[Federal Register Volume 68, Number 147 (Thursday, July 31, 2003)]
[Rules and Regulations]
[Pages 45134-45144]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-19568]
[[Page 45133]]
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Part VI
Federal Trade Commission
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16 CFR Part 310
Telemarketing Sales Rule Fees; Final Rule
Federal Register / Vol. 68, No. 147 / Thursday, July 31, 2003 / Rules
and Regulations
[[Page 45134]]
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FEDERAL TRADE COMMISSION
16 CFR Part 310
Telemarketing Sales Rule Fees
AGENCY: Federal Trade Commission.
ACTION: Final rule.
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SUMMARY: The Federal Trade Commission (the ``Commission'' or ``FTC'')
is issuing this Final Rule to amend the FTC's Telemarketing Sales Rule
(``TSR'') by adding a new Section 310.8 that would impose fees on
entities accessing the National Do Not Call Registry.
EFFECTIVE DATE: Section 310.8 (``the Final Fee Rule'') will become
effective September 1, 2003, the first day that entities engaged in
telemarketing will be able to access the National Do Not Call Registry.
ADDRESSES: Requests for copies of this Final Fee Rule should be sent
to: Public Reference Branch, Federal Trade Commission, Room 130, 600
Pennsylvania Avenue, NW., Washington, DC 20580. The complete record of
this proceeding is also available at that address, and on the Internet
at: http://www.ftc.gov/bcp/rulemaking/tsr/tsrrulemaking/index.htm.
FOR FURTHER INFORMATION CONTACT: David M. Torok, (202) 326-3075,
Division of Marketing Practices, Bureau of Consumer Protection, Federal
Trade Commission, 600 Pennsylvania Avenue, NW., Washington, DC 20580.
SUPPLEMENTARY INFORMATION:
I. Background
On January 30, 2002, the FTC published a Notice of Proposed
Rulemaking to amend the FTC's TSR and to request public comment on the
proposed changes. 67 FR 4492 (Jan. 30, 2002) (``the Rule NPRM''). Among
other provisions, the Rule NPRM proposed to establish a National Do Not
Call Registry, to be maintained by the FTC, that would permit consumers
who prefer not to receive telemarketing calls to register on one
centralized list. On May 29, 2002, the FTC published another Notice of
Proposed Rulemaking to further amend the TSR by imposing user fees on
sellers and telemarketers to access the proposed registry. 67 FR 37362
(May 29, 2002) (``the User Fee NPRM''). In drafting the User Fee NPRM,
the Commission was guided by the Independent Offices Appropriations Act
of 1952, 31 U.S.C. 9701, and Office of Management and Budget Circular
No. A-25. The Commission received 34 comments in response to the User
Fee NPRM.
The Commission issued final amendments to the TSR on December 18,
2002. 68 FR 4580 (Jan. 29, 2003). Among the changes made to the TSR,
the Commission adopted the proposal to establish a National Do Not Call
Registry, permitting consumers to register, via either a toll-free
telephone number or the Internet, their preference not to receive
telemarketing calls. The Amended TSR requires telemarketers to refrain
from calling consumers who have placed their numbers on the national
registry, starting October 1, 2003, the date by which full compliance
with the ``do-not-call'' registry provisions of the Amended TSR, 16 CFR
310.4(b)(1)(iii)(B), is required. See 68 FR 16238, 16245 (April 3,
2003). To comply with this requirement, telemarketers will be required
to access the national registry at least once every three months to
remove from their telemarketing lists the telephone numbers of those
consumers who have placed their numbers on the registry. 16 CFR
310.4(b)(3)(iv). When it promulgated the Amended TSR, the Commission
reserved its decision on the issues raised in the User Fee NPRM,
stating that it would seek further comment in a revised Notice of
Proposed Rulemaking. See 68 FR 4580, 4640 n. 716.
On February 20, 2003, the President signed into law the
Consolidated Appropriations Resolution of 2003, Pub. L. 108-7 (2003)
(``the Appropriations Act''), which appropriated funds for the
operation of the FTC during fiscal year 2003. In the Appropriations
Act, Congress also authorized the agency to collect fees sufficient to
implement and enforce the ``do-not-call'' provisions of the Amended
TSR. Congress further estimated the costs for fiscal year 2003 at
$18,100,000. Id. at Division B, Title II. See also The Do-Not-Call
Implementation Act, Pub. L. 108-10 (2003) (``the Implementation Act'')
at sec. 2. Pursuant to the Appropriations Act and the Implementation
Act, as well as the Telemarketing and Consumer Fraud and Abuse
Prevention Act, 15 U.S.C. 6101-08 (``the Telemarketing Act''), the FTC
issued a Revised Fee Notice of Proposed Rulemaking (``the Revised Fee
NPRM''). 68 FR 16238 (April 3, 2003). The Commission received 35
comments in response to the Revised Fee NPRM.\1\
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\1\ A list of the commenters in this proceeding, and the
acronyms used to identify each, is attached hereto as Appendix A.
Comments submitted in response to the Revised Fee NPRM will be cited
in this Notice as ``[Acronym of Commenter]-Revised Fee at [page
number].'' Comments submitted in response to the User Fee NPRM will
be cited as ``[Acronym of Commenter]-User Fee at [page number].''
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On July 3, 2003, the Federal Communication Commission (``FCC'')
issued its Report and Order in the Matter of Rules and Regulations
Implementing the Telephone Consumer Protection Act of 1991 (``the FCC
Rules'').\2\ Among numerous other provisions, the FCC Rules prohibit
any ``person or entity'' from ``initiating any telephone solicitation''
to a ``residential telephone subscriber who has registered his or her
telephone number on the national do-not-call registry of persons who do
not wish to receive telephone solicitations that is maintained by the
federal government.'' \3\
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\2\ The FCC Rules may be found at: http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-03-153A1.pdf.
\3\ 47 CFR 64.1200(c)(2), amended July 3, 2003.
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Based on its review of the record in this proceeding, and on its
law enforcement experience in this area, the Commission hereby
promulgates this Final Rule establishing fees for entities accessing
the National Do Not Call Registry.
II. Constitutionality
Some commenters, principally ATA and DMA, contended that both the
National Do Not Call Registry and its associated fees would violate
telemarketers' First Amendment rights.\4\ The Commission was mindful of
the First Amendment implications of the national registry while
amending the TSR,\5\ and throughout this rulemaking has carefully
considered the constitutionality of the proposed Fee Rule.\6\
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\4\ See ATA-Revised Fee at 1-16; DMA-Revised Fee at 6-7. See
also ICL-Revised Fee at 5-6 (asserting simply ``Given that the
nondeceptive and nonmisleading telemarketing activity is protected
commercial speech, the decision to charge some persons, corporate or
individual, more than others with no relation to furtherance of
residential privacy is unconstitutional.''); DB-Revised Fee; JJ-
Revised Fee; BP-Revised Fee; GS-Revised Fee; JS-Revised Fee; & SS-
Revised Fee at 1-2 (individuals voicing concerns about freedom of
speech).
\5\ See, e.g., 68 FR 4580, 4634-37 (January 29, 2003).
\6\ To the extent that ATA and DMA challenge the
constitutionality of the National Do Not Call Registry itself, and
not the fee proposal, the rulemaking on the registry is closed and
the parties are briefing the matter for the courts to decide.
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Relying primarily on case law addressing speech entitled to full
First Amendment protection, ATA contended the registry's fees are
unconstitutional in part because by ``making purchase of the list a
precondition for engaging in telemarketing, the Commission has
structured the list as a prior restraint on protected speech.''\7\ The
Commission
[[Page 45135]]
disagrees and believes that the registry fee provision is
constitutional. To the extent the fee imposes a restraint on speech, it
restrains only commercial speech. The Supreme Court has ``observed that
commercial speech is such a sturdy brand of expression that traditional
prior restraint doctrine may not apply to it.'' See Central Hudson Gas
& Elec. v. Pub. Serv. Comm. of N.Y., 447 U.S. 557, 571 n.13 (1980)
(quoting Virginia Pharmacy Bd. v. Virginia Citizens Consumer Council,
425 U.S. 748, 771-72 n.24 (1976)). Moreover, the Final Fee Rule ensures
that the fee is collected from the telemarketing industry through
procedures that safeguard against unbridled discretion in the hands of
a government official or agency.\8\ The registry fees are more akin to
the registration fees or business licenses that are commonly imposed
upon businesses before they can engage in commercial speech. A
regulatory fee on speech is constitutionally permissible when it is
related sufficiently to the costs of administering and enforcing that
regulation.\9\
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\7\ ATA-Revised Fee at 3-6. See also DMA-Revised Fee at 6 n.11
(contending ``the Court took a dim view of permits to engage in
constitutionally protected speech whose issuance depended on the
payment of a license tax because it acted as a prior restraint on
speech'').
\8\ ATA and DMA also challenge the fee size and structure. See,
e.g., ATA-Revised Fee at 10 (categorizing the registry's fee
structure as ``irrationally differentiated''); DMA-Revised Fee at 1.
