The Federal Trade Commission today proposed extending protections against telemarketing tricks and traps to small businesses and strengthening safeguards against other pernicious telemarketing tactics plaguing consumers. The agency is seeking comments on updates to the Telemarketing Sales Rule that would protect small businesses against business-to-business telemarketing schemes, address tech-support scams that target seniors, and extend click-to-cancel requirements to telemarketing.
“Today we are taking aggressive action to protect small businesses and consumers from telemarketing tricks and traps,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “We look forward to hearing from the public about how we can further strengthen this rule to hold telemarketing scammers accountable.”
Both the notice of proposed rulemaking and advance notice of proposed rulemaking announced today stem from the Commission’s regulatory review of the Telemarketing Sales Rule and address public comments the FTC has received as part of that review.
The current regulatory review of the Telemarketing Sales Rule began with the publication of a 2014 Federal Register notice seeking comments on general issues such as whether to retain, eliminate, or modify the rule. It also sought comment on specific issues, such as whether the rule should provide additional protections to consumers from telemarketing calls involving use of previously acquired account information and negative option offers, as well as recordkeeping requirements for sellers and telemarketers.
The Telemarketing Sales Rule
The FTC’s Telemarketing Sales Rule became law in 1995 and applies to virtually all “telemarketing” activities, both in the United States and international sales calls to consumers in the U.S. 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 rule requires telemarketers to make certain disclosures and prohibits misrepresentations during sales calls.
The Telemarketing Sales Rule ensures that telemarketers obtain a consumer’s authorization before billing or collecting payment, and prohibits telemarketers from requesting advance payments for services, such as credit repair, “guaranteed” loans, and debt settlement programs. The rule also prohibits credit card laundering by or on behalf of telemarketers and generally prohibits them from calling phone numbers on the Do Not Call Registry or plaguing consumers with robocalls, among other things.
Proposal to Protect Small Businesses and Strengthen Enforceability
The notice of proposed rulemaking announced today proposes amending the recordkeeping requirements of the Telemarketing Sales Rule and prohibiting deception in business-to-business telemarketing calls. Specifically, the notice seeks public comment on:
- Business-to-business schemes: Whether the FTC should amend the Telemarketing Sales Rule to prohibit misrepresentations in business-to-business calls, as the Commission’s experience has shown that small businesses continue to be harmed by deceptive telemarketing, and
- Recordkeeping requirements: Whether the FTC should amend the rule’s recordkeeping provisions to require telemarketers to retain information in seven new categories, such as keeping recordings of robocalls.
Addressing Other Telemarketing Tactics and Scams
The advance notice of proposed rulemaking announced today seeks information on a range of issues, some of which were identified during the previous comment period. Specifically, the agency seeks public comment on:
- Tech-support scams: Whether the Telemarketing Sales Rule should add additional provisions to address the rise in tech-support scams. These are scams where telemarketers trick consumers into purchasing unnecessary computer technology services to fix phantom problems. Generally, telemarketers who induce consumers to call them by placing deceptive internet ads are currently exempt from Telemarketing Sales Rule requirements. The advance notice of proposed rulemaking seeks comment on whether those calls should be covered by the rule.
- Click-to-cancel requirements: Whether the rule should require telemarketers to provide consumers with a simple notice and cancelation, such as click-to-cancel, when they sign up for subscription plans; and
- Robocalls and other telemarketing to small businesses: Whether the Telemarketing Sales Rule broadly should stop treating telemarketing calls made to businesses differently from those made to consumers. Generally, such calls currently are exempt from certain provisions of the rule.
The Commission vote approving publication of the notice of proposed rulemaking and advance notice of proposed rulemaking in the Federal Register was 4-0.