Markets Wired

As part of its ongoing review of the rules and regulations it enforces, the Federal Trade Commission is seeking public comment on its Telemarketing Sales Rule (TSR).

As detailed in the Federal Register notice announcing the rule review, the TSR has been updated regularly since 2000, leading to amendments in 2003 to create the national Do Not Call (DNC) Registry for telemarketers, as well as in 2008 and 2010, when the rule was amended to more specifically address pre-recorded telemarketing calls and debt collection services, respectively.  In addition, last year, the Commission proposed amendments to the TSR to ban telemarketers from using certain payment methods often used in defrauding consumers.

The Commission relies on public comments in considering whether and how to amend and improve the TSR and other rules. In the notice, the FTC explains specific changes in the marketplace and legal landscape since the TSR was last amended, focusing on:  1) the use and sharing of pre-acquired account information in telemarketing, and 2) issues raised by the use of negative-option and free-trial offers in combination with general media ads designed to generate inbound telemarketing calls from consumers. In addition, the notice seeks suggestions for specific changes to the rule that will reduce DNC enforcement obstacles encountered when trying to obtain call records from telemarketers.

The notice includes a comprehensive list of questions regarding the TSR, posed in soliciting public comment. Examples include the following:

• Has the Rule provision related to “express informed consent” been effective in preventing the use of pre-acquired information for unauthorized billing of consumers’ accounts?  If so, why?  If not, why not, and how has the prohibition been inadequate?
• Should the Commission consider a prohibition on any use of pre-acquired account information in external upsells?  If so, why?  If not, why not, and what costs and burdens would such a requirement imposed on businesses and consumers?
• Should telemarketers and sellers who receive inbound calls from consumers in response to general media ads for a negative-option product or service receive the same disclosures currently required for outbound telemarketing calls?  Why or why not?

Background of the TSR.  The FTC’s TSR became law in 1995 and applies to virtually all “telemarketing” activities, both in the United States and sales calls from abroad to U.S. citizens. With several notable exceptions, the Rule generally applies only to outbound calls made by telemarketers to consumers, and protects consumers in a range of ways.  For example, the TSR requires telemarketers to make certain disclosures and prohibits material misrepresentations during sales calls.

The TSR ensures that telemarketers obtain a consumer’s “express informed consent” before billing or collecting payment, and prohibits telemarketers from requesting advance payments for services, such as credit repair, “guaranteed” loans, recovery services, and debt settlement programs. The Rule also prohibits credit card laundering by or on behalf of telemarketers and prohibits them, with certain exceptions, from calling phone numbers on the DNC Registry, among other things.

The Commission vote approving publication of the notice in the Federal Register was 5-0. Written comments on the TSR must be received no later than October 14, 2014. Information about how to submit comments can be found in the Request for Comments section of the Supplementary Information in the Federal Register notice. Comments can be submitted electronically.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.