Office of the Secretary

UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580

 
 

March 14, 2003

 

Robert Corn-Revere
Ronald G. London
Paul A. Werner III
Counsel for the American Teleservices Association
Hogan & Hartson
555 13th Street, N.W.
Washington, DC 20004

Re: Request for Stay (filed February 27, 2003)

Dear Messrs. Corn-Revere, London, and Werner:

This is in response to the above-referenced Request submitted by the American Teleservices Association to the Federal Trade Commission asking that the Commission "stay the March 31, 2003, effective date of the Amended Telemarketing Sales Rule ("Amended TSR"), 16 C.F.R. §§ 310.4 et seq., pending judicial review of the Amended TSR," or, in the alternative, "postpone the March 31, 2003, effective date until the FCC has finished reviewing its regulations under the Telephone Consumer Protection Act ("TCPA")."

The Commission has considered the reasons and evidence advanced to support the assertion that a March 31, 2003, effective date for compliance with the abandoned call provision and its safe harbor would place an undue burden on telemarketers who lack the requisite equipment or software to (1) play an outgoing prerecorded message, (2) allow each telemarketing call to ring for at least four (4) rings or fifteen (15) seconds, and (3) effectuate necessary recordkeeping. The Commission has also evaluated the assertion that § 310.4(b)(4)(iii) may conflict with FCC regulations under the TCPA.

As a preliminary matter, the Commission notes that (following a nearly three-year long rule review and rulemaking proceeding) it announced the amendment of its Telemarketing Sales Rule and posted the amended Rule text and Statement of Basis and Purpose on its web site on December 18, 2002. Publication of the amended TSR in the Federal Register occurred more than a month later, on January 29, 2003. Thus, the amended Rule became public more than 130 days before the announced effective date.

The Commission is persuaded that telemarketers may be unable, despite their best efforts, to comply with the recording requirement of the call abandonment safe harbor provision, § 310.4(b)(4)(iii), which requires that "whenever a sales representative is not available to speak with the person answering the call within two (2) seconds after the person's completed greeting,

the seller or telemarketer promptly plays a recorded message that states the name and telephone number of the seller on whose behalf the call was placed." The Commission accepts the proposition that predictive dialers are an important feature of viable telemarketing operations, and that the use of this equipment may inevitably result in some abandoned calls. Therefore, the ability to meet all the requirements of the safe harbor is critically important. The Commission also believes that companies currently lacking the necessary recording technology as part of their predictive dialer mechanism may have difficulty meeting the March 31, 2003, deadline. Therefore, the Commission has determined that it will stay the date by which it will require full compliance with the call recording provision of the abandoned call safe harbor, § 310.4(b)(4)(iii), until October 1, 2003. The Commission also will partially stay, until October 1, 2003, the date by which it will require full compliance with § 310.4(b)(4)(iv), to the extent it would require record keeping to document the use of a recorded message in instances of call abandonment. Staying these provisions will provide ample time for all telemarketers who use predictive dialers to obtain, install and test the necessary hardware or software, and should alleviate concerns that predictive dialer manufacturers might not have adequate supplies of the necessary products by March 31, 2003.

The Commission believes the Petitioner is in error in its assertion that the recording provision of the TSR's call abandonment safe harbor conflicts with the FCC's TCPA regulation, 47 C.F.R. 64.1200. The FCC regulation prohibits the initiation of "any telephone call to any residential telephone line using an artificial or prerecorded voice to deliver a message . . ." but expressly excludes from the scope of this prohibition any "call or message, by or on behalf of, a caller that is made for a commercial purpose but does not include the transmission of any unsolicited advertisement." 47 C.F.R. § 64.1200(c)(2)(emphasis supplied). The term "unsolicited advertisement," in turn, is defined as "any material advertising the commercial availability or quality of any property, goods, or services which is transmitted to any person without that person's prior express invitation or permission." 47 C.F.R. § 64.1200(f)(5). Thus, a recorded message that merely identifies the seller and provides the seller's telephone number does not violate the FCC's regulation.(1) It also fulfills the Amended TSR's call abandonment safe harbor requirement.

As you are aware, the FCC is currently reviewing its TCPA regulations. Moreover, Section 3 of the Do-Not-Call Implementation Act, signed by President Bush on March 11, 2003, requires the FCC to issue a final rule that "maximize[s] consistency with the rule promulgated by the Federal Trade Commission" within 180 days of enactment of that legislation. The stay will allow time for clarification of the interplay between the TSR and the FCC regulation on this point.(2)

The Commission finds that there is insufficient reason to stay the effective date of the abandoned call prohibition, § 310.4(b)(1)(iv), or the other safe harbor requirements (§§ 310.4(b)(4)(i), (ii), or (iv)(3)). The Commission believes that it will be possible for telemarketers using extant equipment and software to comply with the three remaining safe harbor provisions, specifically, that sellers or telemarketers: 1) employ technology to ensure abandonment of no more that three (3) percent of all calls answered by a person, measured per day per calling campaign; 2) for each telemarketing call placed, allow the telephone to ring for at least fifteen (15) seconds or four (4) rings before disconnecting an unanswered call; and 3) retain records establishing compliance with the other safe harbor provisions.

Moreover, the Commission is not persuaded by the Petitioner's arguments that the effective date of the amended TSR should be stayed because the Petitioner will likely prevail in its court challenge to the Rule based on assertions: that the "do-not-call" registry provision, § 310.4(b)(1)(iii)(B), is unconstitutional; that the call abandonment provisions, §§310.4(b)(1)(iv) & (b)(4), are precluded by an exclusive grant to the FCC of authority to regulate predictive dialers; or that the Commission's adoption of the amended Rule was arbitrary and capricious.

By direction of the Commission.

Donald S. Clark
Secretary

1. In fact, the FCC's current regulation requires that in situations where recorded messages are permitted, they "shall at the beginning of the message state clearly the identity of the business, individual or other entity initiating the call and . . . state clearly the telephone number or address of such business, other entity, or individual." 47 C.F.R. § 64.1200(d).

2. Similarly, the time necessary to implement the "do-not-call" registry provisions of the revised TSR will allow time for clarification of the interplay between the TSR and FCC regulations pursuant to the TCPA and the Do-Not-Call Implementation Act.

3. Section 310.4(b)(4)(iv) is not stayed to the extent that it requires record keeping to document compliance with §§  310.4(b)(4)(i) or (ii).