Telemarketing Sales Rule

<RULE> FEDERAL TRADE COMMISSION <CFR>16 CFR Part 310</CFR> <RIN>RIN 3084-AB19</RIN> <SUBJECT>Telemarketing Sales Rule</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Federal Trade Commission. <HD SOURCE="HED">ACTION:</HD> Final rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Federal Trade Commission (“FTC” or “Commission”) adopts amendments to the Telemarketing Sales Rule (“TSR”) that, among other things, require telemarketers and sellers to maintain additional records of their telemarketing transactions, prohibit material misrepresentations and false or misleading statements in business to business (“B2B”) telemarketing calls, and add a new definition for the term “previous donor.” These amendments are necessary to address technological advances and to continue protecting consumers, including small businesses, from deceptive or abusive telemarketing practices. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> The amendments are effective May 16, 2024. However, compliance with 16 CFR 310.5(a)(2) is not required until October 15, 2024. The incorporation by reference of certain material listed in the rule is approved by the Director of the Federal Register as of May 16, 2024. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> Relevant portions of the record of this proceeding, including this document, are available at <E T="03">https://www.ftc.gov.</E> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Patricia Hsue, (202) 326-3132, <E T="03">phsue@ftc.gov,</E> or Benjamin R. Davidson, (202) 326-3055, <E T="03">bdavidson@ftc.gov,</E> Division of Marketing Practices, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW, Mail Stop CC-6316, Washington, DC 20580. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> This document states the basis and purpose for the Commission's decision to adopt amendments to the TSR that were proposed and published for public comment in the <E T="04">Federal Register</E> on June 3, 2022 in a Notice of Proposed Rulemaking (“2022 NPRM”). <SU>1</SU> <FTREF/> After careful review and consideration of the entire record on the issues presented in this rulemaking proceeding, including 26 public comments submitted by a variety of interested parties, the Commission has decided to adopt, with several modifications, the proposed amendments to the TSR intended to curb deceptive or abusive practices in telemarketing and improve the effectiveness of the TSR. <FTNT> <SU>1</SU>  Notice of Proposed Rulemaking (“2022 NPRM”), 87 FR 33677 (June 3, 2022). </FTNT> <HD SOURCE="HD1">I. Background</HD> Congress enacted the Telemarketing and Consumer Fraud and Abuse Prevention Act (“Telemarketing Act” or “Act”) in 1994 to curb abusive telemarketing practices and provide key anti-fraud and privacy protections to consumers. <SU>2</SU> <FTREF/> The Act directed the Commission to adopt a rule prohibiting deceptive or abusive telemarketing practices. <SU>3</SU> <FTREF/> The Act also directed the Commission to include, among other provisions, disclosure requirements and to consider recordkeeping requirements in its rulemaking. <SU>4</SU> <FTREF/> Pursuant to the Act, the Commission promulgated the TSR on August 23, 1995. <SU>5</SU> <FTREF/> <FTNT> <SU>2</SU>  Public Law 103-297, 108 Stat. 1545 (1997) (codified as amended at 15 U.S.C. 6101 through 6108). </FTNT> <FTNT> <SU>3</SU>  15 U.S.C. 6102(a)(1). </FTNT> <FTNT> <SU>4</SU>  15 U.S.C. 6102(a)(3). </FTNT> <FTNT> <SU>5</SU>   <E T="03">See</E> Statement of Basis and Purpose and Final Rule (“Original TSR”), 60 FR 43842 (Aug. 23, 1995). </FTNT> The Rule prohibits deceptive or abusive telemarketing practices, such as misrepresenting several categories of material information or making false or misleading statements to induce a person to pay for a good or service. <SU>6</SU> <FTREF/> The Rule also requires sellers and telemarketers to make specific disclosures and keep certain records of their telemarketing activities. <SU>7</SU> <FTREF/> The Commission determined that recordkeeping requirements were necessary to “ascertain whether sellers and telemarketers are complying with the [. . .TSR], identify persons who are involved in any challenged practices, and [ ] identify customers who may have been injured.”  <SU>8</SU> <FTREF/> <FTNT> <SU>6</SU>   <E T="03">See, e.g.,</E> 16 CFR 310.3(a); <E T="03">see also</E> Original TSR, 60 FR at 43848-51. </FTNT> <FTNT> <SU>7</SU>   <E T="03">See, e.g.,</E> 16 CFR 310.3(a)(1), 310.5; <E T="03">see also</E> Original TSR, 60 FR at 43846-48, 43851, 43857. </FTNT> <FTNT> <SU>8</SU>  Original TSR, 60 FR at 43857. </FTNT> Since 1995, the Commission has amended the Rule on four occasions: (1) in 2003 to create the National Do Not Call (“DNC”) Registry and extend the Rule to telemarketing calls soliciting charitable contributions (“charity calls”);  <SU>9</SU> <FTREF/> (2) in 2008 to prohibit prerecorded messages (“robocalls”) in sales calls and charity calls;  <SU>10</SU> <FTREF/> (3) in 2010 to ban the telemarketing of debt relief services requiring an advance fee;  <SU>11</SU> <FTREF/> and (4) in 2015 to bar the use in telemarketing of certain payment mechanisms widely used in fraudulent transactions. <SU>12</SU> <FTREF/> <FTNT> <SU>9</SU>   <E T="03">See</E> Statement of Basis and Purpose and Final Amended Rule (“2003 TSR Amendments”), 68 FR 4580 (Jan. 29, 2003) (adding Do Not Call Registry, charitable solicitations, and other provisions). The Telemarketing Act was amended in 2001 to extend its coverage to telemarketing calls seeking charitable contributions. <E T="03">See</E> Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (“USA PATRIOT Act”), Public Law 107-56, 115 Stat. 272 (Oct. 26, 2001) (adding charitable contribution to the definition of telemarketing and amending the Act to require certain disclosures in calls seeking charitable contributions). </FTNT> <FTNT> <SU>10</SU>   <E T="03">See</E> Statement of Basis and Purpose and Final Rule Amendments (“2008 TSR Amendments”), 73 FR 51164 (Aug. 29, 2008) (addressing the use of robocalls). </FTNT> <FTNT> <SU>11</SU>   <E T="03">See</E> Statement of Basis and Purpose and Final Rule Amendments (“2010 TSR Amendments”), 75 FR 48458 (Aug. 10, 2010) (adding debt relief provisions including a prohibition on misrepresenting material aspects of debt relief services in Section 310.3(a)(2)(x)). The Commission subsequently published technical corrections to Section 310.4 of the TSR. 76 FR 58716 (Sept. 22, 2011). </FTNT> <FTNT> <SU>12</SU>   <E T="03">See</E> Statement of Basis and Purpose and Final Rule Amendments (“2015 TSR Amendments”), 80 FR 77520 (Dec. 14, 2015) (prohibiting the use of remotely created checks and payment orders, cash-to-cash money transfers, and cash reload mechanisms). </FTNT> Despite making significant amendments to the Rule, the Commission has not updated the recordkeeping provisions since the Rule's inception in 1995. <SU>13</SU> <FTREF/> Evolutions in technology and the marketplace have made it more difficult for regulators to enforce the TSR, particularly provisions relating to the DNC Registry. <SU>14</SU> <FTREF/> As a result, the Commission solicited comment during its regulatory review process on whether it should update the recordkeeping provisions, and subsequently proposed amending them in the 2022 NPRM. <SU>15</SU> <FTREF/> <FTNT> <SU>13</SU>  When the Commission decided in 2003 and 2010 to make substantive amendments to the TSR, it declined to modify the Rule's recordkeeping provisions. <E T="03">See</E> 2003 TSR Amendments, 68 FR at 4645, 4653-54 (declining to implement any of the suggested recordkeeping revisions that were raised in the public comments); 2010 TSR Amendments, 75 FR at 48502. </FTNT> <FTNT> <SU>14</SU>  2022 NPRM, 87 FR at 33679-81. </FTNT> <FTNT> <SU>15</SU>  The Commission issued the 2022 NPRM after it had embarked on a regulatory review of the TSR in 2014. In that review, it sought feedback on a number of issues, including the existing recordkeeping requirements. <E T="03">See</E> 2014 TSR Rule Review, 79 FR 46732, 46735 (Aug. 11, 2014). </FTNT> The 2022 NPRM also proposed applying the TSR's prohibitions on deceptive telemarketing to B2B calls. <SU>16</SU> <FTREF/> The original TSR generally excluded B2B calls, except those selling office and cleaning supplies, because in the Commission's experience at the time, those calls were “by far the most significant business-to-business problem area.”  <SU>17</SU> <FTREF/> In 2003, the Commission considered extending the TSR's protections to B2B calls selling internet or web services, but decided against doing so for fear of chilling technological innovation. <SU>18</SU> <FTREF/> It did, however, note it would “continue to monitor closely” B2B telemarketing practices in this area and “may revisit the issue in subsequent Rule Reviews should circumstances warrant.”  <SU>19</SU> <FTREF/> Since then, the Commission has continued to see small businesses harmed by deceptive B2B telemarketing, and the 2022 NPRM proposed extending Section 310.3(a)(2)'s prohibition on misrepresentations  <SU>20</SU> <FTREF/> and Section 310.3(a)(4)'s prohibition on false or misleading statements  <SU>21</SU> <FTREF/> to B2B calls. <SU>22</SU> <FTREF/> <FTNT> <SU>16</SU>  2022 NPRM, 87 FR at 33682-83. </FTNT> <FTNT> <SU>17</SU>  Original TSR, 60 FR at 43867, 43861. </FTNT> <FTNT> <SU>18</SU>  2003 TSR Amendments, 68 FR at 4663; 2022 NPRM, 87 FR at 33682-83. </FTNT> <FTNT> <SU>19</SU>  2003 TSR Amendments, 68 FR at 4663; 2022 NPRM, 87 FR at 33682-83. </FTNT> <FTNT> <SU>20</SU>  S ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 227k characters. 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