TSR 2013 SS final

Supporting Statement for
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 Telemarketing Sales Rule (“TSR” or “Rule”), 16 C.F.R. § 310, implements the
Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C. §§ 6101-6108
(“Telemarketing Act”), as amended by the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act (“USA PATRIOT Act”),
Pub. L. 107056 (Oct. 25, 2001). The Act seeks to prevent deceptive or abusive telemarketing
practices in telemarketing, which, pursuant to the USA PATRIOT Act, includes calls made to
solicit charitable contributions by third-party telemarketers. The Telemarketing Act mandated
certain disclosures by telemarketers, and directed the Federal Trade Commission (“Commission”
or “FTC”) to include recordkeeping requirements in promulgating a rule to prohibit such
practices. As required by the Telemarketing Act, the TSR mandates certain disclosures for
telephone sales and requires telemarketers to retain certain records regarding advertising, sales,
and employees. The required disclosures provide consumers with information necessary to make
informed purchasing decisions. The required records are to be made available for inspection by
the Commission and other law enforcement personnel to determine compliance with the Rule.
Required records may also yield information helpful to measuring and redressing consumer
injury stemming from Rule violations.
In 2003, the Commission amended the TSR to include certain new disclosure
requirements and to expand the Rule in other ways. See 68 Fed. Reg. 4580 (Jan. 29, 2003).
Specifically, the Rule was amended to cover “upsells” 1 (not only in outbound calls, but also in
inbound calls) and additional transactions were included under the Rule’s purview. For example,
the Rule was extended to the solicitation by telephone of charitable donations by third-party
telemarketers in response to the mandate of the USA PATRIOT Act. Finally, the amendments
established the National Do Not Call Registry (“Registry”), permitting consumers to register, via
either a toll-free telephone number or the Internet, their preference not to receive certain
telemarketing calls. 2 Accordingly, under the TSR, most sellers and telemarketers are required to
1

An “upsell” is the solicitation in a single telephone call of the purchase of goods or services after an initial
transaction occurs. The solicitation may be made by or on behalf of a seller different from the seller in the initial
transaction, regardless of whether the initial transaction and the subsequent solicitation are made by the same
telemarketer (“external upsell”). Or, it may be made by or on behalf of the same seller as in the initial transaction,
regardless of whether the initial transaction and subsequent solicitation are made by the same telemarketer (“internal
upsell”).

2

68 Fed. Reg. 4580 (Jan. 29, 2003). The Registry applies to any plan, program, or campaign to sell goods or
services through interstate phone calls. This includes telemarketers who solicit consumers, often on behalf of thirdparty sellers. It also includes sellers who provide, offer to provide, or arrange to provide goods or services to
consumers in exchange for payment. It does not limit calls by political organizations, charities, or telephone
surveyors.

refrain from calling consumers who have placed their numbers on the Registry. 3 Moreover,
sellers and telemarketers must periodically access the Registry to remove from their
telemarketing lists the telephone numbers of those consumers who have registered. 4
In 2008, the Commission promulgated amendments to the TSR regarding prerecorded
calls, 16 C.F.R. § 310.4(b)(1)(v), and call abandonment rate calculations, 16 C.F.R. §
310.4(b)(4)(i). 5 The amendment regarding prerecorded calls added certain information collection
requirements. 6 Specifically, the amendment expressly authorized sellers and telemarketers to
place outbound prerecorded telemarketing calls to consumers only if: (1) the seller has obtained
written agreements from those consumers to receive prerecorded telemarketing calls after a clear
and conspicuous disclosure of the purpose of the agreement; and (2) the call discloses and
provides an automated telephone keypress or voice-activated opt-out mechanism at the outset of
the call. 7
In 2010, the Commission published additional amendments taking effect that year to
require specific new disclosures in the sale of a “debt relief service,” as that term is defined in
Section 310.2(m) to include for profit credit counseling services, debt settlement, and debt
negotiation services. The amendments 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) applied the TSR to inbound telemarketing of debt relief services; and
(2) added new required disclosures and prohibited representations to curb deceptive practices
prevalent in the telemarketing of debt relief services.
(a) Recordkeeping
The Rule expressly requires that certain records be kept by covered entities. Specifically,
records evidencing various aspects of each covered transaction must be kept for a period of 24
months. 8 These records include marketing material, telemarketing scripts, identifying
3

16 C.F.R. § 310.4(b)(1)(iii)(B).

4

16 C.F.R. § 310.4(b)(3)(iv). Effective January 1, 2005, the Commission amended the TSR to require
telemarketers to access the Registry at least once every 31 days. See 69 Fed. Reg. 16,368 (Mar. 29, 2004).

5

See 73 Fed. Reg. 51,164 (Aug. 29, 2008).

6

By contrast, the revised standard for measuring the call abandonment rate did not impose any new or affect any
existing reporting, recordkeeping or third-party disclosure requirements within the meaning of the PRA. That
amendment relaxed the prior requirement that the abandonment rate be calculated on a “per day per campaign” basis
by permitting, but not requiring, its calculation over a 30-day period, as industry requested.
7

The prerecorded call amendment provided the first ever explicit authorization in the TSR for sellers and
telemarketers to place prerecorded telemarketing calls to consumers. The pre-amendment call abandonment
prohibition of the TSR implicitly barred such calls by requiring that all telemarketing calls be connected to a sales
representative, rather than a recording, within two seconds of the completed greeting of the person who answers.
The requirements apply not only to prerecorded calls that are answered by a consumer, but also to prerecorded
messages left on consumers= answering machines or voicemail services.
8