Because Congress's guidance on the amount of the fees to be
collected and the Commission's efforts to tailor the fee structure
are best understood in context, these First Amendment concerns will
be addressed throughout the remaining sections of this Statement.
\9\ See, e.g., Coalition for Abolition of Marijuana Prohibition
v. City of Atlanta, 219 F.3d 1301, 1324 n.16 (11th Cir. 2000);
National Awareness Foundation v. Abrams, 50 F.3d 1159, 1164-1168 (2d
Cir. 1995).
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III. Access to the National Do Not Call Registry
A. Entities That Are Allowed Access
In Section 310.8(e) of the Revised Fee NPRM, the Commission
proposed to allow access to the national registry by telemarketers,
sellers, others engaged in or causing others to engage in telephone
calls for commercial purposes, and service providers acting on behalf
of such persons.\10\ The Commission stated that such access to the
National Do Not Call Registry may be necessary to effectuate more fully
the purpose of the ``do-not-call'' regulations; namely, to enable
consumers to stop unwanted telemarketing calls. Such access would allow
those entities that are exempt from the FTC's jurisdiction, but that
want to scrub their calling lists as a matter of customer service, to
obtain the information necessary to do so. It also would allow sellers
to obtain access, as well as other entities that have traditionally
provided service to the telemarketing industry. The Commission further
stated that the information in the national registry should be used for
no other purpose than to stop unwanted telemarketing calls. Thus, the
Commission proposed that, prior to gaining access to the national
registry, a person would be required to certify, under penalty of law,
that the person is accessing the registry solely to comply with the
provisions of this Rule or to otherwise prevent calls to telephone
numbers on the registry.
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\10\ Proposed Section 310.8(e) also permitted access to the
national registry by any government agency that has the authority to
enforce a federal or state ``do-not-call'' statute or regulation.
Such agencies will access information in the national registry
through Consumer Sentinel, a dedicated, secure website available
only to law enforcement agencies. The Commission is expanding this
provision of the Final Fee Rule to allow access to the national
registry to any ``government agency that has law enforcement
authority.'' This revised language more effectively mirrors the list
of law enforcement agencies that currently have access to Consumer
Sentinel, and that therefore will have access to the national
registry data.
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A number of commenters supported the Commission's proposal to allow
for such broad access to the national registry.\11\ Others suggested
that nonprofit organizations soliciting donations also should be
allowed to access the national registry. For example, DMA noted that
such access would ``effectuate the purposes of the do-not-call
regulations'' by allowing such entities to voluntarily scrub their
calling lists.\12\ The Commission agrees that nonprofit organizations
that wish to obtain access to the national registry to prevent calling
consumers whose telephone numbers are on the registry, even though they
are not required by rule to do so, should be allowed the opportunity.
As a result, the Commission is amending Section 310.8(e) by eliminating
the phrase ``commercial purposes'' from this provision, and instead
allowing access to the national registry to entities ``engaged in or
causing others to engage in telephone calls to consumers.'' As
previously stated, each entity will be required to certify, under
penalty of law, that it is accessing the registry solely to comply with
the provisions of this Rule or to otherwise prevent calls to telephone
numbers on the registry.
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\11\ See ARDA-Revised Fee at 2; BOA-Revised Fee at 1; Household-
Revised Fee at 2; NCL-Revised Fee at 1 (``Entities that are exempt
from the FTC's jurisdiction should not be prevented from voluntarily
accessing the registry to avoid calling consumers who do not wish to
receive telemarketing solicitations.'').
\12\ DMA-Revised Fee at 15-16. See also NCL-Revised Fee at 1.
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B. Entities Required To Pay the Fee
The Revised Fee NPRM proposed requiring each seller to pay, on an
annual basis, the appropriate fee for accessing the National Do Not
Call Registry prior to initiating, or causing a telemarketer to
initiate, an outbound telephone call. After paying the appropriate fee
each annual period, the seller would be provided with a unique account
number that it could use to gain direct access to the national registry
at any time during its annual period.\13\ In addition, the seller could
provide its account number to any telemarketer or service provider with
which it does business. That unique account number would permit the
telemarketer or service provider to gain access to the information to
which the seller has subscribed. The Commission noted that under this
revised fee structure, each seller would be charged only one time
annually for access to the information included in the national
registry, and would be allowed to transfer its ability to access the
national registry to whatever telemarketers or service providers it
wished to employ on its behalf.
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\13\ As set forth in Section 310.8(d) of the Revised Fee NPRM
and the Final Fee Rule, the ``annual period'' is defined as the
twelve months following the first day of the month in which the
person paid the fee. For example, a seller who pays its annual fee
on September 15, 2003, has an ``annual period'' that runs from
September 1, 2003 through August 31, 2004.
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A number of commenters noted that the proposed rule would require
certain sellers to pay for access to the national registry, even if
they do not have to gain such access under the Amended TSR.\14\
Specifically, under the Amended TSR, a seller that calls only persons
with whom the seller has an established business relationship, or from
whom the seller has obtained the express written agreement to call, is
not required to access the national registry prior to engaging in those
calls.\15\ Nonetheless, as proposed, the Revised Fee NPRM would require
such sellers to pay the annual fee prior to making such calls. ATA
described this aspect of the proposed fees as a ``particularly
invidious prior restraint'' and thus a violation of the First Amendment
because telemarketers are forced to ``pay a fee even where they have no
use for information in the registry.''\16\ As VISA noted, the FTC
should ``clarify in the final rule that if a seller is not required to
access the registry pursuant to an exemption or otherwise, the seller
[[Page 45136]]
should not be required to pay a user fee provided the seller does not
access the registry for other reasons.''\17\
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\14\ See ABA-Revised Fee at 1; ATA-Revised Fee at 5-6; VISA-
Revised Fee at 1-2.
\15\ See 16 CFR 310.4(b)(1)(iii)(B)(i) and (ii).
\16\ ATA-Revised Fee at 5-6.
\17\ VISA-Revised Fee at 1-2.
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The Commission agrees that sellers engaged solely in calls to
persons with whom they have an established business relationship or
from whom they have obtained express written agreement to call, and who
do not otherwise want to access the national registry, should not have
to pay an annual fee. As a result, the Commission is amending Section
310.8(a) to make clear that sellers do not have to pay for access to
the National Do Not Call Registry if the seller initiates, or causes a
telemarketer to initiate, calls solely to persons pursuant to the
exemptions set forth in Amended TSR Sec. Sec. 310.4(b)(1)(iii)(B)(i)
or (ii), and the seller does not access the National Do Not Call
Registry for any other purpose. A similar change is being made to
Section 310.8(b), regarding telemarketer access to the national
registry.
Some commenters requested clarification that sellers exempt from
the Amended TSR are not required to access the National Do Not Call
Registry and pay the annual fee.\18\ With the adoption of the FCC
Rules, the list of sellers exempt from the requirements of the National
Do Not Call Registry under federal law is considerably narrowed. Any
such exempt seller, however, is not required to access the national
registry or pay the annual fee. For example, solicitations to induce
charitable contributions via outbound telephone calls are not covered
by the National Do Not Call Registry requirements of the TSR.\19\ As a
result, sellers involved only in such solicitations would not be
required to pay a fee or access the national registry. In addition,
entities engaged solely in conducting surveys are not seeking to induce
the purchase of goods or services and therefore are not engaged in
``telemarketing'' nor subject to the TSR.\20\ Similarly, political fund
raising is not ``telemarketing'' and is not covered.\21\ Of course, any
of those entities may access the national registry if they voluntarily
wish to prevent calling telephone numbers that are on the registry, or
if they are required by other laws or regulations to gain such access.
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\18\ See FSR-Revised Fee at 1-2; VISA-Revised Fee at 1-2.
\19\ 16 CFR 310.6(a). See also 47 CFR 64.1200(f)(9)(iii),
amended July 3, 2003 (FCC Rules defining a ``telephone
solicitation'' as not including a call or message ``by or on behalf
of a tax-exempt nonprofit organization.''
\20\ The Amended TSR defines ``telemarketing'' as a ``plan,
program, or campaign which is conducted to induce the purchase of
goods or services or a charitable contribution, by use of one or
more telephones, and which involves more than one interstate
telephone call.'' 16 CFR 310.2(cc).
\21\ Sellers that engage solely in intrastate telemarketing, or
that engage in businesses outside of the jurisdictional limitations
of the FTC, are not required by the Amended TSR to access the
National Do Not Call Registry or pay for such access. However, such
companies are required by the FCC Rules to access the national
registry and pay for such access. See FCC Rules at ] 27.
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DMA stated that nonprofit organizations voluntarily accessing the
national registry to avoid calling potential donors who do not want to
receive telemarketing calls should not be charged for such access.\22\
The Commission agrees that such charges are unwarranted. Section
310.8(c) is amended to provide that there shall be no charge to any
person engaging in or causing others to engage in outbound telephone
calls to consumers and who is accessing the national registry without
being required under this Rule, the FCC Rules, or any other federal
law.\23\ Such persons must provide all information required of other
entities accessing the registry, must certify, under penalty of law,
that they are accessing the registry solely to prevent telephone calls
to telephone numbers on the registry, and must further certify that
they are accessing the registry without being required under this Rule,
the FCC Rules, or any other federal law. Affording these persons such
access to the registry will enable them to abide by consumers' choices
not to be called by commercial telemarketers. At the same time, the
certification requirement--under penalty of law--will enable the
Commission to take appropriate steps against those who misuse the
registry.
