TSR '10 Suppl SS for Final Rule DR amendments

Supplemental Supporting Statement for Final Amendments to
Information Collection Provisions of
the Telemarketing Sales Rule
16 C.F.R. Part 310
(OMB Control No. 3084-0097)
(1)

Necessity for Collecting the Information

The Federal Trade Commission (“FTC” or “Commission”) promulgated the Telemarketing
Sales Rule (“TSR” or “Rule”) in 1995. The Rule was issued in accordance with the Telemarketing and
Consumer Fraud and Abuse Prevention Act (“Telemarketing Act”),1 which sought to prevent deceptive
or abusive telemarketing practices by requiring the Commission to promulgate rules regarding such
telemarketing practices and by increasing the consumer fraud enforcement tools available to the FTC.2
The amended TSR addresses unlawful practices that have been occurring with increasing
frequency in the telemarketing of debt relief services, including for-profit credit counseling services,
debt settlement, and debt negotiation services. Based on the entire record in the proceeding, including
recent law enforcement actions, staff outreach to stakeholders (see further discussion under item (8) of
this Supporting Statement), analysis of complaint data, and other research, staff believes that tailoring
the TSR to address law violations in the sale of debt relief services is warranted under the
Telemarketing Act to enhance consumer protection.
(2)

Use of the Information

The amendments require specific new disclosures in the sale of a “debt relief service,” as that
term is defined in Section 310.2(m), which result in PRA burden for all covered entities – both new
and existing respondents – that engage in telemarketing of these services. The amendments, among
other things: (1) apply the TSR to inbound telemarketing of debt relief services3; and (2) add new
required disclosures and prohibited representations to curb deceptive practices prevalent in the
telemarketing of debt relief services.
These modifications provide sellers and telemarketers of debt relief services with clear
requirements and expand the Commission’s ability to use the TSR – an important tool in its law
enforcement arsenal – to bring law enforcement actions against, and obtain civil penalties from, debt
relief service providers who prey on vulnerable consumers.

1

Public Law No. 103-297, 15 U.S.C. §§ 6101-6108.

2

The Telemarketing Act specified that telemarketing sales rules issued by the Commission must include:
(1) requirements prohibiting unsolicited telephone calls that reasonably might be considered to be coercive or
abusive of the consumer’s right to privacy; (2) restrictions on the hours when unsolicited telephone calls may
be made; (3) requirements that the telemarketer promptly and clearly disclose the purpose of the call, as well
as make any other disclosures the Commission deems appropriate, including the nature and price of the goods
and services; and (4) provisions defining and prohibiting deceptive telemarketing practices. The
Telemarketing Act also directed the Commission to consider recordkeeping requirements in promulgating the
Rule.
3

While the TSR already covers outbound calls by debt relief service providers, the amendments also bring
inbound calls within the TSR’s reach.

(3)

Consideration of Using Improved Information Technology to Reduce Burden

The TSR’s recordkeeping provisions permit sellers and telemarketers to keep records in
whatever form, manner, format, or location they choose. Accordingly, the Rule’s recordkeeping
provisions are consistent with the requirements of the Government Paperwork Elimination Act
(“GPEA”).4 The disclosures required by the TSR for the most part are made orally and, secondarily,
by direct mail. Thus, electronic disclosures for purposes of implementing the provisions of the GPEA
are either inapplicable or impracticable.
(4)

Efforts to Identify Duplication

The TSR’s recordkeeping requirements involve the preparation and retention of records
demonstrating compliance with the Rule. Other federal and state government agencies may also
require the retention of some records that the TSR requires to be retained (e.g., personnel, sales, or
donation information). The amendments create a new obligation under the TSR’s existing
recordkeeping requirements for sellers conducting inbound debt relief telemarketing to retain
electronic or other records of consumers’ written agreement to receive such calls, and the scripts used
in such calls.5 Some state laws entail the retention of records required by the debt relief amendments,
but the Commission is unaware of any federal laws that impose such requirements.6 To the extent that
the recordkeeping requirements of the TSR may duplicate the information collection requirements of
other federal or state government agencies, the TSR does not require that any duplicate records be
maintained.
Many state laws require the same or similar disclosures as those the TSR mandates. Staff
knows of no instance, however, under which the TSR and any other law or regulation governing
telemarketing require that a specific disclosure be made in duplicative ways to satisfy the Rule’s
requirements and a parallel law or regulation’s requirements.
(5)