16 C.F.R. § 310.5(a).

2

information for prize recipients, identifying information for customers and the goods or services
that customers purchased, identifying information for employees engaged in telemarketing, and
documents evidencing customers’ authorization to be billed.
(b) Disclosures
The TSR deems the failure to make certain disclosures in covered transactions to be a
deceptive act or practice. Among the Rule’s provisions that require covered entities to make
disclosures, for example, are failing to disclose the “total costs to purchase, receive, or use, and
the quantity of, any goods or services that are the subject of the sales offer;” 9 failing to disclose
“[a]ll material restrictions, limitations, or conditions to purchase, receive, or use the goods or
services that are the subject of the sales offer;” 10 failing to disclose “[a]ll material costs or
conditions to receive or redeem a prize that is the subject of the prize promotion;” 11 and failing to
disclose all material conditions related to negative option offers. 12 The TSR also requires two
disclosures in solicitations for charitable contributions, namely: (1) that the call is to solicit a
charitable contribution; and (2) the identity of the charitable organization on whose behalf the
call is being made.
(2)

Use of the Information
(a) Recordkeeping

The primary purpose of the recordkeeping requirements is to maintain evidence of
compliance with the Rule. The Rule requires the production of records on a case-by-case basis,
and the records are used to establish whether the company or persons affiliated with the company
have violated the Rule. In addition, the FTC, other governmental agencies, or private litigants
may use the records as evidence in administrative or court proceedings, to identify witnesses, and
to identify consumers who may be entitled to redress in connection with any law enforcement
actions. Without the required records, it would be difficult to ensure that entities are complying
with the Rule’s requirements and to redress injury that may have resulted from violations of the
Rule.
(b) Disclosures
The Rule’s disclosure requirements for live telemarketing calls help prevent deceptive or
abusive telemarketing acts or practices by ensuring that consumers are informed about the
purpose of the call and the terms and conditions of the potential sale or solicitation. Consumers
use the disclosed information in making purchasing decisions. The Rule’s disclosure
9

16 C.F.R. § 310.3(a)(1)(i).

10

16 C.F.R. § 310.3(a)(1)(ii).

11

16 C.F.R. § 310.3(a)(1)(v).

12

16 C.F.R. § 310.3(a)(1)(vii).

3

requirements are also intended to prevent fraud by making it more difficult for telemarketing
companies to mislead consumers and easier for law enforcement officials to identify and take
action against those engaged in deceptive or abusive telemarketing practices. The debt relief
provisions similarly require disclosures to curb deceptive practices prevalent in the telemarketing
of debt relief services.
The disclosure requirements for prerecorded telemarketing calls protect consumer privacy
by ensuring that consumers have the same ability as in a live telemarketing call to ask to be
placed on a seller’s company-specific do-not-call list and terminate the call. The prerecorded call
amendment therefore requires that all prerecorded calls disclose at the outset of the message the
key to press or what to say to terminate the call and be placed automatically on the seller’s donot-call list. The other disclosure required by the amendment is designed to ensure that
consumers who are asked to agree to receive prerecorded calls clearly understand the agreement
they are making.
(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”). 13 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.
Neither the 2008 or 2010 amendments altered the TSR’s recordkeeping requirements, and
both are designed to encourage the use of electronic means of compliance. As previously noted,
the prerecorded call amendment expressly permits the use of electronic means to record the
written agreements required by the amendment, as well as the use of electronic media for making
required disclosures.
(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 debt relief and prerecorded call provisions create an obligation
under the TSR’s existing recordkeeping requirements for sellers to retain electronic or other
records of consumers’ written agreements to receive such calls, and the scripts used in such calls.
Staff is not aware of any federal or state requirement that may entail the retention of any records
required by either the prerecorded call amendment or debt relief provisions, except for newly
effective and substantially identical FCC prerecorded call and call abandonment requirements 14
13

Pub. L. No. 105-277, Title XVII, 112 Stat. 2681-749 (1998) codified at 44 U.S.C. § 3501 et seq.

14

47 C.F.R. §§ 64.1200(a)(1)-(3), 64.1200(a)(7), and 64.1200(b)(3). The FCC’s opt-out requirements took effect
on January 14, 2013. The written agreement requirements will take effect on October 13, 2013.

4

and some state law requirements for the calculation of call abandonment rates. 15 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 a
duplicate set of records be maintained.
Many state laws require the same or similar disclosures the TSR mandates. Staff knows
of no instance, however, under which the TSR (including the most recent amendments) and any
other law or regulation governing telemarketing requires 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

The TSR’s disclosure and recordkeeping requirements are generally consistent with the
business practices that most telemarketing organizations would choose to follow, regardless of
legal requirements. Moreover, the Rule and its recent amendments have been designed to
minimize the burdens on all business entities, including small businesses. For example, the Rule
contains an exemption that allows a seller and its telemarketer to place live telemarketing calls to
consumers with whom the seller has an established business relationship, even if the consumer
has placed his or her telephone number on the National Registry. The effect of this exemption is
that businesses—and in particular small businesses—do not need to check their lists of existing
customers against the National Registry for live telemarketing calls. In addition, the burden
placed on small charities is minimized by the fact that for-profit firms that make fundraising calls
on behalf of charitable organizations are not required to ensure that they exclude consumers who
have placed their telephone numbers on the National Registry. 16 Rather, they only have to honor
individual consumer requests not to be called by the particular charity. 17 Furthermore, the TSR
permits all entities accessing the National Registry to obtain the first five area codes of data for
free, limiting the burden placed on businesses that only require access to a small portion of the
National Registry.
The prerecorded call provisions of the TSR are not likely to have a significant impact on
legitimate small business for several reasons. By their nature, most small businesses serve local
customers, develop personal relationships with their clientele, and are therefore likely to be able
to obtain their customers’ agreements to receive useful prerecorded telemarketing messages.
Moreover, purely informational prerecorded messages are not covered by the TSR, and the use of
such messages to schedule service calls, delivery times, and the like therefore will not be subject
to the written agreement requirement. In addition, to the extent that, in this Internet age, small
businesses may no longer be strictly local businesses, the option provided by the amendment to
obtain written agreements to receive prerecorded message calls pursuant to E-SIGN will place
them on an equal footing with other businesses.
15

E.g., California Public Utilities Commission, Interim Opinion, Rulemaking 02-02-020 (June 27, 2002) at 20.

