Proposed Rule2022-09914
Telemarketing Sales Rule
Primary source
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Published
June 3, 2022
Issuing agencies
Federal Trade Commission
Abstract
The Federal Trade Commission ("FTC" or "Commission") seeks public comment on proposed amendments to the Telemarketing Sales Rule ("TSR"). The proposed amendments would 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 transactions, and add a new definition for the term "previous donor." The modified recordkeeping requirements are necessary to protect consumers from deceptive or abusive telemarketing practices and support the Commission's law enforcement mandate to enforce the TSR. The prohibition on material misrepresentations and false or misleading statements is necessary to protect businesses from deceptive telemarketing practices. The new definition of "previous donor" will clarify that a telemarketer may not use prerecorded messages to solicit charitable donations on behalf of a charitable organization unless the recipient of the call made a donation to that particular charitable organization within the prior two years.
Full Text
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<title>Federal Register, Volume 87 Issue 107 (Friday, June 3, 2022)</title>
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[Federal Register Volume 87, Number 107 (Friday, June 3, 2022)]
[Proposed Rules]
[Pages 33677-33695]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-09914]
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FEDERAL TRADE COMMISSION
16 CFR Part 310
RIN 3084-AB19
Telemarketing Sales Rule
AGENCY: Federal Trade Commission.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Federal Trade Commission (``FTC'' or ``Commission'') seeks
public comment on proposed amendments to the Telemarketing Sales Rule
(``TSR''). The proposed amendments would 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
transactions, and add a new definition for the term ``previous donor.''
The modified recordkeeping requirements are necessary to protect
consumers from deceptive or abusive telemarketing practices and support
the Commission's law enforcement mandate to enforce the TSR. The
prohibition on material misrepresentations and false or misleading
statements is necessary to protect businesses from deceptive
telemarketing practices. The new definition of ``previous donor'' will
clarify that a telemarketer may not use prerecorded messages to solicit
charitable donations on behalf of a charitable organization unless the
recipient of the call made a donation to that particular charitable
organization within the prior two years.
DATES: Comments must be received by August 2, 2022.
ADDRESSES: Interested parties may file a comment online or on paper by
following the instructions in the Request for Comment part of the
SUPPLEMENTARY INFORMATION section below. Write ``Telemarketing Sales
Rule (16 CFR part 310--NPRM) (Project No. R411001)'' on your comment
and file your comment through <a href="https://www.regulations.gov">https://www.regulations.gov</a>. If you
prefer to file your comment on paper, mail your
[[Page 33678]]
comment to the following address: Federal Trade Commission, Office of
the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 (Annex B),
Washington, DC 20580, or deliver your comment to the following address:
Federal Trade Commission, Office of the Secretary, Constitution Center,
400 7th Street SW, 5th Floor, Suite 5610 (Annex B), Washington, DC
20024.
FOR FURTHER INFORMATION CONTACT: Benjamin R. Davidson, (202) 326-3055,
<a href="/cdn-cgi/l/email-protection#6e0c0a0f18070a1d01002e081a0d40090118"><span class="__cf_email__" data-cfemail="34565055425d50475b5a745240571a535b42">[email protected]</span></a>, or Patricia Hsue, (202) 326-3132, <a href="/cdn-cgi/l/email-protection#f989918a8c9cb99f8d9ad79e968f"><span class="__cf_email__" data-cfemail="d7a7bfa4a2b297b1a3b4f9b0b8a1">[email protected]</span></a>,
Division of Marketing Practices, Bureau of Consumer Protection, Federal
Trade Commission, 600 Pennsylvania Avenue NW, Mail Stop CC-8528,
Washington, DC 20580.
SUPPLEMENTARY INFORMATION:
I. Introduction
The Federal Trade Commission issues this notice of proposed
rulemaking (``NPRM'') to invite public comment on proposed amendments
to the TSR (part 310). The proposed amendments to the recordkeeping
requirements reflect evolutions in the marketplace that make it more
difficult for the Commission and other regulators to obtain records of
sellers' and telemarketers' telemarketing activities to enforce the
TSR. The principal proposed amendments would require sellers or
telemarketers to retain additional records of their telemarketing
activities and clarify the existing recordkeeping requirements to more
clearly delineate the information telemarketers or sellers must keep to
comply with those provisions. The Commission is also proposing to
prohibit in B2B telemarketing transactions: (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''). This prohibition is necessary to help protect
businesses from deceptive telemarketing practices. Finally, the
Commission is proposing a new definition of the term ``previous donor''
to clarify that telemarketers are prohibited from using prerecorded
messages to solicit charitable contributions from consumers on behalf
of a non-profit charitable organization unless the consumer donated to
that non-profit charitable organization within the last two years.
This NPRM invites written comments on all issues raised by the
proposed amendments, including answers to the specific questions set
forth in Section IV of this document.
II. Overview of the Telemarketing Sales Rule
Congress enacted the Telemarketing and Consumer Fraud and Abuse
Prevention Act (``Telemarketing Act'' or ``Act'') in 1994 to curb
deceptive and abusive telemarketing practices and provide key anti-
fraud and privacy protections for consumers receiving telephone
solicitations to purchase goods or services.\1\ The Telemarketing Act
directed the Commission to adopt a rule prohibiting deceptive or
abusive telemarketing practices, including prohibiting telemarketers
from undertaking a pattern of unsolicited calls that reasonable
consumers would consider coercive or abusive of their privacy,
restricting the time of day telemarketers may make unsolicited calls to
consumers, and requiring telemarketers to promptly and clearly disclose
that the purpose of the call is to sell goods or services.\2\ The Act
also generally directed the Commission to address in its rule other
acts or practices it found to be deceptive or abusive, including acts
or practices of entities or individuals that assist and facilitate
deceptive telemarketing, and to consider including recordkeeping
requirements.\3\ Finally, the Act authorized state Attorneys General,
or other appropriate state officials, and private litigants to bring
civil actions in federal district court to enforce compliance with the
FTC's rule.\4\
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\1\ 15 U.S.C. 6101-6108.
\2\ 15 U.S.C. 6102(a)(3). The Telemarketing Act was subsequently
amended in 2001 to add Section 15 U.S.C. 6102(a)(3)(D), which
requires a telemarketer to promptly and clearly disclose that the
purpose of the call is to solicit 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).
\3\ 15 U.S.C. 6101(a). See also 2002 notice of proposed
rulemaking, 67 FR 4492, 4510 (Jan. 30, 2002).
\4\ 15 U.S.C. 6103, 6104.
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Pursuant to the Act's directive, the FTC promulgated the TSR on
August 23, 1995.\5\ The FTC included recordkeeping requirements in
Sec. 310.5, stating the provision was ``necessary to enable law
enforcement agencies to ascertain whether sellers and telemarketers are
complying with the requirements of the Final Rule, to identify persons
who are involved in any challenged practices, and to identify customers
who may have been injured.'' \6\ The FTC also included a prohibition on
misrepresenting several categories of material information in Sec.
310.3(a)(2).\7\ The categories were based on ``established case law''
and ``allegations in complaints filed in recent years by the
Commission.'' \8\ The Commission also included a prohibition on making
false or misleading statements to induce a person to pay for goods or
services, or to induce a charitable contribution, in Sec.
310.3(a)(4).\9\ Section 310.3(a)(4) was designed to ``provide[] law
enforcement with flexibility to address new ways that sellers and
telemarketers engaged in fraud might attempt to take consumers'
money.'' \10\
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\5\ See Statement of Basis and Purpose and Final Rule
(``Original TSR''), 60 FR 43842 (Aug. 23, 1995).
\6\ Id. at 43857.
\7\ Id. at 43848.
\8\ Id.
\9\ Id. at 43851.
\10\ Id.
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The original TSR excluded several types of calls, including B2B
calls other than those that sold office and cleaning supplies.\11\ The
Commission required B2B calls that sold office and cleaning supplies to
comply with the TSR because, in the Commission's experience, calls
involving the sale of those products were ``by far the most significant
business-to-business problem area.'' \12\
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\11\ Id. at 43867.
\12\ Id. at 43861.
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Since then, the Commission has amended the Rule on four occasions:
(1) In 2003 to, among other things, create the National Do-Not Call
Registry and extend the Rule to telemarketing calls soliciting
charitable contributions; \13\ (2) in 2008 to prohibit prerecorded
messages (``robocalls'') selling a good or service or soliciting
charitable contributions; \14\ (3) in 2010 to ban the telemarketing of
debt relief services requiring an advance fee; \15\ and (4) in 2015 to
bar the use in telemarketing of certain novel payment mechanisms widely
used in fraudulent transactions.\16\
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\13\ 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).
\14\ See Statement of Basis and Purpose and Final Rule
Amendments (``2008 TSR Amendments''), 73 FR 51164 (Aug. 29, 2008)
(addressing the use of robocalls).
\15\ See Statement of Basis and Purpose and Final Rule
Amendments (``2010 TSR Amendments''), 75 FR 48458 (Aug. 10, 2010)
(adding debt relief provisions). The prohibition on misrepresenting
material aspects of debt relief services in 310.3(a)(2)(x) was added
in 2010 along with other debt relief provisions. See 2010 TSR
Amendments, 75 FR at 48498. The Commission subsequently published
correcting amendments to the text of Sec. 310.4 of the TSR.
Telemarketing Sales Rule; Correcting Amendments, 76 FR 58716 (Sept.
22, 2011).
\16\ 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).
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[[Page 33679]]
A. 2008 Robocall Amendment for Charitable Solicitations
Pursuant to the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act
(``USA PATRIOT Act''),\17\ the Commission amended the TSR in 2003 to
extend its coverage to telemarketing calls soliciting charitable
contributions.\18\ As part of that amendment, the Commission defined
``donor'' as ``any person solicited to make a charitable
contribution.'' \19\ The Commission declined to limit the definition of
donor to those who have ``an established business relationship with the
non-profit charitable organization.'' \20\ The Commission stated its
intent was for the term ``donor. . .[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.' '' \21\
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\17\ Public Law 107-56, 115 Stat. 272 (Oct. 26, 2001).
\18\ 2003 TSR Amendments, 68 FR at 4582.
\19\ Id. at 4590.
\20\ Id.
\21\ Id. at 4590-91.
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In 2008, the Commission amended the TSR to prohibit robocalls
soliciting charitable donations unless the robocall was delivered to a
``member of, or previous donor to, a non-profit charitable organization
on whose behalf the call is made'' and the seller or telemarketer
otherwise complied with the provisions of Sec. 310.4(b)(1)(v)(B).\22\
In allowing robocalls to previous donors, the Commission stated it was
recognizing the strong interests of non-profit charitable organizations
in reaching those 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 . . . .'' \23\ The
Commission concluded that 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.'' \24\ Although
the Commission's Statement of Basis and Purpose for the 2008 Amendment
makes clear the Commission intended previous donor to mean a donor who
has previously provided a charitable contribution to the particular
non-profit charitable organization, the Commission did not include a
definition of the term ``previous donor'' to explicitly effect that
intention.
