the TCPA prohibit prerecorded with whom the seller has an established inclusion of the call abandonment message telemarketing, absent a business relationship, which the prohibition in the TSR would not be consumer’s prior express consent.11 Commission treated as a petition to present in campaigns conducted amend the TSR under § 1.25 of the according to its proposed business B. The Safe Harbor Proposal and FTC’s Rules of Practice.5 VMBC’s model. Specifically, VMBC argued that Specific Issues Raised for Public submission sought permission to deliver the use of prerecorded messages would Comment prerecorded messages to consumers make it unnecessary to subject a To assist interested parties in who have an established business consumer to ‘‘dead air’’ while waiting commenting on the VMBC petition, the relationship with the seller on whose for a sales representative, and would not NPRM included a proposed new behalf the telemarketing calls are made, result in a ‘‘hang-up’’ when no § 310.4(b)(5) that would have amended asserting that such calls would not representative is available. Moreover, the TSR to permit prerecorded result in the twin harms of ‘‘hang ups’’ because the prerecorded messages telemarketing messages to established and ‘‘dead air’’ that the prohibition on would immediately identify the seller, customers.12 As drafted, the proposed abandoned calls in § 310.4(b)(1)(iv) was the seller would not be engaging in safe harbor provision would have designed to remedy. telemarketing under the cloak of required sellers and telemarketers to: (1) The amendment requested by DMA, anonymity that often prompts consumer Allow the telephone to ring for at least in contrast, sought modification of the concern about ‘‘dead air’’ and ‘‘hang 15 seconds or four rings before method for calculating the maximum ups.’’ disconnecting an unanswered call; (2) three percent call abandonment rate Second, VMBC contended that play a prerecorded message within two prescribed in the existing safe harbor because the prerecorded messages seconds of the called party’s completed provision. DMA asked that the would be delivered only to existing requirement in § 310.4(b)(4)(i) that customers, sellers would have a strong messages rather than using live telemarketers, so sellers and telemarketers use incentive to preserve their customers’ the volume of commercial calls that consumers receive may increase. ‘‘ ‘‘technology that ensures abandonment goodwill.7 This incentive would serve, 9 47 CFR 64.1200. See also FCC Rules and of no more than three (3) percent of all VMBC posited, as a sufficient check on Regulations Implementing the Telephone Consumer calls answered by a person, measured the potential for abuse such that Protection Act of 1991, CC Docket No. 92–90, per day per calling campaign’’ be prerecorded calls to established Report and Order, 7 FCC Rcd 8752 (1992), available customers would be unlikely to prompt at http://gullfoss2.fcc.gov/prod/ecfs/ revised so that the three percent retrieve.cgi?native_or_pdf = standard instead could be ‘‘measured substantial consumer objection.8 pdf&id_document=1071340001, summarized in 57 over a 30-day period’’ for all of a FR 48333 (Oct. 23, 1992) (‘‘1992 FCC Order’’); telemarketer’s calling campaigns. 6 16 CFR 310.2(n) (‘‘ ‘Established business amended by FCC Rules and Regulations relationship’ means a relationship between a seller Implementing the Telephone Consumer Protection II. The VMBC Petition and a consumer based on: (1) The consumer’s Act of 1991, CG Docket No. 02–278, Report and purchase, rental, or lease of the seller’s goods or Order, 18 FCC Rcd 14014, available at http:// The VMBC petition for an additional services or a financial transaction between the hraunfoss.fcc.gov/edocs_public/attachmatch/FCC- safe harbor was premised on a business consumer and seller, within the eighteen (18) 03-153A1.pdf, summarized in 68 FR 44143 (July 25, months immediately preceding the date of a 2003) (‘‘2003 FCC Order’’). model that, VMBC contended, would telemarketing call; or (2) the consumer’s inquiry or 10 47 U.S.C. 227 (1991). not result in the harms the call application regarding a product or service offered 11 47 CFR 64.1200(a)(2). The FCC’s TCPA abandonment prohibition in by the seller, within the three (3) months regulations make an exception for calls placed by § 310.4(b)(1)(iv) was designed to immediately preceding the date of a telemarketing a seller or telemarketer that has obtained the called call.’’). party’s prior express consent to receive prevent. Under VMBC’s proposed 7 VMBC noted that the FTC suggested that ‘‘the telemarketing calls, or has an established business model, prerecorded messages would incentive to nurture established business relationship with the called party. 47 CFR give the called party an opportunity to relationships may provide an adequate restraint on 64.1200(a)(2). The regulations also exclude calls for assert a company-specific Do Not Call the growth of recorded message telemarketing’’ in emergency purposes, calls not made for a request. The messages would allow the its Report to Congress Pursuant to the Do Not Call commercial purpose that do not include a Implementation Act (‘‘DNCIA Report’’), p. 35. solicitation, and calls made by or on behalf of a tax- called party to do so either by pressing 8 In support of this argument, VMBC cited one exempt nonprofit organization. 47 CFR rmajette on PROD1PC67 with PROPOSALS2 a button on the telephone keypad to prerecorded campaign for a major retailer in which 64.1200(a)(2)(i)–(v). In addition, the FCC’s speak to a sales representative at any only .02 of 1 percent of 5.8 million customers regulations absolutely prohibit all live and time during the message, or asserted their Do Not Call rights. 69 FR at 67288 n. prerecorded telemarketing calls to a cellular 8. See also n. 30, infra. The Commission noted in telephone, regardless of any established business alternatively by dialing a toll-free the NPRM, however, that any incentive to preserve relationship or prior express consent a seller or consumer goodwill could be outweighed in practice telemarketer may have obtained. 47 CFR 4 16 CFR §§ 310.4(b)(4)(i)–(iv). 64.1200(a)(1)(iii). by the fact that ‘‘it may be more economical for 5 16 CFR 1.25. companies to contact consumers via prerecorded 12 69 FR at 67289. VerDate Aug<31>2005 15:07 Oct 03, 2006 Jkt 211001 PO 00000 Frm 00003 Fmt 4701 Sfmt 4702 E:FRFM04OCP2.SGM 04OCP2
    • 58718 Federal Register / Vol. 71, No. 192 / Wednesday, October 4, 2006 / Proposed Rules greeting; (3) give the called party an consumers to assert a company-specific into the proposed amendment to the call opportunity to assert an entity-specific Do Not Call request, was to ensure the abandonment safe harbor,’’ 19 stating Do Not Call request at the outset of the same Do Not Call rights for consumers that it would ‘‘satisfy the proposed safe message, with only the disclosures who receive prerecorded message calls harbor.’’ 20 This endorsement gave required by §§ 310.4(d) or (e) preceding as are available to consumers receiving advance assurance to sellers and that opportunity; 13 and (4) ensure that live telemarketing calls from a sales telemarketers that they could adopt this the message complies with all other representative. Absent such parity, the means of compliance during the requirements of the TSR and other Commission was concerned that, in pendency of this proceeding when the applicable State and Federal laws.14 view of the likely increase in the Commission announced it would 1. The ‘‘Ring-Time’’ Standard frequency of lower-cost prerecorded forebear from enforcing the call message calls (compared to the cost of abandonment provision if they The NPRM explained that the first live calls by sales representatives), the complied with the proposed safe prerequisite for meeting the safe harbor privacy protection provided by the harbor.21 requirements, the ‘‘ring time’’ standard National Do Not Call Registry might Although the NPRM did not similarly requiring 15 seconds or four rings to become illusory. The NPRM endorse prerecorded messages elapse while awaiting an answer, is emphasized: providing a toll-free number for identical to the analogous element of the consumers to call to be placed on a existing safe harbor in § 310.4(b)(4)(ii). Accordingly, the Commission believes that, if allowed, telemarketing calls that deliver company-specific Do Not Call list, the That standard, modeled on what were prerecorded messages to consumers with Commission sought ‘‘information and then DMA’s ethical guidelines for its whom a seller has an established business data about the costs and benefits of members, was designed to give relationship must preserve the ability of requiring that the disclosure of how to consumers, including the elderly or those consumers to assert their Do Not Call make a Do Not Call request be made at infirm who may struggle to get to a rights quickly, effectively, and efficiently, so the outset of the call,’’ as well as about telephone, a reasonable opportunity to that consumers retain an effective right to ‘‘alternative methods of preserving the answer telemarketing calls before the decide whether to receive commercial calls, including prerecorded messages.15 consumer’s ability to assert a Do Not connection is terminated. Call request when receiving a 2. The ‘‘Dead Air’’ Standard The proposed safe harbor therefore prerecorded message telemarketing required that the prerecorded message call.’’ 22 In addition, the NPRM sought The second prerequisite of the provide, ‘‘at the outset of the call’’ (i.e., proposed safe harbor, requiring that the information and data about the preceded only by the prompt oral technical feasibility and costs of prerecorded message be played within disclosures required by the TSR), an two seconds of the called party’s implementing the interactive technology opportunity for the called party to assert that allows consumers to make a completed greeting, was intended to a seller-specific Do Not Call request by minimize ‘‘dead air.’’ It was based on company-specific Do Not Call request pressing a button on his or her with the press of a keypad button, and the analogous element of the existing telephone keypad to connect to a sales safe harbor in § 310.4(b)(4)(iii), allowing the costs to industry of requiring this representative or an automated system. mechanism. no more than two seconds of dead air By stressing that ‘‘the Commission before the called party is connected to believes that the Do Not Call option 4. Effect on Other Laws a sales representative. The Commission should allow consumers to assert their The fourth and final element of the specifically requested public comment Do Not Call rights during the draft proposal simply made it clear that on whether the maximum amount of prerecorded message,’’ 16 the NPRM the new safe harbor would not obviate dead air should be less than two distinguished this element of the or negate any other provision of the TSR seconds in the new safe harbor for Commission’s safe harbor proposal from or other Federal or State laws, in order prerecorded messages in which there FCC rules allowing prerecorded to preserve consistency with the would be no need to connect a sales messages to provide a toll-free number existing TSR call abandonment safe representative. The Commission also consumers may call to make a Do Not harbor. It placed sellers and requested information on the relative Call request during or after the telemarketers on notice that other costs and benefits of a standard that message.17 The NPRM expressly applicable regulations may be stricter would set the maximum amount of dead declined to adopt the FCC approach, than the proposed safe harbor. The air at a level lower than two seconds. which requires ‘‘consumers to be NPRM sought comment on whether or 3. Prompt Opportunity for Company- prepared with pen and paper at the not this requirement was appropriate. Specific Do Not Call Requests ready when they answer the phone, to take down the number and to place a C. Public Comment The purpose of the third prerequisite, separate call’’ to make a Do Not Call In general, the industry comments on mandating a prompt opportunity for request, because that approach the VMBC petition supported 13 Section 310.4(d) requires the following prompt ‘‘encumbers consumers’’ assertions of liberalizing the TSR to allow the use of oral disclosures in outbound commercial company-specific Do Not Call rights.’’ 18 prerecorded telemarketing messages, telemarketing calls: (1) The identity of the seller; (2) Noting that the VMBC petition and consumers and consumer advocates that the purpose of the call is to sell goods or ‘‘contemplates some prerecorded opposed it.23 Although both industry services; (3) the nature of the goods or services; and messages that would enable consumers (4) that no purchase or payment is necessary to be able to win a prize or participate in a prize to speak with a sales representative 19 Id. promotion if a prize promotion is offered, and that during the call by pressing a button on 20 Id.at 67290. rmajette on PROD1PC67 with PROPOSALS2 21 See the discussion in Section II.F, infra. any purchase or payment will not increase the their telephone keypads,’’ the NPRM chances of winning. Section 310.4(e) requires the specifically ‘‘incorporated this feature 22 69 FR at 67289. following oral disclosures in outbound charitable 23 All of the public comments, excluding 442 solicitation calls: (1) The identity of the charitable judged obscene or not germane, appear at http:// 15 69 FR at 67288–89 (emphasis added). organization on behalf of which the request is being www.ftc.gov/os/comments/tsrcallabandon/ 16 69 FR at 67289 (emphasis added). made; and (2) that the purpose of the call is to index.htm, where they are listed alphabetically solicit a charitable contribution. 17 47 CFR 64.1200(b)(2). under the name of the person who submitted the 14 69 FR at 67294. 18 69 FR at 67289. comment. The first citation of each comment VerDate Aug<31>2005 15:07 Oct 03, 2006 Jkt 211001 PO 00000 Frm 00004 Fmt 4701 Sfmt 4702 E:FRFM04OCP2.SGM 04OCP2
    • Federal Register / Vol. 71, No. 192 / Wednesday, October 4, 2006 / Proposed Rules 58719 and consumer comments addressed the not only that prerecorded messages not ‘‘telemarketing’’ as defined by the major issues raised by the NPRM, not all avoid the harms associated with Telemarketing Act 31 or the Rule.32 responded to each of the questions on abandoned calls (i.e., ‘‘dead air’’ and Adopting VMBC’s view that sellers which the Commission requested public ‘‘hang ups’’), but also ensure better would self-regulate and not abuse the comment. quality service to customers than goodwill of their customers, most of the Many of the comments, both from the telemarketers because there is no risk industry comments that addressed the telemarketing industry and consumers, that the intended message will vary issue doubted that the volume of exhibited a fundamental misconception from call to call.26 prerecorded telemarketing messages that of the TSR’s scope. They presumed that, Several industry comments posited consumers receive would increase if the absent the proposed safe harbor, the that consumers are interested in safe harbor proposal were adopted.33 TSR’s call abandonment prohibition receiving prerecorded messages.27 VMBC’s comment further predicted that would prevent sellers from using Although some of the examples cited to the likely result would not be an prerecorded messages to provide support this contention were increase in calls, but that many ‘‘non- important information to customers prerecorded messages governed by the sale’’ calls would convert from live calls with whom they have an established TSR (such as letting customers know of from sales representatives to cost- business relationship, such as special promotional events or upcoming effective recorded messages.34 Two notifications of flight cancellations, sales),28 many of the examples, if not industry comments disagreed. One reminders of medical appointments and most, were informational messages that acknowledged that, if allowed, overdue payments, and notices of dates are not covered by the TSR at all.29 For prerecorded telemarketing messages and times for delivery of goods or example, SBC cited a survey of 1217 of would increase in number given their service appointments. Such strictly its DSL Internet access customers on the low cost.35 Another observed that the informational calls, however, whether use of prerecorded informational proposed safe harbor would free it and live or prerecorded, have never been messages to remind them of their its telemarketers from using recorded covered by the TSR. The TSR applies service installation dates, in which 55.1 messages solely for informational only to ‘‘telemarketing,’’ which is percent said they would like to receive purposes, ‘‘and put prerecorded defined, in pertinent part, as ‘‘a plan, such messages in the future.30 As messages to additional valuable program or campaign which is previously noted, such informational uses.’’ 36 conducted to induce the purchase of messages are neither governed nor Only two industry comments goods or services.’’ 