Telemarketing Sales 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> Notice of proposed rulemaking. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Federal Trade Commission (“FTC” or “Commission”) proposes to amend the Telemarketing Sales Rule (“Rule”) to extend its coverage to inbound telemarketing calls by consumers to technical support services— <E T="03">i.e.,</E> calls that consumers make in response to an advertisement through any medium or to a direct mail solicitation. The proposed amendment is necessary in light of the widespread deception and consumer injury caused by tech support scams. The amendment would provide the Commission with the ability to obtain stronger relief in cases involving tech support scams, including civil penalties and consumer redress. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> Comments must be received by June 17, 2024. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> Interested parties may file a comment online or on paper by following the instructions in the Request for Comment part of the <E T="02">SUPPLEMENTARY INFORMATION</E> section below. Write “Telemarketing Sales Rule (16 CFR part 310—NPRM) (Project No. R411001)” 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 T), Washington, DC 20580. <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Benjamin R. Davidson, (202) 326-3055, <E T="03">bdavidson@ftc.gov,</E> or Patricia Hsue, (202) 326-3132, <E T="03">phsue@ftc.gov,</E> Division of Marketing Practices, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW, Mail Stop CC-8528, Washington, DC 20580. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">I. Introduction</HD> The Federal Trade Commission issues this notice of proposed rulemaking (“NPRM”) to invite public comment on a proposed amendment to the TSR that would require inbound technical support (“tech support”) calls to comply with the Rule. <SU>1</SU> <FTREF/> The Rule is currently framed to exempt from its requirements: (1) calls initiated by a customer in response to an advertisement through any medium, and (2) calls initiated by a customer in response to a direct mail solicitation. <SU>2</SU> <FTREF/> The proposal would specifically exclude tech support calls from these inbound call exemptions. The NPRM also explains the Commission's decision to refrain from proposing changes to the TSR that would: (1) require a notice and cancellation mechanism with negative option sales or (2) further address business to business (“B2B”) calls. <SU>3</SU> <FTREF/> <FTNT> <SU>1</SU>   <E T="03">See</E> 16 CFR part 310. References to the TSR will cite the section number ( <E T="03">e.g.,</E> § 310.6(b)(5)). </FTNT> <FTNT> <SU>2</SU>   <E T="03">See</E> § 310.6(b)(5) and (b)(6). The exemptions currently exclude certain categories of calls that are likely to be deceptive, such as calls relating to investment opportunities and debt relief services. </FTNT> <FTNT> <SU>3</SU>  The Commission is concurrently issuing a Final Rule that would require B2B calls to comply with the TSR's prohibitions on deception. </FTNT> This NPRM invites written comments on all issues raised by the proposed amendment, including answers to the specific questions set forth in Section IV of this Notice. The Commission has issued a final rule—published elsewhere in this same issue of the <E T="04">Federal Register</E> —that, among other things, will require telemarketers and sellers to maintain additional records of their telemarketing transactions and prohibit material misrepresentations and false or misleading statements in B2B telemarketing calls. <HD SOURCE="HD1">II. Overview of the Telemarketing Sales Rule</HD> Congress enacted the Telemarketing and Consumer Fraud and Abuse Prevention Act (“Telemarketing Act” or “Act”) in 1994 to curb deceptive and abusive telemarketing practices and provide anti-fraud and privacy protections for consumers receiving telephone solicitations to purchase goods or services. <SU>4</SU> <FTREF/> The Telemarketing Act directed the Commission to adopt a rule prohibiting deceptive or abusive telemarketing practices, including prohibiting telemarketers from undertaking a pattern of unsolicited calls that reasonable consumers would consider coercive or abusive of their privacy, restricting the time of day telemarketers may make unsolicited calls to consumers, and requiring telemarketers to promptly and clearly disclose that the purpose of the call is to sell goods or services. <SU>5</SU> <FTREF/> The Act also directed the Commission to address in its rule other acts or practices that it found to be deceptive or abusive, including acts or practices of entities or individuals that assist and facilitate deceptive telemarketing, and to consider including recordkeeping requirements. <SU>6</SU> <FTREF/> Finally, the Act authorized State Attorneys General, or other appropriate State officials, and private litigants to bring civil actions in federal district court to enforce compliance with the FTC's rule. <SU>7</SU> <FTREF/> <FTNT> <SU>4</SU>  15 U.S.C. 6101-6108. </FTNT> <FTNT> <SU>5</SU>  15 U.S.C. 6102(a)(3). The Telemarketing Act was subsequently amended in 2001 to add 15 U.S.C. 6102(a)(3)(D), which requires a telemarketer to promptly and clearly disclose the purpose calls made to solicit 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”), Pub. L. 107-56, 115 Stat. 272 (Oct. 26, 2001). </FTNT> <FTNT> <SU>6</SU>  15 U.S.C. 6101(a); <E T="03">see also</E> 2002 Notice of Proposed Rulemaking, 67 FR 4492, 4510 (Jan. 30, 2002). </FTNT> <FTNT> <SU>7</SU>  15 U.S.C. 6103, 6104. </FTNT> Pursuant to the Act's directive, the FTC promulgated the TSR on August 23, 1995. <SU>8</SU> <FTREF/> Since then, the Commission has amended the Rule's substantive provisions on four occasions: (1) in 2003 to, among other things, create the National Do Not Call Registry and extend the Rule to telemarketing calls soliciting charitable contributions;  <SU>9</SU> <FTREF/> (2) in 2008 to prohibit calls playing a recorded message (“robocalls”) selling a good or service or soliciting charitable contributions;  <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 novel payment mechanisms widely used in fraudulent transactions. <SU>12</SU> <FTREF/> <FTNT> <SU>8</SU>   <E T="03">See</E> Statement of Basis and Purpose and Final Rule (“Original TSR”), 60 FR 43842 (Aug. 23, 1995). </FTNT> <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). </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). The prohibition on misrepresenting material aspects of debt relief services in § 310.3(a)(2)(x) was added in 2010 along with other debt relief provisions. <E T="03">See</E> 2010 TSR Amendments, 75 FR at 48498. The Commission subsequently published correcting amendments to the text of § 310.4 of the TSR. Telemarketing Sales Rule; Correcting Amendments, 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> On June 3, 2022, the Commission issued an advance notice of proposed rulemaking (“ANPR”) and a separate notice of proposed rulemaking (“June NPRM”)  <SU>13</SU> <FTREF/> concerning several potential changes to the TSR. The June NPRM proposed amending the TSR's recordkeeping requirements and requiring B2B calls to comply with the TSR's prohibitions on several types of misrepresentations. <SU>14</SU> <FTREF/> The TSR currently excludes most B2B calls from the Rule's coverage. <SU>15</SU> <FTREF/> The ANPR sought comment on: (1) whether to further modify the TSR's treatment of B2B calls including removing the exemption entirely; (2) whether the Rule should require sellers of negative option products to provide consumers notice before they are billed and a simple mechanism to cancel the negative option; and (3) whether to extend the Rule to apply to inbound tech support calls. <FTNT> <SU>13</SU>  87 FR 3367. </FTNT> <FTNT> <SU>14</SU>   <E T="03">Id.</E> at 3367. The June NPRM also proposed adding a new definition of “previous donor.” </FTNT> <FTNT> <SU>15</SU>   <E T="03">See</E> § 310.6(b)(7). The exemption for B2B calls excludes calls selling nondurable office or cleaning supplies. </FTNT> <HD SOURCE="HD1">III. Discussion of Comments</HD> <HD SOURCE="HD2">A. Negative Option</HD> The Commission received seven comments that addressed whether the Rule shou ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 77k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━