Efforts to Minimize Burden on Small Businesses

In drafting the amended Rule, the Commission has made every effort to avoid unduly
burdensome requirements for entities. The Commission believes that the amendments – including the
new disclosures for debt relief services, prohibited misrepresentations, and the advance fee ban – are
necessary in order to protect consumers considering the purchase of debt relief services. Similarly, the
Commission is extending the coverage of the existing provisions of the Rule to inbound telemarketing
of debt relief services. This amendment is designed to ensure that in telemarketing transactions to sell
debt relief services, consumers receive the benefit of the Rule’s protections. For each of these

4

44 U.S.C. § 3504 note.

5

16 C.F.R. 310.5(a)(1) and (5). No specific recordkeeping requirement in the TSR applies to any other
provision of the prerecorded call amendment. Telemarketers will continue to have the burden of proof to
establish as an affirmative defense that they have complied with the call abandonment safe harbor, and may
keep records showing that their call abandonment rates have not exceeded 3 percent over a 30-day period
under the abandonment rate calculation amendment, although this is not expressly required by the TSR.
6

See, e.g., Colorado Statutes § 12-15-5-203 et seq.

2

amendments, the Commission has attempted to tailor the provision to the concerns evidenced by the
entire record. In fact, in determining the Final Rule’s requirements, the FTC eliminated three of the
disclosures initially proposed in the NPRM to reduce the burden on business, including small entities.7
On balance, the Commission believes that the benefits to consumers of each of the Rule’s
requirements outweigh the costs to industry of implementation.
The Commission considered, but decided against, providing an exemption for small entities in
the amended Rule. The protections afforded to consumers from the amendments are equally important
regardless of the size of the debt relief service provider with whom they transact. Indeed, small debt
relief service providers have no unique attributes that would warrant exempting them from provisions,
such as the required debt relief disclosures. The information provided in the disclosures is material to
the consumer regardless of the size of the entity offering the services. Similarly, the protections
afforded to consumers by the advance fee ban are equally necessary regardless of the size of the entity
providing the services. Thus, the Commission believes that creating an exemption for small
businesses from compliance with the amendments would be contrary to the goals of the amendments
because it would arbitrarily limit their reach to the detriment of consumers.
Nonetheless, the Commission has taken care in developing the amendments to set performance
standards, which establish the objective results that must be achieved by regulated entities, but do not
establish a particular technology that must be employed in achieving those objectives. For example,
the Commission does not specify the form in which records required by the TSR must be kept.
Moreover, the Rule’s disclosure requirements are format-neutral; sellers and telemarketers may make
the disclosures in writing or orally, as long as they are clear and conspicuous.8 In sum, the FTC has
worked to minimize any significant economic impact on small entities.
(6)

Consequences of Conducting the Collection Less Frequently
(a) Recordkeeping

The TSR requires specified records to be retained for 24 months.9 A record retention period of
less than two-years would frustrate many investigations under the FTC’s enforcement program.
Consumers who complain to the FTC about transactions covered by the Rule often do not do so

7

The Commission determined, however, that one additional disclosure was necessary under the amended
final Rule. Section 310.3(a)(1)(viii)(D) imposes an additional disclosure requirement on debt relief providers
who request or require the customer to place money for its fee and for payment to customers’ creditors or debt
collectors in a dedicated bank account at an insured financial institution. These providers must disclose that
the consumer owns the funds held in the account and may withdraw from the debt relief service at any time
without penalty and receive all funds currently in the account. This information would be highly material to
reasonable consumers in deciding whether to enroll in the service; the right to cancel and receive a refund is a
key right for consumers under the Rule, but it is only meaningful if consumers know that they have the right.
8

If the disclosures are made in writing, they are considered clear and conspicuous “only if they are sent close
enough in time to the call so that the consumer associates the call with the written disclosures.” FTC,
Complying With the Telemarketing Sales Rule (May 2009), available at
http://www.ftc.gov/bcp/edu/pubs/business/marketing/bus27.shtm.
9