24 It does not apply prohibited by the TSR, because they are addressed the question posed in the to informational calls, unless the calls NPRM of whether the proposed safe combine the informational message with OL–113915 at 8; Joint Comment of the United States harbor would complicate Commission a sales invitation or promotional pitch. Chamber of Commerce, The Coalition for Healthcare Communication, The Consumer Bankers enforcement actions against sellers or 1. Industry Comments Association, The Magazine Publishers of America, telemarketers who falsely claim to have The Mortgage Bankers Association, The National an established business relationship Comments from 21 telemarketers and Newspaper Association, The Newspaper with the consumers they call. Both business trade associations uniformly Association of America, and The Independent Insurance Agents and Brokers (‘‘U.S. Chamber’’) opined that potential enforcement favored allowing sellers to use (Wiley Rein & Fielding), No. OL–113911 at 5; The problems should not be an issue prerecorded telemarketing messages to Heritage Company (‘‘Heritage’’), No. OL–112918 at because the burden of proving the reach their customers, arguing that this 1; West Corporation (‘‘West’’), No. OL–112911 at 2. is a cost-effective method for 26 VMBC at 7, 11; U.S. Chamber at 5; West at 1; existence of an established business communicating without the need for Direct Marketing Association and American relationship falls on the seller or sales representatives.25 Several noted Teleservices Association (‘‘DMA’’), No. OL–113918 telemarketer, not the Commission.37 at 9; Visa U.S.A., Inc. (‘‘Visa’’), No. 000023 at 2; Call The industry comments uniformly Command, LLC (‘‘Call Command’’) No. 000025 at includes the name of the commenter, the name in 1–2; Verizon Telephone Companies (‘‘Verizon’’), urged the FTC to adjust the TSR to track parentheses of the person or entity submitting the No. OL–113893 at 4. the FCC’s regulations that permit the comment if it is different from the name of the 27 VMBC at 6, 10; U.S. Chamber at 4; Call use of prerecorded messages for commenter, and the comment number (e.g., ABC Command at 2; SBC Communications, Inc. (‘‘SBC’’), telemarketing to established Corp. (Smith, J.), No. OL–123456). Comment No. 000026 at 2, 4.; National Retail Federation numbers without a prefix were delivered to the customers.38 Some went so far as to (‘‘NRF’’), No. 000027 at 3. Commission in paper form; those with the prefix 28 VMBC at 2; SBC at 2; NRF at 3. argue that the Commission lacks ‘‘OL’’ were submitted online at the FTC’s Web site; 29 E.g., Call Command at 2 (asking that the jurisdiction to regulate prerecorded and those with the prefix ‘‘EREG’’ were submitted Commission acknowledge that prerecorded telemarketing messages because to http://www.regulations.gov. Subsequent citations informational messages, such as notification about to a comment omit the comment number. Congress has given exclusive authority a change in flight schedules or about a product 24 16 CFR 310.2(cc). For the same reason, it is recall, are permissible, and suggesting that all such to the FCC to do so.39 One conceded unnecessary to grant the request made in a ‘‘transactional’’ messages, as that term is used in the comment on behalf of credit and collection CAN–SPAM Act, 15 U.S.C. 7702(17), be exempt 31 15 U.S.C. 6106(4). professionals that the Commission forbear from from the TSR); Broadcast Solutions, No. OL–113933 32 16 CFR 310.2(cc). enforcing alleged violations of the Fair Debt at 1; SBC at 3; NRF at 3; VMBC at 2; Verizon at 33 E.g., VMBC at 10; U.S. Chamber at 5; DMA at Collection Practices Act based on the FCC’s 5. 9; SBC at 2; NRF at 4. requirement that debt collectors identify themselves 30 SBC at 3 (acknowledging that the survey 34 VMBC at 10. However, since such ‘‘non-sale’’ by their State-registered name in prerecorded reports were not ‘‘directly apposite, as they relate calls are not governed by the TSR, the Rule does telephone messages. ACA International, No. OL– to service activation and related transactional not prevent the use of prerecorded messages for this 113912. As the Commission has previously stated, messages’’). Similarly, VMBC cited arguably purpose. pure debt collection calls are not covered by the favorable reaction from 5.8 million consumers to 35 West at 2. TSR because they are not ‘‘telemarketing’’ calls. prerecorded campaigns as measured by an increase 36 SBC at 3 n.7. TSR SBP, 68 FR at 4664 n.1020 (noting, however, of from 20 to 40 percent in response rates to rmajette on PROD1PC67 with PROPOSALS2 37 Infocision Management Corp. (‘‘Infocision’’), that ‘‘if the debt collection call also included an ‘‘promotions’’ and ‘‘showing up for appointments’’ upsell, the upsell portion of the call would be with Do Not Call requests ‘‘averaging 2/100ths of No. OL–113920 at 4; West at 3. subject to the Rules as long as it also met the criteria one percent.’’ VMBC at 6. Unfortunately, this 38 VMBC at 12; Infocision at 1; SoundBite for ‘telemarketing’ and was not otherwise exempt merging of data for prerecorded messages that are Communications, Inc. (‘‘Soundbite’’), No. OL– from the Rule. All debt collection calls must not governed by the TSR with those that are, 112919 at 1–2. comply with the FDCPA.’’). without specifying the opt-out method provided to 39 Soundbite at 1–2; Infocision at 1; but see, 25 Only 21 of the 23 industry comments addressed consumers, provides little help in evaluating the United States Senate, No. OL–113862 (Senators Bill this issue. E.g., VMBC (Wiley Rein & Fielding), No. potential impact of the proposed safe harbor. Continued VerDate Aug<31>2005 15:07 Oct 03, 2006 Jkt 211001 PO 00000 Frm 00005 Fmt 4701 Sfmt 4702 E:FRFM04OCP2.SGM 04OCP2
    • 58720 Federal Register / Vol. 71, No. 192 / Wednesday, October 4, 2006 / Proposed Rules that the Commission may have authority very cost effective basis.’’ 46 One Like many industry comments, most to regulate deceptive, unfair, and comment doubted that it ‘‘would of the consumer comments that seemed abusive telemarketing practices, but necessarily be the case that the to support the proposal to allow cited a need for clarification of the interactive feature would connect the prerecorded messages in telemarketing TSR’s applicability to prerecorded consumer to a live sales representative calls to established customers exhibited messages.40 any faster than if the customer were a basic misunderstanding of the TSR’s The subject that elicited the greatest simply to dial an 800-number.’’ 47 applicability. Specifically, the majority industry comment was the proposed Several comments recommended that of these relatively few supportive safe harbor requirement that consumers the Commission leave the timing and consumer comments indicated that they be presented, at the outset of a method of providing a Do Not Call did not want the Commission to prerecorded message, with an option up to the industry, as the FCC prohibit prerecorded informational interactive mechanism to exercise their has done, so that sellers will have the messages such as reminder messages— company-specific Do Not Call rights. flexibility to choose the method most although such messages have never Almost all opposed this aspect of the suitable to their operations based on been covered, much less barred, by the proposal,41 with two objecting that it preferences and costs.48 TSR.53 These consumers expressed unconstitutionally mandated compelled 2. Consumer Comments appreciation for prerecorded or ‘‘forced speech.’’ 42 Several argued informational messages about delivery that requiring a disclosure at the outset Nearly all the consumers and dates for previously purchased goods or would result in a large number of Do consumer advocacy groups who services, medical prescription order commented opposed the proposal to notifications, flight cancellation alerts, Not Call requests, and might confuse permit telemarketing calls that are and overdue bill and appointment consumers who would otherwise wish prerecorded, regardless of whether the reminders.54 Yet some of the same to hear the message.43 Others contended party called has an established business consumers made it clear they opposed that the method authorized by the FCC relationship with the seller.49 Their receiving prerecorded telemarketing of providing a number during or at the comments show that consumers sales pitches.55 Thus, there is only the end of the message that consumers can overwhelmingly find prerecorded barest consumer support in the record call with a Do Not Call request works telemarketing messages more intrusive for the proposed safe harbor for well, and should be adopted by the and invasive of the privacy they enjoy prerecorded telemarketing sales calls to FTC.44 Many objected that interactive in their homes than live telemarketing established customers. technology, either to connect to a calls,50 primarily because they are representative or to make an automated The widespread opposition expressed powerless to make themselves heard.51 Do Not Call request, is costly, in this record to the infringement on As one consumer put it, ‘‘[t]he burdensome, and not widely personal privacy through prerecorded telephone is for conversing with another available,45 notwithstanding the telemarketing calls to home telephones human being, not for invading my home arguments by two industry members stands in sharp contrast to the consumer with inexpensive advertising.’’ 52 that the technology is available on ‘‘a support in the record of the TSR 46 Soundbite at 2; VMBC at 10. amendment proceeding for including an Nelson and Dianne Feinstein commented that 47 SBC at 14 n.13. established business relationship ‘‘there is no reason why the FTC should promulgate 48 VMBC at 13–14; U.S. Chamber at 6; West at 3; exemption for telemarketing using sales an anti-consumer rule to meet the FCC’s lower Visa at 2; cf. NRF at 4 (suggesting a more flexible standard for prerecorded messages.’’). disclosure timing such as ‘‘reasonably promptly’’). you[r] window, and entering your home to sell you 40 Verizon at 5. 49 E.g., Electronic Privacy Information Center his product only * * * it will be a robot, not a 41 DMA at 11; Infocision at 4; Heritage at 1–2; SBC (‘‘EPIC’’), No. OL–113823 at 2; Privacy Rights person.’’). at 4; West at 3; Visa at 2; Verizon at 6; Soundbite Clearinghouse (‘‘PRC’’), No. OL–113986 at 2–4; 53 Of the 77 positive consumer comments, more at 2; Convergys Corp. (‘‘Convergys’’), No. OL– National Consumers League (‘‘NCL’’), No. OL– than half—47—sought only to preserve prerecorded 113952 at 5–6; National Association of Realtors 112905 at 5. Well over 13,000 of the 13,550 informational messages that are not prohibited by (‘‘NAR’’), No. EREG–000005 at 1–2; National Retail consumer comments in the record clearly opposed the TSR. These 47 consumers opposed any Federation (‘‘NRF’’), No. 000027 at 5; The Broadcast allowing prerecorded telemarketing messages, with limitation on prerecorded ‘‘reminder’’ messages, Team, No. OL–112822 at 2. no more than 77 of the comments indicating with some 36 of them seeking to avoid any need 42 Heritage at 2; Infocision at 3. arguable support for the proposed amendment. to sign a consent form to receive such messages, 43 VMBC at 10; U.S. Chamber at 5; DMA at 9; SBC 50 Some 2,100 of the consumer comments apparently in the mistaken belief that this would be at 2; NRF at 4; Heritage at 1–2; Soundbite at 2; SBC opposing prerecorded telemarketing calls necessary if the proposed amendment were not at 4; West at 3. specifically objected that they constitute an adopted. E.g., Haas, No. OL–113929; Tran, No. OL– 44 Call Command at 1; Convergys at 5; DMA at 11; invasion of privacy. 113929; Lopez, No. OL–113975; Schroeter, No. OL– NAR at 1–2; Visa at 2; Verizon at 6–7; NRF at 4– 51 E.g., Myers, M., No. OL–100768 (‘‘Pre-recorded 113882; DeSantis, No. OL–113892. One consumer 5. Verizon also argued that requiring that Do Not messages are even more annoying than calls from group correctly noted that such strictly Call information be provided ‘‘at the outset’’ of a live people. You can’t interrupt, you can’t ask informational messages ‘‘would not fall under the prerecorded message would conflict with current questions and you can’t respond.’’); Allen, No. OL– definition of ’telemarketing’’’ in the TSR. NCL at 3. FCC regulations. Verizon at 6. 103079 (‘‘I cannot ask a recording to clarify who 54 E.g., Matthews, D., No. OL–100004; Forrette, 45 DMA at 11–12 (estimating that reprogramming they are or what our existing relationship is.’’); No. OL–113959; Bartholow, D., No. OL–113662; calling stations would cost ‘‘$25,000 per location’’); Stahl, K., No. OL–101878 (‘‘The very worst form of Auerbach, No. OL–101665; Oberly, No. OL–105967. SBC at 4 (citing the ‘‘significant investment of time telemarketing is the one made by a machine. Pre- 55 E.g., Matthews, D., No. OL–100004 (‘‘Some pre- and capital to synchronize telephonic dialing recorded messages are just as invasive and recorded computer generated calls are convenient capabilities with interactive voice platforms and unwanted, and far more frustrating.’’); Levy, No. and necessary’’ but ‘‘[t]elemarketing computer databases,’’ the significant cost of requiring the OL–102365 (‘‘No business should be able to call me generated ’cold calls’’ are definitely a problem.’’). availability of sales agents, and asserting that the unless I have a pre-existing relationship (one that Forrette, No. OL–113959 (‘‘I can think of several ‘‘number of calls able to be made in a single day >I< recognize), but even a company I do business cases where I find this very useful, such as would decrease by more than 99%’’); Convergys at with should hire someone to actually speak to me.’’) notification from my airline when there’s a rmajette on PROD1PC67 with PROPOSALS2 5 (arguing that connection to an agent would be cost (punctuation in original); Powell, D., No. OL– schedule change to my flight. As long as the prohibitive because of the increase in 113775 (‘‘Recorded messages like this are more than prohibition on the use of pre-recorded messages for telecommunications costs to maintain ‘‘bridges’’ to an annoyance, they are a way for business to avoid ’cold calling’ remains in place, I think it’s okay.’’); customer service personnel); Visa at 2 (‘‘[T]he talking to their customers, and instead just talk at Bartholow, D. No. OL–113622 (‘‘Bill reminders are technology to permit registration [on company- them.’’). not the same as telemarketing sales calls.’’); specific Do Not Call lists] during the telemarketing 52 Watson, B., No. OL–108960; cf. Nungesser, R., Consumer Assistance Network, No. OL–113928 call presently is not widely implemented and * * * No. OL–112535 (uninvited prerecorded calls are (‘‘The consumer would rather receive a [reminder] would be costly and complicated’’). ‘‘no different than a door to door salesman breaking message rather than a telemark[et]ed call.’’). VerDate Aug<31>2005 15:07 Oct 03, 2006 Jkt 211001 PO 00000 Frm 00006 Fmt 4701 Sfmt 4702 E:FRFM04OCP2.SGM 04OCP2
    • Federal Register / Vol. 71, No. 192 / Wednesday, October 4, 2006 / Proposed Rules 58721 representatives. In that proceeding, the the same complaint.60 Several as they could with a sales Commission provided such an consumers cited the danger of the loss representative.64 Some consumers exemption from the Do Not Call of use of their telephone lines, which reported that the mechanism typically provisions after 40 percent of the can be tied up for some period of time provided for exercising their Do Not consumers who commented supported even after the recipient hangs up on a Call rights is impractical,65 both because the exemption.56 Here, only 15 prerecorded message.61 A few they have to wait until the end of what consumer comments—a scant tenth of consumers cited instances when may be a lengthy message to get a one percent of the more than 13,000 prerecorded messages prevented them number to call to speak to an agent,66 consumer comments that addressed the from making emergency calls,62 and a and because the Do Not Call option proposed amendment—expressed community shelter that forwards its provided at the end of the message unambiguous support for the proposed calls to allow staff counselors to receive simply does not work.67 safe harbor for prerecorded message them on their home telephones reported More generally, the comments attest telemarketing to established that ‘‘[w]e are dealing with life and that consumers found the company- customers.57 death situations from suicide to specific opt-out regime required to stop Consumers also expressed concern substance abuse to domestic violence’’ unwanted prerecorded messages prior to about the potential costs, including the and clients ‘‘are unable to get to a crisis risks to health and safety, if the counselor due to the high volume of 64 E.g., Sahagian, No. OL–113021 (a self-described proposed safe harbor allowing telemarketers calling our [home] phone ‘‘unemployed telemarketing manager, laid off as a direct result of the national do not call list’’ who prerecorded telemarketing messages to number.’’ 63 finds prerecorded messages ‘‘the most intrusive’’ established customers were adopted. Consumers emphasized the because ‘‘I can’t ask the message to get to the point For example, consumers who subscribe difficulties they experience with or never call again.’’); Bedell, No. OL–105951 (‘‘A to a telephone company or other voice prerecorded messages in exercising their machine can’t hear me say ‘put me on your do-not- call list! ’ ’’); Schares, No. OL–110388 (‘‘At least mail services protested having to pay for company-specific Do Not Call rights. with a live person, you can have the illusion of storage of messages they do not want, Many objected to the fact that they requesting removal from the list, with a machine, which can exceed their allotted storage could not tell a prerecorded message to you are just out of luck.’’); Irving, No. OL103862; capacity and prevent them from put them on the seller’s Do Not Call list, see also, e.g., Sawyer, No. OL–108895; Goltz, OL– 107085; Hancock, J., No. OL–112529; Blumberg, No. receiving the messages they need, as did OL–104484; O’Daire, No. OL–113753; Salgado, No. owners of answering machines.58 60 E.g., Northeast Harbor Inn, Inc., No. OL– OL–111816; Von Kennen, No. OL–113646; Ianson, Consumers with home-based businesses 113439; Bart’s Pneumatics Corp., No. OL–107508; No. OL–105278; Valum, No. OL–102442; Van Bus. Innovations, No. OL–110414; cf. Idaho Small objected to the costs incurred when Bus. Dev. Ctr., No. OL–113259; County of Berks— Baren, No. OL–101942; Zimmerman, J., No. OL– their home telephone lines are tied up 113999. Prison, No. OL–105593. 