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\22\ See 2008 TSR Amendments, 73 FR at 51185.
\23\ Id. at 51193.
\24\ Id. at 51194.
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Because the TSR's definition of donor is ``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 non-
profit charitable organization, regardless of whether the consumer
actually agreed to donate to that charitable organization. Thus, the
Commission proposes to add a new definition of ``previous donor'' to
clarify the exemption, explicitly referencing consumers from whom the
non-profit charitable organization has received a donation in the last
two years.\25\
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\25\ The Commission proposes implementing a time limit for the
existence of an established relationship 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 (i.e., one year the consumer might
donate in January and the following year the consumer might not
donate until December). The Commission seeks public comment on
whether two years is an appropriate time period.
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B. TSR's Recordkeeping Provisions Regulatory History
Since the Commission promulgated the TSR in 1995, it has not made
substantial changes to its recordkeeping requirements under Sec.
310.5. The TSR generally requires 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.\26\ 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.\27\
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\26\ 16 CFR 310.5(a).
\27\ 16 CFR 310.5(b) and (c).
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During its 2003 and 2010 rulemaking processes, the Commission
considered whether it should modify the recordkeeping provisions in
tandem with the substantive amendments under consideration.\28\ In each
instance, however, the Commission declined to make substantial
modifications to that provision, deeming such changes unnecessary to
enact the substantive amendments it was promulgating.\29\ In its 2003
Amendment adding the DNC provisions and extending the TSR to charitable
solicitations, the Commission inserted a reference to ``solicitations''
in Sec. 310.5(a)(4) to require telemarketers and sellers to keep
records of employees involved in charitable solicitations.\30\ It also
inserted the phrase ``express informed consent or express agreement''
in Sec. 310.5(a)(5) to require sellers and telemarketers to keep
records of those agreements, in addition to verifiable authorizations,
since those agreements were newly added terms in the 2003
amendments.\31\ For its 2010 Amendment, the Commission noted the
existing recordkeeping requirements would extend to new providers of
debt relief services as a result of the Amendment.\32\
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\28\ In 2003, the Commission added a recordkeeping requirement
for the abandoned call safe harbor but did not include that
provision in Sec. 310.5(a). See 2003 TSR Amendments, 68 FR at 4645.
\29\ See, e.g., 2003 TSR Amendments, 68 FR at 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.
\30\ 2003 TSR Amendments, 68 FR at 4653-54.
\31\ Id.
\32\ 2010 TSR Amendments, 75 FR at 48502.
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In 2015, the Commission amended the TSR to expressly state a seller
or telemarketer bears the burden of demonstrating that a seller has an
existing business relationship (``EBR'') with a consumer whose number
is on the Commission's Do Not Call (``DNC'') Registry, or has obtained
express written agreement (``EWA'') from such a consumer, as required
by Sec. 310.4(b)(1)(iii)(B)(1)-(2).\33\ The Commission stated that
these two amendments reflected existing law, but the Commission adopted
the amendments to make clear the burden of proof was on sellers and
telemarketers to assert these affirmative defenses.\34\ The Commission
also reiterated this carve out from the DNC prohibitions applies only
to sellers ``that obtained the EWA directly from, or has an EBR
directly with, the person called.'' \35\ The Commission, however, did
not amend the recordkeeping requirements to clarify what records a
seller or telemarketer must keep to assert these affirmative defenses,
believing that telemarketers and sellers would naturally maintain such
records in the ordinary course of business
[[Page 33680]]
without affirmatively being required to do so.
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\33\ 2015 TSR Amendments, 80 FR at 77555-56.
\34\ Id.
\35\ Id. (emphasis added). As such, ``cold calls to consumers
whose name and numbers were purchased from a third-party list broker
are [still] prohibited under the TSR's do-not-call provisions
because the calls are not placed by the specific seller that
obtained the EWA or EBR.'' Id.
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The telemarketing landscape has changed drastically since the
Commission promulgated the Rule's original recordkeeping provisions.
Technological advancements have made it easier and cheaper for
unscrupulous telemarketers to engage in illegal telemarketing,
resulting in a greater proliferation of unwanted calls.\36\
Technological advancements have also reduced the burden and costs of
recordkeeping.\37\ While the Commission has made substantial amendments
to the TSR over the last 25 years to address the rise in unwanted
calls--including by identifying new abusive and deceptive telemarketing
practices such as prohibiting robocalls and calls to consumers on the
DNC Registry \38\--the TSR's recordkeeping provisions have remained
largely static. As such, they no longer adequately meet the needs of
the Commission's law enforcement mission to protect consumers.
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\36\ See, e.g., Prepared Statement of the Federal Trade
Commission Before the United States Senate Aging Committee on
Commerce Science and Transportation: Abusive Robocalls and How We
Can Stop Them (Apr. 18, 2018), available at <a href="https://www.ftc.gov/system/files/documents/public_statements/1366628/p034412_commission_testimony_re_abusive_robocalls_senate_04182018.pdf">https://www.ftc.gov/system/files/documents/public_statements/1366628/p034412_commission_testimony_re_abusive_robocalls_senate_04182018.pdf</a>
(last visited Jan. 31, 2022). From 2016 to 2020, the Commission
received on average over 5.5 million Do Not Call complaints per
year, and the DNC Registry currently has over 240 million active
telephone numbers. FTC, Do Not Call Data Book 2020 (``2020 DNC
Databook''), at 6 (Oct. 2020), available at <a href="https://www.ftc.gov/system/files/documents/reports/national-do-not-call-registry-data-book-fiscal-year-2020/dnc_data_book_2020.pdf">https://www.ftc.gov/system/files/documents/reports/national-do-not-call-registry-data-book-fiscal-year-2020/dnc_data_book_2020.pdf</a> (last visited Jan. 31,
2022). 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 <a href="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">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</a> (last visited Jan. 31, 2022); National Do Not
Call Registry Data Book for Fiscal Year 2009, at 4 (Nov. 2009),
available at <a href="https://www.ftc.gov/sites/default/files/documents/reports_annual/fiscal-year-2009/091208dncadatabook.pdf">https://www.ftc.gov/sites/default/files/documents/reports_annual/fiscal-year-2009/091208dncadatabook.pdf</a> (last visited
Jan. 31, 2022).
\37\ See infra Section V.C. and note 95.
\38\ See supra notes 5-13.
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C. Law Enforcement Challenges in Enforcing the TSR
To date, the Commission has brought more than 150 enforcement
actions against companies and telemarketers under the TSR for DNC,
robocall, spoofed caller identification (``caller ID''), and assisting
and facilitating violations.\39\ In bringing those cases, the
Commission has identified several challenges in obtaining the necessary
records to determine whether a particular telemarketing campaign is
covered by and compliant with the TSR, which entities are involved in
the telemarketing campaign, and which consumers have been harmed by
violations of the TSR.
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\39\ See Enforcement of the Do Not Call Registry, available at
<a href="https://www.ftc.gov/news-events/media-resources/do-not-call-registry/enforcement">https://www.ftc.gov/news-events/media-resources/do-not-call-registry/enforcement</a> (last visited Jan. 31, 2022).
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The primary hurdles are in: (1) Identifying the telemarketer and
seller responsible for the telemarketing campaign; (2) obtaining
records of the telemarketing calls reflecting the date, time, duration,
and disposition of each call, as well as the phone number(s) that
placed and received each call (i.e. ``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.
The TSR currently requires telemarketers and sellers to retain
records of ``all substantially different advertising, brochures,
telemarketing scripts and promotional materials'' used in their
telemarketing activities.\40\ It does not require sellers or
telemarketers to keep other records of their telemarketing activities
including call detail records or records of the nature of their
telemarketing campaigns, such as whether the campaign used prerecorded
messages, placed calls to consumers (``outbound telemarketing'') or
induced calls from consumers through advertising (``inbound
telemarketing''), or solicited from consumers or businesses. Nor does
it require telemarketers or sellers to keep records that link a
particular telemarketing campaign to a set of call detail records. The
Commission's law enforcement experience has shown, absent a
recordkeeping requirement, it is increasingly difficult to obtain these
critical records and associate the records with the nature, purpose, or
content of a particular telemarketing campaign, frustrating the
Commission's law enforcement efforts. As discussed below, the
Commission proposes recordkeeping requirements that ensure it is able
to adequately assess whether a telemarketing campaign complies with the
TSR and remedy the current gaps impeding effective law enforcement.
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\40\ 16 CFR 310.5(a).
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When the TSR was promulgated in 1995, the Commission relied on
consumer complaints about unwanted calls to evaluate whether a
particular telemarketing campaign likely violated the TSR and warranted
further investigation. It also relied on consumer complaints to
identify the relevant telemarketer responsible for making the calls.
Specifically, the Commission could use the calling number included in
the consumer's complaint to identify the voice service provider
(``voice provider'') \41\ responsible for sending the call and send a
civil investigative demand (``CID'') to the voice provider in question
to identify the responsible telemarketer through the voice provider's
billing records. The Commission could also obtain the voice provider's
call detail records for that telemarketer and use that data as a proxy
for the seller's or telemarketer's telemarketing campaign.
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\41\ In this NPRM, a voice service provider broadly refers to
any provider of telephony services, including telecommunications
carriers, interconnected VoIP service providers, and any other voice
service providers.
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The proliferation of new technologies over the years has enabled
bad actors to ``spoof'' or fake a calling number and send calls cheaply
from within the United States and abroad.\42\ As a result, bad actors
have sent increasingly large numbers of unlawful spoofed calls, making
it more difficult for law enforcement to identify the telemarketer and
seller responsible for a particular telemarketing campaign and obtain
the applicable call detail records.\43\ For example, to identify a
suspect telemarketer using ``spoofed'' calls, the Commission needs to
issue CIDs to multiple voice providers in order to trace the 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 the records.\44\ As such, 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 calls. While the Commission has employed
other tools to successfully identify and take action against
telemarketers violating the law, the absence of call detail records can
present challenges, particularly in
[[Page 33681]]
demonstrating violations of the TSR's do-not-call provisions.\45\
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\42\ See supra note 36. 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 <a href="https://www.ftc.gov/news-events/press-releases/2019/06/ftc-law-enforcement-partners-announce-new-crackdown-illegal">https://www.ftc.gov/news-events/press-releases/2019/06/ftc-law-enforcement-partners-announce-new-crackdown-illegal</a> (last visited Jan. 31,
2022).
\43\ Id.
\44\ 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.