16 C.F.R. § 310.5.

3

immediately. Therefore, there may already be a substantial “lag time” between the time the alleged
rule violations occur and the time the FTC learns of the alleged violations. A two-year record
retention period allows Commission staff to gather the information needed to pursue enforcement
actions and to identify those persons who have most recently suffered injury from the alleged
deceptive or abusive telemarketing practices.
(b) Disclosures
All of the disclosures required by the Rule provide consumers with information necessary to
make informed purchasing decisions or are essential to protect their privacy. Moreover, the Rule’s
disclosure requirements address specific areas of recurring deception or abuse in telemarketing, and
have been narrowly crafted to address the specific problems identified in these transactions through
law enforcement efforts by the states and the FTC. The debt relief specific disclosures are narrowly
crafted to address the specific problems raised by debt relief services that were identified in the
rulemaking record.
(7)

Circumstances Requiring Collection Inconsistent With OMB Guidelines

The collection of information in this Rule is consistent with all applicable guidelines contained
in 5 C.F.R. § 1320.5(d)(2).
(8)

Consultation Outside the Agency

Consistent with 44 U.S.C. 3506(c)(2)(B), the FTC provided an opportunity for public comment
on the information collections contained in this rulemaking. See 74 Fed. Reg. 41,988 (Aug. 19, 2009).
In addition to the consultation elaborated on at length in the preceding Supporting Statement submitted
to OMB for the NPRM, this amended Rule is further informed by public comments received in
response to this proceeding, including a forum to discuss the issues raised by the commenters.10
During the course of this rulemaking, the Commission received comments from 321
stakeholders, including representatives of the debt relief industry, creditors, law enforcement, consumer
groups, and individual consumers.11 Most industry commenters supported parts of the proposal but

10

The comments are available at http://www.ftc.gov/os/comments/tsrdebtrelief/index.shtm. A list of
commenters cited in this Supporting Statement, along with the short citation names or acronyms used for
them, appears as an Appendix to this document. When a commenter submitted more than one comment, the
comment is also identified by date.

11

These 321 commenters consist of: 35 industry representatives, 10 industry trade associations and groups,
26 consumer groups and legal services offices, six law enforcement organizations, three academics, two labor
unions, the Uniform Law Commission, the Responsible Debt Relief Institute, the Better Business Bureau, and
236 individual consumers. Of these commenters, three submitted confidential data as part of their comments.

4

opposed the advance fee ban.12 One industry member opposed virtually the entire proposal,13 while a
few supported the proposal as a whole.14 In contrast, state attorneys general and regulators, consumer
advocates, legal aid attorneys, and creditors generally supported the proposed amendments, including
the advance fee ban.15
On November 4, 2009, the Commission held a public forum to discuss the issues raised by the
commenters in this proceeding. Many of those who had filed comments on the proposed rule
participated as panelists at the forum, and members of the public in attendance had the opportunity to
make statements on the record. The forum was open to the public, and a transcript of the proceeding
was placed on the public record.16 After the forum, Commission staff sent letters to trade associations
and individual debt relief providers that had submitted public comments, soliciting additional
information in connection with certain issues that arose at the public forum.17 Sixteen organizations
responded and provided data. Finally, Commission staff met with industry and consumer
representatives to discuss the issues under consideration in the rulemaking proceeding.
(9)

Payments or Gifts to Respondents
Not applicable.

(10) & (11)

Assurances of Confidentiality/Matters of a Sensitive Nature

The collection of information in this Rule is consistent with all applicable guidelines contained
in 5 C.F.R. § 1320.5(d)(2). To the extent that information covered by a recordkeeping requirement of
the Rule is collected by the Commission for law enforcement purposes, the confidentiality protections
of Sections 6(f) and 21 of the Federal Trade Commission Act, 15 U.S.C. §§ 46(f) and 57b-2, will apply.
(12)

Burden Estimate
Estimated Additional Annual Hours Burden: 43,375 hours
As explained below, the estimated annual burden for recordkeeping attributable to the Rule

12

See, e.g., TASC (Oct. 26, 2009) at 2; USOBA (Oct. 26, 2009) at 3. Two industry commenters supported a
partial advance fee ban allowing debt relief providers to receive fees to cover administrative expenses before
providing the promised services. CRN (Oct. 2, 2009) at 10-11; USDR (Oct. 20, 2009) at 2.

13

MD (Oct. 26, 2009) at 4.

14

ACCORD (Oct. 9, 2009) at 1; FCS (Oct. 27, 2009) at 1; CareOne at 1.

15

NAAG (Oct. 23, 2009) at 1; NACCA at 1; CFA at 2; SBLS at 1; QLS at 2.

