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	<title> - THE DO NOT CALL LIST AUTHORIZATION</title>
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	[House Hearing, 108 Congress]
	[From the U.S. Government Publishing Office]




	THE DO NOT CALL LIST AUTHORIZATION
	=======================================================================

	HEARING

	before the

	COMMITTEE ON ENERGY AND COMMERCE
	HOUSE OF REPRESENTATIVES

	ONE HUNDRED EIGHTH CONGRESS

	FIRST SESSION

	__________

	JANUARY 8, 2003

	__________

	Serial No. 108-1

	__________

	Printed for the use of the Committee on Energy and Commerce


	Available via the World Wide Web: http://www.access.gpo.gov/congress/
	house


	__________









	U.S. GOVERNMENT PRINTING OFFICE
	84-759 WASHINGTON : 2003
	___________________________________________________________________________
	For Sale by the Superintendent of Documents, U.S. Government Printing Office
	Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512-1800
	Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001







	COMMITTEE ON ENERGY AND COMMERCE

	W.J. ``BILLY'' TAUZIN, Louisiana, Chairman

	MICHAEL BILIRAKIS, Florida JOHN D. DINGELL, Michigan
	JOE BARTON, Texas Ranking Member
	FRED UPTON, Michigan HENRY A. WAXMAN, California
	CLIFF STEARNS, Florida EDWARD J. MARKEY, Massachusetts
	PAUL E. GILLMOR, Ohio RALPH M. HALL, Texas
	JAMES C. GREENWOOD, Pennsylvania RICK BOUCHER, Virginia
	CHRISTOPHER COX, California EDOLPHUS TOWNS, New York
	NATHAN DEAL, Georgia FRANK PALLONE, Jr., New Jersey
	RICHARD BURR, North Carolina SHERROD BROWN, Ohio
	Vice Chairman BART GORDON, Tennessee
	ED WHITFIELD, Kentucky PETER DEUTSCH, Florida
	CHARLIE NORWOOD, Georgia BOBBY L. RUSH, Illinois
	BARBARA CUBIN, Wyoming ANNA G. ESHOO, California
	JOHN SHIMKUS, Illinois BART STUPAK, Michigan
	HEATHER WILSON, New Mexico ELIOT L. ENGEL, New York
	JOHN B. SHADEGG, Arizona ALBERT R. WYNN, Maryland
	CHARLES ``CHIP'' PICKERING, GENE GREEN, Texas
	Mississippi KAREN McCARTHY, Missouri
	VITO FOSSELLA, New York TED STRICKLAND, Ohio
	ROY BLUNT, Missouri DIANA DeGETTE, Colorado
	STEVE BUYER, Indiana LOIS CAPPS, California
	GEORGE RADANOVICH, California MICHAEL F. DOYLE, Pennsylvania
	CHARLES F. BASS, New Hampshire CHRISTOPHER JOHN, Louisiana
	JOSEPH R. PITTS, Pennsylvania TOM ALLEN, Maine
	MARY BONO, California JIM DAVIS, Florida
	GREG WALDEN, Oregon JAN SCHAKOWSKY, Illinois
	LEE TERRY, Nebraska HILDA L. SOLIS, California
	ERNIE FLETCHER, Kentucky
	MIKE FERGUSON, New Jersey
	MIKE ROGERS, Michigan
	DARRELL E. ISSA, California
	C.L. ``BUTCH'' OTTER, Idaho

	David V. Marventano, Staff Director

	James D. Barnette, General Counsel

	Reid P.F. Stuntz, Minority Staff Director and Chief Counsel

	(ii)




	C O N T E N T S

	__________
	Page

	Testimony of:
	Muris, Hon. Timothy J., Chairman, Federal Trade Commission... 12
	Material submitted for the record by:
	Muris, Hon. Timothy J., Chairman, Federal Trade Commission,
	response for the record.................................... 33

	(iii)




	THE DO NOT CALL LIST AUTHORIZATION

	----------


	WEDNESDAY, JANUARY 8, 2003

	House of Representatives,
	Committee on Energy and Commerce,
	Washington, DC.
	The committee met, pursuant to notice, at 10:10 a.m., in
	room 2123, Rayburn House Office Building, Hon. W.J. ``Billy''
	Tauzin (chairman) presiding.
	Members present: Representatives Tauzin, Barton, Upton,
	Stearns, Gillmor, Cox, Deal, Burr, Shimkus, Bass, Terry,
	Dingell, Markey, Hall, Eshoo, and Strickland.
	Staff present: Kelly Zerzan, majority counsel; Ramsen
	Betfarhad, majority counsel; Brendan Williams, legislative
	clerk; John Tripp, press; and Jonathan Cordone, minority
	counsel.
	Mr. Burr [presiding]. The committee will come to order. Let
	me take this opportunity to welcome all of the members back to
	the 108th Congress.
	At this time let me make a brief opening statement. This is
	for the purpose of members a briefing rather than a hearing,
	but it is--there is a record on this, and I would make a
	unanimous consent request at the beginning that the record be
	left open for all members who might have comment on this
	hearing. No objection, so ordered.
	Although the committee does not formally organize until the
	end of January, due to the important subject matter and the
	time sensitive matter of this issue, we are holding a briefing
	rather than a hearing.
	However, like any hearing, this briefing will be an attempt
	to create a record and all members will have the opportunity to
	offer an opening statement and ask questions of our witness.
	Today we have before us the Federal Trade Commission
	chairman, Tim Muris, and welcome as always, to brief us on the
	funding issues for the Commission's new national do-not-call
	registry. We have all read about the Commission's national do-
	not-call list, which is designed to provide consumers with one
	central contact to stop unwanted telemarketing calls.
	One remaining issue is the question of funding the do-not-
	call registry, which is anticipated to cost upwards of $16
	million per year. The FTC plans on levying fees on the
	telemarketing industry for the use of the list, which would
	fund the operation and enforcement of the do-not-call registry.
	However, in order to assess such fees, the Commission needs
	authorization from its authorizing committee, which is why we
	are here today.
	The policy questions that need to be addressed include
	whether the authorization should be permanent or for specific
	fiscal years, and whether the authorization requires the FTC to
	raise all of its funding from the telemarketing industry or
	whether general appropriations should share the burden. I look
	forward to hearing the Commission's position on these issues.
	I understand that the Commission has a very limited
	timeframe within which it needs to secure an authorization and
	appropriations in order for the do-not-call registry to be
	operational for fiscal year 2003.
	As a result, the Commission and this committee are faced
	with a difficult time line. However, I can assure you that we
	will do our best to make sure that the national do-not-call
	registry is successful.
	For years now the FTC, the FCC, the States, and the Direct
	Marketing Association have all over--had all overlapping do-
	not-call regulatory regimes to stop unwanted telemarketing
	calls.
	A new national do-not-call list will cut through this
	regulatory morass to reduce the financial and regulatory
	burdens on telemarketers and be far more user friendly for the
	American consumer. However, consumers who place their name on
	the Commission's national do-not-call list will expect, and
	rightfully expect, that the telemarketing calls will stop.
	The limited scope of the FTC's jurisdiction will not
	capture all of the telemarketing calls being made. This
	solution will not eliminate telemarketing calls for the
	American people.
	Fortunately, the FCC is currently reviewing and will be
	amending its do-not-call rules. The good news is that the FCC
	is another agency under our purview and hopefully we can all
	work together to provide a total solution to the problem of
	unwanted telemarketing calls.
	These are all important issues that we need to consider.
	Once again, Chairman Muris, thank you for this, and thank you
	for briefing the committee today. I look forward to your
	statement.
	At this time, the Chair would recognize any members who
	would also like to make opening statements. The Chair would
	recognize Mr. Markey for 3 minutes.
	[The prepared statement of Hon. Richard Burr follows:]
	Prepared Statement of Hon. Richard Burr, a Representative in Congress
	from the State of North Carolina
	Welcome everyone to the 108th Congress. Although the Committee does
	not formally organize until the end of January, due to the important
	subject matter and the time-sensitive nature of the issue, we are
	holding a ``briefing'' rather than a ``hearing.'' However, like any
	hearing, this briefing will be an attempt to create a record and all
	Members will have the opportunity to offer an opening statement and ask
	questions of our witness.
	Today, we have before us the Federal Trade Commission Chairman,
	Timothy Muris, to brief us on the funding issues for the Commission's
	new national ``do-not-call'' registry. We have all read about the
	Commission's national do-not-call list which is designed to provide
	consumers with one central contact to stop unwanted telemarketing
	calls.
	One remaining issue is the question of funding the do not call
	registry, which is anticipated to cost upwards of $16 million per year.
	The FTC plans on levying fees on the telemarketing industry for the use
	of the list which would fund the operation and enforcement of the do
	not call registry. However, in order to assess such fees, the
	Commission needs authorization from its authorizing committee, which is
	why we are here today. The policy questions that need to be addressed
	include whether the authorization should be permanent or for specific
	fiscal years, and whether the authorization requires the FTC to raise
	all of its funding from the telemarketing industry or whether general
	appropriations should share the burden. I look forward to hearing the
	Commission's positions on these issues.
	I understand that the Commission has a very limited time frame
	within which it needs to secure an authorization and appropriations in
	order for the do-not-call registry to be operational in fiscal year
	2003. As a result, the Commission and this Committee is faced with a
	difficult timeline. However, I can assure you that we will do our best
	to make sure that a national do-not-call registry is successful.
	For years now, the FTC, the FCC, the states, and the Direct
	Marketing Association have all had overlapping do-not-call regulatory
	regimes to stop unwanted telemarketing. A new national do-not-call list
	will cut through this regulatory morass to reduce the financial and
	regulatory burdens on telemarketers and be far more user-friendly for
	the American consumer. However, consumers who place their names on the
	Commission's national do-not-call list will expect, and rightly expect,
	that the telemarketing calls will stop. The limited scope of the FTC's
	jurisdiction will not capture all of the telemarketing calls being
	made. This solution will not eliminate telemarketing calls from the
	American people.
	Fortunately the FCC is currently reviewing, and will be amending,
	its do-not-call rules. The good news is that the FCC is another agency
	under our purview and hopefully we can all work together to provide a
	total solution to the problem of unwanted telemarketing calls.
	Thank you, Chairman Muris, for briefing the Committee today and I
	look forward to hearing from you.

