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+
+ - THE DO NOT CALL LIST AUTHORIZATION
+
+[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.1 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.'').2 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,''
+3 as well as restrictions on the hours unsolicited telephone
+calls can be made to consumers.4 Accordingly, the Commission
+adopted the Telemarketing Sales Rule on August 16, 1995, which, inter
+alia, defined and prohibited certain deceptive telemarketing
+practices,5 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) 6 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.7 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.8 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.9
+---------------------------------------------------------------------------
+ \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.10 This notice
+invited comments on the TSR as a whole.11
+---------------------------------------------------------------------------
+ \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.12 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.13
+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.14
+---------------------------------------------------------------------------
+ \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.15 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.16 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.17 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,
+2002.18
+---------------------------------------------------------------------------
+ \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.19 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.20 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.21
+---------------------------------------------------------------------------
+ \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.22
+---------------------------------------------------------------------------
+ \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.23
+---------------------------------------------------------------------------
+ \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.24 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.25 Consumers
+who have placed their telephone number on the registry also can give
+permission to specific companies to call them.26
+---------------------------------------------------------------------------
+ \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.
+
+