Pay-Per-Call - SS - 2012 - FINAL

Supporting Statement for Information Collection Provisions of
the Trade Regulation Rule Pursuant to the Telephone Disclosure
and Dispute Resolution Act of 1992
(“Pay-Per-Call Rule”)
16 C.F.R. Part 308
OMB Control No.: 3084-0102

(1)

Necessity for Collecting the Information

The Telephone Disclosure and Dispute Resolution Act of 1992 (“TDDRA”), 15 U.S.C.
§§ 5701 et seq., as amended, was enacted to curtail unfair and deceptive practices engaged in by
some “pay-per-call services”1 and other “telephone-billed purchases,”2 and to encourage the
growth of the legitimate pay-per-call industry.3 The TDDRA requires the Federal Trade
Commission (“FTC” or “Commission”) to prescribe regulations governing various aspects of
pay-per-call services and telephone-billed purchases. The Commission’s Pay-Per-Call Rule, 16
C.F.R. Part 308, implements Titles II and III of the TDDRA.

1

The TDDRA defines “pay-per-call service” to mean, in relevant part, any service in which any person
provides or purports to provide either: (1) audio information or entertainment produced or packaged by such
person; (2) access to simultaneous voice conversation services; or (3) any service, including the provision of a
product, the charges for which are assessed on the basis of the completion of the call. See 47 U.S.C. § 228(I)
(Telecommunications Act of 1934, as amended by the TDDRA). This definition applies only where the caller
pays a per-call or per-time-interval charge that is greater than, or in addition to, the charge for the call. Id.
The definition is further limited to services that are accessed through use of a 900 telephone number or other
prefix or area code, as designated by the Federal Communications Commission (“FCC”). Id. The definition
does not include directory services provided by a common carrier or its affiliate or by a local exchange carrier
or its affiliate, or any service for which users are assessed charges only after entering into a presubscription or
comparable arrangement with the service provider. Id. Title II of the TDDRA, which authorizes the
disclosure requirements of the Commission’s Rule, incorporates this definition by reference. See 15 U.S.C.
§ 5714. Furthermore, the Telecommunications Act of 1996 authorizes the FTC to extend its Rule to cover
“similar” audio information and entertainment services that are “susceptible to the unfair or deceptive acts or
practices that are prohibited by” the Rule, whether or not such services are accessed through a 900 number or
other prefix or area code specifically designated by the FCC under the Communications Act definition. See
Pub. L. No. 104-104, § 701(b), 110 Stat. 56 (Feb. 8, 1996).

2

15 U.S.C. §§ 5711(c), 5721(c). Under the TDDRA, “telephone-billed purchase” refers to a purchase of
goods or services (other than telephone toll services) that is “completed solely as a consequence of completion
of the call or a subsequent dialing, touch tone entry, or comparable action of the caller,” and includes all payper-call services. 15 U.S.C. § 5724(1).

3

Title I of the Act directs the FCC to adopt regulations defining the obligations of common carriers in
connection with providing tariffed common carrier services to providers of pay-per-call services. See 47
U.S.C. § 228; 47 C.F.R. §§ 64,1501 et seq. (FCC regulations).

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$

Title II of the TDDRA, 15 U.S.C. §§ 5711-5714, directs the FTC to enact regulations
governing advertising by, and other service standards for, the pay-per-call industry.
Title II provides, among other things, that disclosures of cost and certain other
information must appear in all advertising for pay-per-call programs and in introductory
messages (“preambles”) at the start of pay-per-call programs.

$

Title III, 15 U.S.C. §§ 5721-5724, requires that the FTC promulgate regulations
establishing procedures for resolving disputes and correcting billing errors in connection
with telephone-billed purchases.