16

16 C.F.R. § 310.6(a).

17

16 C.F.R. § 310.4(b)(1)(iii).

5

Likewise, the Commission has taken care in developing the debt relief provisions to set
performance standards, which establish the objective results that must be achieved, 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 required records must be kept.
Moreover, the debt relief disclosure requirements are format-neutral; sellers and telemarketers
may make the disclosures in writing or orally, as long as they are clear and conspicuous. 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. 18 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 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 twoyear 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. They have been narrowly crafted to address the specific problems identified in
these transactions through law enforcement efforts by the states and the FTC.
(7)

Circumstances Requiring Collection Inconsistent With OMB Guidelines

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

Consultation Outside the Agency

Dating back to the Rule’s inception, the Commission has had a long history of
consultation with outside parties, including affected entities and consumers. As noted above, in
connection with the Commission’s required rule review, the TSR was amended in January 2003
to include certain new disclosure requirements and to expand the Rule’s parameters in other
ways. During the 2003 rule review, representatives of the industry informed the FTC that the
information collection burdens the Rule imposes are minimal and that some have even lessened
18

16 C.F.R. § 310.5.

6

over time as technology has improved. During this time, Commission staff also met with federal,
state, and local law enforcement agencies to determine, among other things, whether the Rule’s
recordkeeping requirements were sufficient to facilitate effective enforcement of the Rule.
The Commission also sought and received extensive comment from interested parties on
the prerecorded call and debt relief amendments that played a significant role in tailoring the
amendments to minimize burden consistent with the consumer protection and privacy objectives
of the amendments. No public comments were received in response to subsequent detailed
analyses of the burden the two amendments would impose.
More recently, Commission staff sought public comment in connection with its latest
PRA clearance request for the TSR, in accordance with 5 C.F.R. § 1320.8(d). See 78 Fed. Reg.
19,483 (Apr. 1, 2013). Consistent with 5 C.F.R. § 1320.12(c), the FTC is providing an additional
opportunity for public comment contemporaneous with this submission.
(9)

Payments or Gifts to Respondents
Not applicable.

(10) & (11)

Assurances of Confidentiality/Matters of a Sensitive Nature

The collection of information in this proposed 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 provisions 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 Annual Hours Burden: 1,320,796 hours
The estimated burden for recordkeeping is 15,610 hours for all industry members affected
by the Rule. The estimated burden for the disclosures that the Rule requires for both the live
telemarketing call provisions of the TSR and those regarding prerecorded calls is 1,305,186
hours for all affected industry members and estimated reporting burden is 405 hours. Thus, the
total PRA burden is 1,320,796 hours. These estimates are explained below.
Number of Respondents: As a preliminary matter, only telemarketers and sellers, not
telefunders (third-party telemarketers soliciting contributions on behalf of charities), are subject
to the Registry provisions of the Rule, and only sellers, not telemarketers or telefunders, are
subject to the new express agreement obligations attributable to the prerecorded call disclosure

7

requirements. 19 The Registry data does not separately account for telefunders; they are a subset
of the overall number of telemarketing entities known to access the Registry for any given year. 20
In calendar year 2012, 28,601 telemarketing entities accessed the Registry. Of these
entities, 641 were “exempt” entities obtaining access to data. 21 By definition, none of the exempt
entities are subject to the TSR. In addition, 22,321 sellers and 5,639 telemarketers accessed the
Registry. Of those, however, 15,854 sellers and 3,996 telemarketers with independent access to
the Registry obtained data for just one state. Staff assumes that these entities are operating solely
intrastate, and thus would not be subject to the TSR. 22 Applying this Registry data, staff
estimates that 8,110 telemarketing entities (28,601 - 641 - 15,854 - 3,996) are currently subject to
the TSR, of which 6,467 (22,321 - 15,854) are sellers and 1,643 (5,639 - 3,996) are
telemarketers. 23
(a) Recordkeeping Hours
Staff estimates that the above-noted 8,110 telemarketing entities subject to the Rule each
require approximately one hour per year to file and store records required by the TSR for an
annual total of 8,110 burden hours. 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. 24 These figures, based on prior
estimates, are consistent with staff’s current knowledge of the industry. Thus, the total estimated
annual recordkeeping burden for new and existing telemarketing entities, including those offering
debt relief services and making prerecorded calls, 25 is 15,610 hours.
19

Telemarketers and telefunders must comply, however, with the abandoned call provisions of the TSR and the optout requirements of the 2008 amendments.
20

For the sake of simplicity and to err conservatively, FTC staff=s burden estimates for provisions less likely to be
applicable to telefunders (e.g., prize promotion disclosure obligations for outbound live calls, under 16 C.F.R.
§ 310.4(d)) will not be reduced by a separate estimate for the subset of telemarketers that are telefunders.
Conversely, estimates of the number of new-entrant telemarketers will incorporate new-entrant telefunders.
21

An exempt entity is one that, although not subject to the TSR, voluntarily chooses to scrub its calling lists against
the data in the Registry.
22

These entities would nonetheless likely be subject to the Federal Communications Commission’s (AFCC@)
Telephone Consumer Protection Act regulations, including the requirement that entities engaged in intrastate
telephone solicitations access the Registry.
23