\45\ In March 2020, the FCC adopted new rules requiring all
originating and terminating voice providers to adopt the
implementation of caller ID authentication using technical standards
known as ``STIR/SHAKEN'' in their internet Protocol (IP) portions of
their networks by June 30, 2021 to reduce the number of spoofed
robocalls. See FCC, Press Release, FCC Mandates That Phone Companies
Implement Caller ID Authentication to Combat Spoofed Robocalls (Mar.
31, 2020), available at <a href="https://docs.fcc.gov/public/attachments/DOC-363399A1.pdf">https://docs.fcc.gov/public/attachments/DOC-363399A1.pdf</a> (last visited Jan. 31, 2022). The FCC is also exploring
whether to expand the mandate to intermediate voice providers and
whether adoption of similar standards on the non-IP portions of
voice provider networks is feasible. Id. While the adoption of STIR/
SHAKEN standards will provide a means of authenticating the caller
ID information for some calls, spoofed calls will continue to
challenge law enforcement in the future.
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Even when the Commission is successful in obtaining the call detail
records from the voice provider and identifying the seller or
telemarketer responsible for the telemarketing campaign, that
information is limited. As noted above, call detail records typically
include only: (1) The phone number that placed the call (``calling
number''); (2) the phone number that received the call (``called
number''); (3) the date, time, and duration of the call; and (4) the
disposition of the call (i.e., was the call answered or connected,
transferred to another phone number, disconnected or dropped). The
records do not contain other important information, including the
purpose of the call, the identity of the seller or charitable
organization, or the nature of the call, such as whether the
telemarketer used prerecorded messages. Although sellers and
telemarketers are required to keep records of their advertisements,
such as telemarketing scripts, which may include information on the
purpose of the call or the identity of the seller, they are not
currently required to maintain records that identify the specific
telemarketing campaign in which they used each advertisement or the
associated call detail records.\46\
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\46\ 16 CFR 310.5(a)(1).
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The lack of records linking the call detail records to the nature,
purpose, and content of the telemarketing campaign presents challenges
to law enforcement. Without this link, it is difficult for the
Commission to ascertain, among other issues: (1) The seller or
charitable organization for which the telemarketer is placing calls;
(2) the good or service the telemarketer is offering for sale or the
charitable purpose for which the telemarketer is soliciting
contributions; (3) whether the telemarketer used robocalls, was
telemarketing to consumers or businesses, or the caller ID,\47\ if any,
they transmitted in outbound telephone calls; and (4) the
representations made during the call. Moreover, without information
linking the call detail records to a particular telemarketing campaign,
the Commission cannot tell when the telemarketing campaigns began and
ended or how many calls the telemarketer made in a particular
telemarketing campaign.
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\47\ Voice providers frequently state that their call detail
records contain the calling number, or the phone number that
actually placed the call, but they do not have information on the
name that the telemarketer chooses to submit to the call recipient's
caller identification service, which provides caller identification
name information to the call recipient.
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In the FTC's law enforcement experience, sellers and telemarketers
often claim they cannot provide this information because they do not
keep call detail records or records associating a telemarketing
campaign with the voice provider's call detail records. For example,
telemarketers typically assert the voice provider's call detail records
include both their telemarketing and non-telemarketing calls (i.e.,
non-sales calls) but they cannot identify those that are telemarketing
calls because they do not keep such records. In other instances,
telemarketers who run telemarketing campaigns on behalf of numerous
sellers or non-profit charitable organizations assert they cannot
identify the telemarketing calls they made on behalf of a particular
client. Without such information, the Commission cannot readily
determine whether all the calls pertain to a particular telemarketing
campaign the Commission is seeking information about or if the calls
are for an unrelated seller and telemarketing campaign.
The ability to associate relevant call detail records with
information on the nature and content of the call is also critical for
inbound telemarketing campaigns. Although many such calls are exempt
from the TSR under Sec. 310.6(b)(4) through (b)(6), the exemptions do
not apply to all inbound telemarketing calls and many such calls must
still comply with the TSR.\48\ Telemarketers frequently claim the voice
provider's records of their inbound calls (when they exist) do not
uniformly reflect calls that would be subject to the TSR. For example,
they claim the voice providers' records of inbound calls include
customer service calls that would be exempt from the TSR.
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\48\ 16 CFR 310.6(b)(5) and (6) (e.g., inbound telemarketing
calls regarding prize promotions, investment opportunities, and debt
relief services, among others, are excluded from the inbound
telemarketing exemption).
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Sellers or telemarketers are in the best position to have
information about their telemarketing calls. Thus, the Commission
proposes new recordkeeping requirements that require sellers and
telemarketers to retain records of this information. Such records are
important in enabling the Commission to ascertain what sections of the
TSR apply to their telemarketing campaigns and whether the
telemarketing campaigns are compliant with the TSR.
The Commission also proposes to clarify existing recordkeeping
requirements to address telemarketers' and sellers' frequent assertion
that the TSR does not apply to their telemarketing campaigns because
one of the TSR exemptions applies. Commonly asserted defenses to the
FTC's law enforcement actions include that the calls were sales calls
to business entities and not consumers, the seller or telemarketer has
an EBR or EWA to make calls to consumers registered on the DNC
Registry, or the seller has an express agreement, in writing,
authorizing that particular seller to place robocalls to a consumer.
Another frequently asserted defense is the consumer never requested to
be placed on the entity-specific do-not-call list, made the request
only after the telemarketing call had been made, or the consumer had
asked to be placed on the entity-specific do-not-call list for one
seller but the telemarketer had made subsequent calls on behalf of a
different seller.
While the Commission has amended the TSR to address some of these
defenses, making clear the seller or telemarketer bears the burden of
proof,\49\ some sellers and telemarketers still assert the defense in
response to law enforcement inquiries even if their records are
incomplete. For example, in some instances, the telemarketer's
purported proof of a consumer's express written agreement is simply a
list of the consumers' IP addresses and timestamps of the purported
agreement. The Commission does not believe that information is
sufficient proof to demonstrate a consumer has provided express written
agreement to receive robocalls or to receive outbound telemarketing
calls when a consumer has placed her phone number on the FTC's DNC
Registry. Thus, in addition to proposing new recordkeeping
requirements, the Commission also proposes amending existing
[[Page 33682]]
recordkeeping provisions to provide further guidance and clarification
on the type of information necessary to assert an applicable
affirmative defense.
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\49\ See, e.g., 2015 TSR Amendments, 80 FR at 77555-56.
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D. Public Comments on Recordkeeping
In 2014, the Commission embarked on a regulatory review of the TSR,
in which it sought feedback on a number of issues including the
existing recordkeeping requirements.\50\ It raised some of the
challenges the Commission has faced in bringing enforcement actions
under the TSR, including the difficulty in obtaining call detail
records, and sought feedback on whether the current recordkeeping
requirements are sufficient for law enforcement agencies to enforce the
Rule's DNC provisions.\51\ Specifically, the Commission raised the
possibility of requiring sellers and telemarketers to ``retain records
of the telemarketing calls they have placed'' to address the
Commission's ongoing law enforcement challenges. It asked for public
comments on: (1) The cost and burden that the lack of such a
requirement imposed on law enforcement and consumers, (2) the cost and
burden such a provision would impose, particularly for small
businesses, and (3) whether there is an alternative solution that would
reduce the law enforcement challenges and minimize the burden on
industry.\52\
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\50\ See 2014 TSR Rule Review, 79 FR 46732, 46735 (Aug. 11,
2014).
\51\ Id.
\52\ Id. at 46738.
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The Commission received comments from other state and federal law
enforcement agencies confirming the problems the Commission has
experienced in enforcing the TSR are not unique to the agency.\53\ The
Department of Justice (``DOJ'') cited ``extreme difficulties'' in
obtaining call records from voice providers that provide usable
information because they ``may contain, among other things, non-
telemarketing calls'' or calls by telemarketers for other clients not
targeted in the investigation.\54\ DOJ also argued the burden of
keeping call detail records would be ``slight'' since ``computer data
storage prices are no longer an obstacle to maintaining records,'' and
stated it is ``confident that most, if not all, reputable sellers and
telemarketers currently maintain accurate records of their outbound
calls.'' \55\
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\53\ The public comments submitted in response to the 2014 TSR
Rule Review are available at <a href="https://www.ftc.gov/policy/public-comments/2014/08/initiative-578">https://www.ftc.gov/policy/public-comments/2014/08/initiative-578</a> (last visited Jan. 31, 2022).
\54\ DOJ, No. 00111, at 1. DOJ notes that multiple defendants
have ``asserte[d] as a defense the inaccuracies of their own
telemarketing call records.'' Id. (emphasis in original).
\55\ Id. at 2.
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The National Association of Attorneys General (``NAAG'') stated in
its experience subpoenas to voice providers are ``time-consuming and
frequently fruitless,'' with those served on offshore voice providers
going unanswered and U.S. voice providers either refusing to provide
the records or requesting an ``exorbitant fee for doing so.'' \56\ NAAG
also argued ``savings realized by telemarketers'' from modern dialing
technologies ``should not be realized at the expense of law
enforcement's resources and consumer protection.'' \57\
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\56\ NAAG, No. 00117, at 11-12.
\57\ Id. at 12.
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Consumer advocacy groups concurred that requiring the retention of
outbound call detail records would benefit consumers. The National
Consumer Law Center, Consumer Federation of America, Americans for
Financial Reform, Consumers Union, Consumer Action, Consumer Federation
of California, The Maryland Consumer Rights Coalition, National
Association of Consumer Advocates, U.S. PIRG, Virginia Citizens
Consumer Council, and Consumer Assistance Council, Inc. of Cape Cod and
the Islands (collectively, ``NCLC, et al.'') submitted a joint comment
supporting a recordkeeping requirement for all outbound telemarketing
calls, and further advocating sellers and telemarketers should also be
required to record the entirety of all completed calls so it is
possible to examine the ``overall net impression'' of the
representations made to determine if they are unfair or deceptive.\58\
AARP argued that in addition to call detail records, sellers and
telemarketers should also maintain complete recordings of calls to
``ease the burden on federal and state enforcers as well as make it
easier for citizens to bring private cases.'' \59\ Another commenter
also noted ``TCPA plaintiffs would benefit from companies keeping
internal records.'' \60\
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\58\ NCLC et. al., No. 00110, at 10.
\59\ AARP, No.00097, at 5.
\60\ West Italian, No. 00113, at 3.
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Industry comments generally opposed any mandatory requirement to
maintain call detail records, arguing that imposing such a requirement
would be overly burdensome, particularly for small businesses.\61\ None
of the industry comments, however, provided concrete information or
data on the costs associated with requiring telemarketers to maintain
call detail records, nor did they suggest any alternative solutions
that address the Commission's law enforcement challenges while
minimizing the burden on industry.
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\61\ See, e.g., Professional Association for Customer Engagement
(``PACE''), No. 00107, at 5; American Bankers Insurance Association
(``ABIA''), No. 00106, at 1, 3; National Automobile Dealers
Association (``NADA''), No. 00112, at 2.
