Announced Actions for May 24, 2002

For Your Information

The Commission has approved the publication of a Federal Register notice related to the FTC's proposal to amend the Telemarketing Sales Rule (TSR) by, among other things, establishing a centralized national "Do-Not-Call" registry. This proposal was announced on January 22, 2002. As detailed in this Notice of Proposed Rulemaking (NPR) and Request for Public Comment, which will be published shortly and is currently available on the Commission's Web site, the FTC is proposing user fees to cover the costs of establishing and maintaining the registry, if one is implemented by the Commission. The user fees would be incorporated in a new section - 310.9 - of the TSR, 16 CFR Part 310. This new section would impose user fees on telemarketers, and those on behalf of whom they conduct telemarketing services, for their access to the registry in order to "scrub" their call lists to avoid calling consumers who have indicated their desire not to receive telemarketing calls.

The NPR contains additional supplementary information that may be useful to members of the public wishing to comment on the user fee proposal. This information includes a background summary of the Commission's work in developing the proposed amendments to the TSR, justification for the proposed implementation of user fees to help cover the cost of managing the proposed registry, a discussion of how user fees might be calculated, and a description of telemarketer access to the proposed national registry. The NPR invites written comments on the issues raised by the proposed changes, and requests answers to specific questions set forth in section VIII of the NPR.

Written comments on the notice will be accepted until June 28, 2002. Six paper copies of each written comment should be submitted to the Office of the Secretary, Federal Trade Commission, 600 Pennsylvania Ave., N.W., Washington, D.C. 20580. The FTC is also accepting electronic copies on disk, with submission procedures outlined in the notice, as well as by e-mail at: userfee@ftc.gov. All comments should be identified as "Telemarketing Rulemaking - User Fee Comment. FTC File No. R41101." The vote to approve publication of the Federal Register notice was 5-0. (FTC File No. R41101, staff contact is David M. Torok, Bureau of Consumer Protection, 202-323-3075; see press release dated January 22, 2002.)

Release of Commission report:

The Federal Trade Commission's annual report on cigarette sales and advertising for 2000 shows that cigarette sales increased slightly (0.5 percent) from 1999 levels, while advertising and promotional expenditures increased significantly. According to the report, the six largest cigarette manufacturers spent $9.57 billion on advertising and promotional expenditures in 2000, a 16.2 percent increase from the $8.24 billion spent in 1999. The industry's total expenditures were the most ever reported to the Commission.

The 2000 report, released today, contains sales and marketing statistics for calendar year 2000 and historical data dating back to 1963, the year the FTC began collecting information from the cigarette industry. In 2000, the manufacturers reported to the Commission that they sold 413.5 billion cigarettes domestically, 2.2 billion more than they sold in 1999. The largest category of advertising and promotional expenditures was promotional allowances, which include payments to retailers for shelf space. Cigarette companies spent $3.91 billion in 2000 on promotional allowances (40.9 percent of total industry spending), up from $3.54 billion in 1999.

Spending on retail value-added - which includes both multiple-pack promotions ("buy one, get one free") and non-cigarette items, such as hats or lighters, given away at the point-of-sale with the purchase of cigarettes - rose from $2.56 billion in 1999 to $3.52 billion in 2000, an increase of 37.4 percent. At the same time, expenditures for distribution of branded specialty items (such as lighters) through the mail, at promotional events, or by any means other than at the point-of-sale with the purchase of cigarettes, declined from $335.7 million in 1999 to $264.8 million in 2000, a decrease of 21.1 percent.

Money spent giving cigarette samples to the public declined from $33.7 million in 1999 to $22.3 million in 2000, a decrease of 33.8 percent. In contrast, spending on discount coupons increased from $531 million in 1999 to $705.3 million in 2000.

The industry's expenditures on advertising in newspapers was $51.7 million in 2000, an increase of 1.4 percent from 1999 to 2000. Spending on magazine advertising decreased from $377.4 million in 1999 to $294.9 million, while outdoor advertising expenditures dropped from $53.8 million to $9.8 million and transit advertising fell from $5.6 million in 1999 to just $4,000 in 2000. Point-of-sale advertising increased from $329.4 million in 1999 to $347 million in 2000. The cigarette companies reported a total of $92.9 million for direct mail advertising in 2000, 1.8 percent less than the $94.6 million reported in 1999. The industry reported spending $949,000 on Internet advertising in 2000. Spending on public entertainment (e.g., sponsorship of concerts, auto racing, and fishing tournaments) was $309.6 million in 2000, an increase of 15.8 percent from 1999.

The Commission vote to issue the report, which is available on the FTC's Web site, was 5-0. (FTC File No. 012-3236; staff contact is Shira D. Modell, Bureau of Consumer Protection, 202-326-3116.)

Copies of the documents mentioned in this release are available from the FTC's Web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. Call toll-free: 1-877-FTC-HELP.

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