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\22\ See DMA-Revised Fee at 15-16.
\23\ Such persons consist solely of entities engaged in outbound
telephone calls to consumers to induce charitable contributions, for
political fund raising, or to conduct surveys.
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The Commission also proposed in the Revised Fee NPRM that
telemarketers who are not also sellers--i.e., entities that engage in
telemarketing only on behalf of others--would not have to pay a
separate fee for their access to the national registry. Similarly, list
brokers or other service providers who develop and/or scrub the calling
lists for their seller-clients would not have to pay for their
individual access to the national registry. Instead, such telemarketers
and service providers would be required to ensure that their seller-
clients have paid for access to the National Do Not Call Registry prior
to initiating outbound telephone calls, or providing services, on their
behalf. Telemarketers and service providers would gain this assurance
by obtaining and using the seller's unique account number to access the
national registry.
DMA opposed this ``seller pays'' model for the National Do Not Call
Registry.\24\ Instead, DMA suggested that the FTC ``should leave the
issue of who pays for the List to the contractual provisions between
service bureaus and sellers.'' \25\ IMC stated that a ``more workable
proposal would be to require each calling entity, third party or seller
using in house callers to purchase and implement the list. Thus, IMC
could purchase access to the registry once and call on behalf of all
its clients.'' \26\ The Commission does not believe such a system would
equitably spread the fees for the national registry among all entities
that engage in telemarketing. As the Commission explained in the
Revised Fee NPRM, sellers are the ultimate beneficiaries of
telemarketing campaigns, and covered sellers must gain access to the
information in the national registry to remain in compliance with the
``do-not-call'' provisions of the Amended TSR. As a result, all such
sellers should pay an appropriate fee for that access. Moreover, by
charging only telemarketers for access to the national registry, and
charging them only once for their access on behalf of multiple clients,
IMC's proposed fee structure would inequitably benefit those sellers
that employ a telemarketer with multiple clients. This inequitable
advantage is created because those sellers would bear less of the cost
of access to the same information than sellers that engage in their own
telemarketing without hiring a telemarketer. Thus, the Commission will
require sellers, and not their telemarketers or service providers, to
pay for access to the national registry.\27\
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\24\ See DMA-Revised Fee at 7-8.
\25\ Id.
\26\ IMC-Revised Fee at 5.
\27\ The FCC Rules require all entities ``making telephone
solicitations (or on whose behalf telephone solicitations are
made)'' to ``purchase[] access to the relevant do-not-call data from
the administrator of the national database.'' 47 CFR
64.1200(c)(2)(i)(E), amended July 3, 2003. The Commission will deem
all telemarketers or service providers who are not also sellers to
have ``purchased access'' to the national registry by providing the
unique account number of the seller on whose behalf the telemarketer
or service provider is gaining access.
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The FCC Rules recognize that allowing telemarketers and others to
share the information obtained from the national registry ``would
threaten the financial support for maintaining the database.''\28\ In
fact, the FCC Rules specifically prohibit any entity that accesses the
national registry from ``participat[ing] in any arrangement to share
the cost of accessing the national
[[Page 45137]]
database, including any arrangement with telemarketers who may not
divide the costs to access the national database among various client
sellers.''\29\ The Commission agrees with the FCC, and believes such a
prohibition is appropriate to include in the Final Fee Rule as well. As
a result, the Commission is including similar prohibitory language in
Section 310.8(c).\30\
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\28\ FCC Rules at ] 32, n.129.
\29\ 47 CFR 64.1200(c)(2)(i)(E), amended July 3, 2003.
\30\ Inclusion of this prohibition in the Fee Rule also will
``maximize consistency'' between the FTC and FCC Rules. See Do Not
Call Implementation Act, Sec. 3.
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The Revised Fee NPRM did not permit any entity, other than a
seller, to purchase the list of numbers in the national registry. A
number of commenters noted that telemarketers calling on behalf of
exempt entities would be in the ``untenable position'' of being
required to comply with the ``do-not-call'' provisions of the Amended
TSR, but not having the ability to access the national registry without
their exempt seller-clients having paid for access.\31\ To address this
potential problem, some commenters suggested allowing telemarketers
direct access to the national registry.\32\ Convergys, a large
telemarketer commenter, described a number of other situations when
telemarketers may want to subscribe to the national registry although
their seller-client is not required to do so, or has already purchased
the list. For example, the telemarketer may want to scrub the calling
list of a client calling customers with an existing business
relationship, or ``to help guard against errors or omissions'' in the
sellers' lists and to re-verify the accuracy of those lists.\33\
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\31\ See ABA-Revised Fee at 1-2; BOA-Revised Fee at 1-2;
Convergys-Revised Fee at 3-5; FSR-Revised Fee at 1-2.
\32\ See BOA-Revised Fee at 1-2; Convergys-Revised Fee at 5.
\33\ See Convergys-Revised Fee at 2-5.
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For the reasons set forth in these comments, the Commission agrees
that allowing independent access to the national registry by
telemarketers or other service providers is appropriate. As a result,
telemarketers or service providers will be allowed to gain access to
the national registry on their own behalf, without being limited solely
to the access allowed for their seller-clients. To maintain the
fairness of the fee structure, however, telemarketers and service
providers will be required to pay the appropriate fee for such
independent access. Moreover, covered sellers still will be required to
pay the fee prior to engaging in, or causing a telemarketer to engage
in, outbound telephone calls for which access to the ``do-not-call''
registry is required by the Amended TSR. This ``covered seller pays''
requirement remains in place regardless of whether the telemarketer or
service provider employed by the seller independently and voluntarily
pays for access to the national registry. In addition, telemarketers
and service providers paying for such independent access must certify
that they are accessing the national registry solely to comply with the
provisions of the Amended TSR, or otherwise to prevent telephone calls
to telephone numbers on the national registry. Finally, such
telemarketers or service providers are not permitted to use the
information they obtain from the national registry on behalf of any
entity, covered seller or exempt, unless that entity has paid the
appropriate fee for access to the information or, for exempt sellers,
has submitted the appropriate certification to gain access to the
national registry.
C. Other Registry Access Issues
Commenters raised three other issues regarding access to the
national registry. First, commenters suggested allowing sellers and
telemarketers to allocate responsibility among themselves for obtaining
access to the national registry. The Revised Fee NPRM anticipated that
all covered sellers would initially access the national registry on
their own behalf, pay the appropriate fee and acquire an account
number, which they could then provide to any telemarketer or service
provider that they wish to hire. Commenters noted, however, that
telemarketers and service bureaus frequently access state ``do-not-
call'' lists on behalf of their seller-clients.\34\ These commenters
maintained that sellers should be permitted to access the national
registry either directly, or permit a third party, such as a
telemarketer or list broker, to enroll and access on the seller's
behalf. ``In either event, a unique account number could be assigned
for each seller, thereby allowing it the flexibility to change
telemarketers/service providers, or use multiple telemarketers, once an
access fee has been paid on its behalf.''\35\
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\34\ See ERA-Revised Fee at 3-5; MPA-Revised Fee at 4-5; West-
Revised Fee at 1-2.
\35\ ERA-Revised Fee at 4.
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The Commission is persuaded that such flexible access is
appropriate. Sellers may contract with telemarketers or other service
providers to access the national registry on their behalf to satisfy
the rule's requirements. In this way, sellers and their agents can
allocate the responsibility for accessing the registry, although the
seller remains ultimately liable for calls made on its behalf, and
telemarketers remain liable for ensuring that their covered sellers
have paid the appropriate fee. A unique account number still will be
provided in the seller's name, for use by the seller throughout its
annual period. As a result, Sec. Sec. 310.8(a), (b), and (d) are
amended to allow sellers to pay the annual fee ``either directly or
through another person.''
The second issue raised by commenters regarding access to the
national registry concerns the frequency of that access. Convergys
stated that the fee rule should require telemarketers to access the
data quarterly, regardless of the number of new clients they might
acquire during that period. Telemarketers could then update their
access and their registration information (with identities of new
sellers) on a quarterly basis.\36\ Similarly, DMA stated that it is
inefficient to require a service bureau to access the registry
separately in the event it signed up a new client, even though it has a
current version of the telephone numbers in the registry.\37\ Convergys
also noted that current telemarketer systems are designed to allow
telemarketers to access data directly and use it for more than one
client. According to Convergys, limiting access to varying levels paid
for by various clients would require significant modifications, burdens
and costs.\38\
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\36\ Convergys-Revised Fee at 6-8.
\37\ DMA-Revised Fee at 8.
\38\ Convergys-Revised Fee at 6.
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The Commission never proposed requiring telemarketers or service
bureaus to access the national registry or download data separately for
each client. There are two requirements in effect that mandate the
frequency of access to the national registry. First, Sec.