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Additionally, a few industry comments confirmed some businesses are
already requiring telemarketers to retain call detail records in the
regular course of business.\62\ Notably, the Association of Magazine
Media (``MPA'') supported requiring ``telemarketers to retain their own
call records'' as a ``reasonable and workable approach.'' \63\ MPA also
stated ``[s]ome magazine publishers are currently requiring third party
telemarketing providers to maintain outbound call records for three
years,'' and argued recordkeeping requirements would provide ``an added
layer of transparency that further blocks opportunities for fraudulent
behavior.'' \64\
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\62\ See American Resort Development Association (``ARDA''),
No.00100, at 7; Association of Magazine Media (``MPA''), No. 00116,
at 4.
\63\ MPA, No. 00116, at 4.
\64\ Id.
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E. The Business-to-Business Exemption
The Original TSR included an exemption for B2B calls other than B2B
calls that sold office and cleaning supplies.\65\ The Commission
decided not to exempt from the TSR B2B calls that sold office and
cleaning supplies because, in the Commission's experience, those calls
were ``by far the most significant business-to-business problem'' at
the time.\66\ The Commission also commented it would ``reconsider that
position if additional business-to-business telemarketing activities
become problems after the Final Rule has been in effect.'' \67\
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\65\ Original TSR, 60 FR at 43867.
\66\ Original TSR at 43861.
\67\ Id.
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In 2003, the Commission reconsidered the scope of the B2B exemption
and issued a Notice of Proposed Rulemaking that would require B2B sales
of internet or web services to also comply with the TSR.\68\ The
Commission explained the sale of these services had ``increased
dramatically'' and these product areas
[[Page 33683]]
``ha[d] emerged as one of the leading sources of complaints.'' \69\ 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.'' \70\ 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.'' \71\
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\68\ 2002 notice of proposed rulemaking, 67 FR at 4500.
``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.
\69\ Id. at 4531.
\70\ 2003 TSR Amendments 68 FR at 4663.
\71\ Id.
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Since 2003, the Commission has continued to see businesses harmed
by deceptive B2B telemarketing. Deceptive B2B telemarketing comes in
many forms,\72\ including schemes that sell business directory
listings,\73\ web hosting or design services,\74\ search engine
optimization services,\75\ and market-specific advertising
opportunities,\76\ as well as schemes that impersonate the
government.\77\ 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 of 2018.\78\ The
Commission believes it is now time to reassess the B2B exemption and
address problems associated with B2B telemarketing.
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\72\ 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 <a href="https://www.bbb.org/SmallBizScams">https://www.bbb.org/SmallBizScams</a> (last visited Jan. 31, 2022).
\73\ See, e.g., FTC v. Your Yellow Book Inc., No. 14-cv-786-D
(W.D. Ok. July 24, 2014), available at <a href="https://www.ftc.gov/system/files/documents/cases/140807youryellowbookcmpt.pdf">https://www.ftc.gov/system/files/documents/cases/140807youryellowbookcmpt.pdf</a> (last visited
Jan. 31, 2022); FTC v. <a href="http://OnlineYellowPagesToday.com">OnlineYellowPagesToday.com</a>, Inc., No. 14-cv-
0838 RAJ (W.D. Wa. June 9, 2014), available at <a href="https://www.ftc.gov/system/files/documents/cases/140717onlineyellowpagescmpt.pdf">https://www.ftc.gov/system/files/documents/cases/140717onlineyellowpagescmpt.pdf</a> (last
visited last visited Jan. 31, 2022); FTC v. Modern Tech. Inc., et.
al., No. 13-cv-8257 (Nov. 18, 2013) available at <a href="https://www.ftc.gov/sites/default/files/documents/cases/131119yellowpagescmpt.pdf">https://www.ftc.gov/sites/default/files/documents/cases/131119yellowpagescmpt.pdf</a> (last visited Jan. 31, 2022); FTC v.
6555381 Canada Inc. d/b/a Reed Publishing, No. 09-cv-3158 (N.D. Ill.
May 27, 2009) available at <a href="https://www.ftc.gov/sites/default/files/documents/cases/2009/06/090602reedcmpt.pdf">https://www.ftc.gov/sites/default/files/documents/cases/2009/06/090602reedcmpt.pdf</a> (last visited Jan. 31,
2022); FTC v. 6654916 Canada Inc. d/b/a Nat'l. Yellow Pages Online,
Inc., No. 09-cv-3159 (N.D. Ill. May 27, 2009), available at <a href="https://www.ftc.gov/sites/default/files/documents/cases/2009/06/090602nypocmpt.pdf">https://www.ftc.gov/sites/default/files/documents/cases/2009/06/090602nypocmpt.pdf</a> (last visited Jan. 31, 2022); FTC v. Integration
Media, Inc., No. 09-cv-3160 (N.D. Ill. May 27, 2009), available at
<a href="https://www.ftc.gov/sites/default/files/documents/cases/2009/06/090602goamcmpt.pdf">https://www.ftc.gov/sites/default/files/documents/cases/2009/06/090602goamcmpt.pdf</a> (last visited Jan. 31, 2022); FTC v. Datacom
Mktg. Inc., et. al., No. 06-cv-2574 (N.D. Ill. May 9, 2006),
available at <a href="https://www.ftc.gov/sites/default/files/documents/cases/2006/05/060509datacomcomplaint.pdf">https://www.ftc.gov/sites/default/files/documents/cases/2006/05/060509datacomcomplaint.pdf</a> (last visited Jan. 31,
2022); FTC v. Datatech Commc'ns, Inc., No. 03-cv-6249 (N.D. Il. Aug.
3, 2005) (filing amended complaint), available at <a href="https://www.ftc.gov/sites/default/files/documents/cases/2005/08/050825compdatatech.pdf">https://www.ftc.gov/sites/default/files/documents/cases/2005/08/050825compdatatech.pdf</a> (last visited Jan. 31, 2022); FTC v. Ambus
Registry, Inc., No. 03-cv-1294 RBL (W.D. Wa. June 16, 2003),
available at <a href="https://www.ftc.gov/sites/default/files/documents/cases/2003/07/ambuscomp.pdf">https://www.ftc.gov/sites/default/files/documents/cases/2003/07/ambuscomp.pdf</a> (last visited Jan. 31, 2022).
\74\ See FTC v. Epixtar Corp., et. al., No. 03-cv-8511(DAB)
(S.D.N.Y. Nov. 3, 2003), available at <a href="https://www.ftc.gov/sites/default/files/documents/cases/2003/11/031103comp0323124.pdf">https://www.ftc.gov/sites/default/files/documents/cases/2003/11/031103comp0323124.pdf</a> (last
visited Jan. 31, 2022); FTC v. Mercury Marketing of Delaware, 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
<a href="https://www.ftc.gov/sites/default/files/documents/cases/2003/08/030812contempmercurymarketing.pdf">https://www.ftc.gov/sites/default/files/documents/cases/2003/08/030812contempmercurymarketing.pdf</a> (last visited Jan. 31, 2022).
\75\ See, e.g., FTC v. Pointbreak Media, LLC, No. 18-cv-61017-
CMA (S.D. Fla. May 7, 2018), available at <a href="https://www.ftc.gov/system/files/documents/cases/matter_1723182_pointbreak_complaint.pdf">https://www.ftc.gov/system/files/documents/cases/matter_1723182_pointbreak_complaint.pdf</a>
(last visited Jan. 31, 2022); FTC v. 7051620 Canada, Inc. No. 14-cv-
22132 (S.D. Fla. June 9, 2014), available at <a href="https://www.ftc.gov/system/files/documents/cases/140717nationalbusadcmpt.pdf">https://www.ftc.gov/system/files/documents/cases/140717nationalbusadcmpt.pdf</a> (last
visited Jan. 31, 2022).
\76\ See, e.g., FTC v. Production Media Co., No. 20-cv-00143-BR
(D. Or. Jan. 23, 2020), available at <a href="https://www.ftc.gov/system/files/documents/cases/production_media_complaint.pdf">https://www.ftc.gov/system/files/documents/cases/production_media_complaint.pdf</a> (last visited
Jan. 31, 2022).
\77\ See, e.g., FTC v. <a href="http://DOTAuthority.com">DOTAuthority.com</a>, No. 16-cv-62186 (S.D.
Fla. Sept. 13, 2016) available at <a href="https://www.ftc.gov/system/files/documents/cases/162017dotauthoriity-cmpt.pdf">https://www.ftc.gov/system/files/documents/cases/162017dotauthoriity-cmpt.pdf</a> (last visited Jan. 31,
2022); FTC v. D & S Mktg. Solutions LLC, No. 16-cv-01435-MSS-AAS
(M.D. Fla. June 6, 2016), available at <a href="https://www.ftc.gov/system/files/documents/cases/160621dsmarketingcmpt.pdf">https://www.ftc.gov/system/files/documents/cases/160621dsmarketingcmpt.pdf</a> (last visited Jan.
31, 2022).
\78\ 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 <a href="https://www.ftc.gov/news-events/press-releases/2018/06/ftc-bbb-law-enforcement-partners-announce-results-operation-main">https://www.ftc.gov/news-events/press-releases/2018/06/ftc-bbb-law-enforcement-partners-announce-results-operation-main</a>
(last visited Jan. 31, 2022).
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The Commission is issuing an ANPR that seeks comments on the B2B
exemption generally, including comments addressing whether the
Commission should remove the exemption entirely.\79\ The Commission
recognizes requiring all B2B calls to comply with all TSR requirements
would be a significant change that will require careful
consideration.\80\ While that process is underway, the Commission
proposes in this NPRM to require all B2B telemarketing calls to comply
with the TSR's existing prohibitions on misrepresentations articulated
in Sec. 310.3(a)(2) and (4).
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\79\ The ANPR is published elsewhere in this issue of the
Federal Register.
\80\ Among other things, it would require telemarketers to
ensure their recordkeeping systems comply with the TSR's
requirements, pay fees to access the National Do Not Call Registry,
and provide mandatory disclosures in telemarketing calls. See, e.g.,
16 CFR 310.3(a)(1) (required disclosures); 310.5 (recordkeeping
requirements); 310.8 (fee for access to the Do Not Call Registry).
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When the Commission issues a rule prohibiting deceptive practices
pursuant to the Telemarketing Act, the Commission assesses whether the
rule prohibits conduct that involves a material representation likely
to mislead consumers acting reasonably under the circumstances.\81\
When the Commission included the prohibition on specific material
misrepresentations \82\ in Sec. 310.3(a)(2) of the original TSR, the
Commission identified these particular misrepresentations ``based on
established case law and the Commission's policy statement on
deception.'' \83\ The prohibition in Sec. 310.3(a)(4) on making false
or misleading statements to induce any person to pay for goods or
services or induce a charitable contribution was included to prohibit
sellers ``from gaining access to consumers' money through false and
misleading statements.'' \84\ The prohibitions in Sec. 310.3(a)(2) and
(4) have been critical tools in the Commission's efforts to combat
deceptive telemarketing.