As directed by Title II, the Commission’s implementing Rule currently requires that
advertisements for pay-per-call services disclose certain material information, including the cost
of the call. See § 308.3. This material information must also be included in an introductory
message (preamble) at the beginning of any pay-per-call program where the cost of the call could
exceed two dollars. See § 308.5. The Rule also requires that anyone who calls a pay-per-call
service be given the opportunity to hang up at the conclusion of the preamble without incurring
any charge for the call. Id. In addition, the Rule requires that all preambles to pay-per-call
services state that individuals under the age of 18 must have the permission of a parent or
guardian to complete the call. Id.
Pursuant to Title III, the Rule establishes procedures for resolving billing disputes for
telephone-billed purchases, such as pay-per-call services. See § 308.7. The Rule imposes
certain obligations on entities that bill and collect for telephone-billed purchases, such as
investigating and responding to billing disputes. Id.
In short, the Rule’s reporting and disclosure requirements are necessary because they are
expressly mandated by the Act. The Rule’s one reporting requirement (found under 1a below)
for common carriers is necessary for law enforcement purposes. The disclosure requirements
(found under 1b below) ensure that consumers are given clear and accurate information about
terms and conditions, the opportunity to decline the service, and there is a fair dispute resolution
process. In addition, there are protections in place to ensure that underage children are not
signed up for services without permission from a parent or guardian [found under 1b(1)-(2)
below].
1a.

Reporting requirement

The requirement in current § 308.6, that common carriers grant the Commission, upon
written request, access to records regarding their service arrangements with pay-per-call
providers (“vendors”) and service bureaus continues to be necessary because the TDDRA

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expressly requires the Commission to adopt such a requirement.4 See 15 U.S.C. § 5711(a)(3).
Common carriers are primarily regulated by the FCC and are normally exempt from FTC
jurisdiction to the extent they are engaged in common carrier activities. The reporting
requirement is essential to the FTC’s exercise of its law enforcement authority by making
explicit the agency’s jurisdiction to obtain information from telephone companies that provide
transmission services to pay-per-call providers. The information reported to the FTC is itself
necessary and used for law enforcement purposes, i.e., so that the Commission can determine
legal compliance with the TDDRA and the Commission’s Rule.
1b.

Disclosure requirements

(1) Advertising disclosures. The TDDRA specifically requires these disclosures. See
TDDRA § 201(a)(1), 15 U.S.C. § 5711(a)(1) (requirements for pay-per-call advertising
regulations). The advertising disclosure requirements of the Rule (§§ 308.3 and 308.4) are
essential in order for consumers to understand the costs associated with the use of a pay-per-call
number and any other pay-per-call service to which the caller might be transferred, and to
prevent and prohibit certain unfair and deceptive practices in pay-per-call advertisements. The
provider shall also ensure that any pay-per-call directed primarily to individuals under the age of
18 must have the permission of such individual’s parent or legal guardian prior to calling such
pay-per-call service. See 16 C.F.R. 308.3(f).
(2) Preamble disclosures. The TDDRA specifically requires these disclosures. See
TDDRA § 201(a)(2), 15 U.S.C. § 5711(a)(2) (pay-per-call service standards, requirements for
introductory disclosure message). The preamble disclosure requirements of the Rule (§ 308.9),
like the advertising disclosures discussed supra, are necessary in order for consumers to be
informed of the cost of a call and other pay-per-call service information. This includes a
requirement to inform the caller that anyone under the age of 18 must have the permission of a
parent or legal guardian in order to complete the call. See 16 C.F.R. § 308.5(a)(4).
(3) Disclosure of telephone-billed charges in billing statements. The TDDRA expressly
mandates the Rule’s current requirements for disclosure of telephone-billed charges in billing
statements, § 308.5(j). See TDDRA § 201(a)(2)(H), 15 U.S.C. § 5711(a)(2)(H).
(4) Disclosure of dispute resolution procedures in billing statements. The TDDRA
mandates the requirement in § 308.7(c) of the current Rule that billing statements disclose the
dispute resolution procedures that are available to consumers. See TDDRA § 301(a)(2).5
4

This requirement has not been categorized as record-keeping, since it does not require the maintenance of
records to be reported.

5

See 15 U.S.C. § 5721(a)(2) (requiring that the Rule afford dispute rights substantially similar to those
afforded under the Truth in Lending and Fair Credit Billing Acts).

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(2)

Use of the Information
2a.

Reporting requirement

As noted in 1a, information reported by common carriers to the Commission upon
request (§ 308.6) and relating to the provision of non-local telecommunications, is used by the
Commission for law enforcement purposes (i.e., determining legal compliance with the Rule).
2b.

Disclosure requirements

The various disclosures prescribed by the Rule are used to convey information required
by the TDDRA regarding the cost and other terms and conditions of the pay-per-call service in
advertisements to consumers and in the preamble to pay-per-call programs, and to inform
consumers of their rights and obligation to dispute a charge if they believe a billing error has
occurred. Consumers, in turn, use this information to decide whether or not to use the pay-percall service, including the charges they must pay if they use the service, and how and whether to
exercise their billing dispute rights.

