Telemarketing Sales Rule

Federal RegisterApr 16, 2024

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FEDERAL TRADE COMMISSION

16 CFR Part 310

RIN 3084-AB19

Telemarketing Sales Rule

AGENCY:

Federal Trade Commission.

ACTION:

Final rule.

SUMMARY:

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.

DATES:

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.

ADDRESSES:

Relevant portions of the record of this proceeding, including this document, are available at

https://www.ftc.gov.

FOR FURTHER INFORMATION CONTACT:

Patricia Hsue, (202) 326-3132,

phsue@ftc.gov,

or Benjamin R. Davidson, (202) 326-3055,

bdavidson@ftc.gov,

Division of Marketing Practices, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW, Mail Stop CC-6316, Washington, DC 20580.

SUPPLEMENTARY INFORMATION:

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

Federal Register

on June 3, 2022 in a Notice of Proposed Rulemaking (“2022 NPRM”).

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.

Notice of Proposed Rulemaking (“2022 NPRM”), 87 FR 33677 (June 3, 2022).

I. Background

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.

The Act directed the Commission to adopt a rule prohibiting deceptive or abusive telemarketing practices.

The Act also directed the Commission to include, among other provisions, disclosure requirements and to consider recordkeeping requirements in its rulemaking.

Pursuant to the Act, the Commission promulgated the TSR on August 23, 1995.

Public Law 103-297, 108 Stat. 1545 (1997) (codified as amended at 15 U.S.C. 6101 through 6108).

15 U.S.C. 6102(a)(1).

15 U.S.C. 6102(a)(3).

See

Statement of Basis and Purpose and Final Rule (“Original TSR”), 60 FR 43842 (Aug. 23, 1995).

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.

The Rule also requires sellers and telemarketers to make specific disclosures and keep certain records of their telemarketing activities.

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.”

See, e.g.,

16 CFR 310.3(a);

see also

Original TSR, 60 FR at 43848-51.

See, e.g.,

16 CFR 310.3(a)(1), 310.5;

see also

Original TSR, 60 FR at 43846-48, 43851, 43857.

Original TSR, 60 FR at 43857.

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”);

(2) in 2008 to prohibit prerecorded messages (“robocalls”) in sales calls and charity calls;

(3) in 2010 to ban the telemarketing of debt relief services requiring an advance fee;

and (4) in 2015 to bar the use in telemarketing of certain payment mechanisms widely used in fraudulent transactions.

See

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.

See

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).

See

Statement of Basis and Purpose and Final Rule Amendments (“2008 TSR Amendments”), 73 FR 51164 (Aug. 29, 2008) (addressing the use of robocalls).

See

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).

See

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).

Despite making significant amendments to the Rule, the Commission has not updated the recordkeeping provisions since the Rule's inception in 1995.

Evolutions in technology and the marketplace have made it more difficult for regulators to enforce the TSR, particularly provisions relating to the DNC Registry.

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.

When the Commission decided in 2003 and 2010 to make substantive amendments to the TSR, it declined to modify the Rule's recordkeeping provisions.

See

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.

2022 NPRM, 87 FR at 33679-81.

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.

See

2014 TSR Rule Review, 79 FR 46732, 46735 (Aug. 11, 2014).

The 2022 NPRM also proposed applying the TSR's prohibitions on deceptive telemarketing to B2B calls.

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.”

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.

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.”

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

and Section 310.3(a)(4)'s prohibition on false or misleading statements

to B2B calls.

2022 NPRM, 87 FR at 33682-83.

Original TSR, 60 FR at 43867, 43861.

2003 TSR Amendments, 68 FR at 4663; 2022 NPRM, 87 FR at 33682-83.

Section 310.3(a)(2) prohibits, among other things, misrepresenting: the total cost to purchase a good or service, material restrictions on the use of the good or service, material aspects of the central characteristics of the good or service, material aspects of the seller's refund policy, the seller's affiliation with or endorsement by any person or government agency, or material aspects of a negative option feature or debt relief service.

See

16 CFR 310.3(a)(2)(i)-(x).

Section 310.3(a)(4) prohibits making false or misleading statements to induce any person to pay for goods or services or induce a charitable contribution.

See

16 CFR 310.3(a)(4).

2022 NPRM, 87 FR at 33682-83. When the Commission issued the 2022 NPRM, it also issued an Advance Notice of Proposed Rulemaking (“2022 ANPR”) in which it sought public comment on whether to extend all of the TSR's protections to B2B calls. 2022 ANPR, 87 FR 33662 (June 3, 2022). The Commission addresses the public comments submitted in response to the 2022 ANPR in a Notice of Proposed Rulemaking that the Commission is issuing simultaneously with this Final Rule.

Finally, the 2022 NPRM proposed adding a definition for “previous donor.” In 2008 the Commission amended the TSR to prohibit robocalls, but allowed charity robocalls if the recipient is a “member of, or previous donor to, a non-profit charitable organization on whose behalf the call is made.”

The Commission intended this narrow exemption to apply only to consumers who had previously donated to the soliciting organization,

but the Commission did not define “previous donor.”

The new definition will clarify that telemarketers are prohibited from making charity robocalls unless the call recipient donated to the soliciting non-profit charitable organization (“charity”) within the last two years.

See

2008 TSR Amendments, 73 FR at 51185. To qualify for this narrow exemption, sellers and telemarketers must also comply with the provisions of Section 310.4(b)(1)(v)(B).

Id.

Pursuant to the USA PATRIOT Act, the Commission amended the TSR in 2003 to extend its coverage to charity calls. 2003 TSR Amendments, 68 FR at 4582. As part of that amendment, the Commission defined “donor” as “any person solicited to make a charitable contribution.”

Id.

at 4590.

2022 NPRM, 87 FR at 33679.

II. Overview of the Proposed Amendments to the TSR

A. Recordkeeping

The TSR's recordkeeping provisions, which have remained unchanged since the Rule was promulgated in 1995, generally require telemarketers and sellers to keep for a 24-month period records of: (1) any substantially different advertisement, including telemarketing scripts; (2) lists of prize recipients, customers, and telemarketing employees directly involved in sales or solicitations; and (3) all verifiable authorizations or records of express informed consent or express agreement.

They may keep the records in any form and in the same manner and format as they would keep such records in the ordinary course of business, and they may allocate responsibilities of complying with the Rule's recordkeeping requirements between the seller and telemarketer.

16 CFR 310.5(a).

16 CFR 310.5(b) & (c).

The telemarketing landscape has changed drastically since 1995. Technological advancements have made it easier and cheaper for unscrupulous telemarketers to engage in illegal telemarketing, resulting in a greater proliferation of unwanted calls.

Bad actors hide their identities by using technology to “spoof” or fake a calling number, making it more difficult for the Commission to identify the responsible parties or obtain records of their illegal telemarketing activities.

Technology also allows these bad actors to operate from anywhere in the world, posing additional challenges to the Commission's law enforcement efforts.

See, e.g.,

Prepared Statement of the Federal Trade Commission Before the United States Senate Committee on Commerce, Science and Transportation: Abusive Robocalls and How We Can Stop Them (Apr. 18, 2018),

available at https://www.ftc.gov/system/files/documents/public_statements/1366628/p034412_commission_testimony_re_abusive_robocalls_senate_04182018.pdf

(last visited Dec. 11, 2023);

see also

Prepared Statement of the Federal Trade Commission: Oversight of the Federal Trade Commission Before the United States Senate Committee on Commerce, Science, and Transportation (Aug. 5, 2020),

available at https://www.ftc.gov/system/files/documents/public_statements/1578963/p180101testimonyftcoversight20200805.pdf

(last visited Dec. 21, 2023).

From 2019 to 2023, the Commission received on average nearly 4 million Do Not Call complaints per year, and the DNC Registry currently has over 249 million active telephone numbers. FTC, Do Not Call Data Book 2023 (“2023 DNC Databook”), at 6 (Nov. 2023),

available at https://www.ftc.gov/system/files/ftc_gov/pdf/Do-Not-Call-Data-Book-2023.pdf

(last visited Dec. 11, 2023). By comparison, within one year of its launch, the DNC Registry had over 62 million active telephone numbers registered, and the Commission received over 500,000 Do Not Call complaints.

See

Annual Report to Congress for FY 2003 and 2004 Pursuant to the Do Not Call Implementation Act on Implementation of the National Do Not Call Registry, at 3 (Sept. 2005),

available at https://www.ftc.gov/sites/default/files/documents/reports/national-do-not-call-registry-annual-report-congress-fy-2003-and-fy-2004-pursuant-do-not-call/051004dncfy0304.pdf

(last visited Dec. 11, 2023); National Do Not Call Registry Data Book for Fiscal Year 2009, at 4 (Nov. 2009),

available at https://www.ftc.gov/sites/default/files/documents/reports_annual/fiscal-year-2009/091208dncadatabook.pdf

(last visited Dec. 11, 2023). Conversely, technological advancements have also reduced the burden and costs of recordkeeping. 2022 NPRM, 87 FR at 33685 n.95 and 33690-91.

See supra

note 29. On June 25, 2019, the FTC announced “Operation Call it Quits,” which included 94 actions against illegal robocallers, many of which used spoofing technology.

See

Press Release, FTC, Law Enforcement Partners Announce New Crackdown on Illegal Robocalls (June 25, 2019),

available at https://www.ftc.gov/news-events/press-releases/2019/06/ftc-law-enforcement-partners-announce-new-crackdown-illegal

(last visited Dec. 11, 2023).

See supra

note 29.

The primary hurdles in enforcing the TSR in the current telemarketing landscape are in: (1) identifying the telemarketer and seller responsible for the telemarketing campaign; (2) obtaining call detail records; and (3) linking the content of the telemarketing calls with the call detail records to determine which TSR provisions might apply to the telemarketing activity.

As explained in more detail in the 2022 NPRM, to identify the responsible parties and obtain evidence of their telemarketing activities, the Commission often must issue civil investigative demands to multiple voice service providers to trace a call from the consumer to the telemarketer's voice provider.

In some instances, by the time the Commission has identified the relevant voice provider, the voice provider may not have retained records of the telemarketing calls such as the date, time, call duration, and disposition of each call, or the phone number(s) that placed and received each call (

i.e.

“call detail records”).

As a result, the call detail records either no longer exist or are not available for law

enforcement purposes, and the Commission cannot identify the bad actor responsible for the spoofed or otherwise illegal calls.

2022 NPRM, 87 FR at 33680-81.

Id.

at 33680. In other instances, voice providers assert it is cost prohibitive to retrieve because they only maintain records in an easily retrievable format for several months before archiving them in the ordinary course of business.

Id.

Call detail records are also necessary to ascertain compliance with certain provisions of the TSR such as the DNC Registry.

And as detailed in the 2022 NPRM, even when the Commission and other law enforcers are successful in obtaining call detail records, the records alone do not contain sufficient information about the content of the calls for regulators to determine whether the telemarketer or seller has violated the TSR.

Id.

at 33681.

Id.

at 33680-82.

The proposed amendments to the recordkeeping requirements addressed the challenges identified above. They included new recordkeeping requirements of telemarketing activity that telemarketers or sellers are in the best position to provide.

Specifically, the proposed amendments required the retention of the following new categories of information: (1) a copy of each unique prerecorded message, including each call a telemarketer makes using soundboard technology;

(2) call detail records of telemarketing campaigns;

(3) records sufficient to show a seller has an established business relationship (“EBR”) with a consumer;

(4) records sufficient to show a consumer is a previous donor to a particular charity;

(5) records of the service providers that a telemarketer uses to deliver outbound calls;

(6) records of a seller or charitable organization's entity-specific do-not-call registries;

and (7) records of the Commission's DNC Registry that were used to ensure compliance with this Rule.

Id.

Soundboard technology is technology that allows a live agent to communicate with a call recipient by playing recorded audio snippets instead of using his or her own live voice.

See

FTC Staff Opinion Letter on Soundboard Technology, at 1 (Nov. 10, 2016),

available at https://www.ftc.gov/system/files/documents/advisory_opinions/letter-lois-greisman-associate-director-division-marketing-practices-michael-bills/161110staffopsoundboarding.pdf

(last visited Dec. 11, 2023).

The proposed amendments stated the call detail records include for each call a telemarketer places or receives, the calling number; called number; time, date, and duration of the call; and the disposition of the call, such as whether the call was answered, dropped, transferred, or connected. If the call was transferred, the record should also include the phone number or IP address that the call was transferred to as well as the company name, if the call was transferred to a company different from the seller or telemarketer that placed the call. 2022 NPRM, 87 FR at 33684.

For each consumer with whom a seller asserts it has an established business relationship, the proposed amendments stated a seller must keep a record of the name and last known phone number of that consumer, the date the consumer submitted an inquiry or application regarding that seller's goods or services, and the goods or services inquired about. A seller may also show it has an established business relationship with a consumer if that consumer purchased, rented, or leased the seller's goods or services or had a financial transaction with the seller during the 18 months before the date of the telemarketing call. Another proposed amendment modifies the existing recordkeeping provisions to state that records of existing customers should also include the date of the financial transaction to establish EBR under these circumstances.