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\81\ See 15 U.S.C. 6102(a); 2003 TSR Amendments, 68 FR at 4612.
The Commission assesses abusive telemarketing practices using its
traditional unfairness analysis. See, e.g., 2013 Notice of Proposed
Rulemaking, 78 FR 41201 (July 9, 2013).
\82\ 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, or the seller's affiliation with or
endorsement by any person or government agency. See 16 CFR
310.3(a)(2)(i) through (vii).
\83\ Original TSR at 43848. The Commission added Sec.
310.3(a)(2)(x) in 2010. 2010 TSR Amendments, 75 FR at 48498. This
section contains prohibitions ``related to the sale of debt relief
services,'' which the Commission also determined are likely to be
material and misleading.
\84\ Id. at 43851. The Commission created a broad prohibition to
``provide[ ] law enforcement with flexibility to address new ways
that sellers and telemarketers engaged in fraud might attempt to
take consumers' money.'' Id.
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The Commission is of the view that requiring B2B calls to comply
with these provisions should not impose any burden on the telemarketing
industry because Section 5 of the FTC Act generally prohibits
telemarketers from making misrepresentations when they sell products or
solicit charitable contributions.\85\ As noted above, the Commission is
not, at this time, proposing B2B sellers and telemarketers comply with
other provisions of the TSR, such as the TSR's recordkeeping
requirements, or the requirements that
[[Page 33684]]
sellers and telemarketers access the Do Not Call Registry and pay
fees.\86\
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\85\ 15 U.S.C. 45(a)(1).
\86\ See 16 CFR 310.5 (recordkeeping requirements); Sec. 310.8
(fee for access to the Do Not Call Registry).
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III. Proposed Revisions
The Commission proposes amending the Sec. 310.5 recordkeeping
provisions to require sellers and telemarketers to maintain additional
records of their telemarketing activities. The proposed amendments
identify specific records that, in the Commission's law enforcement
experience, are difficult for the Commission to obtain if the
telemarketer or seller does not maintain these records, but are
necessary for the Commission to ensure compliance with the TSR.
The proposed amendments also clarify certain of the existing
recordkeeping requirements by providing additional guidance to sellers
and telemarketers regarding what the Commission considers a complete
record and the penalties for failing to keep such records. In
developing the proposed amendments, the Commission carefully considered
the types of records sellers and telemarketers likely keep in the
ordinary course of business, any additional burden the proposed
amendments would impose, and the types of records the Commission
considers necessary to enforce the TSR.
The Commission also proposes amending the exemption for B2B
telemarketing calls in Sec. 310.6(b)(7) to require all such calls to
comply with Sec. 310.3(a)(2) and (4). The proposed amendments would
provide businesses the same protections the TSR provides consumers
against misrepresentations. Finally, the Commission proposes adding a
definition of ``previous donor'' to effectuate its original intent in
the 2008 TSR Amendments.
The Commission invites written comments on the proposed amendments,
and in particular, seeks answers to the questions set forth in Section
IV below. The written comments will assist the Commission in
determining whether to implement the proposed amendments and whether
the amendments as proposed strike an appropriate balance between the
goal of protecting consumers from deceptive and abusive telemarketing
and harm from imposing compliance burdens.
A. New Recordkeeping Requirements
The proposed amendments require sellers and telemarketers to retain
new categories of information the Commission considers necessary for it
to pursue law enforcement actions against those who have violated the
TSR. Specifically, the proposed amendments require the retention of the
following new categories: (1) A copy of each unique prerecorded
message; (2) call detail records of telemarketing campaigns; (3)
records sufficient to show a seller has an established business
relationship with a consumer; (4) records sufficient to show a consumer
is a previous donor to a particular charitable organization; (5)
records of the service providers 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.\87\
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\87\ As discussed in Sections III.A.3 and III.A.4, the proposed
amendments requiring records of EBR or previous donor status will
only apply if a seller or telemarketer intends to assert that a
consumer has an EBR with the seller or is a previous donor to a
particular charitable organization.
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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 proposed
amendments to Sec. 310.5(a)(1) would require telemarketers and sellers
to also keep a copy of each unique prerecorded message they use in
telemarketing, including each call a telemarketer makes using
soundboard technology.\88\ In the FTC's law enforcement experience,
records of each unique prerecorded message are necessary for the
Commission to ensure compliance with the TSR. The Commission does not
believe keeping copies of each unique robocall will be unduly
burdensome because the recordings are typically of short duration. For
calls utilizing soundboard technology, the Commission is mindful such
calls may be of longer duration than a typical robocall. As such, the
Commission seeks 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.\89\
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\88\ 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 <a href="https://www.ftc.gov/system/files/documents/advisory_opinions/letter-lois-greisman-associate-director-division-marketing-practices-michael-bills/161110staffopsoundboarding.pdf">https://www.ftc.gov/system/files/documents/advisory_opinions/letter-lois-greisman-associate-director-division-marketing-practices-michael-bills/161110staffopsoundboarding.pdf</a>
(last visited Jan. 31, 2022).
\89\ See infra Section IV.B.4.
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The proposed amendments also clarify a copy of each substantially
different advertising, brochure, telemarketing script, promotional
material, and each unique robocall constitutes one record, and failure
to keep one substantially different version of such records is one
violation of the TSR.\90\ This provision applies to each telemarketing
script, including robocall and upsell scripts. Telemarketers or sellers
would be required to keep such records for 5 years from the date the
record is no longer used in telemarketing. The Commission is proposing
to modify this time period so it dates from the time the record is no
longer in use to account for the possibility the advertisement may be
in use for more than 5 years, which would exceed the proposed
recordkeeping time period.
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\90\ See infra Section III.B.6 (clarifying that a failure to
keep one record constitutes one violation of the TSR).
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2. Sec. 310.5(a)(2)--Call Detail Records
As discussed above, the Commission frequently has difficulty
obtaining the call detail and other records of a seller or
telemarketer's telemarketing activities.\91\ Ensuring the availability
of such records is necessary to enable the Commission to adequately
determine whether the telemarketer or seller is complying with the
TSR.\92\
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\91\ See supra Section II.C
\92\ See supra Section II.C-D.
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To address these problems, the Commission proposes to amend the TSR
to add Sec. 310.5(a)(2), which would require the retention of call
detail records. Such 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 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.
The proposed addition of Sec. 310.5(a)(2) would require the
retention of other 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
[[Page 33685]]
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 robocall (if applicable) that was used in the call.
Finally, proposed Sec. 310.5(a)(2) would require 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.
As stated above, the proposed addition of Sec. 310.5(a)(2) is
necessary for the Commission to determine whether the TSR applies to
the calls in the telemarketing campaign and which particular sections
of the TSR the seller and telemarketer must comply with for that
particular telemarketing campaign.\93\
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\93\ See supra Section II.C.
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Although some consumer advocates recommended telemarketers and
sellers should also be required to retain recordings of all their
telemarketing calls,\94\ the Commission believes at this time, it would
be overly burdensome to require retention of call recordings of each
telemarketing call, particularly for small businesses. Requiring
telemarketers and sellers to retain records of the substantially
different telemarketing script(s) and unique robocall used in each call
should provide the Commission with sufficient information regarding the
content of the call, thus striking an appropriate balance between the
Commission's interest in ensuring compliance with the TSR and avoiding
the imposition of unnecessary burdens on businesses.
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\94\ See NCLC, No. 00110, at 10 (recommending that sellers keep
recordings of all outbound calls); AARP, No.00097, at 5 (same). In
response to the FTC's Advance Notice of Proposed Rulemaking
Concerning the Use of Prenotification Negative Option Plans, 84. FR
52393 (Oct. 2, 2019), a number of state attorneys general (``State
AGs'') submitted a comment requesting amendments to the TSR to
address negative option offers. Specifically, the State AGs
suggested that for all negative option offers, sellers and
telemarketers should ``record the entire transaction and retain it
for a specified period of time and provide a full refund if the
consumer [complains] of unauthorized charges, unless the company is
able to provide the consumer with the recording of the phone call
establishing the consumer's affirmative consent to be charged.'' See
State AGs' Comment (#0082-0012), available at <a href="https://www.regulations.gov/comment/FTC-2019-0082-0012">https://www.regulations.gov/comment/FTC-2019-0082-0012</a> (last visited Jan.
31, 2022). For the reasons stated above and the reasons stated in
Section IV.C of the Advance Notice of Proposed Rulemaking that the
Commission is issuing simultaneously with this NPRM, the Commission
does not believe imposing this requirement is necessary.
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The Commission also believes implementing this new provision should
not be overly burdensome for telemarketers or sellers since the cost of
electronic storage is decreasing over time.\95\ Additionally, given the
prevalent use of technology such as autodialers in telemarketing
campaigns, the Commission believes telemarketers likely already prepare
similar call detail records in the regular course of business and can
do so in an automated fashion. For the categories of information that
may not be generated in an automated fashion, such as records of which
script was used in the telemarketing calls, the seller's identity, or
other information regarding the content of the call, the Commission
believes telemarketers should be able to create a record of this
information without much difficulty. For example, if the script
contains information about the identity of the seller and the product
or service being sold or the charitable purpose for which contributions
are being solicited, the telemarketer or seller need only keep records
of which telemarketing script is used for a particular telemarketing
campaign.
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\95\ For example, electronic storage can cost $.74 per gigabyte
for onsite storage including hardware, software, and personnel
costs. See Gartner, Inc. ``IT Key Metrics Data 2020: Infrastructure
Measures--Storage Analysis.'' Gartner December 18, 2019.
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3. Sec. 310.5(a)(5)--Established Business Relationship
As discussed above, the Commission proposes adding Sec.
310.5(a)(5) to further clarify what records a seller must keep in order
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.\96\ The Commission does not believe adding
this provision to the recordkeeping requirements will impose any
significant burdens on sellers or telemarketers because sellers or
telemarketers must already collect and use this information to ensure
they are complying with the requirements of this affirmative defense.
They are only being asked to retain the records demonstrating their
compliance.
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\96\ 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
establish EBR under these circumstances. See infra Section III.B.3.
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4. Sec. 310.5(a)(6)--Previous Donor
Similar to the EBR requirements described above, the Commission
also proposes adding Sec. 310.5(a)(6) to clarify that if a
telemarketer intends to assert a consumer is a previous donor to a
particular non-profit charitable organization,\97\ 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 non-profit charitable organization. The Commission
does not believe this provision will impose any new burdens on
telemarketers since this is information a non-profit charitable
organization already keeps and telemarketers that comply with the TSR
will likely seek this information in the ordinary course of business.
