43842 federal register / vol. 60, no. 163 / wednesday, august 23

43842 Federal Register / Vol. 60, No. 163 / Wednesday, August 23, 1995 / Rules and Regulations

1 15 U.S.C. 6101–08.2 60 FR 8313–8333 (February 14, 1995).3 H.R. Rep. No. 20, 103rd Cong., 1st Sess.; S. Rep.

No. 80, 103rd Cong., 1st Sess. (hereinafter referredto as ‘‘House Report’’ and ‘‘Senate Report,’’respectively).

4 A list of the commenters to both the NPR andthe Revised Notice of Proposed Rulemaking(‘‘RNPRM’’), including the acronyms used toidentify each commenter in this Statement, isattached as an Appendix.

5 The selected participants were: AARP, ATA,ATFA, APAC, ANA, DMA, DSA - Nev., DSA, EMA,ISA, ICTA, MPA, Monex, NAAG, NACAA, NAPA,NCL, NRF, PMAA, and USPS.

6 References to the conference transcript are citedas ‘‘Tr.’’ followed by the appropriate pagedesignation. References to comments are cited as‘‘[acronym of commenter] at [page number].’’Unless otherwise indicated, all comment referencesin this Statement are to the comments received inresponse to the RNPRM.

7 60 FR 30406–30428 (June 8, 1995).8 The FTC gopher server address is

CONSUMER.FTC.GOV 2416. For World Wide Webaccess, the URL is GOPHER://CONSUMER.FTC.GOV:2416.

FEDERAL TRADE COMMISSION

16 CFR Part 310

Telemarketing Sales Rule

AGENCY: Federal Trade Commission.ACTION: Statement of basis and purposeand final rule.

SUMMARY: The Federal TradeCommission (‘‘Commission’’ or ‘‘FTC’’)issues its Statement of Basis andPurpose and Final Rule pursuant to thetelemarketing and Consumer Fraud andAbuse Prevention Act (‘‘TelemarketingAct’’ or the ‘‘Act’’). Section 3 of the Actdirects the FTC to prescribe regulations,within 365 days of enactment of the Act,prohibiting deceptive and abusivetelemarketing acts or practices.EFFECTIVE DATE: The Rule will becomeeffective December 31, 1995.ADDRESSES: Requests for copies of theRule and the Statement of Basis andPurpose should be sent to PublicReference Branch, Room 130, FederalTrade Commission, 6th Street andPennsylvania Avenue, NW.,Washington, DC 20580.FOR FURTHER INFORMATION CONTACT:Division of Marketing Practices: JudithM. Nixon (202) 326–3173, David M.Torok (202) 326–3140, or Carole I.Danielson (202) 326–3115, FederalTrade Commission, Washington, DC20580.SUPPLEMENTARY INFORMATION: The Rule,in connection with any telemarketingtransaction: (1) Requires clear andconspicuous disclosures of specifiedmaterial information, orally or inwriting, before a customer pays forgoods or services offered; (2) prohibitsmisrepresenting, directly or byimplication, specified materialinformation relating to the goods orservices that are the subject of a salesoffer, as well as any other materialaspects of a telemarketing transaction;(3) requires express verifiableauthorization before submitting forpayment a check, draft, or other form ofnegotiable paper drawn on a person’saccount; (4) prohibits false ormisleading statements to inducepayment for goods or services; (5)prohibits any person from assisting andfacilitating certain deceptive or abusivetelemarketing acts or practices; (6)prohibits credit card laundering; (7)prohibits specified abusive acts orpractices; (8) imposes calling timerestrictions; (9) requires specifiedinformation to be disclosed, truthfully,promptly, and in a clear andconspicuous manner, in an outboundtelephone call; (10) requires that

specified records be kept; and (11)specifies certain acts or practices thatare exempt from the Rule.

Statement of Basis and Purpose

I. IntroductionOn August 16, 1994, the President

signed into law the Telemarketing Act,1which directs the Commission toprescribe regulations, within 365 daysof enactment of the Act, prohibitingdeceptive and abusive telemarketingacts or practices. The first step inmeeting the Congressional directive wasto publish a Notice of ProposedRulemaking (‘‘NPR’’) in the FederalRegister.2 The provisions of the initiallyproposed Rule published in the NPRwere based on the legislative history ofthe Telemarketing Act,3 on theCommission’s enforcement experience,and on information informally obtainedfrom law enforcement and thetelemarketing industry. The NPR gaveinterested persons 45 days to commenton the proposal. The comment periodon the NPR closed on March 31, 1995.In response to the NPR, the Commissionreceived over 350 comments fromindustry, law enforcement, consumerrepresentatives, individual consumers,and businesses.4

From April 18 through 20, 1995,Commission staff conducted a publicworkshop conference in Chicago,Illinois, to discuss the issues raised inthe NPR and the comments received inresponse to the NPR. Twentyassociations or individual businesseswere selected to engage in a roundtablediscussion at the conference.5 Theseparticipants were selected based upon(1) their interest in the rulemakingbased on the likely effect the Ruleultimately will have on them or theirmembers, and (2) their ability torepresent others with similar interests.Participants discussed key aspects of theinitially proposed Rule, addressed eachother’s comments and questions, andresponded to questions fromCommission staff. The conference wasopen to the public, and more than 150observers attended. Time was reservedfor oral comments from members of the

public each day, and 37 persons spokeduring the course of the three-dayconference. The entire proceeding wastranscribed, and the transcript wasplaced on the public record.6

On May 3, 1995, in an open meeting,Commission staff briefed all theCommissioners about the rulemakingprocess, the issues raised in the writtencomments and the public workshopconference, and outlined possibleapproaches to address the issuescommenters raised. The briefing wastranscribed, and the transcript wasplaced on the public record.

On June 8, 1995, the Commissionpublished in the Federal Register aRevised Notice of Proposed Rulemaking(‘‘RNPRM’’) 7 for additional publiccomment. The revised proposed Rulepublished in the RNPRM reflectedcontinued consideration of the Act’slegislative history, the writtencomments received in response to theNPR, and information learned at theworkshop conference. The publiccomment period on the RNPRM closedon June 30, 1995. The Commissionreceived over 350 comments to theRNPRM from interested parties,including industry, law enforcement,consumer representatives, individualconsumers, and businesses.

Individual consumers whocommented favored restrictingtelemarketing; some even urged theCommission to prohibit telemarketingcompletely. Industry and businesscomments were generally positive aboutthe revised proposed Rule. Lawenforcement and consumer groups,however, expressed concern that manyof the provisions in the initiallyproposed Rule, which, they asserted,provided consumers with much neededprotection, had been eliminated fromthe revised proposed Rule.

The entire public record to date,including the comments, the publicworkshop conference transcript, and theCommission open meeting transcript isavailable on CD–ROM. In addition, thepublic record up to, but not includingthe RNPRM and the comments receivedin response to the RNPRM, was placedon the Internet.8

43843Federal Register / Vol. 60, No. 163 / Wednesday, August 23, 1995 / Rules and Regulations

9 See, e.g., initial comments: GHAA at 3; AT&Tat 6–13; AmEx at 3; ABA at 1; BOB at 1; ASAE at2; SCIC at 7.

10 15 U.S.C. 6105(a).

11 15 U.S.C. 45(a)(2).

12 Section 18(f)(3) of the FTC Act, 15 U.S.C.57(f)(3), describes ‘‘savings associations as definedin section 3 of the Federal Deposit Insurance Act,’’12 U.S.C. 1811 et seq.

13 Section 18(f)(4) of the FTC Act, 15 U.S.C.57(f)(4), describes ‘‘Federal credit unions undersections 120 and 206 of the Federal Credit UnionAct (12 U.S.C. 1766 and 1786).’’

14 15 U.S.C. 45(a)(2).15 See 15 U.S.C. 44.

16 See Section 2 of the McCarran-Ferguson Act, 15U.S.C. 1012(b).

17 See, e.g., CUNA at 3–4.18 As noted in the RNPRM, Sections 3 (d) and (e)

of the Telemarketing Act, 15 U.S.C. 6102 (d) and(e), exclude from Rule coverage any of the followingpersons: a broker, dealer, transfer agent, municipalsecurities dealer, municipal securities broker,government securities broker, government securitiesdealer (as those terms are defined in Section 3(a)of the Securities and Exchange Act of 1934, 15U.S.C. 78c(a)), an investment adviser (as that termis defined in Section 202(a)(11) of the InvestmentAdvisers Act of 1940, 15 U.S.C. 80b–2(a)(11)), aninvestment company [as that term is defined insection 3(a) of the Investment Company Act of1940, 15 U.S.C. 80a–3(a)), any individual associatedwith those persons, or any persons described insection 6(f)(1) of the Commodity Exchange Act, 7U.S.C. 8, 9, 15, 13b, 9a.

19 See, e.g., Chase at 1; AT&T at 5–6; BOA at 1;IBAA at 1; Consortium at 2; ATFA at 3. See, e.g.,initial comments: ABA at 1; Advanta at 1; Chase at2; Citicorp at 3; NFN at 2.

20 15 U.S.C. 45(a)(2); FTC v. Miller, 549 F.2d 452(7th Cir. 1977).

21 15 U.S.C. 44; Community Blood Bank v. FTC,405 F.2d 1011 (8th Cir. 1969).

22 See, e.g., Official Airlines Guides, Inc. v. FTC,630 F.2d 920 (2d Cir. 1980); FTC v. Miller, 549 F.2d452 (7th Cir. 1977).

23 AARP at 12; CFA at 5–6; NCL at 12–13; USPSat 8.

24 See, e.g., Thompson Medical Co., 104 F.T.C.648, 797–98 (1984); The Kroger Co., 98 F.T.C. 639,760 (1981); Statement of Enforcement Policy, ‘‘Clearand Conspicuous Disclosures in TelevisionAdvertising,’’ Trade Regulation Reporter (CCH) ¶7569.09 (Oct. 21, 1970); Statement of EnforcementPolicy, ‘‘Requirements Concerning Clear andConspicuous Disclosures in Foreign LanguageAdvertising and Sales Materials,’’ 16 CFR 14.9.

II. Discussion of the Rule

A. Section 310.1: Scope of theRegulations

Section 310.1 of the Final Rule statesthat this part implements theTelemarketing Act.

The Commission received a numberof comments on the initially proposedRule asking that the Commissionexpressly exempt those entities that arenot subject to the Federal TradeCommission Act (‘‘FTC Act’’), 15 U.S.C.41 et seq.9 In response to thosecomments, the revised proposed Ruleadded language to this Section that wasintended to clarify that the Rule doesnot apply to any activity outside thejurisdiction of the FTC Act. In thatregard, the Commission quoted theTelemarketing Act as follows:

[N]o activity which is outside thejurisdiction of (the FTC) Act shall be affectedby this Act.10

After reviewing the record in thisrulemaking, the Commission hasdecided to delete the additionallanguage from the Final Rule. TheTelemarketing Act makes clear that theRule does not apply to any activityexcluded from the Commission’sjurisdiction; thus, restating this in theRule is unnecessary. By deleting thislanguage, the Commission does notintend to expand or contract itsjurisdiction or the scope of the Rule’scoverage. The Commission’sjurisdictional limitations are set forth insection 5(a)(2) of the FTC Act; 11

accordingly, the Rule does not apply to:banks, savings and loan institutions

described in section 18(f)(3), 12 Federal creditunions described in section 18(f)(4), 13

common carriers subject to the Acts toregulate commerce, air carriers and foreignair carriers subject to the Federal AviationAct of 1958, and persons, partnerships, orcorporations insofar as they are subject to thePackers and Stockyards Act, 1921, asamended, except as provided in section406(b) of said Act.14

In addition, the Rule does not applyto any entity that is not ‘‘organized tocarry on business for its own profit orthat of its members.’’ 15 Finally, the Rule

does not apply to the business ofinsurance to the extent that suchbusiness is regulated by State law.16

Other commenters 17 requested thatthe Final Rule expressly exclude fromcoverage those investment entitieswhich were expressly excluded underthe Telemarketing Act.18 Again, theTelemarketing Act clearly excludes suchentities and the Rule need not reiteratethe statutory exclusion.

The Commission also receivedcomments expressing differing views onwhether parties acting on behalf oforganizations exempt under section 5 ofthe FTC Act should be expressly exemptfrom the Rule. Some commenters urgedthe Commission to exclude agents ofexempt organizations from Rulecoverage.19 The Commission does notsee a need to provide broadly for theexemption of agents in the Rule. TheFTC Act itself establishes exemptionsfrom its coverage, and theTelemarketing Act provides thatauthority under the Rule may be nobroader than under the FTC Act. Thus,for example, banks and airlines wouldnot be subject to the Final Rule, becausethey are exempt under section 5 of theFTC Act.20 Similarly, section 4 of theFTC Act exempts corporations that arenot acting for their profit or that of theirmembers.21 However, a nonbankcompany that contracts with a bank toprovide services on behalf of the bank,and a non-airline company thatcontracts with an airline to provideservices on behalf of the airline, are notexempt from the FTC Act.22 Similarly, acompany that is acting for profit wouldbe subject to the FTC Act even when

providing services to a nonprofitcorporation. The Commission is notaware of any reason why the Final Ruleshould create a special exemption forsuch companies where the FTC Actdoes not do so. Accordingly, the FinalRule does not include special provisionsregarding exemptions of parties actingon behalf of exempt organizations;where such a company would be subjectto the FTC Act, it would be subject tothe Final Rule as well.

B. Section 310.2: Definitions

The revised proposed Rule definedthe following terms: ‘‘acquirer,’’‘‘attorney general,’’ ‘‘cardholder,’’‘‘Commission,’’ ‘‘credit,’’ ‘‘credit card,’’‘‘credit card sales draft,’’ ‘‘credit cardsystem,’’ ‘‘customer,’’ ‘‘investmentopportunity,’’ ‘‘material,’’ ‘‘merchant,’’‘‘merchant agreement,’’ ‘‘outboundtelephone call,’’ ‘‘person,’’ ‘‘prize,’’‘‘prize promotion,’’ ‘‘seller,’’ ‘‘state,’’‘‘telemarketer,’’ and ‘‘telemarketing.’’Only the terms ‘‘investmentopportunity,’’ ‘‘material,’’ ‘‘seller,’’ and‘‘telemarketing’’ elicited muchcomment. Additionally, somecommenters called for a definition ofthe term ‘‘clear and conspicuous,’’ asthat term is used in Sections 310.3(a)(1)and 310.4(d) of the revised proposedRule.

In the Final Rule, the Commission hasmodified the definitions of ‘‘investmentopportunity’’ and ‘‘seller.’’ All otherdefinitions have been adopted in theFinal Rule without change from therevised proposed Rule. The Commissionalso has determined that the term‘‘telemarketing’’ needs no furthermodification.

The Commission considered, butrejects, comments calling for a furtherdefinition of the phrase ‘‘clear andconspicuous.’’ 23 The Commissionbelieves it is unnecessary to define theterm ‘‘clear and conspicuous’’ in theRule because the concept is well-developed in Commission case law andpolicy statements.24 Moreover, theCommission believes that mandatingrigid ‘‘clear and conspicuous’’ criteriawould be inconsistent with the goal ofallowing businesses maximumflexibility as long as customers receive


25 15 U.S.C. 6106(4).26 See, e.g., Chase at 2.27 See House Report at 11; Senate Report at 8.28 The Telemarketing Act and the Final Rule

require catalogs to include multiple pages of writtendescriptions or illustrations of the goods or servicesbeing offered for sale, to include a business addressof the seller, and to be issued not less frequentlythan once a year. 29 NASAA at 1.

30 Rollins at 1–2.31 As previously stated in discussing the

definition of ‘‘telemarketing,’’ the Commissionintends that a ‘‘prize,’’ as that term is defined in§ 310.2(p), is a good or service for purposes of thisRule.

32 NYSCPB at 3–4.33 Id.

the material information they need tomake purchasing decisions.

1. Section 310.2(u): Definition of‘‘Telemarketing’’

The definition of ‘‘telemarketing’’ setsthe parameters of the Final Rule. Thedefinition in the Final Rule reflects thestatutory definition set forth byCongress in section 7(4) of theTelemarketing Act.25

Some commenters requested that theCommission exempt calls made byconsumers in response to writtenadvertisements and promotionalmaterials sent by financial institutionsor their agents that comply with thedisclosure requirements in the Truth inLending Act (‘‘TILA’’), 15 U.S.C. 1601 etseq., and its implementing Regulation Z(‘‘Reg. Z’’), 12 CFR part 226.26 TheCommission has determined that such abroad exemption is inappropriate. TheTILA and Reg. Z disclosures for creditand charge card solicitations, 15 U.S.C.1631–1632; 12 CFR 226.5–226.5a, relateto specific costs and terms of credit, butdo not contain many of the otherprotections that would be available toconsumers under §§ 310.3 and 310.4 ofthis Rule. The Commissionacknowledges, however, that certaincredit disclosures required undersections 1631–1632 of the TILA and§§ 226.5–226.5a of Reg. Z are sufficientfor compliance with some of the FinalRule’s affirmative disclosures set forthin § 310.3(a)(1). Therefore, the FinalRule makes clear that compliance withthe TILA and Reg. Z will suffice forpurposes of compliance with§ 310.3(a)(1)(i) of the Rule.

The Commission intends that thephrase ‘‘goods or services’’ contained inthe definition of ‘‘telemarketing’’ coverany tangible and intangible goods orservices including, but not limited to,leases, licenses, or memberships. Prizesand awards are also included as ‘‘goodsor services’’ under the definition of‘‘telemarketing.’’ This is consistent withthe legislative history of theTelemarketing Act 27 and reflects theCommission’s enforcement experiencein this area.

The Telemarketing Act and the FinalRule exempt from the definition oftelemarketing all solicitations of salesthrough the mailing of a catalog,28 whenthe person making the solicitation does

not call customers but only receivescalls from customers in response to thecatalog and only takes orders duringthose calls, without further solicitation.The Commission has determined thatthe term ‘‘without further solicitation’’requires interpretation. Appliedliterally, the term could bar conduct thatwould not be deceptive or abusive,including asking catalog customers whohave placed orders whether they wish tobuy another item. There is no reason tosuppose that Congress intended such aresult. The Final Rule permits that,when catalog sellers receive calls fromcustomers, the person taking the ordermay provide further information to thecustomer about, or may try to sell, anyother item included in the same catalogwhich prompted the customer’s call, orin a substantially similar catalog,without losing the exemption from thedefinition of ‘‘telemarketing.’’ TheCommission’s experience in the area ofcatalog sales suggests that thisclarification will burden neitherlegitimate catalog sellers nor exposetheir customers to a significant risk ofthe type of deception or abuse that theFinal Rule is intended to address.

2. Section 310.2(j): Definition of‘‘Investment Opportunity’’

Section 310.2(j) of the Final Ruledefines ‘‘investment opportunity’’ asanything, ‘‘tangible or intangible, that isoffered, offered for sale, sold, or tradedbased wholly or in part onrepresentations, either expressed orimplied, about past, present, or futureincome, profit, or appreciation.’’ TheRNPRM clarified that the definition ofthe term ‘‘investment opportunity’’ didnot include sales of franchises subject tothe Commission’s Franchise Rule, 16CFR part 436. To clarify further that theRule does not cover such franchisesales, the Commission has deleted thatlanguage from the Final Rule’sdefinition of ‘‘investment opportunity’’and has created an express exemptionfor such transactions in § 310.6(b).

3. Sections 310.2(r) and (t): Definitionsof ‘‘Seller’’ and ‘‘Telemarketer’’

In response to a suggestion from acommenter,29 the Commission hasmodified the definition of ‘‘seller’’ toclarify that the term includes not onlypersons who, in connection with atelemarketing transaction, provide oroffer to provide goods and services tothe customer in exchange forconsideration, but also persons who, inconnection with a telemarketingtransaction, arrange for others toprovide goods or services to the

customer. The Commission made thischange in order to clarify that the Rule’scoverage cannot be avoided bystructuring a sale so that someone otherthan the seller actually provides thegoods or services directly to thecustomer.

Another commenter requestedclarification of the definition of ‘‘seller’’with respect to its application todiversified companies or divisionswithin one parent organization.30 TheCommission intends that distinctcorporate divisions may be consideredseparate ‘‘sellers.’’ The determination asto whether distinct divisions of a singlecorporate organization will be treated asseparate sellers will depend on suchfactors as: (1) whether there existssubstantial diversity between theoperational structure of the corporateorganization and the division that isselling the goods or services that are thesubject of the offer, or between thatdivision and the other divisions of thecorporation; or (2) whether the nature ortype of goods or services offered by thedivision are substantially different fromthose offered by other divisions of thecorporation or the corporateorganization as a whole.

Section 310.2(t) of the Final Ruledefines ‘‘telemarketer’’ as ‘‘any personwho, in connection with telemarketing,initiates or receives telephone calls to orfrom a customer.’’ The Commissionintends that the term ‘‘telemarketer’’apply to persons making a telephonecall to, or receiving a telephone callfrom, a customer in connection with thepurchase of goods or services.31 It doesnot include persons making or receivingcustomer service calls or similartangential telephone contacts, unless asales offer is made or accepted duringsuch calls.

One commenter asserted that sellersand telemarketers should be held jointlyliable under the Rule for the actions ofthe other.32 NYSCPB stated that, absentlegislative history indicating that jointand several liability is contrary to theintent of Congress, the Commissionshould apply joint and severalliability.33 NYSCPB pointed out that inmany instances a telemarketer engagingin fraud may abscond before lawenforcers can move against it. NYSCPBexpressed concern that, in such cases,State law enforcers might not be able tomove against others involved in the


34 E.g., Citicorp at 2; VISA at 2–4.35 15 U.S.C. 6102(a)(2).36 See generally House Report at 2; Senate Report

at 2, 10.37 15 U.S.C. 1603(e).38 15 U.S.C. 1603(k).

39 60 FR at 30410.40 See, e.g., NRF at 5–8; IBM at 11; CC at 1.

deceptive telemarketing scheme whoremain within their reach.

The Commission declines to readjoint and several liability for sellers andtelemarketers into the TelemarketingAct. The assisting and facilitatingprovisions in § 310.3(b) of the Rule moreappropriately provide a basis for anaction by State enforcers in the situationdescribed by NYSCPB.

4. Sections 310.2 (a), (c), (e), (f), (g), (h),(l), and (m): Credit-Related Definitions

The revised proposed Rule definedvarious credit-related terms that comeinto play primarily in § 310.3(c), whichaddresses credit card laundering. Theseterms are: ‘‘Acquirer,’’ ‘‘cardholder,’’‘‘credit,’’ ‘‘credit card,’’ ‘‘credit cardsales draft,’’ ‘‘credit card system,’’‘‘merchant,’’ and ‘‘merchantagreement.’’ The Commission hasadopted these definitions withoutchange in the Final Rule. No furtherdiscussion is necessary in thisStatement regarding the definitions of‘‘acquirer,’’ ‘‘cardholder,’’ ‘‘merchant,’’and ‘‘merchant agreement.’’

Section 310.2(e) defines ‘‘credit’’ tomean ‘‘the right granted by a creditor toa debtor to defer payment of debt or toincur debt and defer its payment.’’ Thisdefinition delineates the scope of§ 310.3(c), which prohibits credit cardlaundering. Several commenters urgedthe Commission to extend the scope of§ 310.3(c) to include other paymentdevices such as debit cards because theybelieve such devices can be launderedas easily as credit card transactions.34

Based on the language of theTelemarketing Act 35 and its legislativehistory,36 however, the Commissionbelieves that Congress meant to prohibitcredit card laundering predicated uponthe definition of ‘‘credit’’ usedthroughout the consumer credit statutes,and did not contemplate coverage of allelectronic payment systems. Thereforethe definition of ‘‘credit’’ tracks thestatutory definition of ‘‘credit’’ underthe TILA.37

Section 310.3(f) of the Final Ruledefines ‘‘credit card’’ as ‘‘any card,plate, coupon book, or other creditdevice existing for the purpose ofobtaining money, property, labor, orservices on credit.’’ This definition isidentical to the statutory definition of‘‘credit card’’ contained in the TILA.38

Again, the Commission has defined‘‘credit card’’ as it is used throughout

the consumer credit statutes forconsistency and to clarify that § 310.3(c)does not include other payment devices.

Section 310.2(g) defines the term‘‘credit card sales draft’’ as ‘‘any recordor evidence of a credit cardtransaction.’’ This definition is designedto be flexible enough to anticipate futuretechnological changes in how creditcard transactions are processed andhandled and, therefore, does not refer tospecific forms of records. Thisdefinition is intended to embody thebroadest possible range ofrecordkeeping formats that will comewithin the scope of the Rule.

Section 310.2(h) of the Final Ruledefines ‘‘credit card system’’ as ‘‘anymethod or procedure used to processcredit card transactions involving creditcards issued or licensed by the operatorof that system.’’ This definition does notinclude any in-house ‘‘system’’ that aseller or telemarketer may put in place.Rather, the Commission intends thatthis definition include only a credit cardsystem to process credit cardtransactions involving credit cardsissued or licensed by the credit cardsystem operator.

5. Section 310.2(k): Definition of‘‘Material’’

The Final Rule states that the term‘‘material’’ means ‘‘likely to affect aperson’s choice of, or conduct regarding,goods or services.’’ In the RNPRM, theCommission responded to commenters’requests for clarification of the term‘‘material’’ by stating that it intendedthat term to comport with theCommission’s Deception Statement andestablished Commission precedent.39

Cliffdale Assocs., 103 F.T.C. 110 (1984);Thompson Medical Co., 104 F.T.C. 648(1984), aff’d, 791 F.2d 189 (D.C. Cir.1986), cert. denied, 479 U.S. 1086(1987); and the Commission’s DeceptionStatement attached as an appendix toCliffdale Associates. Nonetheless,several commenters on the revisedproposed Rule requested additionalclarification.40 The Commission hasconsidered these requests, but believesfurther clarification is unnecessarygiven the comprehensive guidance inthe cited case law and policy statement.