Id.

at 33685.

If a telemarketer intends to assert that a consumer is a previous donor to a particular charity, the Commission proposed that for each such consumer the telemarketer must keep a record of that consumer's name and last known phone number, and the last date that consumer donated to the particular charity. The proposed amendments also included a new definition of “previous donor.”

Id.

at 33685.

The proposed amendments stated that service providers include, but are not limited to, voice providers, autodialers, sub-contracting telemarketers, or soundboard technology platforms. The Commission did not intend for this provision to include every voice provider involved in delivering the outbound call and limited this provision to the service providers with which the seller or telemarketer has a business relationship. For each such entity, the seller or telemarketer must keep records of any applicable contracts, the date the contract was signed, and the time period the contract is in effect. The proposed amendments also stated that the records should be retained for five years after the contract expires or five years from the date the telemarketing activity covered by the contract ceases, whichever is shorter.

Id.

at 33685-86.

For the entity-specific do-not-call registry, the Commission proposed requiring telemarketers and sellers to retain records of: (1) the consumer's name, (2) the phone number(s) associated with the DNC request, (3) the seller or charitable organization from which the consumer does not wish to receive calls, (4) the telemarketer that made the call; (5) the date the DNC request was made; and (6) the good or service being offered for sale or the charitable purpose for which contributions are being solicited.

Id.

at 33686.

The Commission proposed requiring telemarketers or sellers to keep records of every version of the FTC's DNC Registry the telemarketer or seller downloaded to ensure compliance with the TSR.

Id.

at 33686.

The proposed amendments also required the retention of other new records that help identify the nature and purpose of each call including: (1) the identity of the telemarketer who placed or received each call; (2) the seller or charitable organization for which the telemarketing call is placed or received; (3) the good, service, or charitable purpose that is the subject of the call; (4) whether the call is to a consumer or business, utilizes robocalls, or is an outbound call; and (5) the telemarketing script(s) and the robocall recording (if applicable) that was used in the call.

The proposed amendments also required the retention of records regarding the caller ID transmitted if the call was an outbound call, including the name and phone number that was transmitted, and records of the telemarketer's authorization to use the phone number and name that was transmitted.

Id.

at 33684.

Id.

The proposed amendments also modified or clarified existing recordkeeping requirements to delineate more clearly the information telemarketers or sellers must keep to comply with those provisions, and specified what information is required to assert an exemption or affirmative defense to the TSR.

Specifically, the proposed amendments modified the recordkeeping provisions to require retention of a customer or prize recipient's last known telephone number and last known physical or email address, and the date a customer bought a good or service.

It modified the time period to keep records from two years to five years from the date the record is made, except for advertising materials under Section 310.5(a)(1) and service contracts under Section 310.5(a)(9), which require retention of records for five years from the date the records under those sections are no longer in use.

Id.

at 33680-82.

Id.

at 33686.

Id.

The proposed amendments clarified that records of verifiable authorizations, express informed consent or express agreement (collectively, “consent”) include a consumer's name and phone number, a copy of the consent requested in the same manner and format that it was presented to that consumer, a copy of the consent provided, the date the consumer provided consent, and the purpose for which consent was given and received.

The NPRM also proposed that if the telemarketer or seller requested consent verbally, the copy of consent requested did not require a recording of the conversation. A copy of the telemarketing script would suffice as a complete record of the consent requested. But the NPRM made clear that this proposal only applies to telemarketing calls where no other provision of the TSR requires a recording of consent.

Id.

at 33686-87. The proposed amendment also stated that for a copy of the consent provided under Sections 310.3(a)(3), 310.4(a)(7), 310.4(b)(1)(iii)(B)(1), or 310.4(b)(1)(v)(A), a complete record must include all of the requirements outlined in those respective sections.

2022 NPRM, 87 FR at 33686-87.

The proposed amendments also included new format requirements for records containing a phone number, time or call duration;

clarified that a

failure to keep each record required under Section 310.5 in a complete and accurate manner constitutes a violation of the TSR; and created a safe harbor for incomplete or inaccurate call detail records where the omission was temporary and inadvertent.

Finally, the Commission proposed modifying the compliance obligations in Section 310.5(e) to obligate both telemarketers and sellers to keep records if they fail to allocate recordkeeping obligations between themselves.

The proposed amendments required records containing international phone numbers to comport

with International Telecommunications Union's Recommendation E.164 format and domestic numbers to comport with the North American Numbering plan. The Commission proposed that records containing time and call duration be kept to the closest whole second, and time must be recorded in Coordinated Universal Time (UTC).

Id.

at 33687.

The Commission proposed a safe harbor for temporary and inadvertent errors in keeping call detail records if the telemarketer or seller can demonstrate that: (1) it has established and implemented procedures to ensure completeness and accuracy of its records under Section 310.5(a)(2); (2) it trained its personnel in the procedures; (3) it monitors compliance and enforces the procedures, and documents its monitoring and enforcement activities; and (4) any failure to keep accurate or complete records under Section 310.5(a)(2) was temporary and inadvertent.

Id.

at 33687.

Id.

at 33687.

B. B2B Telemarketing

The Original TSR exempted B2B calls other than those selling office and cleaning supplies, which the Commission considered the “most significant business-to-business problem area” at the time.

The Commission stated, however, it would reconsider the B2B exemption if “additional [B2B] telemarking activities become problems.”

In 2003, the Commission reconsidered the scope of the B2B exemption and proposed requiring B2B calls selling internet or web services to comply with the TSR because they had become an emerging area for fraud.

The Commission ultimately decided not to modify the B2B exemption because the Commission wanted to “move cautiously so as not to chill innovation in the development of cost-efficient methods for small businesses to join in the internet marketing revolution.”

But the Commission again noted it would “continue to monitor closely” the B2B telemarketing practices in this area and “may revisit the issue in subsequent Rule Reviews should circumstances warrant.”

Original TSR, 60 FR at 43861.

Id.; see also

2002 Notice of Proposed Rulemaking (“2002 NPRM”), 67 FR 4492, 4500 (Jan. 30, 2002); 2014 TSR Rule Review, 79 FR at 46738.

2002 NPRM, 67 FR at 4500, 4531. “internet Services” meant any service that allowed a business to access the internet, including internet service providers, providers of software and telephone or cable connections, as well as services that provide access to email, file transfers, websites, and newsgroups.

Id.

“Web services” was defined as “designing, building, creating, publishing, maintaining, providing, or hosting a website on the internet.”

Id.

The Commission intended for the term internet services to encompass any and all services related to accessing the internet and the term web services to encompass any and all services related to operating a website.

Id.

2003 TSR Amendments, 68 FR at 4663.

Id.

Since 2003, the Commission has continued to see small business harmed by numerous types of deceptive B2B telemarketing schemes,

including those selling business directory listings,

web hosting or design services,

search engine optimization services,

market-specific advertising opportunities,

payment processing services,

and schemes that impersonate the government.

For example, some of these schemes were the subject of a coordinated FTC-led crackdown on scams targeting small businesses, called “Operation Main Street,” announced in June 2018.

A 2018 survey conducted by the Better Business Bureau revealed that the same scams that harm consumers, such as tech support scams and imposter scams, also harm small businesses, and that 57% of scams that impact small businesses are perpetrated through telemarketing. Better Business Bureau,

Scams and Your Small Business Research Report,

at 9-10 (June 2018),

available at https://www.bbb.org/SmallBizScams

(last visited Dec. 11, 2023).

See, e.g., FTC

Your Yellow Book Inc.,

No. 14-cv-786-D (W.D. Ok. July 24, 2014),

available at https://www.ftc.gov/system/files/documents/cases/140807youryellowbookcmpt.pdf

(last visited Dec. 11, 2023);

FTC

OnlineYellowPagesToday.com, Inc.,

No. 14-cv-0838 RAJ (W.D. Wash. June 9, 2014),

available at https://www.ftc.gov/system/files/documents/cases/140717onlineyellowpagescmpt.pdf

(last visited Dec. 11, 2023);

FTC

Modern Tech. Inc., et al.,

No. 13-cv-8257 (Nov. 18, 2013)

available at https://www.ftc.gov/sites/default/files/documents/cases/131119yellowpagescmpt.pdf

(last visited Dec. 11, 2023);

FTC

6555381 Canada Inc. d/b/a Reed Publishing,

No. 09-cv-3158 (N.D. Ill. May 27, 2009)

available at https://www.ftc.gov/sites/default/files/documents/cases/2009/06/090602reedcmpt.pdf

(last visited Dec. 11, 2023);

FTC

6654916 Canada Inc. d/b/a Nat'l. Yellow Pages Online, Inc.,

No. 09-cv-3159 (N.D. Ill. May 27, 2009),

available at https://www.ftc.gov/sites/default/files/documents/cases/2009/06/090602nypocmpt.pdf

(last visited Dec. 11, 2023);

FTC

Integration Media, Inc.,

No. 09-cv-3160 (N.D. Ill. May 27, 2009),

available at https://www.ftc.gov/sites/default/files/documents/cases/2009/06/090602goamcmpt.pdf

(last visited Dec. 11, 2023);

FTC

Datacom Mktg. Inc., et al.,

No. 06-cv-2574 (N.D. Ill. May 9, 2006),

available at https://www.ftc.gov/sites/default/files/documents/cases/2006/05/060509datacomcomplaint.pdf

(last visited Dec. 11, 2023);

FTC

Datatech Commc'ns, Inc.,

No. 03-cv-6249 (N.D. Ill. Aug. 3, 2005) (filing amended complaint),

available at https://www.ftc.gov/sites/default/files/documents/cases/2005/08/050825compdatatech.pdf

(last visited Dec. 11, 2023);

FTC

Ambus Registry, Inc.,

No. 03-cv-1294 RBL (W.D. Wash. June 16, 2003),

available at https://www.ftc.gov/sites/default/files/documents/cases/2003/07/ambuscomp.pdf

(last visited Dec. 11, 2023).

See FTC

Epixtar Corp., et al.,

No. 03-cv-8511(DAB) (S.D.N.Y. Nov. 3, 2003),

available at https://www.ftc.gov/sites/default/files/documents/cases/2003/11/031103comp0323124.pdf

(last visited Dec. 11, 2023);

FTC

Mercury Mktg. of Del., Inc.,

No. 00-cv-3281 (E.D. Pa. Aug. 12, 2003) (filing for an Order to Show Cause Why Defendants Should Not be Held in Contempt),

available at https://www.ftc.gov/sites/default/files/documents/cases/2003/08/030812contempmercurymarketing.pdf

(last visited Dec. 11, 2023).

See, e.g., FTC

Pointbreak Media, LLC,

No. 18-cv-61017-CMA (S.D. Fla. May 7, 2018),

available at https://www.ftc.gov/system/files/documents/cases/matter_1723182_pointbreak_complaint.pdf

(last visited Dec. 11, 2023);

FTC

7051620 Canada, Inc.

No. 14-cv-22132 (S.D. Fla. June 9, 2014),

available at https://www.ftc.gov/system/files/documents/cases/140717nationalbusadcmpt.pdf

(last visited Dec. 11, 2023).

See, e.g., FTC

Prod. Media Co.,

No. 20-cv-00143-BR (D. Or. Jan. 23, 2020),

available at https://www.ftc.gov/system/files/documents/cases/production_media_complaint.pdf

(last visited Dec. 11, 2023).

See, e.g., FTC

First Am. Payment Sys., LP, et al.,

No. 4:22-cv-00654 (E.D. Tex. July 29, 2022),

available at https://www.ftc.gov/system/files/ftc_gov/pdf/Complaint%20%28file%20stamped%29_0.pdf

(last visited Dec. 11, 2023).

See, e.g., FTC

DOTAuthority.com,

No. 16-cv-62186 (S.D. Fla. Sept. 13, 2016)

available at https://www.ftc.gov/system/files/documents/cases/162017dotauthoriity-cmpt.pdf

(last visited Dec. 11, 2023);

FTC

D & S Mktg. Sols. LLC,

No. 16-cv-01435-MSS-AAS (M.D. Fla. June 6, 2016),

available at https://www.ftc.gov/system/files/documents/cases/160621dsmarketingcmpt.pdf

(last visited Dec. 11, 2023).

See

Press Release, FTC, BBB, and Law Enforcement Partners Announce Results of Operation Main Street: Stopping Small Business Scams Law Enforcement and Education Initiative (June 18, 2018),

available at https://www.ftc.gov/news-events/press-releases/2018/06/ftc-bbb-law-enforcement-partners-announce-results-operation-main

(last visited Dec. 11, 2023).

