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THE FEDERAL TRADE COMMISSION (FTC)

President Woodrow Wilson signed the "FTC Act" into law on September 26, 1914, thereby creating the Federal Trade Commission. The Federal Trade Commission ("FTC") has grown into a valuable and powerful organization since it's inception. The FTC now has jurisdiction and enforcement rights for a variety of federal antitrust and consumer protection laws. Specifically the FTC has enforcement and administrative responsibilities over 46 Federal laws.

In Section 105(b) of the E-SIGN Act, Congress directed the Department of Commerce ("Commerce") and the Federal Trade Commission ("FTC") to issue a report on the impact of the consumer consent provision of Section 101(c)(1)(C)(ii). Details of this report can be found by visiting the FTC ESIGN Report.

The United States FTC is regulated by the Code of Federal Regulations ("CFR") 34).

Franchise Rule, 16 C.F.R. Part 436

Franchisors must furnish potential franchisees with written disclosures providing important information about the franchisor, the franchised business and the franchise relationship, and give them at least ten business days to review it before investing. Franchisors may make the required disclosures by following either the Rule's disclosure format or the Uniform Franchise Offering Circular Guidelines prepared by state franchise law officials.

PrivaSign has received Federal Trade Commission ("FTC") approval for electronic UFOC distribution.

In October 1999, the Commission published for comment in the Federal Register a Notice of Proposed Rulemaking (“NPR”) in connection with the Franchise Rule, 16 C.F.R. Part 436. The NPR sought comment on a wide range of issues, including proposed instructions enabling franchisors to furnish disclosure documents electronically, including through the Internet. Among other things, the proposed instructions would:

1. Require prior consent by a prospective franchisee before a franchisor could comply with the Rule electronically;
2. Afford a prospective franchisee the right to obtain a paper disclosure document until the time of sale;
3. Require franchisors to provide a prospective franchisee with a paper summary document, which includes, among other things, the disclosure document’s table of contents, as well as an admonition to download or otherwise preserve the electronic disclosure document;
4. Specify the general format of an electronic disclosure document to ensure that it can be downloaded or otherwise preserved, that the disclosures are clear and conspicuous, and that the disclosures do not contain extraneous or distracting features (such as animation or pop-up screens); and
5. Permit the use of navigational tools to review a disclosure document, such as scroll bars, search features, and internal links.

FRANDATA estimates that on average, 100 documents are distributed per franchisor per year. This represents 200,000 UFOCs distributed each year in the US alone. FRANDATA also estimates the cost of each UFOC to be near $100. My own research supports this UFOC cost as outlined below.

$ 15	Cost of Paper, Ink, Packaging etc.
$ 46	Office labor to print, prep and manage each packet
$ 35	FedEx Overnight – original packet Denver to Miami
$ 20	Estimated cost to store each paper document
$116	Total cost per UFOC sent by traditional shipping

This data represents an annual cost to each franchise system of $116,000 for the current distribution of paper UFOCs. These figures account for an annual cost of $23.2 million to the franchise industry. PrivaSign sees an incredible opportunity to save the franchise industry millions of dollars each year and at the same time offer services that allow them to expand faster than previously possible.

FTC - Complying with the Telemarketing Sales Rule (online)

Written Authorization - Any form of written authorization from a consumer is acceptable, as long as it has the consumer’s signature. For example, a consumer may transmit written authorization to the seller or telemarketer by facsimile or may send a “voided” signed check as written authorization. An electronic signature also is valid, provided it would be recognized as a valid signature under applicable federal or state contract law.

The Written Permission to Call Exemption - The Rule allows sellers and telemarketers to call any consumer who gives his or her express agreement to receive calls, even if the consumer’s number is in the National Do Not Call Registry. The consumer must give express agreement in writing to receive calls placed by—or on behalf of—the seller, including the number to which calls may be made, and the consumer’s signature. The signature may be a valid electronic signature, if the agreement is reached online.

PrivaSign allows businesses to electronically sign consumer authorization to call exemptions.

The FTC oversees the Children'sOnline Privacy Protection Act (COPPA) which is regulated by 16 CFR 312

The primary goal of the Children’s Online Privacy Protection Act (COPPA) Rule is to give parents control over what information is collected from their children online and how such information may be used.

In 16 CFR 312.5 - "Parental Consent"

(b) Mechanisms for verifiable parental consent.

(1) An operator must make reasonable efforts to obtain verifiable parental consent, taking into consideration available technology. Any method to obtain verifiable parental consent must be reasonably calculated, in light of available technology, to ensure that the person providing consent is the child's parent.

(2) Methods to obtain verifiable parental consent that satisfy the requirements of this paragraph include: providing a consent form to be signed by the parent and returned to the operator by postal mail or facsimile; requiring a parent to use a credit card in connection with a transaction; having a parent call a toll-free telephone number staffed by trained personnel; using a digital certificate that uses public key technology; and using e-mail accompanied by a PIN or password obtained through one of the verification methods listed in this paragraph.