16

The record in this proceeding, including the transcript of the forum, is available at
http://www.ftc.gov/bcp/rulemaking/tsr/tsr-debtrelief/. In addition, the full paper record is available in Room
130 at the FTC, 600 Pennsylvania Avenue, N.W., Washington, DC 20580, telephone number: 202-326-2222.

17

In addition to the public comments, the letters are also posted at
http://www.ftc.gov/os/comments/tsrdebtrelief/index.shtm.

5

amendments, averaged over a prospective three-year PRA clearance, is 29,886 hours for all industry
members affected by the Rule. Although the first year of compliance will entail setting up compliant
recordkeeping systems, the burden will decline in succeeding years as they will then have in place such
systems. The estimated burden for the disclosures that the Rule requires, including the new disclosures
relating to debt relief services, is 13,489 hours for all affected industry members, the same estimate
used for the proposed rule. Thus, the total PRA burden is 43,375 hours.
A.

Number of Respondents

Based on its estimate that 2,000 entities sell debt relief services, and on the assumption that each
of these entities engages in telemarketing as defined by the TSR, staff estimates that 879 new
respondents will be subject to the Rule as a result of the amendments. The latter figure is derived by a
series of calculations, beginning with an estimate of the number of these entities that conduct inbound
versus outbound telemarketing of debt relief services. This added estimate is needed to determine how
many debt relief service providers are existing respondents and how many are new respondents because
their respective PRA burdens will differ.
Staff is not aware of any source that directly states the number of outbound or inbound debt
relief telemarketers; instead, estimates of these numbers are extrapolated from external data.
According to the Direct Marketing Association (“DMA”), 21% of all direct marketing in 2007 was by
inbound telemarketing and 20% was by outbound telemarketing.18 Using this relative weighting, staff
estimates that the number of inbound debt relief telemarketers is 1,024 (2,000 x 21 ÷ (20 + 21)) and the
number of outbound telemarketers is 976 (2,000 x 20 ÷ (20 + 21)).
Of the estimated 1,024 entities engaged in inbound telemarketing of debt relief services, an
estimated 217 entities conduct inbound debt relief telemarketing through direct mail; the remaining 807
entities do so through general media advertising and have been thus far largely exempt from the Rule’s
current requirements.19 Of the 217 entities using direct mail, staff estimates that 72, approximately onethird, make the disclosures necessary to exempt them from the Rule’s existing requirements.20 Thus, an
estimated 879 entities (807 + 72) are new respondents that will be newly subject to the TSR and its
PRA burden, including burden derived from the new debt relief disclosures.
The remaining 145 entities (217 - 72) conducting inbound telemarketing for debt relief through
direct mail would be existing respondents because they receive inbound telemarketing calls in response
to direct mail advertisements that do not make the requisite disclosures to qualify for the direct mail

18

See DMA Statistical Fact Book 1, 17 (30th ed. 2008) (“DMA Statistical Fact Book”).

19

According to the DMA, 21.2% of annual U.S. advertising expenditures for direct marketing is through
direct mail; the remaining 78.8% is through all other forms of general media (e.g., newspapers, television,
Internet, Yellow Pages). See id. at 11. Thus, applying these percentages to the above estimate of 1,024
inbound telemarketers, 217 entities (21.2%) advertise by direct mail, and 807 (78.8%) use general media.

20

The apportionment of one-third is a longstanding assumption stated in past FTC analyses of PRA burden
for the TSR. See, e.g., Agency Information Collection Activities, 74 Fed. Reg. 25540, 25543 (May 28, 2009);
Agency Information Collection Activities, 71 Fed. Reg. 28698, 28700 (May 17, 2006). No comments have
been received to date with an alternative apportionment or reasons to modify it.

6

exemption.21 The estimated 976 entities conducting outbound telemarketing of debt relief services are
already subject to the TSR and thus, too, would be existing respondents. Accordingly, an estimated
1,121 telemarketers selling debt relief services will be subject only to the additional PRA burden
imposed by the newly adopted debt relief disclosures in amended Rule § 310.3(a)(1)(viii).
B.