65 E.g., Hohm, No. OL–104448 (‘‘Allowing by telemarketing calls,59 and even small 61 E.g., Graham, No. OL–104100 (‘‘If you needed automated calls will let telemarketers flood businesses and government agencies to call for a fire truck or an ambulance or poison consumers with sales calls * * * with no practical control and some recorded message was tying up that are not protected by the TSR lodged your phone, would you think it was OK?’’); Vernen, means for the consumer to challenge their propriety or to refuse further calls.’’); Sartin, No. OL–104554 No. OL–110383 (prerecorded calls ‘‘most 56 TSR SBP, 68 FR at 4593 n.141. (‘‘If [prerecorded calls] are to be allowed, it should dangerously—frequently fail to release the line only be through opt-in, not an inherently awkward 57 Only 15 of the 77 consumer comments that promptly when hung up on. This presents an and unreliable opt-out.’’); Von Kennen, No. OL– arguably supported prerecorded telemarketing calls immediate risk to the health and safety of the call 113646 (‘‘I can only imagine the telephone ping- did so without reservation or apparent recipient since the telephone line is unavailable in pong game between menus, voice-mail, call misunderstanding. E.g., Hamilton, No. OL–113099 an emergency.’’); see also, e.g., Adkins, No. OL– transfers, and the inevitable disconnection that I’ll (‘‘I would be in support of the change. * * * I 104921; Albright, D., No. OL–105813; Alquist, No. would rather hang up on an automated machine OL–113229; Schmaljohn, No. OL–110028; Granzo, have to play before I can hope to talk to someone than a live person.’’); Curran, D., No. OL–105145; No. OL–104469; Pickett, A., OL–104461; who will listen [to a Do Not Call request].’’). 66 E.g., Sahagian, No. OL–113021 (an Childress, No. OL–102612; Young, E., No. OL– Simnacher, No. OL–108720; Miller, C., No. OL– 112546. Another 13 approved of prerecorded sales 105006. As the legislative history of the TCPA ‘‘unemployed telemarketing manager’’ who states calls from businesses they know and regularly notes, S. Rep. No. 102–178, at 10 (1991), some that ‘‘[o]ften one must wait until the end of the patronize, but not necessarily from any business telephone networks are not capable of notifying message for contact information, write down a from which they have made a purchase. E.g., callers that a consumer has hung up, thereby phone number, call back, turn down a live sales Leader, No. OL–110416 (‘‘I am not in favor of this excusing telemarketers from complying with an offer, ask to speak with a manager, and then finally amendment. * * * [T]he only calls that should be FCC requirement that they release the line ‘‘within ask to be deleted from future calling campaigns.’’); allowed are to companies who have an ongoing 5 seconds of the time [such] notification is Nobles, No. OL–105403, (‘‘The requirement[s] that existing and real business relationship with the transmitted.’’ 47 CFR 68.318(c). It appears from the they identify themselves and allow me to ask them customer.’’); Dusenbury, No. OL–113951 comments that many networks still lack this to remove me from their calling list are (supporting prerecorded reminder messages capability. Thus, depending on their local network, meaningless, since that information is always generally, including ‘‘sale reminders from my consumers may have to wait until the end of what supplied at the very end of the call.’’); Stahl, K., No. favorite stores.’’); Bartholow, D., No. OL–113622. may be a lengthy prerecorded message before their OL–101878; Schneider, P., No. OL–101484. The Two consumers backed prerecorded messages in telephone line is released. call-back requirement that consumers describe, if the mistaken belief that such messages would be 62 Friedman, No. OL–110265 (a disabled permitted by FCC rules, does not comply with the ‘‘permission based’’ opt-in messages. Taylor, J., No. consumer unable to make an emergency call safe harbor proposal in the NPRM because it fails OL–105274; Taylor, R., No. OL–105171. The because the recorded message would not to give consumers an opportunity to exercise their remaining 47 supported prerecorded ‘‘reminder’’ disconnect); Gardiner, W., No. OL–100542 (an Do Not Call Rights during the call. messages, as previously noted. See note 53, supra. elderly consumer who complained that the receipt 67 E.g., Blumberg, No. OL–104484 (‘‘There is 58 E.g., Allison, No. OL–108414 (‘‘In the recent of prerecorded messages twice prevented him from always an option to wait until the end of the election one citizen had her answering machine [so] contacting a doctor). See also, NCL at 3; PRC at 11 message and press a number to talk with a person filled with phone messages from a candidate that (citing a comment it received from a self-identified but only in rare instances does this work.’’); her child could not get word to her of an emergency ‘‘former legitimate telemarketing salesman’’ Vinegra, No. OL–104055 (‘‘[I]n my experience, at the child’s school.’’); O’Connor D., OL–111858; objecting to allowing prerecorded messages because automated phone spam is the MOST likely to not Rose, C., OL–111837; Micret, OL–111402; Rickey, ‘‘[t]here are one or more deaths on record have a valid way to get off the list. Oh, sure, it may OL–104029; see also PRC at 6–7; NCL at 3. Neither Nationally that were precipitated by a prerecorded give you an 800 number to call, but that’s likely to rmajette on PROD1PC67 with PROPOSALS2 the TSR nor the proposed new safe harbor, message that would not cede the line it was on, reach some convoluted voicemail system that never however, prohibits the use of prerecorded messages even though the receiving party had hung up! ’’). gets you anywhere.’’); Fiol, No. OL–112458 (‘‘I do when an answering machine picks up a call. See the 63 Chico Community Shelter Partnership, No. OL– not believe that offering consumers the option of discussion in Section II.E, infra. 109650; cf. Udehn, No. OL–114005 (‘‘Callers are hanging up and calling an 800 number is an 59 E.g., Brown, R., No. OL–104366; Amsberry, No. persistent and do not like to release phone lines effective one. It only worsens the interruption and OL–105113; Lasting Fitness, No. OL–110413; until they make a sale, even to allow emergency imposition on the consumer’s time, and * * * Miller, No. OL–103424; Grover, No. OL–109774; patient calls. I need a line uncluttered by telephone frustrate[s] the consumer if the 800 number is busy Pearlman, S., No. OL–112275. SPAM to continue emergency room coverage.’’). or even inoperative.’’). VerDate Aug<31>2005 15:07 Oct 03, 2006 Jkt 211001 PO 00000 Frm 00007 Fmt 4701 Sfmt 4702 E:FRFM04OCP2.SGM 04OCP2
    • 58722 Federal Register / Vol. 71, No. 192 / Wednesday, October 4, 2006 / Proposed Rules the advent of the Registry extremely A number of consumers also the Registry 78—especially if the use of burdensome and frequently challenged a presumption implicit in prerecorded messages is permitted.79 ineffective.68 Apparently assuming that the proposed safe harbor that would These consumers foresee that allowing a company-specific opt-out might not have permitted prerecorded prerecorded messages will likely take the form of an interactive method telemarketing calls to established increase the number of ‘‘established at the outset of the call (as proposed by customers. Notwithstanding the FCC’s business relationship’’ telemarketing the Commission), some consumers rationale for allowing sellers to use campaigns, with the result that complained that the burden would be prerecorded messages in calls to consumers will have to assert company- placed on them to listen until the end established customers,73 many specific Do Not Call requests repeatedly of unwanted messages to obtain an opt- consumers contended that neither a for different sellers from which they out telephone number, to copy the opt- prior inquiry nor purchase implied their made a one-time purchase.80 Moreover, out number, and to wait to call that consent to receipt of future prerecorded some consumers reported that they number during normal business hours solicitations from a seller,74 contrary to receive both live and prerecorded to ask not to be called again—a process prior consumer support for live they would have to repeat for each telemarketing calls from businesses with telemarketing calls.75 Many of the which they have no ‘‘established company that calls.69 consumer comments argued that, given Some consumers and consumer business relationship.’’ 81 the intrusive and impersonal nature of groups questioned the adequacy of the Many consumers also commented that proposed interactive mechanism that prerecorded messages, prerecorded since they listed their telephone would permit consumers to exercise telemarketing calls should not be numbers on the National Do Not Call their Do Not Call rights by pressing a permitted at all without the consumer’s Registry, they have come to rely on it to button on the telephone keypad. At least prior consent.76 In addition, many objected to what they regard as the shield them from unwanted one consumer noted that this approach telemarketing calls, including would be ineffective for her, and overbreadth of the TSR’s definition of an ‘‘established business prerecorded messages.82 A large number presumably many thousands of other fear the proposed safe harbor will create consumers who still have rotary dial relationship,’’ 77 which some regarded as threatening to make a ‘‘mockery’’ of a ‘‘loophole’’ that will dilute the telephones without keypads.70 A effectiveness of the Registry in consumer group and at least one preventing unwelcome intrusions on consumer questioned whether the bars the use of equipment that channels a call to proposed interactive mechanism would a sales representative if a consumer answers, but to a recorded message if an answering machine picks 78 Sanderson, No. OL–447. See also Sager, No. be effective in the absence of a up. See TSR SBP, 68 FR at 4645; see also the OL–104269; Yarrow, No. OL–102563. requirement that a representative be discussion in Section II.E, infra. 79 EPIC at 14; PRC at 9; NCL at 3. promptly available.71 Another consumer 73 1992 FCC Order, 7 FCC Rcd 8752, ¶ 34 80 E.g., Hancock, J., No. OL–112529 (‘‘Since a group doubted that consumers would (concluding that a ‘‘solicitation can be deemed ‘business relationship’ is readily established by any invited or permitted by a subscriber in light of the inquiry or purchase, the universe of companies that really benefit from the proposed business relationship.’’). can claim a basis to make junk phone calls is interactive mechanism.72 74 E.g., Sancibrian, No. OL–106078; Salem, No. huge.’’); Talmo, No. OL–110438 (‘‘A few years ago, OL–107247; Sartin, No. OL–104554; Laucik, No. most of my purchases were made within my 68 E.g., Gollinger, No. OL–103929 (‘‘This puts an OL–104859; Wortman, No. OL–103376; Corey, No. community.* * * The digital world has opened up undue burden upon the consumer to attempt to OL–105981; Innes, No. OL–105931; Brown, R., No. very far-reaching so-called relationships. * * * I contact the company to have their name deleted OL–107136; Troup, No. OL–103143; Goland, No. now make many one-time [Internet] purchases from from the call list.’’); Wahlig, No. OL–104503 at 1 OL–100107. companies I may never contact again. I fear that (citing the ‘‘unjustifiable burden on citizens who 75 See note 56, supra, and accompanying text. these simple one time purchases will constitute a wish to assert their DNC rights’’); Tomas, No. OL– Many of the consumer comments opposing so-called business relationship.’’); Argyropoulos, 101671 (‘‘Instead, the burden is placed on the expansion of the ‘‘established business No. OL–102968 at 1 (‘‘Companies are offering free victim’s shoulders to contact the telemarketer to relationship’’ exemption did not distinguish or below-cost inducements to establish business have himself removed from the call list.’’); Ayers, between prerecorded calls and live calls from a relationships for the primary purpose of acquiring T., No. OL–113131; Bashor, No. OL–113062; Fiol, sales representative. Consequently, it is impossible the ability to telemarket to consumers in the Do Not No. OL–112458; LaMountain, No. OL–101888; to determine whether these comments would Call registry.’’). Boyd, M., No. OL–113844; Hall, No. OL–104082; support an established business relationship 81 E.g., Fryman, No. OL–101503 (‘‘The established Grace, No. OL–113784; Piro, No. OL–112925. exemption for live telemarketing calls, or whether business relationship clause of the existing system 69 E.g., Hancock, J., No. 112529; Sahagian, No. they reflect a change in consumer attitudes toward has been stretched and twisted beyond all OL–113021; Kleger, No. OL–103115. the exemption. recognition, such that companies that we have had 70 Sachau, No. EREG–000002; see also 76 EPIC at 2, 14; PRC at 4, 9; NCL at 4; see also, no ‘business relationship’ with in over 5 years are Argyropoulos, No. OL–102968 at 2 (‘‘[N]one of the e.g., Barry, A., No. OL–104109; Williams, K., No. still calling.’’); Anderson, J., No. OL–102561 (‘‘I get proposed options allow a person answering on a OL–101321; North, W., No. OL–103090; Schnautz, 3–5 calls a day, with recorded messages. And NO, non-touch-tone phone to efficiently make a Do Not No. OL–104508; Tipping, No. OL–109310; Twilling, they are NOT people I’ve done business with!’’); Call request.’’). While other mechanisms No. OL–108395; Viggiano, No. OL–108516. Holt, C., No. OL–102518, (‘‘I constantly receive undoubtedly exist to provide equivalent 77 E.g., Nuglat, No. OL–109584 (‘‘[T]hese solicitations from companies who claim I have a functionality for rotary dial telephone users, no companies will be calling a purchase of a stick of relationship with them, and I’ve never heard of industry comment addressed this problem in gum a year ago the basis of an established business them before. STILL get calls, both human and PRE- response to the NPRM’s request for information relationship.’’); Touretzky, No. OL–100891 (‘‘I work Recorded.* * *[A]s I was writing this, I was just about ‘‘alternative mechanisms.’’ nights and sleep in the daytime. I do not want to interrupted by a TELEMARKETING CALL!!!!!! 71 NCL at 5 (‘‘The FTC proposal seems to assume * * *[I]t was not a company we had ever done be dragged out of bed by every low-life outfit that that when the consumer presses the number to once sold me a box of paperclips.’’); Holt, C., No. business with and they would not tell me how they speak to a live company representative, one will be OL–102518 (‘‘Time Warner owns some 80% of the got this number.’’). readily available. It is unclear what happens if that media markets, does that mean if I buy one copy 82 E.g., Thompson, A., No. OL–104385 (‘‘I is not the case. Will the consumer get dead air? Be of Time magazine that I should have to receive recently moved, and my new phone number was put on hold with recorded music? Be hung up phone calls from every other media outlet Time not on the Do Not Call list; I received more ‘junk’ rmajette on PROD1PC67 with PROPOSALS2 on?’’); Argyropoulos, No. OL–102968 at 2. owns? That’s the way it functions now.’’); see also, calls than I received normal phone calls. Adding 72 PRC at 7 (arguing that most prerecorded e.g., Holt, C., No. OL–102518; Schendel, K., No. my new number to the list made having a phone telemarketing messages are left on answering OL–101419; Veech, No. OL–110162; Ehlinger, No. bearable again.’’); Musgrave, No. OL–106135; machines or voice mail services, depriving OL–105751; Eide, No. OL–102754; Erskine, D., No. Sampson, No. OL–106004; Anholt, No. OL–104141; consumers of the benefits of such an option, and OL–109355; Volek, No. OL–100697; Inman, J., No. Dougherty, J., No. OL–106035; Gordon, M., No. OL– ultimately clogging their message storage with OL–102319; Verner, No. OL–104134; Islam-Zwart, 109877; Matson, No. OL–111933; Gunnells, No. unwanted telemarketing messages). However, No. OL–100028; Sampson, No. OL–106004; OL–108503; McCarthy, L., No. OL–101367; Sayer, nothing in the TSR’s call abandonment prohibition Salisbury, No. OL–104292. No. OL–100407. VerDate Aug<31>2005 15:07 Oct 03, 2006 Jkt 211001 PO 00000 Frm 00008 Fmt 4701 Sfmt 4702 E:FRFM04OCP2.SGM 04OCP2