For purposes of these calculations, staff assumes that telemarketers making prerecorded calls download telephone
numbers listed on the Registry, rather than conduct online searches, because the latter may consume much more time.
Other telemarketers not placing the high-volume of automated prerecorded calls may elect to search online, rather
than to download.
24

This figure includes new entrants making prerecorded calls and offering debt relief services, based on prior
estimates that neither would require more than 100 hours to comply with those requirements. See 74 Fed. Reg.
11,952, 11,954 n.17 (Mar. 20, 2009); 75 Fed. Reg. 48,458, 48,504 (Aug. 10, 2010).
25

The recordkeeping requirements for prerecorded calls are de minimis, and are subsumed within the PRA estimates
above for existing and new telemarketing entities. As in its prior estimates, staff continues to believe that any

8

(b) Disclosure Hours
Staff believes that in the ordinary course of business a substantial majority of sellers and
telemarketers make the disclosures the Rule requires because to do so constitutes good business
practice. To the extent this is so, the time and financial resources needed to comply with
disclosure requirements do not constitute “burden.” 16 C.F.R. § 1320.3(b)(2). Moreover, many
state laws require the same or similar disclosures as the Rule mandates. Thus, the disclosure
hours burden attributable solely to the Rule is far less than the total number of hours associated
with the disclosures overall. As when the FTC last sought 3-year OMB clearance for this Rule,
staff estimates that most of the disclosures the Rule requires would be made in at least 75 percent
of telemarketing calls even absent the Rule. 26 Accordingly, staff has continued to estimate that
the hours burden for most of the Rule’s disclosure requirements is 25 percent of the total hours
associated with disclosures of the type the TSR requires.
Based on previous assumptions, staff estimates that of the 8,110 telemarketing entities
noted above, 3,726 conduct inbound telemarketing. 27 Inbound calls from consumers in response
to direct mail solicitations that make certain required disclosures are exempt from the TSR. 28
Although such calls are exempt from the Rule, the Commission believes it is likely that industry
members choosing to make the requisite disclosures in direct mail solicitation might only do so
in an effort to qualify for the exemption. Thus, Commission staff believes it is appropriate to
include in the relevant burden hour calculation both the burden for compliance with the Rule’s
oral disclosures and the burden incurred by entities that make written disclosures in order to
qualify for the inbound direct mail exemption. Accordingly, staff estimates that, of the 3,726
entities that conduct inbound telemarketing, approximately one-third (1,242) will choose to
incorporate written disclosures in their direct mail solicitations that exempt them from complying
with the Rule. 29
ongoing incremental burden on sellers to create and retain electronic records of written agreements by new
customers to receive prerecorded calls should not be material since the agreements may be obtained and recorded
electronically pursuant to the Electronic Signatures In Global and National Commerce Act (commonly, “E-SIGN”).
Although telemarketers (and telefunders) that place prerecorded calls on behalf of sellers or charities must capture
and transmit to the seller any requests they receive to place a consumer=s telephone number on the seller=s entityspecific do-not-call list, this obligation extends both to live and prerecorded telemarketing calls, and is also
subsumed within the PRA estimates above.
26

75 Fed. Reg. at 48,504; 74 Fed. Reg. at 11,954.

27

While staff does not have information directly stating the number of inbound telemarketers, data last appearing in
the DMA 2009 Statistical Fact Book (February 2009), p. 18, shows that 17% of all direct marketing in 2008 was by
inbound telemarketing and 20% was by outbound telemarketing. Accordingly, based on such relative weighting,
staff estimates that the number of inbound telemarketers is approximately 3,726 ((8,110 x 17) ÷ (17 + 20)).
28

Some exceptions to this broad exemption exist, including solicitations regarding prize promotions, investment
opportunities, business opportunities other than business arrangements covered by the Franchise Rule or Business
Opportunity Rule, advertisements involving goods or services described in 310.3(a)(1)(vi), advertisements involving
goods or services described in 310.4(a)(2)-(4); and any instances of upselling included in such telephone calls.
29

Since only “sellers,” and not “telemarketers,” would make the written disclosures, and this estimate includes both,
it conservatively overstates the number of entities subject to the requirement.

9

Staff necessarily has made additional assumptions in estimating burden. From the total
volume of outbound and inbound calls, staff first calculated disclosure burden for initial
transactions that resulted in sales, derived from external data and/or estimates drawn from a
range of calendar years (2001-2010). Staff recognizes that disclosure burdens may still be
incurred regardless of whether or not a call results in a sale. Conversely, a substantial percentage
of outbound calls result in consumers hanging up before the seller or telemarketer makes the
required disclosure(s). However, because the requirements in § 310.3(a)(1) for certain
disclosures before a consumer pays for a telemarketing purchase apply only to sales, early call
cessation (i.e., consumers hanging up pre-disclosure or before full disclosure) is excluded from
staff’s burden estimates for § 310.3(a)(1).
For transactions in which a sale is not a precursor to a required disclosure, i.e., the upfront
disclosures required in all outbound telemarketing calls and outbound or inbound “upsell” calls
by § 310.4(d), staff has calculated burden for initial transactions based on estimates of the total
volume of outbound and inbound calls, discounted for anticipated early hang-ups. For
transactions in which a sale is a precursor to required disclosure, i.e., § 310.3(a)(1), the
calculation is based on the volume of direct sales.
Based on the most recently available applicable industry data and further FTC
extrapolations, 30 staff estimates that 2.4 billion outbound telemarketing calls are subject to FTC
jurisdiction, that 484 million of these calls result in direct sales, 31 and that there are 1.9 billion
inbound calls that result in direct sales. Staff retains its longstanding estimate that, in a
telemarketing call involving the sale of goods or services, it takes 7 seconds 32 for telemarketers
to recite the required pre-sale disclosures plus 3 additional seconds 33 to disclose the information
required in the case of an upsell. Staff also retains its longstanding estimates that at least 60
percent of sales calls result in “hang-ups” before the telemarketer can make all the required
disclosures and that “hang-up” calls allow for only 2 seconds of disclosures. 34
30