6. Sections 310.2 (p) and (q): Definitionsof ‘‘Prize’’ and ‘‘Prize Promotion’’

The Final Rule, at § 310.2(p), adoptsthe revised proposed Rule’s definitionof ‘‘prize’’ as follows: ‘‘Anythingoffered, or purportedly offered, andgiven, or purportedly given, to a personby chance.’’ Further tracking the revised

proposed Rule, the Final Rule alsomakes clear that ‘‘chance exists if aperson is guaranteed to receive an itemand, at the time of the offer or purportedoffer, the telemarketer does not identifythe specific item that the person willreceive.’’ This ensures that a typicaldeceptive prize scheme will be capturedin the definition of ‘‘prize.’’ In thoseschemes, consumers receive asolicitation typically listing four or fiveitems, guaranteeing that they willreceive one of them. Consumers,however, are not told which specificitem they will receive. Because aconsumer is ‘‘guaranteed’’ to receive oneof the stated items, it could be construedthat there is no element of ‘‘chance’’involved in the offer, and the item,therefore, is not a ‘‘prize.’’ Thatinterpretation is eliminated by thedefinition as adopted.

Section 310.2(q) of the Final Ruledefines ‘‘prize promotion’’ as either ‘‘(1)a sweepstakes or other game of chance;or (2) an oral or written express orimplied representation that a person haswon, has been selected to receive, ormay be eligible to receive a prize orpurported prize.’’ This definition makesclear that the representations aboutwinning may be either express orimplied. In this way, the Final Ruleincludes in the definition of ‘‘prizepromotion’’ those deceptivetelemarketing solicitations that areartfully crafted to avoid expressrepresentations while delivering animplied message that a consumer haswon a prize.

7. Sections 310.2 (b), (d), (i), (n), (o), and(s): Other Definitions

The Commission received nocomments in response to the RNPRM onthe definitions of ‘‘Attorney General,’’‘‘Commission,’’ ‘‘customer,’’ ‘‘outboundtelephone call,’’ ‘‘person,’’ or ‘‘State.’’Therefore, these definitions are adoptedunchanged.

C. Section 310.3: DeceptiveTelemarketing Acts or Practices

1. Section 310.3(a): ProhibitedDeceptive Telemarketing Acts orPractices

Section 310.3(a) of the Final Rulerequires affirmative disclosures,prohibits misrepresenting materialinformation, requires express verifiableauthorization before submitting forpayment a check, draft, or other form ofnegotiable paper drawn on a person’saccount, and prohibits false ormisleading statements to inducepayment for goods or services. In theFinal Rule, the Commission hasclarified the applicability of the


41 ANA at 4; NCL at 12.42 NCL at 12.43 AARP at 12. Similarly, CFA suggested that the

Rule require the disclosures be made before aconsumer makes a purchasing decision, rather than

before payment is made, in order to ensure thatconsumers have all necessary material informationbefore deciding whether to buy a product or service.CFA at 6–8. The Commission agrees that consumersshould have material information about the productor service before making their purchasing decision.However, the Commission believes that ‘‘before acustomer pays’’ permits sufficient time for theconsumer to consider all of the material informationbefore making a final decision whether to purchaseand provide payment for the goods or services.

44 NAAG at 10.45 Many law enforcement and consumer

representatives urged the Commission to reinstate,in the Final Rule, the absolute prohibition oncourier pick-ups of customer payments included inthe initially proposed Rule. See, e.g., NAAG at 20;USPS at 5–6; VT AG at 2; IA DOJ at 11–12; NY DCAat 1; GA OCA at 2; NAPA DA at 1; SD DAG at 2;MA AG at 4; AARP at 17–21. As stated in theRNPRM, however, the Commission believes thatthere is nothing inherently deceptive or abusiveabout the use of couriers. In fact, a substantialnumber of legitimate businesses use them. See, e.g.,initial comments: Monex at 13–14; DMA at 25;PMAA at 84. While fraudulent telemarketers oftenuse couriers to obtain quickly the spoils of their

deceit, such telemarketers engage in other acts orpractices that clearly are deceptive or abusive andtherefore can be reached through other provisionsof this Rule. Thus, an absolute prohibition ofcourier use is outweighed by the undue burden itwould impose on legitimate industry.

46 Chase at 2; MBAA at 1; CBA at 2; Citicorp at3; CUNA at 4; VISA at 4; NB at 1.

47 15 U.S.C. 1631–1632; 12 CFR 226.5–226.5a.48 Under a negative option plan, the customer

agrees to purchase a specific number of items in aspecified time period. The customer receivesperiodic announcements of the selections; eachannouncement describes the selection, which willbe sent automatically and billed to the customerunless the customer tells the company not to sendit. See also the Commission’s Rule governing ‘‘Useof Negative Option Plans by Sellers in Commerce,’’16 CFR part 425.

49 ‘‘Continuity plans’’ offer subscriptions tocollections of goods. Customers are offered anintroductory selection and agree to receiveselections on a regular schedule until they canceltheir subscription. Unlike negative option plans,customers do not agree to buy a specified numberof additional items in a specified time period, butmay cancel their subscription at any time.Continuity plans resemble negative option plans inthat customers are sent announcements ofselections and those selections are shippedautomatically to the customer unless the customeradvises the company not to send it. Unlike negativeoption plans, however, customers are not billed forthe selection when it is shipped, but only if theydo not return the selection within the time specifiedfor the free examination period.

50 CHC at 2–4; ANA at 4; Time Warner at 3; DMAat 2.

disclosure of ‘‘total cost and quantity’’in transactions involving creditproducts. In addition, the Commissionhas modified the provision requiringdisclosure of refund policies and hasincluded additional disclosures that arerequired in connection with prizepromotions. The Commission also hasclarified that all required disclosuresmust be made before a customer paysfor the goods or services that are thesubject of the sales offer. Finally, theCommission has added requirements forexpress verifiable authorization forpayments.

a. Section 310.3(a)(1): AffirmativeDisclosures

Section 310.3(a)(1) requiresaffirmative disclosure of certaincategories of material information beforea customer pays for goods or services.The Final Rule specifies only that thedisclosures be made ‘‘before a customerpays’’ and that they be made ‘‘in a clearand conspicuous manner.’’ Thesedisclosures may be made either orally orin writing.

The timing of the disclosuresprompted considerable comment. Twocommenters expressed the view that therevised proposed Rule was ambiguousregarding when payment occurs incredit card transactions: Does‘‘payment’’ occur when the customerprovides a seller or telemarketer withhis or her credit card information, orwhen the customer’s credit card accountis charged for the goods or services? 41

NCL, for example, expressed concernthat telemarketers might interpret thisprovision to permit delaying thedisclosures until after the consumer hasdivulged his or her credit card or bankinformation and the funds have beenwithdrawn or transferred to a merchantcredit card account.42 The Commissionintends that the disclosures be madebefore the consumer sends funds to aseller or telemarketer or divulges to atelemarketer or seller credit card or bankaccount information. Thus, atelemarketer or seller who fails toprovide the disclosures until theconsumer’s payment information is inhand violates the Rule.

AARP recommended that theCommission require that the disclosuresbe made at the time of sale to preventdeceptive telemarketers from providingthe disclosures in a postcard sent to thecustomer weeks before making the salescall.43 The Commission intends, by

requiring ‘‘clear and conspicuous’’disclosures, that any outboundtelephone call made after writtendisclosures have been sent to consumersmust be made sufficiently close in timeto enable the customer to associate thetelephone call with the writtendocument.

NAAG expressed a concern thatpermitting disclosures to be made‘‘before a customer pays’’ will allowimportant disclosure information to bedelayed until ‘‘after the con artist can soexcite and entice the consumer that,when made, the disclosures becomemeaningless.’’ 44 For example, NAAGstated that under the revised proposedRule, a seller or telemarketer coulddelay making the required disclosures toconsumers until the time that a courierarrives at the customer’s door, ready topick up payment for the goods orservices. The Commission agrees thatsuch tactics would evade the intent ofthe Rule that disclosures be given so asto be meaningful to a customer’spurchase decision. The Commissionalso recognizes that deceptivetelemarketers use couriers to a largeextent and would most likely providethe required disclosures in the mannerdescribed by NAAG. Accordingly, theFinal Rule makes clear, in a footnote to§ 310.3(a)(1), that ‘‘when a seller ortelemarketer uses, or directs a customerto use, a courier to transport payment,the seller or telemarketer must make thedisclosures required by § 310.3(a)(1)before sending a courier to pick uppayment or authorization for payment,or directing a customer to have a courierpick up payment or authorization forpayment.’’ All required disclosures,therefore, must be made before a courierpick-up of payment or authorization forpayment from a customer.45

Section 310.3(a)(1)(i) requiresdisclosure of ‘‘the total costs * * * andthe quantity of, any goods or servicesthat are the subject of the sales offer.’’In response to numerous commentsfrom industry,46 the Final Rule, in afootnote to § 310.3(a)(1)(i), clarifies that,with regard to offers of credit productssubject to the TILA and Reg. Z,compliance with the credit disclosurerequirements and the timing of thosedisclosures mandated by the TILA andReg. Z 47 will constitute compliancewith the total cost and quantitydisclosures required under§ 310.3(a)(1)(i) of the Rule.

Several commenters also pointed outthat total cost and quantity is notascertainable in those telemarketingsales transactions involving negativeoption 48 or continuity plans 49 wherethe customer has the option to previewor purchase a series of products overtime.50 Under such plans, separatepayments are made for each item in theseries. In addition, the customercontrols how many products he or sheaccepts and typically can decide toterminate the series at any time, or aftera minimum number of items arepurchased. Thus, in both continuity andnegative option plans, neither the sellernor the customer necessarily knows thequantity of products the customer willultimately purchase, or the total cost forthose products.


51 See, e.g., BSA at 4–6; ACRA at 5; SCIC at 2.

52 CFA at 8; USPS at 6; NJ DCA at 2–3; San Diegoat 1; NACAA at 3; NCL at 13.

53 For example, NJ DCA pointed out that the NewJersey Consumer Fraud Act requires retailers to postreturn policies in such a fashion that the consumerwill be aware of such policies before they tendertheir money. N.J. Stat. Ann. 56:82.14 et seq. NJ DCAat 3.

54 16 CFR 239.3(b).55 A seller or telemarketer ‘‘makes a

representation about a refund, cancellation,exchange or repurchase policy’’ if the seller ortelemarketer introduces this subject or discusses itin response to a customer’s inquiry about suchpolicies. If asked, the seller or telemarketer mustdisclose the material terms or conditions of itspolicy.

56 AARP at 12–13.57 See also NM AG at 4.58 See, e.g., NJ DCA at 3; NACAA at 3; NCL at 13;

USPS at 7; NAAG at 14–15; IA DOJ at 14–15.59 See, e.g., USPS at 7; NAAG at 15.

The Commission recognizes that aseller or telemarketer may not be able toprovide total cost and quantityinformation under such circumstances.Accordingly, in the case of negativeoption or continuity plans, thedisclosures required under§ 310.3(a)(1)(i) are satisfied if the selleror telemarketer discloses, before acustomer pays for any of the goods orservices offered, the total costs andquantity of goods or services that arepart of the initial offer of the plan, thetotal quantity of additional goods orservices, if any, that the customer mustpurchase over the duration of the plan,and the cost, or range of costs, topurchase each individual additionalgood or service.

Section 310.3(a)(1)(ii) requires sellersand telemarketers to disclose ‘‘allmaterial restrictions, limitations, orconditions to purchase, receive, or usethe goods or services that are the subjectof the sales offer.’’ A number of industrycommenters expressed concern that thisrequirement was ambiguous and askedthe Commission to provideclarification.51 For example, SCIC statesthat, absent a clear definition of‘‘material,’’ prudent business practicewould require the disclosure of all termsand conditions, which would not bepractical in connection with thetelemarketing of service contracts. TheCommission does not intend that sellersand telemarketers disclose all terms andconditions, but only those that arematerial. The Commission believes thatthe Final Rule’s definition of ‘‘material’’provides sufficient guidance regardingthose factors which must be evaluatedin determining which restrictions,limitations, or conditions must bedisclosed.

Section 310.3(a)(1)(iii) requiresdisclosure of a seller’s refund,cancellation, exchange, or repurchasepolicies under certain circumstances.The Final Rule tracks the revisedproposed Rule by requiring disclosure,before the customer pays, of all materialterms and conditions of such policiesonly if the seller or telemarketer makesa representation relating to suchpolicies. Section 310.3(a)(1)(iii) alsorequires a customer to be informed ifthere is a policy of not making refunds,cancellations, exchanges, orrepurchases.

Many law enforcement and consumergroups urged the Commission tobroaden this provision to require adisclosure of the seller’s refund,cancellation, exchange, or repurchasepolicies in all telemarketing

transactions.52 These commenters wereconcerned that this provision mightcreate an incentive for sellers andtelemarketers to remain silent abouttheir refund policies in order to avoidtriggering the disclosure requirement.Law enforcement and consumer groupsasserted that information regardingthese policies is material to theconsumer’s purchasing decision,particularly because consumersgenerally assume that an unconditionalrefund is available from sellers if theyare dissatisfied.53

Historically, the Commission has notrequired sellers or advertisers todisclose material limitations orconditions applicable to a satisfactionguarantee or similar policy unless asolicitation mentions such a satisfactionguarantee or policy. The Commission’slongstanding policy on this issue is setforth in the ‘‘Guides for the Advertisingof Warranties and Guarantees,’’ whichstates:

An advertisement that mentions a‘‘Satisfaction Guarantee’’ or a similarrepresentation should disclose, with suchclarity and prominence as will be noticedand understood by prospective purchasers,any material limitations or conditions thatapply to the ‘‘Satisfaction Guarantee’’ orsimilar representation.54

Therefore, the Commission hasretained in the Final Rule therequirement that all material terms andconditions of such policies be disclosedonly if the seller or telemarketer makesa representation relating to a refund,cancellation, exchange, or repurchasepolicy.55 Industry pointed out that manycompanies have a variety of refund,cancellation, exchange and repurchasepolicies, only some of which arereferred to in advertising. TheCommission does not intend that theseller or telemarketer disclose all of aseller’s possible policies, but only thepolicies that relate to the specific goodsor services that are the subject of thesales offer.

AARP suggested that, at a minimum,the Rule should require an affirmativedisclosure if no refunds, exchanges, or

cancellations are available.56 AARPpointed out that this information isparticularly important in the context oftelemarketing sales because of the lackof direct contact between the seller andthe consumer and because the consumerhas no opportunity to examine thegoods or services offered at the time ofsale.57 The Commission agrees thatconsumers may be misled if a sellerfails, in a telemarketing transaction, todisclose that the sale is final. Therefore,the Commission has modified§ 310.3(a)(1)(iii) of the Final Rule torequire that the customer be informed ifthere is a policy of not making refunds,cancellations, exchanges, orrepurchases.

Finally, § 310.3(a)(1) (iv) and (v)require a seller or telemarketer todisclose certain information inconnection with prize promotions.Under the revised proposed Rule, sellerswho offered a prize promotion wererequired to disclose only that nopurchase was necessary to win. Lawenforcement and consumer groupsstrongly urged the Commission torequire disclosure of additional items ofinformation to consumers.58 They notedthat deceptive prize promotions giverise to a large number of complaints,that they generate a very large amountof consumer injury, and that many Statelaws already require affirmativedisclosure of more information than therevised proposed Rule required,including the odds of winning, the no-purchase method of entering, and thevalue of prizes. These commenters alsonoted that such State laws haveprovided law enforcement with avaluable tool in reaching deceptiveprize promotions. In addition, several ofthese commenters noted that thedisclosure ‘‘no purchase is necessary’’ ismeaningless without requiring that theseller or telemarketer disclose themethod for entering without apurchase.59 Finally, USPS noted that therequired disclosure should include, inaddition to ‘‘no purchase is necessary,’’that ‘‘no payment is necessary’’ to entera prize promotion or to win a prize.According to USPS, such a disclosurewill cover those scams where the selleror telemarketer will not ask thecustomer to purchase goods or servicesin connection with the prize promotion,but instead will ask for some type of


60 USPS at 2.

61 Although legitimate awards, prizes, and prizepromotions do not require a person to make apayment or purchase to enter a prize promotion orto win, there are instances when a person may berequired to pay certain fees to receive or redeem aprize or award that they have already won.

62 See, e.g., CFA at 9; MA AG at 4; NJ DCA at 3.63 The Commission’s Deception Statement, first

set out in a letter to the Honorable John D. Dingell,Chairman, Subcommittee on Oversight andInvestigations, Committee on Energy andCommerce, is attached as an appendix to CliffdaleAssociates, 103 F.T.C. 110 (1984).

64 See, e.g., NACAA at 3–4; NJ DCA at 4; USPSat 2; GA OCA at 2; MA AG at 3; SC DCA at 2–3.

65 15 U.S.C. 53(b).66 See, e.g., USPS at 1–3; GA OCA at 2; AARP at

13–14; NACAA at 4; MA AG at 4; CFA at 9; NJ DCAat 3.

payment in order to enter or win aprize.60

The Commission’s law enforcementexperience is replete with examples ofsellers and telemarketers usingdeceptive prize promotions to ‘‘hook’’unsuspecting victims. Uponconsideration of these comments, theCommission is persuaded thatadditional disclosures are needed toensure that consumers are not misled bythe promise of a prize or award. TheCommission agrees that disclosure ofthe no-purchase/no-payment method ofentry would serve to emphasize themessage that no purchase or payment isnecessary in order to participate in aprize promotion or to win a prize. If thatdisclosure were absent, the fact that nopurchase or payment is necessary couldmore easily become ‘‘lost’’ in a salespitch or promotional piece. TheCommission is mindful, however, of theburden of making extensive disclosuresand has attempted to provide industrywith flexibility in making thisdisclosure to consumers. Therefore, forall telemarketing of prize promotions,the Final Rule requires, in addition to astatement that no purchase or paymentis necessary to win, that sellers andtelemarketers also disclose the no-purchase or no-payment method ofentering the prize promotion by eitherproviding full instructions on how toparticipate or by providing an addressor local or toll-free telephone numberthat a customer may contact to obtaindetails.

The Commission is also persuadedthat consumers should be made awareof the odds of being able to receive aspecific prize. A truthful statement ofthe odds of receiving a prize helps todispel the illusion that the consumerhas been ‘‘specially selected’’ or is‘‘guaranteed’’ to receive a particularprize. A statement of the odds alsoprovides some indication of the value ofeach prize, since it is likely that themost valuable prizes would be awardedto the fewest people and the leastvaluable prizes would go to the mostpeople. The Commission recognizes thatin some prize promotions, sellers andtelemarketers may not be able tocalculate the odds in advance.Therefore, the Final Rule requires thatthe seller or telemarketer disclose theodds of being able to receive a prize,and if the odds are not calculable inadvance, they must disclose the factorsused in calculating the odds, such as atruthful statement that the odds dependon the number of entries received.

Finally, the Commission’senforcement history includes numerous

examples of prizes whose value hasbeen limited by the additional costs orconditions that were necessary toreceive or redeem the prize. Forexample, these ‘‘prizes’’ includedvacation certificates that requiredconsumers to spend substantial amountsof money on airfare or other expenses,or that had extensive restrictions on use.Therefore, in § 310.4(a)(1)(v), the FinalRule requires that the seller ortelemarketer disclose all material costsor conditions to receive or redeem aprize.61

Several commenters urged theCommission to require affirmativedisclosures in connection withinvestment opportunities.62 TheCommission believes that theaffirmative disclosures required under§ 310.3(a)(1) are sufficient to cover theinformation relating to the sale ofinvestment opportunities, which ifundisclosed would be deceptive. Theseinclude the total costs to purchase,receive, or use the goods or services,and the material restrictions,limitations, or conditions to purchase,receive, or use the goods or services.Although some commenters urged theCommission to include specificaffirmative disclosures relating toinvestment characteristics such as risk,profitability, liquidity, and earningspotential, the Commission declines todo so. Based on the Commission’senforcement experience, it believes thedeception involving disclosure ofinvestment information relating to risk,profitability, liquidity, or earningspotential can be addressed under§ 310.3(a)(2)(vi) of the Final Rule.Therefore, the Commission hasdetermined that additional affirmativedisclosures for investment opportunitiesare unnecessary.

b. Section 310.3(a)(2): ProhibitedMisrepresentations

Section 310.3(a)(2) prohibitsmisrepresentations of several categoriesof material information. Theinformation deemed material under§ 310.3(a)(2) is based on established caselaw and the Commission’s policystatement on deception.63 Severalcommenters urged the Commission to

reinstate the list of specific prohibitedpractices that was contained in§ 310.3(a)(2) of the initially proposedRule.64 Each of these prohibitedmisrepresentations was based onallegations in complaints filed in recentyears by the Commission under section13(b) of the FTC Act.65 Thesecommenters asserted that such a listprovided the type of ‘‘bright line’’guidance to industry, law enforcement,and consumers that Congress haddirected the FTC to provide in the Rule.They also believed that the revisedproposed Rule did not address severalof the specific misrepresentationsincluded in the initially proposed Ruleand deleted in the revised proposedRule, such as misrepresenting the non-profit or charitable status of a seller ortelemarketer, or the purpose for whichthe seller or telemarketer will use aperson’s checking, savings, share, orsimilar account number, credit cardaccount number, social securitynumber, or related information.

The Commission has determined thatit is unnecessary to enumerate thespecific prohibited misrepresentationsset forth in the initially proposed Rule.The enumerated misrepresentations inthe initially proposed Rule aresubsumed in the general prohibitionsagainst misrepresentations set forth in§ 310.3(a)(2) of the Final Rule. Noinference should be drawn that theseomissions from the Final Rule in anyway alter the Commission’s view thatthe misrepresentations set forth in§ 310.3(a)(2) of the initially proposedRule would violate the FTC Act as wellas the Final Rule. The Commissionbelieves that this more conciseregulatory approach effectuatesCongress’s legislative intent. TheCommission also believes that broadprohibitions will give law enforcementagencies the necessary flexibility toadapt to the changes that the deceptivetelemarketing industry will undergo asa result of increased regulation.

Although some commenters requestedthat additional prohibitedmisrepresentations be included under§ 310.3(a)(2),66 few commenters raisedconcerns about or requested changes inthe language of § 310.3(a)(2) as itappeared in the RNPRM. As a result,§§ 310.3(a)(2)(i)–(iv), (vi), and (vii) areadopted as set forth in the RNPRM.Sections 310.3(a)(2)(i)–(ii) prohibitmisrepresenting certain informationrequired to be disclosed under


67 15 U.S.C. 53(b).68 Almost 32% of the 141 telemarketing cases

brought by the Commission since 1991 related todeceptive prize promotions.

69 See Senate Report at 2, 8.

70 See, e.g., AARP at 13; NACAA at 4; GA OCAat 2; NJ DCA at 3.

71 16 CFR 308.3(c).72 See Senate Report at 8. 73 See, e.g., CFA at 9; MA AG at 4; NJ DCA at 3.

§§ 310.3(a)(1)(i) and (ii): total costs,quantity, and material restrictions,limitations, or conditions. Section310.3(a)(2)(iii) specifies that amisrepresentation of ‘‘any materialaspect of the performance, efficacy,nature, or central characteristics ofgoods or services that are the subject ofthe sales offer’’ violates the Rule.Commission case law and policy areclear that such information is likely toaffect a person’s choice of, or conductregarding, the purchase of goods orservices. Similarly, representationsabout a seller’s refund, cancellation,exchange, or repurchase policies arelikely to affect a person’s purchasedecision. Section 310.3(a)(2)(iv),therefore, prohibits misrepresentinginformation regarding the materialaspects of these policies.

Section 310.3(a)(2)(v) of the FinalRule prohibits misrepresenting ‘‘anymaterial aspect of a prize promotion,including but not limited to, the odds ofbeing able to receive a prize, the natureor value of a prize, or that a purchaseor payment is required to win a prize orparticipate in a prize promotion.’’ Thisprovision is adopted in substantially thesame form as it appeared in the revisedproposed Rule. The provisionenumerates specific examples ofmaterial aspects of a prize promotionthat are frequently misrepresented bydeceptive telemarketers. TheCommission has targetedmisrepresentation of these aspects ofprize promotions in a number ofcomplaints filed against deceptivetelemarketers under section 13(b) of theFTC Act.67 The Commission believesthat a separate Rule provision is neededspecifically prohibitingmisrepresentations regarding prizepromotions, given the great number ofdeceptive prize promotions and thedistinct characteristics associated withsuch promotions.68 The legislativehistory clearly shows that Congressspecifically intended that the Rule coverprizes or awards.69 The Commissionintends that the telemarketing of prizepromotions is not only subject to theprohibitions in § 310.3(a)(2)(v), but alsoto the other prohibitions againstmisrepresentations set forth in§ 310.3(a)(2).

Although supportive of treating prizepromotions separately in this Section,several commenters urged theCommission to expand the list ofspecific aspects relating to prize

promotions that sellers or telemarketersmay not misrepresent, especially that aperson has been specially selected toreceive a prize or that a premium is aprize.70 The Commission believes thatthe current list of specific aspectsadequately covers those concerns. Asdiscussed in connection with theaffirmative disclosures for prizepromotions, supra, a truthful statementof the odds of receiving a prize shouldhelp dispel the illusion that theconsumer has been ‘‘specially selected’’or is ‘‘guaranteed’’ to receive aparticular prize. Furthermore, aprincipal distinction between a‘‘premium’’ and a ‘‘prize’’ is that whilepremiums are given only in connectionwith the purchase of goods or services,no such purchase is required to receivea prize. Therefore, the prohibitionagainst misrepresenting that purchase orpayment is required to receive a prizeshould also cover misrepresenting that apremium is a prize. Finally, theCommission’s use of the language‘‘including but not limited to’’ isintended to indicate that the list ofmaterial aspects of a prize promotion isillustrative, but should not beconsidered exhaustive.Misrepresentations of other materialaspects of a prize promotion not listedhere are also prohibited.