To address these scams, the 2022 NPRM proposed applying the TSR's prohibitions against misrepresentations, as articulated in Sections 310.3(a)(2) and 310.3(a)(4), to B2B telemarketing. Specifically, sellers and telemarketers would be prohibited from making: (1) several types of material misrepresentations in the sale of goods or services; and (2) false or misleading statements to induce a person to pay for goods or services or to induce a charitable contribution (collectively, “misrepresentations”).

The 2022 NPRM did not propose applying any other provisions of the TSR to B2B calls, such as recordkeeping, DNC Registry, or DNC fee access requirements.

2022 NPRM, 87 FR at 33682-84.

Id.; see also

16 CFR 310.5 (recordkeeping requirements); 310.8 (fee for access to the Do Not Call Registry).

C. New Definition for “Previous Donor”

The 2022 NPRM proposed adding a new definition for the term “previous donor” to clarify that telemarketers are prohibited from making charity robocalls unless the consumer donated to the soliciting charity within the last two years. When the Commission amended the TSR to prohibit robocalls

in 2008,

it included a narrow exemption allowing charity robocalls to prior donors, recognizing a charity's strong interest in reaching consumers with “whom the charity has an existing relationship—

i.e.

members of, or previous donors to[,] the non-profit organization on whose behalf the calls are made.”

The Commission meant to limit the exemption to consumers with actual relationships to the soliciting organization, because allowing “telefunders to make impersonal prerecorded cold calls on behalf of charities that have no prior relationship with the call recipients . . . would defeat the amendment's purpose of protecting consumers' privacy.”

But in creating the exemption, the Commission did not update the definition of “donor” or include a definition of “previous donor.” Because “donor” is defined as “any person solicited to make a charitable contribution,”

the Commission's 2008 Amendment could be misinterpreted as allowing a telemarketer to send robocalls to any consumer it had previously

solicited

for a donation on behalf of a charity, regardless of whether the consumer donated to or has an existing relationship with that charity.

2008 TSR Amendments, 73 FR at 51164.

Id.

at 51193.

Id.

at 51194.

16 CFR 310.2(p). The Commission declined to limit the definition of donor to those who have “an established business relationship with the non-profit charitable organization” because it wanted the term “[to] encompass not only those who have agreed to make a charitable contribution but also any person who is solicited to do so, to be consistent with [the Rule's] use of the term `customer.' ” 2003 TSR Amendments 68 FR at 4590.

Adding a definition for “previous donor” makes clear a seller or telemarketer may only make charity robocalls to a donor who has previously provided a charitable contribution to that particular charity within the last two years.

The Commission proposed that the definition of “previous donor” be limited to those who donated to a charity within the past two years so that consumers will not receive robocalls in perpetuity from organizations to which they have donated. The Commission chose two years to account for the possibility that consumers who donate annually may not necessarily donate exactly one year apart. 2022 NPRM, 87 FR at 33688.

D. Overview of Public Comments Received in Response to the 2022 NPRM

In response to the 2022 NPRM,

the Commission received 26 comments

representing the views of State governments,

consumer groups,

consumers,

industry trade associations,

and businesses.

The vast majority of the comments focused on the proposed recordkeeping amendments. Commenters on behalf of government, individual consumers, and consumer advocacy groups generally supported amending the recordkeeping requirements but also submitted suggestions for additional amendments.

Industry groups and businesses had mixed comments. Some commenters did not support any recordkeeping amendments, citing the burden they would impose, while others were generally supportive or supportive of specific proposed amendments.

The Commission also received 114 unique comments in response to the 2014 Rule Review reflecting the opinions of State and Federal agencies, consumer advocacy groups, consumers, academics, and industry. 2022 ANPR, 87 FR at 33664. The comments addressing whether the Commission should amend the TSR's recordkeeping provisions are summarized in the 2022 NPRM. 2022 NPRM, 87 FR at 33682.

Many commenters filed one comment in response to the 2022 ANPR or 2022 NPRM that addressed issues raised by both documents. Comments regarding the proposals in the 2022 NPRM will be addressed in this Final Rule. Comments regarding the proposals in the 2022 ANPR will be addressed in the Notice of Proposed Rulemaking that the Commission is issuing concurrently with this Final Rule (“2024 NPRM”). We cite public comments by name of the commenting organization or individual, the rulemaking (ANPR comments were assigned “33” and the NPRM comments were assigned “34”), and the comment number. All comments submitted can be found at

www.regulations.gov.

National Association of Attorneys General on behalf of 43 State Attorneys General (“NAAG”) 34-20.

World Privacy Forum (“WPF”) 34-21; Electronic Privacy and Information Center, National Consumer Law Center (on behalf of its low-income clients), Center for Digital Democracy, Consumer Action, Consumer Federation of America, FoolProof, Mountain State Justice, New Jersey Citizen Action, Patient Privacy Rights, Public Good Law Center, Public Knowledge, South Carolina Appleseed Legal Justice Center, and Cathy Lesser Mansfield (Senior Instructor in Law at Case Western Reserve University School of Law) (“EPIC”) 34-23.

Bradley 34-15; Cassady 34-2; Chen 34-9; Kreutzmann 34-5, Yang 34-12, and 4 Anonymous submitters at 34-3, 34-4, 34-7, and 34-11. Four commenters submitted consumer complaints or were not relevant to the proceeding.

See

Anonymous 34-6, 34-8, and 34-16; and Grener 34-10.

Enterprise Communications Advocacy Coalition (“ECAC”) 34-22; National Federation of Independent Business 33-4 (“NFIB”); Ohio Credit Union League (“OCUL”) 34-19; Professional Association for Customer Engagement 33-15 (“PACE”); Revenue Based Finance Coalition(“RBFC”) 34-13; Third Party Payment Processors Association (“TPPPA”) 34-14; US Chamber of Commerce (“Chamber”) 34-24; and USTelecom—The Broadband Association (“USTelecom”) 33-14.

Rapid Financial Services, LLC and Small Business Financial Solutions, LLC (“Rapid Finance”) 34-17; Sirius XM Radio (“Sirius”) 34-18.

Many of the consumer comments generally stated that they supported the recordkeeping amendments because they would help protect consumers from deceptive telemarketing and with enforcing the TSR.

See, e.g.,

Cassady 34-3; Chen 34-9; and Anonymous 34-11 and 34-3. One commenter generally urged more enforcement and larger penalties. Kowalski 33-7.

One anonymous commenter did not support any recordkeeping because it required collection of too much data, which the commenter believed infringed on a consumer's privacy. Anonymous 34-4.

Similarly, industry groups and businesses did not support applying the TSR's prohibitions against deceptive telemarketing to B2B calls; while government, individual consumers, and consumer organizations were supportive. Only three comments touched on the proposed amendment to add a new definition of “previous donor.” The comments and the basis for the Commission's adoption or rejection of the commenters' suggested modifications to the proposed amendments are analyzed in Section III below.

III. Final Amended Rule

The Commission has carefully reviewed and analyzed the record developed in this proceeding.

The record, which includes the Commission's law enforcement experience and that of its State and Federal counterparts, support the Commission's view the proposed amendments in the 2022 NPRM are necessary and appropriate to protect consumers, including small businesses, from deceptive or abusive telemarketing practices and ensure the Commission and other regulators can effectively and efficiently enforce the TSR.

The record includes the 2014 Rule Review, the 2022 NPRM, 2022 ANPR, and the law enforcement cases and experience referenced therein, which are hereby incorporated by reference.

The Commission's decision to amend the Rule is made pursuant to the rulemaking authority granted by the Telemarketing Act to protect consumers, including small businesses, from deceptive or abusive practices. 15 U.S.C. 6102(a).

The Final Rule requires sellers and telemarketers to keep additional records of their telemarketing activities, prohibits misrepresentations in B2B telemarketing, and adds a new definition for previous donor. The Final Rule also implements several other clerical modifications as originally proposed in the 2022 NPRM.

2022 NPRM, 87 FR at 33688.

In some instances, the Commission has clarified or made modifications to its original proposal in response to the public comments submitted. The

Commission otherwise adopts the amendments proposed in the 2022 NPRM as set forth in Section VII—Congressional Review Act (“Final Rule”) below. The primary modifications and clarifications between the proposed rule published in the 2022 NPRM and the Final Rule are:

• The term “prerecorded message” includes telemarketing calls made using “digital soundboard” rather than “soundboard technology” to make clear the term includes any digital or sound technologies that sellers or telemarketers use to convey a verbal message to a consumer in telemarketing;

• Telemarketers and sellers will have one hundred and eighty days after the Final Rule is published to implement any new systems, software, or procedures necessary to comply with the new requirement that they keep call detail records under Section 310.5(a)(2);

• Sellers and telemarketers need not retain records of the calling number, called number, date, time, duration, and disposition of telemarketing calls under Sections 310.5(a)(2)(vii) and (x) for any calls made by an individual telemarketer who manually enters a single telephone number to initiate a call to that telephone number. Such sellers and telemarketers, however, must still comply with the other requirements under Section 310.5(a)(2);

• Modified Section 310.4(b)(2) to state it is also an abusive telemarketing act or practice and a violation of the TSR for any person to sell, rent, lease, purchase, or use any list established to comply with the TSR's recordkeeping requirements under Section 310.5. This modification makes clear telemarketers and sellers cannot use any consumer lists created for recordkeeping purposes for any other purpose;

• In obtaining written consent to contact a consumer using robocalls on behalf of a “specific seller,” the written agreement must identify the “specific seller” by its legal entity name to make clear that any agreement to receive robocalls is limited to that legal entity. The seller or telemarketer obtaining consent from the consumer must ensure the consumer understands which legal entity they have authorized to send robocalls;

• Where no provision of the TSR requires a recording of the call, the Final Rule modifies what was proposed in the NPRM and now states a complete record of consent that is verbally requested must include a recording of the consent requested as well as the consent provided, and that recording must make clear the purpose for which consent was provided;

• Service providers referenced under Section 310.5(a)(9) include any entity that provides “digital soundboard” technology rather than “soundboard technology platforms” to make clear sellers and telemarketers must retain records of any entity that provides any digital or sound technologies sellers or telemarketers use to convey a verbal message to a consumer in telemarketing;

• Sellers and telemarketers must retain records of their service providers under Section 310.5(a)(9) for five years from the date the contract expires;

• For records of the entity-specific DNC list under Section 310.5(a)(10), sellers and telemarketers must retain a record of the telemarketing entity that made the call and not the individual telemarketer;

• Under Section 310.5(a)(11), sellers and telemarketers need only retain records of which version of the FTC DNC Registry they used to comply with the TSR rather than the version itself. A record of which version used includes: (1) the name of the entity which accessed the registry; (2) the date the DNC Registry was accessed; (3) the subscription account number that was used to access the registry; and (4) the telemarketing campaign(s) for which it was accessed;

• The new formatting requirements under Section 310.5(b) apply to new records created after the Final Rule goes into effect;

• The safe harbor to retain call detail records under Section 310.5(a)(2) will grant sellers and telemarketers thirty days to correct any inadvertent errors from the date of discovery, if the seller or telemarketer who made the error otherwise complies with the other provisions of the safe harbor; and

• Under Section 310.5(e), sellers who delegate recordkeeping responsibilities to a telemarketer must also retain access rights to those records so the seller can produce responsive records in the event it has hired a telemarketer overseas.

A. Recordkeeping Requirements

The Final Rule requires sellers and telemarketers to maintain additional records that, in the Commission's law enforcement experience, are difficult for the Commission to obtain but are necessary to ensure compliance with the TSR.

The Final Rule also clearly defines the information telemarketers or sellers must retain to comply with existing provisions and specifies the records needed to assert an exemption or affirmative defense to the TSR. In this section, the Commission details the public comments it received in response to each proposed amendment to the recordkeeping requirements, and the Commission's response.

The Telemarketing Act authorizes the Commission to include recordkeeping requirements in the Rule. 15 U.S.C. 6102(a)(3).

1. Section 310.5(a)(1)—Substantially Different Advertising Materials and Each Unique Prerecorded Message

Section 310.5(a)(1) currently requires sellers and telemarketers to keep records of “all substantially different advertising, brochures, telemarketing scripts, and promotional materials.” The 2022 NPRM proposed modifying Section 310.5(a)(1) to require retention of a copy of each unique robocall, including each call a telemarketer makes using soundboard technology.

The 2022 NPRM also proposed changing the records retention period under this provision from two years to five years from the date that the records are no longer in use.

See infra

Section III.A.10 (Time Period to Keep Records).

The Commission received five public comments addressing this proposal. The Enterprise Communications Advocacy Coalition (“ECAC”) and Sirius XM Radio (“Sirius”) object to this proposed amendment, stating it would be overly burdensome. Sirius states requiring the retention of each unique robocall would “generate massive amounts of data that then needs to be searched, analyzed, secured, and retained, and will be extremely burdensome.”

ECAC claims robocalls are “typically stored as .wav files that are significantly larger than text files. While storage costs

may

have decreased over time, the expense associated with the storage of these large .wav files will be a significant burden on lawful telemarketers.”