    • Federal Register / Vol. 71, No. 192 / Wednesday, October 4, 2006 / Proposed Rules 58723 their privacy at home.83 Consumers and easily and as quickly as in a similar call indeterminate length have prevented their advocates expressed concern that, using sales representatives. Thus, the consumers from making emergency if the proposed new safe harbor were Commission’s analysis begins from the calls—a concern which was an adopted, marketplace economics could premise that a new safe harbor that important factor leading to passage of soon produce a flood of prerecorded treats prerecorded telemarketing calls to the TCPA.87 While the record does not telemarketing messages that would established customers differently from suggest that obstruction of emergency engulf the privacy protection provided other prerecorded calls might be calls by prerecorded messages is a by the Registry. They cited, in appropriate if: (1) The consumer common occurrence, the seriousness of particular, such recent digital aversion to prerecorded calls (which led the potential consequences when it does technologies as Voice Over Internet to enactment of the TCPA ban on such occur creates legitimate cause for Protocol (‘‘VoIP’’) as likely to lower the calls) does not apply when such calls concern. costs of prerecorded telemarketing are made to established customers; (2) Likewise, the possibility that any messages to the point that they would any harm to consumer privacy is harm to consumer privacy might be be used extensively, if permitted.84 outweighed by the value of prerecorded outweighed by the value of prerecorded Thus, several comments argued that calls to established customers; or (3) calls to established customers is allowing the use of prerecorded there is something unique about the convincingly refuted by the consumer messages in telemarketing to established relationship between sellers and their comments. There is support in the customers would in effect create the established customers that gives sellers record for prerecorded informational telephonic equivalent of ‘‘spam,’’ a sufficient incentive to self-regulate so messages—i.e., messages without any overwhelming consumers with that they would avoid prerecorded sales pitch—which are not prohibited unwanted messages that cost the caller telemarketing campaigns that their by the TSR; yet there is virtually none little or nothing to send.85 customers would consider abusive. for prerecorded telemarketing messages. Based on careful consideration of the Accordingly, this second potential D. Analysis of the Comments, comments, the Commission concludes rationale for adoption of a new safe Discussion and Conclusion that the record does not support any of harbor is not supported by the record— Two themes strikingly emerge from these possible rationales for treating a fact that assumes particular the record. First, there is virtually no prerecorded telemarketing calls to importance in view of Supreme Court consumer support for allowing the use established customers differently from precedent that has long recognized the of prerecorded messages; and second, other prerecorded calls. significant governmental interest in neither industry nor consumers support First, if consumers had little or no protecting residential privacy.88 the proposal’s effort to ensure that aversion to prerecorded calls from The third possible rationale for a new consumers would be able to assert an sellers with whom they have an safe harbor—that sellers will self- entity-specific Do Not Call request in an established business relationship, the regulate the number of prerecorded ‘‘established business relationship’’ call fact that such calls avoid the twin harms messages they send in order to preserve delivering a prerecorded message as of ‘‘dead air’’ and ‘‘hang ups’’ associated the goodwill of established with abandoned calls would weigh customers 89—is similarly unpersuasive. 83 Over 5,900 consumer comments asserted that heavily in favor of the adoption of a new Although it may be that well-established there is no need to create a ‘‘loophole’’ or to adopt safe harbor. The record here provides businesses with brand or name the amendment. E.g., Brown, R., No. OL–101294; compelling evidence, however, that recognition will engage in such Hill, A., No. 000037; Moore, M., No. OL–101468; consumer aversion to prerecorded restraint, the same is not necessarily Fryman, No. OL–101503; Vrignaud, No. OL– 101542; Jester, No. OL–101685; Selmi, No. OL– message telemarketing—regardless of true for new entrants and small 102168; Miller, No. OL–103424; Vogel, No. OL– whether an established business businesses in highly competitive 105708 at 1. relationship exists—has not diminished markets. The proposed safe harbor, if 84 Sacerdote, No. OL–112192 (‘‘The cost of since enactment of the TCPA, which, in approved, would expose consumers, placing such automatic call[s] is essentially zero, including those who have entered their and the desire to place such calls will therefore be no small measure, was prompted by nearly infinite.’’) (emphasis added); EPIC at 5–6 consumer outrage about the use of telephone numbers on the Registry, to (citing a 1999 news report that VMBC could leave prerecorded messages. The comments in such prerecorded messages, potentially ‘‘messages with 1% of the U.S. population over a this record demonstrate that consumers from every seller from whom they have two-day period,’’ and the increasing use of low cost made a single purchase in the past 18 Internet services such as VoIP or Internet continue to view such calls as an telephony); PRC at 8–9 (citing an August 10, 2004, abusive invasion of their privacy, and months. In addition, because the TSR’s CNET article about software that can deliver up to an even greater invasion of their privacy definition of an ‘‘established business 1,000 synthetic calls every five seconds to Internet than live telemarketing calls because relationship’’ includes consumers who Protocol addresses assigned to telephones); NCL at they are powerless to interact with a have not made a prior purchase, but 2–3 (arguing that low cost use of prerecorded messages rather than salespersons and expansive recording. Indeed, almost all of the very simply an inquiry, sellers would have reading of ‘established business relationship’ will few consumers who commented in favor result in increase of telemarketing calls); see also, of prerecorded messages confined their 87 S. Rep. No. 102–178, at 10 (1991). e.g., Allan, A., No. OL–103079; United States comments strictly to informational calls, 88 E.g.,Frisby v. Schultz, 487 U.S. 474 (1988); Senate, No. OL–113862 at 3; Bates, J., No. OL– Rowan v. U.S. Post Office Dep’t, 397 U.S. 728 100012; Fisher, B., No. OL–109494; Watson, B., No. in some cases qualifying their support (1970). 108960. with negative comments about 89 Several industry comments inconsistent with 85 E.g., Anderson, No. OL–106320 (‘‘E-mail spam prerecorded sales calls.86 this rationale argue that because the burden of proof is killing e-mail for legitimate business In addition, some consumers are of an established business relationship would fall communication and phone spam would do the troubled by the potential hazards that on the seller, no new enforcement concerns would same for telephone communications.’’); Kislo, No. be created by a safe harbor for prerecorded calls. As rmajette on PROD1PC67 with PROPOSALS2 OL–102924 (‘‘Such a modification would change prerecorded messages may pose for their these comments reflect, the industry recognizes that telemarketing rules in such a radical fashion, you health and safety when home telephone the burden of this affirmative defense rests on risk bringing the ‘e-mail spam’ problem to the lines cannot be released in emergencies. sellers and telemarketers to prove that the seller has telephones across the US.’’); Malone, S., No. OL– As this record attests, in at least a few an established business relationship with the party 107630 (objecting to FTC proposal to allow ‘‘pre- called, 16 CFR 310.4(b)(1)(iii)(B)(ii), just as in the recorded ‘spam blitzes’’ ’); Miller, No. OL–103424 instances, prerecorded messages of express written agreement exception, 16 CFR (‘‘Left unchecked (as I believe it is today) the phone 310.4(b)(1)(iii)(B)(i), and the Do Not Call safe system will become much like e-mail, 80% spam.’’). 86 See note 54, supra. harbor, 16 CFR 310.4(b)(3). 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    • 58724 Federal Register / Vol. 71, No. 192 / Wednesday, October 4, 2006 / Proposed Rules less of an incentive to self-regulate the record indicates that new digital that agency recognized that the TCPA number of prerecorded messages they technologies, including VoIP, are likely did not exempt prerecorded calls to a send to such consumers, because they to reduce the cost of transmitting consumer who has an established have no established customer to lose, prerecorded telemarketing messages by business relationship with a seller.95 In but only a customer to gain. The telephone dramatically, if not to adopting regulations prohibiting likelihood that industry-wide self- ‘‘essentially zero,’’ in the foreseeable virtually all prerecorded message restraint would be effective must be future.92 As the costs decrease, the telemarketing calls where the called assessed with an eye toward the economic incentives to increase the use party has not given ‘‘prior express industry’s record of compliance with of prerecorded telemarketing messages consent’’ to receive such calls, the FCC the TSR to date. While overall for advertising will multiply, increasing nonetheless elected to create an compliance with the Do Not Call the flow of prerecorded messages ‘‘established business relationship’’ provisions of the TSR is quite good, not consumers receive in their homes. exemption from that prohibition.96 The all covered entities are complying.90 Thus, there is no apparent rationale FCC explained that, in its view, a The compliance record presents a for according special treatment to ‘‘solicitation can be deemed invited or particular problem with respect to prerecorded telemarketing calls to permitted by a subscriber in light of the consumer concerns about the breadth of established customers. Nevertheless, business relationship,’’ 97 that requiring the industry’s interpretation of what there remains the industry contention ‘‘prior express consent’’ would constitutes an ‘‘established business that failure to adopt the proposed safe ‘‘significantly impede communications relationship,’’ as the consumer harbor would be contrary to the between businesses and their comments and the Commission’s law mandate of the Do Not Call customers,’’ and thus, that a enforcement experience indicate.91 Implementation Act (‘‘DNCIA’’),93 ‘‘solicitation to someone with whom a This argument also ignores the fact because FCC regulations permit certain prior business relationship exists does that the cost of conducting live prerecorded telemarketing calls, even not adversely affect subscriber privacy telemarketing campaigns with sales though the DNCIA directed the FCC to interests.’’ 98 In updating its regulations agents, as now permitted by the TSR, is maximize the consistency of its Do Not in 2003 to comply with the DNCIA, the itself a separate, significant check on the Call regulations with the FTC’s TSR.94 FCC elected to retain the exemption, number of such campaigns. Thus, it is When the FCC first promulgated its stating that ‘‘[t]he record reveals that an reasonable to expect that the regulations under the TCPA in 1992, established business relationship substantially lower cost of prerecorded exemption is necessary to allow message telemarketing (compared to live 92 E.g., Mari-Len de Guzman, Spam may be a companies to contact their existing telemarketing campaigns with sales future threat to VoIP, Computerworld, Sept. 7, 2005, at 2, available at http://www.computerworld.com/ customers.’’ 99 agents) would significantly increase the networkingtopics/networking/ story/ As a result, the relevant provisions of use of such campaigns, at least by new 0,10801,104442,00.html (citing Spam over Internet the FCC rules and the TSR differ to the entrants and small businesses that lack Telephony (SPIT) as a growing concern for VoIP extent that the FCC rules permit users because technology would allow artificial brand or name recognition. It is no less messages to be sent to 30,000 IP phones in a second reasonable to predict that, as new digital and costs would be ‘‘essentially zero’’) (emphasis 95 1992 FCC Order, 7 FCC Rcd 8752, ¶ 34. In fact, technologies further reduce the cost of added); Associated Press, Voice Over Internet Use the TCPA states that Congress has found that Soaring, Yahoo! News, Mar. 1, 2006, available at ‘‘residential telephone subscribers consider prerecorded telemarketing, the volume automated or prerecorded telephone calls * * * to http://www. ladlass.com/ice/archives/010819.html of prerecorded calls will increase. The (reporting that the number of users of Internet be a nuisance and an invasion of privacy,’’ and that telephone services tripled in 2005, jumping from ‘‘[b]anning such automated or prerecorded 90 From December 31, 1995 until March 25, 2003, 1.3 million users of VoIP to 4.5 million); Deborah telephone calls to the home, except when the the Commission brought 162 cases against Solomon, AARP’s Antagonist, N.Y. Times receiving party consents to receiving the call * * * telemarketers alleging violations of the TSR. Since Magazine, Mar. 13, 2005, at 23 (explaining how is the only effective means of protecting telephone March 31, 2003, the effective date of the amended automated telephone messages are ‘‘extraordinarily consumers from this nuisance and privacy TSR, 24 cases alleging violations of the TSR’s Do inexpensive’’ and efficient, and citing, as an invasion.’’ TCPA, Pub. L. No. 102–243, 105 Stat. Not Call provisions, and another 37 cases alleging example, calling every household in North Dakota 2394 (1991) at §§ 2(10) and (12). 96 47 CFR 64.1200(a)(2)(iv). The only other TSR violations by telemarketers have been in just four hours for $10,000); VoIP to Open Door brought by the Commission or the Department of for Flood of Overseas Telemarketing, VoIPNEWS, requirements are that the prerecorded message must Justice at the Commission’s request. E.g., FTC v. May 17, 2005, http://web.archive.org/eb/ clearly identify the business responsible for Universal Premium Serv., No. 06–0849 (C.D. Cal. 20050316232140/www.voip-news.com/art/6q.html initiating the call and provide, ‘‘during or after the entered Feb. 21, 2006) (ex parte TRO entered to halt (citing Burton Group analyst Fred Cohen who message,’’ a telephone number that consumers can alleged TSR violations in ‘‘WalMart Shopping Spree predicts that ‘‘the average enterprise or household call during normal business hours to make a Scam’’ involving continuing calls to consumers could see as much as 150 calls a day’’ from company-specific Do Not Call request. 47 CFR who had asked to be placed on the seller’s telemarketers using VoIP based in part on the price 64.1200(b). company-specific Do Not Call list); United States v. of Internet telephony which has cut costs by a factor 97 1992 FCC Order, 7 FCC Rcd 8752, ¶ 34. But cf., DirecTV, Inc., No. SACV05–1211 (C.D. Cal. filed of 100). Telecom Decision, CRTC 2004–35, ¶ 111 (in which Dec. 12, 2005) ($5.3 million civil penalty settlement 93 Public Law No. 108–10, 117 Stat. 557 (2003). the Canadian Radio-Television and for alleged TSR violations in making calls to A related argument asserted in some industry Telecommunications Commission declined to consumers on the Registry, and for allegedly comments, that Congress gave exclusive jurisdiction create an established business relationship assisting a telemarketer in making prerecorded to the FCC to regulate the use of automated dialing exemption for prerecorded telemarketing calls on telemarketing calls that violated the call and announcing devices, has been rejected by each the ground that ‘‘when a consumer purchases a abandonment safe harbor). court that has considered the question. Mainstream service or product from a company * * * there is 91 In United States v. Columbia House Co., No. Mktg. Servs. v. FTC, 358 F.3d 1228, 1237, 1259 no ‘implied consent’ as a result of that purchase to 05C–4064 (N.D. Ill. filed July 14, 2005), the (10th Cir.), cert. denied, 543 U.S. 812 (2004); Nat’l receive future solicitations’’). Commission obtained a $300,000 civil penalty Fed’n of the Blind v. FTC, 420 F.3d 331, 337 (4th 98 1992 FCC Order, 7 FCC Rcd 8752, ¶ 34. settlement for alleged calls to tens of thousands of Cir. 2005), cert. denied, 126 S.Ct. 2058 (2006); see 99 2003 FCC Order, 68 FR at 44165. In comments numbers on the Registry. Although the defendant also Broad. Team, Inc. v. FTC, 429 F.Supp.2d 1292, filed with the FCC during the rulemaking it claimed an ‘‘established business relationship’’ 1301–02 (M.D. Fla. 2006), appeal docketed, No. 06– conducted pursuant to the DNCIA, the FTC rmajette on PROD1PC67 with PROPOSALS2 with the consumers it called, the Commission 13520–EE (11th Cir. June 23, 2006). specifically urged the FCC to eliminate this alleged, after investigation and analysis, that most 94 Section 3 of the DNCIA directed that ‘‘the discrepancy, as the FCC’s ruling acknowledged. were calls to consumers who last made a purchase Federal Communications Commission shall consult 2003 FCC Order, 18 FCC Rcd 14014, 14109, ¶ 156 from the defendant far outside the prior 18-month and coordinate with the Federal Trade Commission & n.556. However, the FCC declined to conform its period during which the exemption would have to maximize consistency with the rule promulgated prerecorded message rules to the FTC’s TSR, with applied, and that other calls were made to by the Federal Trade Commission (16 CFR no explanation except that the ‘‘current exception consumers who had previously instructed the 310.4(b))’’ in issuing the 2003 FCC Order to is necessary to avoid interfering with ongoing company not to call them. implement and enforce the Do Not Call Registry. business relationships.’’ Id. at 95. VerDate Aug<31>2005 15:07 Oct 03, 2006 Jkt 211001 PO 00000 Frm 00010 Fmt 4701 Sfmt 4702 E:FRFM04OCP2.SGM 04OCP2