One minor change in wording hasbeen adopted in § 310.3(a)(2)(v),namely, the phrase ‘‘the odds ofwinning’’ has been changed to ‘‘the oddsof being able to receive a prize.’’ Thiswording is intended to be broader andmore general, and is based upon similarusage employed by the Commission inprovisions of the Pay-Per-Call Rule, 16CFR Part 308, that govern solicitationsfor 900-number services involvingsweepstakes or games of chance.71

Another minor change is the addition ofthe language ‘‘or payment.’’ Thisaddition is consistent with similarlanguage added to § 310.3(a)(1)(v).

Similarly, § 310.3(a)(2)(vi) prohibitsmisrepresenting material aspects of aninvestment opportunity. This Sectionremains unchanged from the RNPRM.The legislative history of theTelemarketing Act reflects Congress’recognition that deceptive investmentopportunities account for a considerablepercentage of deceptive telemarketing.72

In fact, since 1991, deceptiveinvestment scams account forapproximately 43% of the Commission’stelemarketing cases. The amount at riskfor a consumer is generally far greater in

investment scams than in deceptiveschemes involving other types ofconsumer goods or services. Thus,investment opportunities are an area ofheightened concern for consumers andthe Commission. The Final Ruleincludes § 310.3(a)(2)(vi), prohibitingmisrepresentation of specified materialaspects of investment opportunities,including risk, liquidity, earningspotential, or profitability. This provisionis included to obviate any possibleconstruction that might excludeinvestment opportunities from the scopeof §§ 310.3(a)(2)(i)–(iii)—the generalprovisions of the Rule that center onpurchase, receipt or use, or upon‘‘performance, efficacy, nature, orcentral characteristics’’ of a limitlessrange of goods and services. TheCommission believes that a separateprovision, § 310.3(a)(2)(vi), is necessaryto cover distinct attributes that arematerial to an investment decision, suchas risk, liquidity, earnings potential, orprofitability. The Commission intendsthat the telemarketing of investmentopportunities is not only subject to theprohibitions in § 310.3(a)(2)(vi), but alsoto the prohibitions contained in otherprovisions set forth in § 310.3(a)(2).

Several commenters urged theCommission to expand the list ofprohibited misrepresentations relatingto specific aspects of investmentopportunities to include markup overacquisition costs, past performance,marketability, and value.73 TheCommission’s use of the language‘‘including but not limited to’’ isintended to indicate that the list ofprohibited material aspects of aninvestment opportunity that must not bemisrepresented is illustrative, notexhaustive. Misrepresentations of othermaterial aspects of an investmentopportunity not listed are alsoprohibited.

Finally, the Commission maintains§ 310.3(a)(2)(vii) as it was proposed inthe revised proposed Rule. This sectionprohibits misrepresenting ‘‘a seller’s ortelemarketer’s affiliation with, orendorsement by, any government orthird-party organization.’’ TheCommission believes that this Section isnecessary based on its own experiencein law enforcement actions againstdeceptive telemarketers, as well as theinformation State law enforcementagencies provided. Deceptivetelemarketers often bolster theircredibility by misrepresenting that theyare endorsed by, or affiliated with,charitable, police, civic, or similarorganizations. A separate category isrequired because these types of


74 See, e.g., NACAA at 4; MA AG at 4.75 See, e.g., NACAA at 4; MA AG at 4.76 See, e.g., USPS at 2; AARP at 14.

77 See generally initial comments: NAPA;Autoscribe; Olan.

78 See initial comments: TCPS at 1; NBR at 1–2.See generally NAPA 2–4; Tr. at 64.

79 NBR stated that in 1994, eighty-five percent ofall consumer transactions were made by cash orcheck compared to fifteen percent by credit anddebit cards. NBR initial comment at 2. TCPSsimilarly noted that nine of the current twentyservice bureaus process approximately 38,000demand drafts weekly, totalling over five milliondollars for over 700 business clients throughout thecountry. TCPS initial comment at 1. AcceleratedPayment Systems stated that it processes half abillion dollars a year through demand drafts. Tr. at547.

80 See initial comments: TCPS at 1–2; NAPA at 2;Olan at 9. Examples of businesses that use demanddrafts include two of the baby Bells, GEICO,Citicorp, Telecheck, Equifax, Bank of America,Discovery Card, Dunn and Bradstreet, and First ofAmerica Bank. See Tr. at 547, 550–51.

81 See initial comments: ATA at 6; Olan at 10;DMA at 21–22.

82 12 CFR 205(g).

83 See Tr. at 544–49 (Accelerated PaymentSystems), 557–58 (TCPS), 578–80 (Check-Debit).See also initial comments: NAPA at 7–9; Olan at 10.

84 60 FR at 30413. That prohibition is found in§ 310.3(a)(4) of the Final Rule and was found in§ 310.3(a)(3) of the revised proposed Rule.

85 See, e.g., NACAA at 4; IA DOJ at 10; AARP at15–16; FRB–SF at 8; VBA at 1; NCL at 9; NJ DCAat 3; San Diego at 2.

86 AARP at 15; NJ DCA at 3–4.87 USPS at 3.88 See generally FRB–SF.89 See UCC 1–201(39), 3–103(a)(6), 3–104(a), 3–

401(a), 3–401(b), 3–402(a), 4–401 (1990 version).

misrepresentations, again, could beconstrued as outside the apparent scopeof §§ 310.3(a)(2)(i)–(iii). However, theprohibition contained in§ 310.3(a)(2)(vii) is in addition to, not inlieu of, the prohibitions contained in theother provisions under § 310.3(a)(2).

Several commenters asked theCommission to include specificprohibitions against misrepresenting thenon-profit or charitable status of a selleror telemarketer.74 The Commissionintends that many of thesemisrepresentations will be covered bythe prohibition in § 310.3(a)(2)(vii)against misrepresenting affiliation orendorsements.

Several commenters asked theCommission to include specificprohibitions against misrepresentingthat a seller can improve a consumer’scredit rating, or can recover money lostby a consumer to a ‘‘dishonest’’telemarketer.75 The Commissionbelieves that these misrepresentationsare subsumed under the prohibition in§ 310.3(a)(2)(iii) against misrepresentingany material aspect of the performance,efficacy, nature, or centralcharacteristics of the goods or services.

In the initially proposed Rule therewas a prohibition, omitted from therevised proposed Rule, againstmisrepresenting the purpose for whichthe seller or telemarketer will use aperson’s checking, savings, share, orsimilar account number, credit cardaccount number, social securitynumber, or related information. Severalcommenters on the revised proposedRule urged the Commission to reinstatethat prohibition, noting that it did notappear to be subsumed under the otherprohibitions set out in § 310.3(a)(2).76

The Commission, however, believes thatsuch misrepresentations are coveredunder § 310.3(a)(4), which prohibits aseller or telemarketer from making afalse or misleading statement to inducea person to pay for goods or services.

c. Section 310.3(a)(3): VerifiableAuthorization

Section 310.3(a)(3) addresses the useof demand drafts, the practice ofobtaining funds from a person’s bankaccount without that person’s signatureon a negotiable instrument. Section310.3(a)(4) of the initially proposed Rulerequired written authorization before aseller or telemarketer could take anyfunds from a consumer’s checking,savings, or similar account. Thisprovision was dropped from the revisedproposed Rule because information

provided in comments to the initiallyproposed Rule and in oral workshopconference presentations tended torefute the proposition that demanddrafts are characteristic solely ofdeceptive telemarketers.77

In response to the NPR, theCommission received a number ofcomments from members of theautomated payment industry—thosecompanies that prepare demand draftsand submit such drafts to financialinstitutions for payment fromconsumers’ bank accounts. Thesecommenters noted that over 70 millionAmericans do not have credit cards.78

Demand drafts can provide a means forthose consumers to enjoy the samebenefits of expeditious telephonetransactions that use of a credit cardprovides.79 Commenters noted thatFortune 500 companies, airlines, carrental companies, insurance companies,and other businesses characterized byquick turn-around transactions now usedemand drafts because they recognizethat not everyone has a credit card.80

The automated payment industry alsopointed out that requiring expresswritten authorization for a demand draftis inconsistent with authorizationrequirements pertaining to an analogouspayment method, electronic fundstransfer.81 As commenters noted, theElectronic Funds Transfer Act (title IXof the Consumer Credit Protection Act)(‘‘EFTA’’), 15 U.S.C. 1601 et seq., and itsimplementing Regulation E (‘‘Reg. E’’),12 CFR part 205, permit authorization ofelectronic funds transfers by telephone,thereby permitting oral authorization.82

Commenters asserted that imposingmore rigid authorization standards onthe legitimate automated paymentindustry, an industry in its formativestages, could unduly hinder itsdevelopment, restrain legitimate

competition, and deprive consumers ofbenefits afforded by this paymentmethod.83

In dropping the written authorizationfrom the revised proposed Rule, theCommission noted in the RNPRM thatthe prohibition on any false ormisleading statements to induce aperson to pay for goods or serviceswould address problems in this area.84

In their comments on the revisedproposed Rule, however, lawenforcement and consumer groupsstrongly urged the Commission toreinstate restrictions on the use ofdemand drafts.85

Law enforcement and consumergroups pointed out that demand draftsdo not provide consumers with thesame level of protection as credit cards,nor is there widespread awarenessamong consumers about the dangers ofthis payment method.86 For example, inmany instances deceptive telemarketersinduce consumers to disclose certainbank account information, after whichthey withdraw funds from theconsumers’ bank accounts without theconsumers authorizing suchwithdrawals or realizing that suchwithdrawals are occurring. In fact, theUSPS pointed out that, as it becamemore difficult for deceptivetelemarketers to access the credit cardsystem, demand drafts have surfaced asthe most frequent form of payment indeceptive telemarketing over the pasttwo to three years.87 In addition, theFederal Reserve Bank of San Francisco(‘‘FRB–SF’’) strongly opposed deletingthe prohibition, questioning whether ageneral ‘‘do not mislead’’ standardwould prevent abuses.88 FRB–SF notedthat laws prohibiting misleadingstatements are already on the books, buthave been of limited effectiveness. Italso noted that any protectionsconsumers might have under the currentUniform Commercial Code provisions 89

are illusory. FRB–SF stated that, inreality, banks have a pronounceddisincentive to accept claims by aconsumer that he or she did notauthorize a particular draft because thebanks must bear the loss of the amountof any draft that was unauthorized.


90 FRB–SF supported a requirement for taperecording customers’ oral authorizations as analternative to prior written authorization. See FRB-SF at 8–9.

91 The six items of information are: ‘‘(A) Date ofthe draft(s); (B) the amount of the draft(s); (C) thepayor’s name; (D) the number of draft payments (ifmore than one); (E) a telephone number forcustomer inquiry that is answered during normalbusiness hours; and (G) the date of the customer’soral authorization.’’

92 FRB-SF at 8–9.93 See, e.g., AARP at 15.

94 NAAG at 23; NACAA at 5.95 NAAG at 23.96 Section 876(b) of the Restatement of Torts

provides: ‘‘For harm resulting to a third person fromthe tortious conduct of another, one is subject toliability if he knows that the other’s conductconstitutes a breach of duty and gives substantialassistance or encouragement to the other so as toconduct himself. * * *’’ Restatement (Second) ofTorts § 876(b) (1977).

97 See, e.g., Schatz v. Rosenburg, 943 F.2d 485,495 (4th Cir. 1991), cert. denied, 503 U.S. 936(1992); National Union Fire Ins. Co. v. Turtur, 892F.2d 199, 206–07 (2d Cir. 1989); DCD Programs,Ltd. v. Leighton, 833 F.2d 183, 188 (9th Cir. 1987);Moore v. Fenex, 809 F.2d 297, 303 (6th Cir. 1987),cert. denied, 483 U.S. 1006 (1987); Rudolph v.Arthur Andersen & Co., 800 F.2d 1040, 1045 (11thCir. 1986), cert. denied, 480 U.S. 946 (1987); Metgev. Baehler, 762 F.2d 621, 624–25 (8th Cir. 1985),cert. denied, 474 U.S. 1057 (1986); Woods v. BarnettBank of Fort Lauderdale, 765 F.2d 1004, 1009 (11thCir. 1985); Cleary v. Perfectune, Inc., 700 F.2d 774,777 (1st Cir. 1983); Armstrong v. McAlpin, 699 F.2d79, 91 (2d Cir. 1983); Harmsen v. Smith, 693 F.2d932, 943 (9th Cir. 1982), cert. denied, 464 U.S. 822(1983); Stokes v. Lokken, 644 F.2d 779, 782–83 (8thCir. 1981); IIT v. Cornfeld, 619 F.2d 909, 922 (2dCir. 1980); Monsen v. Consolidated Dressed BeefCo., 579 F.2d 793, 799 (3d Cir. 1978), cert. denied,439 U.S. 930 (1978); Woodward v. Metro Bank ofDallas, 522 F.2d 84, 94 (5th Cir. 1975).

Many of these cases base their analysis upon thetest laid down in SEC v. Coffey, 493 F.2d 1304,1316 (6th Cir. 1974), cert. denied, 420 U.S. 908(1975):

A person may be held as an aider and abettoronly if some other party has committed a securitieslaw violation, if the accused party had generalawareness that his role was part of an overallactivity that was improper, and if the accused aider-abettor knowingly and substantially assisted theviolation.

FRB–SF described a variety of ways thatbanks can and do avoid authorizing arefund of a draft claimed by a consumerto be unauthorized. For example, banksmay allege that consumers werenegligent in giving out their bankinformation, or allege that consumerswho have given such information havegiven apparent authority to issue anynumber of drafts in any amount.

Based on the extensive use of demanddrafts by legitimate companies, theCommission is persuaded that demanddrafts, in and of themselves, are notnecessarily harmful, and, in fact mayproduce real benefits for consumers.The Commission also believes thatrequiring prior written authorizationcould be tantamount to eliminating thisemerging payment alternative.Moreover, the Commission believes thatit would be inconsistent to impose upondemand drafts a more stringentauthorization mechanism than thatimposed on electronic funds transfersunder the EFTA and Reg. E. TheCommission, however, is alsopersuaded by the comments on therevised proposed Rule that consumersneed additional protections from abuseof this increasingly popular paymentmethod. Therefore, the Final Ruleincludes certain restrictions on the useof demand drafts.

Section 310.3(a)(3) balances thebenefits to consumers that may flowfrom the use of demand drafts againstthe costs arising from the known abusesof this payment method by deceptivetelemarketers. Section 310.3(a)(3)requires ‘‘express verifiableauthorization’’ before any seller ortelemarketer obtains or submits ‘‘forpayment a check, draft, or other form ofnegotiable paper drawn on a person’schecking, savings, share, or similaraccount.’’ To prevent deceptivetelemarketers from abusing this mode ofauthorization, the Commission hasincluded in the Final Rule specificrequirements to establish whatconstitutes ‘‘verifiable authorization’’under the Rule.

An authorization will be deemedverifiable if any of the following meansare employed: (1) Express writtenauthorization by the customer; (2)express oral authorization which is taperecorded 90 and made available to acustomer’s bank upon request, andwhich clearly evidences both thecustomer’s authorization of payment forthe goods or services that are the subjectof the sales offer and the customer’s

receipt of six specific items ofinformation during the tape recording; 91

or (3) written confirmation of thetransaction sent to the customer, prior tosubmitting the draft for payment,containing the same six items ofinformation required under the taperecording option. The writtenconfirmation method also requires aseller or telemarketer to have in place,and to disclose to the customer in theconfirmation, the procedures by whichthe customer can obtain a refund fromthe seller or telemarketer in the eventthe written confirmation is inaccurate.The Commission recognizes that thelatter method of verifiable authorizationmay be susceptible to manipulation bydeceptive sellers and telemarketers.However, any misrepresentation of thenature or terms of the refund policy willbe actionable under § 310.3(a)(2)(iv),prohibiting misrepresentation of aseller’s refund policy. The Final Rulealso incorporates FRB-SF’s suggestionthat the taped verifiable authorizationbe made available to the customer’sbank upon request.92 The Commissionwill monitor the effectiveness of thisprovision in preventing the deceptiveuse of demand drafts.

d. Section 310.3(a)(4): False orMisleading Statements To InducePayment

Section 310.3(a)(4) generally prohibits‘‘[m]aking a false or misleadingstatement to induce any person to payfor goods or services.’’ The fewcomments on this Section questionedwhether a general prohibition is anadequate substitute for a provisionrequiring express authorization fordemand drafts: Unauthorized accessoften involves no inducement orpurchase; the money is simply taken.93

The Commission believes the FinalRule’s express verifiable authorizationrequirement, § 310.3(a)(3), sufficientlyaddresses this concern.

Section 310.3(a)(4) also prohibitssellers and telemarketers from gainingaccess to consumers’ money throughfalse and misleading statements,regardless of the type of payment systemused. This provides law enforcementwith flexibility to address new waysthat sellers and telemarketers engaged infraud might attempt to take consumers’money.

2. Section 310.3(b): Assisting andFacilitating

Section 310.3(b) of the revisedproposed Rule received substantialattention from commenters. Lawenforcement objected to the inclusion ofa requirement that the requisitesubstantial assistance or support be‘‘related to the commission orfurtherance’’ of a core rule violation.94

NAAG viewed this as an unnecessaryadditional element of proof that wouldburden law enforcement, and feared thatit could result in assisters andfacilitators evading liability on theground that their assistance was not‘‘related to’’ an unlawful act, evenwhere required showings of knowledgeand substantial assistance could bemade.95 The Commission hasdetermined that the ‘‘related to’’requirement may be susceptible to themisapplication NAAG foresees, and hastherefore deleted this requirement fromthe Final Rule. The Commission notesthat knowledge of, and substantialassistance to, another’s wrongdoing area sufficient basis for liability in tort,96

and were so in cases brought under theSecurities and Exchange Act of 1934 97

until the recent Supreme Court decisionin Central Bank of Denver v. Interstate


98 114 S. Ct. 36, lll U.S. lll (1994). TheSupreme Court held that there is no private causeof action for aiding and abetting under Rule 10(b)because the Securities and Exchange Act of 1934does not expressly create such a cause of action.The Court’s decision did not address the soundnessof the rationale for the elements of aiding andabetting as developed in the cases. TheTelemarketing Act, on the other hand, expresslyauthorizes ‘‘assisting and facilitating’’ as a violationof the Rule.

99 See, e.g., NJ DCA at 4; NACAA at 5; AARP at16; NCL at 11; USPS at 12.

100 See, e.g., NAA at 2; MSSC at 4; HII at 2.101 The level of knowledge required for aider and

abettor liability under the Securities and ExchangeAct of 1934 varied from circuit to circuit. Forexample, the standard enunciated in SEC v. Coffey(general awareness of impropriety, plus knowingand substantial assistance) applied in the SixthCircuit, whereas actual knowledge or recklessdisregard was required in the Ninth Circuit. Levinev. Daimanthuset, Inc., 950 F.2d 1478, 1483 (9th Cir.1991). The Second Circuit held that ‘‘somethingcloser to an actual intent to aid in a fraud’’ mustbe demonstrated. Edwards & Hanly v. Wells FargoSec. Clearance Corp., 602 F.2d 478, 485 (2d Cir.1979), cert. denied, 444 U.S. 1045 (1980). See W.H. Kuehnle, Secondary Liability Under the FederalSecurities Laws—Aiding and Abetting, Conspiracy,Controlling Person, and Agency: Common-LawPrinciples and the Statutory Scheme, 14 J. Corp. L.313, 322 (1988); Note, Liability for Aiding andAbetting Violations of Rule 10b-5: The RecklessnessStandard in Civil Damage Actions, 62 Tex. L. Rev.1087 (1984).

102 The Commission noted in the RNPRM thatcase law under Section 13(b) of the FTC Act hasdeveloped a knowledge standard in the context ofan analogous type of liability: individual liability topay restitution to consumers for injury resulting

from law violations of a corporation controlled bythe individual. The Commission has sought, andthe courts have ordered, payment of consumerredress from individual defendants for injuryresulting from law violations of corporationscontrolled by such individuals only where theCommission could show either that theseindividuals had actual knowledge of the unlawfulpractices of the corporation, were recklesslyindifferent to such practices, or had an awarenessof a high probability of fraud coupled with anintentional avoidance of the truth. FTC v. AmericanStandard Credit Systems, Inc., No. CV 93–2623 LGB(JRx) (C.D. Cal. Aug. 15, 1994); FTC v. Amy TravelServ., 875 F.2d 564, 573–74 (7th Cir.), cert. denied,493 U.S. 954 (1989); FTC v. Kitco of Nevada, Inc.,612 F. Supp. 1282, 1292 (D. Minn. 1985); FTC v.International Diamond Corp., 1983–2 Trade Cas.(CCH) ¶ 65,725 at 69,707 (N.D. Cal. 1983).

103 See, e.g., Citicorp Credit Services, Inc., FTCDkt. No. C–3413 (Consent Order, Feb. 4, 1993).

104 It is noteworthy that Section 5(m)(1)(A) of theFTC Act, 15 U.S.C. 45(m)(1)(A), specifies thatimposition of civil penalties for an act prohibitedby a rule requires a showing of ‘‘actual knowledgeor knowledge fairly implied on the basis ofobjective circumstances that such act is unfair ordeceptive and is prohibited by such rule.’’

105 Proof of conscious avoidance is widelyaccepted in criminal cases as fulfilling therequirement for proof of knowledge. See, e.g.,United States v. Beech-Nut Nutrition Corp., 871F.2d 1181, 1195–1196 (2d Cir.), cert. denied, 493U.S. 933 (1989); United States v. Diaz, 864 F.2d 544,549 (7th Cir.), cert. denied, 490 U.S. 1070 (1989);United States v. Manriquez Arbizo, 833 F.2d 244,248 (10th Cir. 1987); United States v. Rothrock, 806F.2d 318, 323 (1st Cir. 1986); United States v.Jewell, 532 F.2d 697, 700 (9th Cir.), cert. denied, 426U.S. 951 (1976).

106 U.S. v. Williams, No. 90–3389, 1995 U.S. App.LEXIS 23546 (7th Cir. Aug. 26, 1994).

107 See, e.g., AARP at 17.

108 As defined in § 310.2(l), a merchant is theperson who is under a contractual agreement withan acquirer to honor or accept credit cards, or totransmit or process for payment credit cardpayments, for the purchase of goods or services.

109 E.g., Citicorp at 2; Mastercard at 2–4.110 15 U.S.C. 6102(a)(2).

Bank of Denver.98 The Commissionfurther believes that the ordinaryunderstanding of the qualifying word‘‘substantial’’ encompasses the notionthat the requisite assistance mustconsist of more than mere casual orincidental dealing with a seller ortelemarketer that is unrelated to aviolation of the Rule.

Law enforcement and consumergroups also generally opposed the‘‘knows or consciously avoids knowing’’standard in this Section, arguing that itimposed a higher burden of proof onlaw enforcement than the ‘‘knows orshould know’’ standard in the initiallyproposed Rule, and requires proof of thewrongdoer’s mental state.99 Thesecommenters recommended that theCommission return to the ‘‘knows orshould know’’ standard. At the otherend of the spectrum, industry commentscontinued to raise concerns that theproposed knowledge standard was toovague or harsh.100

As noted above, both in the law of tortand in a substantial body of pre-CentralBank of Denver aider and abettor caselaw developed under the Securities andExchange Act of 1934, knowledge is aprerequisite for liability.101 TheCommission recognizes that provingactual knowledge could be a formidablehurdle in some cases.102 The ‘‘knows or

should know’’ standard is certainly theappropriate standard to use in framingallegations of third-party liability forunfair or deceptive acts or practices, inviolation of section 5 of the FTC Act,103

or in violation of State ‘‘Little FTC’’Acts. However, in a situation where aperson’s liability to pay redress or civilpenalties 104 for a violation of this Ruledepends upon the wrongdoing ofanother person, the ‘‘consciousavoidance’’ standard is correct.105

The ‘‘conscious avoidance’’ standardis intended to capture the situationwhere actual knowledge cannot beproven, but there are facts and evidencethat support an inference of deliberateignorance 106 on the part of a person thatthe seller or telemarketer is engaged inan act or practice that violates§§ 310.3(a) or (c), or § 310.4 of this Rule.

Some commenters recommended thatthe Commission reinstate the examplesof ‘‘assisting and facilitating’’ that hadbeen in § 310.3(b)(2) of the initiallyproposed Rule.107 The Commission hasdeclined to list in the Rule examples ofsubstantial assistance, but still considersthe acts or practices enumerated informer § 310.3(b)(2) of the initiallyproposed Rule to be illustrative of thosethat can constitute substantial assistanceto Rule violators when coupled with

knowledge or conscious avoidance ofknowledge of a violation of §§ 310.3 (a)or (c) or § 310.4. These include:Providing lists of contacts to a seller ortelemarketer that identify persons overthe age of 55, persons who have badcredit histories, or persons who havebeen victimized previously by deceptivetelemarketing or direct sales; providingany certificate or coupon which maylater be exchanged for travel relatedservices; providing any script,advertising, brochure, promotionalmaterial, or direct marketing piece usedin telemarketing; or providing anappraisal or valuation of a good orservice sold through telemarketingwhen such an appraisal or valuation hasno reasonable basis in fact or cannot besubstantiated at the time it is rendered.

3. Section 310.3(c): Credit CardLaundering

Section 310.3(c) of the Final Ruleprohibits credit card laundering, thepractice of depositing into the creditcard system a sales draft that is not theresult of a credit card transactionbetween the cardholder and amerchant.108 The Commission receivedvery few comments that offered changesor that were critical of this section.Those comments that did address thissection suggested that it be expanded toinclude other payment devices, such asdebit cards, because such devices can belaundered as easily as credit cardtransactions.109 The Commission hasrejected such an expansion for thereasons stated supra in the discussionregarding the definition of ‘‘credit.’’