(3)

Consideration of the Use of Information Technology to Reduce Burden

The information collection requirements of the Pay-Per-Call Rule do not prohibit affected
persons from using any improved information technology to reduce the burden, which is
consistent with the Government Paperwork Elimination Act, Pub. L. 105-277, § 1704, 44 U.S.C.
§ 3504 note. The Rule’s reporting requirement is format-neutral and simply requires the
production of documents upon request in whatever form they may be maintained, which may
include electronic. To the extent the disclosure requirements implicitly or explicitly require that
the disclosure be made in the same format as the advertisement, preamble, or other setting to
which the disclosure relates, it would be impracticable to permit a service provider to make that
disclosure in some alternative electronic format, which would undermine the consumer
protection purpose of the disclosure. In any event, many of the disclosures, by their nature, are
inherently made in an electronic format (e.g., in the telephone call itself, in television
advertising, etc.).

(4)

Efforts to Identify Duplication

The disclosure and reporting requirements of the Rule do not duplicate other information
collection requirements by the Commission, or, to its knowledge, the requirements of other
federal or state government agencies. To promote consistency in enforcement and compliance
with respect to the pay-per-call industry, and to minimize the industry’s compliance burden, the
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Commission and the FCC initially adopted similar prohibitions and definitions concerning payper-call services in their respective Pay-Per-Call Rules. The Commission’s Rule governs the
advertising, marketing and billing practices of the vendors, service bureaus, billing entities, and,
to a limited extent, the common carriers who lease 900 numbers and other numbers to vendors of
pay-per-call services. In contrast, the FCC’s rule defines the obligations of common carriers
with respect to the provision of 900-number services. Thus, the requirements of the
Commission’s Pay-Per-Call Rule do not duplicate any other information collection requirements
by the FCC, but rather complement those requirements and ensure that the two agencies charged
with regulation of this industry impose compatible standards.
There is no other information readily and routinely available from other sources that
would provide the information that the Pay-Per-Call Rule requires to be disclosed to the public
or provided to the Commission. In fact, this is what prompted Congress to enact the TDDRA,
which mandated promulgation of the Pay-Per-Call Rule.

(5)

Efforts to Minimize Burden on Small Businesses or other Small Entities

The Commission has designed the Rule to minimize the compliance burden of these
requirements as much as possible. In virtually every instance, the disclosures required by the
Rule repeat exactly or follow closely the language of the requirements as set forth in the
TDDRA. Thus, the Rule consistently prescribes “performance” standards rather than “design”
standards (i.e., specific compliance methods) that might potentially be more burdensome for
regulated entities to satisfy. Similarly, as directed by the statute, the Commission patterned the
billing dispute provisions of the Rule on the statutory requirements of the Truth in Lending Act
and Fair Credit Billing Act without substantial change. Furthermore, while the Rule does require
some reporting and disclosure, there are no mandatory recordkeeping provisions.
Staff has previously determined that the Rule does not have a significant economic
impact on a substantial number of small entities. See 58 Fed. Reg. at 42,399 (certification of no
effect under the Regulatory Flexibility Act). As noted below in our response to Specification #8,
the Commission recently published estimate for burden costs and hours for public comment in
compliance with the
Paperwork Reduction Act (“PRA”) in February of 2012, and received no comment. 77 Fed.
Reg. 5017 (February 1, 2012).

(6)

Consequences of Conducting the Collection Less Frequently
6a.

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Reporting requirement

Page 6
As noted earlier, the Rule’s sole reporting requirement requires common carriers to
provide financial information about vendors and service bureaus, upon request, to the FTC.
These records are kept in the normal course of business and there is no requirement that the
information be provided on a regular basis. To the extent this information must be made
available to the Commission only upon request, the failure of the Commission to obtain this
information would hamper the agency’s ability to determine whether a regulated entity is in
compliance with the Rule and thus jeopardize enforcement efforts.
6b.

Disclosure requirements

The disclosures required by the Rule provide consumers with the information necessary
to make informed purchasing decisions. The TDDRA mandates these disclosures. To do less
than this would violate the TDDRA and frustrate the Congressional intent underlying the statute.

(7)

Circumstances Requiring Collection Inconsistent with Guidelines

The information collection requirements in the Pay-Per-Call Rule are consistent with all
applicable guidelines contained in 5 C.F.R. § 1320.5(d).