310.4(b)(3)(iv) of the Amended TSR requires sellers and telemarketers
to employ a version of the national registry obtained from the
Commission no more than three months prior to the date any call is
made. Second, Sec. 310.8(a) of the revised fee rule requires sellers
to pay the annual fee prior to initiating, or causing a telemarketer to
initiate, outbound telephone calls to persons whose numbers are on the
registry. As a result, a telemarketer need only access the national
registry once every three months, assuming it can scrub all of its
calling lists by using that frequency of access.\39\ It can call on
behalf of all of
[[Page 45138]]
its clients during that period, scrubbing from all of its calling lists
those numbers that were included in the national registry at the time
the telemarketer accessed the registry. If the seller-client agrees to
allow the telemarketer to use the information already in the
telemarketer's files from a prior download from the national registry
within the previous three months, there is no rule violation for the
telemarketer to do so. In other words, telemarketers and service
providers acting on behalf of sellers may use one download from the
national registry on behalf of multiple clients, as long as the fee for
each of the seller-clients is paid.
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\39\ The Commission has developed the ``do not call'' rules to
allow sellers and telemarketers to determine when and how frequently
they need to access the national registry to remain in compliance.
Unlike many state systems, the national registry is continuously
updated as consumers register. As a result, telemarketers obtain the
most up-to-date list of telephone numbers each time they access the
registry. This allows consumers to see a decrease in telemarketing
calls from the first day they register, rather than having to wait
for their numbers to be published in a quarterly list. This caused
some concern for one commenter, West, that stated: ``Without a
defined update schedule, the potential exists for numbers to be
missed in the three-month window. It takes approximately twenty to
twenty-four hours to update the West system with a do-not-call
registry consisting of one million records because the upload
happens on a real time basis. Given this, there is the potential for
a number that is added one day after West downloads the do-not-call
registry to be missed in the three month window. This would require
West to actually download the list more than quarterly to avoid this
potential problem.'' West-Revised Fee at 2. It is up to the
individual seller or telemarketer to determine how frequently it
must access the national registry to remain in compliance with the
requirement that it use a version of the registry obtained from the
Commission not more than three months prior to the date any call is
made.
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The third access issue raised by commenters is an objection to the
requirement that telemarketers and list brokers must identify their
clients when accessing the national registry. According to DMA, these
``contractual relationships are proprietary information and bear no
relationship to consumer privacy.'' \40\ Convergys stated: ``For any
business, customer identity is inherently sensitive, proprietary data
and there is no basis in the record for requiring telemarketers to
disclose it routinely and in the absence of substantial complaints or
other evidence to suggest there have been violations.'' \41\ The
Commission understands the likely proprietary nature of these business
relationships, and notes that, to the extent, if any, such information
constitutes trade secrets or other confidential or privileged
commercial or financial information, it would not be subject to
mandatory public disclosure by the Commission.\42\ Nevertheless, this
information is critical for effective law enforcement of the ``do not
call'' registry provisions of the Amended TSR, as well as for effective
collection of the required fees. Typically, consumers reporting ``do-
not-call'' complaints will have only the name of the seller provided to
the consumer during the call. As part of the investigation of such
complaints, law enforcement may seek to determine whether the seller
made that call on its own behalf, or used the services of a
telemarketer. Information provided by sellers and telemarketers to gain
access to the national registry is highly relevant to law enforcement.
Querying the registry is faster, less expensive, and a potentially more
reliable method of obtaining that information than traditional
discovery tools, which also likely would eventually result in the
disclosure of the same proprietary information. Equally important, to
ensure that all sellers pay their appropriate share of the registry
fees, it is critical to know the identity of each seller that pays the
fee, and on whose behalf each telemarketer or service provider is
accessing the national registry. Thus, the Commission will continue to
require, in Sec. 310.8(e), that if a person is accessing the national
registry on behalf of other sellers, that person must identify each of
the other sellers.
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\40\ DMA-Revised Fee at 7-8.
\41\ Convergys-Revised Fee at 5-6.
\42\ See Freedom of Information Act Exemption 4, 5 U.S.C.
552(b)(4); FTC Act Sec. 6(f), 15 U.S.C. 46(f).
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D. Seller and Telemarketer Liability
In the Revised Fee NPRM, the Commission proposed, in Section
310.8(a) of the Rule, to make sellers directly liable for initiating,
or causing a telemarketer to initiate, an outbound telephone call
without first paying the appropriate fee for access to the national
registry. The Commission also proposed, in Section 310.8(b), to make
telemarketers directly liable for initiating an outbound telephone call
on behalf of a seller without first ensuring that their seller-clients
have paid for up-to-date access to the National Do Not Call Registry.
The Commission proposed imposing this liability under the authority of
the Appropriations Act and the Implementation Act, in addition to the
Telemarketing Act, which provides the authority for the other portions
of the Amended TSR.
This proposed liability engendered a wide range of comment. For
example, NCL stated: ``The FTC's proposal to hold sellers and any
entities acting on their behalf directly liable for compliance with the
fee requirements is absolutely crucial to prevent abuses in this
regard.'' \43\ On the other hand, IMC maintained that liability should
not exist unless a seller or telemarketer calls a consumer who had
placed their number on the registry. According to IMC, liability for
simply failing to purchase the list is unrelated to any consumer
privacy interest and is unconstitutional.\44\
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\43\ NCL-Revised Fee at 1-2.
\44\ IMC-Revised Fee at 5-6.
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As the Commission stated in the Revised Fee NPRM, direct liability
on sellers and telemarketers is necessary to effectuate fairly the
mandate of the Appropriations Act and the Implementation Act, which
authorize the Commission to collect fees sufficient to cover the costs
of implementing and enforcing the ``do-not-call'' provisions of the
Amended TSR. Without such direct liability, the Commission remains
concerned that not all entities that obtain information from the
national registry will pay their fair share of the fees for that
information, resulting in increased fees for those entities that do
pay. The Commission continues to believe that the most effective way to
ensure that all covered sellers pay their fair share of the registry
fees is to impose direct liability upon them if they initiate, or cause
a telemarketer to initiate, a call to a consumer without first paying
the appropriate annual fee.
As for telemarketer liability, a number of commenters suggested
that ``where a service bureau has reasonably relied on evidence that
its seller clients have paid for access, the service bureau should not
be held liable for the seller's lack of compliance.'' \45\ The
Commission agrees that telemarketers can rely on the registry for proof
of payment as long as that reliance is reasonable given the totality of
the circumstances. If a telemarketer or list broker accesses the
national registry on behalf of a seller-client and presents that
seller-client's unique account number, the telemarketer will be able to
determine whether the seller's account is paid up to date, and the
extent of access allowed by that payment. The telemarketer or service
provider may rely on that information as proof of the seller's payment.
---------------------------------------------------------------------------
\45\ DMA-Revised Fee at 15. See also IMC-Revised Fee at 6
(suggesting the Final Fee Rule should ``allow a telemarketer to
legally rely on a seller providing a working access number as
conclusive proof that the seller has properly purchased access to
the registry''); ARDA-Revised Fee at 3.
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Thus, Sections 310.8(a) and (b) continue to impose direct liability
on sellers and telemarketers. The failure of a covered seller to pay
the appropriate fee prior to initiating or causing another entity to
initiate an outbound telephone call and the failure of a telemarketer
to ensure that a covered seller has paid the appropriate fee prior to
initiating an
[[Page 45139]]
outbound telephone call on its behalf are violations of the Amended
TSR, and subject the seller and telemarketer to all remedies available
for such violations.
E. Corporate Divisions, Subsidiaries, and Affiliates
In the Revised Fee NPRM, the Commission proposed to treat each
separate division, subsidiary, or affiliate of a corporation as a
separate seller for purposes of Section 310.8. The Commission rejected
comments suggesting that separate subsidiaries, divisions, or
affiliates of the same corporation be treated as a single seller,
stating that such treatment could greatly diminish the number of
entities that will pay for access to the national registry, provide an
unjust advantage to larger, multi-divisional corporations, and
potentially increase the fees required to be paid by smaller, less
complex corporate entities.
NCL agreed with the Commission's proposal, stating that allowing
separate subsidiaries, divisions, and affiliates ``to be considered as
one seller, even though they would likely be conducting telemarketing
campaigns for quite different products or services, would create an
inequitable situation for smaller companies and threaten the financial
viability of the registry.''\46\ On the other hand, this proposal was
significantly criticized by industry commenters.\47\ They noted that
companies organize into affiliated entities for tax, regulatory and
historical reasons, often beyond their control.\48\ For example, SBC
noted that due to statutory and regulatory requirements, it would be
required to pay over 44 separate annual fees, even though the services
provided by its separate subsidiaries and affiliates are similar and
consumers have a reasonable expectation that they are dealing with one
company.\49\ West stated that the proposal would cause it problems,
since telemarketers such as itself would need to understand the
corporate divisional structure of their seller-clients, which is not
always clear.\50\ In addition, a number of commenters noted that this
proposal appeared contrary to the Commission's assertion, stated in the
Revised Fee NPRM, that the agency did not want to charge the same
company multiple times for access to the national registry.\51\
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\46\ NCL-Revised Fee at 2.