	Mr. Markey. Thank you, Mr. Chairman. And I want to commend
	you and Chairman Tauzin for calling this timely members
	briefing on proposals from the Federal Trade Commission to
	create a national telemarketing do not call data base.
	I also want to welcome FTC Chairman Tim Muris to the
	committee today to hear more about the Federal Trade
	Commission's historic action in this area.
	The decision by the Federal Trade Commission to implement a
	national do-not-call data base is a giant step forward for
	consumers who are often plagued by unwanted intrusive
	unsolicited telemarketing.
	When this committee in 1991 successfully approved the
	Telephone Consumer Protection Act legislation which I
	sponsored, to help consumers deal with the seemingly daily
	ritual of unwanted telemarketing calls, and--``Hello. No, I
	don't want to change my phone service. I'm very happy. How did
	you get my cell phone number? I am in a Congressional hearing
	now on this very subject. Can you please take me off--I've
	already asked you five times before to take me off that list.''
	Doesn't that just bother you, huh? That these people, and
	they're moving to cell phones now as well.
	This was legislation--by the way, the legislation back in
	1991, it was bipartisan. Norm Lent on this committee, Matt
	Rinaldo, Bob Livingston, Bill Paxon, Chris Smith, and Tom
	DeLay, were all cosponsors of my legislation back in 1991.
	Now, Chairman Muris deserves tremendous credit for
	advancing this powerful new tool with which consumers can
	combat unsolicited telemarketing calls. And consumers around
	the country cheered when Chairman Muris announced the FTC's
	decision to move forward with a do not call data base the week
	before Christmas.
	Consumers have waited a long time for the benefits of the
	same digital and telecommunications technology that has so
	advanced the ability of telemarketers to efficiently and cost
	effectively reach consumers, to also be harnessed on behalf of
	consumers to help them address legitimate privacy concerns.
	I certainly hope that consumers do not have to wait yet
	another year or more before the FTC is able to continue
	implementing its plan. While outstanding issues remain to be
	resolved at the Federal Communications Commission with respect
	to coverage of telephone companies as well as coverage of
	financial institutions and airlines and how much and by what
	methods telemarketers may be charged to support data base
	implementation and enforcement, such issues are ripe for
	consideration by the Federal Communications Commission and by
	the Federal Trade Commission, respectively, and we need not
	bring the entire do not call data base effort to an abrupt halt
	in order to continue consideration and resolution of these
	issues.
	We want to work with you, Chairman Muris, as well as
	Chairman Tauzin and Mr. Dingell and all of the other members on
	the committee, Chairman Upton, to achieve timely implementation
	of an idea that is highly popular with our constituents. You
	have a box office runaway smash hit on your hands. As soon as
	it gets introduced into the hands of consumers, they take
	advantage of it as quickly as they can get to a phone and get
	their name on the do-not-call list.
	So let's hope that we can, in Congress, help you to
	implement your vision, because I think it is a correct one for
	America, and once again congratulations.
	Chairman Tauzin. Thank you, Mr. Markey, and welcome,
	Chairman.
	It is my time to call on Mr. Barton, but he has got a no-
	call note on my desk. So I will call him anyhow. Mr. Barton is
	recognized.
	Mr. Barton. Mr. Markey has already had a better line than
	that, Mr. Chairman.
	I will point out that so far the record for going over on
	opening statements is already held by Mr. Markey. He has
	already gone over by 1 minute. But I am sure that he will break
	that record fairly soon. So he has it set up. I just wanted to
	say that.
	I just want to say I think this is a good hearing. I am on
	the Texas do-not-call list, which so far hasn't seemed to help
	me yet. But they told me it would take about 6 months. My
	questions, when we have questions, if we are going to have a
	national do-not-call list, I would encourage the Commission, to
	the extent that it is within its jurisdiction, to be inclusive
	of all calls that it can restrict, including political calls
	and charitable calls.
	You have so many gaps in your jurisdiction that if you add
	to that, for political reasons or humanitarian reasons,
	whatever you wish to call it, your do-not-call list isn't going
	to be much of a do-not-call list. So if you are going to do it,
	do it, or be honest and say that you don't have the
	jurisdiction to make it stick and pass on it.
	With that I will yield back, Mr. Chairman.
	Chairman Tauzin. Thank the gentleman. Mr. Hall is
	recognized for an opening statement.
	Mr. Hall. Thank you, Mr. Chairman. I think it is a timely
	hearing. I thank the chairman. I think we would do well to get
	underway to listen to him. I yield back my time.
	Chairman Tauzin. Further requests for time? Mr. Upton, the
	chairman of the Telecommunications Subcommittee.
	Mr. Upton. Thank you, Mr. Chairman. I would only like to
	say that we are in a little bit of an awkward sport. As
	Chairman of the Telco Subcommittee, I want to work with the FCC
	who I know has another important piece in terms of the
	regulatory side of this issue. And I know that they are in the
	process of promulgating some regulations, and think I all of us
	need to get to the bottom of why they are not as up to speed as
	the FTC is. And I intend to do that and talk with Chairman
	Powell and members of my subcommittee.
	This is something that all of us want, not only as
	individuals, but for the districts that we represent as well,
	and I yield back my time.
	Chairman Tauzin. Further requests for time? On this side,
	the gentleman, Mr. Stearns, chairman of the Commerce, Trade,
	and Consumer Protection Subcommittee.
	Mr. Stearns. Good morning. Thank you, Mr. Chairman. And
	good morning and best wishes for the new year to Chairman
	Muris.
	Let me just say, since you took the office at the
	Commission you have been kind enough to testify before our
	subcommittee, as the Chairman mentioned, the Commerce, Trade
	and Consumer Protection Subcommittee, on a number of occasions.
	It is great that you are doing so today, and I commend you
	for it. Your testimony in the past has been very helpful to
	understand the issues, and that is why we are glad you are here
	this morning.
	At the outset, you and the Commission staff should be
	commended for taking the initiative, I believe, on this issue.
	And I think you have done a lot of hard work promulgating the
	recent amendments to the Telemarketing Sales Rule, especially
	the do-not-call amendments.
	As a member that has championed consumer information
	privacy legislation for the past 2 years, I think a national
	do-not-call list is an important, although small step toward
	furthering enhancing consumers' privacy. There is no question
	that I, along with most of my constituents welcome any
	effective measure designed to protect us from unwanted
	telephone solicitations.
	A national do-not-call list goes a long way in fulfilling
	our want for a little peace and quiet at the family dinner
	table.
	On a number of occasions, the Commission staff, to their
	credit, sat down with our staff and listened carefully to
	concerns that I and a few other members have raised. Some
	concerns have been addressed in making this rule, in my view,
	more effective.
	There are, however, significant issues that remain, which
	are worthy of further Commission and committee consideration.
	For example, it is important that the national do-not-call list
	truly be a one-stop shopping experience for the consumer.
	As it stands now, I understand that 28 States have their
	own do-not-call lists. I think we must have a single national
	registry or list for all interstate calls.
	That is why I think the Commission must ensure
	harmonization among the myriad of State and Federal FTC and FCC
	telemarketing rules and do-not-call lists. However, the amended
	Telemarketing Sales Rule contains no substantive direction or
	mandate to achieve the goal of a one-stop shop for do-not-call
	lists.
	I know there is a question as to whether the Commission has
	the authority to preempt State action on this matter. I think
	the committee should carefully examine and consider the grant
	of such authority.
	I strongly encourage the FTC to work very closely with the
	FCC on its national do-not-call registry proposed rulemaking so
	that if the FCC was to promulgate its own rule, it is
	substantially in agreement and harmony with the FTC rule.
	Finally, I encourage the Commission to further review its
	authentication procedures, especially with regards to on line
	registration. These outstanding issues, among others, lend
	themselves to future oversight hearings by this committee, Mr.
	Chairman.
	Chairman Tauzin. Would the gentleman yield?
	Mr. Stearns. Yes.
	Chairman Tauzin. I want to commend him on his statement.
	While I was not here to make an opening statement, he has
	really pinpointed the big concerns of our committee, Mr.
	Chairman, and I wanted to amplify them just a bit, that is,
	that the last thing we need is for two separate agencies with
	different jurisdictional scope crafting their own do-not-call
	list formulations that are going to be different and
	administered differently, and perhaps fall differently upon
	telemarketing associations and consumers.
	And, so it is going to be critical, as we move forward in
	this hearing, to get a full understanding from you and your
	Commission as to what efforts have been made to coordinate with
	the FCC, what authority the FCC has that you do not have in
	terms of perfecting a rule that will work for all Americans and
	for the business community as well, and what efforts are going
	to be made to make sure that we don't have overlapping
	duplication, or worse yet, conflicting rules coming out of two
	Federal agencies.
	I thank the gentleman for yielding and again, compliment
	him on his opening statement.
	Mr. Stearns. I thank the chairman for emphasizing again how
	the FTC and FCC must substantially harmonize and bring their
	rules together.
	Let me conclude, Mr. Chairman, by saying that--I will end
	by speaking briefly to the specific objectives of today's
	hearing, the Commission's request for authority to collect
	fees.
	I think it is important that an agency work very closely
	and cooperatively with its authorizing committee in Congress,
	namely us, even when time is a luxury and not easily afforded.
	The hearing today is an important and necessary first step,
	according to our committee, that has jurisdiction to carefully
	examine your request. And so again I commend you, Mr. Muris,
	Chairman Muris, for coming forward and presenting your reasons
	for this fee. Thank you, Mr. Chairman.
	Chairman Tauzin. Thank the gentleman again. The Chair is
	pleased to welcome and recognize the ranking member of our full
	committee, the gentleman from Michigan, Mr. Dingell.
	Mr. Dingell. Mr. Chairman, thank you. And happy New Year to
	you and my colleagues.
	Chairman Tauzin. And indeed to you, Mr. Dingell.
	Mr. Dingell. Mr. Chairman, I thank you for holding this
	public briefing on the Federal Trade Commission's national not-
	to-call registry. This is a matter of which I am certain will
	be appreciated by millions of Americans who are finding some of
	these calls to be a vast and a complete annoyance. This is an
	increasingly important issue then to consumers across the
	country.
	Unwanted telemarketing calls have become a genuine nuisance
	that many consider to be an outright invasion of privacy. The
	national do-not-call registry would enable consumers to
	eliminate unwanted intrusions and once again to answer their
	telephones without aggravation.
	Any national program to address these problems should
	provide common sense exceptions for charitable organizations
	and the existing relationships that businesses have with their
	customers. It should also maximize consumer choice, allowing
	individuals to receive the calls they want and to avoid those
	they do not.
	Most importantly, for a national registry to be successful,
	it must be diligently enforced. And I look forward to seeing to
	it that that transpires here. It appears also that the FTC has
	made significant progress toward establishing such a national
	program.
	Consumers, charities, telemarketers, State and local
	governments and other interested parties have voiced their
	complaints and communicated their concerns. The Commission
	appears to have carefully considered a wide range of
	complicated issues and produced what appears to be a balanced
	and thoughtful result.
	The rules have been crafted. How these rules will be
	implemented and enforced remains to be seen. I am looking
	forward to hearing from Chairman Muris today regarding the
	FTC's plans to fund, implement and enforce its national do-not-
	call registry.
	I look forward to the committee inquiring what we should do
	to cooperate, to both to make this successful, and to see what
	needs to be done to assure that it works in the best way
	possible. I am looking forward to prompt Congressional action
	to address this national problem of unwanted telemarketing
	calls.
	And I note, parenthetically, that I look forward also to
	address the problems of cramming, spamming, and other improper
	actions affecting the American consuming public. Thank you for
	recognizing me, Mr. Chairman.
	Chairman Tauzin. I thank my friend and share his views
	entirely. I would be happy now to yield to my friend from
	California, Mr. Cox.
	Mr. Cox. Thank you, Mr. Chairman for holding this briefing
	on an issue of great importance, or perhaps we should say,
	great annoyance.
	Thank you, Chairman Muris, for visiting the committee today
	to describe the FTC's progress in creating a national do-not-
	call list to shield consumers from unwanted telemarketing
	calls. I count myself among the many consumers who have had the
	misfortune of receiving multiple unsolicited, unwanted
	marketing pitches over the phone, almost always timed to
	coincide with something critically important.
	And I also count myself among those who have had to wade
	through a tidal wave of paper emanating from my fax machine.
	Therefore, Chairman Muris, I not only support your efforts
	to protect consumers from hassle via voice communication, but I
	encourage you also to prevent aggravation via fax, and I urge
	this committee to support legislation to create a national do-
	not-fax list. Just this morning, because I left my home fax on,
	I ended up with half a dozen pieces of paper that I didn't
	want.
	I commend Chairman Muris on his success in the past 12
	months in amending the FTC's Telemarketing Sales Rule,
	concluding with the Commission's December 2002 announcement of
	a final rule for the creation of a national do-not-call list.
	Now, of course, you seek authorization from this committee
	to collect fees from telemarketers to fund this effort. I urge
	the committee to approve this request, and also to ensure that
	the FTC has the authority to enforce the rule nationwide and
	across every industry, including such industries as banks and
	telephone companies, which by statute, do not currently fall
	under the FTC's authority in this area.
	I note that the exemptions carved out from this national
	do-not-call list by the FTC include political solicitations.
	They are not covered by the do-not-call list. If protecting
	consumers is our governmental purpose, if every man and woman's
	home is to be their castle, then surely there is no reason to
	grant preferred status to political calls, which are often the
	most annoying of all.
	I know that First Amendment reasons have been advanced to
	justify this exemption. But, giving political phone calls
	protected status because of the message they convey proves too
	much under the first amendment, because the first amendment
	requires that we be neutral toward the content of these calls.
	It is not the content of the message, it is the form that is
	being regulated. An exemption for political calls betrays a
	concern with the nature and the substance of the message being
	conveyed.
	Finally, much as I want relief as a consumer who has been
	bombarded with too many intrusive marketing calls and unwanted
	faxes, I would also urge this committee to ensure that any
	authorizing legislation provide a safe harbor for those
	marketers who make a good faith effort to play by the rules and
	to ensure that the law benefits consumers, not lawyers, by
	clarifying that any private rights of action belong only to
	individual consumers, and that all damage awards go to
	consumers not Governments.
	Thank you, Mr. Chairman. Thank you, Mr. Chairman.
	Chairman Tauzin. Thank you, Mr. Cox. Is there further
	request for opening statements on this side? I will come back
	to this side when the gentlelady is settled.
	On this side? The gentleman, Lieutenant Colonel Shimkus. We
	will know when and if things happen in Iraq when we see the
	gentleman dressed in a different uniform.
	I want to welcome the gentleman and ask for the opening
	statement.
	Mr. Shimkus. Thank you, Mr. Chairman. I will be brief. I
	want to ask unanimous consent that every member should have the
	ability to submit opening statements that hasn't.
	Chairman Tauzin. Without objection, so ordered.
	Mr. Shimkus. I will just say that it will be nice to be
	about to return to the days when you wanted to--when you wanted
	to run to answer the phone because you knew that the call was
	being placed by someone who was a friend or a colleague or a
	family member or it was an important thing to do.
	And too many people today don't want to answer their
	phones. And then leave it to the answering machines to do the
	screening on their part. The problem is, the people with
	moderate incomes may not have that access to caller ID or
	answering machines.
	And so I think the consensus here is strong. I applaud this
	second day of activity by the Commerce Committee. I yield back
	my time, Mr. Chairman.
	Chairman Tauzin. Thank the gentleman. Further requests for
	time on this side? The gentlelady from California.
	Ms. Eshoo. Thank you, Mr. Chairman. It is good to be back.
	I congratulate all of my colleagues on your elections. And, Mr.
	Chairman, happy New Year to you, and I look forward to working
	with all of my colleagues here.
	Thank you for having the hearing. I want to salute the FTC
	for taking this issue on. I think it is an important consumer
	issue. And I am looking forward to your testimony.
	I have some questions. As a consumer in this country, I am,
	like so many other people, irked and ticked off by the number
	of calls that come in. And one of my favorite responses now, if
	I am home around dinner time, is to say, give me your number,
	let me call you back.
	And, at least they hang up. So obviously we need to do
	something about this. Consumers have been clamoring for some
	time. So thank you, Mr. Chairman, for holding the hearing. And
	to the FTC, I look forward to hearing your testimony and asking
	some questions.
	Chairman Tauzin. To the gentlelady, I wanted to extend to
	her a welcome too and a happy New Year to she and her
	colleagues.
	I want to point out that this, while this is not an
	official hearing, we are not even fully constituted yet. I know
	you are going to add some new members to the Democratic side of
	our committee. We are going to be busy tomorrow, I believe,
	adding three, perhaps four new members to our side of the
	committee.
	That is how important we felt this issue was that we
	thought we ought to take the time immediately and meet with our
	friend and get some reading on what is going on.
	Further opening statements? The gentleman--first of all,
	the gentleman is recognized from Ohio.
	Mr. Gillmor. Thank you, Mr. Chairman. I want to thank the
	chairman for the opportunity to address the FTC's amended
	Telemarketing Sales Rule and particular the authorization of
	funding for the creation of a national do-not-call register.
	Over the course of the last decade, Congress enacted
	legislation with a goal of protecting consumers from unwanted
	telemarketing phone calls.
	However, over the last few years, I have heard from an
	increasing number of northwest Ohioans conveying their
	opposition to telephone solicitations. And one potential reason
	for this scenario may be the presence of fly by-night
	telemarketers setting up shop and just as quickly disappearing
	with no intention of complying with the law.
	And another may be the need to further encourage legitimate
	telemarketers to comply with existing statutes. Early last
	Congress, this panel, and later the House, overwhelmingly
	approved legislation banning telemarketers from blocking caller
	ID. And I was happy to cosponsor that bill, and I certainly
	applaud the FTC's recent efforts to tighten existing laws.
	And I look forward to hearing about other pertinent issues
	from Chairman Muris, such as the rules potential impact on the
	telemarketing industry, as well as further authorization and
	funding issues.
	And I yield back, Mr. Chairman.
	[The prepared statement of Hon. Paul E. Gillmor follows:]
	Prepared Statement of Hon. Paul E. Gillmor, a Representative in
	Congress from the State of Ohio
	I thank the Chairman for the opportunity to address the Federal
	Trade Commission's (FTC) amended Telemarketing Sales Rule (TSR) and in
	particular, the authorization of funding for the creation of a national
	``do not call'' registry.
	Over the course of the last decade, Congress enacted legislation
	with the goal of protecting consumers from unwanted telemarketing phone
	calls. However, over the last few years, I have heard from an
	increasing number of Northwest Ohioans conveying their opposition to
	telephone solicitations. One potential reason for this scenario may be
	the presence of fly-by-night telemarketers setting-up shop and just as
	quickly disappearing, with no intention of complying with federal or
	state laws. Another may be the need to further encourage legitimate
	telemarketers to comply with existing statutes.
	Early last Congress this panel, and later the House, overwhelmingly
	approved legislation banning telemarketers from blocking Caller ID. I
	was happy to cosponsor that bill and certainly applaud the FTC's recent
	efforts to tighten existing laws. I also look forward to hearing about
	other pertinent issues from Chairman Muris such as the rule's potential
	impact on the telemarketing industry as well as further authorization
	and funding issues.
	Again, I thank the Chairman and yield back the remainder of my
	time.