The Act expressly cited credit cardlaundering as a type of assisting andfacilitating that the Rule couldprohibit.110 Credit card laundering is apernicious practice because it enablesdeceptive telemarketers access to thecredit card system that they wouldotherwise be unable to obtain. In orderto obtain payment by credit card, aseller (‘‘merchant’’ as is defined in§ 310.2(l)) must first have established anaccount with a financial institution(‘‘acquirer’’ as is defined in § 310.2(a))that is authorized to accept credit cardpayments. A seller must have a writtencontract (‘‘merchant agreement’’ asdefined in § 310.2(m)) with the financialinstitution to be able to access the creditcard system and obtain payment from aconsumer’s credit card account. Whenthe seller accepts a credit card for


111 Senate Report at 2.112 See initial comments: MasterCard at 10–11.

113 Section 310.4(a) remains unchanged from theRNPRM.

114 See, e.g., House Report at 8.

115 See FDCPA section 806(1), 15 U.S.C. 1692d(1)(‘‘the use or threat of use of violence or othercriminal means to harm the physical person,reputation, or property of any person’’); Section807(5), 15 U.S.C. 1692e(5) (‘‘the threat to take anyaction that cannot legally be taken or that is notintended to be taken’’); and section 808(6), 15U.S.C. 1692f(6) (‘‘taking or threatening to take anynonjudicial action to effect dispossession ordisablement of property’’ in certain situations).

116 Section 806(2) of the FDCPA, 15 U.S.C.1692d(2).

117 A seller or telemarketer can make suchrepresentations about the time for delivery of thecredit repair goods or services either orally or inwriting, including in the contract for the services.If any discrepancy exists between variousrepresentations by a credit repair seller, the longesttime frame represented will determine whenpayment may be requested or received.

payment, the seller generates what isknown as a credit card sales draft (asdefined in § 310.2(g)). The seller thendeposits the credit card sales draft intothe seller’s account with the financialinstitution and obtains the cash amountof the deposited drafts. The financialinstitution sends the credit card salesdraft through the particular credit cardsystem, e.g., Visa, which will post thecharge to the consumer’s credit cardaccount.

Most deceptive telemarketers areunable to establish a merchant accountwith an acquirer. Therefore, to be ableto accept payment by credit card, theymust gain access to the credit cardsystem through another’s merchantaccount. Obtaining access to the creditcard system through another merchant’saccount without the authorization of thefinancial institution is credit cardlaundering. Credit card launderingfacilitates deceptive telemarketing actsor practices by providing telemarketersengaged in fraud with ready access tocash through the credit card system.Credit card laundering also costslegitimate credit card companies over$300 million per year as a result oftelemarketing fraud involving paymentby credit card.111

The underlying purpose of § 310.3(c)is to delineate clearly, in accordancewith legitimate industry standards,those persons who are deemed to haveproper access to the credit card system.The Commission believes that thedistinction between persons who are‘‘launderers’’ and persons wholegitimately use credit card systemsrests on whether the credit card systempermits such persons access to itssystem. In their comments to theinitially proposed Rule, Visa andMasterCard recommended that access bepermitted under the Rule if it isexpressly permitted by the applicablecredit card system.112 Therefore, theCommission proposed in the revisedproposed Rule language to the preambleof § 310.3(c), that ‘‘except whereexpressly permitted by the applicablecredit card system . . .’’ and addedsimilar language to the end of§ 310.3(c)(3). In the absence ofcomments on this section in theRNPRM, the Final Rule adopts§ 310.3(c) without change.

Section 310.3(c) of the Final Rule isdivided into three parts. Section310.3(c)(1) deals with merchants whoengage in credit card laundering. Underthis Section, it is a deceptivetelemarketing act or practice, and aviolation of the Rule, for a merchant to

present to, or deposit into, the creditcard system for payment, a credit cardsales draft generated by a telemarketingtransaction that is not the result of atelemarketing credit card transactionbetween the cardholder and thatmerchant. It is also a deceptive act orpractice for a merchant to cause anotherperson to present to, or deposit into, thecredit card system for payment such acredit card sales draft.

Section 310.3(c)(2) of the Final Ruledeals with telemarketers, brokers, orothers who employ merchants to engagein credit card laundering. This Sectionstates that it is a deceptive telemarketingact or practice, and a violation of theRule, for ‘‘any person to employ, solicit,or otherwise cause a merchant or anemployee, representative, or agent of themerchant, to present to or deposit intothe credit card system for payment, acredit card sales draft generated by atelemarketing transaction that is not theresult of a telemarketing credit cardtransaction between the cardholder andthe merchant.’’

Finally, § 310.3(c)(3) prohibits creditcard laundering by means of jointventures or other business relationshipswith a merchant. Specifically, thissection prohibits any person fromobtaining ‘‘access to the credit cardsystem through the use of a businessrelationship or an affiliation with amerchant, when such access is notauthorized by the merchant agreementor the applicable credit card system.’’

D. Section 310.4: AbusiveTelemarketing Acts or Practices

1. Section 310.4(a): Abusive ConductGenerally

Section 310.4(a) of the Final Ruleprohibits any seller or telemarketer fromengaging in four enumerated abusiveacts or practices. Each of these practiceswill be discussed in turn.113

a. Section 310.4(a)(1): Threats,Intimidation, or the Use of Profane orObscene Language

Section 310.4(a)(1) of the Final Ruleprohibits any seller or telemarketer fromengaging in threats, intimidation, or theuse of profane or obscene language. Thelegislative history of the TelemarketingAct indicates that the Commissionshould consider prohibiting suchpractices, and should ‘‘draw upon itsexperience in enforcing standardsestablished under the Fair DebtCollection Practices Act (‘‘FDCPA’’), 15U.S.C. 1692, in defining these terms.’’ 114

The FDCPA includes a number of

prohibitions on various types ofthreats,115 and a specific prohibition onthe use of profane or obscenelanguage.116 The Commission believessuch prohibitions are equallyappropriate in this Rule.

This Section covers all types ofthreats, including threats of bodilyinjury and financial ruin, and threats toruin credit. It also prohibitsintimidation, including acts which putundue pressure on a consumer, orwhich call into question a person’sintelligence, honesty, reliability, orconcern for family. Repeated calls to anindividual who has declined to acceptan offer may also be an act ofintimidation.

b. Section 310.4(a)(2): Credit RepairServices

Section 310.4(a)(2) of the Final Rule isintended to limit the telemarketing ofdeceptive credit repair services.Typically, these services promiseconsumers that, for a fee paid inadvance, they will improve theconsumer’s credit record by removingnegative information from that record.Once the fee is paid, however, the sellerfails to deliver the promised services orachieve the promised results, and theconsumer’s credit record does notimprove.

This section of the Final Rule statesthat, in selling any goods or servicesrepresented to remove derogatoryinformation from, or improve, a person’scredit history, credit record, or creditrating, a seller or telemarketer isprohibited from requesting or receivingpayment of any fee or considerationuntil two events occur. First, the timeframe within which the seller hasrepresented that all of the goods orservices will be provided to thepurchaser must have expired.117

Second, the promised results must havebeen achieved. In order to ensure theachievement of the promised results, theFinal Rule requires the seller to provide


118 The Fair Credit Reporting Act (‘‘FCRA’’), 15U.S.C. 1681, specifies certain permissible purposesfor which a consumer report may be furnished. TheFinal Rule states that nothing in this Rule shouldbe construed to affect those requirements set forthin the FCRA.

119 See, e.g., Mastercard at 6–7; BOA at 1–2.120 However, all other parts of this Rule, including

all required disclosures and prohibitions againstmisrepresentations, apply to the telemarketing ofsecured credit cards.

121 By using the terms ‘‘loans or other extensionsof credit,’’ the Final Rule makes clear that thissection does not apply to other types of creditservices, such as monitoring or counseling services.

122 BOA at 2; P&C–1 at 2–3.123 Statement of General Policy or Interpretation;

Commentary on the Fair Credit Reporting Act, 55FR 18804, 18815 (May 4, 1990).

124 15 U.S.C. 6102(a)(3)(A).125 15 U.S.C. 1692d(5).126 See, e.g., House Report at 8.127 See SD DAG at 2; AARP at 22–23.128 Statements of General Policy or Interpretation;

Staff Commentary on the Fair Debt CollectionPractices Act, 53 FR 50097, 50105 (Dec. 13, 1988).

129 See, e.g., Bingham v. Collection Bureau, Inc.,505 F. Supp. 864 (D.N.D. 1981); Venes v.Professional Service Bureau, 353 N.W.2d 671(Minn. Ct. App. 1984).

the purchaser with a consumer reportfrom a consumer reporting agency thatwas issued more than six months afterthe results were achieved.118

A number of commenters stated thatthis section should not apply to theoffering of secured credit cards.119

According to these commenters, securedcredit cards often are marketed as creditproducts that can improve a consumer’scredit history, if properly used. Theabusive practice against which§ 310.4(a)(2) is directed is the deceptivemarketing and sale of bogus creditrepair services; it is not directed at thenondeceptive telemarketing of securedcredit cards.120 In addition, theCommission does not intend that thisSection apply to legitimate creditmonitoring services.

c. Section 310.4(a)(3): Recovery RoomServices

The next abusive practice prohibitedby the Final Rule involves recoveryroom scams. In these operations, adeceptive telemarketer calls a consumerwho has lost money, or who has failedto win a promised prize, in a previousscam. The recovery room telemarketerfalsely promises to recover the lostmoney, or obtain the promised prize, inexchange for a fee paid in advance.After the fee is paid, the promisedservices are never provided. In fact, theconsumer may never hear from thetelemarketer again.

The Final Rule, at § 310.4(a)(3),prohibits any seller or telemarketer from‘‘requesting or receiving payment of anyfee or consideration from a person, forgoods or services represented to recoveror otherwise assist in the return ofmoney or any other item of value paidfor by, or promised to, that person in aprevious telemarketing transaction,until seven business days after suchmoney or other item is delivered to thatperson.’’ This prohibition does notapply, however, to goods or servicesprovided by a licensed attorney. Asstated in the RNPRM, the Commissiondoes not wish to hinder legitimateactivities by licensed attorneys torecover funds lost by consumersthrough deceptive telemarketing, andthus does not believe this prohibitionshould be applied to their services.

The Commission also intends that thisSection not cover debt collectionpractices, since debt collection is not‘‘conducted to induce the purchase ofgoods or services,’’—a prerequisite forRule coverage as dictated by thedefinition of ‘‘telemarketing’’ in§ 310.2(u). Furthermore, this section isapplicable only to recovery services thatpromise the return of money or otheritems of value paid for or promised tothe consumer in a previoustelemarketing transaction. Thus, thisSection will not apply to attempts torecover money or items lost outside oftelemarketing.

d. Section 310.4(a)(4): Advance FeeLoans

Section 310.4(a)(4) of the Final Ruleprohibits any seller or telemarketer fromrequesting or receiving payment of anyfee or consideration in advance ofobtaining a loan or other extension ofcredit when the seller or telemarketerhas guaranteed or represented a highlikelihood of success in obtaining orarranging a loan or other extension ofcredit for a person.121 This section isintended to prevent ‘‘advance fee loan’’scams, in which a telemarketer promisesto obtain a loan for a consumer,regardless of that consumer’s credithistory or credit record, in exchange fora fee, paid in advance. As with recoveryroom scams, after the consumer pays thefee, the promised services typically arenot provided.

Two commenters stated that non-banktelemarketers may make ‘‘prescreened,’’unconditional offers of home equitycredit lines or other forms of mortgagecredit and urged that the Rule shouldnot prohibit non-bank telemarketersfrom collecting, in connection withlegitimate ‘‘prescreened’’ offers ofcredit, an application fee, credit reportfee, and/or appraisal fee before the loanactually closes.122 Section 310.4(a)(4) isnot directed at firm offers of credit bya creditor who properly uses aprescreened list in accordance with theFTC staff commentary on the FCRA.123

Making an authentic firm offer of creditto every consumer on a prescreened listis not equivalent to the specious type oftransaction involved in advance fee loanscams where a seller or telemarketeroffers to obtain or arrange a loan orother extension of credit for a person.

2. Section 310.4(b): Pattern of CallsThe Telemarketing Act directs the

Commission to include in this Rule ‘‘arequirement that telemarketers may notundertake a pattern of unsolicitedtelephone calls which the reasonableconsumer would consider coercive orabusive of such consumer’s right toprivacy.’’ 124 Section 310.4(b) of theFinal Rule sets forth two prohibitions onsellers and telemarketers which areintended to effectuate this requirementof the Act.

First, § 310.4(b)(1)(i) prohibits causingany telephone to ring, or engaging anyperson in telephone conversation,repeatedly or continuously with intentto annoy, abuse, or harass any person atthe called number. Such a prohibition isincluded in the FDCPA,125 and thelegislative history of the TelemarketingAct states that the Commission shouldconsider the FDCPA in establishingprohibited abusive acts or practices.126

Several comments on the RNPRMsuggested that this Section should bekeyed to a reasonable consumer’s beliefof what is annoying, abusing, orharassing, rather than the caller’sintent.127 The Commission has takenthis prohibition virtually verbatim fromthe FDCPA, and finds no reason to alterthis language. The staff commentary tothe FDCPA states that ‘‘continuously’’means ‘‘making a series of telephonecalls, one right after the other,’’ and that‘‘repeatedly’’ means ‘‘calling withexcessive frequency under thecircumstances.’’ 128 The Commissionbelieves that if a telemarketer calls aconsumer continuously or repeatedly, asthose terms have been defined, it ispresumed that the caller’s intent was toannoy, abuse, or harass the person beingcalled. The few courts that have ruledon this provision of the FDCPA havebeen silent on the intent requirement,ultimately deciding the case simply onthe repeated nature of the calls.129

The second prohibition in the FinalRule intended to limit unsolicitedtelephone calls is the ‘‘do not call’’requirement set forth in § 310.4(b)(1)(ii).This section prohibits any telemarketerfrom initiating, or any seller to cause atelemarketer to initiate, an outboundtelephone call to a person when thatperson previously has stated that he or


130 47 U.S.C. 227.131 47 CFR 64.1200(e).132 See, e.g., Citicorp at 2; DMA at 4–5; NRF at 8;

Mastercard at 7; Chase at 2–3.133 The Telemarketing Sales Rule will be enforced

by the Commission, the States, and any person whosuffers more than $50,000 in actual damages causedby violations of this Rule. See 15 U.S.C. 6102(c),6103, 6104. On the other hand, the TCPA ‘‘do notcall’’ provisions may be enforced only in State courtby a private person who receives more than onetelephone call within any 12-month period by or onbehalf of the same entity in violation of the FCC’sregulation. See 47 U.S.C. 227(c)(5).

134 In the RNPRM discussion of the effective dateof the Rule, the Commission stated that the ‘‘do notcall procedures’’ adopted by telemarketers underthe TCPA would comply with this section of therevised proposed Rule as well. 60 FR at 30424. The‘‘procedures’’ mentioned in that section of theRNPRM consist of the compiling of the list ofconsumers who request not to be called by theseller or telemarketer.

135 Rollins at 2.136 See supra text accompanying § 310.2(r) and (t)

(discussing definitions of ‘‘seller’’ and‘‘telemarketer’’).

137 Milligan at 1.138 This includes a statement by consumers that

they are revoking their prior consent to receive callsby that seller. See GA OCA at 3.

139 NYSCPB at 4–5.140 AARP at 23. See also Gardner at 1.

141 15 U.S.C. 6102(a)(3)(B).142 See, e.g., Broadbent at 1; Tiegs at 1; Dander at

1; Beaver at 1; Lombard at 1; Shore at 1.143 See, e.g., GA OCA at 3 (to protect older victims

who are home alone during the day, restrict callsto businesses between 8:00 a.m. to 5 p.m., and callsto residences between 5 p.m. and 9 p.m.); Dick at1 (from 11 a.m. to 5 p.m. daily, with no calls onholidays and weekends); Rice at 1 (9 a.m. to 7 p.m.,in respect for families with children); Stritchko at1 (8 a.m. to 6 p.m., so a person can relax in theevening); Durkee at 1 (11 a.m. to 8 p.m., to respectthose working nights or second shift); Kempf at 1(10 a.m. to 2 p.m.); Joseph at 1; Tucker at 1;Magnuson at 1; Reymann at 1 (8 a.m. or 9 a.m. to5 p.m.).

144 See 47 CFR 64.1200(e)(1).

she does not wish to receive such a callmade by or on behalf of the seller whosegoods or services are being offered.

The Telephone Consumer ProtectionAct (‘‘TCPA’’) 130 and the regulations ofthe Federal CommunicationsCommission (‘‘FCC’’) implementing thatAct 131 include a similar ‘‘do not call’’prohibition. A number of commentersasked the Commission to clarify thatcompliance with the TCPA’s ‘‘do notcall’’ procedures will constitutecompliance with this section of theTelemarketing Sales Rule as well.132 TheCommission cannot make such ablanket pronouncement due to thedifferences in enforcement of the TCPAand this Rule,133 and the slightvariations in the safe harbor provisions,discussed infra. On the other hand, inorder to lessen compliance burdens, theCommission wishes to clarify that inorder to comply with both the TCPAand this Rule, sellers and telemarketersneed compile only one list of consumerswho request not to be called by thatseller or telemarketer.134

One commenter asked theCommission to modify this Section ofthe Final Rule to focus the ‘‘do not call’’prohibition on a particular good orservice, rather than on a seller.135 Forexample, this commenter stated that ifit calls a consumer to sell termitecontrol, and the consumer asks it not tocall any more, the Final Rule shouldpermit that same seller to call theconsumer in the future to offer a decktreatment. The Commission disagrees.Once a consumer states that he or shedoes not wish to receive any additionalcalls from a particular seller, that sellermay not call the consumer to sell anyother product or service whatsoever. Onthe other hand, in the discussion of thedefinition of ‘‘seller,’’ 136 the

Commission has made clear that it willconsider distinct corporate divisions tobe separate sellers. Thus, if a consumertells one division of a company not tocall again, a distinct corporate divisionof that company may make anothertelemarketing call to that consumer.

Another commenter asked theCommission to clarify what consumersmust tell a seller to indicate they do notwant additional calls, whether thatrequest must be in writing, and howquickly the seller must act upon thecaller’s request.137 Any form of requestthat the consumer does not wish toreceive calls from a seller will suffice.138

An oral statement as simple as ‘‘Do notcall again’’ is effective notice. Finally,although the Rule is silent on the timeframe within which the seller must actupon the consumer’s request, suchactions must be taken in a reasonablyexpeditious manner.

Section 310.4(b)(2) of the Final Ruleprovides a limited safe harbor againstliability for violating the ‘‘do not call’’prohibitions included in§ 310.4(b)(1)(ii). The safe harbor statesthat a seller or telemarketer will not beliable for such violations if: (1) It hasestablished and implemented writtenprocedures to comply with the ‘‘do notcall provisions’’; (2) it has trained itspersonnel in those procedures; (3) theseller, or the telemarketer acting onbehalf of the seller, has maintained andrecorded lists of persons who may notbe contacted; and (4) any subsequentcall is the result of error.

One commenter maintained that thisSection should mandate that a seller ortelemarketer meet the requirements ofthe safe harbor in a reasonable mannerin order to successfully assert thedefense.139 Another stated that a selleror telemarketer who makes repeatedcalls as the result of ‘‘error,’’ despite itsadoption of the requisite proceduresoutlined in this Section, should be onnotice of its error and should not beallowed to repeatedly violate the ‘‘donot call’’ provision.140 The Commissionagrees that a rule of reasonablenessshould prevail in determiningapplication of the safe harbor provision.If a company is complying in areasonable manner with therequirements of the safe harbor, any trueerror should be excused. On the otherhand, numerous purportedly‘‘erroneous’’ calls to consumers whopreviously had asked not to be called

may be a sign that the seller’s adoptedprocedures are ineffective, and that thesafe harbor should no longer beavailable.

3. Section 310.4(c): Calling TimeRestrictions

In the Final Rule, the Commissionadopts the RNPRM’s prohibition, in§ 310.4(c), against any telemarketerengaging in outbound telephone calls toa person’s residence, without the priorconsent of the person, at any time otherthan between 8 a.m. and 9 p.m. localtime at the called person’s location. Thisprovision is included in response to theTelemarketing Act’s directive that theRule should include ‘‘restrictions on thehours of the day and night whenunsolicited telephone calls can be madeto consumers.’’ 141

This provision of the Rule struck aresponsive chord with individualconsumers. A number of individualsmaintained that telemarketers beprohibited from calling them at all.142

Others suggested multiple different timerestrictions, for many differentreasons.143 On the other hand, the FCChas established calling time hours of 8a.m. to 9 p.m. in its regulationsimplementing the TCPA.144 By alteringthose permitted calling hours, theCommission would introduce a conflictin the federal regulations governingtelemarketers. The record contains nocompelling evidence to support achange that would produce such aresult. Thus, this section of the FinalRule will be adopted as proposed.

4. Section 310.4(d): Required OralDisclosures

The Telemarketing Act requires theCommission to include in this Rule thefollowing:

A requirement that any person engaged intelemarketing for the sale of goods or servicesshall promptly and clearly disclose to theperson receiving the call that the purpose ofthe call is to sell goods or services and make


145 15 U.S.C. 6102(a)(3)(C).146 See RNPRM at 30418.147 See, e.g., NAAG at 13–14; NY DCA at 1; GA

OCA at 1; AARP at 23–25; NAPA DA at 1.148 VT AG at 2–3.149 USPS at 6.150 The Commission believes that the usual

meaning of the term should apply. ‘‘Prompt’’ isdefined as ‘‘done, performed, delivered, etc., atonce or without delay.’’ Webster’s EncyclopedicUnabridged Dictionary of the English Language at1151 (Portland House 1989).

151 See MD AG at 2.

152 IA DOJ at 4.153 See, e.g., NAAG at 13–14; VT AG at 2–3; AARP

at 23–25.154 See Senate Report at 9–10.155 See Rollins at 2.

156 See Citicorp at 2.157 See USPS at 2.158 One commenter asked if an announcement,

during a telemarketing call, that the consumer ‘‘hasbeen entered free’’ into a sweepstakes would satisfythe disclosure requirement that no purchase orpayment is necessary to win a prize. See ITI at 2–3. The Commission does not believe this disclosurewould suffice, since the mere entry into apromotion may be different from actually having achance of winning a prize.

159 See 18 U.S.C. 1301.160 See, e.g., DMA at 5–6; ITI at 3; PCH at 2–3.

other such disclosures as the Commissiondeems appropriate.145

The Final Rule requires alltelemarketers, in outbound telephonecalls, to disclose promptly and in a clearand conspicuous manner to the personreceiving the call the following fouritems of information: (1) The identity ofthe seller; (2) that the purpose of the callis to sell goods or services; (3) the natureof the goods or services; and (4) that nopurchase or payment is necessary to winif a prize promotion is offered.

The Final Rule adheres to thestatutory requirement that thedisclosures be prompt and clear.Industry representatives generallysupported this requirement.146 On theother hand, many law enforcement andconsumer representative commentersmaintained that the Commission shouldreturn to the language in the initiallyproposed Rule, requiring suchdisclosures to occur ‘‘at the beginning’’of the telephone call.147 One commenternoted that it is important that callsbegin with a statement of the call’spurpose to provide ‘‘an importantprotection against the usual strategy ofprize promoters, which is to seduceconsumers with visions of cars and cashbefore ever revealing that the caller’smain purpose is to sell something.’’ 148

Another stated that the Commission’sfailure to define the term ‘‘promptly’’will ‘‘invite shady promoters to shootfor the grey area, and to provokelitigation over its meaning.’’ 149

The Final Rule adopts the statutorylanguage, requiring the disclosures to be‘‘prompt.’’ Intending to permit someflexibility in the seller’s telemarketingpresentation, the Commission has optednot to include in the Rule a definitionof the term ‘‘prompt.’’ 150 However, torespond to some of the concerns raisedby commenters, the Commissionintends that the Final Rule not permitthe disclosure of the identity of theseller and the promotional purpose ofthe call at the end of the sales pitch.151

At a minimum, the Commission agreeswith commenters that ‘‘prompt’’disclosures should be made prior to thetime any substantive information about

a prize, product, or service is conveyedto the consumer.152

The comments also raised a numberof questions about when the requiredoral disclosures must be made in‘‘multiple purpose calls’’—callsinvolving the sale of goods or servicesand some other activity, such asconducting a prize promotion or marketresearch, or determining customersatisfaction. Law enforcementcommenters noted the importance ofrequiring the mandated disclosuresearly in the call, to avoid consumerconfusion about the call’s purpose.153 Inaddition, the legislative history of theTelemarketing Act noted the problem ofdeceptive telemarketers contactingpotential victims under the guise ofconducting a poll, survey, or other typeof market research.154 To address theseproblems, the Commission believes thatin any multiple purpose call where theseller or telemarketer plans, in at leastsome of those calls, to sell goods orservices, the disclosures required by thissection of the Rule must be made‘‘promptly,’’ during the first part of thecall, before the non-sales portion of thecall takes place. Only in this mannerwill the Rule assure that a sales call isnot being made under the guise of asurvey research call, or a call for someother purpose.

To clarify this point, the followingtwo examples, taken from thecomments, are offered. On the one hand,a seller may call a customer todetermine if that customer is satisfiedwith a previous purchase of goods orservices. The seller plans, during thecourse of that call, to move into a salespresentation if the seller determines thatthe customer is satisfied. If the sellerdetermines that the customer is notsatisfied, however, the seller plans toterminate the call.155 In this example,since the seller plans to make a salespresentation in at least some of its calls,the seller is required to disclosepromptly the information required bythis part of the Rule during the initialportion of the call, before the sellermakes lengthy inquiries about customersatisfaction.