    • Federal Register / Vol. 71, No. 192 / Wednesday, October 4, 2006 / Proposed Rules 58725 prerecorded calls where the seller has delicate balance the Commission has would be available promptly,105 and an established business relationship struck between legitimate, but because, in their view, most prerecorded with the party called, and the TSR’s call competing, privacy and communication messages end up on answering abandonment prohibition does not.100 interests. If a safe harbor that would machines or voice mail services, so that While regulatory uniformity may be a permit prerecorded telemarketing the interactive mechanism would not laudable goal, it is not a sufficient basis messages to established customers were materially assist consumers in avoiding for conforming the TSR to the FCC’s created, it seems certain that consumers the costs and encumbrances of asserting regulations given the Congressional whose telephone numbers are listed on their company-specific opt-out rights.106 mandate that the Commission’s the Registry would receive some greater No industry or consumer comment Telemarketing Act regulations prohibit number of telemarketing messages than proffered a suitable alternative that abusive telemarketing calls—and they do now. Although reasonable would serve the same purpose as the particularly given the lack of support in people may differ on the likely size and interactive mechanism proposed. the record for exempting such calls from scope of that increase, there can be no In the absence of any mechanism the Rule’s prohibition.101 In sum, the dispute that it would come at some cost widely acceptable to industry and record does not establish a rationale that to the privacy of consumers in their consumers that would provide would warrant special treatment for homes. Based on the record to date, the recipients of prerecorded telemarketing prerecorded message telemarketing concern is a very real one that messages the opportunity to assert their when directed to consumers with whom consumers, to some degree, would Do Not Call rights ‘‘quickly, effectively the seller has an established business return to the same burdensome situation and efficiently,’’ the Commission does relationship. that existed before the Registry, when not believe that it can craft conditions An additional consideration they were repeatedly having to assert a for the proposed safe harbor that would articulated in the record supports the company-specific Do Not Call remedy preserve the balance between the Commission in its conclusion not to that the Commission deemed consumer privacy interests that adopt the new safe harbor VMBC inadequate for commercial sales Congress intended to protect and the sought: the potential of such a change to solicitation calls when it created the interest of sellers and telemarketers in undermine the effectiveness of the Registry.102 communicating sales and promotional National Do Not Call Registry. There can Only one issue remains to be offers to their established customers via be no question that public support for considered. In drafting the proposed prerecorded messages. the Do Not Call Registry is new safe harbor in response to the It is important to reiterate, however, overwhelming and widespread. As of VMBC petition, the Commission sought that many (if not most) of the September 1, 2006, consumers had to minimize the potential harms of communications sellers wish to send via registered more than 130 million prerecorded calls to established prerecorded messages, and that telephone numbers, choosing to ‘‘opt customers by requiring sellers and customers wish to receive, are in’’ to the protection provided by the telemarketers to provide a prompt informational communications not Registry to keep unwanted opportunity at the outset of the message governed by the TSR, and thus are not telemarketing calls from invading and for customers to assert a company- prohibited by its call abandonment disturbing the privacy of their homes. specific Do Not Call request. The provision.107 It is equally noteworthy The importance of the Registry to Commission specifically endorsed an that because the proposed new safe millions of consumers in preserving interactive mechanism that would harbor would have been predicated on personal privacy in their homes cannot permit the party called to connect to a an ‘‘established business relationship,’’ be understated or underestimated, as the sales representative during the message sellers would have had an opportunity consumer comments on the record in by pressing a button on the telephone during their business dealings to obtain this proceeding make clear. keypad. The purpose of this provision the prior written agreement of their Nevertheless, the Commission is was to put recipients of a prerecorded customers to receive telemarketing calls mindful of the legitimate interest of message on an equal footing in asserting that deliver prerecorded messages.108 businesses in communicating with their their company-specific Do Not Call For this and all the other reasons established customers. The rights with customers who now receive discussed above, the Commission has communication interest in such calls is live telemarketing calls from sales concluded that, on balance, the record one reason the TSR expressly permits representatives under the TSR’s in this proceeding fails to provide the sellers and telemarketers to make live established business relationship support necessary to justify the telemarketing calls to consumers whose exemption. proposed additional safe harbor. telephone numbers are listed on the A majority of both industry and Accordingly, the Commission has Registry, provided the seller has an consumer comments on the record have determined not to adopt the proposed established business relationship with resoundingly rejected this proposal. amendment, and to deny the VMBC each consumer who is called, or has Most of the sellers and telemarketers petition. The Commission’s Rules of obtained a written agreement to receive who commented on the proposed Practice afford VMBC and other sellers such calls that is signed by the interactive mechanism objected to it as and telemarketers the right to seek any consumer. The safe harbor VMBC costly, burdensome, and not widely advisory opinions they may need to requested would have altered the available.103 Consumers and their advocates protested that the mechanism 105 See note 71, supra, and accompanying text. 106 See note 72, supra, and accompanying text. 100 As noted, the TSR addresses only calls would be ineffective because touchtone 107 Examples of informational calls—provided delivering a recorded message when a person keypads are not universal,104 there is no answers, as opposed to an answering machine or they are not combined with a sales pitch—include rmajette on PROD1PC67 with PROPOSALS2 voice mail system. guarantee that a sales representative calls from an airline notifying consumers about a 101 The Commission’s view might be otherwise if cancelled flight or a schedule change to a booked 102 TSR SBP, 68 FR at 4631 (‘‘[T]he company- flight, or calls from a company notifying consumers the two sets of regulations were so contradictory that they imposed inconsistent obligations on specific approach is seriously inadequate to protect about the recall of a purchased product. See notes sellers and telemarketers, but that is not the case consumers’ privacy from an abusive pattern of calls 29 & 54, supra, and accompanying text. here, where compliance with the more restrictive placed by a seller or telemarketer.’’). 108 Sellers would have the same opportunity if the 103 See note 45, supra, and accompanying text. requirements of the TSR does not violate the FCC amendment discussed in Section II.E, infra, is regulations. 104 See note 70, supra, and accompanying text. adopted. VerDate Aug<31>2005 15:07 Oct 03, 2006 Jkt 211001 PO 00000 Frm 00011 Fmt 4701 Sfmt 4702 E:FRFM04OCP2.SGM 04OCP2
    • 58726 Federal Register / Vol. 71, No. 192 / Wednesday, October 4, 2006 / Proposed Rules clarify the types of prerecorded addition to the ‘‘Pattern of Calls’’ consumer who cannot be connected to informational messages that are not prohibitions in § 310.4(b)(1) of the TSR, a sales representative. covered by the TSR, and thus are not and to invite public comment on the The proposed amendment barring prohibited.109 proposal until November 6, 2006. prerecorded telemarketing calls without Additionally, the Commission has Section 3.10(b)(1) will continue to a consumer’s prior written agreement decided, based on the record in this provide that ‘‘It is an abusive would make the present prohibition proceeding, to propose an amendment telemarketing act or practice and a explicit, and would implement the of the TSR, pursuant to § 3(a)(3)(A) of violation of this rule for a telemarketer Commission’s broad authority under the the Telemarketing Act,110 to add an to engage in, or for a seller to cause a Telemarketing Act to prohibit abusive express prohibition against unsolicited telemarketer to engage in, the following telemarketing practices. The prerecorded telemarketing calls, unless conduct:’’ The new subsection would Telemarketing Act directs the FTC to the seller has obtained a consumer’s add: ‘‘include in [the TSR] a requirement that express prior written agreement to (v) Initiating any outbound telemarketing telemarketers may not undertake a receive such calls. In so doing, the call that delivers a prerecorded message pattern of unsolicited telephone calls Commission also seeks to address the when answered by a person, unless the seller which the reasonable consumer would criticism, encountered by FTC staff in has obtained the express agreement, in consider coercive or abusive of such providing industry guidance, that the writing, of such person to place prerecorded consumer’s right to privacy.’’ 116 text of the TSR does not calls to that person. Such written agreement The consumer comments in this straightforwardly address prerecorded shall clearly evidence such person’s proceeding have made it clear that message telemarketing, and instead authorization that calls made by or on behalf consumers overwhelmingly consider of a specific party may be placed to that prerecorded telemarketing calls coercive places the burden on industry members person, and shall include the telephone and their legal advisors to divine that number to which the calls may be placed and and abusive of their right to privacy. the call abandonment provisions the signature of that person; provided, They find prerecorded calls more effectively bar this practice (except for however, that prerecorded messages coercive and abusive than live the very restricted use of recorded permitted for compliance with the call telemarketing calls because they are messages in the call abandonment safe abandonment safe harbor in § 310.4(b)(4)(iii) powerless to interact with a recording, harbor). The Commission continues to do not require such an agreement.114 either to assert their Do Not Call rights think that the plain language of the call The purpose of the proposed or to request additional information abandonment provision itself prohibits amendment is to make it explicit that about the product or service offered. calls delivering prerecorded messages the TSR prevents sellers and Thus, the present record supports a when answered by a consumer, a telemarketers from delivering a finding that a reasonable consumer position it has repeatedly stated,111 and prerecorded message when a person would consider prerecorded that has been accepted by at least one answers a telemarketing call, regardless telemarketing calls coercive or abusive court.112 However, the Commission of whether the call is made to a of such consumer’s right to privacy, believes that it might be beneficial to consumer whose number is listed on the unless the consumer had given his or make the prohibition more prominent Do Not Call Registry or to a consumer her express prior written agreement to by adding a provision that makes who has an established business receive such calls. explicit the prohibition on relationship with the seller, without the The proposed amendment would telemarketing calls delivering consumer’s express prior written prohibit only the initiation of a call prerecorded messages (while clarifying agreement.115 The prohibition contains ‘‘that delivers a prerecorded message that the call abandonment safe harbor a proviso that would permit the use of when answered by a person.’’ The continues to allow the use of prerecorded messages required by the Commission specifically seeks comment prerecorded messages in very limited call abandonment safe harbor when a on whether the limitation ‘‘when circumstances). telemarketing call is answered by a answered by a person’’ is necessary and This record demonstrates that the appropriate or whether the prohibition overwhelming majority of consumers 114 This proposed language is modeled on on prerecorded messages should be consider prerecorded telemarketing existing § 310.4(b)(1)(iii)(B)(i), which permits calls extended to calls answered by a calls a particularly ‘‘coercive or to numbers on the Registry with the consumer’s voicemail system or an answering prior written agreement, and is consistent with the machine. For example, the intrusion of abusive’’ infringement on their right to call abandonment prohibition in § 310.4(b)(1)(iv). privacy.113 Nevertheless, the As such, the proposed amendment would permit a telemarketing call delivering a Commission believes that all interested digital and electronic signatures to the extent prerecorded message would seem less parties should be afforded an recognized by applicable Federal or State contract disruptive if it arrives when the party law. 16 CFR 310.4(b)(1)(iii)(B)(i) n.6; see also TSR called is not home than if it arrives opportunity to comment on the SBP, 68 FR at 4608–09. proposed prohibition, and will base its 115 The proposal would not prohibit placement of when he or she is at home in the midst final decision on the full record of prerecorded messages on answering machines of of daily activities. Nevertheless, the comments it receives. consumers who have listed their number on the Commission seeks comment on whether Registry if they have an established business there are other harms when a E. Proposed Amendment relationship with the seller, or on answering telemarketing call delivering a machines of consumers who have not listed their Accordingly, the Commission has numbers on the Registry. The Commission notes, prerecorded message is answered by an decided to propose the following however, that any telemarketing campaign directed answering machine or voice mail at leaving pre-recorded messages on answering 109 16 machines could still run afoul of the abandoned call 116 15 U.S.C. 6102(a)(3)(A). This directive appears CFR §§ 1.1–1.4. requirements of the TSR if calls that are answered consistent with the previously expressed intent of rmajette on PROD1PC67 with PROPOSALS2 110 15 U.S.C. 6102(a)(3)(A). by an actual consumer, rather than an answering Congress, as stated in the preamble to the TCPA, 111 E.g., 68 Fed. Reg. at 4644; 69 Fed. Reg. at machine, are not transferred to a sales agent as that ‘‘banning * * * automated or prerecorded 67,288; DNCIA Report at 33–34. required by § 310.4(b)(1)(iv) But cf. 47 CFR telephone calls to the home, except when the 112 Broad. Team, Inc. v. FTC, 429 F.Supp.2d 64.1200(a)(2) (FCC regulation stating that ‘‘[n]o receiving party consents to receiving the call * * * 1292, 1301–02 (M.D. Fla. 2006), appeal docketed, person or entity may initiate any telephone call to is the only effective means of protecting telephone No. 06–13520–EE (11th Cir. June 23, 2006). any residential line using an artificial or consumers from this nuisance and privacy 113 15 U.S.C. 6102(a)(3)(A); see TSR SBP, 68 FR prerecorded voice to deliver a message.’’) (emphasis invasion.’’ TCPA, Pub. L. No. 102–243, 105 Stat. at 4613. added). 2394 (1991) at § 2(12). VerDate Aug<31>2005 15:07 Oct 03, 2006 Jkt 211001 PO 00000 Frm 00012 Fmt 4701 Sfmt 4702 E:FRFM04OCP2.SGM 04OCP2