Recordkeeping Hours

Staff estimates that in the first year following promulgation of the Final Rule, it will take 100
hours for each of the 879 new respondents identified above to set up compliant recordkeeping systems.
This estimate is consistent with the amount of time allocated in other PRA analyses for the TSR that
have addressed new entrants, i.e., newly formed entities subject to the TSR.22 The recordkeeping
burden for these entities in the first year following the amended Rule’s adoption is 87,900 hours (879
new respondents x 100 hours each). In subsequent years, when TSR-compliant recordkeeping systems
will, presumably, have already been established, the burden for these entities should parallel the one
hour of ongoing recordkeeping burden staff has previously estimated for existing respondents under the
Rule.23 Thus, annualized over a prospective three-year PRA clearance period, cumulative annual
recordkeeping burden for the 879 new respondents will be 29,886 hours (87,900 hours in Year 1: 879
hours for each of Years 2 and 3). Burden accruing to new entrants, an estimated 100 hours apiece to set
up new recordkeeping systems compliant with the Rule, along with the FTC’s estimate of 75 new
entrants per year, has already been factored into past analyses submitted for public comment24 and
cleared by OMB (most recently, on July 21, 2009, through July 31, 2012 under OMB Control No.
3084-0097).
Staff believes that the 1,121 existing respondents identified above will not have recordkeeping
burden associated with setting up compliant recordkeeping systems. These entities are already required
to comply with the Rule, and thus should already have recordkeeping systems in place. As noted
above, these existing respondents will each require approximately one hour per year to file and store
records required by the TSR. Here, too, however, this recordkeeping task is already accounted for in
the FTC’s existing cleared estimates that were previously submitted for public comment.
C.

Disclosure Hours

Industry comments stated that in the ordinary course of business a substantial majority of sellers
and telemarketers make the disclosures the Rule requires because doing so constitutes good business

21

16 CFR 310.6(b)(6).

22

See, e.g., Agency Information Collection Activities, 74 Fed. Reg. at 25542; Agency Information Collection
Activities, 71 Fed. Reg. at 28699.

23

Id.

24

See, e.g., Agency Information Collection Activities, 74 Fed. Reg. at 25542 (“The Commission staff also
estimates that 75 new entrants per year would need to spend 100 hours each developing a recordkeeping
system that complies with the TSR for an annual total of 7,500 burden hours.”). The term “new entrant”
denotes an entity that has not yet, but may in the future come into being.

7

practice.25 To the extent this is so, the time and financial resources needed to comply with disclosure
requirements do not constitute “burden.”26 The Commission also streamlined the disclosures required
in the final Rule by decreasing the number of required disclosures from six to four. Moreover, some
state laws require the same or similar disclosures as the Rule mandates. Thus, the disclosure hours
burden attributable to the Rule is far less than the total number of hours associated with the disclosures
overall. Staff continues to assume that most of the disclosures the Rule requires will be made in at least
75% of telemarketing calls even absent the Rule.27
To determine the number of outbound and inbound calls regarding debt relief services, staff has
combined external data with internal assumptions. Staff assumes that outbound calls to sell and
inbound calls to buy debt relief services are made only to and by consumers who are delinquent on one
or more credit cards.28 For simplicity, and lacking specific information to the contrary, staff further
assumes that each such consumer or household will receive one outbound call and place one inbound
call for these services.
The PRA analysis in the NPRM focused on the number of U.S. households having credit cards
(91.1 million) as a base for further calculations. One commenter noted that both individuals and
couples within a household may file for bankruptcy relief, and a large proportion of households include
more than two adults.29 In response, FTC staff has refocused its analysis on an estimated number of
adult (ages 18 and over) decision makers within each household. With that as the revised base, staff
then applies the additional calculations and assumptions presented below to project an estimated
number of consumers who will receive and place a call for debt relief services in a given year.
Based on U.S. Census Bureau data,30 FTC staff estimates that there are 162,769,000 decision
making units. This estimate is based on the assumptions that couples constitute a single decision
making unit, as are single (widowed, divorced, separated, never married) adults within each household.
Using households as a proxy for individual decision makers in applying again the previously stated
percentage of households (78%) that had one or more credit cards at the end of 2008,31 staff further
25

See, e.g., MD (Oct. 26, 2009) at 21 & 35-37; TASC (Oct. 26, 2009) at 5 & 14-15; Franklin at 19-20; see
also Agency Information Collection Activities, 74 Fed. Reg. at 25542.

26

16 CFR 1320.3(b)(2).

27

See, e.g., Agency Information Collection Activities, 74 Fed. Reg. at 25543; Agency Information Collection
Activities, 71 Fed. Reg. at 28699. Accordingly, staff has continued to estimate that the hours burden for most
of the Rule’s disclosure requirements is 25% of the total hours associated with disclosures of the type the TSR
requires.