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\97\ The Commission also proposes adding a new definition of
``previous donor.'' See supra Section II.A.
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5. Sec. 310.5(a)(9)--Other Service Providers
The Commission proposes including a new record keeping requirement
in Sec. 310.5(a)(9) requiring sellers and telemarketers to keep
records of all service providers the telemarketer uses to deliver
outbound calls in each telemarketing campaign. Such service providers
include, but are not limited to, voice providers, autodialers, sub-
contracting telemarketers, or soundboard technology platforms. The
Commission does not intend for this provision to include every voice
provider involved in delivering the outbound call, but limits 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 Commission also proposes that the seller or telemarketer
maintain such records for five years from the date the contract expires
or five years from the date the telemarketing activity covered by the
contract ceases, whichever is shorter. The Commission proposes that the
telemarketer or seller maintain such records for that specified time
period to provide the Commission and other law enforcement agencies
sufficient time to complete any investigation of noncompliance. Such
information is
[[Page 33686]]
necessary for the Commission to determine whether any other entities
assisted and facilitated in violating the TSR. The Commission
calculates the five-year period from the date the contract expires or
the date the telemarketing activity ceases rather than the date the
contract was signed to account for the possibility the contract could
be of long-standing duration. The Commission does not believe this
requirement is overly burdensome because telemarketers and sellers
likely keep such records in the ordinary course of business.
6. Sec. Sec. 310.5(a)(10) and (11)--DNC and Entity-Specific DNC
The NPRM also includes two new provisions requiring telemarketers
and sellers to maintain for five years records related to the entity-
specific do-not-call registry and the FTC's DNC Registry. For the
entity-specific do-not-call registry, the Commission proposes 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.
For the FTC's DNC Registry, the Commission proposes 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. The Commission does not believe these two proposed
recordkeeping requirements impose a substantial burden on the
telemarketer or seller since telemarketers complying with the TSR
already keep such records in the ordinary course of business to avail
themselves of the TSR's safe harbor provisions.\98\
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\98\ 16 CFR 310.4(b)(3)(iii) and (b)(3)(iv).
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The Commission, however, invites public comment on whether and for
how long telemarketers and sellers maintain records in the ordinary
course of business of every version of the FTC's DNC Registry they
access to comply with the TSR's safe harbor rules, and if not, whether
requiring them to do so would be overly burdensome. The Commission also
invites comment from other law enforcement agencies and any other
interested parties regarding whether a record of the name of the
telemarketer or seller who accessed the registry, the subscription
account number used to access the registry, the telemarketing campaign
for which it was accessed, and the date of access would suffice to
ensure telemarketers and sellers are complying with the TSR.\99\
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\99\ See infra Section IV.B.9.
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B. Modification of Existing Recordkeeping Requirements
1. Time Period To Keep Records
In this NPRM, the Commission proposes changing the time period
telemarketers and sellers must keep records from two years to five
years from the date the record is made, except for Sec. 310.5(a)(1)
and (9), which require retention of records for five years from the
date such records are no longer in use.\100\ The Commission is
proposing to change the time period from two years to five years
because the Commission needs adequate time to complete its
investigations of non-compliance with the TSR. Given the additional
complexities of identifying the telemarketer and seller responsible for
particular telemarketing campaigns and gathering the necessary
evidence, two years is no longer a sufficient amount of time for the
Commission to fully complete its investigations of noncompliance. Given
the decreasing cost of data storage, the Commission does not believe
changing the length of time sellers and telemarketers are required to
keep records will be unduly burdensome.
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\100\ The records covered by these two sections include
advertising materials and the service providers who assisted in
outbound telemarketing, respectively. See supra Sections III.A.1 and
III.A.5.
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2. Sec. 310.5(a)(3)--Prize Recipients
The TSR currently requires telemarketers and sellers to retain the
``name and last known address'' of each prize recipient.\101\ The
Commission is proposing to modify this provision also to require
sellers and telemarketers to retain the last known telephone number and
the last known physical or email address for each prize recipient.\102\
The Commission is proposing this change to reflect current business
practices in communicating with customers. The Commission does not
believe retention of such records is unduly burdensome since
telemarketers and sellers likely keep such information in the regular
course of business.
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\101\ 16 CFR 310.5(a)(2).
\102\ The Commission proposes to modify the form of this section
so that it aligns with the new additions to Sec. 310.5(a) but makes
no substantive changes except adding the prize recipient's last
known phone number and last known physical or email address as
described above.
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3. Sec. 310.5(a)(4)--Customer Records
The TSR currently 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.'' \103\
To account for the new requirement telemarketers and sellers keep
records of each consumer with whom a seller intends to assert it has an
EBR, the Commission proposes modifying Sec. 310.5(a)(4) to require the
seller or telemarketer to keep records of the date the customer
purchased the good or service.\104\ The Commission also proposes
modifying Sec. 310.5(a)(4) to require the retention of the customer's
last known telephone number and the customer's last known physical
address or email address to account for current business practices in
communicating with existing customers. Because the Commission believes
sellers likely already keep records of this information in the ordinary
course of business, the Commission does not believe these modifications
will cause significant additional burden.
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\103\ 16 CFR 310.5(a)(3).
\104\ The Commission proposes to modify the form of this section
so that it aligns with the new additions to Sec. 310.5(a) but makes
no substantive changes except adding the date the customer purchased
the good or service, the customer's last known phone number, and the
customer's last known physical or email address as described above.
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The Commission recognizes requiring telemarketers and sellers to
retain information regarding consumers' names, phone numbers, and
either their email or physical addresses, in combination with the goods
or services they have purchased, raises privacy concerns. The
Commission emphasizes telemarketers and sellers have an obligation
under Section 5 of the FTC Act to adhere to commitments they make about
their information practices, and take reasonable measures to secure
consumers' data.\105\
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\105\ See generally Federal Trade Commission 2020 Privacy and
Data Security Update, available at <a href="https://www.ftc.gov/system/files/documents/reports/federal-trade-commission-2020-privacy-data-security-update/20210524_privacy_and_data_security_annual_update.pdf">https://www.ftc.gov/system/files/documents/reports/federal-trade-commission-2020-privacy-data-security-update/20210524_privacy_and_data_security_annual_update.pdf</a>
(last visited Jan. 31, 2022).
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4. Sec. 310.5(a)(8)--Records of Consent
Section 310.5(a)(5) of the TSR currently 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 [the TSR] .'' The Commission proposes
modifying this
[[Page 33687]]
requirement to keep records of verifiable authorizations, express
informed consent or express agreement (collectively, ``consent'') to
clarify what information the Commission believes is a complete record
sufficient for a telemarketer or seller to assert such an affirmative
defense.\106\ Specifically, for each consumer from whom a seller or
telemarketer states it has obtained consent, the Commission proposes
requiring sellers or telemarketers to 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.
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\106\ See supra Section II.C at 14 (a list of consumer IP
addresses is not a complete record of consent when the Commission
cannot tell the name of the consumer allegedly providing consent and
cannot know the nature of the purported consent).
---------------------------------------------------------------------------
For a copy of the consent provided under Sec. 310.3(a)(3),
310.4(a)(7), (b)(1)(iii)(B)(1), or (b)(1)(v)(A), a complete record must
include all of the requirements outlined in those respective sections.
For example, a copy of the consent provided to receive prerecorded
sales messages under Sec. 310.4(b)(1)(v)(A) must evidence, in writing:
(1) The consumer's name, telephone number, and signature; (2) the
consumer states she is willing to receive prerecorded messages from or
on behalf of a specific seller; (3) 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) the seller did not condition the
sale of the relevant good or service on the consumer providing consent
to receive prerecorded messages.
If the telemarketer or seller requested consent verbally, the copy
of consent requested need not be a recording of the conversation unless
such a recording is required by another provision of the TSR. For such
consent requests, unless such a recording is required by another
provision of the TSR, a copy of the telemarketing script of the request
for consent will suffice as a complete record. The Commission does not
believe requiring the telemarketer or seller to keep records of consent
imposes significant additional burden since it is likely telemarketers
and sellers who comply with the TSR already keep such records in the
ordinary course of business.
5. Sec. 310.5(b)--Format of Records
The NPRM includes a modification to the formatting requirements for
records that include phone numbers, time, or duration. For such
records, the Commission proposes to require that international phone
numbers must comport with the International Telecommunications Union's
Recommendation E.164 format and domestic numbers must comport with the
North American Numbering plan. For time and duration, the Commission
proposes such records be kept to the closest whole second, and time
must be recorded in Coordinated Universal Time (UTC). The Commission
does not believe specifying these format requirements will cause any
undue burden since the numbering formats are standard practice across
the telecommunications industry, and the proposed time and duration
formats are widely used, so sellers and telemarketers can easily select
them when they set up an automated method of maintaining call detail
records.
6. Sec. 310.5(c)--Violation of Recordkeeping Provisions
The Commission proposes clarifying that the failure to keep each
record required by Sec. 310.5 in a complete and accurate manner
constitutes a violation of this Rule. The Commission wants to state
clearly that a violation does not mean a failure to keep all records,
but instead that failure to keep each required record constitutes a
separate violation. To do otherwise would create a perverse incentive
for deceptive telemarketers to choose not to comply with the
recordkeeping provisions when the only consequence would be liability
for a single violation of the TSR. Such an outcome would negate the
entire purpose of implementing recordkeeping requirements.
7. Sec. 310.5(d)--Safe Harbor for Incomplete or Inaccurate Records
Kept Pursuant to Sec. 310.5(a)(2)
The Commission proposes including a safe harbor provision for
temporary and inadvertent errors in keeping call detail records
pursuant to Sec. 310.5(a)(2). Specifically, a seller or telemarketer
would not be liable for failing to keep records under Sec. 310.5(a)(2)
if it can demonstrate: (1) It has established and implemented
procedures to ensure completeness and accuracy of its records under
Sec. 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 Sec. 310.5(a)(2) was temporary and
inadvertent.
The Commission believes providing a safe harbor for the
recordkeeping requirements under Sec. 310.5(a)(2) is appropriate since
the process of maintaining such records will likely be automated by
technology, and telemarketers and sellers should not be held liable
under this section of the TSR for brief and inadvertent technological
errors so long as they make good faith efforts to comply.
8. Sec. 310.5(e)--Compliance Obligations
The Commission also proposes modifying the compliance obligations
in Sec. 310.5(e). In the event the seller and telemarketer fail to
allocate responsibility for maintaining the required records, the TSR
currently designates which recordkeeping obligations fall on the
telemarketer and which fall on the seller. The Commission is proposing
to modify the TSR so that if the seller and telemarketer fail to
allocate recordkeeping obligations between themselves, the
responsibility for complying with this Section will fall on both
parties. This would avoid disputes between sellers and telemarketers
over which party is responsible for recordkeeping. Also, because the
parties may still allocate the recordkeeping obligations, the
Commission does not believe modifying this provision would alter the
overall burden of complying with the TSR; rather, it should incentivize
the parties to delineate clearly their respective responsibilities.