(8)

Consultation Outside the Agency

The Commission consulted with parties outside the agency in promulgating the original
Rule. In drafting the original Rule, the staff received comments from and in some cases met
with numerous members of the pay-per-call industry, including vendors, associations, telephone
companies, and consumer organizations. The Commission also conducted a public workshop at
which representatives of affected interests and law enforcement officials participated in a
discussion of the Rule’s requirements. See 58 Fed. Reg. 13,370 (March 10, 1993) (announcing
public workshop). The Commission used this information to help it balance the need for
consumers to receive certain information prior to calling and in connection with billing for payper-call services, with the burden such requirements would place on affected entities, within the
confines of the statutory requirements.
The Commission sought public comment on the Rule and its associated burden analysis
multiple times. 64 Fed. Reg. 70,031 (Dec. 15, 1999), 67 Fed. Reg. 77,066 (Dec. 16, 2002), 71
Fed. Reg. 9128 (Feb. 26, 2006), 74 Fed. Reg. 17,492 (April 15, 2009). Although all public
comments and discussion were generally directed to the compliance obligations of the Rule, the
comments did not provide significant information, if any, on the FTC’s specific burden hour or
cost calculations regarding the current Rule’s information collection requirements, despite the
FTC’s affirmative request for comment on these provisions.
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In early 2012, the Commission again sought public comment on PRA aspects of the Rule,
as required by 5 C.F.R. § 1320.8(d). 77 Fed. Reg. 5017 (February 1, 2012). No comments were
received. The FTC is providing another opportunity for public comment on its request for
extension of the clearance for the Rule by publishing another Federal Register notice,
contemporaneous with this submission.

(9)

Payment and Gifts to Respondents
Not applicable.

(10) & (11)

Assurances of Confidentiality/Matters of a Sensitive Nature

Information covered by the sole reporting requirement of the Rule (§ 308.6) is normally
collected by the Commission for law enforcement purposes. In such cases, it would be subject to
the confidentiality provisions of sections 6(f) and 21 of the Federal Trade Commission Act, 15
U.S.C. §§ 46(f) and 57b-2, as applicable. Section 6(f), which tracks Exemption 4 of the
Freedom of Information Act, 5 U.S.C. § 552(b)(4), protects trade secrets and commercial or
financial information obtained from a person and privileged or confidential. Section 21 of the
FTC Act protects information submitted pursuant to compulsory process or voluntarily in lieu
thereof in a Commission investigation. See FTC Act §§ 21(b) & (f), 15 U.S.C. §§ 57b-2(b) &
(f). These confidentiality provisions are also set forth in the Commission’s Rules of Practice.
See, e.g., 16 C.F.R. § 4.10(a) (records not required to be made public).

(12)

Estimated Annual Hour and Labor Cost Burden

The FTC’s PRA analysis in the recent 60-day Federal Register notice provided estimates
of the annual hour burden imposed by the Rule’s information collection (i.e., reporting and
disclosure) requirements. See 77 Fed. Reg. 5017 (February 1, 2012). The FTC’s estimates are
also set forth below first in total and then separately.
The FTC is again seeking a 3-year clearance for the Rule as was done in 2009.6
6

On October 30, 1998, the Commission published a Notice of Proposed Rulemaking (“NPRM”), 63 FR 58524, to
amend its Pay-Per-Call Rule, 16 CFR Part 308. The Rule, which implements Titles II and III of the Telephone
Disclosure and Dispute Resolution Act (“TDDRA”), 15 U.S.C. 5711-14, 5721-24, requires the disclosure of cost and
other information regarding pay-per-call services and establishes dispute resolution procedures for telephone-billed
purchases (i.e., charges for pay-per-call services or other charges appearing on a telephone bill other than
telecommunications charges). As was explained in the NPRM, the Rule contains certain reporting and disclosure
requirements that are subject to OMB review under the PRA, 44 U.S.C. 3501-3521. Accordingly, the FTC

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Likely respondents and their estimated number:
Respondents are telecommunications common carriers (subject to the reporting
requirement only, unless acting as a billing entity), information providers (vendors) offering one
or more pay-per-call services or programs, and billing entities. Staff estimates that there are 7
common carriers,7 approximately 13,800 vendors,8 and approximately 1,560 possible billing
entities.9 The FTC seeks public comment or data on these estimates and those stated below.
Estimated annual reporting and disclosure burden: 2,379,796 hours; $130,263,530 in
associated labor costs10
submitted the Rule, with proposed amendments, to OMB (see 64 FR 70031, Dec. 15, 1999) for its approval, which
was granted until December 31, 2002 (OMB control number 3084-0102). Thereafter, the FTC obtained renewed
clearance from OMB covering both the existing Rule and the proposed changes up through April 30, 2009.