28

By extension upsells on these initial calls would not be applicable. Moreover, staff believes that few, if
any, upsells on initial outbound and inbound calls would be for debt relief.

29

RDRI at 2.

30

U.S. Census Bureau, Current Population Survey, 2008 Annual Social and Economic Supplement, Internet
Release Date: January 2009.

31

See Ben Woolsey and Matt Schulz, Credit card statistics, industry facts, debt statistics, available at
(continued...)

8

estimates that 126,959,820 consumers have one or more credit cards. This figure, in turn, is then
multiplied by the most recently available Federal Reserve Board data regarding the delinquency rate for
credit cards. The Federal Reserve Board reported that the delinquency rate for credit cards was 6.58%
in the third quarter of 2009.32 Multiplying this delinquency rate by the estimated number of consumers
having one or more credit cards – 126,959,820 – results in an estimate of 8,353,956 consumers with
delinquent accounts. As before, staff assumes that each of these consumers will receive and place a
call for debt relief services in a given year.
Because outbound calls are already subject to the existing provisions of the TSR, each such call
will entail only the incremental PRA burden resulting from the new debt relief disclosures. For
inbound calls, however, there will be new respondents in addition to existing ones, and associated
underlying distinctions between current exemptions applicable to direct marketing via direct mail and
those for general media (discussed further below). Accordingly, separate estimates are necessary for
inbound debt relief calls attributable to each.
To determine the number of inbound debt relief calls attributable to general media advertising
versus direct mail advertising, staff relied upon the DMA estimate that 78.8% of direct marketing is
done by general media methods33 and that 21.2% of direct marketing is done by direct mail.34 Applying
these percentages to the above-noted estimate of 8,353,956 inbound debt relief calls translates to
6,582,917 calls resulting from general media advertising and 1,771,039 calls arising from direct mail.
Staff then estimated that 1/3 of inbound direct mail debt relief calls, or 590,346 such calls, are currently
exempt from the TSR because they are in response to direct mail advertising that makes the requisite
§ 310.3(a)(1) disclosures. The remaining 2/3, or 1,180,692 inbound direct mail calls, are non-exempt.
1.

Existing respondents’ disclosure burden

As discussed above, the amended Rule includes a new provision, § 310.3(a)(1)(viii), which
includes four disclosures specific to providers of debt relief services; moreover, the Commission
eliminated three disclosures set forth in the proposed rule. Staff estimates that reciting these
disclosures in each sales call pertaining to debt relief services will take 10 seconds.35
For outbound calls, the disclosure burden for existing entities from the new debt relief
disclosures is 4,112 hours (5,921,500 outbound calls involving debt relief x 10 seconds each (for new
debt relief disclosures) x 25% TSR burden).
31

(...continued)
http://www.creditcards.com/credit-card-news/credit-card-industry-facts-personal-debt-statistics-1276.php.
32

FRB, Federal Reserve Statistical Release: Charge Offs and Delinquency Rates on Loans and Leases at
Commercial Banks, available at http://www.federalreserve.gov/releases/chargeoff/delallsa.htm (reporting a
6.58% delinquency rate for credit cards for the third quarter of 2009).
33

Id.

34

DMA Statistical Fact Book at 17.

35

This estimate considers commenters’ input while excluding the time pertaining to disclosures that are not
invoked by the amended Rule.

9

Similarly, currently non-exempt inbound calls – inbound calls placed as a result of direct mail
solicitations that do not include the § 310.3(a)(1) disclosures – will only entail the incremental PRA
burden resulting from the new debt relief disclosures. As noted above, this totals 1,180,692 such calls
each year. The associated disclosure burden for these calls will be 820 hours (1,180,692 non-exempt
direct mail inbound calls x 10 seconds for debt relief disclosures x 25% burden from TSR).
Thus, the total disclosure burden under the amended Rule for all existing respondents is 4,932
hours (4,112 hours for entities conducting outbound calls + 820 hours for entities conducting inbound,
non-exempt telemarketing).
2.