Sirius 34-18 at 8.

ECAC 34-22 at 2.

The National Association of Attorneys General (on behalf of 43 State Attorneys General) (“NAAG”), Professional Association for Customer Engagement (“PACE”), and World Privacy Forum (“WPF”) all state they generally support this amendment.

PACE further states their members “often keep copies of [each unique robocall] despite the TSR currently not requiring businesses to do so. Retaining these records will protect American consumers, who receive countless prerecorded messages, and protect companies, who will be able to prove compliance with the TSR.”

NAAG 34-20 at 3-4; PACE 33-15 at 2; WPF 34-21 at 2.

PACE 33-15 at 2.

The Commission is not persuaded by ECAC's and Sirius' arguments. In the Commission's experience, robocalls are typically of short duration and the file sizes are minimal. As ECAC notes, the cost of storage may be decreasing every

year. Moreover, the Commission proposed requiring a copy of each

unique

robocall, not

every

robocall used. Finally, as some commenters have stated,

businesses typically keep these records in the ordinary course of business. In the FTC's law enforcement experience, records of each unique prerecorded message are necessary for the Commission to ensure compliance with the TSR, and requiring retention of each unique robocall should not impose an undue burden.

See, e.g.,

PACE 33-15 at 2.

With respect to calls utilizing soundboard technology, the Commission sought comment on the burden that may be imposed by requiring sellers or telemarketers to keep each unique prerecorded message involving the use of soundboard technology, including how many telemarketers employ soundboard technology in telemarketing, how many calls they make using soundboard technology, the average duration of each call, and whether the telemarketer typically keeps recordings of such calls in the ordinary course of business.

The FTC's law enforcement experience demonstrates the use of soundboard technology is ongoing. The Commission did not receive any public comments regarding this issue. WPF did note, however, the Commission should be mindful of using technological language that is broad enough to encompass a variety of digital and other sound technologies and recommended the use of the term “digital soundboard” in lieu of “soundboard technology.”

In light of this recommendation, the Commission states that the term “prerecorded message” includes telemarketing calls made using “digital soundboard” rather than “soundboard technology” to make clear the term includes any digital or sound technologies that sellers or telemarketers use to convey a verbal message to a consumer in telemarketing. Some digital soundboard technologies allow a seller or telemarketer to mimic or clone the voice of a specific individual and calls using this technology would be subject to this provision of the TSR to the extent that the mimic or cloning creates a prerecorded message that is used in telemarketing.

2022 NPRM, 87 FR at 33689.

WPF 34-21 at 2.

WPF also “encourage[s] the FTC to require telemarketers to keep a copy of the full range of materials involved in the advertising campaign, including transcripts.”

The Commission notes the TSR's recordkeeping provisions already require telemarketers and sellers to retain a copy of each substantially different advertising, brochure, telemarketing script, and promotional material.

The 2022 NPRM simply clarified telemarketing scripts include robocall and upsell scripts, and the failure to keep one substantially different version of each record under Section 310.5(a)(1) is a violation of the TSR.

Id.

16 CFR 310.5(a)(1).

2022 NPRM, 87 FR at 33684.

2. Section 310.5(a)(2)—Call Detail Records

The 2022 NPRM proposed adding Section 310.5(a)(2) to require retention of call detail records, including, for each call a telemarketer places or receives: the calling number; called number; time, date, and duration of the call; and the disposition of the call, such as whether the call was answered, dropped, transferred, or connected. For transfers, the record included the phone number or IP address the call was transferred to and the company name, if transferred to a company different from the seller or telemarketer that placed the call. The 2022 NPRM also required the retention of other records regarding the nature and purpose of each call including: (1) the telemarketer who placed or received each call; (2) the seller or charity for which the telemarketing call is placed or received; (3) the good, service, or charitable purpose that is the subject of the call; (4) whether the call is to a consumer or business, utilizes robocalls, or is an outbound call; and (5) the telemarketing script(s) and robocall (if applicable) that was used in the call. Finally, the 2022 NPRM required retention of records regarding the caller ID transmitted for outbound calls, including the name and phone number transmitted, and records of the telemarketer's authorization to use that phone number and name.

The Commission received eight comments regarding this proposal. ECAC,

the National Federation of Independent Businesses (“NFIB”),

100

and Sirius

101

objected, stating that compliance with this provision would impose enormous expense on businesses engaged in lawful telemarketing.

102

ECAC states its members “make hundreds of millions of calls each year” and “[f]actoring in the size of a CDR file” multiplied by the number of calls its members make each year, “the expense associated with this retention . . . would be massive.”

103

ECAC also argues that, while its members likely keep information regarding the nature and purpose of the calls in the ordinary course of business, associating particular scripts with a particular call is unworkable because “well-trained telemarketers are able to deviate from scripts or not use them at all” and “scripts are constantly changing and evolving to reflect consumer questions and concerns.”

104

ECAC 34-22 at 3.

100

NFIB 33-4 at 4-5.

101

Sirius 34-18 at 7.

102

OCUL also generally objects to the proposed recordkeeping requirements as overly burdensome, stating it would require a significant investment to collect and retain new data points in a constricted time frame. OCUL 34-19 at 2.

Other commenters generally objected to the recordkeeping amendments, arguing that they require telemarketers and sellers to retain more information than they would in the ordinary course of business and are “contrary to data minimization principles” articulated by the Commission elsewhere.

See, e.g.,

Sirius 34-18 at 2, 4-6; NFIB 33-4 at 3-4. The Commission interprets these arguments to refer to the new requirement that sellers and telemarketers retain call detail records. NFIB lists other categories in their comment as examples of burden, such as records of established business relationships, customer lists, consent, and entity-specific DNCs or versions of the FTC's DNC Registry. NFIB 33-4 at 3-4. None of these categories, however, is new, and the TSR has always required telemarketers and sellers to keep these records.

See, e.g.,

16 CFR 310.5(a)(3) and (5) (requiring records of consent and customer lists); 310.4(b)(3)(iii) and (iv) (requiring records of an entity-specific DNC or a version of the FTC's DNC Registry that a seller or telemarketer used to qualify for the safe harbor provisions);

see also

2015 TSR Amendments, 80 FR at 77554 (stating the seller or telemarketer bears the burden of demonstrating the seller has an existing relationship with a customer whose number is on the DNC).

The Commission notes that the call detail records primarily reflect sellers' and telemarketers' business practices rather than implicate any consumer information. The only new items of consumer information that sellers and telemarketers are required to retain under the new recordkeeping amendments are a consumer's phone number and the option to retain the consumer's last known email address rather than a physical address.

See

proposed amendments under Sections 310.5(a)(2) (call detail records); (a)(3) (prize recipients); (a)(4) (customer records); and (a)(6) (previous donor). As explained in the 2022 NPRM, the Commission believes that telemarketers and sellers likely retain this information in the ordinary course of business. 2022 NPRM, 87 FR at 33684-85. Furthermore, they must already retain consumers' phone numbers to comply with the entity-specific DNC requirements. As discussed in additional detail in Section III.A.3—Prize Recipients and Customer Records, the Commission will prohibit use of any records created to comply with the TSR's recordkeeping requirements for any other purpose.

103

ECAC 34-22 at 3.

104

Id.

at 4. The Commission does not find ECAC's argument persuasive. Even if a telemarketer deviates from a script, fails to use the script, or the company constantly updates the scripts, there is still

script associated with a particular call and in the Commission's law enforcement experience, telemarketers typically retain that information in the ordinary course of business.

Sirius argues the Commission's “overly prescriptive” approach would impair a business's ability to adapt to

changing market conditions and a company's ability to innovate. It would also impose “significant administrative burdens” and “substantial transactional costs” on sellers and telemarketers to establish contracts and systems to capture the information requested.

105

And NFIB argues sellers and telemarketers would “incur substantial costs to: (1) establish in-house, or purchase from others, systems designed and built to accomplish the newly-mandated, extraordinarily-detailed recordkeeping, and (2) employ personnel to maintain and operate the systems.”

106

At minimum, Sirius requests the Commission allow a “phase-in” period of a few years to allow companies sufficient time to adjust agreements, implement new systems, and build compliance plans.

107

105

Sirius 34-18 at 7-8.

106

NFIB 33-4 at 5.

107

Sirius 34-18 at 8.

The Electronic Privacy and Information Center (on behalf of 13 advocacy groups) (“EPIC”), NAAG, WPF, and an individual consumer, all support the proposed amendments.

108

NAAG echoed the Commission's law enforcement experience and agreed the amendments are necessary to ensure compliance with the TSR and should not be overly burdensome to create and maintain these records.

109

EPIC stated they “strongly support” the amendment which rectifies “a major weakness in the existing rule” of requiring retention of only “prizes awarded and sales” which are of “little use in identifying violations of the do-not-call rule” without accompanying records of calls.

110

EPIC particularly applauded the amendment requiring retention of any caller ID information transmitted and the telemarketer's authorization to use that caller ID because spoofing has undermined consumers' faith in the U.S. telecommunication system, making it harder for emergency calls to reach consumers.

111

WPF and NAAG also commented that requiring records of call transfers and the identity of the recipient of those transfers is particularly important because it is “otherwise impossible to trace fraudulent activity” when transfers typically appear as a separate inbound call to the recipient in the voice provider's call records.

112

The individual consumer stated retaining call detail records was necessary to enforce the TSR and “a fair compromise” in comparison to requiring recordings of all telemarketing transactions which would be overly burdensome to small businesses.

113

108

Cassady 34-2; EPIC 34-23 at 4; NAAG 34-20 at 5; WPF 34-21 at 2.

109

NAAG 34-20 at 5.

110

EPIC 34-23 at 4.

111

Id.

112

WPF 34-21 at 2; NAAG 34-20 at 6.

113

Cassady 34-2.

PACE notes some of its members are able to maintain the requested records and already do so in the ordinary course of business, but the proposed amendments may not be technically feasible for all members, particularly those who do not use software to engage in telemarketing but use employees in retail locations.

114

PACE members raised particular concerns about the technical capacity to record “the duration of the call, disposition of the call, and to whom the call was transferred.”

115

114

PACE 33-15 at 2.

115

Id.

As explained in the 2022 NPRM, the proposed addition of Section 310.5(a)(2) is necessary for the Commission to determine whether the TSR applies and which sections of the TSR the seller and telemarketer must comply with for a telemarketing campaign.

116

The Commission is cognizant this amendment will require some administrative costs in establishing a new recordkeeping system. In the 2022 NPRM, the Commission provided an estimate of those costs and invited comment about those estimates,

117

but did not receive any public comment specifically disputing its estimates. Nevertheless, in determining whether to implement the proposed amendments, the Commission considers whether the proposed amendments strike an appropriate balance between the goal of protecting consumers from deceptive or abusive telemarketing and the harm from imposing compliance burdens.

116

2022 NPRM, 87 FR at 33680-82, 33684.

117

2022 NPRM, 87 FR at 33690-91.

To address the concerns raised by the public comments, the Commission will provide a grace period of one hundred and eighty days from the date Section 310.5(a)(2) is published in the

Federal Register

for sellers and telemarketers to implement any new systems, software, or procedures necessary to comply with this new provision. Furthermore, the Commission will modify this amendment and provide an exemption for calls made by an individual telemarketer who manually enters a single telephone number to initiate a call. For such calls, the seller or telemarketer need not retain records of the calling number, called number, date, time, duration, and disposition of the telemarketing call under Sections 310.5(a)(2)(vii) and (x) but must otherwise comply with the other requirements under Section 310.5(a)(2). Making this modification should alleviate the general concerns commenters have raised regarding the feasibility and burden of creating and retaining call detail records. The Commission is not persuaded that requiring sellers and telemarketers to retain call detail records of their telemarketing campaigns would impose an undue burden if the seller or telemarketer can use automated mechanisms to conduct their campaigns instead of placing calls manually. In those situations, as PACE notes, the seller or telemarketer already maintains similar call detail records in the ordinary course of business.

118

PACE 33-15 at 2.

Nor is the Commission persuaded by Sirius' arguments that the proposed amendments are overly prescriptive and requiring retention of these records would stifle innovation. The proposed amendments merely identify the information sellers and telemarketers must retain. It does not dictate the form or “look and feel” of business records as Sirius' suggests. As discussed in more detail in Section III.A.11—Format of Records, the Commission believes the amendment to Section 310.5(a)(2) strikes the appropriate balance between providing specificity about the information sellers and telemarketers are required to keep without prescribing how it must do so.

EPIC and WPF's comments also suggested additional modifications to Section 310.5(a)(2). WPF requested the Commission consider requiring sellers and telemarketers to retain records of their use of voice biometrics in call centers, including whether voice biometrics recognition or voice emotion analysis software was used, whether a consumer's records were marked with any inferences from any voice biometric analysis, and whether that analysis was shared with any other parties.

119

The FTC's Policy Statement on Biometric Information notes significant privacy concerns regarding the collection and use of biometric information and the possibility such practices may be considered an “unfair” practice under Section 5 of the FTC Act.