    • Federal Register / Vol. 71, No. 192 / Wednesday, October 4, 2006 / Proposed Rules 58727 service, and whether such harms rise to maximum permissible percentage of campaign’’ standard when running the level of an intrusion that the answered calls that may be abandoned multiple campaigns each day, suggested ‘‘reasonable consumer would consider when a telemarketer is not available. that telemarketers engage in precisely coercive or abusive of such consumer’s Rather than measuring the three (3) the practices that the ‘‘per day per right to privacy.’’ 117 percent maximum ‘‘per day per calling campaign’’ standard was designed to In soliciting comments on the campaign,’’ as prescribed in prevent. DMA argued that predictive proposed amendment, the Commission § 310.4(b)(4)(i), to limit ‘‘hang ups’’ and dialer systems manage call again wishes to emphasize that the ‘‘dead air,’’ DMA asks that the abandonment rates ‘‘as an average of all proposed prohibition will not prevent maximum be ‘‘measured over a 30-day campaigns per day, so it is inevitable telemarketers from transmitting period.’’ that certain logins would end the day at prerecorded informational messages to In adopting the ‘‘per day, per say, 3.1% and other at 2.9%, yet the consumers that are not part of a ‘‘plan, campaign’’ standard for calculating the overall average would still be 3% or program or campaign which is maximum level of abandoned calls, the less.’’ 121 The DMA petition did not conducted to induce the purchase of Commission stated: explain why telemarketing systems goods or services or a charitable The ‘per day per campaign’ unit of cannot dynamically maintain a steady contribution.’’ With that caveat, the measurement is consistent with DMA’s level of no more than three percent Commission will be interested in guidelines addressing its members use of overall, or could not be modified to comments that address the costs and predictive dialer equipment. Under this keep the abandonment rate below three benefits to industry and to consumers of standard a telemarketer running two or more percent separately for each campaign. the proposed amendment, as more fully calling campaigns simultaneously cannot The NPRM rejected the last two elaborated in Section VIII below. offset a six percent abandonment rate on behalf of one seller with a zero percent arguments in DMA’s petition as F. Revocation of Non-Enforcement abandonment rate for another seller in order insufficient to warrant a change in the Policy Against Prerecorded to satisfy the Rule’s safe harbor provision. call abandonment standard. The Telemarketing Calls Each calling campaign must record a Commission noted that ‘‘compliance maximum abandonment rate of three percent with the FTC’s more precise standard In view of the foregoing decision, the per day to satisfy the safe harbor.119 would constitute acceptable Commission will no longer continue the compliance’’ with both the 30-day DMA’s petition conceded that former forbearance policy announced in the standard adopted by California and the DMA Guidelines for Ethical Business NPRM on enforcement actions for FCC, and that court decisions Practices set a ‘‘per day per campaign’’ violation of the TSR’s call abandonment ‘‘controvert DMA’s argument that the standard for the maximum percentage of prohibition in § 310.4(b)(1)(iv), against FTC’s expertise or legal authority calls that DMA members could sellers or telemarketers that, in regarding the acceptable level of call abandon, but emphasized that the conformity with the now-rejected call abandonment is inferior to that of the Guidelines set a five percent abandonment safe harbor, place FCC.’’ 122 abandonment rate, rather than the three telephone calls delivering prerecorded The NPRM further explained that, in percent rate incorporated in the TSR’s messages to consumers with whom the its petition, DMA had provided no safe harbor. However, as the NPRM seller has an established business information that would tend to counter noted, the petition provided no factual relationship. The Commission wishes to the foreseeable shortcomings of a 30-day support for DMA’s apparent argument emphasize that although many standard that the Commission set forth that a ‘‘per day per campaign’’ standard prerecorded informational messages are at length in its DNCIA Report.123 The would be feasible at a five percent call not covered by the TSR, the TSR does potential for a 30-day standard to abandonment rate, but not at three cover (and prohibit) telemarketing calls ‘‘enable telemarketers to target call percent. that deliver prerecorded messages to abandonments at certain less valued consumers.118 A. DMA’s Rationale for Revising The groups of consumers,’’ and thus ‘‘offset Nevertheless, in order to prevent any Safe Harbor a high abandonment rate in low income reasonably foreseeable hardship for The DMA petition advanced three zip codes and make up the difference by sellers or telemarketers that have relied reasons for modifying the three percent abandoning no calls in affluent ones’’ on the Commission’s forbearance policy, standard: (1) The standard is ‘‘virtually led the Commission to adopt the ‘‘per the Commission will give such sellers impossible’’ for vendors who run day per campaign’’ standard to reduce and telemarketers until January 2, 2007 multiple campaigns each day to meet; to revise their practices to conform to ‘‘the potential for concentrating abuse (2) the California Public Utilities by ensuring an even distribution of the TSR, and will take no enforcement Commission—whose three percent call action based on calls to consumers with abandoned calls to all segments of the abandonment rate the Commission cited public.’’ 124 whom the seller has an established in adopting the standard—measures business relationship that are placed B. Request for Public Comment and abandoned calls on a ‘‘per 30-day’’ basis before that date and that conform to the Response according to the DMA; and (3) the FTC previously proposed, and now rejected, The NPRM sought public comment on should defer to the FCC’s determination safe harbor. the petition, noting that ‘‘the that the call abandonment rate should III. The DMA Petition be measured over a 30-day period, Commission is receptive to any factual The DMA petition urges a change in because the issue ‘‘lies closer to the core information that would establish that the standard of the TSR’s existing call expertise of the FCC than of the such a change is warranted,’’ but abandonment safe harbor in FTC.’’ 120 observing that DMA had ‘‘not provided rmajette on PROD1PC67 with PROPOSALS2 § 310.4(b)(4) for measuring the As the NPRM noted, however, DMA’s an adequate factual basis that would first argument, the near impossibility for compel’’ a modification. The 117 See discussion of the Commission’s authority vendors to meet the ‘‘per day per 121 Id.at 2. to prohibit ‘‘abusive’’ practices in the notice of 122 69 FR at 67291 & n.19. proposed rulemaking for the amended TSR. 67 FR 119 TSRSBP, 68 FR at 4643 (footnotes omitted). 4493 at 4510 (Jan. 30, 2002). 120 DMA petition at 3, available at http:// 123 DNCIA Report at 31. 118 16 CFR § 310.2(cc). www.ftc.gov/os/2004/10/ 041019dmapetition.pdf. 124 69 FR at 67291. VerDate Aug<31>2005 15:07 Oct 03, 2006 Jkt 211001 PO 00000 Frm 00013 Fmt 4701 Sfmt 4702 E:FRFM04OCP2.SGM 04OCP2
    • 58728 Federal Register / Vol. 71, No. 192 / Wednesday, October 4, 2006 / Proposed Rules Commission emphasized that it was software.126 Consumer groups expressed called, the greater the deviation can be particularly interested in three types of continued concern that a 30-day from the desired abandonment rate.133 information: (1) Any elaboration on the standard would enable telemarketers to Since the projected average answering problems telemarketers who are running target high call abandonment rates at rate is determined by predictive dialer multiple campaigns at the same time less valued groups of consumers,127 sampling as calls are made, larger face in attempting to comply with the offsetting the high rates with lower periods of calling time limit the impact current requirement; (2) any information abandonment rates for preferred groups, of unexpected fluctuations in the demonstrating that telemarketers who while a number of consumers were answering rate, while shorter periods of make a relatively small number of calls more concerned that the number of time exaggerate their effect. Any per day may be differentially abandoned calls would increase on unexpected spike in answered calls disadvantaged by the current some days or in some campaigns.128 could, according to DMA and ATA, requirements; and (3) information and ‘‘make it impossible to recover within 2. Industry Comments data demonstrating that it is unlikely the same day based upon such a small Eleven comments from telemarketers, time frame of calling.’’ 134 that, if additional flexibility were their trade associations and other For these reasons, DMA and ATA provided, telemarketers would business trade associations argued that the present ‘‘per day per intentionally set the abandonment rates unanimously supported revision of the campaign’’ standard inhibits the use of above 3 percent for some campaigns or ‘‘per day per campaign’’ standard,129 smaller, ‘‘segmented’’ lists of fewer than calls directed to certain consumers, with several echoing the argument that 15,000 names that target consumers while setting lower rates of call the FTC should defer to the FCC most likely to be interested in an abandonment for other campaigns or standard,130 and some contending that offer.135 This disadvantages consumers, calls in order to stay within the three there is no evidence that telemarketers the comment contended, by making it percent maximum call abandonment would abuse a 30-day standard by more likely they will receive calls about rate. discriminating against disfavored sales offers in which they have no 1. Consumer Comments groups of consumers.131 DMA and the interest, and also particularly American Teleservices Association disadvantages small business sellers Comments from some 230 consumers (‘‘ATA’’) argued in their joint comment with small clienteles, as well as the and three consumer advocacy groups that compliance with the current smaller telemarketing companies that addressed issues raised by the DMA standard is difficult because the pace of serve them.136 DMA also asserted that petition. All but a smattering of these outbound calls placed by predictive the Commission significantly increased comments opposed changing the call dialers is based on the average number the compliance burden for small abandonment standard to a 30-day of calls answered by consumers, and business users of segmented lists, given average across all telemarketing unexpected fluctuations in the number the difficulties of predicting campaigns.125 Many argued that the answered, or the time sales agents spend abandonment rates with shorter calling DMA did not offer a compelling reason speaking with consumers, make it lists, by setting the safe harbor call for the change, with at least two noting difficult to predict the call abandonment abandonment rate at three percent, that the difficulties DMA cited for some rate and ensure compliance, particularly rather than the five percent figure in telemarketers in meeting the current in smaller campaigns, and in campaigns DMA’s former guidelines, with the standard could easily be eliminated by focusing on evening calls at the end of result that predictive dialer economic modifying or upgrading their the day.132 ‘‘efficiencies disappear almost DMA and ATA explained that entirely.’’ 137 125 Three of ten consumers who supported a predictive dialers base the rate at which DMA and ATA further argued that change suggested limiting it to 30-days ‘‘per calling they place calls on a projection of the ‘‘[t]he actual number of abandoned calls campaign,’’ with two of them proposing reducing average number of consumers who will would not increase if the measurement the period further to ‘‘the lesser of’’ 30 days or the answer and the number of sales agents duration of a specific campaign. McCorvey, No. available. The margin of error for these 133 This follows, according to DMA and ATA, OL–104248 (‘‘As an engineer, I recognize the possibility that various causes outside the control projections, in turn, is a function of the from ‘‘a bedrock principle of statistical analysis that number of consumers to be called. The the smaller the size of the sample, the larger the of the marketing organization may make it difficult standard deviation and sampling errors.’’ DMA at for them to ensure compliance when measured larger the number of consumers to be 3; see also, U.S. Chamber at 8 (‘‘ In general, the across a very narrow time span. This expansion of called, the smaller the deviation is smaller the list or the smaller the campaign (or the the compliance window would not (in my opinion) create any real opportunity for abuse ONLY if it is likely to be from the projected call fewer days over which the call abandonment rate abandonment rate. Conversely, the is measured), the more likely that the abandonment tied to each campaign. Therefore, wording of the rate may deviate from the targeted rate of three form ‘measured over a 30-day period per campaign’ smaller the number of consumers to be percent.’’). would be both fair, practical and provide continued 134 DMA at 4. protection for consumers.’’); Kaufmana, No. OL– 126 E.g., Argyropoulos, No. OL–102968 at 3; 135 DMA and ATA not that ‘‘some’’ predictive 102724 (‘‘I would recommend the changed phrase Protigal, No. 000010 at 11. dialers require callings lists of ‘‘approximately to be ‘measured over a 30-day period or the calling 127 NCL at 5–6; PRC at 10; EPIC at 14. campaign, whichever is less.’ ’’); Zajonc, No. OL– 15,000 names’’ and ‘‘at least 7 or 8 telemarketing 128 E.g., Bullard, No. OL–101198; Kislo, No. OL– 102790 (‘‘I’m not against the 30-day provision for agents for any one program’’ to meet the current 3% abandonment, though I would probably shrink 102924; Ripple, No. OL–101379; Giuliani, No. OL– ‘‘per day per campaign’’ standard. DMA at 5. it, or have it be the lesser of 30 days or a specific 108532. 136 DMA at 4; see also, U.S. Chamber at 8 (‘‘In 129 E.g., DMA at 2; American Teleservices Ass’n., campaign.’’). See also Tukey, D, PhD, No. OL– particular, the current test for call abandonment in 104725 (‘‘I understand the nature of statistical No. 000058 at 3; VMBC at 15; Heritage at 3; U.S. the TSR inflicts a disproportionate harm on smaller fluctuation, so it seems a longer time period is not Chamber at 7; Infocision at 6 (advocating a 30-day businesses. Smaller businesses have smaller calling out of order.’’); Yamane, No. OL–101436 (‘‘[A] 30- standard for each separate campaign, while all other lists; one consequence of this is that a small rmajette on PROD1PC67 with PROPOSALS2 day period seems less of a problem, although it does industry comments supported DMA’s proposal for business may inadvertently exceed the three seem to make abuses of the system more likely by an overall 30-day standard for all of a percent figure comparatively quickly. To stay providing a larger window over which abuses can telemarketers’s concurrent campaigns). within the limits, the small business must 130 DMA at 8; VMBC at 15; Infocision at 6; U.S. be measured.’’); cf. Holm, M., No. OL–100438 (‘‘If recalibrate its dialing equipment, hire more sales this is merely a technical change * * * then I am Chamber at 7. representatives (which could cost overtime rates not opposed.’’); Frye, T., No. OL–106806; 131 Infocision at 5; DMA at 8; see U.S. Chamber under the per day test), or risk violating the law.’’); VanDusen, No. OL–113869; Thornton, No. OL– at 8. VMBC at 15–16; Visa at 3. 111679; Cummings, No. OL–113849. 132 DMA at 3–4; U.S. Chamber at 8. 137 DMA at 6. VerDate Aug<31>2005 15:07 Oct 03, 2006 Jkt 211001 PO 00000 Frm 00014 Fmt 4701 Sfmt 4702 E:FRFM04OCP2.SGM 04OCP2
    • Federal Register / Vol. 71, No. 192 / Wednesday, October 4, 2006 / Proposed Rules 58729 occurs on a 30-day basis rather than per however, that compliance with the small, segmented lists prohibitively day per campaign.’’ 138 In fact, they current standard is costly and expensive. noted, if a telemarketer’s call burdensome. One reported that ‘‘[o]n a The record also shows that many abandonment rate were to exceed three daily basis, campaigns must be shut consumers regard their home as their percent on any given day under the down and managed in a manual mode castle, and vehemently object to current standard (e.g., due to an to ensure compliance with this overly receiving what they regard as uninvited unexpected spike in answered calls at burdensome requirement,’’ and as a telemarketing calls. Their comments the end of the day), there may be more result, ‘‘[e]fficiency is destroyed and the give eloquent testimony to the fact that abandoned calls than if the telemarketer resulting increase in costs has made consumers despise ‘‘dead air’’ and had 30 days to correct for the many programs no longer cost- ‘‘hang ups’’ even more than unexpected increase in call effective.’’ 142 The other asserted that telemarketing, and that many believe abandonments on that day. For the same ‘‘having the freedom to run a higher they should not receive any reason, DMA and ATA contended that abandonment rate at times when telemarketing calls at all when they the ‘‘per day per campaign’’ standard is customers are less likely to be home have chosen to place their home more likely to force sellers and (such as 8 a.m. to 5 p.m.) and lowering telephone number on the Do Not Call telemarketers to discriminate between it when people are more likely to be Registry, regardless of whether they different groups of consumers than a 30- home (such as 6–9 p.m.) would make an have an established business day standard. This is because, if the call outbound campaign more efficient,’’ relationship with the seller who calls. abandonment rate unexpectedly exceeds noting that ‘‘[w]hile this approach could While this popular view of the Registry three percent on any given day, the theoretically be used under the three may be widespread, as the record telemarketer could attempt to percent per campaign per day system, it reflects, it overlooks the fact that in compensate by calling phone numbers would be far more difficult to manage establishing the Registry, the less likely to be answered by a without significantly risking being over Commission expressly authorized live consumer, but also less likely to belong the three percent threshold.’’ 143 telemarketing calls to consumers who to a consumer interested in the product have an established business or service being offered. With a 30-day C. Analysis of the Comments, relationship with the seller on whose standard, DMA and ATA argued, there Discussion and Conclusion behalf the calls are made, provided they would be no need nor incentive for As discussed above, the Commission have not asserted a company-specific Do telemarketers to discriminate in the adopted the call abandonment provision Not Call request.144 distribution of abandoned calls.139 of the TSR to prevent the abusive The comments also illustrate Finally, DMA and ATA asserted that practice of ‘‘dead air’’ calls and ‘‘hang- consumer concern that any loosening of the TSR’s protection of consumers ups.’’ The safe harbor exception to the the current standard would enable would not otherwise be diminished if call abandonment prohibition was telemarketers to target disfavored groups the 30-day standard were adopted designed to minimize this abuse, while of consumers with a disproportionate because of other protections provided to allowing the telemarketing industry to share of abandoned calls, even though consumers when the TSR was amended benefit from the economies provided by the total number of abandoned calls for in 2003. They pointed out that predictive dialer technologies. In any calling list would not exceed three consumers can: (1) Place their numbers attempting to strike an appropriate percent if the standard were on the national Do Not Call Registry; (2) balance between consumer and industry modified.145 For its part, the industry assert company-specific Do Not Call interests, the Commission adapted apparently cannot and does not deny requests; and (3) use Caller ID to find DMA’s ‘‘per day per campaign’’ that this offensive practice may be more out the names of telemarketers that have guideline when it established the three likely to occur if a change were made to abandoned calls to their telephone percent call abandonment ceiling as an a 30-day average for all campaigns. It is numbers.140 element of the § 310.4(b)(4) safe harbor. left to argue the good faith of trade Two of the industry comments It appears from the record, however, association members, and the absence of appeared to acknowledge that it is that the impact of the three percent ‘‘per empirical evidence that such an abusive technically possible to configure day per campaign’’ call abandonment practice has occurred in the past, predictive dialers to comply with the limit may be disturbing the balance the notwithstanding the existence of current standard.141 Both argued, Commission sought to achieve by economic incentives that seem likely to frustrating the full realization of the promote the abuse. At the same time, 138 In theory, if a list of 240,000 telephone potential economies provided by the Commission does not take the numbers were called at the rate of 24,000 a day for 10 days, the three percent maximum would be 720 predictive dialers, particularly with 144 TSR SBP, 68 FR at 4633–34. The Commission abandoned calls a day (.03 × 24,000 = 720), or 7200 respect to the use of segmented lists. established a limited exemption balancing the for 10 days, which is three percent of 240,000 The comments suggest that this privacy needs of consumers and the need of (.03 × 240,000 = 7200). 139 DMA and ATA agreed that ‘‘ there should not unintended consequence may be having businesses to contact their current customers, an adverse effect on small business noting: Industry comments were nearly unanimous be a group of ‘less valued’ consumers that receive in emphasizing that it is essential that sellers be a larger rate of abandoned calls,’’ and insisted that sellers and telemarketers in particular, able to call their existing customers. Although the ‘‘our members do not engage in such tactics,’’ but by increasing the costs of their initial comments from consumer groups opposed an appeared tacitly to acknowledge that there is telemarketing, and in some instances exemption for ‘established business relationships,’ nothing in the 30-day standard they advocate that * * * their supplemental comments expressed the would necessarily prevent such an offensive making telemarketing campaigns using view that such an exemption would be acceptable, practice. DMA at 7. Another industry comment as long as it was narrowly-tailored and limited to objected that there has never been any evidence that algorithms determining the speed at which the current, ongoing relationships. * * * 60 percent of rmajette on PROD1PC67 with PROPOSALS2 telemarketers target less favored consumers with system dials. It is possible to maintain a steady consumers * * * stated that they opposed an higher call abandonment rates. Infocision at 5. level but it is not an exact science.’’). Both stated, exemption for ‘established business relationship,’ 140 Another comment noted that the Caller ID however, that while they can comply with the [although] 40 percent favored such an exemption. requirement should allay any concerns of elderly present standard, a 30-day standard would permit 145 The total number of abandoned calls might consumers that abandoned calls were precursors of greater efficiency and flexibility in their increase slightly, however, because telemarketers home burglaries. Heritage at 3 n.2. telemarketing campaigns. may have had to set their predictive dialers below 141 Heritage at 3; Infocision at 5–6 (‘‘Yes, the 142 Infocision at 5. three percent to meet the present ‘‘per day per technology allows controls to be placed on the 143 Heritage at 3. calling campaign’’ standard. VerDate Aug<31>2005 15:07 Oct 03, 2006 Jkt 211001 PO 00000 Frm 00015 Fmt 4701 Sfmt 4702 E:FRFM04OCP2.SGM 04OCP2
    • 58730 Federal Register / Vol. 71, No. 192 / Wednesday, October 4, 2006 / Proposed Rules industry argument lightly that the ‘‘per days, the call abandonment rate must be The FTC Act and other laws the day per campaign’’ standard may be at or below three percent for the Commission administers permit the more restrictive than intended, given duration of the campaign; if it continues collection of public comments to the limitations of predictive dialers in for more than 30 days, the three percent consider and use in this proceeding as adjusting to unexpected spikes in ceiling must be measured separately for appropriate. The Commission will average call abandonment rates. The each successive 30-day period during consider all timely and responsive record shows that particular problems which the campaign is conducted. If the public comments that it receives, arise in connection with the use of campaign continues for more than 30 whether filed in paper or electronic smaller, segmented lists that are the days, but less than an additional 30-day form. Comments received will be most economical for small businesses period, the three percent maximum available to the public on the FTC Web and the most useful in targeting only would be measured both for the initial site, to the extent practicable, at those consumers most likely to be 30-day period, and separately for the http://www.ftc.gov. As a matter of interested in a particular sales offer. As remaining period of less than 30 days. discretion, the FTC makes every effort to a result, the Commission is inclined to In inviting public comment on this remove home contact information for believe that an amendment of the proposal from interested parties, the individuals from the public comments it present standard may be warranted. Commission wishes to emphasize that it receives before placing those comments has not yet reached any final conclusion on the FTC Web site. More information, D. Proposed Amendment on whether or not to amend the present including routine uses permitted by the Accordingly, the Commission has Privacy Act, may be found in the FTC’s decided to propose the following ‘‘per day per campaign’’ standard, although it is inclined to do so on this privacy policy, which is available at substitute for the present ‘‘per day per http://www.ftc.gov/ftc/privacy.htm. campaign’’ standard in § 310.4(b)(4)(i), record. That ultimate decision will be and to invite public comment on the informed by the public comment V. Communications by Outside Parties proposal until November 6, 2006: received on the proposed amendment. to Commissioners or Their Advisors (i) The seller or telemarketer employs IV. Invitation To Comment Written communications and technology that ensures abandonment of no summaries or transcripts of oral All persons are hereby given notice of the more than three (3) percent of all calls communications respecting the merits opportunity to submit written data, views, answered by a person, measured over the facts, and arguments addressing the of this proceeding from any outside duration of a single calling campaign, if less party to any Commissioner or amendments proposed in this notice. Written than 30 days, or separately over each Commissioner’s advisor will be placed comments must be submitted on or before successive 30-day period or portion thereof on the public record. See 16 CFR that the campaign continues. November 6, 2006. Comments should refer to: ‘‘TSR Prerecorded Call Prohibition and 1.26(b)(5). The proposed amendment is limited, Call Abandonment Standard Modification, in accordance with the suggestions of Project No. R411001’’ to facilitate the VI. Paperwork Reduction Act the supportive consumer comments and organization of comments. A comment filed Pursuant to the Paperwork Reduction an industry comment, by requiring that in paper form should include this reference Act (‘‘PRA’’), 44 U.S.C. §§ 3501–3502, the three percent ceiling be met both in the text and on the envelope, and the Office of Management and Budget separately by each of a seller’s or should be mailed or delivered to the (‘‘OMB’’) approved the information following address: Federal Trade telemarketer’s calling campaigns. The Commission/Office of the Secretary, Room collection requirements in the TSR and Commission believes such a limitation H–159 (Annex K), 600 Pennsylvania Avenue, assigned OMB Control Number 3084– is important to prevent sellers and NW., Washington, DC 20580. If the comment 0097. The proposed rule amendments, telemarketers from running multiple contains any material for which confidential as discussed above, would explicitly campaigns with what could be treatment is requested, it must be filed in prohibit all prerecorded telemarketing significantly different call abandonment paper (rather than electronic) form, and the calls answered by a person without a rates that together average only three first page of the document must be clearly written agreement signed by the percent over a 30-day period. Allowing labeled ‘‘Confidential.’’ 146 The FTC is consumer to receive such calls, and alter the flexibility that DMA proposed requesting that any comment filed in paper the standard for measuring the three form be sent by courier or overnight service, would more likely create incentives for percent call abandonment rate if possible, because U.S. postal mail in the a seller to ensure that its most favored Washington area and at the Commission is permitted by the TSR’s call customers experience lower call subject to delay due to heightened security abandonment safe harbor. abandonment rates, thus preserving precautions. The proposed amendment explicitly their goodwill, at the cost of less favored limiting the use of prerecorded customers. Thus, the Commission’s To ensure that the Commission telemarketing calls will not change the proposal is designed to reduce the considers an electronic comment, you existing paperwork burden on sellers or potential for discriminatory treatment of must file it on the Web-based form at telemarketers. It simply makes the TSR’s disfavored consumer groups by the http://secure.commentworks.com/ existing prohibition explicit rather than subjecting them to higher than average ftc-tsr Web site. You may also visit imposing a new prohibition. Thus, the call abandonment rates. http://www.regulations.gov to read this proposed amendment will, if anything, Because the proposal would measure proposed Rule, and may file an reduce the paperwork burden and the call abandonment on a ‘‘per campaign’’ electronic comment through that Web amount of time required for basis, it must account for the possibility site. The Commission will consider all telemarketers to comply with the TSR. that a campaign may continue for less comments that regulations.gov forwards In addition, an FCC regulation than 30 days, or for more than 30 days. to it. rmajette on PROD1PC67 with PROPOSALS2 prohibiting prerecorded calls has been The proposal would accomplish this, in effect since 1992, following the and provide needed certainty to sellers 146 Commission Rule 4.2(d), 16 CFR 4.2(d). The enactment of the TCPA.147 The FCC and telemarketers, by specifying that the comment must be accompanied by an explicit regulation prohibits prerecorded calls request for confidential treatment, including the call abandonment rate will be measured factual and legal basis for the request, and must delivering unsolicited advertisements or over the duration of the campaign. If the identify the specific portions of the comment to be campaign continues for less than 30 withheld from the public record. 147 47 CFR 64.1200(a)(2). 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    • Federal Register / Vol. 71, No. 192 / Wednesday, October 4, 2006 / Proposed Rules 58731 telephone solicitations to residential A. Reasons for the Proposed Rule The Commission has not previously telephones unless, inter alia, the caller Amendment requested comment on an explicit has an ‘‘established business The proposed explicit prohibition of prohibition of all prerecorded relationship’’ with the person called, or all prerecorded telemarketing calls telemarketing calls answered by a has obtained that person’s ‘‘prior answered by a person without the person without the consumer’s express express consent’’ to receive such consumer’s express prior written prior written agreement, but believes calls.148 The proposed TSR amendment agreement, discussed in Section II.E that the impact of the proposal on small therefore will not change the paperwork above, implements the Telemarketing business sellers and telemarketers burden created by the pre-existing FCC Act requirement that the Commission would be de minimis because such calls regulation. prohibit a pattern of unsolicited are currently prohibited by the TSR’s Nor will the proposed change to the telephone calls that ‘‘the reasonable call abandonment provision. Based on standard for measuring the three percent consumer would consider coercive or the absence of available data in this and call abandonment rate substantially abusive of such consumer’s right to related proceedings, the Commission affect the existing paperwork burden. privacy,’’ and effectuates the apparent believes that a precise estimate of the The present ‘‘per day per campaign’’ intent of Congress in the TCPA to number of small entities that would be standard requires sellers and prohibit prerecorded telemarketing subject to the proposal is not currently telemarketers to establish recordkeeping calls. feasible, and specifically requests systems evidencing their compliance, The proposed modification of the information or comment on this issue. and the proposed amendment may TSR’s call abandonment provision, In the proceedings to amend the TSR lessen this burden slightly because it discussed in Section III.D above, would in 2002, the Commission sought public relaxes the current requirement. modify the existing safe harbor to allow comment and information on the Thus, the proposed amendments sellers and telemarketers to measure the number of small business sellers and would not impose any new or affect any three percent maximum call telemarketers that would be impacted existing reporting, recordkeeping, or abandonment rate prescribed in by amendment of the standard for third-party disclosure requirements that § 310.4(b)(4)(i) for a single calling measuring the three percent call are subject to review by OMB under the campaign over a 30-day period. The abandonment rate. In its request, the PRA. Commission proposes to revise the Commission noted the lack of publicly VII. Regulatory Flexibility Act standard to permit measurement of the available data regarding the number of three percent maximum ‘‘over the small entities that might be impacted by The Regulatory Flexibility Act duration of a single calling campaign, if the proposed Rule.150 The Commission (‘‘RFA’’), 5 U.S.C. §§ 601–12, requires an less than 30 days, or separately over received no information in response to agency to provide an Initial Regulatory each successive 30-day period or its requests.151 Flexibility Analysis (‘‘IRFA’’) with a portion thereof that the campaign proposed rule and a Final Regulatory Likewise, neither the petition to continues.’’ Flexibility Analysis (‘‘FRFA’’) with the amend the call abandonment safe harbor final rule, if any, unless the agency B. Statement of Objectives and Legal to expand the period over which the certifies that the rule will not have a Basis three percent call abandonment ceiling significant economic impact on a The objectives of the proposed rule for live telemarketing calls is calculated, substantial number of small entities. See amendments are discussed above. The nor the industry comments on that 5 U.S.C. §§ 603–05. legal basis for the proposed rule issue, provide any data regarding the The Commission has determined that amendment is the Telemarketing and number of small entities that may be it is appropriate to publish an IRFA in Consumer Fraud and Abuse Prevention affected by the Commission’s ultimate order to inquire into the impact of the Act, 15 U.S.C. §§ 6101–6108. determination.152 Based on the absence proposed rule amendment on small of available data in this and related entities. Therefore, the Commission has C. Description of and, Where Feasible, proceedings, the Commission believes prepared the following analysis. an Estimate of the Number of Small that a precise estimate of the number of Entities to Which the Proposed Rule small entities that fall under the 148 Thus, under the FCC regulation, it is unlawful Will Apply proposed rule is not currently feasible, for a seller or telemarketer to place a prerecorded Each of the proposed rule and specifically requests information or call to a residential telephone unless it can show amendments will affect sellers and comment on this issue. compliance with one of the two exemptions. The ‘‘prior express consent’’ requirement, in particular, telemarketers that make interstate 150 See TSR SBP, 68 FR at 4667 (noting that imposes essentially the same recordkeeping burden telephone calls to consumers (outbound as the proposed amendment. Moreover, in adopting Census data on small entities conducting calls) as part of a plan, program or telemarketing does not distinguish between those regulations to implement the Do Not Call Registry pursuant to the DNCIA, the FCC determined that campaign which is conducted to induce entities that conduct exempt calling, such as survey sellers must obtain a written agreement signed by the purchase of goods or services or a calling, those that receive inbound calls, and those a consumer whose number is listed on the Registry charitable contribution. For the majority that conduct outbound calling campaigns. to satisfy the ‘‘prior express consent’’ requirement. Moreover, sellers who act as their own of entities subject to the proposed rule, telemarketers are not accounted for in the Census 2003 FCC Order, 18 FCC Rcd. at 14043–44, ¶ 44. Although the FCC subsequently concluded that an a small business is defined by the Small data.). oral consent would suffice to authorize calls to Business Administration as one whose 151 Id.; see also 68 FR 45134, 45143 (July 31, consumers whose numbers were not listed on the average annual receipts do not exceed 2003) (noting that comment was requested, but not Registry, Rules and Regulations Implementing the $6 million or that has fewer than 500 received, regarding the number of small entities Telephone Consumer Protection Act of 1991, CG subject to the National Do Not Call Registry employees.149 rmajette on PROD1PC67 with PROPOSALS2 Docket No. 02–278, Second Order on provisions of the amended TSR). Reconsideration, 20 FCC Rcd. 3788 (2005), sellers 152 Although industry comments have argued that or telemarketers still must create records evidencing 149 These numbers represent the size standards the proposed revision would remove an obstacle to any such oral consent because the caller bears the for most retail and service industries ($6 million small business compliance with the call burden of demonstrating that prerecorded calls are total receipts) and manufacturing industries (500 abandonment safe harbor, as discussed in Section lawful. See In re Septic Safety, Inc., 20 FCC Rcd. employees). A list of the SBA’s size standards for III, supra, none of the comments has addressed the 2179 (2005); In re Warrior Custom Golf, Inc., 19 all industries can be found at http://www.sba.gov/ number of small businesses that might benefit from FCC Rcd. 23648 (2004). size/summary-whatis.html. revision of the current standard. 