New respondents’ disclosure burden

New respondents – those currently exempt from the Rule’s coverage as a result of the direct
mail or general media exemptions for inbound calls – will incur disclosure burden not only for the debt
relief disclosures in § 310.3(a)(1)(viii), but also for the existing general disclosures for which such
entities will newly be responsible.36
As noted above, inbound calls responding to debt relief services advertised in general media are
currently exempt from the Rule.37 The disclosure burden for these calls will be 18 seconds each (8
seconds for existing § 310.3(a)(1) disclosures + 10 seconds for debt relief disclosures). Applying this
unit measure to the estimated 6,582,917 inbound debt relief calls arising from general media
advertising, the cumulative disclosure burden is 8,229 hours per year (6,582,917 inbound debt relief
calls in response to general media advertising x 18 seconds x 25% burden from TSR).
Applying the previously stated estimates and assumptions, the disclosure burden for new
respondents attributable to currently exempt inbound calls tied to direct mail (i.e., currently exempt
when the requisite § 310.3(a)(1) disclosures are made), is 328 hours per year (590,346 exempt inbound
direct mail calls x 8 seconds x 25% burden from TSR).
Thus, the total disclosure burden attributable to the Final Rule is 13,489 hours (4,932 + 8,229 +
328).
D.

Estimated Annual Labor Cost: $945,361
1.

Recordkeeping

Assuming a cumulative burden of 100 hours in Year 1 (of a prospective three-year PRA
clearance for the TSR) to set up compliant recordkeeping systems for existing debt relief service
providers newly subject to the Rule (879 new respondents x 100 hours each in Year 1 only), and

36

See Agency Information Collection Activities, 74 Fed. Reg. at 25542.

37

This is so because, at present, no limitation or exemption would limit use of the general media exemption
by those selling debt relief services via inbound telemarketing. See 16 CFR 310.6(b)(5) (the general media
exemption, unlike the direct mail exemption, is not conditional and does not presently except from its
coverage debt relief services).

10

applying to that a skilled labor rate of $26/hour,38 labor costs will approximate $2,285,400 in the first
year of compliance for new respondents.39 As discussed above, however, in succeeding years,
recordkeeping associated with the Rule will only require 879 hours, cumulatively, per year. Applied to
a clerical wage rate of $14/hour, this will amount to $12,306 in each of those years. Thus, the
estimated labor costs for recordkeeping associated with the amended Rule, averaged over a prospective
three-year clearance period, is $770,004.
2.

Disclosure

The estimated annual labor cost for disclosures under the amended Rule is $175,357. This total
is the product of applying an assumed hourly wage rate of $13.0040 to the earlier stated estimate of
13,489 hours pertaining to general and specific disclosures in initial outbound and inbound calls.
(13)

Capital and Other Non-Labor Cost Estimate
Estimated Annual Capital/Non-Labor Cost: $ 58,753
1.

Recordkeeping

Staff believes that the capital and start-up costs associated with the TSR’s information
collection requirements are de minimis. The Rule’s recordkeeping requirements mandate that
companies maintain records, but not in any particular form. While those requirements necessitate that
affected entities have a means of storage, industry members should have that already regardless of the
Rule. Even if an entity finds it necessary to purchase a storage device, the cost is likely to be minimal,
especially when annualized over the item’s useful life.
Affected entities need some storage media such as file folders, electronic storage media or paper
in order to comply with the Rule’s recordkeeping requirements. Although staff believes that most
affected entities will maintain the required records in the ordinary course of business, staff estimates
that the previously determined 879 new respondents newly subject to the final amended Rule will spend
an annual amount of $50 each on office supplies as a result of the Rule’s recordkeeping requirements,
for a total recordkeeping cost burden of $43,950.

38

This rounded figure is derived from the mean hourly earnings shown for computer support specialists found
in the National Compensation Survey: Occupational Earnings in the United States 2008, U.S. Department of
Labor released August 2009, Bulletin 2720, Table 3 (“Full-time civilian workers,” mean and median hourly
wages). See http://www.bls.gov/ncs/ncswage2008.htm#Wage_Tables.

39

As discussed above, existing respondents should already have compliant recordkeeping systems and thus
are not included in this calculation.

40

This rounded figure is derived from the mean hourly earnings shown for telemarketers found in the
National Compensation Survey: Occupational Earnings in the United States 2008, U.S. Department of Labor
released August 2009, Bulletin 2720, Table 3 (“Full-time civilian workers,” mean and median hourly wages).
See http://www.bls.gov/ncs/ncswage2008.htm#Wage_Tables.

11

2.

