Trade Regulation Rule on Impersonation of Government and Businesses

FEDERAL TRADE COMMISSION <CFR>16 CFR Part 461</CFR> <RIN>RIN 3084-AB71</RIN> <SUBJECT>Trade Regulation Rule on Impersonation of Government and Businesses</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Federal Trade Commission. <HD SOURCE="HED">ACTION:</HD> Supplemental notice of proposed rulemaking; request for public comment. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Federal Trade Commission (FTC or Commission) requests public comment on its proposal to amend the trade regulation rule entitled Rule on Impersonation of Government and Businesses (Impersonation Rule or Rule) to revise the title of the Rule, add a prohibition on the impersonation of individuals, and extend liability for violations of the Rule to parties who provide goods and services with knowledge or reason to know that those goods or services will be used in impersonations of the kind that are themselves unlawful under the Rule. The Commission believes these changes are necessary and such impersonation is prevalent, based on all comments it received on the Rule and other information discussed in this document. The Commission now solicits written comment, data, and arguments concerning the utility and scope of the proposed revisions to the Impersonation Rule. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> Comments must be received on or before April 30, 2024. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> Interested parties may file a comment online or on paper by following the instructions in the Comment Submissions part of the <E T="02">SUPPLEMENTARY INFORMATION</E> section below. Write “Impersonation SNPRM, R207000” on your comment and file your comment online at <E T="03">https://www.regulations.gov</E> . If you prefer to file your comment on paper, mail your comment to the following address: Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, Mail Stop H-144 (Annex I), Washington, DC 20580. <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Claire Wack, <E T="03">cwack@ftc.gov,</E> (202-326-2836). </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> The Commission invites interested parties to submit data, views, and arguments on the proposed amendments to the Impersonation Rule and, specifically, on the questions set forth in Section VIII of this supplementary notice of proposed rulemaking (“SNPRM”). The comment period will remain open until April 30, 2024. To the extent practicable, all comments will be available on the public record and posted at the docket for this rulemaking on <E T="03">https://www.regulations.gov</E> . If interested parties request to present their position orally, the Commission will hold an informal hearing, as specified in section 18(c) of the FTC Act, 15 U.S.C. 57a(c). Any request for an informal hearing must be submitted as a written comment within the comment period and must include: (1) a request to make an oral submission, if desired; (2) a statement identifying the person's interests in the proceeding; and (3) any proposals to add disputed issues of material fact that need to be resolved during the hearing. See 16 CFR 1.11(e). Any comment requesting an informal hearing should also include a statement explaining why an informal hearing is warranted and a summary of any anticipated oral or documentary testimony. If the comment identifies disputed issues of material fact, the comment should include evidence supporting such assertions. If the Commission schedules an informal hearing, either on its own initiative or in response to request by an interested party, the FTC will publish a separate document notifying the public pursuant to 16 CFR 1.12(a) (“initial notice of informal hearing”). <HD SOURCE="HD1">I. Background</HD> <HD SOURCE="HD2">A. Trade Regulation Rule on Impersonation of Government and Business</HD> Published elsewhere in this issue of the <E T="04">Federal Register</E> is the Commission's final Trade Regulation Rule entitled “Rule on Impersonation of Government and Business,” promulgated under the authority of section 18 of the FTC Act, 15 U.S.C. 57a(b)(2); the provisions of Part 1, Subpart B, of the Commission's Rules of Practice, 16 CFR 1.7-1.20; and the Administrative Procedure Act (“Impersonation Rule” or “Rule”). This authority permits the Commission to promulgate, modify, or repeal trade regulation rules that define with specificity acts or practices that are unfair or deceptive in or affecting commerce within the meaning of section 5(a)(1) of the FTC Act, 15 U.S.C. 45(a)(1). Promulgation of this Rule followed publication of an Advance Notice of Proposed Rulemaking (ANPR) on December 23, 2021, <SU>1</SU> and a Notice of Proposed Rulemaking on October 17, 2022 (NPRM). <SU>2</SU> On March 30, 2023, the Commission published an Initial Notice of Informal Hearing, <SU>3</SU> and on May 4, 2023, Chief Administrative Law Judge D. Michael Chappell presided over the informal hearing, <SU>4</SU> which was