	Chairman Tauzin. I thank the gentleman. Is there further
	request for time on this side? Then the gentleman, Mr. Bass, is
	recognized for an opening statement.
	Mr. Bass. Thank you, Mr. Chairman. And I have a full
	statement for the record. And I commend you for having this
	hearing, inviting Commission Chairman Muris here to testify on
	the do-not-call list.
	Like many members of this committee on both sides of the
	aisle, I share their support for this action. I do have
	concerns about the issue of fee collection, the scope of the
	rule, and that ultimate balance that we need to hold between
	the irritation and aggravation that this business creates
	versus an industry which employs a lot of people who might not
	be able to be employed in other capacities.
	I commend the Commission for their work in this area and
	look forward to your testimony. I yield back.
	Chairman Tauzin. I thank the gentleman. Further requests
	for opening statements?
	[Additional statements submitted for the record follow:]
	Prepared Statement of Hon. Lee Terry, a Representative in Congress from
	the State of Nebraska
	Mr. Chairman, thank you for holding this briefing today. We have
	all gotten that phone call from a telemarketer just as we were about to
	sit down for a nice family dinner, and I think we can all agree it is
	extremely annoying when these phone calls occur often. But Mr.
	Chairman, I wonder if there is not an easier, less intrusive, less
	regulated, and much less expensive way to stop these unsolicited phone
	calls from telemarketers.
	Mr. Chairman, on numerous occasions I have picked up the phone to
	dial one of my constituents only to have been forced to listen to a
	short recording stating that the person I am calling does not receive
	solicitations and that if this phone call is for a solicitation that
	this person requests to be removed from the telemarketers phone list.
	In addition, I must enter the phone number of the phone I am calling
	from in order to get beyond the recording and reach the person I am
	dialing. Mr. Chairman, all of this happens before the phone even rings
	on the other end of the line. The person I am dialing is unaware of my
	call until after I jump through some small, non-invasive hoops. The
	phone company can provide this recording for a nominal monthly charge.
	It is easier, less intrusive, and much less expensive than the $17
	million in fees the Federal Trade Commission (FTC) proposes to charge
	telemarketing companies.
	In addition to this recording, I have seen advertisements for items
	such as the ``TeleZapper'' which currently sells for $31.95 and is
	designed to help automatically remove the user's phone number from
	telemarketing lists. The TeleZapper does not interfere with normal
	calls or telephone functions and tells predictive dialing computers
	your phone number is disconnected. Mr. Chairman, this is one of many
	devices currently on the market to stop intrusive and unwanted calls.
	Mr. Chairman, I understand the desire to have a National Do Not
	Call Registry, however, I think that more research needs to be done.
	With new technologies entering the market on almost a daily basis, I
	believe a market-based solution is more appropriate than a governmental
	one. The two examples I stated earlier are just two of potentially many
	different market-based solutions that would cost the government nothing
	and still give consumers the ability to block unsolicited telemarketing
	calls. Mr. Chairman, why are we adding more bureaucracy to an already
	burdened government when the market is already showing us that new,
	innovative technology can solve this problem?
	Mr. Chairman, it is conceivable that we could kill an industry that
	employs hundreds of thousands of people each year. Do we know how many
	jobs may be lost because of the $17 million price tag the FTC plans on
	charging the telemarketers? Before we move forward, I think it best
	that we consider all our options with regards to this industry. We
	should only move forward after careful analysis has been made of all
	viable options.
	______

	Prepared Statement of Hon. Bart Stupak, a Representative in Congress
	from the State of Michigan
	My state of Michigan has very recently, on December 30, 2002,
	enacted a law to establish a state Do Not Call list.
	Responsibility for running the list will reside with the state
	Public Service Commission, which will also have an option to enlist a
	private vendor.
	If a federal agency, such as the FTC, establishes a federal do not
	call list, the Michigan law provides for the adoption of the federal
	list as the state do-not-call list.
	The passage of the Michigan law demonstrates the Michigan
	legislature's commitment to this issue, and the importance of cutting
	down on telemarketing calls to the residents of Michigan.
	I hear frequently from constituents that are frustrated and annoyed
	with the number of calls that they get from telemarketers.
	Frankly, I share their views, after many a family dinner
	interrupted by a phone call from a telemarketer trying to sell me
	something.
	I commend the FTC for trying to address this issue, and the Direct
	Marketing Association for supporting a national registry.
	Some valid concerns have been raised regarding the wisdom of having
	separate FTC and FCC do not call registries, along with the registries
	of 28 states.
	We want to protect consumers, but not to impose an unfair or
	irrational burden on businesses.
	I support the creation of the FTC do not call registry, and look
	forward to working on ways to streamline and harmonize these registries
	as much as possible.
	Thank you.
	______

	Prepared Statement of Hon. Eliot Engel, a Representative in Congress
	from the State of New York
	Thank you Mr. Chairman and I want to the thank the FTC Chairman for
	coming to brief us today.
	Like all my colleagues, I have had numerous complaints about
	telemarketers calling during dinner, calling too early or too late, as
	well as deceptive practices.
	I am pleased that the FTC is moving forward on this idea of a
	national do not call list. However, since authorizing law for the
	program is needed, I believe we should use that opportunity to provide
	one-stop shopping for our constituents. I am aware that due to the
	FTC's jurisdictional barriers, it cannot affect all telemarketers.
	The FCC is also looking at creating a ``do not call list'' for
	industries under its jurisdictions. The fact is we have a
	responsibility to empower a single agency to handle all industries when
	it comes to telemarketing. Whether it be FTC, FCC, or even NASA--our
	constituents deserve some efficiency in this process.
	My other concern is that we not destroy any of the hard work the
	states have already done. In 2000, Governor Pataki signed legislation
	creating the New York Do Not Call system. My constituents have used it,
	like it and don't believe the federal government should preempt it.
	My questions are fairly simple--for the record could you list the
	industries that FTC cannot impose the ``do not call list'' rules upon
	and would FTC welcome authority to have oversight of those other
	industries?

	Chairman Tauzin. We turn our attention to the reason we
	came together. That is to hear from the Chairman of the Federal
	Trade Commission, the Honorable Timothy Muris for his
	statement.
	And, Mr. Chairman, you know we usually have a 5-minute
	rule. It doesn't apply here. I want you to take as much time as
	you need. Give us some background, and a full explanation of
	the action of the Commission and what exactly you are seeking
	in new authorities.