Disclosure

Estimated outbound disclosure hours (4,112) per above multiplied by an estimated commercial
calling rate of 6 cents per minute ($3.60 per hour) equals $14,803 in telephone-related costs.41
(14)

Estimated Cost to the Federal Government

The Commission has also amended the TSR several times in order to impose fees on entities
that must pay for access to the National Registry.42 In the Do-Not-Call Registry Fee Extension Act of
2007, Congress directed the FTC to make a moderate reduction in the TSR’s fees for access to the
National Registry, and to expand the definition of “exempt” entities eligible to access the National
Registry without charge.43 Notwithstanding the recent access fee reduction, staff anticipates that there
will be no annualized net cost to the Federal Government to implement and enforce the TSR during the
three year period for which clearance is sought because all such costs will be offset by fee collections.
(15)

Adjustments

As noted above regarding disclosure burden hours, the PRA analysis in the NPRM focused on
the number of U.S. households having credit cards (91.1 million) as a base for further calculations.
Allowing for a commenter’s observation that both individuals and couples within a household may file
for bankruptcy relief, and a large proportion of households include more than two adults, FTC staff has
refocused its analysis on an estimated number of adult (ages 18 and over) decision makers within each
household. In addition, the final rule amendments, in response to public comment, has narrowed the
additional new disclosures to four disclosures, rather than six, thereby reducing the cumulative burden
estimates for the collective new disclosures. Finally, capital/non-labor cost estimates, though
accounted for in the preceding Supporting Statement at the proposed rule stage, were inadvertently
excluded from the ROCIS submission at that time.
(16)

Plans for Tabulation and Publication
Not applicable.

41

Staff believes that remaining non-labor costs would largely be incurred by affected entities, regardless, in
the ordinary course of business and/or marginally exceed such costs.

42

The Do-Not-Call Implementation Act enacted by Congress shortly after the Commission amended the TSR
authorized the Commission to “promulgate regulations establishing fees sufficient to implement and enforce
the provisions relating to the ‘do-not-call’ registry of the [TSR].” Pub. L. 108–10, 117 Stat. 557 (2003) at § 2.
Since receiving that authority, the Commission has conducted amendment proceedings several times to set and
adjust National Registry access fees. See 68 Fed. Reg. 45134 (July 31, 2003); 69 Fed. Reg. 45580 (July 30,
2004); 70 Fed. Reg. 43273 (July 27, 2005); 71 Fed. Reg. 43040 (July 31,2006). Most recently, the
Commission has reduced the access fees, in compliance with the Do-Not-Call Registry Fee Extension Act of
2007, Pub. L. 110–188, 122 Stat. 63573. See 73 Fed. Reg. 43354 (July 25, 2008).

43

Pub. L. 110–188, 122 Stat. 635 (2007). Under the Act, National Registry access fees are to be increased
after fiscal year 2009 by the amount by which the average monthly Consumer Price Index for urban
consumers for the most recently ended 12-month period ending on June 30 exceeds the CPI for the 12 month
period ending June 30, 2008, provided the increase is at least one percent.

12

(17)

Exceptions for the Display of the Expiration Date for OMB Approval
Not applicable.

(18)

Exceptions to the “Certification for Paperwork Reduction Act Submissions”
Not applicable.

13

APPENDIX
List of Commenters and Short-Names/Acronyms Cited in this Supplemental Supporting
Statement for the TSR Debt Relief Final Rule
Short-name/Acronyms

Commenter

ACCORD
CRN
CareOne
CFA

American Coalition of Companies Organized to Reduce Debt
Consumer Recovery Network
Care One Services
Consumer Federation of America, Consumers Union, Consumer
Action, National Consumer Law Center, Center for Responsible
Lending, National Association of Consumer Advocates, National
Consumers League, US Public Interest Research Group, Privacy
Rights Clearinghouse, Arizona Consumers Council, Chicago
Consumer Coalition, Consumer Assistance Council, Community
Reinvestment Association of North Carolina, Consumer Federation of
the Southeast, Grass Roots Organizing, Jacksonville Area Legal Aid,
Inc., Maryland Consumer Rights Coalition, Mid-Minnesota Legal
Assistance, and Virginia Citizens Consumer Council
Financial Consulting Services, LLC
Franklin Debt Relief
Morgan Drexen, Inc.
Queens Legal Services
Responsible Debt Relief Institute
South Brooklyn Legal Services
The Association of Settlement Companies
US Debt Resolve, Inc.

FCS
Franklin
MD
QLS
RDRI
SBLS
TASC
USDR