\47\ See, e.g., ARDA-Revised Fee at 4; BOA-Revised Fee at 2;
DMA-Revised Fee at 11-12; ERA-Revised Fee at 5-6; Household-Revised
Fee at 2; IMC-Revised Fee at 5; MPA-Revised Fee at 3-4; SBC-Revised
Fee at 2-4; Verizon-Revised Fee at 1-4; VISA-Revised Fee at 2.
\48\ See BOA-Revised Fee at 2; SBC Revised Fee at 2-4; VISA-
Revised Fee at 2.
\49\ SBC-Revised Fee at 2. See also Verizon-Revised Fee at 1-4
(Verizon includes roughly two dozen separate corporations that
engage in telemarketing).
\50\ West-Revised Fee at 3.
\51\ See, e.g., MPA-Revised Fee at 3-4; SBC-Revised Fee at 2-4.
---------------------------------------------------------------------------
Many commenters suggested, as an alternative, that the Commission
should use the ``consumer expectation'' factors set forth in the
Amended TSR Statement of Basis and Purpose that apply to the
established business relationship exemption to determine whether
separate divisions, subsidiaries, or affiliates must pay the annual
fee; namely, would consumers reasonably perceive the entity as a single
seller based on the nature and type of goods or services sold and the
identity of the division, subsidiary or affiliate.\52\ On the other
hand, another commenter noted that such factors do not provide
sufficient notice as to whether any particular division would be
required to separately purchase access to the national registry, and
that the final rule must provide ``a more definitive definition of the
circumstances that would subject multiple divisions to separate fee
obligations.''\53\
---------------------------------------------------------------------------
\52\ ARDA-Revised Fee at 4; ERA-Revised Fee at 5-6; MPA-Revised
Fee at 3-4; SBC-Revised Fee at 2-4.
\53\ BOA-Revised Fee at 2.
---------------------------------------------------------------------------
The Commission agrees that, for purposes of assessing a fee, the
test to determine who must pay must be more specific and clear cut than
the ``consumer expectation'' test established for the established
business relationship exemption. The ``consumer expectation'' test
works for determining whether a company has violated the established
business relationship exemption because it is consumers themselves who
will state, in their complaints, that they did not believe the company
that called was related to the company with which they had done
business in the past. There will be no such consumer arbiters to
determine who should pay the fee. The Commission does agree, however,
that those factors are appropriate ones to consider in determining
which divisions, subsidiaries, or affiliates should pay a fee.
To develop a more bright line test for which entities must pay,
while taking the consumer expectation factors into consideration, the
Commission will require separate divisions, subsidiaries, or affiliates
to pay a separate annual fee for access to the national registry under
the following circumstances: (1) The entity is separately incorporated
or, for a non-corporate entity such as a partnership, is a similarly
distinct legal entity; and (2) the entity has or markets under a
different name. If the name difference reflects only a geographic
distinction, that will not be sufficient to require the entity to pay a
separate fee for access. For example, ``ABC Marketer of Oklahoma,
Inc.'' would not be considered a separate seller, for purposes of the
Fee Rule, from its affiliate, ``ABC Marketer of Texas, Inc.'' On the
other hand, if the name difference reflects some other distinction,
such as product or service, then the separately-incorporated entity
would be required to pay a separate fee for access. For example,
``John's Books and Games, Inc.'' would be considered a separate seller
from its subsidiary, ``John's Computers, Inc.'' \54\
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\54\ The Commission does not believe these changes to the
treatment of corporate subsidiaries and affiliates warrant any
change to the estimate of the number of entities that will pay for
access to the national registry, discussed below. There is no
evidence on the record to indicate that the types of subsidiaries
and affiliates which no longer will be considered separate sellers
under the Final Fee Rule are numerous or widespread throughout the
telemarketing industry.
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IV. Calculation of Fees
A. Number of Entities Accessing the National Registry
The first step in establishing the appropriate fees to charge
entities that access consumer telephone numbers included in the
national registry is to estimate the number of such entities that would
be required to pay the fee. In both the User Fee NPRM and the Revised
Fee NPRM, the Commission acknowledged that this step is among the most
difficult, given the dearth of information about the number of
companies currently in the marketplace who make outbound telemarketing
calls to consumers.\55\ In the User Fee NPRM, the Commission
determined, after examining relevant industry literature and the record
in this and past TSR rulemaking proceedings, that the most pertinent
information for determining the number of firms that would be required
to pay the proposed user fee would be the number of firms that access
state do-not-call registries. At that time, the most telemarketing
firms that accessed any individual state registry was 2,932. Thus, to
propose a realistic fee structure that would ensure sufficient funds
would be collected to cover the costs of a national registry, the
Commission estimated in the User Fee NPRM that 3,000 entities would pay
for access to the information in the national registry. The Commission
sought comment and evidence to determine
[[Page 45140]]
whether this estimate was realistic and appropriate.
---------------------------------------------------------------------------
\55\ See User Fee NPRM, 67 FR at 37363-64, Revised Fee NPRM, 68
FR at 16241.
---------------------------------------------------------------------------
Of the 34 comments received in response to the User Fee NPRM, only
one commenter provided any information relevant to this inquiry,
stating the number of clients for which it would have to obtain access
to the national registry. In addition, a second commenter provided some
company-specific information. Based on these comments, the Commission
proposed a new estimate of the number of firms that will access the
national registry, developed through a calculation using the limited
information provided in the comments, combined with relevant industry-
wide data available and the Commission's knowledge of the industry.
Based on this detailed calculation, set out in the Revised Fee NPRM,
the Commission estimated that the total number of firms that would
access the national registry would be 7,500.\56\
---------------------------------------------------------------------------
\56\ See Revised Fee NPRM, 68 FR at 16241-42.
---------------------------------------------------------------------------
As the Commission stated in the Revised Fee NPRM, this calculation
made a number of significant assumptions based on the best information
available to the agency at that time. The Commission asked specific
questions about each of these assumptions, seeking information as to
their reliability. The Commission also asked commenters to provide any
information they could about any and all of these assumptions,
including company-specific information and data that could help the
agency to refine its estimates of the number of firms that will need to
access the national registry.
Once again, the Commission received virtually no comments providing
information on the validity of the Commission's assumptions. One
``leading teleservices company'' stated that one of the Commission's
assumptions--sellers that use third-party telemarketers on average
employ three different telemarketers to make calls to consumers over
the course of a year--was ``generally accurate.'' \57\ Two telemarketer
commenters stated that most of their clients market nationwide.\58\
Otherwise, the comments provided no information on this question
whatsoever. Instead, the major industry association commenters faulted
the Commission's calculations, claiming that they are ``largely without
empirical foundation,'' \59\ ``speculative and largely unsupported''
and ``completely arbitrary.'' \60\
---------------------------------------------------------------------------
\57\ IMC-Revised Fee at 1, 4.
\58\ Id. at 4-5; West-Revised Fee at 3.
\59\ DMA-Revised Fee at 8.
\60\ ERA-Revised Fee at 7-8. See also MPA-Revised Fee at 6.
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As previously stated, the Commission's calculations are based on
the best information available to the agency at this time. Although the
Commission has requested information on this issue on a number of prior
occasions, the very entities that have access to such information have
rebuffed the agency at every stage. The Commission has no obligation to
``conduct a comprehensive study of the telemarketing industry'' to
determine the proper fees, as suggested by the DMA.\61\ In fact, it has
reason to doubt such a study would be productive, given the industry's
ongoing reticence in this area. The Commission has undertaken
substantial efforts to determine the number of entities that will be
required to access the national registry. It has scoured industry
literature, reviewed and analyzed numerous rounds of comments on this
issue, and used its knowledge of the industry to make basic assumptions
about its operation. Given this review and analysis, and the limited
information provided in the comments, the Commission continues to
believe that its original estimate that 7,500 entities will be required
to pay for access to the national registry is reasonable and
appropriate.
---------------------------------------------------------------------------
\61\ DMA-Revised Fee at 8-10.
---------------------------------------------------------------------------
However, given the new FCC Rules, additional entities, originally
exempt from the Amended TSR, now will be required to access the
national registry. In the Revised Fee NPRM, the Commission estimated
that a total of 10,900 firms engage in outbound telemarketing to
consumers.\62\ The Commission reduced that number to account for firms
that are engaged in charitable solicitations, firms that are calling
directly from sellers exempt from FTC regulation, and firms that make
only intrastate calls. Of that group, after the adoption of the FCC
Rules, only firms that engage in charitable solicitations remain exempt
from the requirement to access the national registry. The Commission
estimates that 900 entities engage exclusively in such charitable
solicitations, resulting in our revised estimate that 10,000 entities
will be required to access the national registry.
---------------------------------------------------------------------------
\62\ See Revised Fee NPRM, 68 FR at 16242.