120

Furthermore, the collection and use of such information might be considered abusive and violative of a consumer's right to privacy, which Congress gave the Commission the power to regulate

with respect to telemarketing.

121

Although the Commission does not believe it has the evidence now either to require the retention of voice biometric recognition data in telemarketing or place restrictions on its use, it will continue to monitor voice biometric use in telemarketing.

119

WPF 34-21 at 2.

120

FTC, Policy Statement of the Federal Trade Commission on Biometric Information and Section 5 of the Federal Trade Commission Act (May 18, 2023),

available at https://www.ftc.gov/system/files/ftc_gov/pdf/p225402biometricpolicystatement.pdf

(last visited Jan 24, 2024).

121

15 U.S.C. 6102(a)(1).

EPIC requested the Commission consider requiring telemarketers and sellers to also retain records of campaign IDs for each call, arguing it is necessary to tie the call detail records to a particular campaign.

122

The Commission recognizes the concern EPIC has raised and addressed it by requiring sellers and telemarketers to retain records that identify,

for each call,

the nature and purpose of that call, such as the seller or soliciting charity for whom the telemarketing call was placed, the good or service sold or the charitable purpose of the call, and the telemarketing script or the robocall recording that was used. This information is at least as comprehensive as a campaign ID. The Commission believes specifying the substantive information sellers and telemarketers are required to retain, rather than identifying a particular data category such as campaign ID that may be subject to change over time, will more effectively enable the Commission and other regulators to enforce the TSR.

122

EPIC 34-23 at 5.

Finally, EPIC requested the Commission consider requiring sellers and telemarketers to keep records of the originating or gateway telecommunications provider for each campaign, rather than any service provider the telemarketer is in a business relationship with, as the NPRM proposes.

123

The Commission believes requiring retention of the call detail records and records of the seller or telemarketer's service providers strikes an appropriate balance between the Commission's interest in having sufficient information to enforce the TSR and industry's concerns regarding burden.

123

Id.

3. Sections 310.5(a)(3) and (4)—Prize Recipients and Customer Records

The TSR currently requires telemarketers and sellers to retain the “name and last known address” of each prize recipient.

124

The 2022 NPRM proposed requiring sellers and telemarketers to also retain the last known telephone number and physical or email address for each prize recipient. The Commission received three comments regarding this proposal, and all were supportive of the amendment. PACE states it believes this was a “prudent measure, and many telemarketers and sellers that reward prizes likely already comply with this proposal.”

125

NAAG agrees, stating the requirement “reflects current business practices” and telemarketers and sellers “likely keep such information in the regular course of their business.”

126

WPF concurs, but also suggests the Commission consider requiring sellers and telemarketers to retain this data in an encrypted state.

127

124

16 CFR 310.5(a)(2).

125

PACE 33-15 at 4.

126

NAAG 34-20 at 9.

127

WPF 34-21 at 3.

With respect to “Customer Records” under Section 310.5(a)(4), the TSR requires sellers or telemarketers to retain the “name and last known address of each customer, the goods or services purchased, the date such goods or services were shipped or provided, and the amount paid by the customer for the goods or services.”

128

Similarly, the Commission proposed modifying this provision to account for current business practices and require the retention of the customer's last known telephone number and the customer's last known physical address or email address. The Commission also proposed adding the date the consumer purchased the good or service to account for the new requirement that telemarketers and sellers keep records of each consumer with whom a seller intends to assert it has an EBR.

129

128

16 CFR 310.5(a)(3).

129

2022 NPRM, 87 FR at 33686.

The Commission received four comments regarding this amendment. NAAG and PACE support this proposal, and agree it is necessary to establish EBR and likely that telemarketers and sellers already retain this information in the ordinary course of business.

130

EPIC and WPF, however, do not support this amendment unless the Commission concurrently passes commensurate privacy protections.

131

130

NAAG 34-20 at 9; PACE 33-15 at 5.

131

EPIC 34-23 at 15; WPF 34-21 at 3. When consumer data is transferred as part of the sale, assignment, or change in ownership, dissolution, or termination of the business, EPIC also urges the Commission to require a successor to acknowledge liability for any TSR violations regarding the calls that those records document. EPIC 34-23 at 15-16. EPIC argues that this will deter a fraudulent seller or telemarketer from shutting their businesses and selling their assets, including customer lists, to a sham successor as a means of evading liability. The Commission does not believe such an amendment is necessary at this time.

The Commission notes that, as it recognized in the 2022 NPRM, requiring sellers and telemarketers to retain additional personal identifying information (such as consumers' names, phone numbers, and either their physical or email address, in combination with goods or services they purchased) may raise privacy concerns.

132

The Commission emphasizes once more that sellers and telemarketers have an obligation under Section 5 of the FTC Act to adhere to the commitments they make about their information practices and take reasonable measures to secure consumers' data.

133

132

2022 NPRM, 87 FR at 33686.

133

See generally

Federal Trade Commission 2020 Privacy and Data Security Update,

available at https://www.ftc.gov/system/files/documents/reports/federal-trade-commission-2020-privacy-data-security-update/20210524_privacy_and_data_security_annual_update.pdf

(last visited Dec. 11, 2023).

But the Commission also recognizes the concerns raised by the comments. It agrees additional protections, similar to those it incorporated into the TSR when it prohibited the sale or use of any lists established or maintained to comply with the TSR's DNC Registry or entity-specific DNC,

134

should also apply to any lists of consumers that sellers or telemarketers create or maintain in order to comply with the amended recordkeeping provisions.

134

2003 TSR Amendments, 68 FR at 4645.

Thus, the Commission will amend Section 310.4(b)(2) to state it is also an abusive telemarketing act or practice and a violation of the TSR for any person to sell, rent, lease, purchase, or use any list established to comply with Section 310.5. Amending the TSR to specify that the sale or use of a list created to comply with the recordkeeping provisions is consistent with the Telemarketing Act's emphasis on privacy protection. The Act authorizes the Commission to regulate “calls which the reasonable consumer would consider coercive or abusive of such consumer's right to privacy.”

135

The Commission agrees with commenters that consumers would consider it coercive and an abuse of their right to privacy if telemarketers or sellers are allowed to use any consumer information they collect and maintain under the TSR's recordkeeping provisions for any other purpose.

135

15 U.S.C. 6102(a)(3)(A);

see also

2002 NPRM, 67 FR at 4510-11.

4. Section 310.5(a)(5)—Established Business Relationship

The 2022 NPRM proposed adding Section 310.5(a)(5) to further clarify what records a seller must keep to “demonstrate that the seller has an established business relationship” with a consumer. Specifically, for each consumer with whom a seller asserts it

has an established business relationship, the seller must keep a record of the name and last known phone number of that consumer, the date the consumer submitted an inquiry or application regarding that seller's goods or services, and the goods or services inquired about.

136

A seller may also show it has an established business relationship with a consumer if that consumer purchased, rented, or leased the seller's goods or services or had a financial transaction with the seller during the 18 months before the date of the telemarketing call. The Commission is modifying the existing recordkeeping provisions to state that records of existing customers should also include the date of the financial transaction to support the existence of an EBR under these circumstances.

See

Section III.A.3 (Prize Recipients and Customer Records).

The Commission received five comments addressing this proposed amendment. EPIC,

137

NAAG, and PACE all support this amendment, agreeing it is necessary for a seller to establish a business relationship with a consumer and it is likely businesses already retain such records.

138

The Ohio Credit Union League (“OCUL”) made a general objection stating it was unclear when a credit union member's business relationship begins or ends, while Sirius objected on the grounds “it was unnecessary” since “sellers and telemarketers must already collect information sufficient to demonstrate an established business relationship to use as an affirmative defense.”

139

137

EPIC also urged the Commission to modify the EBR requirements to include consumers who purchased a good or service from the seller. EPIC 34-23 at 14. The Commission does not believe this is necessary since sellers and telemarketers must already keep records of customers, which includes consumers who purchased a good or service from the seller. 16 CFR 310.5(a)(3). Furthermore, as discussed in Section III.A.3—Prize Recipients and Customer Records above, the Commission is amending the customer records provision to include the date the consumer purchased the good or service to account for the new EBR recordkeeping requirements.

EPIC also urges the Commission to consider clarifying that EBR may only be asserted as an affirmative defense if the seller or telemarketer intentionally called the consumer

because

it has an established business relationship with the consumer. EPIC 34-23 at 15. The TSR does not currently contemplate the use of EBR in this manner but rather allows telemarketers and sellers to call a consumer if the seller can demonstrate it has an EBR with that consumer and otherwise meets other requirements under the TSR. Making any modifications to this framework would require additional consideration.

138

EPIC 34-23 at 15; NAAG 34-20 at 7; and PACE 33-15 at 2-3.

139

OCUL 34-19 at 2; Sirius 34-18 at 5.

The Commission is not persuaded by either OCUL's or Sirius's objections. As the Commission noted in its 2022 NPRM, this requirement only applies if a seller intends to assert it has an established business relationship with a consumer.

140

As Sirius notes, sellers must already collect this information in the ordinary course of business and thus the amendment should not impose an additional burden.

140

2022 NPRM, 87 FR at 33685.

5. Section 310.5(a)(6)—Previous Donor

Similar to the EBR requirements described above, the Commission also proposed adding Section 310.5(a)(6) to clarify that, if a telemarketer intends to assert that a consumer is a previous donor to a particular charity,

141

the telemarketer must keep a record, for each such consumer, of the name and last known phone number of that consumer, and the last date the consumer donated to the particular charity. The Commission received two comments on this proposed amendment. NAAG agreed with this proposed amendment, stating it was akin to the proposed amendment for EBR and should not “impose any undue burden.”

142

WPF concurred stating the new recordkeeping provision will “serve to clarify the exemption for charitable donations.”

143

141

The Commission also proposed adding a new definition of “previous donor.”

See supra

Section II.C.

142

NAAG 34-20 at 7.

143

WPF 34-21 at 1.

6. Section 310.5(a)(8)—Records of Consent

Section 310.5(a)(5) of the TSR requires sellers or telemarketers to keep records of “[a]ll verifiable authorizations or records of express informed consent or express agreement required to be provided or received under this Rule.” The Commission proposed modifying this provision to clarify what constitutes a complete record of consent sufficient for a telemarketer or seller to assert an affirmative defense.

144

It wanted to make clear that common practices previously employed by telemarketers or sellers, such as maintaining a list of IP addresses and timestamps as proof of consent, are insufficient to demonstrate that a consumer has, in fact, provided consent to receive robocalls or receive telemarketing calls when the consumer has registered her phone number on the DNC Registry.

145

144

2022 NPRM, 87 FR 33686-87.

145

Id.

at 33681.

Specifically, the 2022 NPRM proposed that for each consumer from whom a seller or telemarketer states it has obtained consent, sellers or telemarketers must maintain records of that consumer's name and phone number, a copy of the consent requested in the same manner and format it was presented to that consumer, a copy of the consent provided, the date the consumer provided consent, and the purpose for which consent was given and received.

146

For a copy of the consent provided under Sections 310.3(a)(3), 310.4(a)(7), 310.4(b)(1)(iii)(B)(1), or 310.4(b)(1)(v)(A), a complete record must also include all of the requirements outlined in those respective sections.

147

The 2022 NPRM also stated if consent were requested verbally, a copy of the telemarketing script of the request would suffice as a copy of the consent requested, and a recording of the conversation was not necessary unless another provision of this Rule required it.

148

146

Id.

at 33686-87.

147

Id.

For example, a copy of the consent provided to receive prerecorded sales messages under Section 310.4(b)(1)(v)(A) must evidence, in writing: (1) the consumer's name, telephone number, and signature; (2) that the consumer stated she is willing to receive prerecorded messages from or on behalf of a specific seller; (3) that the seller obtained consent only after clearly and conspicuously disclosing that the purpose of the written agreement is to authorize that seller to place prerecorded messages to that consumer; and (4) that the seller did not condition the sale of the relevant good or service on the consumer providing consent to receive prerecorded messages. The TSR also states that a seller must obtain consent from the consumer, and the Commission reiterates that this means a seller must obtain consent directly from the consumer and not through a “consent farm.”

148

2022 NPRM, 98 FR at 33686-87.

The Commission received four comments regarding this proposed amendment. EPIC, NAAG, PACE, and WPF all generally support the proposed amendment.

149

PACE states it “welcomes these provisions in order to better ascertain what records are necessary to assert an affirmative defense” and the proposed records “flow logically from the TSR.”

150

149

See

EPIC 34-23 at 10-11; NAAG 34-20 at 10; PACE 33-15 at 5; and WPF 34-21 at 3.

150

PACE 33-15 at 5.

But EPIC, NAAG, and WPF also submitted suggestions on additional amendments, arguing the Commission should implement more stringent requirements. WPF suggests the Commission consider updating how a consumer “may withdraw or revoke consent, and create responsibilities for telemarketers to provide a clear opportunity to revoke or consent in each communication.”