The clearance that expires on May 31, 2012, did not include PRA approval relating to the proposed
changes to the Rule. The proposed changes have not been adopted, and any final decision about them is too
uncertain to merit inclusion in this request for clearance renewal. The Commission will seek PRA clearance
separately for any proposed rule amendments if that becomes necessary at a future date.
7

This estimate is based on the North American Numbering Plan Association Report, “900-NXX Codes,”
http://www.nanpa.com/nas/public/form900MasterReport.do?method=display900MasterReport (updated as of 2011),
and excluding Canadian entities and one carrier that withdrew from carrying 900 number service. See Federal
Communications Commission, “Section 63.71 Application of Sprint Communications Company L.P. for Authority
to Discontinue Domestic Telecommunications Services,” Order, WC Docket No. 08-116, DA 08-2557 (Wireline
Competition Bureau Nov. 24, 2008) (“FCC Sprint Order”).

8

The number of vendors is difficult to estimate as there is no ready source of such statistics. FTC staff has reduced
a 2006 estimate of the number of vendors (approximately 15,000) by 8 percent, reflecting a corresponding decrease
in the allocation of 900 numbers. One carrier which withdrew from carrying 900-number services stated that
between 2004 and 2007 claimed that it saw a 41.5 percent decrease in vendor use of such numbers. See FCC Sprint
Order. However, erring conservatively, FTC staff instead is applying an 8 percent reduction in the number of
vendors, tied to a comparison of the number of 900-NXX codes allocated per vendor, as reported annually by the
North American Numbering Plan Administration (NANPA). In 2004, it was 133; in 2010, it fell to 123.

9

The Federal Communications Commission report on telephone statistics indicated that at the end of 2010 there
were approximately 1,560 local telephone companies (local exchange carriers). See Local Telephone Competition:
Status as of December 31, 2010 (released 10/11) (tables 3 and 4), available at
http://www.fcc.gov/wcb/iatd/comp.html.

10

Non-labor (e.g., capital/other start-up) costs are generally subsumed in activities otherwise undertaken in the
ordinary course of business (e.g., business records from which only existing information must be reported to the
Commission, pay-per-call advertisements or audiotext to which cost or other disclosures are added, etc.). To the
extent that entities incur operating or maintenance expenses, or purchase outside services to satisfy the Rule’s
requirements, staff believe those expenses are also included in (or, if contracted out, would be comparable to) the
annual burden hour and cost estimates provided below (where such costs are labor-related), or are otherwise
included in the ordinary cost of doing business (regarding non-labor costs).

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The burden hour estimate for each reporting and disclosure requirement has been
multiplied by a “blended” wage rate (expressed in dollars per hour), based on the particular skill
mix needed to carry out that requirement, to determine its total annual cost. The blended rate
calculations are based on the following skill categories and average wage rates and/or labor
costs: $250/hour for professional (attorney) services; $17/hour for skilled clerical workers;
$35/hour for computer programmers; and $50/hour for management time. These figures are
averages, based on the most currently available Bureau of Labor Statistics (“BLS”) cost figures
posted online.11 FTC staff calculated labor costs by applying appropriate hourly cost figures to
the burden hours discussed further below.
(a) Reporting burden (applies to common carriers):
The Rule provides that common carriers must make available to the Commission, upon
written request, any records and financial information maintained by such carrier relating to the
arrangements between the carrier and any vendor or service bureau (other than for the provision
of local exchange service). See 16 CFR 308.6. Staff believes that the resulting burden on this
segment of the industry will be minimal, since OMB’s definition of “burden” for PRA purposes
excludes any business effort that would be expended regardless of a regulatory requirement. 5
CFR 1320.3(b)(2). Because this reporting requirement permits staff to seek information limited
to that which is already maintained by the carriers, the only burden would be the time an entity
expends to compile and provide the information to the Commission. Because the Commission
has seldom needed to rely on this requirement, staff estimates the annual time for reporting at 3
hours per entity.
In obtaining OMB clearance for this reporting requirement in 2009, staff estimated a total
reporting burden of 39 hours, with an annual cost of $2,925. Staff is now decreasing the total
burden estimate to 21 hours, based on an average estimate of 3 hours expended by 7 common
carriers. Using a $76/hour blended wage rate (assuming for all labor calculations herein,
$35/hour for computer programmers, $250/hour for attorneys, $17/hour for skilled clerical
workers, and $50/hour for managers),12 the FTC now estimates an annual cost of $1600.
(b) Disclosure burden:
11