C. Modification of the B2B Exemption
The Commission proposes narrowing the B2B exemption to require B2B
telemarketing calls to comply with Sec. 310.3(a)(2)'s prohibition on
misrepresentations and Sec. 310.3(a)(4)'s prohibition on false or
misleading statements. The Commission believes a prohibition on such
deceptive conduct will protect businesses from illegal telemarketing
without burdening industry since the FTC Act already prohibits
businesses from making misrepresentations and false or misleading
statements.
D. New Definitions
The Commission proposes adding a new definition for the term
``previous donor'' to implement the Commission's original intent to
allow robocalls soliciting charitable donations on behalf of a
particular non-profit charitable organization only to consumers who
have an established relationship with that organization. The proposed
definition also specifies the consumer
[[Page 33688]]
must have made a donation to the non-profit charitable organization
within the two-year period immediately preceding the date of the
robocall. The Commission proposes implementing a time limit for the
existence of an established relationship and chose two years to account
for the possibility that consumers who donate annually may not
necessarily donate exactly one year apart (i.e., one year the consumer
might donate in January and the following year the consumer might not
donate until December). The Commission, however, seeks public comment
on whether two years is an appropriate time period to use in
determining whether the consumer has an established relationship with a
particular organization.
E. Corrections to the Rule
The Commission also proposes five corrections to the Rule. The
first is a clerical correction to the cross-reference citations in
Sec. 310.6(b)(1), (2), and (3) changing the cross-references from
Sec. 310.4(a)(1) and (7), (b), and (c) to Sec. 310.4(a)(1) and (8),
(b), and (c).
The second is modifying the time requirements in the definition of
EBR to change it from months to days. For Sec. 310.2(q)(1), the time
requirement to qualify for EBR will be modified from 18 months between
the date of the telephone call and financial transaction to 540 days.
For Sec. 310.2(q)(2), the time requirement to qualify for EBR will be
modified from three months between the date of the telephone call and
the date of the consumer's inquiry or application to 90 days. The
Commission is proposing these modifications to make the technical
calculations of whether a consumer has an EBR with a particular seller
easier to determine since the number of days to qualify would be fixed
instead of fluctuating depending on which months were applicable.
The third correction is to add an email address to Sec. 310.7 so
state officials or private litigants can more easily provide notice to
the Commission that the state official or private litigant intends to
bring an action under the Telemarketing Act.
The fourth correction is amending Sec. 310.5(a)(7) so it is
consistent in form with the new proposed additions to Sec. 310.5(a).
The substantive requirements of this section will remain the same.
The fifth correction is amending Sec. 310.5(f) to remove an
extraneous word. The substantive requirements of this section will
remain the same.
IV. Request for Comment
The Commission seeks comments on all aspects of the proposed
requirements, including the likely effectiveness of the proposed
requirements to combat violations of the TSR and any alternatives to
the proposed requirements. The Commission also seeks comments on the
estimated burden compliance with the proposed regulations will impose
on sellers and telemarketers. In their replies, commenters should
provide any available evidence and data that supports their position,
such as empirical data on the costs of complying with the proposed
amendments.
You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before August 2, 2022.
Write ``Telemarketing Sales Rule (16 CFR part 310--NPRM) (Project No.
R411001)'' on your comment. Your comment--including your name and your
state--will be placed on the public record of this proceeding,
including, to the extent practicable, on the <a href="https://www.regulations.gov">https://www.regulations.gov</a> website.
Because of the public health emergency in response to the COVID-19
outbreak and the agency's heightened security screening, postal mail
addressed to the Commission will be subject to delay. We strongly
encourage you to submit your comment online through the <a href="https://www.regulations.gov">https://www.regulations.gov</a> website. To ensure the Commission considers your
online comment, please follow the instructions on the web-based form.
If you file your comment on paper, write ``Telemarketing Sales Rule
(16 CFR part 310--NPRM) (Project No. R411001)'' on your comment and on
the envelope, and mail your comment to the following address: Federal
Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW,
Suite CC-5610 (Annex B), Washington, DC 20580, or deliver your comment
to the following address: Federal Trade Commission, Office of the
Secretary, Constitution Center, 400 7th Street SW, 5th Floor, Suite
5610 (Annex B), Washington, DC 20024. If possible, please submit your
paper comment to the Commission by courier or overnight service.
Because your comment will be placed on the publicly accessible
website, <a href="https://www.regulations.gov">https://www.regulations.gov</a>, you are solely responsible for
making sure your comment does not include any sensitive or confidential
information. In particular, your comment should not include any
sensitive personal information, such as your or anyone else's Social
Security number; date of birth; driver's license number or other state
identification number, or foreign country equivalent; passport number;
financial account number; or credit or debit card number. You are also
solely responsible for making sure your comment does not include any
sensitive health information, such as medical records or other
individually identifiable health information. In addition, your comment
should not include any ``trade secret or any commercial or financial
information which . . . is privileged or confidential''--as provided by
Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2),
16 CFR 4.10(a)(2)--including in particular competitively sensitive
information such as costs, sales statistics, inventories, formulas,
patterns, devices, manufacturing processes, or customer names.
Comments containing material for which confidential treatment is
requested must be filed in paper form, must be clearly labeled
``Confidential,'' and must comply with FTC Rule 4.9(c). In particular,
the written request for confidential treatment that accompanies the
comment must include the factual and legal basis for the request, and
must identify the specific portions of the comment to be withheld from
the public record. See FTC Rule 4.9(c). Your comment will be kept
confidential only if the General Counsel grants your request in
accordance with the law and the public interest. Once your comment has
been posted publicly at <a href="http://www.regulations.gov">www.regulations.gov</a>--as legally required by FTC
Rule 4.9(b)--we cannot redact or remove your comment from the FTC
website, unless you submit a confidentiality request that meets the
requirements for such treatment under FTC Rule 4.9(c), and the General
Counsel grants that request.
Visit the FTC website to read this document and the news release
describing it. The FTC Act and other laws the Commission administers
permit the collection of public comments to consider and use in this
proceeding as appropriate. The Commission will consider all timely and
responsive public comments it receives on or before August 2, 2022. For
information on the Commission's privacy policy, including routine uses
permitted by the Privacy Act, see <a href="https://www.ftc.gov/site-information/privacy-policy">https://www.ftc.gov/site-information/privacy-policy</a>.
In addition to the issues raised above, the Commission solicits
public comment on the list of questions below regarding the costs and
benefits of the proposed amendments. The Commission requests that
comments
[[Page 33689]]
provide the factual data upon which they are based. These questions are
designed to assist the public and should not be construed as a
limitation on the issues on which a public comment may be submitted.
A. General Questions for Comments
1. What would be the impact (including any benefits and costs), if
any, of the proposed amendments on consumers?
2. What would be the impact (including any benefits and costs), if
any, of the proposed amendments on individual firms (including small
businesses) that must comply with them?
3. What would be the impact (including any benefits and costs), if
any, on industry, including those who may be affected by the proposed
amendments but not obligated to comply with the Rule?
4. What changes, if any, should be made to the proposed amendments
to minimize any costs to consumers or to industry and individual firms
(including small businesses) that must comply with the Rule?
5. How would each change suggested in response to Question 4 affect
the benefits that might be provided by the proposed amendment to
consumers or to industry and individual firms (including small
businesses) that must comply with the Rule?
6. How would the proposed amendments impact small businesses with
respect to costs, profitability, competitiveness, and employment? What
other burdens, if any, would the proposed amendments impose on small
businesses, and in what ways could the proposed amendments be modified
to reduce any such costs or burdens?
7. How many small businesses would be affected by each of the
proposed amendments?
8. With respect to each of the proposed amendments, are there any
potentially duplicative, overlapping, or conflicting federal statutes,
rules, or policies currently in effect?
B. Specific Questions for Comments
1. Is 5 years an appropriate time period to require telemarketers
and sellers to maintain records? If not, what is an appropriate time
period and why?
2. What are the current practices of sellers and telemarketers in
keeping records of their telemarketing activities? How will the
proposed amendments alter the current practices?
3. Is the proposed requirement to retain a record of each unique
robocall recording used in telemarketing, under Sec. 310.5(a)(1),
overly burdensome? If so, what are the costs or burdens associated with
keeping a record of each unique robocall recording?
4. What are the costs or burdens associated with keeping a record
of each call in which soundboard technology is used? How many
telemarketers employ soundboard technology in telemarketing? How many
calls do telemarketers make on average in one year using soundboard
technology? What is the average duration of each call using soundboard
technology? Do telemarketers typically keep recordings of such calls in
the ordinary course of business? If so, how long do telemarketers
typically keep such recordings in the ordinary course of business?
5. Do the proposed recordkeeping requirements of 310.5(a)(2)
adequately identify all data categories a telemarketer or seller should
retain from the call detail records of their telemarketing activities?
If not, what data categories are missing? Alternatively, are there data
categories that are overly burdensome or unnecessary to ensure the
telemarketer and seller are complying with the TSR? If the data
categories are overly burdensome, is there an alternative proposal on
how a telemarketer or seller can retain the information from that data
category in a less burdensome manner?
6. Is the proposed requirement to identify the robocall recording
used in each call, under Sec. 310.5(a)(2), overly burdensome? If so,
what are the costs or burdens associated with this requirement? Is
there an alternative proposal that would still give the Commission
information on what robocall was used in the call but is less
burdensome for the seller or telemarketer?
7. Does the proposed amendment to Sec. 310.5(a)(8) adequately
describe the information the telemarketer or seller needs to retain to
provide proof of verifiable authorizations, express informed consent,
or express agreement? If not, what other information should the
telemarketer or seller be required to retain to show proof of
verifiable authorizations, express informed consent, or express
agreement?
8. Does the proposed amendment to Sec. 310.5(a)(8) require
sufficient records to demonstrate whether telemarketers or sellers who
obtain preacquired account information through data pass are authorized
to bill consumers? If not, what other information should the
telemarketer or seller be required to retain?
9. Does the proposed amendment to Sec. 310.5(a)(8) sufficiently
address any potential harms caused by telemarketers or sellers using
preacquired account information through data pass? Does it also
sufficiently address any new harms that have emerged since 2014 caused
by telemarketers or sellers using preacquired account information
through data pass? If not, what harms have emerged since 2014? What
other changes should be made to the TSR to address harms caused by data
pass of preacquired account information?
10. Does the proposed amendment in Sec. 310.5(a)(9) requiring the
telemarketer or seller to retain records of all service providers a
telemarketer uses to deliver an outbound call provide adequate guidance
on which service providers are referenced in this provision? If not, is
there an alternative description that would more accurately provide
guidance on what service providers a telemarketer or seller would need
to retain records of as required by this provision? Would such a
description be flexible enough to account for changes in the
telecommunications industry, including technological developments?