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B. Access by Area Code; Small Business Access
In both the User Fee NPRM and the Revised Fee NPRM, the Commission
proposed a fee structure based on the number of different area codes of
data that an entity wished to use annually.\63\ The Commission received
no comments on this issue in response to the Revised Fee NPRM. As a
result, the Commission will continue to charge for access to the
national registry based on the number of area codes of information an
entity requests.
---------------------------------------------------------------------------
\63\ See User Fee NPRM, 67 FR at 37364; Revised Fee NPRM, 68 FR
at 16242.
---------------------------------------------------------------------------
As for small business access to the national registry, the
Commission proposed, in both the User Fee NPRM and the Revised Fee
NPRM, to provide free registry access to any firm wishing to obtain
data from only one to five area codes.\64\ The Commission proposed such
free access to limit the burden placed on small businesses that only
require access to a small portion of the national registry. The
Commission noted that its proposal was consistent with the mandate of
the Regulatory Flexibility Act, 5 U.S.C. 601, which requires that to
the extent, if any, a rule is expected to have a significant economic
impact on a substantial number of small entities, agencies should
consider regulatory alternatives to minimize such impact.\65\ In the
Revised Fee NPRM, the Commission sought comment on other alternatives
that would balance the burdens faced by small businesses with the need
to raise appropriate fees to fund the registry in an equitable manner,
as well as on the appropriate level of free access.
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\64\ See User Fee NPRM, 67 FR at 37364; Revised Fee NPRM, 68 FR
at 16243-44.
\65\ See also Section VII, below, where the Commission
determines that the instant proposed Rule would not have a
significant economic impact on a substantial number of small
entities.
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The Commission received few comments in response to this proposal
in the Revised Fee NPRM. NCL found the Commission's proposal
``reasonable.'' \66\ S&K, on the other hand, stated that the Commission
should grant access to five or maybe even ten area codes for free, and
``employ a graduated system that places the majority of the fees on the
largest scale sellers or telemarketers, as determined by a mixture of
revenues, profits, subsidiaries and overall cost structure.'' \67\ In
contrast, ATA contended that the proposed fee was unconstitutional
precisely because it would impose differential treatment, shift the
burden to certain sellers to pay for fees in excess of the benefits
they would receive, and thus target and penalize the largest entities
more than simply favor small businesses.\68\ ATA
[[Page 45141]]
also expressly warned that a fee justified largely by the gross revenue
of paying sellers would not survive judicial scrutiny.\69\ ARDA
suggested that the Commission should make access to the first five area
codes free for all sellers. According to ARDA, the ``small business
that purchases that sixth area code is punished by having to pay for
the first five. The small-to-medium business would be less inclined to
circumvent the fee requirement if it were only required to pay an
incremental cost ($29) for the sixth and seventh and so forth area
codes rather than $174 for one additional area code.'' \70\
---------------------------------------------------------------------------
\66\ NCL-Revised Fee at 2.
\67\ S&K-Revised Fee at 2.
\68\ ATA-Revised Fee at 10-11.
\69\ Id. at 12.
\70\ ARDA-Revised Fee at 6. See also ATA-Revised Fee at 8. The
FCC Rules note that thirty-three states currently have five or fewer
area codes. See FCC Rules at ] 54.
---------------------------------------------------------------------------
After evaluating all of the comments received in this proceeding,
the Commission continues to believe that providing access to five area
codes of data for free is an appropriate compromise between the goals
of equitably and adequately funding the national registry, on the one
hand, and providing appropriate relief for small businesses, on the
other.\71\ Moreover, the Commission is persuaded that it would be more
equitable to provide all firms free access to up to five area codes,
rather than to only those firms that access five or fewer area codes.
It is true that a relatively small firm could need to access six area
codes of data. It does not seem fair to charge that firm the full cost
for all six area codes, simply because it needed access to one area
code more than another small firm. The marginal cost of that sixth area
code should not be so high. As a result, the Commission will provide
the first five area codes of data from the national registry free to
all entities that gain access. Section 310.8 of the Fee Rule is revised
accordingly.
---------------------------------------------------------------------------
\71\ The Commission continues to believe, as stated in the
Revised Fee NPRM, that providing small businesses with exemptive
relief more directly tied to size status would not balance the
private and public interests at stake any more reasonably than the
approach selected. Any reduced fee schedule based on a small
business' size, revenues, or profits would require a certification
and determination of that status to implement and enforce, and thus
would present greater administrative, technical, and legal costs and
complexities than the approach selected by the Commission, which
does not require proof or verification of small business status. See
Revised Fee NPRM, 68 FR at 16243, n.52.
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C. Fees for Access
As set forth in the Background Section of this Statement, both the
Appropriations Act and the Implementation Act authorize the Commission
to assess fees sufficient to cover the costs of implementing and
enforcing the do-not-call provisions of the Amended TSR, estimated at
$18.1 million for fiscal year 2003. The Commission continues to
anticipate that it will need to raise the entire estimated $18.1
million authorized to cover the costs associated with those efforts in
this fiscal year. A number of commenters claimed that the Commission
failed to provide any indication how it intends to spend the $18.1
million, and that the costs are not justified or necessary.\72\ The
Commission disagrees.
---------------------------------------------------------------------------
\72\ See DMA-Revised Fee at 2-6; ERA-Revised Fee at 6-7; MPA-
Revised Fee at 5-6.
---------------------------------------------------------------------------
As stated in the Revised Fee NPRM, costs for the National Do Not
Call Registry fall primarily into three broad categories.\73\ First are
the actual estimated contract costs along with associated agency costs
to develop and operate the national registry. This includes items such
as handling consumer registration and complaints, the transfer of
registration information from state lists to the registry, telemarketer
access to the registry, and the management and operation of law
enforcement access to appropriate information. The second category of
costs relates generally to enforcement efforts. These costs will
include law enforcement initiatives, both domestic and international,
to identify targets and challenge alleged violators. Enforcement costs
also include consumer and business education, which are critical
complements to enforcement in securing compliance with the ``do-not-
call'' provisions. The third category of costs covers agency
infrastructure and administration costs, including information
technology structural supports. In particular, the Consumer Sentinel
system (the agency's repository for all consumer fraud-related
complaints) and its attendant infrastructure are being upgraded to
handle the anticipated increased demand from state law enforcers for
access to ``do-not-call'' complaints. Further, the Consumer Sentinel
system will require substantial changes so that it can handle the
significant additional volume of complaints that is expected.
---------------------------------------------------------------------------
\73\ See Revised Fee NPRM, 68 FR at 16244.
---------------------------------------------------------------------------
To raise $18.1 million this fiscal year, and assuming that 10,000
firms will pay for that access,\74\ the Commission will charge an
annual fee of $25 for each area code of data accessed.\75\ There will
be no fee charged to any entity for access to the first five area codes
of data. In addition, the Commission will place a cap of $7,375 as the
maximum annual fee that will be charged an entity that wants access to
the entire national database. The maximum fee will now be charged for
accessing 300 area codes of data or more.\76\ As a result of this Fee
Rule, examples of fees that will be charged for various levels of
access to the national registry are as follows: obtaining up to five
area codes of data would have no charge; six area codes of data would
cost $25; seven area codes would cost $50; thirty area codes would cost
$625; two hundred area codes would cost $4,875; and access to the data
from all area codes would be capped at $7,375 annually.\77\
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\74\ A number of commenters continued to suggest that consumers
should pay a portion of the costs to implement and operate the
national registry. See, e.g., ARDA-Revised Fee at 7; IMC-Revised Fee
at 7; MPA-Revised Fee at 7; PDS-Revised Fee at 1-3. As stated in the
User Fee NPRM, the Commission does not believe it is appropriate to
charge consumers to protect their privacy from unwanted and abusive
telemarketing calls. See User Fee NPRM, 67 FR at 37363. In addition,
the Implementation Act clearly authorizes the Commission to raise
the appropriate fees from the industry, and not from consumers.
\75\ In the Revised Fee NPRM, the Commission assumed that, on
average, sellers will pay to obtain information from 83 area codes
of data in the national registry. See Revised Fee NPRM, 68 FR at
16244, n. 56. The addition of entities making intrastate calls will
reduce the average number of area codes entities will pay to obtain
from the national registry, as will our decision to allow all
entities to obtain five area codes of data for free. As a result,
the Commission is now estimating that the average entity accessing
the national registry will purchase 73 area codes of data.
\76\ The Commission is capping the maximum amount that will be
charged for access to the entire national registry to ease the
administrative burdens of operating the system and those faced by
the largest users of the registry. There are currently 317 area
codes included in the national registry, and more area codes are
added on an irregular schedule. If there were no maximum fee for
access to the national registry, every time a new area code were
added, all entities that had paid for access to the entire database
would be required to pay an additional fee prior to being able to
download the national list. The Commission does not consider the
limited additional fees that such a requirement would generate to
outweigh this burden. More limited users, on the other hand, who
have asked for a specific list of area codes of data, will need to
change the scope of their access if they wish to obtain any newly
added area codes. Because they already will be asking for a change
in their access rights, it will be less of an administrative burden
to charge those entities for the additional area codes. Thus,
contrary to ATA's suggestion, the cap in the proposed fee structure
is sufficiently related to a consideration of the actual
administrative costs of the registry to justify its use. See ATA-
Revised Fee at 9.