http://www.bls.gov/ncs/ocs/sp/nctb1477.pdf (National Compensation Survey: Occupational Earnings in the
United States, US Department of Labor, BLS, released May 2011, Bulletin 2753, Table 3 (“Full-time civilian
workers,” mean and median hourly wages). Notwithstanding the referenced BLS data, estimated attorney costs are
based on what staff believes may more closely reflect hourly attorney costs associated with Commission information
collection activities under the Rule.
12

This blended wage rate is based upon an estimate of 30 percent for computer programming, 20 percent for
attorney services, 30 percent for skilled clerical workers, and 20 percent for managerial time.

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(1) Advertising (applies to vendors). FTC staff estimates that the annual burden on the
industry for the Rule’s advertising disclosure requirements is 49,680 hours. The estimate
reflects the burden on approximately 13,800 vendors who must make cost disclosures for all payper-call services and additional disclosures if the advertisement is (a) directed to individuals
under 18 or (b) for certain pay-per-call services.13 Because of continued industry changes and
the fact that the Commission has seldom needed to rely on this requirement, staff is retaining the
estimated percentage of advertising both directed to individuals under 18 and relating to certain
other pay-per-call services to 20 percent of overall pay-per-call services. FTC staff estimates
that each disclosure mandated by the Rule requires approximately one hour of compliance time.
The total estimated annual cost of these burden hours is $3,477,600 applying a blended
wage rate of $70/hour.14
(2) The Rule’s preamble disclosure (applies to every pay-per-call service). To comply
with the Act, the Pay-Per-Call Rule also requires that every pay-per-call service be preceded by
a free preamble and that four different disclosures be made in each preamble. Additionally,
preambles to sweepstakes pay-per-call services and services that offer information on federal
programs must provide additional disclosures. Each preamble need only be prepared one time,
unless the cost or other information is changed. There is no additional burden on the vendor to
make the disclosures for each telephone call, because the preambles are taped and play
automatically when a caller dials the pay-per-call number.
As noted above (see footnote 8), staff now believes that the industry has had at least an 8
percent reduction in size since 2004 (when there were an estimated 45,864 pay-per-call
services). Accordingly, staff now estimates that there are no more than 42,195 advertised payper-call services.
As with advertising disclosures, preambles for certain pay-per-call services require
additional preamble disclosures. Consistent with the estimates of advertised pay-per-call
services discussed above, staff estimates that an additional 20 percent of all such pay-per-call
services (8,440) relating to certain types of pay-per-call services would require such additional
disclosures.15 Staff now estimates that it would require no more than one hour to draft each type
13

Based on an assumed three advertisements per vendor, or a total of 41,400 ads (for 13,800 vendors, as explained
in note 8), plus an estimated total 20 percent of which would require such additional disclosures, or 8,280
advertisements. Staff estimates that it would require no more than one hour to draft each type of disclosure.
Accordingly, at an estimated one hour each, vendors would require cumulatively 49,680 burden hours to comply
with these requirements.

14

The blended rate is based upon 20 percent for attorney services, 60 percent for skilled clerical workers, and 20
percent for management time.

15

See note 10.