	STATEMENT OF HON. TIMOTHY J. MURIS, CHAIRMAN, FEDERAL TRADE
	COMMISSION

	Mr. Muris. Thank you very much, Mr. Chairman. I will take a
	little longer than 5 minutes, but not much. I want to hear your
	specific concerns and I want try to respond to some of the
	points that I have already heard.
	I am certainly pleased to be here today on behalf of the
	Commission to provide you with information about our recently
	announced amendments to the Telemarketing Sales Rule. I want to
	thank you personally, Mr. Chairman, and the committee, for your
	support of the FTC and for holding this briefing so soon in the
	new Congress. I realize it is a busy week and a busy day, and I
	am very appreciative.
	In particular, as you have already indicated, you have
	asked about our request for authority to collect fees to offset
	the cost of implementing the do-not-call registry. This is a
	critical aspect of the Commission's efforts to protect
	consumers' privacy. We look forward to working with the
	committee to ensure its implementation this fiscal year.
	As you know, we promulgated the registry and other
	amendments to the Telemarketing Sales Rule under the
	Telemarketing and Consumer Fraud and Abuse Prevention Act of
	1994. That Act directed the Commission to protect consumers
	from fraud and unwarranted intrusions on their privacy, and to
	issue a trade regulation rule defining and prohibiting
	deceptive or abusive telemarketing acts or practices.
	The Commission adopted the original Telemarketing Sales
	Rule in August 1995. Among other provisions, the rule
	prohibited certain deceptive telemarketing practices,
	prohibited calls by telemarketers or sellers to consumers who
	had previously requested not to receive such calls from that
	particular telemarketer or seller, and prohibited calls to
	consumers before 8 a.m. or after 9 p.m. local time for the
	consumer.
	The Telemarketing Act also directed the Commission to
	undertake a review of the Telemarketing Sales Rule within 5
	years of its promulgation. The Commission began its review in
	late 1999 and held a public forum to examine the then-existing
	do-not-call provision.
	On June 13, 2000, the Commission reported on its review at
	a hearing before this committee's Subcommittee on
	Telecommunications, Trade and Consumer Protection. Chairman
	Tauzin opened that hearing with insightful remarks about
	consumers' growing perception of telemarketing's intrusiveness,
	noting the rise in consumer complaints, and wondering if
	telemarketing calls were becoming more offensive.
	A look back at our consumer complaint data showed that
	Chairman Tauzin was absolutely correct in predicting consumers'
	concerns about the intrusiveness of unwanted telemarketing
	calls.
	Consumer complaints to the FTC about those unwanted calls
	have continued to increase since that hearing almost 3 years
	ago. On November 7, 2001, I presented the Commission's
	testimony, which Mr. Stearns referred to, before his
	subcommittee, and identified consumer privacy as an enforcement
	and programmatic priority. We stated our intent to increase the
	resources devoted to privacy protection, and we stated we were
	considering amending the Telemarketing Sales Rule to credit a
	national do-not-call registry.
	Shortly after that, on December 10, 2001, we held a
	briefing with your staff to discuss our plans, including that
	the do-not-call registry would need to be funded by a fee paid
	by telemarketers. The review, the ongoing review of the
	Telemarketing Sales Rule offered several opportunities for us
	to address privacy protections.
	We have prohibited--we considered, and, in fact, have
	prohibited, telemarketers from blocking the transmission of
	caller ID information on outbound telephone calls, as was just
	mentioned a minute ago.
	Second, we have promulgated specific restrictions on the
	use of predictive dialer software, which results in consumers
	receiving dead air or disconnected calls. Finally, there is the
	do-not-call registry.
	We received, during our rulemaking, over 64,000 written
	comments, which was an astonishing amount of interest, the most
	we have ever received on a rulemaking proceeding. These
	comments overwhelmingly expressed concern about unwanted calls
	and supported the do-not-call registry.
	The Commission unanimously announced its adoption of the
	do-not-call amendments last month on December 18. Throughout
	the rulemaking process, and this is an issue that I know many
	of you are concerned about and so are we. We have sought to
	harmonize our proposed registry with the States for maximum
	efficiency and cost savings.
	Twenty-seven States have enacted do-not-call laws, and 25
	States have implemented their laws by establishing registries
	and collecting fees.
	To comply with all 25 State laws, telemarketing firms are
	required to pay over $10,000 in annual fees. It is likely that
	this financial burden for telemarketers ultimately will be
	reduced with a national list. With over half of the States
	requiring telemarketers to buy no-call lists, and more States
	considering legislation to do the same, the choices are clear,
	either continue on a course that ultimately will require
	telemarketers to purchase many separate lists at an ever-
	increasing cost, or move to an efficient national system that
	also provides free access to the States.
	Over the next 12 to 18 months, the FTC and the States will
	harmonize their do-not-call requirements and procedures.
	Through harmonization we believe we can eliminate costly
	inefficiencies to telemarketers by creating one national
	registry with one fee. And we have spent an enormous amount of
	time already on a State-by-State basis discussing this issue.
	The national registry will provide efficiency benefits to
	consumers as well. It will give them an easy, no-cost way to
	sign up under both Federal and State do-not-call laws, and to
	file complaints if telemarketers call them in violation of
	State or Federal law.
	Further, the national registry will benefit the
	telemarketers by eliminating consumers from their lists who do
	not wish to be called. This should enable telemarketers to be
	more efficient and effective in conducting their marketing.
	We have also had extensive consultations with the FCC. We
	are--obviously I cannot speak for the FCC, we are encouraging
	them to adopt a rule substantially like ours. They have
	rulemaking underway. They would not maintain and run the
	registry. That would certainly be duplication. They have no
	intention of doing that, and they are not considering that.
	But, because of jurisdictional gaps that we have, if the
	FCC does promulgate its rule, we believe that about 80 percent
	of the calls that individuals receive would be prohibited, if
	those individuals sign up for the do-not-call list.
	Today, we are seeking Congressional approval to collect
	offsetting fees to fund the operation of the do-not-call
	registry and its related functions. We anticipate that the
	costs will fall in three broad categories:
	First, are costs to develop and operate the do-not-call
	registry, including receiving complaints. Second, are our
	enforcement costs, which include consumer and business
	education and international coordination.
	And third, are agency infrastructure and administration
	costs, including information technology structural support. We
	have proposed language that requests funding and authority to
	collect offsetting fees sufficient to cover the costs of those
	three categories, which we estimate at $16 million.
	It is important to emphasize that this figure is only an
	estimate of the implementation and enforcement costs. This is
	largely because the most substantial component, developing and
	operating the do-not-call registry is part of an ongoing
	procurement process.
	In addition, we anticipate that there may be numerous
	difficult-to-estimate costs associated with implementing and
	enforcing the do-not-call provisions. Absent Congressional
	approval for funding and fee collection, preferable by the end
	of this month, the do-not-call system will not be available to
	consumers in FY--in this fiscal year, 2003, because the agency
	will not be able to collect fees this fiscal year.
	I appreciate the opportunity to describe our amendments to
	the Telemarketing Sales Rule, and look forward to working with
	the committee and the Congress as we move forward to implement
	these important provisions this year. I would be happy to
	answer any questions.
	[The prepared statement of Hon. Timothy J. Muris follows:]
	Prepared Statement of Hon. Timothy J. Muris, Chairman, Federal Trade
	Commission
	Mr. Chairman, I am Timothy J. Muris, Chairman of the Federal Trade
	Commission.<SUP>1</SUP> I am pleased to appear today, on behalf of the
	Commission, to provide the Committee with information about our
	recently-announced amendments to the Telemarketing Sales Rule (``TSR''
	or ``Rule''). In particular, you have asked about our request for
	authority to collect fees to offset the costs of implementing the ``do-
	not-call'' amendments to the TSR. Our testimony provides an overview of
	the TSR amendment process, discussion of the do-not-call provisions,
	and an examination of the funding request. The do-not-call registry is
	an important aspect of the Commission's ongoing efforts to protect
	consumers' privacy, and we look forward to working with this Committee
	to ensure its implementation in fiscal year 2003.
	---------------------------------------------------------------------------
	\1\ The written statement represents the views of the Federal Trade
	Commission. My oral presentation and responses are my own and do not
	necessarily reflect the views of the Commission or of any other
	Commissioner.
	---------------------------------------------------------------------------
	i. the tsr review
	The FTC promulgated the do-not-call and other substantial
	amendments to the TSR under the express authority granted to the
	Commission by the Telemarketing and Consumer Fraud and Abuse Prevention
	Act (``the Telemarketing Act'' or ``the Act.'').<SUP>2</SUP> The
	Telemarketing Act, adopted in 1994, directed the Commission to issue a
	trade regulation rule defining and prohibiting deceptive or abusive
	telemarketing acts or practices. Specifically, the Telemarketing Act
	mandated that the rule include prohibitions against any pattern of
	unsolicited telemarketing calls ``which the reasonable consumer would
	consider coercive or abusive of such consumer's right to privacy,''
	<SUP>3</SUP> as well as restrictions on the hours unsolicited telephone
	calls can be made to consumers.<SUP>4</SUP> Accordingly, the Commission
	adopted the Telemarketing Sales Rule on August 16, 1995, which, inter
	alia, defined and prohibited certain deceptive telemarketing
	practices,<SUP>5</SUP> prohibited calls by any telemarketer or seller
	to any consumer who had previously requested not to receive such calls
	from that telemarketer or seller (the ``company-specific'' do-not-call
	provision) <SUP>6</SUP> and prohibited calls to consumers before 8:00
	AM or after 9:00 PM, local time for the consumer.
	---------------------------------------------------------------------------
	\2\ 15 U.S.C. Sec. Sec. 6101-08.
	\3\ 15 U.S.C. Sec. 6102(a)(3)(A).
	\4\ 15 U.S.C. Sec. 6102(a)(3)(B).
	\5\ 16 C.F.R. Sec. 310.3.
	\6\ 16 C.F.R. Sec. 310.4(b)(1)(ii).
	---------------------------------------------------------------------------
	The Telemarketing Act directed the Commission to undertake a review
	of the TSR within five years of its promulgation.<SUP>7</SUP> The
	Commission began its review of the TSR on November 24, 1999, with the
	publication of a Federal Register Notice announcing a public forum on
	January 11, 2000, to examine the TSR's do-not-call
	provision.<SUP>8</SUP> At that forum, industry representatives,
	consumer groups, and state law enforcement and regulatory officials
	discussed the existing do-not-call requirement, which prohibited
	telemarketers from placing calls to consumers who asked not to receive
	more calls from that telemarketer; efforts by industry at self-
	regulation in this area; the growing number of state laws establishing
	do-not-call lists; the absence of caller identification information for
	some telemarketing calls; and growing consumer dissatisfaction with
	unwanted and abandoned telemarketing calls.<SUP>9</SUP>
	---------------------------------------------------------------------------
	\7\ 15 U.S.C. Sec. 6108.
	\8\ 64 Fed. Reg. 66124 (Nov. 24, 1999).
	\9\ The transcript of the ``Do-Not-Call Forum'' is available on the
	FTC's website at the following address: http://www.ftc.gov/bcp/
	rulemaking/tsr/dncforum/index.html.
	---------------------------------------------------------------------------
	On February 28, 2000, the Commission published a second notice in
	the Federal Register, broadening the scope of its inquiry to encompass
	the effectiveness of all the TSR's provisions.<SUP>10</SUP> This notice
	invited comments on the TSR as a whole.<SUP>11</SUP>
	---------------------------------------------------------------------------
	\10\ 65 Fed. Reg. 10428 (Feb. 28, 2000).
	\11\ The notice also announced a second public forum to be held on
	July 27 and 28, 2000 to discuss provisions of the TSR other than the
	do-not-call requirement. The transcript for the second TSR Forum is
	located on the FTC's website at the following address: http://
	www.ftc.gov/bcp/rulemaking/tsr/tsragenda/index.htm.
	---------------------------------------------------------------------------
	In response to this notice, the Commission received 92 comments
	from representatives of industry, law enforcement, and consumer groups,
	as well as from individual consumers.<SUP>12</SUP> The comments
	uniformly praised the effectiveness of the TSR in combating the
	fraudulent practices that had plagued the telemarketing industry before
	the Rule was promulgated. They also strongly supported the Rule's
	continuing role as the centerpiece of federal and state efforts to
	protect consumers from interstate telemarketing fraud. Commenters
	questioned the effectiveness of the Rule's provisions dealing with
	consumers' right to privacy, such as the do-not-call provision and the
	provision restricting calling times. In particular, commenters noted
	that the company-specific do-not-call provision was extremely
	burdensome to consumers, open to violation, and hard to enforce. In
	addition, the company-specific do-not-call provision did not address
	the invasive and abusive potential of each company's initial call as
	telemarketing has vastly increased. They also identified a number of
	areas ripe for fraud and abuse, as well as the emergence of new
	technologies that affect telemarketing for industry members and
	consumers. Following the receipt of public comments, the Commission's
	second forum was held on July 27 and 28, 2000. On June 13, 2000, the
	Commission reported on its do-not-call review at a hearing before this
	Committee's Subcommittee on Telecommunications, Trade and Consumer
	Protection (``the Subcommittee'') that focused on proposed legislation
	to protect consumers from unwanted telemarketing calls.<SUP>13</SUP>
	Chairman Tauzin opened the hearings with remarks about consumers'
	growing perception of telemarketing's intrusiveness. Noting that, from
	1997 to 1999, the FTC experienced greater than an eight-fold increase
	in consumer complaints about telemarketing, Chairman Tauzin observed:
	---------------------------------------------------------------------------
	\12\ These public comments may be found on the FTC's website at the
	following address: http://www.ftc.gov/bcp/rulemaking/tsr/comments/
	index.html.
	\13\ The Know Your Caller Act of 1999 and the Telemarketing Victim
	Protection Act of 1999: Hearing on H.R. 3100 and H.R. 3180 Before the
	Subcomm. on Telecommunications, Trade, and Consumer Protection of the
	House Comm. on Commerce, 106th Cong 26-34 (2000)(statement of Eileen
	Harrington, Associate Director for Marketing Practices, Federal Trade
	Commission).
	---------------------------------------------------------------------------
	We, of course, can only speculate as to the reason for this
	rise in consumer complaint. Perhaps more and more people see
	telemarketing as an intrusion on their personal in-home
	privacy, particularly during meal time. Don't we all have a
	sense of that? And perhaps pitches and telemarketing sales
	pitches and consumer relation practices are becoming more
	offensive.<SUP>14</SUP>
	---------------------------------------------------------------------------
	\14\ Id. at 1 (statement of Rep. Tauzin, Chairman, Subcomm. on
	Telecommunications, Trade, and Consumer Protection of the House Comm.
	on Commerce).
	---------------------------------------------------------------------------
	A look back at the Commission's consumer complaint data shows that
	Chairman Tauzin's observation that consumers view unwanted
	telemarketing calls as an intrusion was correct: consumer complaints to
	the FTC about unwanted telemarketing calls have continued to increase
	significantly over the past three years.
	ii. the do-not-call amendments to the tsr
	On November 7, 2001, the Commission testified before this
	Committee's Subcommittee on Commerce, Trade and Consumer Protection,
	and delineated its enforcement and programmatic
	priorities.<SUP>15</SUP> Among the areas highlighted was consumer
	privacy. The Commission stated its intent to increase the resources
	dedicated to privacy protection and, specifically, to consider amending
	the TSR to create a national do-not-call registry.
	---------------------------------------------------------------------------
	\15\ The testimony may be found on the FTC's website at the
	following address: http://www.ftc.gov/os/2001/11/muris011107.htm.
	---------------------------------------------------------------------------
	The TSR review, in fact, offered several opportunities for the
	Commission to address privacy protections. In January 2002, the
	Commission issued its Notice of Proposed Rulemaking (``NPR'') to amend
	the Telemarketing Sales Rule to address several important concerns