Staff employs the methodology, assumptions, and studies it has consistently used since their development for the
2003 TSR amendments to determine, indirectly from external sales data and the relative percentages of inbound and
outbound calls, the number of telemarketing calls and resulting number of sales because no call or sales number
totals are otherwise available. Staff relies on its own prior estimates that, of the $148 billion of sales to consumers in
2010 (DMA 2010 Statistical Fact Book, at 5), 92.8% are subject to FTC jurisdiction, with the average value of a sale
being $85, and 20% of outbound calls resulting in a sale.
31

For staff’s PRA burden calculations, only direct sales orders by telephone are relevant. That is, sales generated
through leads or customer traffic are excluded from these calculations because such sales are not subject to the
TSR’s recordkeeping and disclosure provisions. The direct sales transactions total of 484 million is based on an
estimated 1.6 billion sales transactions from outbound calls being subject to FTC jurisdiction reduced by an
estimated 30 percent attributable to direct orders. This percentage estimate is derived from the most recent available
direct sales data for telephone marketing to consumers. See DMA Statistical Fact Book (2001), p. 301.
32

See, e.g., 60 Fed. Reg. 32,682, 32,683 (June 23, 1995); 63 Fed. Reg. 40,713, 40,714 (July 30, 1998); 66 Fed.
Reg. 33,701, 33,702 (June 25, 2001); 71 Fed. Reg. 28,698, 28,700 (May 17, 2006); 74 Fed. Reg. 11,952, 11,955
(Mar. 20, 2009).
33

71 Fed. Reg. 3302, 3304 (Jan. 20, 2006); 71 Fed. Reg. 28,698, 28,700.

34

See, e.g., 60 Fed. Reg. at 32,683.

10

Staff bases all ensuing upsell calculations on the volume of additional sales after an initial
sale, with the assumption that a consumer is unlikely to be predisposed to an upsell if he or she
rejects an initial offer -- whether through an outbound or an inbound call. Using industry
information, staff assumes an upsell conversion rate of 40% for inbound calls as well as
outbound calls. 35 Moreover, staff assumes that consumers who agree to an upsell will not
terminate an upsell before the seller or telemarketer makes the full required disclosures.
Based on the above inputs and assumptions, staff estimates that the total time associated
with these pre-sale disclosure requirements is 865,333 hours per year: [(2.4 billion outbound
calls x 40% lasting the duration x 7 seconds of full pre-sale disclosures = 1,866,667) + (2.4
billion outbound calls x 60% terminated after 2 seconds of disclosures = 800,000) + (484 million
outbound calls resulting in direct sales x 40% upsell conversions x 3 seconds of related
disclosures = 161,333) + (1.9 billion inbound calls x 40% upsell conversions x 3 seconds =
633,333)] x an estimated 25% of affected entities not already making such disclosures
independent of the TSR = 865,333 hours.
The TSR also requires several general sales disclosures in telemarketing calls before the
customer pays for goods or services. 36 These disclosures include the total costs of the offered
goods or services, all material restrictions, and all material terms and conditions of the seller’s
refund, cancellation, exchange, or repurchase policies (if a representation about such a policy is a
part of the sales offer).
Staff estimates that the general sales disclosures for telemarketing calls require 377,949
hours annually. This figure includes the burden for written disclosures (1,242 inbound
telemarketing entities estimated to use direct mail 37 x 10 hours 38 per year x 25% burden = 3,105
hours), as well as the figure for oral disclosures [(484 million outbound calls x 8 seconds x 25%
burden = 268,889 hours) + (484 million outbound calls x 40% (upsell conversion) x 20% sales
conversion x 8 seconds x 25% burden = 21,511 hours) + (1.9 billion inbound calls x 40% upsell
conversion x 20% sales conversion x 8 seconds x 25% burden = 84,444 hours)] = 377,949
hours. 39
To estimate the time required to provide the general sales disclosures for calls offering
debt relief services, staff employs different assumptions and calculations set forth when the debt
35

This assumption originated with industry response to the Commission=s 2003 Final Amended TSR. See 68 Fed.
Reg. 4580, 4597 n.183 (Jan. 29, 2003). Although it was posited specifically regarding inbound calls, FTC staff will
continue to apply this assumption to outbound calls as well, barring the receipt of any information to the contrary.
36

16 C.F.R. § 310.3(a)(1)(i)-(iii).

37

See supra text preceding note 29.

38

FTC staff believes a typical firm will spend approximately 10 hours per year engaged in activities ensuring
compliance with this provision of the Rule; this, too, has been stated in prior FTC notices inviting comment on PRA
estimates. No comments were received, and staff believes this estimate remains reasonable.
39

The percentage and unit of time measurements are FTC staff estimates.