\77\ DMA contends that while ``a nominal fee unrelated to
content of the speech may be permissible under certain
circumstances,''. . . ``a much lower fee [than the Commission has
proposed] is also needed to conform with Supreme Court First
Amendment jurisprudence on monetary restrictions on speech.'' DMA-
Revised Fee at 1-2, 6-7. See also ATA-Revised Fee at 15. Contrary to
the DMA's comment, the fee need not be ``nominal'' so long as it is
related sufficiently to the costs of administration and enforcement.
Moreover, ``[n]ominal is necessarily a relative term, to be judged
by how substantial something is when viewed in its context.''
National Awareness Foundation v. Abrams, 812 F.Supp. 431, 433
(S.D.N.Y. 1994), aff'd 50 F.3d 1159 (2d Cir. 1995). The Commission
believes that the $25 fee per area code is nominal, as is the
maximum fee of $7,375 for nationwide access, when considered in the
context of an annual fee for members of the telemarketing industry
engaged in commercial speech. Cf. Cox v. New Hampshire, 312 U.S.
569, 577 (1949)(upholding a fee up to $300, in 1938 dollars, for a
one-day permit to engage in fully protected speech).
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[[Page 45142]]
As stated above and in the Revised Fee NPRM, these fees are based
on certain assumptions and estimates. The Commission anticipates that
these fees may need to be reexamined periodically and adjusted, in
future rulemaking proceedings, to reflect actual experience with
operating the registry.
V. Operation of the National Registry for the Telemarketing Industry
The Commission is developing a fully-automated, secure website
dedicated to providing members of the telemarketing industry with
access to the registry's list of telephone numbers, sorted by area
code. The first time an entity accesses the system, it will be asked to
provide certain limited identifying information, such as company name
and address, company contact person, and the contact person's telephone
number and email address. If an entity is accessing the registry on
behalf of a seller-client, the entity also will need to identify that
client.
The only consumer information that companies will receive from the
national registry is a registrant's telephone number. Those telephone
numbers will be sorted and available by area code. Companies will be
able to access as many area codes as desired, by selecting, for
example, all area codes within a certain state. Of course, companies
also will be able to access the entire national registry, if desired.
In addition, after providing the required identifying information and
paying the appropriate fee, if any, companies will be allowed to check,
via interactive Internet pages, a small number of telephone numbers
(less than ten) at a time to permit small volume callers to comply with
the national registry requirements of the TSR without having to
download a potentially large list of all registered telephone numbers
within a particular area.
As previously stated, sellers, telemarketers and other service
providers will be allowed to access the national registry. When a
seller first submits an application to access registry information, the
company will be asked to specify the area codes that it wants to
access. As discussed above, each seller accessing the registry data
will be required to pay an annual fee, based on the number of area
codes of data the seller accesses. Fees will be payable via credit card
(which will permit the real-time transfer of data) or electronic funds
transfer (which will require the seller to wait approximately three
days for the funds to clear before data access will be provided). A
seller must pay these fees prior to gaining access to the registry, and
may do so either directly or through another entity to which the seller
has provided the necessary authority.
Sellers will be able to access data as often as they like during
the course of one year (defined as their ``annual period'') for those
area codes for which they have paid. However, to protect system
integrity, an account number will support a download of the entire
national registry only once in any 24-hour period. If, during the
course of their annual period, sellers need to access data from more
area codes than those initially selected, they would be required to pay
for access to those additional area codes. For purposes of these
additional payments, the annual period is divided into two semi-annual
periods of six months each. Obtaining additional data from the registry
during the first semi-annual, six month period will require a payment
of $25 for each new area code. During the second semi-annual, six month
period, the charge of obtaining data from each new area code requested
during that six-month period is $15. These payments for additional data
would provide sellers access to those additional areas of data for the
remainder of their annual term.
After payment is processed, the seller will be given a unique
account number and permitted access to the appropriate portions of the
registry. That account number will be used in future visits to the
website, to shorten the time needed to gain access. On subsequent
visits to the website, sellers will be able to download either a full
updated list of numbers from their selected area codes, or a more
limited list, consisting only of changes to the registry that have
occurred since the company's last download. This would limit the amount
of data that a company needs to download during each visit.
Telemarketers and other service providers working on behalf of
sellers may obtain access to the registry either directly or through
the use of their seller-client's unique account number. If access is
gained directly, i.e., the telemarketer or service provider decides to
obtain the information on its own behalf, either voluntarily or to
satisfy other legal requirements, that telemarketer or service provider
will need to comply with all requirements placed on sellers accessing
the registry, as previously discussed in this Section. Such
telemarketers and service providers will be provided a unique account
number that can be used only by that company, i.e., that account number
will not authorize other companies to access the registry on behalf of
the telemarketer or service provider. On the other hand, if
telemarketers or service providers are accessing the registry through
the use of their seller-client's account number, the extent of their
access will be limited to the area codes requested and paid for by
their seller-clients. They also will be permitted to access the
registry as often as they wish for no additional cost, once the annual
fee has been paid by their seller-clients.\78\ As indicated in the Rule
NPRM discussion of Section 310.4(b)(3)(iv), however, the Rule requires
a seller or telemarketer to employ a version of the do-not-call
registry obtained from the Commission no more than three months prior
to the date any telemarketing call is made.
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\78\ Telemarketers and service providers working on behalf of
sellers also will be limited to downloading the entire national
registry only once in any 24-hour period.
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Data will be available from the national registry using Internet-
based formats and download methods that serve both small and large
businesses. Data also will be available in three different sets: full
lists, change lists, and small list lookups. For the full lists and the
change lists, downloads may be accomplished via a web browser or a
programmatic web service. For the small list lookup, a web page will
allow a person to enter from one to ten telephone numbers on a form.
After entering the numbers and clicking a button, the national registry
will display on the web page the list of numbers entered and whether
each number is in the national registry or not.
With a web browser, a person will access a secure web page that
will allow the person to select: a national download (all area codes),
all area codes from individual states, or individual area codes.\79\
After selecting the area codes, the person will choose a flat text file
or an XML tagged data file. The person also will choose a zipped or
unzipped file. After making these selections, the person will click a
``download'' button and be prompted to save the file to his or her
company computer. If the person chooses the full list, the flat file
will contain just ten-digit telephone numbers, with a single
[[Page 45143]]
number on each line. For the change list in flat file format, each line
of the file will contain a telephone number, the date of the change,
and an ``A'' (for Added) or ``D'' (for Deleted). The change list data
will be fixed-width fields.
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\79\ When new area codes are added, the ``by state'' display
temporarily will show a new area code proximate to but separate from
its state, to ensure that the new area code has been paid for.
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The alternative to web browser downloads will be programmatic web
services using XML tagged data. This will assist larger companies in
automating downloads of the national registry. The XML tags will
include the following: a login and encrypted password; the name and
email address of the company contact person; certification that access
to the registry is solely to comply with the provisions of this Rule;
the account number(s) for which the download is being performed; the
area code of the telephone numbers to be downloaded; and whether a full
list or change list is to be downloaded.
Entities that select a change list will be provided all telephone
numbers that have been added to, or deleted from, the registry since
the date of their previous access. Change lists, for both flat files
and XML tagged data, will be available to provide changes on a daily
basis (representing the additions and deletions from the day before).
The telemarketer website on the national registry will have a help
desk available during regular business hours via a secure electronic
form.
VI. Paperwork Reduction Act
Pursuant to the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.
(``PRA''), the Commission sought public comments on the information
collection activities contained in the Final Fee Rule. See 67 FR 37362
(May 29, 2002); 68 FR 16238 (April 3, 2003). The Commission received no
comments on its PRA analysis nor has it modified its proposal in any
manner that necessitates revising its original burden estimates for the
Final Fee Rule.\80\ The Commission additionally sought clearance from
OMB for those information collection requirements, and obtained it on
July 24, 2003, under OMB Control No. 3084-0097.
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\80\ While the Commission is increasing its estimate of the
number of entities that must pay for access to the national
registry, that increase is created by the FCC Rules, which require
entities exempt from the FTC's jurisdiction to gain access.
Accordingly, the paperwork burden faced by those entities will be
reported by the FCC, rather than the FTC. In addition, entities that
access the national registry solely because of the FCC Rules are not
required to comply with the recordkeeping provisions of the Amended
TSR. As a result, the increase in the Commission's estimate of the
number of entities required to access the national registry does not
affect that aspect of the Commission's prior PRA burden estimates.
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VII. Regulatory Flexibility Act
The Regulatory Flexibility Act (``RFA''), 5 U.S.C. 601 et seq.,
requires the agency to provide an Initial Regulatory Flexibility
Analysis (``IRFA'') with its proposed rule, and a Final Regulatory
Flexibility Analysis (``FRFA'') with its final rule, unless the agency
certifies that the rule will not have a significant economic impact on
a substantial number of small entities. As explained in the User Fee
NPRM, the Revised Fee NPRM, and this Statement, the Commission does not
expect that its Fee Rule will have the threshold impact on small
entities. Nonetheless, the Commission published an IRFA with the User
Fee NPRM, and is also publishing a FRFA with its Final Fee Rule below,
in the interest of further explaining its determination, even though
the Commission continues to believe that it is not required to publish
such analyses.