	raised by consumers during the rule review.<SUP>16</SUP> First, the NPR
	proposed an amendment prohibiting telemarketers from blocking the
	transmission of caller identification information on outbound telephone
	calls. Second, the NPR proposed specific restrictions on the use of
	``predictive dialer'' software that, the rule review record showed,
	resulted in consumers receiving ``dead air'' or disconnected calls from
	telemarketers. Finally, the NPR proposed to require telemarketers
	subject to the Rule to subscribe to a national do-not-call registry, to
	be established and maintained by the Commission, and to prohibit them
	from calling consumers who place their telephone numbers on the
	national registry.
	---------------------------------------------------------------------------
	\16\ 67 Fed. Reg. 4492 (Jan. 30, 2002).
	---------------------------------------------------------------------------
	The Commission ultimately received over 64,000 written comments in
	its rulemaking proceeding. The overwhelming majority of these comments
	expressed concern about unwanted telemarketing calls, and supported the
	do-not-call registry proposal.<SUP>17</SUP> The Commission concluded
	that the rulemaking record showed that a national do-not-call registry
	was necessary to protect consumers' privacy from an abusive pattern of
	calls placed by a seller or telemarketer, and formally announced its
	adoption of the do-not-call amendments on December 18,
	2002.<SUP>18</SUP>
	---------------------------------------------------------------------------
	\17\ These comments may be found on the FTC's website at the
	following address: http://www.ftc.gov/bcp/rulemaking/tsr/tsrreview.htm.
	\18\ Apart from the national do-not-call registry, the Commission
	adopted other amendments to give consumers better tools to stop
	unwanted calls. Within one year, telemarketers will be required to
	transmit caller i.d. information so consumers can know who has called
	them. Consumers' comments reflect their strong desire to have this
	information, which is analagous to a return address on postal mail.
	This information also will enable consumers to file meaningful
	complaints against telemarketers who call them in violation of the TSR.
	Another amendment regulates telemarketers' use of predictive dialer
	software. During the rule review, consumers complained of disconnected
	telemarketing calls, which are generated by predictive dialers set to
	cause excessive call abandonment. Under the amended rule, telemarketers
	may use predictive dialers only if they set the abandonment rate at 3
	percent or less, and, within two seconds of the consumer's answering
	the call, play a message identifying the caller. This package of
	amendments addresses the most intrusive practices identified during our
	rule review and amendment proceeding. The amended rule may be viewed at
	the following address: http://www.ftc.gov/os/2002/12/tsrfrn.pdf.
	---------------------------------------------------------------------------
	Throughout the rulemaking process, the Commission's staff sought to
	harmonize its proposed registry with the states for maximum efficiency
	and cost-savings. At least twenty-seven states have enacted do-not-call
	laws, and twenty-five states have implemented their laws by
	establishing registries and collecting fees from telemarketers. To
	comply with these state laws, telemarketing firms that conduct business
	in all states are required to pay an estimated $10,139 in annual fees
	to obtain the state registries. Without an effort to centralize these
	registries under one national system, states would continue to enact
	their own laws and establish their own registries. With over half of
	the states requiring telemarketers to buy their ``no-call'' lists, and
	more states considering legislation to do the same, telemarketers
	ultimately will have to purchase dozens of separate lists at an ever-
	increasing cost. A national system that also provides free access to
	the states is a more efficient approach.
	As the Commission indicated in the Statement of Basis and Purpose
	for the amended Telemarketing Sales Rule, the amendment does not
	preempt state do-not-call laws.<SUP>19</SUP> Based upon extensive
	discussions among the FTC staff and state enforcement colleagues,
	however, the Commission believes it likely that, over the next twelve
	to eighteen months, the FTC and the states will harmonize their do-not-
	call requirements and procedures. Indeed, we believe that most states
	will begin using the FTC's do-not-call registry to satisfy state law
	requirements, and will stop operating their own registries and
	collecting fees from telemarketers subject to state ``no call'' laws.
	In the handful of instances where state do-not-call laws differ from
	the FTC's amended TSR, we are hopeful that state authorities will ask
	their legislatures to amend their statutes to make them more consistent
	with the FTC's Rule. We also are hopeful that state authorities will
	ask their legislatures to make technical amendments to a variety of
	state laws to make it possible for the states to transfer their
	registry data to the national registry; to permit telemarketers to
	subscribe to the national registry to comply with state laws; and to
	allow state agencies to phase out their state registries. Through
	harmonization, we believe we can eliminate costly inefficiencies to
	telemarketers by creating one national registry--that is, one source of
	information--with one fee.
	---------------------------------------------------------------------------
	\19\ ``At this time, the Commission does not intend the Rule
	provisions establishing a national `do-not-call' registry to preempt
	state `do-not-call' laws. Rather, the Commission's intent is to work
	with those states that have enacted `do-not-call' registry laws, as
	well as with the FCC, to articulate requirements and procedures during
	what it anticipates will be a relatively short transition period
	leading to one harmonized `do-not-call' registry system and a single
	set of compliance obligations.'' Id. at 158-59.
	---------------------------------------------------------------------------
	The national registry will provide efficiency benefits to consumers
	as well. It will give them an easy, no-cost way to sign up under both
	state and federal do-not-call laws, and to file complaints if
	telemarketers call them in violation of state or federal laws. Further,
	the national registry will benefit telemarketers by eliminating
	consumers from their lists who do not wish to be called. This should
	enable telemarketers to be more efficient and effective in conducting
	their marketing initiatives.
	iii. funding and offsetting fee collection request
	As mentioned earlier, the agency seeks Congressional approval to
	fund the operation of the do-not-call registry and its related
	functions through offsetting fee collections. We anticipate that the
	costs will fall primarily in three broad categories: (1) costs of
	development and operation of the do-not-call registry, including the
	handling of complaints; (2) enforcement costs, which includes consumer
	and business education and international coordination; and (3) agency
	infrastructure and administration costs, including information
	technology structural supports.
	The first category relates to the development and operation of the
	do-not-call registry. The phrase ``do-not-call registry'' refers to a
	comprehensive, automated system that will handle a range of
	functions.<SUP>20</SUP> The system will enable consumers to register
	their telephone numbers via either a toll-free telephone number or a
	dedicated website. Both methods of registration will use technologies
	to provide reasonable assurance that the person registering is
	authorized to do so, and will retain only the telephone numbers of the
	registrant. To complement this registration process and enhance
	harmonization with existing state do-not-call lists, the registry will
	permit states to transfer their data into the registry.
	---------------------------------------------------------------------------
	\20\ A number of these functions are discussed in more detail in
	the TSR Statement of Basis and Purpose, pp. 157-164, available at
	www.ftc.gov/os/2002/12/tsrfrn.pdf.
	---------------------------------------------------------------------------
	Further, the system will allow telemarketers, at a minimum,
	quarterly access to all the registration information. Telemarketer
	access to the registry will be through a secure website maintained by
	the selected vendor, and will be granted based upon area codes selected
	by the telemarketer, following payment of the requisite
	fees.<SUP>21</SUP>
	---------------------------------------------------------------------------
	\21\ The exact fees to be assessed and other aspects regarding
	telemarketer subscription to the do-not-call registry, will be
	addressed in a separate rule making that will commence upon
	Congressional approval of funding.
	---------------------------------------------------------------------------
	The system also must permit access by law enforcement agencies to
	appropriate information. Law enforcers will be able to obtain data to
	determine when a consumer registered, when or if a particular
	telemarketer accessed the registry, and what information (i.e., which
	area codes) the telemarketer accessed. Access by law enforcement
	agencies will be provided through the Commission's existing Consumer
	Sentinel system, which is a secure Internet website.
	Additionally, the system will be designed to handle complaints from
	consumers who indicate they have received telemarketing calls in
	violation of the TSR. Consumers will be able to lodge such complaints
	either by a toll-free telephone call or online.<SUP>22</SUP>
	---------------------------------------------------------------------------
	\22\ The Commission currently receives consumer complaints through
	its toll-free number, 877-FTC-HELP or online at www.ftc.gov. We hope to
	steer most do-not-call complaints to the selected vendor's dedicated
	complaint system, where they can be processed and verified in an
	efficient manner. Nonetheless, we anticipate that some consumers will
	complain through the agency's other channels.
	---------------------------------------------------------------------------
	In sum, the scope of the do not call system is considerable. It
	will have the immediate capacity to register and verify over 60 million
	telephone lines and process hundreds of thousands (and possibly
	millions) of complaints.<SUP>23</SUP>
	---------------------------------------------------------------------------
	\23\ States that have established statewide do-not-call registries
	have experienced consumer registration levels ranging from a few
	percent of the telephone lines in use within the state, to over 40
	percent of all lines. Forty percent of all consumer telephone lines in
	the United States would equal approximately 60 million telephone
	numbers. In the State of Missouri, about two percent of consumers who
	signed up for Missouri's registry filed complaints with the State
	within nine months. Assuming two percent of consumers who sign up for
	the FTC's do-not-call registry file complaints, the Commission could
	expect to receive 1.2 million complaints.
	---------------------------------------------------------------------------
	The second cost category consists of various expenditures to
	enforce the do-not-call and related TSR provisions. As with all TSR
	enforcement, we plan to coordinate ``sweeps'' with our state partners
	and the Department of Justice, thereby leveraging resources and
	maximizing the deterrent impact. Further, given the fact that various
	telemarketing operations are moving offshore, international
	coordination will be especially important in the future. As such, it is
	a vital part of our enforcement plan.
	We consider consumer and business education as important
	complements to enforcement in securing compliance with the TSR. Past
	law enforcement initiatives have made clear that a key to compliance is
	education. Because the amendments to the TSR are substantial, and the
	do-not-call system is an entirely new feature, educating consumers and
	businesses will reduce confusion, enhance consumers' privacy, and
	ensure the overall effectiveness of the new system. Based on our
	experience, a substantial outreach effort will be necessary and
	constructive.
	The last category of costs consists of expenditures for related
	agency infrastructure and administration, including necessary
	enhancements to the agency's information technology structural support.
	For example, as noted above, law enforcement agencies will access do-
	not-call complaints through the existing Consumer Sentinel secure
	website. Currently, there are nearly one million consumer complaints in
	the Sentinel system (including identity theft-related complaints). Over
	one thousand individual law enforcers access the Sentinel system,
	passing through its secure firewall. The Sentinel system allows these
	law enforcers to successfully and securely identify targets, categorize
	trends, and buttress existing investigations.
	The Sentinel system and attendant infrastructure must be upgraded
	to handle the anticipated increased demand from state law enforcers for
	access to the do-not-call complaints. Further, the Sentinel system will
	require substantial changes so that it may handle the significant
	additional volume of complaints that are expected. As noted above, the
	vendor's system must be able to accept hundreds of thousands and
	possibly millions of consumer complaints. Those complaints will be
	transferred to and accessible within the Sentinel system. The impact to
	the Sentinel system by such a huge influx of complaints can be
	illustrated as follows: In calendar year 2002, the Sentinel system
	received about 360,000 complaints. With do-not-call, the Sentinel
	system must be equipped to handle easily twice that volume of
	complaints, which will require significant changes to our information
	technology infrastructure.
	The FTC has recently proposed FY 2003 appropriations language that
	requests funding and authority to collect fees sufficient to cover the
	costs discussed above. Specifically, the language provides for
	``offsetting collections derived from fees sufficient to implement and
	enforce the do-not-call provisions of the Telemarketing Sales Rule, 16
	C.F.R. Part 310, promulgated under the Telephone Consumer Fraud and
	Abuse Prevention Act (15 U.S.C. 6101 et seq.), estimated at
	$16,000,000.'' It is important to emphasize that this figure is only an
	estimate of the implementation and enforcement costs. This is largely
	because the most substantial component B developing and operating the
	do-not-call registry B is part of an ongoing procurement process. In
	addition, we anticipate that there may be numerous, difficult-to-
	estimate costs associated with implementing and enforcing the do-not-
	call provisions.
	The Commission will determine the details of these new fees through
	a rulemaking proceeding. Such a proceeding will allow interested
	industry members and the general public to comment on, and provide
	information and input to, the actual fee structure.
	Absent Congressional approval for funding and fee collection very
	soon, preferably by the end of this month, the do-not-call system will
	not be available to consumers in FY 2003 because the agency will not be
	able to collect fees in FY 2003. Our target time line is as follows: We
	will be ready to award a contract in early February. Consumers will be
	able to register their telephone lines four months later, i.e., June-
	July 2003. States also will be able to download their own do-not-call
	lists into the registry as of June. Next, in August, telemarketers will
	subscribe to the list, pay the requisite fees, and begin accessing
	those area codes needed.<SUP>24</SUP> Consumer and business education
	efforts will continue throughout this time period. The do-not-call
	provisions become effective one month after telemarketers are first
	provided access to the national registry. Law enforcement efforts to
	ensure compliance with the do-not-call provisions of the amended TSR
	may begin at that time.
	---------------------------------------------------------------------------
	\24\ Because the fiscal year ends in September, this time line
	gives us very little margin for error in implementing the rule in time
	to collect fees in fiscal year 2003.
	---------------------------------------------------------------------------
	iv. conclusion
	These amendments to the TSR will greatly benefit American
	consumers, allowing them to continue receiving the telemarketing calls
	they want, while empowering them to stop unwanted intrusions into the
	privacy of their homes. The amendments also will help direct marketers
	target their telephone marketing campaigns to consumers who want to
	hear from them over the telephone. Consumers who want to continue
	receiving the calls they currently receive need take no action.
	Consumers who wish to reduce the number of telemarketing calls they
	receive may do so by placing their telephone numbers on the national
	do-not-call list when registration opens. Those consumers still can
	receive calls from companies with which they have an existing business
	relationship, unless they instruct those particular companies, on a
	company-by-company basis, to stop calling them.<SUP>25</SUP> Consumers
	who have placed their telephone number on the registry also can give
	permission to specific companies to call them.<SUP>26</SUP>
	---------------------------------------------------------------------------
	\25\ See Amended TSR Sec. 310.4(b)(1)(iii)(B)(ii).
	\26\ Id. at Sec. 310.4(b)(1)(iii)(B)(i).
	---------------------------------------------------------------------------
	The Commission appreciates the opportunity to describe its
	recently-promulgated amendments to the Telemarketing Sales Rule. We
	look forward to working with the Committee and the Congress as we move
	forward to implement these important provisions in the current fiscal
	year.