On the other hand, a seller may makecalls to welcome new customers and toinquire whether everything aboutrecently-purchased goods or services issatisfactory. The seller does not plan,during any of these calls, to sellanything to those customers. However,during such calls the customer may ask

about other purchase opportunities, towhich the seller will respond bypresenting those opportunities.156 Sincethe seller initially has no plans to sellgoods or services during these calls, noprompt disclosures are required.

As for the content of the required oraldisclosures, the only significantcomments concerned the ‘‘no purchasenecessary’’ disclosure, in § 310.4(d)(4),required for calls offering a prizepromotion. As stated in the RNPRM, theCommission believes that thisdisclosure is so critical to consumerprotection in a prize promotion that itshould be stated during an outboundtelephone call. The USPS expressedconcern in its comment that thisdisclosure may not cover scams wherethe marketer will not ask the consumerto purchase a prize, but instead will askfor payment of shipping charges, taxes,or other fees in order to enter or win aprize.157 The Commission believes thisis a valid concern, and therefore isamending this portion of the Final Ruleto require the disclosure that ‘‘nopurchase or payment is necessary towin’’ a prize. This disclosure isdesigned to counteract the falseimpression created by deceptive prizepromotion telemarketers that aconsumer must purchase some item, ormake some other type of payment, inorder to win the ‘‘fabulous’’ prizeoffered.158 This disclosure carries themessage to consumers that a true,legitimate prize promotion does notrequire any purchase or payment toparticipate or to win.159

The revised proposed Rule requiredthis disclosure to be made before theprize is described to the person called.A number of industry commentersrequested some timing flexibility here,suggesting that this disclosure berequired ‘‘before or in immediateconjunction with’’ the description of theprize.160 The Commission agrees thatsuch a change will ensure that this keydisclosure is linked directly to the prizedescribed. This modification is designedto prohibit deceptive telemarketers fromseparating the disclosure from thedescription of the prize, thereby


161 The statement in the Final Rule that thisdisclosure must be made before or in conjunctionwith the description of the prize does not alter therequirement that this disclosure must also be made‘‘promptly.’’

162 NAAG at 15 (‘‘at a minimum, the Rule mustrequire meaningful oral disclosures of the methodof free entry, the odds of winning the prizesdescribed, and the restrictions and conditionsassociated with the use of the prize’’); VT AG at 3(all of the above plus verifiable retail sales priceshould be disclosed); MD AG at 1 (requiredisclosure of the odds of winning, the nature andvalue of prizes, and the conditions on receiving theprizes); MA AG at 5 (value and odds); USPS at 7(sales price and odds); AARP at 26–27 (free methodof entry and prize value); IA DOJ at 14 (prize value);NAPA DA at 2 (prize value).

163 USPS at 7.

164 The Telemarketing Act authorizes theCommission to include recordkeeping requirementsin the Rule. 15 U.S.C. 6102(a)(3).

165 See, e.g., Decora, Hall, Knobe, Mansfield, Way.

166 See, e.g., NAAG at 25; NACAA at 7; AARP at27.

167 NAAG at 25–26.

negating or diluting its salutary effect.161

In addition, in order to make the ‘‘nopurchase or payment’’ disclosuremeaningful, the Final Rule also requirestelemarketers to disclose the no-purchase/no payment entry method forthe prize promotion, if requested by theperson called.

Many law enforcement and consumerrepresentative commenters suggestedthat additional oral disclosures berequired in every outbound telephonecall involving a prize promotion.162 TheUSPS comment included the mostconcise statement on this issue, notingthat ‘‘the fraud and deception caused byprize promotions are so great that anyextra expense associated with making[such] oral disclosures * * * is anecessary cost of creating much-neededbalance between telemarketers (whohave all the information) and consumers(who will know only what thetelemarketer tells them).’’ 163 While theCommission is aware of the extensiveamount of telemarketing fraud thatoccurs with deceptive prize promotions,it also is mindful that required oraldisclosures increase both the length andthe cost of telemarketing calls.Moreover, as stated in the RNPRM, theCommission is doubtful of the consumerbenefit to be derived from repeateddisclosures of the same information.Under §§ 310.3(a)(1) (iv) and (v) of theFinal Rule, all sellers and telemarketersmust disclose, before a customer paysfor goods and services, the odds ofreceiving a prize (or the factors used incalculating the odds, if the odds cannotbe calculated in advance), that nopurchase or payment is necessary toreceive a prize or to participate in aprize promotion, and the no purchase/no payment method of entry with eitherinstructions on how to enter or anaddress or local or toll-free telephonenumber the customers may contact forinformation. In addition, all sellers andtelemarketers must disclose the materialcosts or conditions to receive or redeema prize. The Commission believes that

mandating the repeated oral disclosureof this information in every outboundtelephone call involving a prizepromotion is unnecessary.

E. Section 310.5: Recordkeeping

Section 310.5 requires sellers ortelemarketers to keep certain recordsrelating to telemarketing activities for 24months from the date the record isproduced.164 Failure to keep the recordsis a violation of the Rule.

A record retention requirement isnecessary to enable law enforcementagencies to ascertain whether sellersand telemarketers are complying withthe requirements of the Final Rule, toidentify persons who are involved inany challenged practices, and to identifycustomers who may have been injured.A 24-month record retention period isnecessary to provide adequate time forthe Commission and State lawenforcement agencies to completeinvestigations of noncompliance.Consumers who complain to a lawenforcement agency about allegeddeceptive or abusive telemarketingpractices often fail to do soimmediately. Thus, there may besubstantial ‘‘lag time’’ between theoccurrence of violations and the timelaw enforcement learns of the allegedviolations. A two-year record retentionperiod allows law enforcement agenciestime to gather information needed topursue law enforcement actions andidentify victims.

The Commission is mindful, however,of the burden on legitimate business inmaintaining these records. For example,commenters from the office suppliesindustry suggested that recordkeepingcompliance costs would increase coststo dealers and, ultimately, consumersbecause of increased paperwork,computer usage and storage, and filingspace.165 The Final Rule, therefore,strikes a balance between minimizingthe recordkeeping burden on industryand retaining the records necessary topursue law enforcement actions andidentify customers who have beeninjured. The Final Rule requiresretaining records that most businessesalready maintain during the ordinarycourse of business.

Section 310.5(a) sets out the recordsthat must be maintained. Section310.5(b) specifies that the records maybe kept ‘‘in any form.’’ Sellers andtelemarketers may maintain the recordsin any manner, format, or place as theykeep such records in the ordinary

course of business, including inelectronic storage. Several lawenforcement and consumer groupsexpressed concern that permittingelectronic storage would increase theease with which deceptive telemarketerscould quickly destroy data.166 Electronicstorage and other non-paperrecordkeeping pose the danger thatdeceptive telemarketers or sellers mayquickly erase or otherwise destroypotential evidence. However, theCommission believes this risk isoutweighed by the cost to legitimatebusinesses of maintaining hard copies ofdocuments for two years. Electronicstorage and other storage formats (otherthan paper) are increasingly used inboth the public and private sectors toconserve space, paper, and personnelresources.

Moreover, if a deceptive telemarketeror seller were to destroy records, lawenforcement agencies still would be ableto charge them with violating § 310.5(b),which makes the failure to maintain allthe required records a violation of theRule.

Under § 310.5(a)(1), sellers andtelemarketers must retain onlysubstantially different advertising,brochures, telemarketing scripts, andpromotional materials. Sellers andtelemarketers need only retain aspecimen copy of each advertising orpromotional piece or script that issubstantially different from otheradvertisements or scripts. They need notkeep copies of documents that arevirtually identical but for immaterialvariations. If no scripts or otheradvertising or promotional materials areused in connection with thetelemarketing activity, then no suchmaterials would need to be retained.NAAG opined that telemarketers andsellers should not have sole discretionto determine what constitutes‘‘substantially different,’’ in view of thefact that what is ‘‘substantiallydifferent’’ in the consumer protectioncontext can be problematic, and thatchanging a few words in a telemarketingscript can have a tremendous impact.167

The Commission agrees thatreasonable people may differ as towhether a particular document is‘‘substantially different’’ from anotherdocument. However, the Commissionalso recognizes that, in the legitimatetelemarketing industry, scripts canchange frequently, often with onlyminor alterations, and advertisements orpromotional materials may differ onlyin minor respects from other versions.


168 AARP at 27–28; IA DOJ at 5.

169 See, e.g., MPA at 3; MSSC at 3; DMT&H at 1;HEARSTCO at 2.

170 IA DOJ at 6.

171 Section 310.3(a)(3) requires express verifiableauthorization before submitting a demand draft forpayment.

172 NASAA at 2.173 This provision was included in § 310.5(b) of

the initially proposed Rule.

Retention of each and every script,advertisement, or other promotionalpiece would likely enhance efforts oflaw enforcers to build cases againstdeceptive telemarketers; but theCommission is unwilling to burdenlegitimate business with a requirementto maintain such a huge volume ofrecords, much of which may beworthless or redundant from a lawenforcement standpoint.

In the revised proposed Rule,§ 310.5(a)(2) required sellers andtelemarketers to maintain records of thename and last known address of eachprize recipient and the prize awardedwhere the prizes have a value of $25 ormore. Several commenters stated thatrequiring records of prize recipientsonly with regard to prizes having avalue of more than $25 will not providethe type of documentation needed bylaw enforcement.168 These commenterspointed out that many of the abusesfound in prize promotions involve itemsvalued under $25, but represented to bevalued much higher. Further, by its verynature, a deceptive prize promotioninvolves prizes sent to consumers thatare virtually worthless. In order toaddress this valid concern, but notincrease the burden on legitimate prizepromoters, the Commission has revised§ 310.5(a)(2) to require that records bemaintained for all prizes represented,directly or by implication, to have avalue of $25 or more. Sellers andtelemarketers do not have to maintainrecords on prize recipients and prizesawarded for prizes that are representedto have a value of less than $25. TheCommission believes that this change inwording should not increase therecordkeeping burden on legitimatebusiness because such telemarketersand sellers would be expected toaccurately represent prize values.Although in the Commission’sexperience, there is often at least animplied representation of value indeceptive prize promotions, there maybe times when a prize promotion issilent as to value. Therefore, in thoseinstances where no direct or impliedrepresentations have been made as to aprize’s value, a seller or telemarketermust keep records for prizes that costthe seller or telemarketer more than $25to purchase.

Section 310.5(a)(3) requires thatrecords be kept of customertransactions, including the name andlast known address of the customer, thegoods or services purchased, the datesuch goods or services were shipped orprovided, and the amount paid by thecustomer for the goods or services. Only

records relating to actual sales need bemaintained; sellers and telemarketersare not required to keep records of allcustomer contacts, if those customers donot make a purchase.

Several commenters from themagazine sales industry noted thatneither the seller nor telemarketer in themagazine sales industry has knowledgeof, or control over, the dates ofshipment, nor would they have recordsof such as required by § 310.5(a)(3); 169

records reflecting the date(s) ofshipment would be kept by thecontracted ‘‘fulfillment house.’’ Thesecommenters noted, however, that sellersand telemarketers would have the datethe order was placed with thefulfillment house or the date that theservice was to commence. In connectionwith magazine sales, either of thesedates will be sufficient for purposes ofcompliance with § 310.5(a)(3).

Section 310.5(a)(4) requires sellersand telemarketers to keep certainrecords on current and formeremployees who are directly involved intelephone sales: name, any fictitiousname used, the last known homeaddress and telephone number, and jobtitle. Any records relating to current andformer employees are required only forthose persons who are or becameemployees on or after the effective dateof the Final Rule.

IA DOJ recommended that, if callersuse fictitious ‘‘desk’’ names, sellers andtelemarketers should not allow morethan one person to use the same aliasand should maintain currentinformation on the name and address ofany employee who has used an alias. Ifsuch requirements were included, IADOJ opined, law enforcement would beable to request and obtain theinformation from a seller or telemarketerexpeditiously. IA DOJ stated that theserequirements are necessary to identifyand locate individuals responsible fordeceptive telemarketing sales.170

The Commission agrees with theconcerns raised by IA DOJ and hasrevised § 310.5(a)(4) to require that, iffictitious names are used by employees,the name must be traceable to a specificemployee. This revision shouldeliminate the confusion that wouldresult if more than one employee wereusing the same desk name.

The Commission believes, however,that it would be overly burdensome andinappropriate to require businesses tocontinue updating records on personswho no longer work for them.Businesses must maintain up-to-date

information on current employees, andlast-known information on formeremployees, but the Final Rule does notplace an affirmative duty on the selleror telemarketer to update informationon former employees.

Section 310.5(a)(5) requires sellersand telemarketers to retain copies of anyverifiable authorizations required under§ 310.3(a)(3) of the Rule.171 Sellers andtelemarketers should retain records ofthe verifiable authorization for eachtransaction. These records may be inany form, manner, or format consistentwith the methods of authorizationpermitted under § 310.3(a)(3).

NASAA suggested that the Final Ruleexpressly provide law enforcement withaccess to records upon reasonable noticefor the purpose of reviewing andcopying.172 The Commission hasdecided not to include a provisionrequiring that the records be providedupon reasonable notice. TheCommission does not believe that sucha provision would appreciably enhancetools currently at the disposal of lawenforcement authorities to obtain suchinformation, if it is required to bemaintained. Moreover, theCommission’s own law enforcementexperience indicates that such aprovision could be construed to hamperits ability to obtain such informationquickly, especially through ex partetemporary restraining orders againstdeceptive telemarketers.

Section 310.5(b) states that ‘‘[f]ailureto keep all records required by § 310.5(a)shall be a violation of this Rule.’’Sections 310.5 (c) and (d) minimize theburden of maintaining duplicaterecords.

Under § 310.5(c), the seller andtelemarketer need not keep duplicativerecords if they allocate betweenthemselves, by written agreement,responsibility for complying with therecordkeeping requirements. Absent awritten agreement between the parties,or if the written agreement is unclear asto who must maintain the requiredrecords, the seller is responsible forcomplying with §§ 310.5(a)(1)–(3) and(5), and the telemarketer is responsiblefor complying with § 310.5(a)(4) (theSection dealing with records aboutcurrent and former employees). Severalcommenters on the initially proposedRule supported § 310.5(c),173 noting thatit strikes a reasonable balance betweenmaintaining necessary documentationand avoiding overly burdensome


174 See, e.g., initial comments: NRF at 41; ARDAat 37–38.

175 NAAG at 25.176 One commenter suggested requiring that any

agreement between the parties established under§ 310.5(c) would also govern who is to maintain therecords in the event of a dissolution. BSA at 7. TheCommission believes that the division ofresponsibilities set forth in the Final Rule appearsto be the most appropriate with regard to the typesof records to be maintained.

177 See, e.g., NCL at 16; NACAA at 8; NAAG at23–25.

178 See, e.g., NCL at 16.179 See, e.g., ACRA at 6–7; IBM at 19–23; FFF;

BPIA at 10–12.180 See generally MFDA.

181 IBM at 19–23; ACRA at 6–7.182 Time Warner at 2–3.183 60 FR 17656 (April 7, 1995).

requirements, as well as noting that it isconsistent with the contractual nature ofthe relationship between sellers andtelemarketers.174

On the other hand, NAAG feared thata seller could use contractual provisionsto shift its recordkeeping responsibilityto another ‘‘fly-by-night,’’ and mostlikely ‘‘judgment proof,’’ telemarketer.NAAG stated that the Rule’s failure toprovide joint and several responsibilityfor recordkeeping exacerbated thedanger of deceptive telemarketersquickly destroying data.175 NAAG askedthat the Final Rule require that recordsbe kept by an entity which will notbenefit by their loss. The Commissionhas considered this suggestion, butsince both sellers and telemarketers areliable for violations of the provisions ofthe Rule, it is unclear where such a‘‘disinterested’’ recordkeeping entitymight be found. Moreover, theCommission believes the risk thatNAAG identified is outweighed by thecost to legitimate sellers andtelemarketers of maintaining duplicatecopies of documents for two years.

Finally, § 310.5(d) sets out the partiesresponsible for maintaining records atthe end of, or after a change inownership of, the seller’s ortelemarketer’s business. In the event ofdissolution or termination of suchbusiness, the principal of the seller ortelemarketer is required to maintainthese records. On the other hand, in theevent of any sale, assignment, or otherchange in ownership of the seller’s ortelemarketer’s business, the successorbusiness is required to maintain therecords.176

F. Section 310.6 ExemptionsSection 310.6 of the Rule exempts

certain types of activities from theRule’s coverage. This section promptedconsiderable RNPRM comments, as itdid in the initially proposed Rule. Intheir comments to the RNPRM, lawenforcement and consumer groups onceagain cautioned against any exemptionsbecause of the potential danger thatdeceptive telemarketers will seize uponany perceived loophole to avoidcoverage under the Rule.177 Thesegroups argued that exemptions only

lead to confusion as to who is coveredunder the Rule and will cause lawenforcement agencies to expendconsiderable resources to determinewhether a telemarketer is subject to theRule. They further maintained that,since only catalog sales are exemptedfrom the Act, Congress intended for alltelemarketers to be covered by the Ruleand did not intend the Commission toinclude a broad list of specificexemptions.178 The business communityonce again suggested that theCommission set out exemptions thatwill allow legitimate telemarketers tooperate without the restraints ofadditional regulation.179

The Commission has concluded thatit is vested by the Telemarketing Actwith discretion both in determiningwhat constitutes ‘‘telemarketing’’ underthe Act and in defining deceptive andabusive practices. In exercising thatdiscretion, the Commission has decidedthat narrowly-tailored exemptions arenecessary to prevent an undue burdenon legitimate businesses and salestransactions. Section 310.6 enumeratesthese exemptions. The Commissiondetermined the advisability of eachexemption after examining the Act andconsidering the following factors: (1)Whether Congress intended that acertain type of sales activity be exemptunder the Rule; (2) whether the conductor business in question already isregulated extensively by Federal or Statelaw; (3) whether, based on theCommission’s enforcement experience,the conduct or business lends itselfeasily to the forms of deception or abusethat the Act is intended to address; and(4) whether requiring businesses tocomply with the Rule would be undulyburdensome when weighed against thelikelihood that sellers or telemarketersengaged in fraud would use anexemption to circumvent Rule coverage.

One commenter suggested anexemption for providers of funeralgoods and services who are subject tothe Commission’s Funeral Rule, 16 CFRpart 453.180 The Commission believesthat most telephone sales by funeralproviders covered by the Funeral Rulewill not be completed until after a face-to-face sales presentation. Suchtransactions would be exempt under§ 310.6(c), discussed below. It istherefore unnecessary to specificallyexempt those transactions from theprovisions of this Rule.

Other commenters requested that theCommission reconsider its decision not

to exempt prior business relationshipsor established businesses.181 TheCommission is not persuaded thatexemptions defined in such a mannerwould be workable, nor does theCommission believe they are necessary,given the changes elsewhere in the Rulethat focus it more narrowly. Indeed, oneof the commenters on the initiallyproposed Rule that strongly advocated a‘‘safe harbor’’ provision for establishedbusinesses has indicated that such anexemption is unnecessary because therevised proposed Rule was morenarrowly and appropriately focused.182

Section 310.6(a) exempts pay-per-callservices subject to the Commission’s900-number Rule, 16 CFR part 308,since that Rule’s extensive requirementsand prohibitions governing thesetransactions already provide customerswith substantial protections regardingthe deceptive or abusive practices thatare the subject of the TelemarketingSales Rule.

Section 310.6(b) exempts the sales offranchises subject to the Commission’sFranchise Rule, 16 CFR part 436. Asdiscussed supra, the revised proposedRule had defined the term ‘‘investmentopportunity’’ in § 310.2(j) to excludefranchise sales. In order to make it clearthat such transactions are not coveredby the Telemarketing Sales Rule, theCommission has decided to add aseparate exemption in § 310.6(b) forsales of franchises covered by theFranchise Rule, rather than to rely uponthe definition of ‘‘investmentopportunity’’ to accomplish this result.The Commission’s Franchise Rulecontains requirements and prohibitionsthat apply to the sale of franchises andbusiness opportunities and that alreadyprovide customers with substantialprotections. Subsequent to thepublication of the NPR in thisproceeding, the Commission issued arequest for comments on the FranchiseRule as part of its periodic regulatoryreview of Commission trade regulationrules and guides.183 The Commissionbelieves it is more appropriate toconsider within the framework of thatreview process whether any furtheraction is needed to address the sale offranchises, including those employingtelemarketing. Following this approach,the Commission ensures that any newrequirement or prohibition applicable tofranchises will be codified in oneregulation—the Franchise Rule—ratherthan spread out over two separate Rules.

One commenter (DSA) maintainedthat business ventures that are not


184 DSA at 2.185 DSA at 3–4. DSA was prompted to raise this

suggestion by its concern that the recruitment ofpersons to engage in the direct sale of goods orservices might be considered a ‘‘businessopportunity’’ which may be covered by this Rule.However, this concern is unfounded given theexemption of face-to-face sales from coverage of thisRule, included in § 310.6(c).

186 DSA at 5–7; ACA at 2; DMT&H at 1;HEARSTCO at 2–3; MSSC at 4.

187 DSA at 5–7.

188 See Senate Report at 8.189 USPS at 10. 190 Mass AG at 5–6; IA DOJ at 7; USPS at 10–11.

covered by the Franchise Rule should beexempted from the definition ofinvestment opportunities as well.184 TheCommission disagrees. When a businessventure is not covered by the FranchiseRule, then consumers do not receive theprotection afforded by that Rule’s pre-sale disclosure requirements. Therefore,it is appropriate that telephone sales ofsuch ventures should be covered by thisRule, so that consumers may receive thebenefit of its protections.185

Section 310.6(c) exempts ‘‘telephonecalls in which the sale of goods orservices is not completed, and paymentor authorization for payment is notrequired, until after a face-to-face salespresentation by the seller.’’ Thisexemption reflects the Commission’senforcement experience that theoccurrence of a face-to-face meetinglimits the incidence of telemarketingdeception and abuse. The paradigm oftelemarketing fraud involves aninterstate telephone call in which thecustomer has no other direct contactwith the caller. The Commission hasdeleted the language in the revisedproposed Rule which would haverequired the consumer to have anopportunity to examine the goods orservices offered. Many commenterspointed out that consumers would notbe able to examine an intangible service,nor would they be able to examine eachitem that was described in a catalogused by the seller in a salespresentation.186 Furthermore, DSApointed out that the requirement that aconsumer be given the opportunity toexamine the good or service wascontrary to most State telemarketinglaws and might preempt a large body ofexisting State law.187

This exemption also covers thosesales that begin with a face-to-face salespresentation and are later completed ina telephone call. The emphasis in thisexemption is on the face-to-face contactbetween the buyer and seller, whichdistinguishes these transactions fromthose of telemarketing that arecompleted without face-to-face contactbetween buyer and seller.

Section 310.6(d) exempts callsinitiated by a customer that are not theresult of any solicitation by a seller ortelemarketer. Such calls are not deemed

to be part of a telemarketing ‘‘plan,program, or campaign * * * to inducethe purchase of goods or services’’under the Act.188 This exemption coversincidental uses of the telephone that arenot in response to a direct solicitation,e.g., calls from a customer to makehotel, airline, car rental, or similarreservations, to place carry-out orrestaurant delivery orders, or to obtaininformation or customer technicalsupport.

Section 310.6(e) exempts callsinitiated by a customer in response togeneral media advertisements, otherthan direct mail solicitations, unless thecalls are in response to an advertisementrelating to investment opportunities,credit repair, recovery rooms, oradvance fee loans. This exemptionapplies to calls in response to televisioncommercials, infomercials, homeshopping programs, magazine andnewspaper advertisements, and otherforms of mass media advertising andsolicitations. This exemption alsocovers calls from a customer in responseto a business listing in the Yellow Pagesor similar general directory listing. TheCommission does not intend thattelephone contacts in response togeneral media advertising be coveredunder the Rule. In the Commission’sexperience, calls responding to generalmedia advertising do not typicallyinvolve the forms of deception andabuse the Act seeks to stem. Deceptivegeneral media advertising will continueto be subject to enforcement actionsunder the FTC Act.

On the other hand, the Commissionknows that some deceptive sellers ortelemarketers use mass media or generaladvertising to entice their victims tocall, particularly in relation to the saleof investment opportunities, specificcredit-related programs, and recoveryrooms. Given the Commission’sexperience with the marketing of thesedeceptive telemarketing schemesthrough television commercials,infomercials, magazine and newspaperadvertisements, and other forms of massmedia advertising, the Commission hasexcluded these activities from thegeneral media advertising exemption.

USPS recommended that theCommission designate prize promotionsas one of the types of telemarketing thatwill not be entitled to claim a generalmedia advertising exemption.189 USPSpointed out that deceptive telemarketershave proven to be very adaptable andthat the general media advertisingexemption may be a major loophole forthose with a ‘‘gift for developing ‘new

and improved’ frauds.’’ USPS cautionedthat deceptive telemarketers may takeadvantage of the exemption byfashioning false and deceptive print andbroadcast media ads instead of usingdirect mail. The Commission agrees thatdeceptive telemarketers are adept atcircumventing regulations. However, itis impossible to predict accurately themanner in which their resourcefulnesswill manifest itself. The Commission’slaw enforcement experience relating todeceptive telemarketing has notidentified a problem with general mediaadvertising of prize promotions, unlikethe problems that have arisen with theenumerated telemarketing businessesthat have been excluded from theexemption. In fact, it would likely bemuch more difficult to persuadeconsumers that they have been‘‘specially selected’’ to receive a prize ifthe solicitation relating to the prize wereto be publicized on the television, in amagazine, or through other mass media.Therefore, the Commission has decidedto retain the exemption for mass mediaadvertising of prize promotions. TheCommission will reconsider thatposition if general advertising of prizepromotions becomes a problem after theFinal Rule has been in effect.