1. Reasons for Consideration of Agency Action
The Final Fee Rule has been considered and adopted pursuant to the
requirements of the Implementation Act and the Appropriations Act,
which authorize the Commission to collect fees sufficient to implement
and enforce the ``do-not-call'' provisions of the Amended TSR.
2. Objectives of and Legal Basis for the Final Rule
As explained above, the objective of the Final Fee Rule is to
collect fees from entities engaged in telemarketing, pursuant to the
legal authority set forth in the Implementation Act and Appropriations
Act.
3. Description and Estimate of Number of Small Entities Affected by the
Final Rule
As explained in the Revised Fee NPRM, comments submitted by the
Small Business Administration cited to information from the North
American Industry Classification System (``NAICS''), suggesting that
there are 2,305 firms identified as ``telemarketing bureaus,'' and that
1,279 of those firms may qualify for small business status, i.e.,
annual receipts of $5 million or less.\81\ Because sellers, and not
``telemarketing bureaus,'' constituted the relevant small entities
affected by the Revised Fee NPRM, the Commission sought further public
comment and information on the number of small business sellers engaged
in outbound telemarketing and subject to the FTC's jurisdiction, since
the NAICS classification system does not provide this level of
detail.\82\ The Commission received no further information in response
to this request for comment. As a result, the agency is unable at this
time to provide a reliable estimate of the number of affected sellers.
In any event, as explained elsewhere in this Statement, the Commission
believes that, to the extent the Final Fee Rule has an economic impact
on small business, the Commission has adopted an approach that
minimizes that impact to ensure that it is not substantial, while
fulfilling the legal mandate of the Implementation Act and
Appropriations Act to ensure that the telemarketing industry supports
the cost of the National Do Not Call Registry.
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\81\ See 68 FR at 16246 n.65.
\82\ Id.
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4. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements for Small Entities
These requirements were discussed in the Revised Fee NPRM section
regarding agency information collection activities subject to OMB
approval under the PRA.\83\ The information collection activities at
issue consist principally of the requirement that firms, regardless of
size, that access the national registry submit minimal identifying and
payment information, which is necessary for the agency to collect the
required fees.
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\83\ See Revised Fee NPRM, 68 FR at 16245.
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Compliance requirements of the Final Fee Rule, other than
information collection requirements within the meaning of the PRA, are
discussed elsewhere in this document and in the User Fee NPRM and
Revised Fee NPRM. In sum, as noted earlier, small entities and all
other entities subject to the Final Fee Rule are required to pay and
obtain access to the National Do Not Call Registry in order to
reconcile their calling lists with the phone numbers maintained in the
national registry.
5. Duplication With Other Federal Rules
None.
6. Description of Any Significant Alternatives to the Final Rule
As discussed in the User Fee NPRM, the Commission considered a
number of alternatives to the proposed fees.\84\ In both the User Fee
NPRM and Revised Fee NPRM, the Commission solicited comment on any
significant alternatives that would further minimize the impact on
small entities consistent with the objectives stated in those Notices,
the Appropriations Act and the Implementation Act. As discussed
[[Page 45144]]
elsewhere in this Statement, the Commission finds that no significant
alternatives are available consistent with those objectives.
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\84\ See User Fee NPRM, 67 FR at 37367.
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List of Subjects in 16 CFR Part 310
Telemarketing, Trade practices.
VIII. Final Rule
0
Accordingly, for the reasons set forth above, the Commission hereby
amends part 310 of title 16 of the Code of Federal Regulations as
follows:
PART 310--TELEMARKETING SALES RULE
0
1. The authority citation for part 310 continues to read as follows:
Authority: 15 U.S.C. 6101-6108.
0
2. Add Sec. 310.8 to read as follows:
Sec. 310.8 Fee for access to the National Do Not Call Registry.
(a) It is a violation of this Rule for any seller to initiate, or
cause any telemarketer to initiate, an outbound telephone call to any
person whose telephone number is within a given area code unless such
seller, either directly or through another person, first has paid the
annual fee, required by Sec. 310.8(c), for access to telephone numbers
within that area code that are included in the National Do Not Call
Registry maintained by the Commission under Sec. 310.4(b)(1)(iii)(B);
provided, however, that such payment is not necessary if the seller
initiates, or causes a telemarketer to initiate, calls solely to
persons pursuant to Sec. Sec. 310.4(b)(1)(iii)(B)(i) or (ii), and the
seller does not access the National Do Not Call Registry for any other
purpose.
(b) It is a violation of this Rule for any telemarketer, on behalf
of any seller, to initiate an outbound telephone call to any person
whose telephone number is within a given area code unless that seller,
either directly or through another person, first has paid the annual
fee, required by Sec. 310.8(c), for access to the telephone numbers
within that area code that are included in the National Do Not Call
Registry; provided, however, that such payment is not necessary if the
seller initiates, or causes a telemarketer to initiate, calls solely to
persons pursuant to Sec. Sec. 310.4(b)(1)(iii)(B)(i) or (ii), and the
seller does not access the National Do Not Call Registry for any other
purpose.
(c) The annual fee, which must be paid by any person prior to
obtaining access to the National Do Not Call Registry, is $25 per area
code of data accessed, up to a maximum of $7,375; provided, however,
that there shall be no charge for the first five area codes of data
accessed by any person, and provided further, that there shall be no
charge to any person engaging in or causing others to engage in
outbound telephone calls to consumers and who is accessing the National
Do Not Call Registry without being required under this Rule, 47 CFR
64.1200, or any other federal law. Any person accessing the National Do
Not Call Registry may not participate in any arrangement to share the
cost of accessing the registry, including any arrangement with any
telemarketer or service provider to divide the costs to access the
registry among various clients of that telemarketer or service
provider.
(d) After a person, either directly or through another person, pays
the fees set forth in Sec. 310.8(c), the person will be provided a
unique account number which will allow that person to access the
registry data for the selected area codes at any time for twelve months
following the first day of the month in which the person paid the fee
(``the annual period''). To obtain access to additional area codes of
data during the first six months of the annual period, the person must
first pay $25 for each additional area code of data not initially
selected. To obtain access to additional area codes of data during the
second six months of the annual period, the person must first pay $15
for each additional area code of data not initially selected. The
payment of the additional fee will permit the person to access the
additional area codes of data for the remainder of the annual period.
(e) Access to the National Do Not Call Registry is limited to
telemarketers, sellers, others engaged in or causing others to engage
in telephone calls to consumers, service providers acting on behalf of
such persons, and any government agency that has law enforcement
authority. Prior to accessing the National Do Not Call Registry, a
person must provide the identifying information required by the
operator of the registry to collect the fee, and must certify, under
penalty of law, that the person is accessing the registry solely to
comply with the provisions of this Rule or to otherwise prevent
telephone calls to telephone numbers on the registry. If the person is
accessing the registry on behalf of sellers, that person also must
identify each of the sellers on whose behalf it is accessing the
registry, must provide each seller's unique account number for access
to the national registry, and must certify, under penalty of law, that
the sellers will be using the information gathered from the registry
solely to comply with the provisions of this Rule or otherwise to
prevent telephone calls to telephone numbers on the registry.
By direction of the Commission.
Donald S. Clark,
Secretary.
Note: The following appendix will not appear in the Code of
Federal Regulations.
Appendix A
List of Acronyms for the TSR Revised Fee Proposal Commenters
Commenter--Acronym
American Bankers Association--ABA
American Resort Development Association--ARDA
American Teleservices Association--ATA
Bahe, Kevin--KB
Bank of America--BOA
Bouffard, David L.--DB
Brown, Jarrett--JB
Citigroup Inc.--Citi
Convergys Corporation--Convergys
Direct Marketing Association--DMA
Electronic Retailing Association--ERA
Financial Services Roundtable--FSR
Girty, John--JG
Goldstein, Mitchell P.--MG
Greene, Shawn--SG
Household Bank (SB), N.A.--Household
Infocision Management Corporation--IMC
Jamtgaard, O. G. Jr.--OJ
Johnson, Jeff--JJ
Lamonds, Cheryl E.--CL
Magazine Publishers of America--MPA
McGowan, Dilton--DM
National Consumers League--NCL
Phone Data Strategies--PDS
Pressley, Bob--BP
Samuels, Sara--SS
SBC Communications Inc.--SBC
Scheid, Justin & Matt Kiverts--S&K
Scott, Richey L.--RS
Smith, Jenna--JS
Stora, Christine--CS
Stutes, Gerald--GS
The Verizon companies--Verizon
VISA U.S.A.--VISA
West Corporation--West
[FR Doc. 03-19568 Filed 7-30-03; 8:45 am]
BILLING CODE 6750-01-P