151

EPIC asks the Commission to specify that in identifying the “specific seller” from whom a consumer has provided written express agreement to receive robocalls, the telemarketer or seller must retain records of the “legal name of the seller whose goods [or] services are being promoted.”

152

EPIC believes this will

“reduce obfuscation” on the “scope of the consumer's consent” and identify the proper defendant if “legal action is necessary.”

153

151

WPF 34-21 at 3.

152

EPIC 34-23 at 10-13.

153

Id.

The Commission believes WPF's recommendation is primarily applicable to transactions involving a negative option feature

154

where a consumer may wish to cancel a subscription plan and revoke billing authorization. The Commission published a Notice of Proposed Rulemaking regarding the Negative Option Rule (“Negative Option NPRM”) on April 24, 2023, which also addresses telemarketing transactions.

155

Because the proposed Negative Option Rule would apply a more comprehensive and consistent framework for negative option transactions regardless of the sales medium, the Commission declines to make any further amendments to the TSR to address WPF's comment at this time.

154

A negative option feature is defined as “an offer or agreement to sell or provide any goods or services, a provision under which a customer's silence or failure to take an affirmative action to reject goods or services or to cancel the agreement is interpreted by the seller as acceptance of the offer.” 16 CFR 310.2(w).

155

88 FR 24716 (Apr. 24, 2023).

With respect to EPIC's request regarding the identification of a “specific seller,” the Commission stated in the Statement of Basis and Purpose finalizing the TSR amendments prohibiting robocalls that it used the term “specific seller” to “make it clear that prerecorded calls may be placed only by or on behalf of the specific seller identified in the agreement.”

156

The Commission wanted to ensure any agreement to receive robocalls would be limited to the seller identified in the agreement and could not be transferrable to any other party.

157

Requiring companies to use the legal entity name to identify the specific seller in the written agreement is a natural extension of the Commission's intention in using the term “specific seller.” Thus, the Commission states now that in identifying the specific seller in any written agreement, the seller should use its legal entity name to make clear any agreement to receive robocalls is limited to that specific legal entity. The Commission also states the burden will be on the seller or telemarketer to ensure and prove a consumer understands which specific legal entity would be permitted to send the consumer robocalls. In circumstances where the legal entity's name may not be recognizable to consumers, perhaps because the consumers would recognize a brand or product name but not the legal entity name, the seller or telemarketer may need to take extra steps to ensure the consumer has knowingly agreed to receive robocalls from the specific seller.

156

2008 TSR Amendments 73 FR at 51186;

see also

Section III.A.2 (Call Detail Records).

172

EPIC 34-23 at 8.

The Commission clarifies that service providers referenced under this provision include any entity that provides “digital soundboard” technology rather than “soundboard technology platforms,” to make clear that sellers and telemarketers must retain records of any entity that provides any digital or sound technologies that sellers or telemarketers use to convey a verbal message to a consumer in telemarketing. This includes, for example, service providers that telemarketers or sellers use to mimic or clone the voice of an individual to deliver live and prerecorded outbound telemarketing calls. With respect to EPIC's concerns of ensuring service providers are also complying with the TSR, as discussed above in Section III.A.2—Call Detail Records, the Commission believes it is not necessary to require records of the service provider used per telemarketing campaign. Requiring retention of all call detail records

and

records of the service providers used in making outbound telemarketing calls would be sufficient for the Commission and other law enforcement agencies to enforce the TSR and strikes an appropriate balance against industry's concerns regarding burden.

PACE requests the Commission limit this provision to the service providers with which sellers and telemarketers have a direct contractual relationship rather than a “business relationship.”

173

PACE argues it would be unreasonable to expect a seller to maintain records of its telemarketers' voice providers when the contractual relationship is between the telemarketer and voice provider.

174

PACE also asks the Commission limit the five year retention time period from the date the contract expires rather than when the telemarketing activity covered by the contract ceases.

175

PACE expressed concerned one party to the contract might cease the telemarketing activity without informing the other party and it would be difficult to identify when the retention period is triggered.

176

173

PACE 33-15 at 3.

174

Id.

175

Id.

176

Id.

The Commission recognizes the potential for uncertainty in the scenario PACE raises and will modify the recordkeeping requirements accordingly to require retention of any records under this provision for five years from the date the contract expires.

177

With respect to PACE's request to limit the recordkeeping requirements to those service providers with whom sellers or telemarketers have a direct contractual relationship, the Commission is not persuaded that requiring records of service providers with which they have a business relationship would cause

additional burden. As explained in more detail in Section III.A.14—Compliance Obligation, the Commission will allow sellers and telemarketers to allocate recordkeeping responsibilities between themselves. In the scenario that PACE raises, a seller can simply require their telemarketer to retain records of all the service providers it uses to make outbound telemarketing calls on the seller's behalf.

177

If, after the end of a fixed term contract, a service provider continues to provide services and the telemarketer or seller continues to pay for those services, the Commission will consider the contract extended until performance ceases.

8. Sections 310.5(a)(10)—Entity-Specific DNC List

The 2022 NPRM also proposed requiring telemarketers and sellers to maintain for five years records related to the entity-specific DNC list and its corresponding safe harbor provision under Section 310.4(b)(3)(iii).

178

Specifically, the Commission proposed requiring telemarketers and sellers to retain records of: (1) the consumer's name, (2) the phone number(s) associated with the DNC request, (3) the seller or charitable organization from which the consumer does not wish to receive calls, (4) the telemarketer that made the call; (5) the date the DNC request was made; and (6) the good or service being offered for sale or the charitable purpose for which contributions are being solicited.

178

2022 NPRM, 87 FR at 33686.

The Commission received four comments on this proposal. NAAG, PACE, and WPF, generally support the provision, noting that businesses likely retain this information in the ordinary course of business, while ECAC raised concerns.

179

ECAC agrees that businesses likely keep most of the data listed in the proposed provision, but stated the requirements should not include retention of consumer phone numbers or records of the purpose of the call (

e.g.,

the good or service offered for sale or the charitable purpose of contributions solicited) because both are burdensome to retain and irrelevant to the entity-specific TSR provisions.

180

Instead, ECAC argues the Commission should modify the entity-specific DNC requirements so it prohibits calls to specific numbers rather than specific people, similar to how the DNC Registry is applied.

181

PACE also requested the Commission clarify that the new entity-specific DNC recordkeeping provision requires retention of the telemarketing

entity

that made the call rather than the

individual

telemarketer.

182

179

ECAC 34-22 at 4; NAAG 34-20 at 8; PACE 33-15 at 3-4; WPF 34-21 at 3.

180

ECAC 34-22 at 4.

181

Id.

182

PACE 33-15 at 4.

The Commission clarifies that the new recordkeeping provision requires retention of the identity of the telemarketing company that made the call and not the individual telemarketer. This requirement is particularly important for sellers or charitable organizations who engage multiple telemarketing entities to sell their good or service or seek a charitable contribution through telemarketing. Sellers or charities already should know which telemarketing entity logged the consumer's request to cease receiving calls on their behalf and ensure all their telemarketers abide by that request.

Similarly, when a telemarketer engages in telemarketing on behalf of multiple sellers or charitable organizations, it is important to require the retention of records of the purpose of the call any time a consumer asks a telemarketer to add them to the entity-specific DNC list. Since the entity-specific DNC prohibition is seller or charitable organization specific, telemarketers already should retain this information in the ordinary course of business because telemarketers must keep track of which seller on whose behalf they cannot contact specific consumers.

With respect to ECAC's concerns that retaining consumer phone numbers is irrelevant and overly burdensome, the Commission notes the safe harbor provision for the entity-specific DNC list is phone-number based and not based on a consumer's name. Section 310.4(b)(3) states that a seller or telemarketer shall not be liable for violating the entity-specific DNC provisions if, among other things, they maintain and record a “list of telephone numbers the seller or charitable organization may not contact, in compliance with [the entity-specific DNC provision.]”

183

Telemarketers must already retain a consumer's phone number in the ordinary course of business to comply with the TSR; including it in the new recordkeeping provision would not impose additional burden on businesses.

183

16 CFR 310.4(b)(3)(iii).

9. Section 310.5(a)(11)—DNC Registry

The 2022 NPRM also proposed requiring telemarketers and sellers to maintain, for five years, records of every version of the FTC's DNC Registry the telemarketer or seller downloaded in implementing the process referenced in the safe harbor provision of Section 310.4(b)(3)(iv).

184

2022 NPRM, 87 FR at 33686.

The Commission received four comments on this provision. NAAG, PACE, and WPF generally support the proposed provision, but also request some clarifications or modifications, while ECAC generally objects to the requirement.

185

WPF notes it “strongly support[s]” the proposed changes, noting they would ensure the “integrity of the Do Not Call Registry.”

186

ECAC argues the Commission should not require records of every version of the DNC Registry used because it “imposes significant costs and burdens” that “greatly exceed any marginal benefit” to the Commission, particularly when many of its members outsource scrubbing responsibilities to third parties and may never download the DNC Registry in the first place.

187

185

ECAC 34-22 at 4; NAAG 34-20 at 8; PACE 33-15 at 3-4; WPF 34-21 at 3.

186

WPF 34-21 at 3.

187

ECAC 34-22 at 4.

WPF requests the Commission require telemarketers to keep records of how many times they accessed the DNC Registry or parts of the DNC Registry.

188

PACE requests the Commission clarify how it believes sellers and telemarketers would comply with the proposal that they retain records of “every version of the registry they have downloaded.”

189

PACE states it would be “redundant” if the Commission is requiring businesses to “maintain separate versions of the registry apart from the up-to-date one” since most businesses only “scrub against the current version” of the registry in the ordinary course of business.

190

PACE would support requiring them to “document the version of the registry they used” since doing so would reduce “redundancy and data storage costs associated with keeping expired registries.”

191

188

WPF 34-21 at 3.

189

PACE 33-15 at 4.

190

Id.

191

Id.

Given the objections raised, the Commission will modify this provision to clarify that sellers and telemarketers need not keep every version of the DNC Registry they accessed to comply with the TSR's safe harbor rules. Instead, sellers and telemarketers must retain records of which version they used by keeping records of: (1) the name of the entity which accessed the registry; (2) the date the DNC Registry was accessed; (3) the subscription account number that was used to access the registry; and (4) the telemarketing campaign(s) for which it was accessed. Amending this provision to retain this information will address ECAC's concerns that the seller or telemarketer may use a third-party service to access the DNC Registry, and PACE's concern that retaining the actual version of the DNC Registry would be

redundant and burdensome. It would also address WPF's request that sellers and telemarketers should keep records of the number of times they access the DNC Registry. Presumably, sellers and telemarketers only access the DNC Registry to ensure compliance with the TSR's DNC prohibitions since accessing the DNC Registry for any other purpose would be a violation of the TSR.

192

16 CFR 310.4(b)(2).

10. Time Period To Keep Records

The Commission proposed changing the time period that telemarketers and sellers must keep records from two years to five years from the date the record is made, except for Sections 310.5(a)(1) and (a)(9),

193

where the Commission proposed requiring retention for five years from the date that records covered by those sections are no longer in use. The Commission received nine comments on this proposal.

194

EPIC, NAAG, and WPF support the proposal, citing as rationales for their support the amount of time necessary to complete an investigation of TSR violations and that telemarketers fail to comply with litigation holds that are issued while investigations are pending.

195

ECAC, NFIB, OCUL, PACE, Sirius, and the US Chamber of Commerce (“Chamber”) all object, raising burden concerns.

196

PACE stated the Commission cannot assume its proposal would not be unduly burdensome based on the fact that data storage costs have decreased since 2014.

197

This is particularly true for small businesses, according to PACE, when the Commission is simultaneously expanding the number of records that must be retained and the length of time those records must be retained.

198

Sirius and OCUL also argue the FTC should not require retention of records “beyond the agency's statute of limitations.”

199

Sirius argues the appropriate statute of limitations is three years,

200

and OCUL argues that while the TSR does not “specify a statute of limitations,” courts will “apply the statute of limitations of the state where the case is filed,” which is two years in Ohio.

201

193

The records covered by these two sections include advertising materials and a list of the service providers who assisted in outbound telemarketing.

See supra

Sections III.A.1 (Substantially Different Advertising Materials) and III.A.7 (Other Service Providers).

194

2022 NPRM, 87 FR at 33686.

195

EPIC 34-23 at 4-5; NAAG 34-20 at 8-9; WPF 34-21 at 3.

196

ECAC 34-22 at 6; NFIB 33-4 at 5; OCUL 34-19 at 2-3; PACE 33-15 at 4; Sirius 34-18 at 3; Chamber 34-24 at 1.

197

PACE 33-15 at 4.

198

Id.

199

Sirius 34-18 at 3.

200

Id.

201

OCUL 34-19 at 2-3.