viewable live from the Commission's website, <E T="03">https://www.ftc.gov</E> . Because there were no disputed issues of material fact to resolve, the informal hearing included no cross examination or rebuttal submissions, and the presiding officer made no recommended decision. <HD SOURCE="HD2">B. Need for a Supplemental Notice of Proposed Rulemaking as to Impersonation of Individuals and Liability for Provision of Goods and Services Used in Impersonation Scams</HD> Based on the comments in response to the ANPR, NPRM, Notice of Informal Hearing, and Informal Hearing, as well as the Commission's history of enforcement and reports to the Commission from consumers and other sources, as discussed in Section V below, the Commission has reason to believe the deceptive or unfair impersonation of individuals and other parties not currently addressed by the Impersonation Rule is prevalent and taking comments on additional proposed provisions is in the public interest. Additionally, as stated in the Statement of Basis and Purpose for the Rule, Question 6 of the NPRM asked for comments on whether the final rule should contain a prohibition against providing the means and instrumentalities for violations against government or business impersonation. <SU>5</SU> As summarized in this document, the Commission received more than 20 comments that expressly addressed this question, and many of the sentiments reflected in these comments were also echoed by several commenters that presented oral statements at the Informal Hearing. <SU>6</SU> Based upon the comments received in connection with the proposed provision regarding means and instrumentalities, the Commission decided that the specific provision warranted further analysis and consideration, and the Commission declined to adopt what was then proposed 16 CFR 461.4. Instead, the Commission stated it would continue to consider the issue, including soliciting additional comment. This SNPRM discusses the comments the Commission received on this proposed section. It also discusses how the comments submitted in response to the Commission's earlier requests for comment informed the Commission's current proposals to (1) rename the Impersonation Rule the “Rule on Impersonation of Government, Businesses, and Individuals;” (2) include a definition of “individual” in the Rule; (3) amend the Rule to include a prohibition of impersonation of individuals; and (4) extend liability to parties who provide goods and services with knowledge or reason to know that those goods or services will be used in impersonations of the kind that are themselves unlawful under the Rule, as amended. The Commission also poses specific questions for comment. Finally, the SNPRM provides the proposed amended text of the Rule. <HD SOURCE="HD1">II. Summary of Comments to ANPR</HD> The Commission published the ANPR on December 23, 2021, and took comments for 60 days. The Commission invited the public to comment on any issues or concerns the public believes are relevant or appropriate to the Commission's consideration of the proposed rule and also posed 13 specific questions for the public. <SU>7</SU> Relevant to this SNPRM, the Commission solicited public comment on the prevalence and methods of impersonation of individuals or entities other than governments and businesses in interstate commerce and whether and how individuals and entities provide the means and instrumentalities used in the impersonation of government, businesses, and individuals. <SU>8</SU> The Commission received 164 timely and unique comments in response to the ANPR, which are publicly available on this rulemaking's docket at <E T="03">https://www.regulations.gov/docket/FTC-2021-0077/comments</E> . <SU>9</SU> No commenter expressed the view that the Commission should not commence this rulemaking. Most comments—140—came from individual consumers. Ten comments were submitted by businesses, <SU>10</SU> 11 by trade associations, <SU>11</SU> and three by government agencies. <SU>12</SU> <HD SOURCE="HD2">A. Comments About the Impersonation of Individuals</HD> Seven commenters discussed the significant impact of impersonation of individuals or parties other than government or businesses. NAAG stated that State consumer protection agencies receive thousands of complaints annually regarding imposter scams that do not fit into government or business impersonation, for example grandparent or romance scams, and that “data from state consumer protection agencies suggests that these scams are only becoming more common.”  <SU>13</SU> WMC Global, a cybersecurity company, listed executive impersonation, public figure impersonation, and political impersonation as categories of individual impersonation of which it is aware. <SU>14</SU> It identified Short Message Services (“SMS”), email, social media, and voice calls as primary methods used by impersonators in contacting ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 88k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━