11

relief amendments were issued. 40 Employing that analysis, as modified in response to a public
comment to account for inbound debt relief sales, 41 staff continues to assume that outbound calls
to sell and inbound calls to buy debt relief services are made only to consumers who are
delinquent on one or more credit cards. 42 For simplicity, and lacking specific information or
prior comment to the contrary, staff further assumes that each such consumer will receive one
outbound call and place one inbound call for these services.
To estimate the number of consumers who are delinquent on one or more credit cards,
staff assumes that couples constitute a single decision-making unit, as do single adults (widowed,
divorced, separated, never married) within each household. According to the most current U.S.
Census Bureau data available, there are 157,356,000 decision-making units. 43 Of these,
113,611,032 have one or more credit cards, 44 and there are 3,101,581 decision-making units with
at least one delinquent credit card account. 45
Accordingly, since reciting the general sales disclosures takes eight seconds, staff
estimates that the general sales disclosure burden for inbound debt relief calls is 1,723 hours
(3,101,581 inbound debt relief calls x 8 seconds x 25% burden ÷ 3,600).
The general sales disclosures required by § 310.3(a)(1)(i)-(iii) must also be made by
sellers and telemarketers for some inbound calls that are excluded from the general media and
direct mail exemptions from the TSR for inbound calls; 46 namely, calls in response to ads for

40

75 Fed. Reg. at 48,504-05.

41

Debt relief sales in outbound calls have always been subject to the general sales disclosure requirements, and are
subsumed in the outbound general sales disclosure totals.
42

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.
43

U.S. Census Bureau, Income, Poverty, and Health Insurance in the United States: 2011, (September 2012), p. 6,
available at http://www.census.gov/prod/2012pubs/p60-243.pdf (reflecting 119,927,000 households in 2010); U.S.
Census Bureau, Sharing a Household: Household Composition and Economic Well Being: 2007-2010 (June 2012),
p. 4, available at www.census.gov/hhes/www/poverty/publications/P60-242.pdf (reflecting 37,429,000 adults living
with a householder that is neither a spouse nor cohabiting partner in 2010).
44

The estimate of consumers with one or more credit cards is derived by multiplying the estimated decision making
units (157,356,000) by the percentage of consumers with one or more credit cards (72.2%). Federal Reserve Bank
of Boston, Consumer Payments Research Center, The 2009 Survey of Consumer Payment Choice (April 2011), p. 8,
available at www.bostonfed.org/economic/ppdp/2011/ppdp1101.pdf.
45

The estimate of consumers with a delinquent account is derived by multiplying the estimate of consumers with
one or more credit cards (113,611,032) by the delinquency rate for credit cards (2.73%). Board of Governors of the
Federal Reserve System, Charge Off and Delinquency Rates on Loans and Leases at Commercial Banks, available
at http:\\www.federalreserve.gov/releases/chargeoff/delallsa.htm (reporting a 2.73% delinquency rate for credit cards
for the fourth quarter of 2012).
46

16 C.F.R. § 310.6(b)(5) (general media) and § 310.6(b)(6) (direct mail).

12

investment opportunities, certain business opportunities, 47 credit card loss protection
(“CCLP”), 48 credit repair, 49 loss recovery services, 50 and advance fee loans. 51
Staff’s estimates for each of these types of inbound calls begins by comparing the number
of complaints reported to the FTC’s Consumer Sentinel system in the most recent year to the
total number of reported fraud complaints for the year. The resulting percentage of total fraud
complaints must be adjusted to reflect the fact that only a relatively small percentage of
telemarketing calls are fraudulent. To extrapolate the percentage of fraudulent telemarketing
calls, staff divides a Congressional estimate of annual consumer injury from telemarketing fraud
($40 billion) 52 by the most recent available total of consumer and business-to-business
telemarketing sales ($332.4 billion in 2010), 53 or 12%. The two percentages are then multiplied
together to determine the percentage of the 1.9 billion annual inbound telemarketing calls
represented by each type of fraud complaint.
Thus, for the 7,117 Sentinel complaints about investment opportunities in 2012, 54 or
0.7% of the 1,074,937 total fraud complaints reported, 55 the general sales disclosure burden is
4,222 hours (1.9 billion inbound calls x 0.001 [0.007 x 0.12] x 8 seconds ÷ 3,600). Likewise, the
burden for business opportunity sales (17,231 including complaints for multi-level marketing/
pyramids/chain letters) is 8,444 hours (1.9 billion x 0.002 [0.016 x 0.12] x 8 seconds ÷ 3,600); 56
47

Staff has previously accounted only for the business opportunity exclusion, which so significantly overstated the
number of complaints not covered by the Franchise Rule or Business Opportunity Rule that it served as a proxy for
all the other exclusions. See infra note 56. With the recent burgeoning increase in advance fee loan complaints, that
may no longer be the case, and staff accordingly now accounts for all the exclusions, even though some may seem
trivial.
48

16 C.F.R. § 310.3(a)(1)(vi).

49

16 C.F.R. § 310.4(a)(2).

50

16 C.F.R. § 310.4(a)(3).

51

16 C.F.R. § 310.4(a)(4).

52

The FBI believes that this estimate now overstates telemarketing fraud losses as a result of its investigations and
closings of once massive telemarketing boiler room operations. See FBI, A Byte Out of History: Turning the Tables
on Telemarketing Fraud (Dec. 8, 2010), available at
www.fbi.gov/news/stories/2010/december/telemarketing_120810/telemarketing_120810.
53

DMA 2010 Statistical Fact Book (January 2010), p. 5.

54

FTC, Consumer Sentinel Data Book for January – December 2012 (February 2013) (“Sentinel Data”), Appendix
B3, p. 83, available at http://www.ftc.gov/sentinel/reports/sentinel-annual-reports/sentinel-cy2012.pdf.
55

Sentinel Data at 7.

56

Sentinel Data at 7, 80. While this total excludes “Franchises/Distributorships” covered by the Franchise Rule and
thus not subject to the TSR, the data cannot additionally be segregated to omit “Work-At-Home” opportunities now
covered by the Business Opportunity Rule and thus also not subject to the TSR. Staff therefore believes this total
significantly overstates the opportunities subject to the TSR.