	Chairman Tauzin. Thank you. I would recognize myself first
	under our time rules. Let me first ask you, what are the gaps
	under your authority that would be filled by the FCC?
	Mr. Muris. The FCC has authority over common carriers that
	we do not have. And we are primarily talking about the--you
	weren't here. Mr. Markey received a--appeared to receive a
	telephone call soliciting a long distance plan.
	Chairman Tauzin. That was all rigged, you know that.
	Mr. Muris. Well----
	Chairman Tauzin. Go ahead.
	Mr. Muris. They also, because of the nature--we don't have
	the authority over banks, the FCC would have authority over
	banks. Our rule exempts, the Telemarketing Sales Act exempts
	the political calls. That wasn't--it wasn't our doing, it was
	in the Telemarketing Act.
	Chairman Tauzin. That is in the Act?
	So that is the 20 percent you are talking about?
	Mr. Muris. If the FCC acts----
	Chairman Tauzin. If they close the gaps and the rule were
	to go forward, what 20 percent----
	Mr. Muris. We are talking charities and we are talking the
	politicians. Now, the charity--and surveys, which are not
	covered by the Act, which are----
	Chairman Tauzin. Like the census. Like political surveys.
	Mr. Muris. Or a marketing survey. People call you up and
	ask you about politicians----
	Chairman Tauzin. They call and ask you about products?
	Mr. Muris. Sure.
	Chairman Tauzin. Those would be exempt.
	Mr. Muris. Also intrastate calls.
	Chairman Tauzin. Give us some idea of what would be
	covered, the kind of calls that you could block by getting on a
	do-not-call list.
	Mr. Muris. An enormous number of the calls are from those--
	the FCC areas, particularly the people trying to pitch long
	distance to you. All business calls would be blocked if you
	signed up for the list--cold calls, those are calls from people
	with whom you don't have an established business relationship.
	Obviously the pattern of calls that individuals receive
	varies depending on their purchasing habits, you know, what
	lists they find themselves on. But, we do believe, and this is
	based on experience in talking to the States, and there are
	many State rules already in effect, that we would block about
	80 percent of the calls.
	Chairman Tauzin. Now, turning to the question of
	duplication. What assurances do you have that the FCC won't
	duplicate your rules or write conflicting rules? Have you and
	the Chairman of the FCC actually talked head to head to ensure
	that that won't happen?
	Mr. Muris. We have--at the staff level we have had
	extensive conversations. Before our rulemaking began, I had
	considerable conversations with Chairman Powell. Again, I can't
	speak for him, but I believe, based on their actions so far,
	that they are moving forward on adopting a rule that would look
	very much like ours.
	Chairman Tauzin. In terms of the funding, and your
	authority to collect fees, you have indicated to us that you
	need to have that included in, I believe, the January
	appropriations, before the end of the month, so that you can
	proceed with implementing this in 2003? Is that correct? Why is
	that so?
	Mr. Muris. Well, the problem is, and let me walk you very
	briefly through the time line.
	Chairman Tauzin. All right.
	Mr. Muris. If we received the authority, we would move to
	finalize the contract, and we could do that in early February.
	It would take a while. This is a considerable infrastructure
	that needs to be set up. It would take about 4 months before
	consumers could begin registering. So consumers would register,
	say, in June.
	Then, we would, by a month or 2 after that, the
	telemarketers would begin to access the registry. But it is
	only then, in August, you know, very near the end of the fiscal
	year that the telemarketers would have to pay the fee, because
	it is only then that we would have the registry set up that you
	have to access.
	So if we slipped the timing very much at all, we won't be
	able to get the fees in this fiscal year.
	Chairman Tauzin. I see. In terms of the contract you
	signed, will it be a multi-year contract or a single-year
	contract?
	Mr. Muris. The contract will provide--it will provide for
	multi years, but it will be on a year basis with an option.
	Chairman Tauzin. With an option. So then, would it be
	acceptable, would it be workable if the Congress were to
	authorize this fee for a single year, this authority to collect
	it as a pilot operation, renewable if we agreed with you that
	it was working and consumers were happy with the program? Would
	that be acceptable and workable under the contract structure
	you are going to design?
	Mr. Muris. I don't think it would be feasible for a year.
	It might be feasible, and I want to talk to my staff and get
	back to you for a multi-year basis, because again, we are
	talking about being at the end of the fiscal year, and it will
	be--it will be many months--we anticipate that the registration
	process and, accessing the list and then addressing complaints
	and all of that, will carry over into the next fiscal year.
	So if we had to shut down on September 30, which is this
	fiscal year, we would not really be able to implement the
	system.
	Chairman Tauzin. So if we adopted a strategy that allowed
	you whatever time is necessary to put this program into effect,
	and implemented it, but with a sunset that would have to be
	reauthorized on the basis is whether it was working to the
	satisfaction of both consumers in this country and to those who
	use these information systems to do their business, that that
	could be an option that we might exercise before the end of
	January?
	Mr. Muris. Obviously, I don't know what the period is, I
	would have to get back to you on that. But obviously it would
	be reasonable to let the program get set up, run, and see if it
	is working. So I just don't know what the precise timing would
	be. I do know it would take at least a couple of fiscal years.
	Chairman Tauzin. I would urge your staff to give that some
	strong consideration, because I have picked up a sentiment from
	a number of members that while they are equally determined as
	you are to set up some system for the consumers of America to
	have better control of this, that they are a little anxious
	about authorizing permanent fees in a system that we haven't
	seen operating yet.
	Mr. Muris. I understand that concern. My only hesitation is
	to what the period would need to be. But that seems--if that is
	what Congress wanted to do, that would be perfectly reasonable.
	Chairman Tauzin. Thank you. The Chair recognizes the
	gentlelady from California for a round of questions.
	Ms. Eshoo.
	Ms. Eshoo. Thank you. And thank you, Chairman Muris, for
	your comments. I have four questions. I am just going to state
	them, and then you can respond. Because I find that when I take
	them one at a time, wait for the response, that the clock runs
	out.
	So the first question that I have is I would like you to
	clarify who has jurisdiction over the credit card companies.
	Obviously the FCC has the telephone companies, as I understand
	it.
	But I think in terms of telemarketing, and the peskiest and
	the most aggressive marketing is done by those two. So who has
	jurisdiction, and how is it going to be covered?
	My next question is: As you stated, there are what, 27
	States that have also passed legislation. How have you worked
	with the States to harmonize what they have already enacted
	with the FTC's proposal? And do you favor the Congress
	providing any kind of preemption, preemptive authority so that
	there are consistent standards? The last thing we want is an
	inconsistency here. Every consumer in every State across the
	country should have this wonderful prepackaged plan and access
	to it, and not one set of standards in one place and another
	obviously in another.
	Does the--has the DMA list been an effective marketing tool
	in meeting consumer demands? I don't know where you are on
	that. If you could just comment quickly on it.
	And my last question, which may be the fifth question
	instead of the fourth, is, in addition to the FTC fee that you
	are requesting of the Congress, would the same companies have
	to pay fees to the States as well, or would that be eliminated?
	So those are my questions, and I hope that you can answer
	them fully and briefly. Thank you.
	Mr. Muris. Thank you. In terms of the credit card
	companies, in terms of anybody who uses a for-profit
	telemarketer, they are subject to our jurisdiction even if the
	underlying company is not.
	Ms. Eshoo. Is that what they traditionally use?
	Mr. Muris. Yes. I think a lot of the credit card companies
	use the third-party telemarketers. Now, obviously if they did
	it in-house, they would be exempt from us, but the FCC's
	authority would pick them up.
	Let me address the States and your last question about the
	multiple fees.
	Ms. Eshoo. And the phone companies, did you mention them?
	Mr. Muris. The phone companies would be the FCC's. If they
	use a third-party for-profit telemarketers, they would be ours.
	In terms of working with the States, our rule states that
	we are reserving the question of preemption. And what we have
	found is overwhelming support in the States for uniformity, in
	part because we would relieve the States of the burden of
	running a registry. And we would allow the States to access the
	registry for law enforcement purposes.
	We already have something like almost a thousand law
	enforcement partners all over the country who can access our
	complaint data. We have very good working relationships.
	And I think most of the people overwhelmingly we talk to in
	the States like the idea of our running a registry that they
	can enforce, they can enforce it in Federal court under our
	law, under the law that you all passed.
	They also, and many of them we expect would do this, would
	effectively make our law their State law, and then they could
	enforce it in State courts. There will be a transition period
	in which multiple--in which the telemarketers will have to pay
	fees both to us and to the States.
	Because it will take a while for the States to harmonize
	themselves. But we think that transition period will be with
	maybe a few exceptions not more than a year, possibly 1\1/2\
	years.
	Ms. Eshoo. I think we need to ride on this one, because you
	don't--there is a lot of talk today about double taxation. And
	I think that we wanted to make this as tight as possible so
	that there isn't that to make it work. Otherwise, it is going
	to get tangled in the underbrush of what I just described. I
	think that it would or could.
	Mr. Muris. I agree. We have gone on a State-by-State basis.
	Your final question was about the DMA lists. It is not
	widely known or subscribed to, consumers have to pay to sign up
	or place a toll call. We think, based on the experience of the
	States, that our approach is much more preferable.
	Ms. Eshoo. Thank you, Mr. Chairman.
	Chairman Tauzin. Thank you, Ms. Eshoo. The Chair is pleased
	to recognize the chairman of the Energy Subcommittee, Mr.
	Barton.
	Mr. Barton. Thank you, Mr. Chairman. And I really just have
	one question. I want to go back to what I said in my opening
	statement. I am for a do-not-call list, because I am on the do-
	not-call list in Texas. I am okay with a do-not-call list at
	the national level where there are jurisdictional issues that
	the States can't regulate.
	But, and I understand the political sensitivity. But, if
	you are going to have a do-not-call list, why not have a do-
	not-call list and say politicians can't call and charities
	can't call. What is the--what is the rationale for those
	exemptions other than you are afraid that people up here on the
	dais are going to complain at you and the folks that are trying
	to get charitable contributions are going to complain to us and
	we will complain for them to you? Why not go all of the way?
	Mr. Muris. Well, the Telemarketing Sales Act again, which
	is passed by Congress, signed by the President, excludes the
	politicians.
	Mr. Barton. Are you going to blame us? Are you going to say
	that we passed a law that ties your hands? That is a low blow.
	Mr. Muris. It defines telemarketing to cover the
	solicitation of sales of goods or services or charitable
	contributions. So, we do have authority, because of the PATRIOT
	Act, over charities. We addressed charities, after extensive
	discussions and rulemaking and--almost all of the States
	exclude the charitable contributions--surveys of consumers in
	these States--there have been some surveys, which indicate that
	consumers like their do-not-call rule including the charitable
	exemption.
	What we have done with the charities for the first time is
	the charities are now going to be subject to the individual do-
	not-call provision of the rule. And my experience with
	charities, and I know a lot of people's experience, I like to
	give my money between Christmas and New Years and write a
	check.
	Mr. Barton. I will remember that next year.
	Mr. Muris. Well, there is a question of what the definition
	of a charity is. But it begins at home.
	Chairman Tauzin. Many people believe that Barton is a
	charity.
	Mr. Muris. We have had a lot of experience with--you know,
	with for-profit telemarketers, and when you tried to put
	yourself on the individual do-not-call list, they would hang up
	on you. My experience with the charities, and a lot of people's
	experience, is they don't want to offend their donor base, and
	if you tell them not to call you, but instead to send you a
	letter, that they will send you a letter.
	So we think that that part of the rule will work well. But,
	obviously, just as anything any government agency does, you
	know, we should, just as we were discussing a few minutes ago,
	we should let it be implemented, have a fair test and look at
	it.
	Mr. Barton. But on the political calls, you are prohibited
	by law?
	Mr. Muris. Absolutely.
	Mr. Barton. We have seen the enemy and he is us.
	Mr. Muris. I was asked about this at the press conference
	when we announced this. I said what is the truth, which is it
	is above my pay grade.
	Mr. Barton. We want you to tell the truth. So I am glad you
	told me the truth. I yield back.
	Chairman Tauzin. I thank the gentleman. Further requests
	for time. Mr. Strickland. You are recognized for a round of
	questions.
	Mr. Strickland. This issue of charities calling is quite
	interesting, I think, because, I have personally adopted a
	policy that if charities call, I ask them to send me something
	in writing, because oftentimes, I don't know who is calling and
	whether they are legitimate or not.
	The question I have, I guess, pertains to the issue of some
	States having calls and other States not, and whether or not
	there is a States' rights issue here. If we were to make a law
	that would preempt the States, is that considered a thorny
	issue or a difficult one to deal with?
	Mr. Muris. Well, certainly the States almost reflectively
	take the position that they don't like Federal preemption. The
	reality here is, I don't think that we have to go down that
	thorny legal road, because we are offering something that the
	States want, which is, we would relieve them on the burden of
	administering their own system.
	I believe there are enormous benefits in a national system,
	both to telemarketers and consumers. And I believe that because
	of the way we can set this up, it is a win-win for both the
	States and us, that we are not going to have to face the
	preemption question.
	Mr. Strickland. Has there been an effort to survey the
	States to--to see if that assumption is an accurate assumption.
	Mr. Muris. Absolutely. Several of the individuals behind
	me, as you can imagine, have spent an enormous amount of time
	on this. And several of the individuals behind me, one of them
	in fact has a big notebook with notes State by State.
	I have charts, some of which are in front of me. There are
	many States right now that are drafting legislation to
	harmonize their rules with ours. Again, I think this is
	overwhelmingly a win-win.
	Mr. Strickland. Okay. Another question. What about
	companies that--and maybe this is not relevant. But, companies
	that may be located in another country or owned by a foreign
	entity and calls would be coming into this country from, say,
	Canada. What authority would you have over such calls, if any?
	Mr. Muris. Well, we certainly have jurisdiction over people
	who are trying to sell things within the United States.
	There is an increasing difficulty and I will be talking--I
	have already talked to the committee staff, and I will be
	talking to many of the members--I have talked to a few
	already--there is a growing problem about cross-border fraud.
	And in Canada, for example, there are telemarketers set up just
	to call into the United States.
	These are not the kind of people who the do-not-call list
	is aimed at. The telemarketing industry is overwhelmingly
	composed of legitimate people, law-abiding individuals. The
	fraud problem is a different story. Several provisons in the
	Telemarketing Sales Rule and the amendments that we just
	promulgated are aimed at those fraud issues.
	We do have a growing problem even with the do-not-call
	provision, of getting evidence, because more and more
	telemarketing firms are using telemarketers outside the U.S.,
	so there is a growing international component to all of this.
	But the fraud area is where the international issues are really
	tricky.