The Commission is not persuaded by the general burden concerns commenters have raised. None of the commenters provided any information on what the burden would be and why small businesses would not be able to comply with the new recordkeeping amendments. As mentioned in Section III.A.2—Call Detail Records, the Commission provided an estimate of the additional cost of complying with the new recordkeeping amendments but did not receive any comment or data on why its estimate is inaccurate.

Additionally, the Commission notes the statute of limitations for the FTC to seek civil penalties under the TSR is five years and not two or three years, as some commenters argued. Although the statute of limitations to seek

consumer redress

for TSR violations is three years under Section 19 of the FTC Act,

202

the applicable statute of limitations for

civil penalties

is five years under Section 5 of the FTC Act.

203

As such, the Commission believes it is appropriate and necessary to require the retention of records for five years. This requirement is particularly important when, as EPIC has noted, not all companies will comply with a litigation hold request while an investigation is pending, potentially leaving law enforcement agencies with no recourse in enforcing the TSR.

204

202

15 U.S.C. 57b(d).

203

15 U.S.C. 45(m); 28 U.S.C. 2462;

see also

Section III.A.12 (Violation of Recordkeeping Provisions which provides additional discussion about the proposed safe harbor).

14. Section 310.5(e)—Compliance Obligations

The Commission proposed modifying the compliance obligations in Section 310.5(e) to state that, in the event the seller and telemarketer failed to allocate responsibility between themselves for

maintaining the required records, the responsibility for complying with the recordkeeping requirements would fall on both parties.

231

The Commission received four comments on this proposal. NAAG, PACE, and Sirius supported the proposal.

232

PACE states that “not only do we consider this fair, but we believe it will encourage parties to negotiate their contracts and cease regarding TSR recordkeeping as an afterthought.”

233

231

2022 NPRM, 87 FR at 33687.

232

NAAG 34-20 at 10; PACE 33-15 at 6; Sirius 34-18 at 8.

233

PACE 33-15 at 6.

EPIC, however, objects to this amendment and strongly urges the Commission to require both telemarketers and sellers to retain records rather than allowing them to allocate responsibilities.

234

Specifically, EPIC raises a concern that a seller may allocate responsibilities to a telemarketer that resides outside the United States and would not be subject to U.S. jurisdiction and process.

235

EPIC argues that if the Commission is inclined to designate only one party, it should be the seller who is responsible because the seller should be accountable for the telemarketers it hires, is less likely to be overseas and undercapitalized compared to telemarketers, and likely receives most of the sales proceeds.

236

But EPIC still believes the Commission should explicitly require both sellers and telemarketers be responsible for recordkeeping to prevent any gamesmanship where sellers move overseas to avoid liability.

237

In the event the Commission is not persuaded, EPIC also argues the Commission should require sellers to audit their telemarketers, including reviewing an actual production of preserved records, and require sellers who hire overseas telemarketers to require those telemarketers to have a U.S.-based agent so their records would be subject to U.S. jurisdiction and process.

238

234

EPIC 34-23 at 8-10.

235

at 10.

236

Id.

237

Id.

238

Id.

The Commission shares EPIC's concerns regarding gamesmanship and the challenges of obtaining records from overseas entities. The Commission is also concerned about sellers hiring unscrupulous telemarketers and disclaiming any responsibility for recordkeeping by allocating the responsibility to those telemarketers. The Commission notes that under the proposed amendment, sellers who allocate recordkeeping responsibilities to their telemarketers would be required to “establish and implement practices and procedure to ensure the telemarketer is complying with the [TSR's recordkeeping provisions].”

239

But given the concerns EPIC has raised, the Commission will modify this provision to also require sellers who allocate recordkeeping responsibilities to their telemarketer to retain access rights to those records so the seller can produce responsive records in the event it has hired a telemarketer overseas. Requiring sellers to ensure their telemarketers are abiding by the TSR's recordkeeping provisions and retain access to their telemarketer's records of telemarketing activities on the seller's behalf should not impose onerous obligations, and such access may never be necessary. Sellers likely already take such steps in the ordinary course of business, given that telemarketers are acting as their agents and their telemarketers' violations of the TSR could also expose them to liability under the TSR.

239

2022 NPRM, 87 FR at 33694.

15. Authority To Require Recordkeeping

NFIB argues the new recordkeeping proposals exceed the FTC's statutory authority under the Telemarketing Act.

240

Section 6102(a) of the Telemarketing Act directs the Commission to: (1) prescribe rules prohibiting deceptive or abusive telemarketing acts or practices;

241

(2) include in those rules a definition of deceptive acts or abusive practices that shall include fraudulent charitable solicitations and may include actions that constitute assisting or facilitating such as credit card laundering;

242

and (3) include in those rules a specific list of abusive practices that govern patterns and timing of unsolicited calls, and disclosures of certain material information in sales or charity calls.

243

It also states at the end of Section 6102(a) that “[i]n prescribing the rules described in this paragraph, the Commission shall also consider recordkeeping requirements.”

240

NFIB 33-4 at 5-6.

241

15 U.S.C. 6102(a)(1).

242

Id.

6102(a)(2).

243

Id.

6102(a)(3).

NFIB argues the directive to consider recordkeeping requirements applies only to the specific list of abusive practices under Section 6102(a)(3) and, since the other paragraphs are silent as to recordkeeping, the Act affirmatively prohibits the FTC from requiring recordkeeping.

244

The Commission does not agree. The language of the Act shows the directive to consider recordkeeping applies to the Act's mandate to promulgate rules addressing deceptive or abusive telemarketing practices and is not limited to the specific abusive practices identified in Section 6102(a)(3).

244

NFIB 33-4 at 6.

Section 6102(a) generally requires the Commission to promulgate rules regarding deceptive or abusive telemarketing acts or practices. Section 6102(a)(1) states: “[t]he Commission

shall prescribe rules

prohibiting deceptive telemarketing acts or practices and other abusive telemarketing acts or practices.”

245

Sections 6102(a)(2) and (a)(3) then identify specific provisions that Congress instructs the Commission to include, or consider including, when it promulgates its rules under Section 6102(a)(1). Section 6102(a)(2) directs the Commission to “

include in such rules

respecting deceptive telemarketing acts or practices” a definition of deceptive telemarketing acts or practices, which may include, among other things, credit card laundering.

246

Section 6102(a)(3) directs the Commission to “

include in such rules

respecting other abusive telemarketing acts or practices” specific requirements including: (1) “a

requirement

that telemarketers may not undertake a pattern of unsolicited telephone calls which the reasonable consumer would consider coercive or abusive of such consumer's right to privacy”; (2) “

restrictions

on the hours of the day and night when unsolicited telephone calls can be made to consumers”; (3) “a

requirement

that any person engaged in telemarketing for the sale of goods or services” make certain disclosures; and (4) “a

requirement

that any person engaged in telemarketing for the solicitation of charitable contributions” make certain disclosures.

247

At the end of Section 6102(a)(3), in a separate unnumbered sentence, the Act states “[i]n

prescribing the rules

described in this paragraph, the Commission shall also consider recordkeeping requirements.”

248

Thus, Congress directed the Commission to promulgate rules prohibiting deceptive or abusive telemarketing acts or practices under Section 6102(a)(1), and Sections 6102(a)(2) and (a)(3) merely inform what types of acts or practices the Commission should include, or consider including, when it promulgates those rules.

249

245

15 U.S.C. 6102(a)(1) (emphasis added).

246

Id.

6102(a)(2) (emphasis added).

247

Id.

6102(a)(3) (emphasis added).

248

Id.

249

The Commission also notes that the official codification of the Telemarketing Act in the United States Code aligns the indentation of the statement

“In prescribing the rules described in this paragraph, the Commission shall consider recordkeeping requirements” with Section 6102(a) rather than with Section 6102(a)(3). As such, it supports the Commission's position that the directive to consider recordkeeping refers generally to Section 6102(a) and is not limited to the specific acts and practices listed in Section 6102(a)(3).

See, e.g., https://www.govinfo.gov/content/pkg/USCODE-2011-title15/pdf/USCODE-2011-title15-chap87.pdf

(last visited November 21, 2023).

NFIB's interpretation of Section 6102(a)(3) improperly divorces that provision from the rest of the statute. As discussed, Section 6102(a)(3) contains Congress's specific guidance regarding the types of rules the Commission must adopt or consider adopting to implement Section 6102(a)(1)'s general grant of authority to ban deceptive or abusive telemarketing practices. Section 6102(a)(3) states when the Commission “prescrib[es] the rules described” by Congress, it “shall also consider recordkeeping requirements.” This provision thus authorizes the Commission to adopt—or not adopt—recordkeeping requirements and declare violations of such requirements to be an abusive telemarketing practice.

But even if Section 6102(a)(3) did not expressly authorize the Commission to consider recordkeeping requirements, the Commission may still require recordkeeping under Section 6102(a)(1). Congress's purpose in enacting the Telemarketing Act was to prevent deceptive or abusive telemarketing acts or practices.

250

As the Commission has noted over the years, recordkeeping provisions prevent deceptive or abusive telemarketing acts or practices because they are necessary to effectively enforce the TSR.

251

NFIB's assertion that “the rules for recordkeeping do not prevent or address deceptive or other abusive telemarketing acts or practices” is not an accurate assertion

252

and it is undermined by the Commission's law enforcement experience and that of other enforcers.

253

250

H.R. Rep. No. 103-20, 103rd Cong., 1st Sess. (“House Report”) at 1; S. Rep. No. 103-80, 103rd Cong., 1st Sess. (“Senate Report”) at 1 (stating the purpose of the bill was “to prevent fraudulent or harassing telemarketing practices”).

251

Original TSR 60 FR at 43857; 2003 TSR Amendments, 68 FR at 4653; 2014 TSR Rule Review, 79 FR at 46735.

252

NFIB 33-4 at 5-6.

253

See, e.g.,

NAAG 34-20 at 3-10.

Even if Section 6102(a)(1) could be read as being silent on recordkeeping, that would not prohibit the Commission from including recordkeeping in any rules the Commission promulgates under this section of the Act. Rather, Congress directed the Commission to prescribe rules prohibiting deceptive telemarketing acts or practices and the Commission is granted authority to issue rules, including recordkeeping provisions, for any deceptive or abusive telemarketing acts or practices it identifies in promulgating the TSR.

254

Congress's silence would make sense given the Commission had yet to identify these deceptive or abusive acts or practices in the TSR at the time the Telemarketing Act was passed, and it was unknown whether and what form of recordkeeping would be necessary to ensure compliance.

255

Interpreting the Telemarketing Act to prohibit the Commission from requiring recordkeeping would contradict the Act's stated purpose—to “enact legislation that will offer consumers necessary protection from telemarketing deception and abuse.”

256

254

See. e.g., U.S. Sugar Corp.

EPA,

830 F.3d 579, 617-18 (D.C. Cir. 2016) (upholding EPA's authority to require recordkeeping in regulating even though Congress was silent on that issue because “Congress plainly intended EPA to regulate sources burning `any' solid waste, a goal presumably advanced by the recordkeeping presumption”).

255

Congress has amended the Telemarketing Act numerous times over the years but made no changes to the recordkeeping provision.

See, e.g., supra

note 13. Given that the TSR has always included recordkeeping requirements since its inception in 1995 and the FTC has reported to Congress on its rulemaking efforts at various congressional hearings, Congress's silence on this issue can be interpreted as agreement with the FTC's statutory construction.

See, e.g., Washington All. of Tech. Workers

U.S. Dep't of Homeland Sec.,

50 F.4th 164, 182 (D.C. Cir. 2022) (quoting

Jackson

Modly,

949 F.3d 763, 772-73 (D.C. Cir. 2020)).

256

15 U.S.C. 6101(5). The Commission's position is also supported by the legislative history, which demonstrates that Congress intended for the Commission to consider recordkeeping requirements more broadly.

See

Senate Report at 7. The Senate Report references Section 3(a)(5) in an earlier version of the Act that directed the Commission to “prescribe rules regarding telemarketing activities” and in prescribing those rules to “consider the inclusion of . . . (5) recordkeeping requirements.” Telemarketing and Consumer Fraud and Abuse Prevention Act, S. 568, 103rd Cong. (1993). At minimum, this legislative history supports the position that the Commission may require recordkeeping for all abusive telemarketing acts or practices it identifies in promulgating the TSR and is not limited to those specific acts or practices listed in Section 6103(a)(3).

Nothing in the text of the Act prevents the Commission from requiring persons to keep records substantiating their compliance with any requirement of the TSR. Nor does NFIB explain why Congress would have intended to deprive the Commission of records essential to the enforcement of the rule. NFIB's interpretation would give telemarketers and sellers a perverse incentive to commit deceptive and abusive practices while destroying any record of those violations.