13

for advance fee loan sales (38,885 complaints), 16,889 hours (1.9 billion x 0.004 [0.036 x 0.12] x
8 seconds ÷ 3,600); for credit repair sales (2,094 complaints), 844 hours (1.9 billion x 0.0002
[0.002 x 0.12] x 8 seconds ÷ 3,600); and 422 hours for loss recovery services (612 complaints)
(1.9 billion x 0.0001 [0.001 x 0.12] x 8 seconds ÷ 3,600); for CCLP sales (1,408 complaints),
676 hours (1.9 billion x 0.00016 [0.0013 x 0.12] x 8 seconds ÷ 3,600). The exceptions to the
TSR’s inbound call exemptions therefore add an additional 31,497 hours to the general sales
disclosure burden. 57
Altogether, the general sales disclosure burden thus is 411,169 hours (377,949 for
outbound sales + 1,723 for debt relief inbound sales + 31,497 for non-exempt inbound sales).
Additional specific disclosures are required if the call involves a prize promotion, 58 the
sale of credit card loss protection products, 59 an offer with a negative option feature, 60 or the sale
of a debt relief service. 61 Staff estimates that the specific sales disclosures other than for debt
relief services will require 23,971 hours annually [(484 million calls x 5% [estimate for outbound
calls involving prize promotions] x 3 seconds x 25% burden = 5,042 hours) + (484 million calls
x 0.1% [estimate for outbound calls involving CCLP] x 4 seconds x 25% burden = 134 hours) +
(484 million calls x 40% upsell conversions x 20% sales conversions x 0.1% [estimate for
outbound calls involving CCLP upsells] x 4 seconds x 25% burden = 11 hours) + (1.9 billion
inbound calls x 40% upsell conversion x 20% sales conversion x 0.1% [estimate for inbound
calls involving CCLP upsells] x 4 seconds x 25% burden = 42 hours) + (484 million calls x 10%
[estimate for outbound calls involving negative options] x 4 seconds x 25% burden = 13,444
hours) + (484 million calls x 40% upsell conversion x 20% sales conversions x 10% [estimate for
outbound calls involving negative option upsells] x 4 seconds x 25% burden = 1,076 hours) +
(1.9 billion inbound calls x 40% upsell conversions x 20% sales conversions x 10% [estimate for
inbound calls involving negative option upsells] x 4 seconds x 25% burden = 4,222 hours).
Staff estimates that reciting the specific sales disclosures in each debt relief sales call will
take ten seconds, and therefore the disclosure burden associated with the debt relief disclosures is
4,308 hours (3,101,581 outbound debt relief calls x 10 seconds x 25% burden = 2,154 hours) +
(3,101,581 inbound debt relief calls x 10 seconds x 25% burden = 2,154 hours).
Thus, the total specific sales disclosure burden is 28,279 hours annually (23,971 for nondebt-relief calls) + 4,308 (for debt relief calls).

57

This total is a further revision to that published in the associated Federal Register Notices, due both to rounding
error and the inadvertent omission of CCLP sales from the published calculations.]
58

16 C.F.R. § 310.3(a)(1)(iv)-(v).

59

16 C.F.R. § 310.3(a)(1)(vi).

60

16 C.F.R. § 310.3(a)(1)(vii).

61

16 C.F.R. § 310.3(a)(1)(viii).

14

Cumulatively, therefore, the total annual burden for all of the sales disclosures is 439,448
hours (411,169 general + 28,279 specific sales disclosures) or, by rough approximation (allowing
that some entities conducting inbound telemarketing will be exempt from oral disclosure if
making certain written disclosures), 54 hours annually per firm (439,448 ÷ 8,110).
(c) Reporting Hours

Finally, any entity that accesses the Registry, regardless whether it is paying for access,
must submit minimal identifying information to the operator of the Registry. This basic
information includes the name, address, and telephone number of the entity; a contact person for
the organization; and information about the manner of payment. The entity also must submit a
list of the area codes for which it requests information and certify that it is accessing the Registry
solely to comply with the provisions of the TSR. If the entity is accessing the Registry on behalf
of other seller or telemarketer clients, it has to submit basic identifying information about those
clients, a list of the area codes for which it requests information on their behalf, and a
certification that the clients are accessing the Registry solely to comply with the TSR.
As it has since the Commission’s initial proposal to implement user fees under the TSR,
FTC staff estimates that affected entities will require no more than two minutes for each entity to
submit this basic information, and anticipates that each entity will have to submit the information
annually. 62 Based on the number of entities accessing the Registry that are subject to the TSR,
this requirement will result in 270 burden hours (8,110 entities x 2 minutes per entity). In
addition, FTC staff continues to estimate that up to one-half of those entities may need, during
the course of their annual period, to submit their basic identifying information more than once in
order to obtain additional area codes of data. Thus, this would result in an additional 135 burden
hours. Accordingly, accessing the Registry will impose a total burden of approximately 405
hours per year.
Cumulative of the foregoing components, disclosure burden for new and existing
telemarketing entities, including those making debt relief and prerecorded calls, 63 is 1,304,781
hours (865,333 [pre-sale disclosures] + 411,169 [general sales disclosures] + 28,279 [specific
sales disclosures]). Thus, the total recordkeeping, disclosure, and reporting burden is 1,320,796
hours (15,610 +1,304,781 + 405).

62

See 67 Fed. Reg. 37,366 (May 29, 2002). The two-minute estimate likely is conservative. The OMB regulation
defining “information” under the PRA generally excludes disclosures that require persons to provide facts necessary
simply to identify themselves, e.g., the respondent, the respondent’s address, and a description of the information the
respondent seeks in detail sufficient to facilitate the request. See 5 C.F.R. 1320.3(h)(1).
63

The required opt-out disclosure for all prerecorded calls mandated by the 2008 amendments would not require
any material time expenditure, and arguably less time than a pre-existing and now identical FCC disclosure
requirement. In any event, because the “opt-out” disclosure applies only to prerecorded calls, which are fully
automated, no additional manpower hours would be expended in its electronic delivery.