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    • 58732 Federal Register / Vol. 71, No. 192 / Wednesday, October 4, 2006 / Proposed Rules D. Description of the Projected Commission does not believe that an persuaded, however, that this more liberal Reporting, Recordkeeping, and Other explicit prohibition would conflict with standard would be as likely as the proposed Compliance Requirements of the the FCC regulations or similar State standard to prevent telemarketers from Proposed Rule laws, because compliance with the targeting disfavored consumers with a disproportionate share of abandoned calls. The proposed rule amendment TSR’s present prohibition does not explicitly prohibiting prerecorded violate those more permissive The explicit prohibition on telemarketing calls answered by a standards. prerecorded calls and the proposed person unless the consumer has agreed Except as indicated below, the FTC revision in the call abandonment safe in writing to accept such calls will affect has not identified any other Federal or harbor are intended to apply to all the TSR’s recordkeeping requirements State statutes, rules, or policies that entities subject to the Rule, and it does insofar as it would compel regulated would overlap or conflict with the not appear that a delayed effective date entities to keep records of such proposed revision of the call for small entities or other alternatives to agreements under the general abandonment safe harbor. The proposed the current proposal would necessarily recordkeeping requirements of the amendment would help to reduce the result in any further reduction in the existing rule.153 It appears, however, differences on this issue between the compliance burdens of the Rule for that there should be no change in this TSR and the FCC’s TCPA rules, as well small entities. The Commission burden since regulated entities, as similar state requirements.155 As nonetheless seeks comments and regardless of size, already should be explained in Section III above, information on what other alternative maintaining records of such agreements compliance with the FTC’s more precise formulations, if any, of the proposed in the ordinary course of business in standard would constitute acceptable safe harbor might further minimize order to demonstrate compliance with compliance with the FCC rule and compliance burdens for small entities, existing FTC and FCC restrictions on similar state requirements, so there is no without compromising the intent and prerecorded calls, as explained in the conflict between these regulations. purpose of the Rule to prevent abusive prior Paperwork Reduction Act F. Discussion of Significant Alternatives telemarketing practices, including the discussion. Likewise, the prerecorded to the Proposed Rule That Would need, if any, for a delayed effective date calls amendment would not impose or Accomplish the Stated Objectives and for small business compliance. affect any new or existing reporting, Minimize Any Significant Economic VIII. Specific Issues for Comment recordkeeping or third-party disclosure Impact of the Proposed Rule on Small requirements within the meaning of the Entities The Commission seeks comment on Paperwork Reduction Act. various aspects of the proposed In addition, the Commission does not The proposed amendment to add an amendment to add an explicit explicit prohibition of all prerecorded prohibition of prerecorded believe that the proposal to expand the telemarketing calls answered by a person period over which the three percent call telemarketing calls to the TSR and the without a consumer’s express prior written abandonment ceiling for live agreement would implement the requirement proposed amendment to the TSR’s call telemarketing calls is calculated will in the Telemarketing Act that the abandonment safe harbor provision. create any new burden on sellers or Commission prescribe rules that include a Without limiting the scope of issues on telemarketers, because the existing ‘‘per prohibition against ‘‘a pattern of unsolicited which it seeks comment, the day per campaign’’ standard of the TSR telephone calls which the reasonable Commission is particularly interested in has already required them to establish consumer would consider coercive or receiving comments on the questions abusive of such consumer’s right to privacy.’’ that follow. In responding to these recordkeeping systems to demonstrate The only alternatives to this explicit their compliance. The Commission also questions, comments should include prohibition would be to continue the present does not believe that this modification prohibition of prerecorded calls in detailed, factual supporting information of the Rule will increase or otherwise § 310.4(b)(4)(i), the call abandonment whenever possible. modify any existing compliance costs, provision, or to permit prerecorded calls, A. General Questions for Comment and may in fact reduce them for small which the Commission has declined to do entities that are able to take advantage based on the record in this proceeding to Please provide comment, including of the revised safe harbor requirement. date. relevant data, statistics, consumer The proposed amendment of the existing complaint information, or any other E. Identification of Other Duplicative, call abandonment safe harbor would replace evidence, on the Commission’s proposal Overlapping, or Conflicting Federal the present requirement that the three to add an explicit prohibition of Rules percent maximum call abandonment rate be measured ‘‘per day per campaign,’’ with a prerecorded telemarketing calls and the The FTC is mindful that the proposed revised requirement that the maximum be proposal to measure the maximum TSR amendment explicitly prohibiting measured ‘‘over the duration of the allowable call abandonment rate under all prerecorded telemarketing calls campaign, if less than 30 days, or separately the existing safe harbor in 16 CFR answered by a person without the over each successive 30-day period or 310.4(b)(4)(i) ‘‘over the duration of a consumer’s express prior written portion thereof that the campaign continues.’’ single calling campaign, if less than 30 agreement differs from the FCC’s Other regulatory options under consideration days, or separately over each successive regulations and some State laws, which include retaining the present ‘‘per day per 30-day period or portion thereof that the campaign’’ standard, or, at the other end of permit sellers to place such calls to campaign continues’’ rather than on a the spectrum, requiring that the maximum consumers who have given their prior call abandonment rate be measured over a ‘‘per day per campaign’’ basis. Please express consent or to consumers with 30-day period for all of a telemarketer’s include answers to the following whom the seller has an ‘‘established campaigns. The Commission has yet to be questions: rmajette on PROD1PC67 with PROPOSALS2 business relationship.’’ 154 However, the 1. What is the effect (including any calls where there is a ‘‘current business or personal benefits and costs), if any, on 153 See 16 CFR 310.5(a)(5). relationship’’). consumers? 154 47 CFR 64.1200(a)(2)(iv). See also, e.g., Ariz. 155 See, e.g., Cal. Pub. Util. Comm’n, Decision 03– Rev. Stat., § 44–1278(B)(4) (permitting prerecorded 03–038 (Mar. 13, 2003), at 19 (adopting the FCC’s 2. What is the impact (including any calls with called party’s ‘‘prior express consent’’); 30-day standard for measuring call abandonment benefits and costs), if any, on individual Ind. Code, § 24–5–14–5 (permitting prerecorded rates). firms that must comply with the Rule? 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    • Federal Register / Vol. 71, No. 192 / Wednesday, October 4, 2006 / Proposed Rules 58733 3. What is the impact (including any 7. What are the costs and benefits to such alternatives be outweighed by benefits and costs), if any, on industry, consumers, if any, of allowing benefits to consumers in avoiding including those who may be affected by companies to leave prerecorded additional abandoned calls to their these proposals but not obligated to messages, as opposed to live messages, homes? comply with the Rule? on consumers’ answering machines? Do IX. Conclusion 4. What changes, if any, should be consumers incur additional costs in made to the proposed Rule to minimize terms of (a) paying for storage of For the reasons discussed above, the any costs to industry, individual firms messages they do not want; (b) Commission has decided, on balance, to that must comply with the Rule, and/or exceeding their allotted storage deny the petition seeking amendment of consumers? capacity; (c) being unable to receive the TSR to create an additional safe 5. How would each suggested change messages they want or need; (d) being harbor to permit prerecorded affect the benefits that might be unable to use home telephone lines tied- telemarketing calls to established provided by the proposed Rule to up by prerecorded messages; or (e) customers. The Commission is also industry, individual firms that must retrieving messages? Do consumers proposing an amendment explicitly comply with the Rule, and/or receive additional benefits, such as prohibiting unsolicited prerecorded consumers? lower marketing costs that are telemarketing calls without a 6. How would the proposed Rule eventually passed on to them? consumer’s express prior written affect small business entities with 8. What are the costs and benefits to agreement to accept such calls. The respect to costs, profitability, companies in not having to apply the Commission will therefore cease its competitiveness, and employment? call abandonment safe harbor limit to forbearance from considering law 7. How many small business entities calls left on answering machines? enforcement actions against sellers and would be affected by each of the 9. Should a 30-day standard, if telemarketers engaged in making proposed amendments? adopted, cover all of a telemarketer’s prerecorded calls to established campaigns within that period, be customers, after allowing a reasonable B. Questions on Specific Issues limited to a single campaign, or be time, as specified above, for them to In response to each of the following limited to the duration of each bring themselves into compliance with questions, please provide: (1) Detailed campaign? the TSR. 10. Are there significant efficiencies The Commission has also decided to comment, including data, statistics, that can be obtained with a requirement propose an amendment to the existing consumer complaint information, and to meet a 30-day standard averaged safe harbor to permit measurement of other evidence, regarding the issue across all of a telemarketer’s campaigns the three percent maximum call referred to in the question; (2) comment that cannot be obtained with a 30-day abandonment rate ‘‘over the duration of as to whether the proposed changes do campaign-specific requirement? If so, a single calling campaign, if less than 30 or do not provide an adequate solution what are they and what effect do they days, or separately over each successive to the problems they were intended to have? 30-day period or portion thereof that the address, and why; and (3) suggestions 11. Are there technological problems campaign continues.’’ The Commission for additional changes that might better that limit the ability of telemarketers will accept public comment on this maximize consumer protections or who are running multiple campaigns to proposal until November 6, 2006. minimize the burden on industry: measure abandonment rates separately 1. Should the Commission include an for each campaign? If so, what are they, X. Proposed Rule explicit prohibition of prerecorded how many telemarketers do they affect, telemarketing calls in the TSR? List of Subjects in 16 CFR Part 310 what remedies, if any, are available, and 2. Is the Commission correct in its what is the cost of such remedies? Telemarketing, Trade practices. understanding that a reasonable 12. Are upgrades available that can Accordingly, the Commission consumer would consider prerecorded reduce the rate at which predictive proposes to amend title 16, Code of telemarketing sales calls and dialers place calls in the case of an Federal Regulations, as follows: prerecorded charitable solicitation calls unexpected spike in call abandonments, to be coercive or abusive of his or her so that it would not be necessary to run PART 310—TELEMARKETING SALES right to privacy? them manually? RULE 3. Does a consumer’s choice not to list 13. Would retaining a ‘‘per campaign’’ his or her telephone number on the Do 1. The authority citation for part 310 standard, but extending the period over Not Call Registry indicate not only that continues to read as follows: which the call abandonment maximum he or she is willing to accept live is measured, make the use of smaller Authority: 15 U.S.C. 6101–6108. telemarketing calls, but also prerecorded segmented lists by small businesses and 2. Amend § 310.4 by adding new telemarketing calls? other sellers more economical? Please paragraph (b)(1)(v), and revising 4. Should the Rule specify disclosures provide specific examples of why or paragraph (b)(4)(i) to read as follows: that must be made when obtaining a why not. consumer’s express written agreement 14. What effect would the proposed § 310.4 Abusive telemarketing acts or to receive such calls? If so, what change in the standard for measuring practices. disclosures are needed? the call abandonment rate have on the * * * * * 5. What is the effect on consumers’ number of abandoned calls that (b) * * * privacy interests, if any, of not applying consumers receive? (1) * * * the call abandonment safe harbor 15. Do small businesses and other (v) Initiating any outbound rmajette on PROD1PC67 with PROPOSALS2 requirements to calls left on consumers’ sellers have alternatives that are equally telemarketing call that delivers a answering machines? or more effective and economical than prerecorded message when answered by 6. Are prerecorded messages left on live telemarketing, such as postcard or a person, unless the seller has obtained answering machines less intrusive than email announcements, to notify their the express agreement, in writing, of prerecorded messages answered by a established customers of sales offers and such person to place prerecorded calls person? to obtain orders? Would the costs of to that person. Such written agreement VerDate Aug<31>2005 15:07 Oct 03, 2006 Jkt 211001 PO 00000 Frm 00019 Fmt 4701 Sfmt 4702 E:FRFM04OCP2.SGM 04OCP2
    • 58734 Federal Register / Vol. 71, No. 192 / Wednesday, October 4, 2006 / Proposed Rules shall clearly evidence such person’s safe harbor in § 310.4(b)(4)(iii) do not separately over each successive 30-day authorization that calls made by or on require such an agreement. period or portion thereof that the behalf of a specific party may be placed * * * * * campaign continues. to that person, and shall include the (4) * * * * * * * * telephone number to which the calls (i) The seller or telemarketer employs By direction of the Commission. may be placed and the signature of that technology that ensures abandonment of no more than three (3) percent of all Donald S. Clark, person; provided, however, that calls answered by a person, measured Secretary. prerecorded messages permitted for over the duration of a single calling [FR Doc. 06–8524 Filed 10–3–06; 8:45 am] compliance with the call abandonment campaign, if less than 30 days, or BILLING CODE 6750–01–P rmajette on PROD1PC67 with PROPOSALS2 VerDate Aug<31>2005 15:07 Oct 03, 2006 Jkt 211001 PO 00000 Frm 00020 Fmt 4701 Sfmt 4702 E:FRFM04OCP2.SGM 04OCP2