Section 310.6(f) of the Final Ruleexempts calls from a customer inresponse to a direct mail solicitationthat clearly, conspicuously, andtruthfully discloses all materialinformation listed in § 310.3(a)(1) of thispart for any item offered in the directmail solicitation. In the Commission’sexperience, such solicitations are notuniformly related to the forms ofdeception and abuse the Act seeks tostem, nor are they uniformly unrelatedto such misconduct. Rather, in certaindiscrete areas of telemarketing, suchsolicitations often provide the openingfor subsequent deception and abuse.The Commission has drawn upon itsenforcement experience, identifiedthose problem areas, and excluded themfrom this exemption. The exemptiondoes not apply to calls initiated by acustomer in response to a direct mailsolicitation relating to any of severalcategories of goods or services:investment opportunities, credit repair,recovery rooms, advance fee loans, orprize promotions.

Many commenters from lawenforcement and consumer groupsstrongly recommended that theCommission also exclude direct mailsolicitations involving prize promotionsfrom this exemption.190 They pointedout that direct mail solicitations of prizepromotions are a major source of


191 IA DOJ at 7; Mass AG at 5–6; USPS at 10–11.

192 IBM at 15–17. The Telemarketing Act exemptssolicitation of sales through the mailing of a catalogas long as the seller or telemarketer ‘‘does not solicitcustomers by phone but only receives calls initiatedby customers in response to the catalog and duringthose calls takes orders only without furthersolicitation.’’ § 6106(4).

193 See, e.g., DMA at 6–7; AAP at 3; BPIA at 4–7.

194 E.g., AAP at 3.195 See, e.g., Allard, Allied, B&D, BESCO, Cook,

Cornerstone, Daisy, Decora, Guernsey, Jud, MBR,Midesha, Pelican, Sablatura, Total, Way.

196 See, e.g., USPS at 11–12; IA DOJ at 8.

197 See, e.g., USPS at 11–12; IA DOJ at 8.198 BPIA at 4–7.199 BPIA at 10–12.

consumer complaints and consumerinjury, and should remain within theRule’s coverage. The Commission ispersuaded that abuse in direct mailprize promotions has been such a majorsource of consumer injury that anexemption no matter how carefullycrafted, might provide loopholes whichdeceptive promoters might exploit toevade the Rule. Therefore, theCommission has added prizepromotions to the list of telemarketingareas that are excluded from the directmail solicitation exemption.

In excluding prize promotions fromthe direct mail solicitation exemption,the Commission has been mindful of theburdens this action might place onlegitimate prize promoters. However,the Commission believes that thechanges elsewhere in the Rule havereduced substantially the burden onlegitimate industry by providingmaximum flexibility to business as longas customers receive the necessaryinformation and protections.Furthermore, the Commission believesthat any increased burden will beminimal. Based on informationprovided during the comment periodsand the public workshop, the legitimateprize promotion industry alreadycomplies substantially with most of theRule’s provisions. For example,legitimate prize promoters do notmisrepresent the prize promotion or thegoods and services offered; they do notdebit customer’s accounts withoutexpress verifiable authorization; andthey maintain the required records.

Several commenters also pointed outthat the wording of the exemption in therevised proposed Rule would allowdirect mail solicitors to claim anexemption even if a direct mailsolicitation were totally deceptive, sincethe exemption was predicated solely onmaking the disclosures required under§ 310.3(a)(1).191 The exemption did notrequire that the disclosures be truthful,only that disclosures be made. It wasnot the Commission’s intent to allow anexemption predicated upon untruthful§ 310.3(a)(1) disclosures. Therefore,§ 310.6(f) of the Final Rule specifies thatthe disclosures be made truthfully, inaddition to being made clearly andconspicuously.

IBM noted that the Rule’s exemptionsfor general media advertising in§ 310.6(e) and direct mail solicitationsin § 310.6(f) are broader and do notcontain the prohibitions against furthersolicitation during calls from consumersthat the Telemarketing Act places on

catalog sales.192 The commenter statedthat ‘‘this produces the potentiallyperverse result of regulating mostintensely the marketing medium thatprovides the greatest indicia oflegitimacy and the most information forthe consumer.’’ This is an illusoryproblem since catalogs, being ‘‘directmail solicitations,’’ are exempt from theRule, through § 310.6(f), if they clearly,conspicuously, and truthfully discloseall material information required in§ 310.3(a)(1).

Section 310.6(g) exempts ‘‘telephonecalls between a telemarketer and anybusiness, except calls involving theretail sale of nondurable office orcleaning supplies.’’ Several industrycommenters suggested that a ‘‘business-to-business’’ exemption was defensibleonly if provided on an across-the-boardbasis, without exceptions.193 Industryalso asked that any exemption beexpanded to include entities other thanbusinesses, e.g., government agenciesand educational institutions.194

Numerous office and cleaning suppliesbusinesses also expressed strongdissatisfaction with being covered bythe Rule, arguing that the burden ofcomplying with the Rule will fall onlegitimate sellers and telemarketers,while the deceptive operators willsimply ignore the requirements.195

Enforcement and consumer agencies,on the other hand, cautioned againstproviding any business-to-businessexemption because of the potentialloophole such an exemption wouldprovide.196 They predicted the revival of‘‘advertising specialty’’ scams thatvictimize small businesses withpromises of fabulous prizes in exchangefor the purchase of promotional itemsengraved with the business’s name.These commenters also predicted therise of other scams targeting smallbusinesses. Law enforcement agenciessuggested that, if a business-to-businessexemption were to be included in theFinal Rule, the Commission shouldexpand the list of goods or services thatwould be excluded from the exemption.They suggested that advertising andpromotional specialties and the sale oflistings in classified directories and

other publications be excluded from theexemption.197 Similarly, commentersfrom the office supplies industry arguedthat they should not be singled out forinclusion under the Rule because otherindustries selling to businesses alsohave a history of abuses, e.g., specialtyor business promotional products,investment opportunities, and premiumand prize promotions.198

The Commission believes thatCongress did not intend that everybusiness use of the telephone becovered by this Rule. Nevertheless, theCommission’s extensive enforcementexperience pertaining to deceptivetelemarketing directed to businesses,particularly office and cleaning supplyscams, amply demonstrate that anacross-the-board exemption forbusiness-to-business contacts isinappropriate. The Commissionrecognizes that there may have beenpast problems with telemarketing salesof products other than office or cleaningsupplies to businesses. However, theCommission’s enforcement experienceagainst deceptive telemarketersindicates that office and cleaningsupplies have been by far the mostsignificant business-to-business problemarea; such telemarketing falls within theCommission’s definition of deceptivetelemarketing acts or practices.Therefore, the Commission has decidednot to expand the list of business-to-business telemarketing activitiesexcluded from the exemption. TheCommission will reconsider thatposition if additional business-to-business telemarketing activitiesbecome problems after the Final Rulehas been in effect.

BPIA suggested that, if theCommission does not believe a totalexemption for business-to-businesscontacts is appropriate, there may beother modifications to the language ofthe Rule that would provide relief to thelegitimate office supplies dealers whowould otherwise be subject to the Rule’sprovisions.199 The Commission believesthat each of the suggested modificationswould provide substantial loopholes fordeceptive telemarketers. For example,one suggestion was that, in the contextof office and cleaning supplies,‘‘telemarketer’’ be defined as only thoseoperations that sell their productsexclusively through telemarketing. Thisdefinition would open the door todeceptive telemarketers who wouldneed to set up only a de minimisnumber of non-telemarketing sales, e.g.,by sales representative or by catalog, in


200 BPIA estimates that, based on Dunn andBradstreet data for 1995, there are over 6,000 officesupply dealers in the United States, and the vastmajority of these firms have annual revenues of lessthan $2 million. BPIA at 8.

201 See 15 U.S.C. 6103 and 6104.202 See generally DMA.203 The Act states: ‘‘(N)o activity which is outside

the jurisdiction of (the FTC) Act shall be affectedby this Act.’’ 15 U.S.C. 6105(a). In addition, thelegislative history includes the statement that:‘‘(t)he legislation * * * does not vest the FTC, theState attorneys general, or private parties with

jurisdiction over any person over whom the FTCdoes not otherwise have authority.’’ Senate Reportat 14.

204 See, e.g., NAAG at 21; VT AG at 2; NACAAat 8.

205 Id.206 NAAG at 8.

order to claim the exemption. The sameproblem would arise from BPIA’salternative suggestion that the Ruleexempt telemarketing of office supplieswhere the initial sale was made by asales representative in person, inwriting, electronically, or as a result ofreceipt of a catalog. Again, thisexemption would open the door todeceptive telemarketers who wouldneed to set up only an initial salethrough a deceptive catalog or othermeans in order to claim the exemption.BPIA’s third alternative was to define‘‘telemarketer’’ as a person employed orunder contract with an office orcleaning supply dealer that sells ordistributes fewer than 100 differentproducts. This alternative presentsevidentiary obstacles to lawenforcement. Law enforcement agencieswould have to expend scarce resourcesto prove that the number of productssold is less than the threshold of 100and argue over whether each brand orsize or color of toner or paper or otherproduct constitutes a separate product.The Commission therefore rejects thesesuggestions as unworkable.

On the other hand, telephone calls tosell nondurable office and cleaningsupplies are the only business-to-business contacts that are not exemptfrom this Rule. The Commissionbelieves that the conduct prohibitionsand affirmative disclosures mandated bythe Final Rule are crucial to protectbusinesses—particularly smallbusinesses and nonprofitorganizations—from the harsh practicesof some unscrupulous sellers of thoseproducts. Nevertheless, it recognizesthat the Rule may result in a disparateimpact on the legitimate sellers of officeand cleaning supplies as opposed toother businesses exempted from theRule. Therefore, the Commission wishesto balance the benefits derived fromcompliance with the Rule’s prohibitionsand disclosure requirements against theburdens imposed upon the office andcleaning supply industry—minimizingsuch burdens where possible.200

After considering all areas of the Rulefor possible minimization of complianceburdens to the legitimate office andcleaning supply industry, theCommission has decided to exemptsellers or telemarketers engaged in thesale of nondurable office and cleaningsupplies from the recordkeepingrequirements in § 310.5 of the Rule. TheCommission realizes that exemptingsellers and telemarketers of office and

cleaning supplies from therecordkeeping requirements may makelaw enforcement’s job more difficult insome situations. However, theCommission has determined that thecosts imposed on legitimate industryfrom the recordkeeping requirementsunder § 310.5 of the Rule outweigh thebenefits compliance with that Sectionwould afford. Based on its own lawenforcement actions against deceptivesellers and telemarketers, theCommission does not believe that suchan exemption will significantly obstructlaw enforcement’s efforts to stopunlawful activities by sellers andtelemarketers of nondurable office andcleaning supplies.

G. Section 310.7: Actions by States andPrivate Persons

The Telemarketing Act permitscertain State officials and privatepersons to bring civil actions in anappropriate federal district court forviolations of this Rule.201 Section310.7(a) sets forth the notice that suchparties must provide to the Commissionregarding those actions. Such partiesmust serve written notice of their actionon the Commission, if feasible, prior toinitiating an action under this Rule. Thenotice must include a copy of thecomplaint and any other pleadings to befiled with the court. If prior notice is notfeasible, the State official or privateperson must serve the Commission withthe required notice immediately uponinstituting its action.

One commenter suggested that thestreet address and telephone number beadded to the mailing address given inthe Rule in order to clarify thatovernight express delivery or facsimilewould also be appropriate for providingwritten notice of State action to theCommission.202 The Commissionbelieves that such an agreement onservice can be arranged informallybetween the Commission and the States.Such an informal agreement alsoprovides the flexibility needed asaddresses and telephone numbers maychange in the future.

Section 310.7(b) of the revisedproposed Rule stated that the Rule‘‘does not vest the attorney general ofany State or any private person withjurisdiction over any person or activityoutside the jurisdiction of the FTCAct.’’ 203 This provision prompted

considerable comment from State lawenforcement agencies, who noted thatthe States are able to sue third parties(including many parties who are exemptfrom FTC jurisdiction) in State court forassisting and facilitating telemarketingfraud.204 The States had anticipatedthat, in filing federal suits under theAct, State pendent claims could andwould be joined to the federal causes ofaction. The States expressed concernthat the language in § 310.7(b) could beconstrued to strip States of the right tobring pendent claims against entitiesthat are exempt from FTCjurisdiction.205

The Commission does not believe thatthe language of § 310.7(b) in the revisedproposed Rule would have compelledthe construction that prompted NAAG’sconcern; but to clarify that theCommission intends to provide nosupport to such a construction, it hasdecided to delete § 310.7(b).

Congress clearly intended that the Actand the Rule serve to enhance, and notdetract from, State law enforcementefforts to address telemarketing fraud.As NAAG pointed out,206 section 6103(f)of the Act contains language whichmakes it clear that the limitation insection 6105(b) of the Act does notrestrict a State’s authority to pursue anyclaim or action under its own laws inState court. Therefore, the Final Ruleadds a new § 310.7(b), with languagetracking § 6103(f)(1) of theTelemarketing Act to clarify, in theRule, that notwithstandingjurisdictional limitations of the FTCAct, an authorized State official is notinhibited from proceeding in State courton the basis of an alleged violation ofany civil or criminal statute of suchState.

III. PreemptionSection 310.8 of the revised proposed

Rule stated that ‘‘(n)othing in (the Rule)shall be construed to preempt any Statelaw that is not in direct conflict withany provision of (the Rule).’’ This wasintended to provide that State statutes,rules, or regulations concerningtelemarketing that contain prohibitionsor requirements that are not imposed bythis Rule would remain in effect, to theextent that these statutes do not conflictwith this Rule. This provision wasintended to make clear that State lawscan exceed the threshold-levelrequirements established by the Rule as


207 See, e.g., Spiegel at 1; DMA at 9–11; Olan at4–6; ATA at 2; NASAA at 2; NJ DCA at 5; MD AGat 1–2; VT AG at 3; GA OCA at 3–4; MA AG at 6–7; NCL at 4; IA DOJ at 8; NAAG at 6–12.

208 Several commenters requested clarificationthat county, municipal or other local laws wouldnot be preempted by the Rule. See generally Napa;Hillsborough; NACAA; NYC; San Diego.

209 GA OCA at 3–4.210 NASAA at 2.211 NAAG at 6–12. NAAG’s position was

supported by AARP, CFA, NACAA, IA DOJ, andUSPS.

212 See, e.g., AAF at 1; CHC at 7; DMA at 11–14;NIMA at 4; IBM at 23–26; Olan at 6; Spiegel at 2;HII at 2.

213 60 FR 8313, 8322 (Feb. 14, 1995).214 Id.215 44 U.S.C. 3501–3520.216 5 CFR 1320.7(c).

long as they do not directly conflictwith the Rule’s requirements.

This provision prompted considerablecomment from industry and from lawenforcement and consumer groups.207

Industry generally recommended thatthe Rule adopt a preemption standardbased on ‘‘inconsistency,’’ which hasbeen used by the FTC in its Mail orTelephone Order Rule, 16 CFR part 435.They argued that such a standard wouldpreempt State and local laws andregulations that are inconsistent withthe federal rules to the extent thatconsumers are not provided with equalor greater protections, and wouldpreempt those provisions of State lawwhich provide the same requirements asthe federal rules, but which demandthat the requirements be undertaken ina fashion different from the federal law.

Law enforcement asked that theCommission clarify that the Rule doesnot preempt State law andrecommended that a presumptionagainst preemption be included in thetext of the Rule.208 They noted that theAct did not authorize the FTC topreempt State laws and that, byincluding a preemption section, Stateswith stronger regulations than the Rulecould find themselves facingpreemptive challenges since the stricterState regulations could be seen toconflict with federal law. GA OCAsuggested that, if the FTC intends toinclude a preemption section, the Ruleshould use the traditional standard ofpreemption used in other FTC rules, i.e.,that State law is preempted only to theextent that it provides less consumerprotection than does the Rule.209

NASAA recommended that only Stateregulations requiring conduct thatwould directly conflict with the federalrule should be exempted.210

NAAG commented most extensivelyon this issue, urging deletion of anypreemption provision from the Rule.211

NAAG stated that the language of therevised proposed Rule deviatedsufficiently from the language of thestatute that it could be used bydefendants to argue that the FTC, byadoption of its Rule, has preemptedenforcement of some State laws whichare stronger than the FTC Rule. NAAG

further stated that although it‘‘disagree[s] that the Rule has thispreemptive effect, or in fact can havethis effect when Congress clearly spoke(in section 4(f)(1) of the Act, 15 U.S.C.6103(f)(1)) in favor of no preemption,history tells us that such arguments willbe made and, as such will makeenforcement of our more consumer-friendly State laws more time-consuming and difficult.’’ NAAG furtherpredicted that deceptive telemarketersdefending against a State enforcementaction may point to the Commission’sdeletion of certain provisions includedin the initial version of the Rulepublished with the NPR as evidencethat in rejecting those provisions, theCommission effectively preemptedsimilar provisions in State law.

The Commission does not intend anysuch preemptive effect and is persuadedby NAAG’s arguments that the quotedpreemption provision in the revisedproposed Rule should be dropped. Byincluding § 310.7(b) that tracks section4(f)(1) of the Act, 15 U.S.C. 6103(f)(1),the Commission intends to underscorethat the Rule does not ‘‘prohibit anyattorney general or other authorizedState official from proceeding in Statecourt on the basis of an alleged violationof any civil or criminal statute of suchState.’’

IV. Effective Date

The revised proposed Rule set aneffective date of 30 days from the datethe Rule was prescribed. Most industrycommenters stated that 30 days wasinadequate to permit systems to berefined, review and rewrite materials,review and renegotiate contractsbetween sellers and telemarketers, andtrain workers.212 The Commissionagrees that there should be a longerperiod of time between the date thisRule is prescribed and the effective datein order to provide sufficient time forindustry members to familiarizethemselves with the requirements of theFinal Rule and to ensure that theiroperations are in compliance. TheCommission believes four months is anadequate amount of time to address theindustry’s needs in this regard.Accordingly, the effective date for thisRule is December 31, 1995.

V. Regulatory Flexibility Act

In publishing the initially proposedRule, the Commission certified, subjectto subsequent public comment, that theproposed Rule, if promulgated, wouldnot have a significant economic impact

on a substantial number of small entitiesand, therefore, that the provisions of theRegulatory Flexibility Act, 5 U.S.C.605(b), requiring an initial regulatoryanalysis, did not apply.213 TheCommission noted that any economiccosts imposed on small entities by theproposed Rule were, in many instances,specifically imposed by statute. Wherethey were not, efforts had been made tominimize any unforeseen burden onsmall entities. The Commissiondetermined, on the basis of theinformation available to the staff at thattime, that the proposed Rule wouldresult in few, if any, independentadditional costs. The Commissionnonetheless requested comment on theeffects of the proposed Rule on costs,profitability, competitiveness, andemployment in small entities, in ordernot to overlook any substantialeconomic impact that would warrant afinal regulatory flexibility analysis.214

The information and commentsreceived by the Commission did notprovide sufficient reliable statistical oranalytical data to quantify precisely theeffect, differential or otherwise, of theproposed Rule on small entities versusits effect on all entities that may besubject to this Rule. Accordingly, theCommission has determined that publiccomments and information before theCommission do not alter the conclusionthat the Final Rule would not have asufficiently significant economic impacton a substantial number of small entitiesto warrant a final regulatory flexibilityanalysis under the RegulatoryFlexibility Act. This notice serves ascertification to that effect to the SmallBusiness Administration.

VI. Paperwork Reduction ActThe Paperwork Reduction Act

(‘‘PRA’’),215 and implementingregulations of the Office of Managementand Budget (‘‘OMB’’) 216 requireagencies to obtain clearance forregulations that involve the ‘‘collectionof information,’’ which includes bothreporting and recordkeepingrequirements. In the RNPRM, theCommission proposed requiring sellersor telemarketers to maintain certainrecords relating to telemarketingtransactions. The proposedrecordkeeping requirements were‘‘collections of information’’ as definedby the OMB regulations implementingthe PRA. The proposed requirements,therefore, were submitted to OMB forreview under the PRA and were


217 60 FR 32682 (June 23, 1995).

published in the Federal Register forseparate comment.217

The Commission estimated thatapproximately 40,000 industry memberscould be affected by the revisedproposed Rule’s recordkeepingrequirements. It further estimated thatno more than 100 companies would findit necessary to develop, modify,construct, or assemble materials orequipment in order to comply with therevised proposed Rule. The Commissionfurther estimated that it would takethese 100 entities approximately 100hours each during the first year ofcompliance to assemble the necessaryequipment, for a total of 10,000 burdenhours. It also estimated that thecompanies that already haverecordkeeping systems would requireonly one hour to comply with theproposed recordkeeping requirements,for a total burden estimate of 49,900hours. The Commission requested thatthis figure be rounded up to a burdenestimate of 50,000 hours. The additionalburden hours, which was a yearlyestimate, allowed for approximately 100new companies to enter the industryduring each succeeding year withoutrequiring the Commission to modify theburden estimate.

The revised proposed Rule requiredsellers and telemarketers to providecertain disclosures in telemarketingtransactions. Specifically, the revisedproposed Rule required sellers ortelemarketers to disclose in an outboundtelephone call, the identity of the seller;the purpose of the call; the nature of thegoods or services; and that no purchasewas necessary to win if a prizepromotion was offered in conjunctionwith a sales offer of goods or services.If requested, the telemarketer wasrequired to disclose the no-purchaseentry method for the prize promotion.

The Commission estimated that40,000 industry members makeapproximately 9 billion calls per year,or 225,000 calls per year per company.However, under §§ 310.6(d) and (e) ofthe revised proposed Rule, if anindustry member chose to solicitconsumers by using advertising mediaother than direct mail or by using directmail solicitations that make certainrequired disclosures, it would beexempted from complying with otherdisclosures required by the Rule.Because the burden of complying withwritten disclosures would be muchlower than the burden of complyingwith all the Rule’s provisions, theCommission estimated that at least9,000 firms would choose to adopttelemarketing methods that exempt

them from the revised proposed Rule’soral disclosure requirements. TheCommission estimated that it wouldtake 7 seconds for callers to disclose therequired information. It also estimatedthat at least 60% of calls resulted in‘‘hang-ups’’ before the seller ortelemarketer could make all the requiredoral disclosures and therefore lastedonly 2 seconds. Accordingly, theCommission estimated that the totaldisclosure burden of the revisedproposed Rule’s requirements wasapproximately 250 hours per firm or7.75 million hours.

The revised proposed Rule alsorequired additional disclosures beforethe customer paid for goods or services.Specifically, the sellers or telemarketerswere required to disclose the total coststo purchase, receive, or use the offeredgoods or services; all materialrestrictions; all material terms andconditions of the seller’s refund,cancellation, exchange, or repurchasepolicies if a representation about thepolicy was part of the sales offer; andthat no purchase was necessary to winif a prize promotion was offered inconjunction with a sales offer of goodsor services. The telemarketer also had todisclose the non-purchase entry methodfor the prize promotion. TheCommission estimated thatapproximately 10 seconds werenecessary to make these requireddisclosures orally. However, thesedisclosures were only required to bemade where a call resulted in an actualsale. The Commission estimated thatsales occur in approximately 6 percentof telemarketing calls. Accordingly, theestimated burden for the disclosureswas 37.5 hours per firm or 1.163 millionhours.

Alternately, the disclosures requiredbefore the customer paid for goods orservices could be made in writing. TheCommission estimated thatapproximately 9,000 firms wouldchoose to comply with the optionalwritten disclosure requirement.Although this burden estimate wasdifficult to quantify, mailing campaignsappeared to be much less burdensomefor firms than were individual oraldisclosures. The Commission also foundthat these disclosure requirements wereclosely consistent with the ordinarybusiness practices of most members ofthe industry. Absent the recordkeepingrequirements, the Commission believedthat this was the type of informationthat would be retained by these entitiesin any event during the normal courseof business because it would be usefulin resolving private, non-governmentalinquiries and disputes. Nonetheless, theCommission had no reliable data from

which to conclude that there was noseparately identifiable burdenassociated with this provision.Therefore, it estimated that a typicalfirm would spend approximately 10hours per year engaged in activitiesensuring compliance with this provisionof the Rule, for an estimated burdenestimate of 90,000 hours.

No comments were receivedaddressing the Commission’s paperworkburden projections. Therefore theCommission sees no reason to revise itsprojections of burden per year percovered industry member, or to modifythe recordkeeping or disclosurerequirements in the revised proposedRule.

Because the aforementionedrequirements would involve the‘‘collection of information’’ as definedby the regulations of OMB, theCommission was required to submit theproposed requirements to OMB forclearance, 5 CFR 1320.13, and did so aspart of this proceeding. OMB approvedthe request and assigned control number3084–0097 to the information collectionrequirements. This approval will expireon July 31, 1998, unless it has beenextended before that date.

List of Subjects in 16 CFR Part 310Telemarketing, Trade practices.Accordingly, the Commission amends

chapter I, subchapter C of 16 CFR byadding a new part 310 to read asfollows:

PART 310—TELEMARKETING SALESRULE

Sec.310.1 Scope of regulations in this part.310.2 Definitions.310.3 Deceptive telemarketing acts or

practices.310.4 Abusive telemarketing acts or

practices.310.5 Recordkeeping requirements.310.6 Exemptions.310.7 Actions by states and private persons.310.8 Severability.

Authority: 15 U.S.C. 6101–6108.

§ 310.1 Scope of regulations in this part.This part implements the

Telemarketing and Consumer Fraud andAbuse Prevention Act, 15 U.S.C. 6101–6108.

§ 310.2 Definitions.(a) Acquirer means a business

organization, financial institution, or anagent of a business organization orfinancial institution that has authorityfrom an organization that operates orlicenses a credit card system toauthorize merchants to accept, transmit,or process payment by credit cardthrough the credit card system for


1 When a seller or telemarketer uses, or directs acustomer to use, a courier to transport payment, theseller or telemarketer must make the disclosuresrequired by § 310.3(a)(1) before sending a courier topick up payment or authorization for payment, or

directing a customer to have a courier pick uppayment or authorization for payment.

