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” or “Rule”) that extend the Rule's applicability to inbound telemarketing calls in response to an advertisement through any medium or direct mail solicitation in which technical support products or services are offered for sale. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> The amendments are effective January 9, 2025. </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> 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-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 April 16, 2024, in a notice of proposed rulemaking (“2024 NPRM”). <SU>1</SU> <FTREF/> The Commission has carefully reviewed and considered the entire record on the issues presented in this rulemaking proceeding. The record includes 25 public comments submitted by a variety of interested parties, none of which opposed the issuance of a final rule amending the TSR to cover technical support calls made by consumers in response to solicitations. The Commission has decided to adopt, with one modification, the proposed amendments to the TSR that are intended to address consumer injury from deceptive technical support scams. <FTNT> <SU>1</SU>  89 FR 26798 (Apr. 16, 2024). This document also concludes the ongoing Regulatory Review. </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/> Pursuant to the Act, the Commission promulgated the TSR on August 23, 1995. <SU>4</SU> <FTREF/> <FTNT> <SU>2</SU>  Public Law 103-297, 108 Stat. 1545 (1997) (codified as amended at 15 U.S.C. 6101-6108). </FTNT> <FTNT> <SU>3</SU>  15 U.S.C. 6102(a)(1). </FTNT> <FTNT> <SU>4</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>5</SU> <FTREF/> The Rule also requires sellers and telemarketers to make specific disclosures and keep certain records of their telemarketing activities. <SU>6</SU> <FTREF/> <FTNT> <SU>5</SU>   <E T="03">See, e.g.,</E> 16 CFR 310.3(a); <E T="03">see also</E> Original TSR, 60 FR 43848-51. </FTNT> <FTNT> <SU>6</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 43846-48, 43851, 43857. </FTNT> Since 1995, the Commission has amended the Rule on five 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>7</SU> <FTREF/> (2) in 2008 to prohibit prerecorded messages (“robocalls”) in sales calls and charity calls;  <SU>8</SU> <FTREF/> (3) in 2010 to ban the telemarketing of debt relief services requiring an advance fee;  <SU>9</SU> <FTREF/> (4) in 2015 to bar the use in telemarketing of certain payment mechanisms widely used in fraudulent transactions;  <SU>10</SU> <FTREF/> and (5) in 2024 to modify the Rule's recordkeeping requirements and prohibit deception in calls between businesses. <SU>11</SU> <FTREF/> <FTNT> <SU>7</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>8</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>9</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 § 310.3(a)(2)(x)). The Commission subsequently published technical corrections to § 310.4 of the TSR. 76 FR 58716 (Sept. 22, 2011). </FTNT> <FTNT> <SU>10</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> <FTNT> <SU>11</SU>   <E T="03">See</E> Statement of Basis and Purpose and Final Rule Amendments (“2024 Amendments”), 89 FR 26760 (Apr. 16, 2024). </FTNT> <HD SOURCE="HD1">II. Overview of the Proposed Amendments to the TSR</HD> The Rule exempts from its coverage certain calls that consumers make to telemarketers, known as inbound calls. <SU>12</SU> <FTREF/> The Rule generally exempts inbound calls that are: (1) not the result of any solicitation, (2) in response to certain advertisements, and (3) in response to a direct mail solicitation that contains certain information. <SU>13</SU> <FTREF/> However, the exemptions for inbound calls contain exclusions for certain types of calls that are often deceptive, such as inbound calls relating to investment opportunities, debt relief services, and prize promotions. <SU>14</SU> <FTREF/> In the 2024 NPRM, the Commission proposed covering inbound telemarketing of technical support services (or tech support) in the Rule ( <E T="03">i.e.,</E> adding it to the exclusions identified in § 310.6(b)(5) and (6)) because of the harm associated with telemarketing these products and services. <SU>15</SU> <FTREF/> <FTNT> <SU>12</SU>   <E T="03">See</E> 16 CFR 310.6(b)(4) through (6). </FTNT> <FTNT> <SU>13</SU>   <E T="03">Id.</E> </FTNT> <FTNT> <SU>14</SU>   <E T="03">Id.</E> </FTNT> <FTNT> <SU>15</SU>  2024 NPRM, 89 FR 26798. </FTNT> <HD SOURCE="HD2">A. Tech Support</HD> Tech support scams consistently generate large numbers of consumer complaints. <SU>16</SU> <FTREF/> The scams can begin in a variety of ways. Sometimes the scammer places an outbound call to consumers warning them that their computers have been infected. <SU>17</SU> <FTREF/> Other scammers use deceptive computer pop-up messages that claim the consumer's computer has a problem and direct the consumer to call a phone number to fix the errors. <SU>18</SU> <FTREF/> Still other scammers place advertisements with search engines that appear when consumers search for their computer company's tech support telephone number. <SU>19</SU> <FTREF/> And sometimes, scammers pay computer security software companies so that when consumers call to activate their service, they reach the scammer and are pitched additional and unnecessary products and services. <SU>20</SU> <FTREF/> Once consumers connect with the scammer, whether through outbound telemarketing or inbound telemarketing, the scammers deceive consumers about a variety of problems with their computers and persuade consumers to purchase subscription tech support services or software that they do not need. <SU>21</SU> <FTREF/> <FTNT> <SU>16</SU>   <E T="03">See</E> FTC Consumer Sentinel Network Databook 2023 at 87, <E T="03">available at https://www.ftc.gov/system/files/ftc_gov/pdf/CSN-Annual-Data-Book-2023.pdf</E> (last visited Sept. 5, 2024). </FTNT> <FTNT> <SU>17</SU>   <E T="03">See, e.g.,</E> Prepared Statement of the Federal Trade Commission Before the United States Senate Special Committee on Aging on Combatting Technical Support Scams (“Tech Support Testimony”), at 3-5 (Oct. 21, 2015), <E T="03">available at https://www.ftc.gov/system/files/documents/public_statements/826561/151021techsupporttestimony.pdf</E> (last visited Sept. 5, 2024). </FTNT> <FTNT> <SU>18</SU>   <E T="03">Id.</E> </FTNT> <FTNT> <SU>19</SU>   <E T="03">Id; see also</E> Complaint, <E T="03">FTC</E> v. <E T="03">Click4Support, LLC,</E> No. 15-cv-05777-SD, at 9-10 (E.D. Pa. Oct. 26, 2015), <E T="03"> available at https://www.ftc.gov/system/ files/documents/cases/151113click4supportcmpt.pdf </E> (last visited Se ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 64k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━