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of disclosure because the disclosures applicable to the preamble closely approximate in content
and volume the advertising disclosures discussed above. Accordingly, staff estimates a total of
50,635 burden hours (42,195 + 8,440) to comply with these requirements. At one hour each,
cumulative labor cost associated with these disclosures is $3,544,450, using a blended wage rate
of $70/hour (i.e., similar to the blended rate used for advertising disclosures).
(3) Telephone-billed charges in billing statements (applies to vendors; applies to
common carriers if acting as billing entity). Section 308.5(j) of the Rule, 16 CFR 308.5(j),
requires that vendors ensure that certain disclosures appear on each billing statement that
contains a charge for a call to a pay-per-call service. Because these disclosures appear on
telephone bills already generated by the local telephone companies, and because the carriers are
already subject to nearly identical requirements pursuant to the FCC’s rules, FTC staff estimated
that the burden to comply would be minimal. At most, the burden on the vendor would be
limited to spot checking telephone bills to ensure that the charges are displayed in the manner
required by the Rule.
As it had in the 2009 PRA submission, FTC staff estimates that only 10 percent of
vendors would monitor billing statements in this manner and that it would take 12 hours per year
to conduct such checks. Using the total estimated number of vendors (1,380), this results in a
total of 16,560 burden hours. The total annual cost would be at most $1,043,280, using a
blended rate of $63/hour.16
(4) Dispute resolution procedures in billing statements (applies to billing entities).
This disclosure requirement is set forth in 16 CFR 308.7(c). The blended rate being used for
these disclosures is $53.50/hour.17 FTC staff previously estimated that the billing entities would
spend approximately 5 hours each to review, revise, and provide the disclosures on an annual
basis. The estimated hour burden for the annual notice component of this requirement is 7,800
burden hours (based on 1,560 possible billing entities each requiring 5 hours each), or a total
cost of $421,200.
(5) Further disclosures related to consumers reporting a billing error (applies to
billing entities). As in the 2009 PRA submission for this Rule, FTC staff estimates that the
incremental disclosure obligations related to consumers reporting a billing error under section
308.7(d) requires, on average, about one hour per each billing error. Previously, staff projected

16

The blended rate is 15 percent for attorney services, 40 percent for skilled clerical workers, 25 percent for
computer programming, and 20 percent for management time.
17

The blended rate is 40 percent for computer programming, 10 percent for attorney services, 30 percent for skilled
clerical workers, and 20 percent for management time.

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that approximately 5 percent of an estimated 46,981,200 calls made to pay-per-call services each
year involves such a billing error. The staff is now reducing its prior estimate of the number of
those calls by 4 percent18 (to 45,101,950 calls) to reflect recent changes in the amount of payper-call services and their billing. Assuming the same apportionment (5 percent) of overall calls
to pay-per-call services, this amounts to 2,255,100 hours, cumulatively. Applying the $54/hour
blended wage rate, the estimated annual cost is $121,775,400 annually.

(13)

Estimated Annual Capital and/or Other Non-labor Related Costs

Pursuant to OMB instructions, this item excludes the cost of burden hours already
identified in item 12 supra and cost to the government identified in item 14 infra.
13a.

Total capital and start-up costs

No comments were received that provided specific information regarding capital or startup costs relating to compliance with the current Rule. As explained earlier, compliance costs
consist mainly of labor expenses incurred in meeting the reporting and disclosure requirements,
and are generally expected to utilize existing equipment, facilities, functions or capabilities
associated with the ordinary course of business (e.g., advertising, billing, etc.).
13b.

Total operation and maintenance and purchase of services component

Not applicable. If services necessary for compliance are purchased from outside the
business rather than performed in-house, these costs would be substantially similar to the labor
costs estimated earlier. Likewise, the Rule does not appear to impose special operation and
maintenance costs that would be apart from those normally incurred in the ordinary course of
business.

(14)

Estimated Cost to the Federal Government

Enforcing the information collection and reporting requirement of the Pay-per-call Rule
will require approximately 2 (one half) of an attorney/investigator work year at an annualized
approximate cost of $100,000 per year. Thus, the approximate total cost to the Commission in
connection with enforcing and monitoring Rule compliance will be $50,000. Clerical and other
support services are included in these estimates.
18

Four percent is determined by an approximate halving of the above-noted 8 percent reduction staff has applied to
its prior estimate of the number of vendors (see note 4). As in past clearance requests for this Rule, it is halved on
the assumption that pay-per-call services do not account for any more than half of all telephone-billed purchases.

April 2012

Page 13
(15)

Program Changes or Adjustments

The FTC estimates a decrease from the previous annual burden estimate of 2,468,412
hours (2009) down to 2,379,796 hours (2012). This decrease is due to an adjustment stemming
from the ongoing changes in the pay-per-call industry as noted in our answer to specification 12.

(16)

Statistical Use of Information/Publication of Results

There are no plans to publish information associated with the proposed requirements for
statistical use.

(17)

Display of Expiration Date for OMB Approval
Not applicable.

(18)

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

April 2012