Finally, even if a court determines the Act only permits recordkeeping for rules that address the specific acts and practices listed in Section 6102(a)(3), the TSR's recordkeeping provisions meet those criteria. The Final Rule requires recordkeeping for eleven general categories of information: (1) advertisements, including telemarketing scripts and robocall recordings; (2) call detail records; (3) prize recipients; (4) customers; (5) customer information to establish a business relationship; (6) previous donors; (7) telemarketers' employees; (8) consent; (9) service providers; (10) entity-specific DNC; and (11) versions of the FTC's DNC. Each of these categories is necessary to ensure compliance with the provisions of the TSR the Commission promulgated to address the specifics acts or practices identified in Section 6102(a)(3).

For example, Section 6102(a)(3)(A) of the Act requires the FTC to prohibit “a pattern of unsolicited telephone calls which the reasonable consumer would consider coercive or abusive of such consumer's right to privacy.”

257

Accordingly, the Commission promulgated Section 310.4(b) of the TSR to prohibit certain “patterns of calls,”

258

including prohibitions against robocalls, calls to consumers who have asked a specific seller to stop calling, and calls to consumers who have registered their phone numbers on the FTC's DNC Registry.

259

As explained in more detail in Section II—Overview of the Proposed Amendments to the TSR above, the Commission needs all eleven categories of information set forth in the Final Rule, including the requirement that sellers and telemarketers retain call detail records to ensure compliance with these prohibitions.

260

257

15 U.S.C. 6102(a)(3)(A).

258

16 CFR 310.4(b).

259

16 CFR 310.4(b)(1)(iii) and (b)(1)(v).

see also

NFIB 33-4 at 11 (arguing all five findings in the Telemarketing Act reference consumer harm and not harm to businesses).

278

PACE 33-15 at 7-9. NFIB raises separate objections to repealing the B2B exemption based on changing market forces described in the Commission's 2022 ANPR. NFIB 33-4 at 9-10. As explained in the 2024 NPRM that the Commission is issuing concurrently with this Final Rule, the Commission declined to move forward with narrowing the B2B exemption as proposed in the 2022 ANPR. As such, the Commission will not address NFIB's argument here since it is not applicable in requiring B2B telemarketing to comply with the TSR's misrepresentation provisions.

The Commission disagrees. The Telemarketing Act directs the FTC to promulgate a rule that addresses deceptive and abusive telemarketing practices which, in the Commission's law enforcement experience, includes B2B telemarketing. The language of the Act supports the Commission's position.

First, the Act defines “telemarketing,” as “a plan, program, or campaign which is conducted to induce purchases of goods or services . . ., by use of one or more telephones and which involves more than one interstate telephone call.”

279

The Act exempts from the definition of telemarketing “the solicitation of sales through the mailing of a catalog” which meet certain criteria and “where the person making the solicitation does not solicit

customers

by telephone but only receives calls initiated by

customers

in response to the catalog during those calls. . . .”

280

The Act only specifies that “telemarketing” must involve the use of one interstate telephone call but does not identify who must participate in the call. To the extent it identifies any participant, it uses the term

customers,

which includes businesses.

281

279

15 U.S.C. 6106(4).

280

15 U.S.C. 6106(4) (emphasis added).

281

See, e.g., Customer,

Merriam-Webster Dictionary,

available at https://www.merriam-webster.com/dictionary/customer

(last visited Feb. 1, 2024) (defining customer as “one that purchases a commodity or service”).

Second, Section 6102(a)(1) directs the Commission to “prescribe rules

prohibiting deceptive telemarketing acts or practices and other abusive telemarketing acts or practices.”

282

Section 6102(a)(2) directs the Commission to include in its rules “a definition of deceptive telemarketing acts or practices which shall include fraudulent charitable solicitations, and which may include acts or practices of entities or individuals that assist or facilitate deceptive telemarketing, including credit card laundering.”

283

Congress used broad language, similar to the language of the FTC Act, in directing the FTC to promulgate a rule. The Act does not limit the scope of the rule promulgated under the Act to telemarketing that harms natural persons. Nor does the Act prohibit applying the rule to telemarketing that harms businesses or other organizations.

282

15 U.S.C. 6102(a)(1).

283

15 U.S.C. 6102(a)(2).

Third, Sections 6102(a)(3)(C) and (D) direct the Commission to require “any person engaged in telemarketing” to “promptly and clearly disclose to the

person

receiving the call the purpose of the call is to” sell a good or service or solicit a charitable solicitation.

284

Once again, Congress did not specify that the disclosure must be made to a natural person rather than a business. It simply specified that the disclosure be made to the person who received the call.

284

15 U.S.C. 6102(a)(3)(C) and (D) (emphasis added).

Although PACE and NFIB argue the Commission's authority is limited to addressing deceptive or abusive telemarketing practices that harm natural persons because of the Act's liberal use of the term “consumer,”

285

none of the Act's provisions described above uses the word “consumer.” Moreover, the Act never defines the term “consumer.” Given the Act's broad language, the most logical reading of the term “consumer” is that it encompasses

all

—including businesses—who consume a product or service.

285

NFIB 33-4 at 11; PACE 33-15 at 7-9.

The absence of a definition is notable when Congress

has

defined “consumer” in other contexts, such as when it enacted the Magnuson-Moss Warranty—Federal Trade Commission Improvement Act in 1975 (“Magnuson-Moss”).

286

Under Title I of Magnuson-Moss, which extended the Commission's jurisdiction over consumer product warranties, Congress narrowly defined “consumer” to mean a buyer of any “consumer product” which is “normally used for personal, family, or household purposes.”

287

Congress also clarified that the narrow definition of consumer was limited to Title I of the Magnuson-Moss Act and did not apply to Title II, which among other things, codified the FTC's ability to seek consumer redress by filing civil actions in Federal court.

288

Under Title II, Congress stated the term “consumer” in the FTC Act should still be construed broadly without the limitations imposed in section 101(3) of title I of S. 356.

289

Here, no such definition exists. If Congress had intended to limit the scope of the Telemarketing Act to those acts and practices directed at individuals rather than businesses, it would have done so.

286

Title I of that legislation created the Magnuson-Moss Warranty Act (“Magnuson-Moss”), Public Law 93-637 (1975) (codified as amended at 15 U.S.C. 2301), extending Commission jurisdiction over consumer product warranties. Title II, separately known as the Federal Trade Commission Improvement Act (“FTCIA”), modernized the FTC Act by expanding the Commission's anti-fraud powers, including power to “redress consumer injury resulting from violations of the [FTC Act]” by filing civil actions in district court. S. Rep. No. 93-151, at 3 (1973). Public Law 93-637; Public Law 93-153. p. 2533 (1975) (codified as amended at 15 U.S.C. 45

et seq.

287

15 U.S.C. 2103(1) and (3).

288

See supra

note 286.

289

S. Rep. No. 93-151, at 27.

The Commission's position is also supported by the legislative history. A Senate Report on the Act explained that, in directing the Commission to define “fraudulent telemarketing acts or practices” in its rulemaking, that Congress intended the rule “to encompass the types of unlawful activities that are currently being addressed by the both the FTC and the States in their telemarketing cases.”

290

The Report also stated Congress intends the “rule to be flexible enough to encompass the changing nature of [fraudulent telemarketing] activity while at the same time providing telemarketers with guidance as to the general nature of prohibited conduct.”

291

At the time the Telemarketing Act was passed, the Commission's law enforcement experience included cases against deceptive B2B telemarketing.

292

In promulgating the original TSR, the Commission considered exempting all B2B telemarketing but stated, given its “extensive enforcement experience pertaining to deceptive telemarketing directed to businesses,” it did not believe “an across-the-board exemption for business-to-business contacts is appropriate.”

293

Instead, the original TSR excluded from the B2B exemption telemarketing schemes that sell nondurable office or cleaning supplies because, in the Commission's law enforcement experience, these B2B schemes “have been by far the most significant business-to-business problem area [that] such telemarketing falls within the Commission's definition of deceptive telemarketing acts or practices.”

294

The Commission also stated it would reconsider the scope of the B2B exemption “if additional business-to-business telemarketing activities become problems after the Final Rule has been in effect.”

295

Each time the Commission has considered applying the TSR to other B2B telemarketing, it has done so based on its law enforcement experience in keeping with Congress's directive.

296

290

Senate Report at 7.

291

Id.

292

See

Prepared Statement of the Federal Trade Commission before the United States House of Representatives Committee on Small Business (Sept. 28, 1994) (detailing the Commission's law enforcement actions against telemarketers who have harmed small businesses).

293

Original TSR, 60 FR at 43861-62.

294

Id.

295

Id.

at 43862.

296

2022 NPRM, 87 FR at 33682-83. Although the Commission's law enforcement efforts have primarily focused on harms to small businesses, the Commission believes that the Telemarketing Act authorizes the Commission to apply the TSR to B2B telemarketing more broadly for the reasons stated here. Similar to the recordkeeping provision, the Commission notes that Congress has amended the Telemarketing Act numerous times but made no changes to prohibit the TSR's application to some B2B telemarketing. Congress's silence here can also be interpreted as agreement with the FTC's statutory construction.

See supra

note 255.

But even if the term “consumer” is construed more narrowly to exclude businesses, the Act's language still supports the Commission's position that the Act allows it to regulate B2B telemarketing. First, one of the Act's findings states “[c]onsumers and

others

are estimated to lose $40 billion a year in telemarketing fraud.”

297

The legislative history makes clear Congress was concerned about telemarketing fraud against small businesses.

298

Second, the Act uses broad language in the definition of telemarketing, in its directives to promulgate rules regarding deceptive or abusive telemarketing under Section 6102(a)(1), and in its directives of what to include in those rules under Sections 6102(a)(2), (a)(3)(C), and (a)(3)(D). These provisions do not contain any reference to a “consumer.”

299

If Congress intended to construe consumer narrowly, Congress's

omission

of the term consumer from

these provisions of the Act demonstrates Congress did not intend to limit the TSR to telemarketing that harms only individual consumers.

297

15 U.S.C. 6101(3) (emphasis added).

298

The legislative history supports the Commission's position that, even assuming a narrower definition of consumer, the Telemarketing Act allows the Commission to regulate B2B telemarketing. The Senate Report on the Act explains that telemarketing fraud “affects a cross section of Americans, including small business.” Senate Report at 2.

299

15 U.S.C. 6102(a) and 6106(4).

Finally, RBFC and TPPPA make general objections that prohibiting misrepresentations in B2B telemarketing is unnecessary; that it would “unduly burden legitimate business activities”;

300

and would not provide small businesses any additional protections when the FTC has authority already to pursue bad actors that harm businesses under the FTC Act.

301

RBFC also argues if the Commission were to prohibit misrepresentations in B2B telemarketing, it should only do so in the areas where there is a history of deception such as the top five scams identified in the Better Business Bureau's research report issued in 2018.

302

300

TPPPA 34-14 at 2.

301

RBFC 34-13 at 2-3.

302

RBFC 34-13 at 3;

see also

Better Business Bureau, Scams and Your Small Business Research Report, at 7-8 (2018),

available at https://www.bbb.org/content/dam/bbb-institute-(bbbi)/files-to-save/bbb_smallbizscamsreport-final-06-18.pdf

(last visited Dec. 11, 2023). RBFC argues that any application of the TSR should be limited to the BBB's top five scams impacting small businesses including: “(1) bank/credit card company imposters, (2) directory listing and advertising services; (3) fake invoice/supplier bills; (4) fake checks; and (5) tech support scams.” RBFC 34-13 at 3.

The Commission is not persuaded by these arguments. The Commission notes that requiring B2B telemarketers to comply with the TSR's prohibitions against misrepresentations would provide the Commission with additional tools to obtain monetary redress for those harmed by illegal telemarketing and civil penalties against bad actors who violate the law, creating a deterrent effect. Importantly, the proposed amendment refrains from imposing any burdens on B2B sellers and telemarketers, including recordkeeping requirements. And, as commenters have noted, because businesses must already comply with the FTC Act, which prohibits deceptive or unfair conduct, complying with the TSR should not create significant burden.

303

The Commission also does not believe it should limit the prohibition against misrepresentations to just the five top scams identified in the BBB's 2018 report. The Commission has monitored deceptive telemarketing impacting small businesses since 1995 and has observed not only the increase in deceptive telemarketing but how easily scammers shift tactics and peddle different products or services to small businesses.

304

Given the Commission's extensive law enforcement experience in B2B telemarketing cases—including schemes involving deceptive business directory listings, web hosting or design, search engine optimization services, and government impersonators

305

—the Commission believes applying the TSR's prohibitions against misrepresentations in Section 310.3(a)(2) and 310.3(a)(4) is appropriate.

303

RBFC 34-13 at 2-3; WPF 34-21 at 4.

304

See

Section II.B (B2B Telemarketing).

305

Id.

C. New Definition of “Previous Donor”

The 2022 NPRM proposed adding a new definition for the term “previous donor” to identify consumers who have donated to a particular charity within the two-year period immediately preceding the date the consumer receives a robocall on behalf of that charity.

306

The Commission proposed including this new definition to make clear that t

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