	Fortunately, as I said, in the do-not-call area it is not a
	big problem.
	Mr. Strickland. But if fraud is not an issue, it is just
	simply calls originating from outside the country? If you have
	a no-call list would such a company be subject to that?
	Mr. Muris. Yes. People are selling into the United States,
	yes. Yes.
	Mr. Strickland. Mr. Chairman, no other questions.
	Chairman Tauzin. Thank you, Mr. Strickland.
	On this side, the gentleman, the chairman of the Commerce,
	Trade, Consumer Protection Subcommittee, Mr. Stearns.
	Mr. Stearns. I guess the first question is, when will the
	FTC formally publish its new rule?
	Mr. Muris. It will be in the--it is available on our Web
	site. It will be published in the Federal Register any day now.
	Mr. Stearns. Then I guess the next question is, what
	consideration has the Commission given to the amount of time
	that businesses affected by this rule will have to comply with
	it?
	Mr. Muris. We have had--let me give you a little
	background.
	We have had--I first publicly discussed the issue of a do-
	not-call list on October 4, 2001. I discussed it again at the
	DMA's national convention the next month. I discussed it in
	front of you that month. We are talking about 14 months ago. We
	have had extensive discussions with members of the industry,
	both privately and publicly.
	In terms of when the rule will be effective, the do-not-
	call parts of the rule on the fastest timetable available would
	not be effective until August in terms of when the industry
	would have to access the list.
	In terms of--we are dealing with caller identification,
	which they have a year from publication in the Federal Register
	to comply with that part of the rule; the rest of the rule,
	they have 60 days from publication of the Federal Register. I
	think there has been ample notice to the industry, and we have
	had lengthy discussions with people in the industry. I realize
	some of them don't like it and they have their objections, but
	I don't think a legitimate objection can be that we are rushing
	to implementation.
	Mr. Stearns. I guess, probably from an industry standpoint,
	they have tens of thousands of employees they have to retrain
	to comply with this rule, and it is probably a lot of computer
	programming that has to be done. And, I mean, I just don't
	know, but you are saying----
	Mr. Muris. Well, they already----
	Mr. Stearns. [continuing] because you have talked to them
	and given them plenty of notice?
	Mr. Muris. Sure. They already have 25 States to deal with.
	We would sell the list based on area codes, and area codes are
	consistent with State boundaries. So this is an issue they have
	already had to deal with, the national telemarketers.
	Mr. Stearns. How will the FCC list that is currently being
	considered relate to the FTC list?
	Mr. Muris. We have had extensive conversations at the staff
	level with the FCC. Before our rulemaking began, I discussed
	this at length with Chairman Powell. I believe--I can't speak
	for the FCC, I believe they will--that they are moving toward
	adopting a list that would substantially conform with ours.
	Mr. Stearns. So the two lists would be pretty much the same
	and coordination on the two of them would be----
	Mr. Muris. Yes. There would be only one national registry,
	which we would maintain. They would be able to enforce it in
	the industries over which they have jurisdiction, which are
	some industries over which we do not have jurisdiction.
	Mr. Stearns. The Commission has spoken to its desire to
	assure agreement among the State and Federal FTC and FCC rules,
	telemarketing rules and do-not-call lists. However, the amended
	Telemarketing Sales Rule contains no substantive direction or
	mandate to achieve the goal of a one-stop shop for a do-not-
	call list. What specific plans have you adopted and what action
	do you and the Commission intend to take to ensure that this
	harmonization, coordination and consistency becomes reality?
	Mr. Muris. Well, that is obviously a very important
	question.
	On a State-by-State basis, we have had for months
	conversations about harmonization with the States that have do-
	not-call registries. We believe there is overwhelming support,
	because I think there are substantial benefits to both the
	States and to us.
	We would relieve the States of the burden they now have of
	administering their own do-not-call registries for the States.
	And the States would be able to enforce--under the
	Telemarketing Sales Act, they could enforce our rule in Federal
	court. We anticipate that many of the States, because they
	would prefer to act in State court rather than Federal court,
	will change their legislation to allow them to enforce our
	rule.
	So we think--because, as I mentioned before, we think this
	is a win-win for everyone--for the States, for consumers and
	for us; we think that will drive national harmonization.
	Mr. Stearns. I think that is a good answer. That is a good
	answer. The Commission's rule will allow for registration
	through an 800 number or over the Internet.
	It is very difficult and expensive to authenticate
	individuals over the Internet without using a payment mechanism
	such as a credit card. How does the Commission intend to
	authenticate individuals that sign on to the registry over the
	phone via the Internet? For example, many States charge a
	nominal fee to consumers to sign on to State do-not-call lists
	as an attempt to limit frivolous requests and provide an
	authentication mechanism. Have you considered steps to cut down
	on these sort of frivolous requests?
	Mr. Muris. Yes. And we will be requesting information from
	people who sign up over the Internet. And we believe that
	through modern technology we can use that information to verify
	the request. We will only retain--we are not going to keep the
	information we use to verify. We are going to retain only the
	phone number. But that is an important issue, and that is one
	that we have thought about it, and we have a way to address it.
	Mr. Stearns. Just a last question, Mr. Chairman. Mr.
	Chairman, you are coming in for $16 million. And I think many
	of us have felt these small budgets start out at $16 million,
	then they escalate quite dramatically.
	How did you arrive at $16 million? I don't mean the
	details. How as a Member of Congress am I sure we are not
	talking about $16 million or $54 million or $100 million?
	Mr. Muris. Well, Congress----
	Mr. Stearns. You mentioned the three things you needed for
	the implementation, the equipment and the enforcement, things
	like that.
	Mr. Muris. Sure. That is obviously an important issue.
	Congress, through its power of the purse, obviously has the
	ability to limit the amount that we can spend. And indeed the--
	that is something that frequently happens with these sorts of
	activities.
	We have had an ongoing process; the largest cost by far
	would be the cost of the contract to develop and operate the
	system, including to receive the consumer complaints. We have a
	system right now where we receive under 400,000 complaints a
	year. Do-not-call easily could double or triple that number of
	complaints. So we need a new infrastructure to receive the
	complaints and the ability to access and utilize the complaints
	other than somebody having to sit down and do them. And both of
	those will require considerable infrastructure and expense.
	Chairman Tauzin. The gentleman's time has expired.
	Let me remind all members we will have a vote in about 10
	minutes on the floor. Under the new rules of decorum, the votes
	will be limited to 15 minutes only and the machines will be
	shut down.
	The gentleman from Massachusetts, Mr. Markey, the ranking
	member of the Telecommunications Subcommittee is recognized.
	Mr. Markey. Obviously the Federal Communications Commission
	has a role to play here as well. You don't have jurisdiction
	over telephone companies' soliciting. So the issue is, should
	you wait for the Federal Communications Commission to act
	before you are able to put your rules on the books?
	And I say this knowing that the intrastate, the calls just
	made within the State are within State jurisdiction; and I will
	point out that Massachusetts' new do-not-call list was made
	available to Massachusetts citizens on January 1, last week.
	And on January 1 and 2, 140,000 people called in on the first 2
	days to put their names on the list. And we expect 1 million
	Massachusetts residents out of 6.3 million, including children,
	to be on the list by the end of this month.
	So the question is, should we wait before your part of this
	problem is solved, until the Federal Communications Commission
	should act; or should you be able to move forward? And maybe,
	if you think you should, how do we reconcile that with the
	Federal Communications Commission piece of the issue?
	Mr. Muris. Well, it is only the FTC that is going to run
	and operate the registry.
	Mr. Markey. Have you already worked that out with the
	Federal Communications Commission?
	Mr. Muris. The Federal Communications Commission proposal
	does not include--they are not even considering, you know,
	implementing and collecting the data base. So that is--I think
	that is an issue that is settled.
	Mr. Markey. So that is a moot issue. In other words, you
	are going to be--the Federal Trade Commission will have that
	responsibility for it and the Federal Communications Commission
	rules and regulations will feed into what you have?
	Mr. Muris. Yes. They would be able to access the data base
	just like all the partners that we have in all the States and
	localities. So, again, I can't speak for the FCC about its time
	line, but we are talking about not having enforcement, assuming
	we get Congressional approval soon for another 8 or 9 months.
	So the reality is that the reason we need to go now, to get
	this authority now, is to be able to set up a system that can
	be in place in 8 or 9 months. That gives the FCC considerably
	more time. And I would hope and I expect--again, I can't speak
	for the FCC, but I would hope and expect the FCC would be ready
	to go in a time very similar to the timing that we are talking
	about.
	Congress gave--you gave the FCC and the FTC authority over
	telemarketers. One of us needed to act first. We acted first.
	Chairman Tauzin. Would the gentleman yield quickly?
	We gave the FCC specific authority to do a no-call list and
	specific authority to collect fees from those accessing it. We
	gave the FTC authority over coercive and abusive practices. You
	are going to get sued over that authority; isn't that correct?
	Mr. Muris. Absolutely. But in 1991 you gave the FCC that
	authority. Three years later you gave the FTC authority. It is
	clear from the legislative history that included the authority
	to do something about do-not-call. Indeed, the 1995 regulation
	did something about do-not-call. It was on a company-by-company
	basis.
	So the idea that the FTC has no authority over do-not-call
	is extremely dubious based on legislative history, based on the
	fact that we have acted. We don't have authority over the fees;
	and that is why we are here, because we are asking for the
	authority.
	Mr. Markey. I would argue by the way, that the way in which
	these telemarketers operate when they start calling you at 9
	a.m. In the morning and it just goes all day into the evening
	is abusive and it is coercive. That is why 140,000 people woke
	up, many of them with a hangover, and the first thought in
	their mind was, I am going to call them, you know, and make
	sure that they can never reach me again this early in the
	morning.
	And I think that is--I think that is basically, you know,
	in the law of the doctrine is res ipsa loquitur--you know, the
	thing speaks for itself, the very thing that so many Americans
	are so passionate about. This issue, by definition, means that
	they view it as abusive and coercive.
	I think all we are really trying to get here is a very
	efficient way for consumers to be able to deal with it. By
	having this central do-not-call list that you have established,
	having the Federal Communications Commission play into that
	with their own rules on subjects over which they have
	jurisdiction, I think is very good.
	Just very quickly, if you don't get the authorization that
	you need, what does that mean in terms of this do-not-call
	list? What does it mean for Americans in terms of their ability
	to have this one-stop shopping?
	Mr. Muris. Sixteen million dollars is a lot of money to us.
	You know, it is not a lot of money in the grand scheme of the
	Federal budget, but it is a lot of money to us. We cannot
	possibly do the do-not-call registry and will not even consider
	doing it unless we have this additional money.
	Mr. Markey. So Americans might have to wait another year
	before----
	Mr. Muris. If we are not authorized soon, we are not going
	to be able to do it for--yes, for this fiscal year. So it
	would--the way the appropriations process works, obviously,
	because we are coming up to where the appropriators are going
	to act for this fiscal year if it is going to happen now; or
	they are going to have to wait until whenever the appropriators
	act again, which isn't going to be soon.
	Mr. Markey. I want a list to be able to call myself
	personally. I think every American does. I hope this Congress
	acts and acts quickly to give the American people what they
	want on a very important subject.
	Thank you, Mr. Chairman.
	Chairman Tauzin. The only thing that I want to point out,
	that res ipsa loquitur decisions are made in court. The problem
	I see, Mr. Markey--we are going to have to talk about it when
	this hearing is complete--is whether or not, if we want to give
	you the authority to raise money, we need to strengthen the
	legal question as to your authority to create the list.
	Otherwise, this list may not be able to go into effect because
	some court issues an injunction, and that is a serious concern
	to a legal staff.
	Mr. Markey. I was using res ipsa loquitur as an analogy, of
	course. But--an administrative agency is given broad discretion
	under the administrative procedures, but the courts have to
	give, by law, great discretion to when they are making
	judgments.
	Chairman Tauzin. But what you are arguing is the outcome of
	the legal case. I am concerned that we have the prospect of a
	legal case because there is at least some question about
	whether there is--res ipsa loquitur would apply here.
	The gentleman, Mr. Deal, is recognized.
	Mr. Deal. I would like to follow up just a bit more.
	Because my first question was going to be, do you think that
	there is need for further legislative language on anything
	other than the authorization for the fee itself? The fact that
	you may think that you have worked out the coordination with
	the FCC, I think we would all like to be certain that that is
	going to be a seamless process, because they are, in their
	jurisdiction of course, controlling an area which has the same
	kind of complaints.
	I suppose if we are going to throw around Latin terms and
	res ipsa loquitur, the other is caveat emptor, ``let the buyer
	beware,'' and the buyer is us in this case. We had better
	beware that we don't sell the American public on the idea that
	if you sign up for this, you are not going to get these calls
	anymore.
	Which leads to the area of the exemptions. Do you think
	that you need any further legislative language to make seamless
	the jurisdiction under the FCC and your jurisdiction and to
	make that workable?
	Mr. Muris. Not for purposes of do-not-call. The Senate
	Commerce Committee last year passed an authorization that gives
	us--which is something I supported--which gives us authority
	over common carriers who are now exempt. You know, that would
	involve bigger issues.
	Mr. Deal. Yes, I understand that. I don't think too many us
	have too many problems with the airlines calling us or common
	carriers calling us. I don't think that is the area of society
	we are concerned with. That is probably going to be one of
	those areas that is going to be in limbo.
	But let me talk about some the other areas that are going
	to be in limbo that fall primarily under State jurisdiction,
	namely insurance companies and financial institutions. They are
	excluded from your ability to put them on a no-call list.
	Let's assume we get this working the way we want it to.
	States are still going to have jurisdictions over those
	institutions, by and large by State law. In the coordination of
	your list with State laws that set up do-not-call lists, will
	there be--will it be seamless also, in that if a State has
	chosen to make the banking institutions or the insurance
	companies subject to do-not-call lists, can those be placed on
	this national register? Or are the States still going to have
	to maintain separate do-not-call lists over the institutions
	that only they have jurisdiction over?
	Mr. Muris. Most of these institutions that you are
	discussing engage in interstate telemarketing, and they are
	already subject to our rule if they use a third-party
	telemarketer. They are already subject--they will be subject to
	the FCC if the FCC goes ahead and acts. And, again, I want to
	emphasize that the State's--the one area where the States will
	need to act if they want to is for intrastate calls. And many
	of them, we anticipate, will still do that.
	Mr. Deal. Just one quick observation.
	Of course, some of us might like to discuss in greater
	detail at another time whether or not we do not in fact--when