2 For offers of consumer credit products subject tothe Truth in Lending Act, 15 U.S.C. 1601 et seq.,and Regulation Z, 12 CFR part 226, compliancewith the disclosure requirements under the Truthin Lending Act, and Regulation Z, shall constitutecompliance with § 310.3(a)(1)(i) of this Rule.

money, goods or services, or anythingelse of value.

(b) Attorney General means the chieflegal officer of a State.

(c) Cardholder means a person towhom a credit card is issued or who isauthorized to use a credit card on behalfof or in addition to the person to whomthe credit card is issued.

(d) Commission means the FederalTrade Commission.

(e) Credit means the right granted bya creditor to a debtor to defer paymentof debt or to incur debt and defer itspayment.

(f) Credit card means any card, plate,coupon book, or other credit deviceexisting for the purpose of obtainingmoney, property, labor, or services oncredit.

(g) Credit card sales draft means anyrecord or evidence of a credit cardtransaction.

(h) Credit card system means anymethod or procedure used to processcredit card transactions involving creditcards issued or licensed by the operatorof that system.

(i) Customer means any person who isor may be required to pay for goods orservices offered through telemarketing.

(j) Investment opportunity meansanything, tangible or intangible, that isoffered, offered for sale, sold, or tradedbased wholly or in part onrepresentations, either express orimplied, about past, present, or futureincome, profit, or appreciation.

(k) Material means likely to affect aperson’s choice of, or conduct regarding,goods or services.

(l) Merchant means a person who isauthorized under a written contractwith an acquirer to honor or acceptcredit cards, or to transmit or process forpayment credit card payments, for thepurchase of goods or services.

(m) Merchant agreement means awritten contract between a merchantand an acquirer to honor or acceptcredit cards, or to transmit or process forpayment credit card payments, for thepurchase of goods or services.

(n) Outbound telephone call means atelephone call initiated by atelemarketer to induce the purchase ofgoods or services.

(o) Person means any individual,group, unincorporated association,limited or general partnership,corporation, or other business entity.

(p) Prize means anything offered, orpurportedly offered, and given, orpurportedly given, to a person bychance. For purposes of this definition,chance exists if a person is guaranteedto receive an item and, at the time of theoffer or purported offer, the telemarketer

does not identify the specific item thatthe person will receive.

(q) Prize promotion means:(1) A sweepstakes or other game of

chance; or(2) An oral or written express or

implied representation that a person haswon, has been selected to receive, ormay be eligible to receive a prize orpurported prize.

(r) Seller means any person who, inconnection with a telemarketingtransaction, provides, offers to provide,or arranges for others to provide goodsor services to the customer in exchangefor consideration.

(s) State means any State of theUnited States, the District of Columbia,Puerto Rico, the Northern MarianaIslands, and any territory or possessionof the United States.

(t) Telemarketer means any personwho, in connection with telemarketing,initiates or receives telephone calls to orfrom a customer.

(u) Telemarketing means a plan,program, or campaign which isconducted to induce the purchase ofgoods or services by use of one or moretelephones and which involves morethan one interstate telephone call. Theterm does not include the solicitation ofsales through the mailing of a catalogwhich: Contains a written description orillustration of the goods or servicesoffered for sale; includes the businessaddress of the seller; includes multiplepages of written material orillustrations; and has been issued notless frequently than once a year, whenthe person making the solicitation doesnot solicit customers by telephone butonly receives calls initiated bycustomers in response to the catalog andduring those calls takes orders onlywithout further solicitation. Forpurposes of the previous sentence, theterm ‘‘further solicitation’’ does notinclude providing the customer withinformation about, or attempting to sell,any other item included in the samecatalog which prompted the customer’scall or in a substantially similar catalog.

§ 310.3 Deceptive telemarketing acts orpractices.

(a) Prohibited deceptive telemarketingacts or practices. It is a deceptivetelemarketing act or practice and aviolation of this Rule for any seller ortelemarketer to engage in the followingconduct:

(1) Before a customer pays 1 for goodsor services offered, failing to disclose, in

a clear and conspicuous manner, thefollowing material information:

(i) The total costs to purchase, receive,or use, and the quantity of, any goodsor services that are the subject of thesales offer; 2

(ii) All material restrictions,limitations, or conditions to purchase,receive, or use the goods or services thatare the subject of the sales offer;

(iii) If the seller has a policy of notmaking refunds, cancellations,exchanges, or repurchases, a statementinforming the customer that this is theseller’s policy; or, if the seller ortelemarketer makes a representationabout a refund, cancellation, exchange,or repurchase policy, a statement of allmaterial terms and conditions of suchpolicy;

(iv) In any prize promotion, the oddsof being able to receive the prize, andif the odds are not calculable inadvance, the factors used in calculatingthe odds; that no purchase or paymentis required to win a prize or toparticipate in a prize promotion; and theno purchase/no payment method ofparticipating in the prize promotionwith either instructions on how toparticipate or an address or local or toll-free telephone number to whichcustomers may write or call forinformation on how to participate; and

(v) All material costs or conditions toreceive or redeem a prize that is thesubject of the prize promotion;

(2) Misrepresenting, directly or byimplication, any of the followingmaterial information:

(i) The total costs to purchase, receive,or use, and the quantity of, any goodsor services that are the subject of a salesoffer;

(ii) Any material restriction,limitation, or condition to purchase,receive, or use goods or services that arethe subject of a sales offer;

(iii) Any material aspect of theperformance, efficacy, nature, or centralcharacteristics of goods or services thatare the subject of a sales offer;

(iv) Any material aspect of the natureor terms of the seller’s refund,cancellation, exchange, or repurchasepolicies;

(v) Any material aspect of a prizepromotion including, but not limited to,the odds of being able to receive a prize,the nature or value of a prize, or that apurchase or payment is required to win


a prize or to participate in a prizepromotion;

(vi) Any material aspect of aninvestment opportunity including, butnot limited to, risk, liquidity, earningspotential, or profitability; or

(vii) A seller’s or telemarketer’saffiliation with, or endorsement by, anygovernment or third-party organization;

(3) Obtaining or submitting forpayment a check, draft, or other form ofnegotiable paper drawn on a person’schecking, savings, share, or similaraccount, without that person’s expressverifiable authorization. Suchauthorization shall be deemed verifiableif any of the following means areemployed:

(i) Express written authorization bythe customer, which may include thecustomer’s signature on the negotiableinstrument; or

(ii) Express oral authorization whichis tape recorded and made availableupon request to the customer’s bank andwhich evidences clearly both thecustomer’s authorization of payment forthe goods and services that are thesubject of the sales offer and thecustomer’s receipt of all of the followinginformation:

(A) The date of the draft(s);(B) The amount of the draft(s);(C) The payor’s name;(D) The number of draft payments (if

more than one);(E) A telephone number for customer

inquiry that is answered during normalbusiness hours; and

(F) The date of the customer’s oralauthorization; or

(iii) Written confirmation of thetransaction, sent to the customer prior tosubmission for payment of thecustomer’s check, draft, or other form ofnegotiable paper, that includes:

(A) All of the information containedin §§ 310.3(a)(3)(ii)(A)–(F); and

(B) The procedures by which thecustomer can obtain a refund from theseller or telemarketer in the event theconfirmation is inaccurate; and

(4) Making a false or misleadingstatement to induce any person to payfor goods or services.

(b) Assisting and facilitating. It is adeceptive telemarketing act or practiceand a violation of this Rule for a personto provide substantial assistance orsupport to any seller or telemarketerwhen that person knows or consciouslyavoids knowing that the seller ortelemarketer is engaged in any act orpractice that violates §§ 310.3(a) or (c),or § 310.4 of this Rule.

(c) Credit card laundering. Except asexpressly permitted by the applicablecredit card system, it is a deceptivetelemarketing act or practice and aviolation of this Rule for:

(1) A merchant to present to ordeposit into, or cause another to presentto or deposit into, the credit card systemfor payment, a credit card sales draftgenerated by a telemarketing transactionthat is not the result of a telemarketingcredit card transaction between thecardholder and the merchant;

(2) Any person to employ, solicit, orotherwise cause a merchant or anemployee, representative, or agent of themerchant, to present to or deposit intothe credit card system for payment, acredit card sales draft generated by atelemarketing transaction that is not theresult of a telemarketing credit cardtransaction between the cardholder andthe merchant; or

(3) Any person to obtain access to thecredit card system through the use of abusiness relationship or an affiliationwith a merchant, when such access isnot authorized by the merchantagreement or the applicable credit cardsystem.

§ 310.4 Abusive telemarketing acts orpractices.

(a) Abusive conduct generally. It is anabusive telemarketing act or practiceand a violation of this Rule for anyseller or telemarketer to engage in thefollowing conduct:

(1) Threats, intimidation, or the use ofprofane or obscene language;

(2) Requesting or receiving paymentof any fee or consideration for goods orservices represented to removederogatory information from, orimprove, a person’s credit history, creditrecord, or credit rating until:

(i) The time frame in which the sellerhas represented all of the goods orservices will be provided to that personhas expired; and

(ii) The seller has provided the personwith documentation in the form of aconsumer report from a consumerreporting agency demonstrating that thepromised results have been achieved,such report having been issued morethan six months after the results wereachieved. Nothing in this Rule shouldbe construed to affect the requirement inthe Fair Credit Reporting Act, 15 U.S.C.1681, that a consumer report may onlybe obtained for a specified permissiblepurpose;

(3) Requesting or receiving paymentof any fee or consideration from aperson, for goods or servicesrepresented to recover or otherwiseassist in the return of money or anyother item of value paid for by, orpromised to, that person in a previoustelemarketing transaction, until seven(7) business days after such money orother item is delivered to that person.This provision shall not apply to goods

or services provided to a person by alicensed attorney; or

(4) Requesting or receiving paymentof any fee or consideration in advanceof obtaining a loan or other extension ofcredit when the seller or telemarketerhas guaranteed or represented a highlikelihood of success in obtaining orarranging a loan or other extension ofcredit for a person.

(b) Pattern of calls. (1) It is an abusivetelemarketing act or practice and aviolation of this Rule for a telemarketerto engage in, or for a seller to cause atelemarketer to engage in, the followingconduct:

(i) Causing any telephone to ring, orengaging any person in telephoneconversation, repeatedly orcontinuously with intent to annoy,abuse, or harass any person at the callednumber; or

(ii) Initiating an outbound telephonecall to a person when that personpreviously has stated that he or she doesnot wish to receive an outboundtelephone call made by or on behalf ofthe seller whose goods or services arebeing offered.

(2) A seller or telemarketer will not beliable for violating § 310.4(b)(1)(ii) if:

(i) It has established and implementedwritten procedures to comply with§ 310.4(b)(1)(ii);

(ii) It has trained its personnel in theprocedures established pursuant to§ 310.4(b)(2)(i);

(iii) The seller, or the telemarketeracting on behalf of the seller, hasmaintained and recorded lists ofpersons who may not be contacted, incompliance with § 310.4(b)(1)(ii); and

(iv) Any subsequent call is the resultof error.

(c) Calling time restrictions. Withoutthe prior consent of a person, it is anabusive telemarketing act or practiceand a violation of this Rule for atelemarketer to engage in outboundtelephone calls to a person’s residenceat any time other than between 8 a.m.and 9 p.m. local time at the calledperson’s location.

(d) Required oral disclosures. It is anabusive telemarketing act or practiceand a violation of this Rule for atelemarketer in an outbound telephonecall to fail to disclose promptly and ina clear and conspicuous manner to theperson receiving the call, the followinginformation:

(1) The identity of the seller;(2) That the purpose of the call is to

sell goods or services;(3) The nature of the goods or

services; and(4) That no purchase or payment is

necessary to be able to win a prize orparticipate in a prize promotion if a


3 For offers of consumer credit products subjectto the Truth in Lending Act, 15 U.S.C. 1601 et seq.,and Regulation Z, 12 CFR part 226, compliancewith the recordkeeping requirements under theTruth in Lending Act, and Regulation Z, shallconstitute compliance with § 310.5(a)(3) of thisRule.

prize promotion is offered. Thisdisclosure must be made before or inconjunction with the description of theprize to the person called. If requestedby that person, the telemarketer mustdisclose the no-purchase/no-paymententry method for the prize promotion.

§ 310.5 Recordkeeping requirements.(a) Any seller or telemarketer shall

keep, for a period of 24 months from thedate the record is produced, thefollowing records relating to itstelemarketing activities:

(1) All substantially differentadvertising, brochures, telemarketingscripts, and promotional materials;

(2) The name and last known addressof each prize recipient and the prizeawarded for prizes that are represented,directly or by implication, to have avalue of $25.00 or more;

(3) The name and last known addressof each customer, the goods or servicespurchased, the date such goods orservices were shipped or provided, andthe amount paid by the customer for thegoods or services; 3

(4) The name, any fictitious nameused, the last known home address andtelephone number, and the job title(s)for all current and former employeesdirectly involved in telephone sales;provided, however, that if the seller ortelemarketer permits fictitious names tobe used by employees, each fictitiousname must be traceable to only onespecific employee; and

(5) All verifiable authorizationsrequired to be provided or receivedunder this Rule.

(b) A seller or telemarketer may keepthe records required by § 310.5(a) in anyform, and in the manner, format, orplace as they keep such records in theordinary course of business. Failure tokeep all records required by § 310.5(a)shall be a violation of this Rule.

(c) The seller and the telemarketercalling on behalf of the seller may, bywritten agreement, allocateresponsibility between themselves forthe recordkeeping required by thisSection. When a seller and telemarketerhave entered into such an agreement,the terms of that agreement shall govern,and the seller or telemarketer, as thecase may be, need not keep records thatduplicate those of the other. If theagreement is unclear as to who mustmaintain any required record(s), or if nosuch agreement exists, the seller shall be

responsible for complying with§§ 310.5(a)(1)–(3) and (5); thetelemarketer shall be responsible forcomplying with § 310.5(a)(4).

(d) In the event of any dissolution ortermination of the seller’s ortelemarketer’s business, the principal ofthat seller or telemarketer shall maintainall records as required under thissection. In the event of any sale,assignment, or other change inownership of the seller’s ortelemarketer’s business, the successorbusiness shall maintain all recordsrequired under this section.

§ 310.6 Exemptions.The following acts or practices are

exempt from this Rule:(a) The sale of pay-per-call services

subject to the Commission’s ‘‘TradeRegulation Rule Pursuant to theTelephone Disclosure and DisputeResolution Act of 1992,’’ 16 CFR part308;

(b) The sale of franchises subject tothe Commission’s Rule entitled‘‘Disclosure Requirements andProhibitions Concerning Franchisingand Business Opportunity Ventures,’’ 16CFR part 436;

(c) Telephone calls in which the saleof goods or services is not completed,and payment or authorization ofpayment is not required, until after aface-to-face sales presentation by theseller;

(d) Telephone calls initiated by acustomer that are not the result of anysolicitation by a seller or telemarketer;

(e) Telephone calls initiated by acustomer in response to anadvertisement through any media, otherthan direct mail solicitations; provided,however, that this exemption does notapply to calls initiated by a customer inresponse to an advertisement relating toinvestment opportunities, goods orservices described in §§ 310.4(a) (2) or(3), or advertisements that guarantee orrepresent a high likelihood of success inobtaining or arranging for extensions ofcredit, if payment of a fee is required inadvance of obtaining the extension ofcredit;

(f) Telephone calls initiated by acustomer in response to a direct mailsolicitation that clearly, conspicuously,and truthfully discloses all materialinformation listed in § 310.3(a)(1) of thisRule for any item offered in the directmail solicitation; provided, however,that this exemption does not apply tocalls initiated by a customer in responseto a direct mail solicitation relating toprize promotions, investmentopportunities, goods or servicesdescribed in §§ 310.4(a) (2) or (3), ordirect mail solicitations that guarantee

or represent a high likelihood of successin obtaining or arranging for extensionsof credit, if payment of a fee is requiredin advance of obtaining the extension ofcredit; and

(g) Telephone calls between atelemarketer and any business, exceptcalls involving the retail sale ofnondurable office or cleaning supplies;provided, however, that § 310.5 of thisRule shall not apply to sellers ortelemarketers of nondurable office orcleaning supplies.

§ 310.7 Actions by States and privatepersons.

(a) Any attorney general or otherofficer of a State authorized by the Stateto bring an action under theTelemarketing and Consumer Fraud andAbuse Prevention Act, and any privateperson who brings an action under thatAct, shall serve written notice of itsaction on the Commission, if feasible,prior to its initiating an action underthis Rule. The notice shall be sent to theOffice of the Director, Bureau ofConsumer Protection, Federal TradeCommission, Washington, DC 20580,and shall include a copy of the State’sor private person’s complaint and anyother pleadings to be filed with thecourt. If prior notice is not feasible, theState or private person shall serve theCommission with the required noticeimmediately upon instituting its action.

(b) Nothing contained in this sectionshall prohibit any attorney general orother authorized State official fromproceeding in State court on the basis ofan alleged violation of any civil orcriminal statute of such State.

§ 310.8 Severability.The provisions of this Rule are

separate and severable from oneanother. If any provision is stayed ordetermined to be invalid, it is theCommission’s intention that theremaining provisions shall continue ineffect.

By direction of the Commission.Benjamin I. Berman,Acting Secretary.

Concurring Statement of CommissionerMary L. Azcuenaga in TelemarketingSales Rule, Matter No. R411001

As required by the Telemarketing andConsumer Fraud and Abuse PreventionAct, the Commission today promulgatesa Telemarketing Sales Rule. I join mycolleagues in promulgating the Rule,which generally should be beneficial incombatting telemarketing fraud. Iremain concerned, however, about thelegal basis for the exemptions (andexceptions to the exemptions) forcertain categories of business activities


under § 310.6 of the Rule. TheCommission has adopted an intricatescheme of exemptions, relying primarilyon its law enforcement experience tojustify its selective application of therequirements of the Rule. TheTelemarketing and Consumer Fraud and

Abuse Prevention Act does not providethe Commission with the expressauthority to grant exemptions from theRule, and the better reading of thestatute is that the Commission does nothave the authority to exempt some ofthe categories of business activities in

§ 310.6. Although the exemptions maybe reasonable as a matter of policy, theCommission does not have the authorityto second-guess the Congress. See PublicCitizen v. FTC, 869 F.2d 1541, 1553–57(D.C. Cir. 1989).

APPENDIX—LIST OF COMMENTERS AND ACRONYMS, TELEMARKETING SALES RULE PROPOSALS

Acronym Commenter

2M .............................. 2M Office Supply & Furniture**3D ............................... 3D Office Supply and Printing**AAAA .......................... American Association of Advertising Agencies***AAF ............................ American Advertising Federation***AAP ............................ Association of American Publishers***AARP ......................... American Association of Retired Persons***ABA ............................ American Bankers Association***ABI ............................. Archbold Buckeye, Inc.*ACA ............................ American Cemetery Association***ACB ............................ Associated Credit Bureaus, Inc.*ACRA ......................... American Car Rental Association***ADC ............................ American Distributing Company***ADS ............................ ADS Teleservices*ADVANTA .................. Advanta Corporation*AFSA .......................... American Financial Services Association*A&H ............................ Arter & Hadden*AIG ............................. American Impact Group*AITS ........................... Ass’n of Independent Television Stations, Inc.*ALIC ........................... Allstate Life Insurance Company*ALLARD ..................... Allard’s**ALLIED ....................... Allied Strauss Office Products**A–MARK .................... A-Mark Precious Metals, Inc.*AMCI .......................... Allstate Motor Club, Inc.*AMERINET ................. AmeriNet, Inc.*AMEX ......................... American Express Company*AMOC ........................ Arizona Mail Order Company, Inc.*ANA ............................ Association of National Advertisers***ANDREWS ................. Andrews Satellite & Home Theater*ANN ARBOR .............. Ann Arbor News***Anonymous ................ 4 comments**APAC ......................... APAC TeleServices*APN ............................ American Publishers Network, Inc.*ARA ............................ Arizona Retailers Association*ARAPAHOE ............... Arapahoe Heating Service, Inc.**ARDA ......................... American Resort Development Association***ARMIN ........................ Armin, Larry**ASAE .......................... American Society of Association Executives*ASH ............................ Ash, Paul T.**ASTA .......................... American Society of Travel Agents, Inc.***AT&T .......................... AT&T Corp.***ATA ............................ American Telemarketing Association***ATAA .......................... Air Transport Association of America**ATFA .......................... American Telephone Fundraisers Association***ATLANTA ................... Atlanta Journal & Atlanta Constitution*AUTOSCRIBE ............ AutoScribe Corporation*AVALON ..................... Avalon Communications**AWMI ......................... American West Marketing, Inc. (comments filed by two company representatives)*BAGGS ...................... Baggs, Andrew*BAGWELL .................. Bagwell, Linda L.*BAKER ....................... Baker, Alden & Blanche**BALLARD ................... Ballard, Barbara**BAUER ....................... Eddie Bauer, Inc.*BAY CITY ................... Bay City Times*B&D ............................ B&D Office City**BEAR ......................... Bear Creek Corporation (comments forwarded by The Honorable Mark Hatfield and The Honorable Bob Packwood)*BEAVER ..................... Beaver, Laurence E.**BELLEVILLE .............. Belleville News-Democrat*BENNETT .................. Bennett’s Office Supply & Equipment (comments forwarded by The Honorable Phil Gramm and The Honorable Kay

Bailey Hutchison)**BESCO ....................... BESCO Business Equipment & Supply Co.**BFC ............................ Brown Forman Corporation*BILLER ....................... Biller, Mr. & Mrs. Albert C.**BIRKHOLZ ................. Birkholtz, Ted**


APPENDIX—LIST OF COMMENTERS AND ACRONYMS, TELEMARKETING SALES RULE PROPOSALS—Continued

Acronym Commenter

BMCA ......................... Beneficial Management Corporation of America*BNC ............................ Birmingham News Company***BOA ............................ Bank of America**BOB ............................ Bank of Boston*BPIA ........................... Business Products Industry Association***BRADLEY .................. Bradley, MJP*BRANNEN .................. Brannen, Mary**BRANTLEY ................ Brantley, Lamar*BREWSTER ............... Brewster, The Honorable Bill K.*BROADBENT ............. Broadbent, Alan R.**BROGDON ................. Brogdon, Doris R.**BROSKI ...................... Broski, Jo Ann**BROWNELL ............... Brownell, Catherine A.**BS MGMT .................. BS Management Group**BSA ............................ Business Software Alliance**BUBRICK ................... Bubrick’s Office Supply Inc.**BURKLAND ................ Burkland, George B.**BUTHER .................... Buther, Peggy**CA .............................. Commercial Appeal*CAPITAL .................... Capital Press*CAPUTO .................... Caputo, Harriet Q.*CARDOZA .................. Cardoza, James E.**CARMODY ................. Carmody, John**CBA ............................ Consumer Bankers Association***CC .............................. Circuit City Stores, Inc.**CCA ............................ Career College Association*CDI ............................. Circulation Development, Inc.*CFA ............................ Consumer Federation of America***CHAMPLIN ................. Champlin, Josephine A.**CHASE ....................... Chase Manhattan Bank (USA)***CHAVKA .................... Chavka, Marian**CHC ........................... Columbia House Company***CHEMICAL ................. Chemical Bank*CHERNIKOFF ............ Chernikoff, J.D.*CHRISTENSON ......... Christenson, Carl E.**CHRISTIAN ................ Christian Book Store & Office Supply**CITICORP .................. Citicorp/Citibank***CME ........................... Center for Media Education*CMOR ........................ Council for Marketing and Opinion Research***COALITION ................ Coalition of various companies*COFFEY ..................... Coffey, Laurie E.**COMCAST ................. Comcast Corporation/Jones Intercable*COMMINS .................. Commins, Kevin J.**CONSORTIUM ........... Consortium of nonprofit organizations**CONWAY ................... Conway National Bank*COOK ......................... Cook Office Machine & Supply Company**COPYTEK .................. Copytek Office Products**CORNELL .................. Cornell Group*CORNERSTONE ....... Cornerstone Office Systems, Inc.**COX ........................... Cox Newspapers, Inc.*CPA ............................ Colorado Press Association*CRAPO ...................... Crapo, The Honorable Michael D.**CRILLY ....................... Crilly, Thomas W.***CROAK ...................... Croak, E. Patrick**CROWLEY ................. Crowley, Claude**CROWDER ................ Crowder, Mrs. Lillian A.**CUCI .......................... CUC International*CUNA ......................... Credit Union National Assn, Inc.**CUNNINGHAM .......... Cunningham, Georgia**CURRAN .................... Curran, Jeanne**DAILY NEWS ............. Daily News*DAILY OKLA .............. Daily Oklahoman*DAISY ........................ Daisy Wheel Ribbon Co., Inc.**DANDER .................... Dander, David A.**DAVENPORT ............. Davenport, Frances L. and Jay E.**DAWSON ................... Dawson, Burton**DCR ........................... Daily Court Review*DECORA .................... Decora Office Furniture/Supplies**DEFAZIO .................... DeFazio, Dominick**DENTON .................... Denton Publishing Company (comments forwarded by The Honorable Kay Bailey Hutchison, The Honorable Mac

Thornberry and The Honorable Phil Gramm)*DIAMOND .................. Diamond, Peter & Karen**