15

Estimated Annual Labor Cost: $16,346,768
(a) Recordkeeping Labor Cost
Assuming a cumulative burden of 7,500 hours a year to set up compliant recordkeeping
systems for new telemarketing entities (75 new entrants/year x 100 hours each), and applying to
that a skilled labor rate of $25.59/hour, 64 labor costs would approximate $191,925 yearly for all
new telemarketing entities. As indicated above, staff estimates that existing telemarketing
entities require 8,110 hours, cumulatively, to maintain compliance with the TSR’s recordkeeping
provisions. Applying a clerical wage rate of $14.07/hour, 65 recordkeeping maintenance for
existing telemarketing entities would amount to an annual cost of approximately $114,108.
Thus, the estimated labor cost for recordkeeping associated with the TSR for both new and
existing telemarketing entities, including prerecorded and debt relief calls, is $306,033.
(b) Disclosure Labor Cost
The estimated annual labor cost for disclosures for all telemarketing entities is
$16,035,758. This total is the product of applying an assumed hourly wage rate of $12.29 66 to
the earlier stated estimate of 1,304,781 hours pertaining to the pre-sale, general and specific
disclosures.
(c) Reporting Labor Cost
Estimated labor cost supplying basic identifying information to the Registry operator is
$4,977 (405 hours x $12.29 per hour).
Thus, cumulatively for both new and existing telemarketing entities, including
prerecorded and debt relief calls, total labor costs are $16,346,768 ($306,033 (recordkeeping) +
$16,035,758 (disclosure) + $4,977 (reporting)).

64

This figure is derived from the mean hourly wage shown for “Computer Support Specialist.” “Occupational
Employment and Wages–May 2012,” Bureau of Labor Statistics, U.S. Department of Labor, released March 2013,
Table 1 (“National employment and wage data from the Occupational Employment Statistics survey by occupation,
May 2011”), available at http://www.bls.gov/news.release/pdf/ocwage.pdf.

65

This figure is derived from the mean hourly wage of shown for Office Clerks, General. See id.

66

This figure is derived from the mean hourly wage shown for Telemarketers. See supra note 64.

16

(13)

Estimated Annual Non-Labor Cost: $5,102,712 67
(a) Recordkeeping

Staff believes that the capital and start-up costs associated with the TSR’s recordkeeping
provisions are de minimis. They mandate that companies maintain records, but not in any
particular form. While the requirements necessitate that affected entities have a means of
storage, industry members should have that already for business purposes independent 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 may need some storage media such as file folders, computer back-up
tapes, or paper in order to comply with the Rule’s recordkeeping requirements. Although staff
believes that most affected entities would maintain the required records in the ordinary course of
business, staff estimates that the approximately 8,110 telemarketing entities subject to the Rule
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 for both new and existing telemarketing
entities, including those making prerecorded calls, of $405,500.
(b) Disclosure
Applying the disclosure estimates discussed above, and totaling 1,304,781 hours, to a
retained estimated commercial calling rate of 6 cents per minute ($3.60 per hour), amounts to
$4,697,212 in phone-related costs. 68
Staff believes that the estimated 1,242 inbound telemarketing entities choosing to comply
with the Rule through written disclosures incur no additional capital or operating expenses as a
result of the Rule’s requirements because they are likely to provide written information to
prospective customers in the ordinary course of business. Adding the required disclosures to that
written information likely requires no supplemental non-labor expenditures.
Thus, cumulatively for both new and existing telemarketing entities, including
prerecorded and debt relief calls, total capital and/or other non-labor costs are $5,102,712
($405,500 (office supplies) + $4,697,212 (telephone charges)).

67

This figure includes a corrected estimate for telephone charges tied to disclosure costs. The associated Federal
Register Notices had overstated this estimate by mistakenly including within phone-related disclosure hours the
separate Registry reporting obligations for sellers and telemarketers in order to gain access to the National Do Not
Call Registry. For the reporting obligations, however, entities complete a web-based form, rather than incur phone
time, in submitting information about themselves to the Registry. Any non-labor costs associated with the web-based
form completion would be de minimis.
68

Staff believes that remaining non-labor costs would be incurred largely by affected entities in the ordinary course
of business and would not materially exceed those ordinary costs. Regarding this figure, see supra note 67.

17

(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. 69 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. 70 Accordingly, the Commission amended the
Rule to comply with that directive.
Notwithstanding the recent access fee reduction, staff estimates 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 access fee
collections.
(15)

Adjustments

The instant cumulative burden estimate of 1,320,796 hours is reduced from the FTC’s
prior cleared burden estimate in 2010 of 1,677,722. Estimated annual non-labor cost is reduced
from $6,561,101 to $5,102,712. 71 These reductions are largely attributable to staff’s reduced
estimates for the number of telemarketing entities subject to the TSR, based on updated National
Registry data.
(16)

Statistical Use of Information
There are no plans to publish any information for statistical use.

(17)

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

69

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. 45,134 (July 31, 2003); 69 Fed. Reg. 45,580 (July 30, 2004); 70
Fed. Reg. 43,273 (July 27, 2005); 71 Fed. Reg. 43,040 (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. 43,354 (July 25, 2008).
70

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.
71

In ROCIS, due to rounding differences attributable to “cost per response” (as opposed to cost per hour), the nonlabor cost total is $5,102,718.

18

(18)

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

19