	you use an instrumentality such as a telephone that is involved
	in interstate commerce, whether or not in fact jurisdiction
	does not extend likewise to intrastate. But that is a debate
	for another time.
	My last question is a very practical question. Is the
	register going to be listed by the telephone number or by the
	name of the person who requested it? That is significant, for
	example, in my household where I have my elderly mother, my
	elderly father-in-law, who live with us. I can understand that
	if I put my telephone number, which is their telephone number,
	on the list, they may be doing business with somebody I am not
	doing business with.
	How do you work that? Does the one telephone number--it is
	by the telephone number as I understand it not the name.
	Mr. Muris. Yes, the registration is by telephone number.
	Now, there is an exemption which most States have and which we
	have although it is tighter than most of the States which is
	for established business relationships. So if you are doing
	business with someone, you will be able to call.
	Mr. Deal. I understand that but that is unlikely, that if
	they are doing business and they get a call that any complaint
	is going to be registered. But it is by the phone number
	itself.
	Mr. Muris. Yes. So if you have multiple phones in your
	house, you will have to register the multiple phones. Mr.
	Markey will have to register his cell phone.
	Mr. Deal. I am just glad that in the funding mechanism you
	are anticipating it is not like some of the States, I think
	mine was one of the first ones that the consumer had to pay to
	be able to get on the list. I am glad to see we are not taking
	that approach. I would hope we would not follow the suggestions
	that some have said that we ought to charge the consumer for
	verification cost. I think that would defeat the purpose.
	Thank you for briefing us today.
	Thank you, Mr. Chairman.
	Chairman Tauzin. Mr. Wynn is recognized.
	Mr. Wynn. Thank you, Mr. Chairman. I apologize for not
	being here for your earlier comments. I wanted to follow up on
	something Mr. Deal asked.
	It is my understanding now that there is no way under these
	procedures that you will be able to get at intrastate calls.
	Mr. Muris. We do not have authority as a Federal agency
	over intrastate calls; that is correct.
	Mr. Wynn. Is there any proposal afoot to give you that
	reach?
	Mr. Muris. No, that would raise some interesting
	constitutional issues. Most--again, the overwhelming majority
	of calls are from out of State.
	Mr. Wynn. The other question I have is, there have been
	allegations that actually this could be a cost saving to
	telemarketers so that instead of having to deal with all the
	individual State do-not-call lists, it would be a large one
	registry. Is that an accurate assessment?
	Mr. Muris. I think at the end of the day there will be
	efficiencies to telemarketers in the sense of not having to
	comply with multiple lists, one; two, of not having to pay, you
	know, lots of fees; and three--and telemarketers will tell you
	this privately, they won't say it publicly--they don't want to
	call people who don't want to be called.
	Mr. Wynn. Do you in any way address the problem of call
	abandonment?
	Mr. Muris. Absolutely. What we have done there is, we have
	essentially outlawed dead air in the following sense: First of
	all, for people who use predictive dialers there is a safe
	harbor, and that is what causes the call abandonment is they
	have a process where they call a lot of numbers and----
	Mr. Wynn. Take the first live one.
	Mr. Muris. They don't have enough people to answer them.
	They can only have 3 percent of those calls that they don't
	answer. For any call that they don't answer, they have to play
	a recording that tells the consumer who was calling.
	Mr. Wynn. Thank you very much. No further questions.
	Chairman Tauzin. Thank you, Mr. Wynn.
	Further questions from any member? We have 10 minutes and
	48 seconds on ordering the previous question motion, which we
	will have to attend.
	Mr. Chairman, let me thank you. This has been very
	enlightening. Obviously, you have heard the sentiments of the
	community of our members who represent a great community of
	citizens in this country. Who applaud your efforts. At the same
	time, we have got some serious questions about the legal and
	efficacy questions of proceeding with two agencies
	simultaneously, and you are needing some authority that you
	currently don't have. We do need to discuss that further.
	I with appreciate hearing from your staff on any concepts
	that might give us a chance to have this thing tested out in a
	way that we can come back and revisit it to make sure it is
	working the way you want it do.
	Particularly, you heard from several members that may even
	want to think about whether or not we were correct in exempting
	some areas from coverage. I personally am offended by all the
	recorded calls from politicians who aren't really live. If you
	are really live and you really want to call me, that is one
	thing, but I know a lot of folks who are tired of hearing
	messages from people who aren't really on the phone that were
	just recording a message to you from a recording studio
	somewhere.
	It is a lot--the last question I want to ask you--I would
	ask you to think about it too, we don't have time to get an
	answer, but if you can come back to us--is, what implications
	will your efforts, along with the FCC's, have in driving a $650
	billion industry?
	This is a huge industry. It is not going to stop calling
	us, and we are not going to stop working with it, because
	telemarketing is very useful. It is a very good way of getting
	your products out in America. And many Americans enjoy using
	information systems to shop and to buy and to learn about new
	products.
	It is a two-edged sword, and this $650 billion industry is
	not going to just go away because people don't want to be
	called. The question is how this will this migrate in the
	Internet world? How will it shift policy questions and
	considerations when broadband systems are fully deployed and
	voice on broadband becomes a substitute for the telephone at
	some time in the future?
	I would like generally maybe--perhaps some writing on that
	from your staff to give us some idea as to whether or not we
	are chasing something that is going to get even bigger or more
	difficult in years ahead.
	This has been very good, Mr. Chairman, and again I think
	all of us applaud your interest and the fact you are pushing
	this as hard as you are. We simply want to make sure it is done
	right, so we don't end up with something that doesn't work.
	Mr. Muris. Well, thank you very much, Mr. Chairman. Again,
	I am very appreciative--I guess I mentioned before you were
	here, the fact that you did this so quickly in the new
	Congress.
	Chairman Tauzin. Thank you very much. The hearing stands
	adjourned.
	[Whereupon, at 11:35 a.m., the committee was adjourned.]
	[Additional material submitted for the record follows:]
	Response for the Record of Hon. Timothy J. Muris, Chairman, Federal
	Trade Commission
	response to questions of hon. richard burr
	Question 1. Why would the Do Not Call List cost $16 million, and
	what sorts of things are covered under that figure?
	Response. The FTC seeks Congressional approval for $16 million to
	fund the operation of the do-not-call registry and its related
	functions through offsetting fee collections. We anticipate that the
	costs will fall primarily in three broad categories: (1) costs of
	development and operation of the do-not-call registry, including the
	handling of complaints; (2) enforcement costs, which include consumer
	and business education and international coordination; and (3) agency
	infrastructure and administration costs, including information
	technology structural supports.
	Question 2. Is it possible for the List to be implemented for less
	than the original $16 million figure specified?
	Response. It is difficult to predict with precision the exact costs
	of the national do-not-call system. This is largely because the most
	substantial component--developing and operating the do-not-call
	registry--is part of an ongoing procurement process. The $16 million
	request is premised upon our best estimates of what is needed to
	develop, implement, and enforce the do-not-call provisions of the
	Telemarketing Sales Rule. We do not anticipate that the costs will be
	less than $16 million.
	response to questions of hon. lee terry
	Question 1. How confident are you that the $17 million in fees you
	want to collect from the telemarketing companies will cover the cost of
	establishing and operating the national ``Do Not Call'' list? What will
	the FTC do to pay for establishing the list if more operator assisted
	calls, and the associated expense, are required to sign people up?
	Response. The FTC seeks Congressional approval for $16 million to
	fund the operation of the DNC registry and its related functions
	through offsetting fee collections. These fees will be used for the
	development and operation of the national do-not-call registry, as well
	as the attendant law enforcement, consumer and business education, and
	infrastructure and administrative expenses associated with the do-not-
	call initiative. Consumer registration will be based on an automatic
	system (via telephone and Internet), and it will not provide for sign-
	up via operator-assisted calls. I believe that the requested level of
	funding is sufficient to support this initiative.
	Question 2. You propose to charge the telemarketing companies to
	fund the establishment of the list. Did you consider the concept of
	asking those who wish to be on the list to pay for the cost of
	establishing the list (i.e. the consumer)? If so, why did you not
	propose that option? What would be your reaction to a Congressional
	directive to collect fees for the cost of establishing the list to
	those who wish to participate in the program?
	Response. The agency did consider charging consumers directly for
	adding their telephone numbers to the do-not-call registry, but
	determined not to impose such charges. The costs of collecting what
	would be a very small fee from each consumer who elected to list his or
	her number in the registry would be much greater than the fee itself.
	For example, if 40 million consumers register their telephone numbers
	in the first year--a potentially realistic figure given the experiences
	of some states that have established their own do-not-call registries--
	each consumer would have to pay a fee of $0.40 to raise $16 million.
	The costs for collecting that fee through the automated system that is
	contemplated for the national registry would be significantly higher
	than $0.40. The agency determined not to establish a payment system
	that would have to charge more to collect a fee than the fee itself.
	Question 3. Will you accept Internet submissions of phone numbers
	to add to the list? If so, how can you be sure the person is who they
	say they are? How would you prevent a person from signing up others via
	the Internet?
	Response. The national do-not-call registry will accept submissions
	via the Internet. To verify the identity of the person submitting the
	registration request over the Internet, the national registry will ask
	the consumer to enter his or her email address along with the telephone
	number to be registered. The do-not-call system will automatically send
	an email to that address, notifying the recipient of the pending
	registration request, and asking the recipient to return to the do-not-
	call website (via the Internet link included in the email) to confirm
	that registration. Only after the consumer returns to the website and
	provides confirmation will the requested telephone number be entered
	into the national registry. The system also will monitor the email
	addresses entered by consumers to prevent the excessive, repeated use
	of the same email address to verify consumer registrations.
	Question 4. Has the FTC performed any studies regarding the number
	of jobs that will be lost upon implementation of the national ``Do Not
	Call'' list? Given the country's current economic climate, should you
	conduct such a study? Besides individuals who will lose jobs, how will
	the implementation of the national ``Do Not Call'' list impact the
	overall economy due to lost sales of goods and services?
	Response. The national do-not-call registry will make the
	telemarketing industry more efficient by allowing telemarketers to
	focus their efforts on those consumers who do not object to receiving
	their sales calls. Similarly, by harmonizing the multitude of state do-
	not-call registries into one national registry, the telemarketing
	industry will find it more efficient to obtain consumer registration
	information from one source--and pay one fee--rather than acquire that
	information from 27 different states, as is currently required. Equally
	important, telemarketers eventually will pay less to comply with one
	national registry than the over $10,000 currently paid by those who
	conduct business in all states that have do-not-call laws. It is also
	noteworthy that the national do not call registry will not impact the
	large portion of the telemarketing industry that conducts business-to-
	business calls, that responds to calls placed by consumers to sellers
	or telemarketers, or that places calls to customers with whom they have
	an established business relationship. Finally, while we have not
	conducted an independent analysis of the assertions about job loss, it
	is worth observing that the telemarketing industry has submitted no
	information or data showing any loss of jobs as a result of the states
	that now have do-not-call registries.
	Question 5. Has the FTC performed any studies or surveys of
	consumers as to specifically which unsolicited telephone calls they
	find most ``annoying?'' If not, why not? What if the FTC discovered
	that the calls citizens find most annoying are primarily those exempted
	under the national ``Do Not Call'' list?
	Response. Given the breadth of comments the Commission received
	during its rulemaking proceeding to amend the Telemarketing Sales Rule,
	including comments about the numerous state do-not-call laws, such a
	discrete study or survey is unnecessary. Over 64,000 comments were
	submitted during that proceeding. Most of those comments wholeheartedly
	supported the establishment of a national do-not-call registry and
	generally objected to the intrusion that unwanted telemarketing calls
	as a whole cause. Those comments did indicate that consumers find less
	objectionable those calls they receive from companies with which they
	have an established business relationship. As a result, the Commission
	exempted such calls from the do-not-call requirements. As for other
	exemptions from the national registry, the FTC continues to work with
	the Federal Communications Commission (``FCC''), in that agency's
	proceeding to review and revise the regulations under the Telephone
	Consumer Protection Act, so that coverage by the complementary
	regulations will be maximized once the FCC concludes its rulemaking.
	Also, as I said during my testimony, the Commission can bring law
	enforcement actions for violations of the Telemarketing Sales Rule
	against third-party telemarketers making calls on behalf of entities
	that otherwise would be exempt from our jurisdiction.
	Question 6. How exactly does this national Do Not Call list protect
	against fraudulent telemarketing firms? How does the FTC plan to combat
	fraud perpetrated by groups and organizations exempt under the national
	``Do Not Call'' list? Are there any other measures in place or under
	consideration that better address the issue of telemarketing fraud?
	Response. The Telemarketing and Consumer Fraud and Abuse Prevention
	Act, adopted in 1994, directed the Commission to issue a trade
	regulation rule defining and prohibiting deceptive or abusive
	telemarketing acts or practices. Establishment of a national do-not-
	call registry is primarily focused on protecting consumers against
	abusive telemarketing calls, namely, calls that ``the reasonable
	consumer would consider coercive or abusive of such consumer's right to
	privacy.'' 15 U.S.C. Sec. 6102(a)(3)(A). In some instances, however,
	the do-not-call registry provisions will also serve as protection
	against fraud, as with consumers who sign up on the registry to protect
	themselves from exploitative or fraudulent telemarketers. As for other
	measures that are in place to address telemarketing fraud, many
	provisions in the Telemarketing Sales Rule are aimed at protecting
	consumers from deceptive or fraudulent telemarketing practices,
	including: requiring disclosure of material information that must be
	made in every telemarketing call; prohibiting misrepresentations of
	material information; requiring that a telemarketer obtain a customer's
	express verifiable authorization before obtaining or submitting for
	payment a demand draft; generally prohibiting disclosing or receiving,
	for consideration, unencrypted consumer account numbers for use in
	telemarketing; prohibiting false and misleading statements to induce
	the purchase of goods or services; holding liable anyone who provides
	substantial assistance to another in violating the Rule; and
	prohibiting credit card laundering in telemarketing transactions.

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