Acronym Commenter

DICK ........................... Dick, Joseph A.**DICKS ........................ Dicks, Della**DILLON ...................... Dillon, William R.**DIVERSIFIED ............. Diversified Marketing Service, Inc.*DMA ........................... Direct Marketing Association***DMBE ......................... Department of Marketing and Business Environment, Florida International University*DMI ............................. DialAmerica Marketing, Inc.***DMSI .......................... Direct Marketing Services, Inc.*DMT&H ...................... Dickerson, Mackaman, Tyler & Hagen, P.C.***DONREY .................... Donrey Media Group*DOUBLEDAY ............. Doubleday Book & Music*DOUGLAS .................. Douglas Center Stock Farm**DOW JONES ............. Dow Jones & Company, Inc.***DSA ............................ Direct Selling Association***DSA–NEV .................. Direct Sales Association of Nevada*DSI ............................. Direct Sales International*DURKEE .................... Durkee, Dixie**DUSTIN ...................... Dustin, Doris**DW&Z ......................... Dierman, Wortley & Zola, Inc.*EAGLE ....................... Eagle Newspapers (forwarded by The Honorable John M. McHughes)*EAKES ....................... Eakes Office Products Center, Inc.**EDMUND ................... Edmund Scientific Company*EDWARDS ................. Edwards, Susan E.**EHRLICH ................... Ehrlich, The Honorable Robert L., Jr.*ELLIOTT ..................... Elliott Office Equipment Co., Inc.**EMA ........................... Electronic Messaging Association***EMMONS ................... Emmons, Ethel B.*EPSTEIN, A ............... Epstein, Ann C.**EPSTEIN, R ............... Epstein, Rosalie**EQUIFAX ................... Equifax Credit Information Services, Inc.*ERIE ........................... Erie Construction (2 copies: one original; one forwarded by The Honorable Marcy Kaptur)*ERNST ....................... Ernst, Michael*EXPRESS .................. Express Office Products**FAIRFAX .................... Fairfax County Dept of Consumer Affairs**FAYETTE ................... Fayetteville Publishing Co.*FEDEX ....................... Federal Express*FFF ............................. Feature Films for Families**FINGERHUT .............. Fingerhut Companies***FLINN ......................... Flinn, Richard M.**FLINT ......................... Flint Journal***FLUCH ....................... Fluch, Mrs. Louise R.**FORD ......................... Ford Office Supply**FORD, W ................... Ford, Wendell**FORMS–NC ............... Forms & Supplies, Inc. (NC)**FORMS–TN ............... Forms and Supplies, Inc. (TN)**FORNEY .................... Forney Messenger Inc.*FORREST .................. Forrest Stationers**FOSTER ..................... Foster, Alice Wilks**FOURNIER ................ Fournier, Stephanie**FPC ............................ Fayetteville Publishing Company (forwarded by The Honorable Bill Hefner)*FRANKLIN ................. Franklin Mint***FRB ............................ Federal Reserve Banks*FRB–SF ..................... Federal Reserve Bank of San Francisco***FREECOM ................. FreeCom Communications, Inc.*FRIENDS ................... Friends Office Products**F&W ........................... F&W Publications*GA OCA ..................... Georgia Office of Consumer Affairs***GABRIEL .................... Gabriel, Mrs. Harry J. Jr.*GAIL ........................... Gail’s Office Supply Company**GANNETT .................. Gannett Co., Inc.*GARAVALIA ............... Garavalia, Barbara A.**GARDNER ................. Gardner, Darien**GCM ........................... Good Cents Marketing*GE .............................. GE Appliances*GEROVICAP .............. Gerovicap Pharmaceutical**GGP ........................... Gift Gallery Promotions*GHA ........................... Group Health Association of America*GIBSON CO ............... C.J. Gibson Co., Inc.**GIBSON, D ................ Gibson, Derek**GIBSON, S ................. Gibson, Stewart & Jean*GLAMOUR ................. Glamour Shots (forwarded by The Honorable Don Nickles)**GLOBE ....................... Old Globe*



Acronym Commenter

GODDARD ................. Goddard, Ed**GODFREY ................. Godfrey, Florence**GOODMAN ................ Goodman, Marcia L.**GORDON ................... Gordon, Philip J. (forwarded by The Honorable John M. McHugh**)GOS ........................... GOS Office Supply**GOSLOW ................... Goslow, Alice**GRA ........................... Georgia Retail Association*GREEN ...................... Green, Jean**GREENE .................... Greene Russ*GRIDER ..................... Grider, Felicia*GRIFFIN ..................... Griffin, Dennis O.**GROLIER ................... Grolier TeleMarketing, Inc.*GUERNSEY ............... Guernsey Office Products**GUTHY ....................... Guthy-Renker*HALL .......................... Henry Hall Office Products**HAND ......................... Hand, Robert & Lisbeth**HARKAWAY ............... Harkaway, Mrs. Patricia**HAWES ...................... Hawes Center, Inc.*HEAD ......................... Head, W.L.***HEARST ..................... Hearst Magazines*HEARSTCO ............... Hearst Corporation**HEATON .................... Heaton, Peggy**HERRERA .................. Herrera, Barbara*HERTZ ....................... Hertz Corporation*HFC ............................ Household Finance Corporation*H&H–1 ........................ Howe & Hutton, Ltd.—March 14 comment*H&H–2 ........................ Howe & Hutton, Ltd.—March 30 comment*HHDM ........................ Harte-Hanks Direct Marketing*HHMS ......................... Harte-Hanks Marketing Services*HII ............................... Household International***HILLSBOROUGH ....... Hillsborough County Consumer Protection Div.**HISER ........................ Hiser, James & Sherrill**HNM&T ...................... Hearst New Media & Technology*HOFMANIS ................ Hofmanis, Alfred**HOLSTEIN ................. Holstein, Everett & Irma**HOUSEHOLD ............ Household Bank*HSN ............................ Home Shopping Network*HUDSON .................... Hudson City Savings Bank*HUNTINGTON ........... Huntington National Bank*HUNTSVILLE ............. Huntsville Times/Huntsville News*IA DOJ ....................... Iowa Department of Justice***IBAA ........................... Independent Bankers Association of America**IBM ............................. International Business Machines Corporation***ICTA ........................... Industry Council for Tangible Assets***ID AG ......................... Idaho Attorney General*IFA .............................. International Franchise Association*IFI ............................... International Fabricare Institute*IH ................................ Investment Hotlines*IMC ............................. InfoCision Management Corporation*IMS ............................. International Magazine Service of Northern California (comment forwarded by the Honorable Lynn Woolsey)*IMS–TX ...................... International Magazine Service (Texas) (comment forwarded by the Honorable Kay Bailey Hutchison)*IMSI ............................ Infomercial Monitoring Service, Inc.*IMSP .......................... IMS Promotions*INFOMALL ................. Infomall TV Network*INSP ........................... Inspirational Network*IRC ............................. Indiana Retail Council, Inc.*IRL .............................. International Readers League of Indianapolis*ISA ............................. Interactive Services Association***ISENBERG ................. Isenberg, Angeline C.**ITI ............................... ITI Marketing Services, Inc.***ITT HARTFORD ......... ITT Hartford**IVAN ........................... Ivan Allen Company**JACKSON .................. Jackson Office Equipment, Inc.**JACKSON, B .............. Jackson, Bogle**JACOBSON ............... Jacobson, Frances S.**JCP ............................ Jackson Citizen Patriot*JENSON ..................... Jenson, Ines V.**JERSEY ..................... Jersey Business Supply Co., Inc.**JOCKS ....................... Jocks, Donald B.**JOHNSON, D ............. Johnson, Darlene**JOHNSON .................. Johnson Stationers**JOHNSTON ............... Johnston, Gloria*



Acronym Commenter

JOINER ...................... Joiner, Alex & Debbie**JOSEPH ..................... Joseph, Laura**JUD ............................ Jud’s Office Supply, Inc.**KALAMAZOO ............. Kalamazoo Gazette***KAPLAN ..................... Kaplan, Jules*KIKENDALL ............... Kikendall, Thomas J.*KARLE ....................... Karle Publications & Communications, Inc.**KELLY ........................ Kelly, Marion R.**KEMPF ....................... Kempf, L.W.**KING .......................... King, Donna E.**KLAVON ..................... Klavon, Karl F.**KLEID ......................... Kleid Company*KNIGHT ...................... Knight Ridder***KNOBE ....................... Knobe’s Office Supply & Equipment**KNOXVILLE ............... Knoxville News Sentinel Co. (comments from two company representatives)*KRELL ........................ Krell, Sadie**LANDMARK ............... Landmark Community Newspapers, Inc.*LARK .......................... Lark In The Morning*LA TIMES ................... The Los Angeles Times*LAURENZA ................ Laurenza, Joseph*LCS ............................ LCS Direct Marketing Service*LEFORT ..................... LeFort, Peter F.**LEIBACHER ............... Leibacher, Philip J.*LENOX ....................... Lenox, Inc.*LEVINSON ................. Levinson, Mrs. Rosalie**LIGHTFOOT ............... Lightfoot, The Honorable Jim*LINDSAY .................... Lindsay, Mrs. Sandra**LM .............................. LM Office Supply & Furniture**LOMBARD ................. Lombard, Barbara C.**LOWE’S ..................... Lowe’s Studio*LS ............................... Landmark Stationers**MACHCINSKI ............. Machcinski, Lynnae**MAGADITSCH ........... Magaditsch, Gwyn**MAGNUSON .............. Magnuson, Donna**MALACINSKI ............. Malacinski, George M.**MANSFIELD ............... Mansfield Typewriter Co.**MARKETLINK ............ Marketlink*MARTIN ..................... Martin Direct*MARWYCK ................ Marwyck, Inc.**MARX ......................... Marx, June D.**MASON ...................... Mason, William Raymond**MASS AG ................... Massachusetts Attorney General**MASTERCARD .......... Mastercard Intl, Inc. and VISA USA, Inc.***MBAA ......................... Mortgage Bankers Association of America***MBNA ......................... MBNA America Bank, N.A.*MBR ........................... Macauley’s Business Resources, Inc.**MCI ............................. MCI Telecommunications Corp***MCKNIGHT ................ McKnight Management Company*MCUL ......................... Michigan Credit Union League**MD AG ....................... Maryland Attorney General**MELLON .................... Mellon Bank Corporation*MELTON .................... Melton, Carol A.*MERCURY ................. Mercury Media*MESSENGER ............ Messenger (forwarded by The Honorable Ed Whitfield)*MEYER ...................... Meyer, Alice W. (forwarded by The Honorable Lynn C. Woolsey)**MEYERS .................... Meyers, Patricia**MFDA ......................... Missouri Funeral Directors’ Association**MGC ........................... Merchants Golden Checks*MGCB ........................ Merchants Gift Check Book*M–I ............................. Messenger-Inquirer*MIDESHA ................... Midesha Enterprises, Inc. (3 copies: one original; one forwarded by The Honorable Trent Lott; one forwarded by The

Honorable Thad Cochran)**MILLIGAN .................. Milligan, A.M.**MILLS, S .................... Mills, Susan*MILLS, M .................... Mills, Maria**MINDHEIM ................. Mindheim, Mrs. Arthur D.**MM ............................. Merchant Masters*MMC ........................... Moore Medical Corporation*MMS ........................... Metropolitan Marketing Services*MOBILE ...................... Mobile Media*MOERSCHELL .......... Moerschell, Mrs. G.E.**MONEX ...................... Monex Deposit Company***



Acronym Commenter

MOORE ...................... Moore Medical (2 copies: one original; one forwarded by The Honorable Nancy L. Johnson)*MOPA ......................... Missouri Press Association*MORA ........................ Missouri Retailers Association*MORSE ...................... Morse, Larry E.*MOUNTAIN ................ Mountain, Raymond**MP .............................. Merchants Promotions*MPA ........................... Magazine Publishers of America***MPG ........................... MPG Newspapers*MPR ........................... Mobile Press Register***MRA ........................... Michigan Retailers Association*MRG ........................... Marketing Response Group & Laser Co., Inc.*MS PRESS ................ Mississippi Press***MS .............................. Merchant Sampler*MSSC ......................... Magazine Subscription Sales Coalition***MTD ........................... MTD Services*MULLINS .................... Mullins, Zelma**MUNSCH ................... Munsch, William C.**MURRAY .................... Murray Ledger & Times*MUSKEGON .............. Muskegon Chronicle*MUTUAL .................... Mutual of Omaha Companies*NAA ............................ Newspaper Association of America***NAAG ......................... National Association of Attorneys General ***NACAA ....................... National Association of Consumer Agency Administrators ***NAM ........................... National Association of Manufacturers **NAMA ......................... National Automatic Merchandising Association *NAPA ......................... National Automated Payment Association ***NAPA DA ................... Napa County District Attorney **NAR ............................ National Association of Realtors ***NARASIMHAN ........... Narasimban, N. **NARDA ....................... North American Retail Dealers Association *NASAA ....................... North American Securities Administrators Association ***NB .............................. NationsBank ***NBR ............................ National Bank of the Redwoods *NBS ............................ NBS Office Supply **NCL ............................ National Consumers League ***NCMC ........................ National Credit Management Corporation *NCTA ......................... National Cable Television Association ***NE .............................. New England Office Supply, Inc. **NETWORK ................. Network Direct *NEVELING ................. Neveling, Dale *NEWS ........................ New Publishing Company *NFA ............................ National Futures Association *NFIB ........................... National Federation of Independent Business *NFN ............................ National Federation of Nonprofits *NHI ............................. New Hampton, Inc. *NIE ............................. Nationwide Insurance Enterprise *NIMA .......................... NIMA International ***NJ DCA ...................... New Jersey Division of Consumer Affairs **NM AG ....................... New Mexico Attorney General **NNA ............................ National Newspaper Association *NORDSTROM ............ Norsdstrom *NORTHLAND ............. Northland Lutheran Retirement Community **NPC ............................ Neighborhood Periodical Club *NPS ............................ National Promotional Services *NRF ............................ National Retail Federation ***NSF ............................ National Science Foundation *NYC DCA ................... New York City Dept of Consumer Affairs **NYNEX ....................... NYNEX *NYSCPB .................... New York State Consumer Protection Board ***NYSCUL ..................... New York State Credit Union League **NYTC ......................... New York Times Company *OCHOA ...................... Ochoa, Anna & James Becker **OCITY ........................ Office City **OCONNECT ............... Office Connection **ODEPOT .................... Office Depot **OENVIRON ................ Office Environments **OEQUIP ..................... Office Equipment Co., Inc **OHIO .......................... Ohio Health Care Products, Inc. *OLAN ......................... Olan Mills, Inc ***OLIVER ...................... Oliver, Louise **OMF ........................... Office Machines & Furniture Inc.**OMSCO ...................... Office Machine Service Co.**



Acronym Commenter

ONYX ......................... House of Onyx (comments forwarded by The Honorable Wendell H. Ford and The Honorable Ed Whitfield)*OPC ........................... Oregonian Publishing Company*OPCO ......................... Office Products Inc.**OREGONIAN ............. East Oregonian*ORESOURCE ............ Office Resources**ORKIN—1 .................. Orkin Pest Control (comments filed by two company representatives)***ORKIN–L .................... Orkin Lawn Care*ORKIN–M ................... Orkin Maid*ORKIN–P1 ................. Orkin Pest Control—March 23 comment*ORKIN–P2 ................. Orkin Pest Control—March 30 comment*ORKIN–PL ................. Orkin Plantscaping*OSS ............................ Office Supply Services Inc.**PACESETTER ........... Pacesetter Corporation*PALACE ..................... Palace Office Supply**PALMER .................... Palmer, Peter W.**PANNITTO ................. Pannitto, Joseph P.**PARKER .................... Parker, Stella**PATRIOT .................... The Patriot-News***PAUL .......................... Paul, Byron S., Jr.**PAYNE ....................... Payne, Mrs. Helen R.**P&C ............................ Pullman & Comley (comment on originally proposed Rule)P&C–1 ........................ Pullman & Comley (June 23 comment on revised proposed Rule)P&C–2 ........................ Pullman & Comley (June 27 comment on revised proposed Rule)PCH ............................ Publishers Clearing House***PCI ............................. Private Citizen, Inc.*PDW ........................... Publishers Discount Warehouse (comments filed by five different company representatives)*PELICAN .................... Pelican Office Supply, Inc.**PENCIL ...................... The Pencil Box Office Supplies**PENNEY .................... J.C. Penney Company, Inc.*PEPPERTREE ........... Peppertree Resorts (2 copies: one original; one forwarded by The Honorable Jesse Helms)*PERSHING ................ Pershing, Robert S.**PETERSON, P ........... Peterson, Phyllis G.*PETERSON, R ........... Peterson, Rosie Marie*PETERSON, S ........... Peterson, Selma**P&G ............................ Procter & Gamble**PIERCE ...................... Pierce, James & Sally**PINCKNEY ................. Pinckney, Betty**PLAIN ......................... Plain Dealer***PLP ............................ Personal Legal Plans*PMAA ......................... Promotional Marketing Association of America and Incentive Federation**POE ............................ Professional Office Enterprises**POLK .......................... Polk, Arlisha Jerone**PORTER .................... Porter, The Honorable John Edward*PPI ............................. Phone Programs Inc.*PRESTIGE ................. Prestige Office Products**PRINTING .................. Printing, Campanella & Rome (forwarded by The Honorable Lynn Woolsey**PROCH ...................... Programmers Clearing House*PRO-PRINT ............... Pro-Print Business Center**PRUDENTIAL ............ Prudential Home Mortgage*PTG ............................ Pacific Telesis Group*QUALITY .................... Quality Ribbons & Supplies Company**QUICKCARD .............. Quickcard Systems***QUILL ......................... Quill Corporation**QVC ........................... QVC, Inc.***RANKIN ...................... Rankin, J.**RDA ............................ Reader’s Digest Association, Inc.*REGAL GROUP ......... Regal Group*REGAL COMM .......... Regal Communications Corporation*REICHWEIN ............... Reichwein, Kay*RELIABLE .................. Reliable Office Products**REYMANN ................. Reymann, Clete**RICE, D ...................... Rice, David**RICE, R ...................... Rice, Rodger D. and Barbara L.*RICH .......................... Rich, David G.*RIGSBY ...................... Rigsby, Janice**RITCHIE ..................... Ritchie Swimwear*RIVERS ...................... Joan Rivers Products, Inc.*RMH ........................... RMH Telemarketing*ROBERTS, D ............. Roberts, Denise A.**ROBERTS, E ............. Roberts, E.**RODRIGUEZ .............. Rodriguez, Ann*ROLLINS .................... Rollins, Inc.***



Acronym Commenter

ROTENBERG ............ Rotenberg, Marion*RPI ............................. Resource Publications, Inc.*RPOA ......................... Resort Property Owners Association*RPS ............................ Rollins Protective Services*RYBKA ....................... Rybka, Edward C.**SABLATURA .............. Sablatura’s Office Supply & Furniture**SAGINAW .................. Saginaw News***SAMPLER .................. Business Sampler Advertising, Inc.*SAN DIEGO ............... San Diego Department of Agriculture, Weights & Measures**SANTROCK ............... Santrock, Billie**SAUNDERS ............... W.J. Saunders**SBTC .......................... Southwestern Bell Telephone Company*SC DCA ..................... South Carolina Department of Consumer Affairs**SCARBOROUGH ....... Scarborough, Peggy S. & Mary A. Bloodworth**SCHENKEL ................ Schenkel, Walter H. Jr.**SCHMIDT ................... Schmidt, Ann **SCHULENBURG ........ Schulenburg Printing Office Supplies, Inc. (comments filed by six different company representatives) **SCIC ........................... Service Contract Industry Council ***SCOTT ....................... Scott, Nancy A. **SDRA ......................... South Dakota Retailers Association *SEARCHLIGHT .......... Record Searchlight (comments filed by two different company representatives) *SEARS ....................... Sears Merchandise Group *SFNA .......................... San Francisco Newspaper Agency*SHANDLING .............. Shandling, Adrian H. **SHI ............................. Shop at Home *SHUBERT .................. Shuberts Inc. **SHULMAN .................. Shulman, Betty *SIA ............................. Staten Island Advance *SIASSR ...................... Securities Industry Association *SIGNAL ...................... Signal Office Supply **SIGNATURE .............. The Signature Group*SIMON, G .................. Simon, Gus & Naomi **SIMON, H ................... Simon, Hank **SIMPSON ................... Simpson, Donald S. **SINGTON ................... Sington, Homer & Coral **SINOPOLI, A .............. Sinopoli, Albert B. **SINOPOLI, M ............. Sinopoli, Michael T. **SINOPOLI, N ............. Sinopoli, Natalie A. **SINOPOLI, P .............. Sinopoli, Peter **SMART ....................... Smart, Bob **SMITH–1 .................... Smith, Mrs. Margaret A. **SMITH–2 .................... Smith, Margie **SMITH–3 .................... Smith, Madelyn **SMITH, R ................... Smith, R. *SMSI .......................... Strategic Marketing Specialists, Inc. *SPIEGEL .................... Spiegel, Inc. ***SPRINT ...................... Sprint Corporation *S&S ............................ Simpson & Simpson, P.C. *SSE ............................ Superstar Satellite Entertainment *SSI ............................. SafeCard Services, Inc. *SSS ............................ ‘‘Strictly’’ Subaru Service **STANDARD ............... Standard Office Supply **STAPLES ................... Staples, Inc. **STAR .......................... Star-Ledger *STOKOE, G ............... Stokoe, Grant **STOKOE, K ................ Stokoe, Kim Neuhoff **STPETE ..................... St. Petersburg Times *STRITCHKO .............. Stritchko, Jim **STUART ..................... Stuart News *SUBURBAN ............... Suburban Stationers, Inc **SUFFOLK ................... Suffolk Life Newspapers **SUN ............................ Sun Newspapers *SUPERIOR ................ Superior Office Products & Furniture Systems **SUTTON .................... Sutton Marketing *S&W ........................... Sullivan & Worcester*SYRACUSE ............... Syracuse Newspapers*TALK800 .................... Talk800*TAYLOR ..................... Taylor’s Stationers**TCI ............................. Thomas Cook, Inc.*TCPS .......................... Telephone Check Payment Systems*TELENATIONAL ........ Telenational Marketing*TELESULTANTS ....... TeleSultants**



Acronym Commenter

TEZANOS .................. Tezanos, Maritza*THOMPSON .............. Thompson’s of Morgantown, Inc.**THOMSON ................. Thomson, Ruth M.**THORNTON ............... Thornton, Kevin A.**THUMB ...................... Thumb Office Supply, Inc.**T–I .............................. Times-Independent*TIEDT ......................... Tiedt, Thomas N.***TIEGS ........................ Tiegs, Curtis D.**TIME WARNER ......... Time Warner***TIMES TRENTON ...... Times of Trenton*TITUS ......................... Titus, The Honorable Dina (2 letters)*TM .............................. Telemarketing Magazine**TMG ........................... Television Marketing Group*TMO ........................... Total Marketing Outbound, Inc.*TMW ........................... TMW Marketing*TOTAL ........................ Total Office Products & Service**TOWNE ...................... Towne Office Supply**TP ............................... Times Picayune***TPA ............................ Tennessee Press Association, Inc.*TRIBUNE ................... Tribune Products Company**TUCKER .................... Tucker, H.J.**TULANDER ................ Tulander, Jerry and Alan**TUPPERWARE .......... Tupperware Worldwide*TVMARKET ................ TV Marketplace, Inc.*UACU ......................... United Airlines Employees Credit Union**UCI ............................. United Color, Inc.*UHL ............................ Uhl, J.M.**UMI ............................. Universal Media, Inc.*UNION ........................ Union-News*UPS ............................ United Parcel Service, Inc.*USCE ......................... U.S. Coin Exchange*USD ............................ University of San Diego, Center for Public Interest Law*USPS ......................... U.S. Postal Service***USTA .......................... United States Telephone Association*USWI .......................... US West, Inc.*VBA ............................ Virginia Bankers Association**VENTURA .................. Ventura County Star*VIACOM ..................... Viacom International***VINCENT ................... Vincent, Chorey, Taylor & Feil*VINSON ..................... M.A. Vinson Construction Co.**VIRGINIA ................... Virginia State Corporation Commission*VT AG ........................ Vermont Attorney General’s Office**WACHOVIA ................ Wachovia Corporation*WADDLE .................... Waddle, Mr. Shannon**WALDOON ................. Waldoon, James B.**WALNUT .................... Walnut Telephone Company**WARD ........................ Ward, Doris L.**WARD ........................ Montgomery Ward*WASHINGTON .......... The Washington Post***WAUGH ..................... Waugh, John C.*WAY ........................... Way Office Products Inc.**WEBB ......................... Webb, Mrs. Alice**WEBER, G ................. Weber, G.E.**WEBER ...................... Ron Weber and Associates*WESTVACO ............... Westvaco, Corp.*WFNNB ...................... World Financial Network National Bank*WHITLEY ................... Whitley, Claude & Evelyn**WILLIAMS .................. Williams Television Time*WILSON, A ................ Wilson, A.M.**WILSON, C ................ Wilson, Charles R.**WILSON ..................... Wilson Daily Times*WINCHESTER ........... Winchester Sun*WINDSOR .................. Windsor Vineyards*WINONA .................... Winona Post*WISE .......................... Wise, Dorothy**WOODARD ................ Woodard, James P.**WOODBOURNE ........ Woodbourne International (comments forwarded by The Honorable Sam Nunn and The Honorable Kay Bailey

Hutchison)*WRIGHT, A ................ Wright, Albert R.**WRIGHT, J ................. Wright, Joseph**WRINKLE ................... Wrinkle, Glenn E.**WTC ........................... Wilmington Trust Company*



Acronym Commenter

WTO ........................... West Telemarketing Outbound*WU ............................. Western Union*YINGLING .................. Yingling, Thomas**YOUNGBERG ............ Youngberg, Arthur D.*ZIRGER ...................... Zirger, Louise**

Notes:* Filed comment to the originally proposed Rule.** Filed comment to the revised proposed Rule.*** Filed comments to both proposed Rules.

[FR Doc. 95–20655 Filed 8–22–95; 8:45 am]BILLING CODE 6750–01–P

43842 federal register / vol. 60, no. 163 / wednesday, august 23

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