11. Should the Commission require the telemarketer or seller to
retain records of every version of the Commission's DNC Registry that
it downloaded to ensure compliance with the TSR or would requiring a
record of each instance the telemarketer or seller accessed the
registry, including the date of access, the subscription account number
used to access, the telemarketing campaign for which it was accessed,
and the entity that accessed the registry, be sufficient to ensure
compliance with the TSR?
12. Should the Commission include the safe harbor provision in
Sec. 310.5(d) for the retention of records identified in Sec.
310.5(a)(2)? Is such a safe harbor necessary? Alternatively, does the
proposed safe harbor provide adequate protection to the seller or
telemarketer against mistakes that cannot readily be prevented? Should
the safe harbor provision apply only to records identified in Sec.
310.5(a)(2) or should it also apply to other records required by Sec.
310.5?
13. Should sellers and telemarketers be allowed to decide by
contract which entity is responsible for retaining records under this
Rule? If not, should both sellers and telemarketers be required to
retain records under this Rule? Alternatively, should the Commission
specify which entity should be required to retain specific categories
of records?
14. Should the definition of previous donor include a two-year time
limit
[[Page 33690]]
after which a consumer is no longer considered a previous donor to a
particular charitable organization? If not, what is the appropriate
amount of time that can lapse before a consumer should no longer be
considered a previous donor to a particular charitable organization?
15. How many calls on average do sellers and telemarketers make per
year?
16. What call detail records do sellers and telemarketers currently
keep?
17. How much do sellers and telemarketers pay to retain call detail
records on a monthly basis?
18. Are there other costs associated with creating and preserving
call detail records?
19. How many different prerecorded messages do sellers and
telemarketers use with their campaigns and what is the file size of the
messages?
20. To what extent do existing recordkeeping requirements, such as
those found under the Telephone Consumer Protection Act, overlap with
the proposed rule's recordkeeping requirements?
21. Are businesses harmed by deception in B2B telemarketing? Would
requiring B2B telemarketing to comply with the TSR's prohibitions on
misrepresentations and making false or misleading statements help
businesses?
22. Are businesses harmed by B2B telemarketing in ways not
addressed by the FTC's past law enforcement work?
23. Would the proposed amendment to the B2B exemption burden
sellers or telemarketers? If so, in what way, and what is the burden?
V. Paperwork Reduction Act
The current Rule contains various provisions that constitute
information collection requirements as defined by 5 CFR 1320.3(c), the
definitional provision within the Office of Management and Budget
(``OMB'') regulations implementing the Paperwork Reduction Act (PRA).
44 U.S.C. chapter 35. OMB has approved the Rule's existing information
collection requirements through September 30, 2022 (OMB Control No.
3084-0097). The proposed amendments will make changes in the Rule's
recordkeeping requirements that will increase the PRA burden as
detailed below. Accordingly, FTC staff will submit this notice of
proposed rulemaking and the associated Supporting Statement to OMB for
review under the PRA.\107\
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\107\ This PRA analysis focuses specifically on the information
collection requirements created by or otherwise affected by the
proposed amendments.
---------------------------------------------------------------------------
The proposed rule contains new recordkeeping requirements and
modifications to existing recordkeeping requirements. The new
recordkeeping provisions would require sellers or telemarketers to
retain: (1) A copy of each unique prerecorded message; (2) call detail
records of telemarketing campaigns; (3) records sufficient to show a
seller has an established business relationship with a consumer; (4)
records sufficient to show a consumer is a previous donor to a
particular charitable organization; (5) records regarding the service
providers 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. The proposed modifications to
the existing recordkeeping requirements would: (1) Change the time
period for retaining records from two years to five years; \108\ (2)
clarify the records necessary for sellers or telemarketers to
demonstrate the person it is calling has consented to receive the call;
and (3) specify the format for records that include phone numbers,
time, or duration.
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\108\ As described above, changing industry practice including
increased spoofing of Caller ID information has made it more
difficult to identify the telemarketers and sellers responsible for
particular telemarketing campaigns and has hindered evidence
gathering. As a result, two years is no longer always a sufficient
amount of time for the Commission to fully complete its
investigations of noncompliance and therefore the Commission is
proposing to increase the required retention period for
recordkeeping under the Rule. Given the decreasing cost of data
storage, the Commission does not believe that changing the length of
time sellers and telemarketers are required to keep records will be
unduly burdensome.
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As explained above, the Commission believes for the most part,
sellers and telemarketers already generate and retain these records in
the ordinary course of business. For example, to comply with the TSR,
sellers and telemarketers must already have a reliable method to
identify whether they have a previous business relationship with a
customer or whether the customer is a prior donor. They must also
access the DNC Registry and maintain an entity-specific DNC registry.
Moreover, sellers and telemarketers are also likely to keep records
about their existing customers or donors and service providers in the
ordinary course of business. The proposed rule would also require
telemarketers and sellers to keep call detail records of their
telemarketing campaigns, but in the Commission's experience the
technological methods sellers and telemarketers use to implement their
campaigns can also reliably generate the records of those campaigns
that would be required under the proposed rule.
A. Estimated Annual Hours Burden
The Commission estimates the PRA burden of the proposed amendments
based on its knowledge of the telemarketing industry and data compiled
from the Do Not Call Registry. In calendar year 2021, 11,756
telemarketing entities accessed the Do Not Call Registry; however, 536
were exempt entities obtaining access to data.\109\ Of the non-exempt
entities, 6,835 obtained data for a single state. Staff assumes these
6,835 entities are operating solely intrastate, and thus would not be
subject to the TSR. Therefore, Staff estimates approximately 4,385
telemarketing entities (11,756--536 exempt--6,835 intrastate) are
currently subject to the TSR. The Commission also estimates there will
be 75 new entrants to the industry per year.
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\109\ See National Do not Call Registry Data Book for Fiscal
Year 2020 (``Data Book''), available at <a href="https://www.ftc.gov/system/files/documents/reports/national-do-not-call-registry-data-book-fiscal-year-2020/dnc_data_book_2020.pdf">https://www.ftc.gov/system/files/documents/reports/national-do-not-call-registry-data-book-fiscal-year-2020/dnc_data_book_2020.pdf</a> (last visited Jan. 31,
2022). An exempt entity is one that, although not subject to the
TSR, voluntarily chooses to scrub its calling lists against the data
in the Registry.
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The Commission has previously estimated that complying with the
TSR's current recordkeeping requirements requires 100 hours for new
entrants to develop recordkeeping systems that comply with the TSR and
1 hour per year for established entities to file and store records
after their systems are created, for a total annual recordkeeping
burden of 4,385 hours for established entities and 7,500 hours for new
entrants who must develop required record systems.\110\
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\110\ See Information Collection Activities; Proposed
Collection; Comment Request 87 FR 23177 (Apr. 19, 2022).
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Because the proposed rule contains new recordkeeping requirements,
the Commission anticipates in the first year after the proposed
amendments take effect, every entity subject to the TSR would need to
ensure their recordkeeping systems meet the new requirements. The
Commission estimates this undertaking will take 50 hours. This includes
10 hours to verify the entities are maintaining the required records,
and 40 hours to create and retain call detail records. This yields an
additional burden of 219,250 hours for established entities (50 hours x
4,385 covered entities).
For new entrants, the Commission estimates the new requirements
will increase their overall burden for establishing new recordkeeping
systems from 100 hours per year to 150 hours
[[Page 33691]]
per year. This yields a total burden for new entrants of 11,250 hours
(150 hours x 75 new entrants per year).
B. Estimated Annual Labor Costs
The Commission estimates annual labor costs by applying appropriate
hourly wage rates to the burden hours described above. The Commission
estimates established entities will employ skilled computer support
specialists to modify their recordkeeping systems.
Applying a skilled labor rate of $29.11/hour \111\ to the estimated
50 burden hours for established entities yields approximately
$6,384,560 in labor costs in the first year after the proposed
amendments would take effect (4,385 respondents x $1,456).
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\111\ This figure is derived from the mean hourly wage shown for
``Computer Support Specialist.'' See ``Occupational Employment and
Wages-May 2021'' Bureau of Labor Statistics, U.S. Department of
Labor, Last Modified March 31, 2022, Table 1 (``National employment
and wage data from the Occupational Employment Statistics survey by
occupation, May 2021'') available at <a href="https://www.bls.gov/news.release/ocwage.t01.htm">https://www.bls.gov/news.release/ocwage.t01.htm</a> (last visited April 5, 2022).
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As described above, the Commission estimates new entrants will
spend approximately 150 hours per year to establish new recordkeeping
systems. Applying a skilled labor rate of $29.11/hour to the estimated
150 burden hours for new entrants, the Commission estimates the annual
labor costs for new entrants would be approximately $327,525 (75
entrants x $4,367).
C. Estimated Non-Annual Labor Costs
Staff previously estimated the non-labor costs to comply with the
TSR's recordkeeping requirements were de minimis because most affected
entities would maintain the required records in the ordinary course of
business. Staff estimated the recordkeeping requirements could require
$50 per year in office supplies to comply with the Rule's recordkeeping
requirements. Because the proposed recordkeeping requirements require
retaining additional records, Staff estimates these requirements will
increase to $60 per year in office supplies.
The new recordkeeping requirements also require entities to retain
call detail records and audio recordings of prerecorded messages used
in calls. Staff estimates the costs associated with preserving these
records will also be de minimis. The Commission regularly obtains call
detail records from voice providers when investigating potential TSR
violations, and these records are kept in databases with small file
sizes even when the database contains information about a substantial
number of calls. For example, the Commission received a 2.9 gigabyte
database that contained information about 56 million calls. The
Commission also received a 1.2 gigabyte database that contained
information about 5.5 million calls. Similarly, audio files of most
prerecorded messages will not be very large because prerecorded
messages are typically short in duration. Storing electronic data is
very inexpensive. Electronic storage can cost $.74 per gigabyte for
onsite storage including hardware, software, and personnel costs.\112\
Commercial cloud-based storage options are less expensive and can cost
around $.20 per gigabyte per year.\113\ The Commission estimates the
non-labor costs associated with electronically storing audio files of
prerecorded messages and call detail records will cost around $5 a
year.
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\112\ See Gartner, Inc. ``IT Key Metrics Data 2020:
Infrastructure Measures--Storage Analysis.'' Gartner December 18,
2019.
\113\ Amazon's storage rate for S3 Standard--Infrequent Access
storage is $0.0125 per GB per month. Available at <a href="https://aws.amazon.com/s3/pricing/?nc=sn&loc=4">https://aws.amazon.com/s3/pricing/?nc=sn&loc=4</a> (last visited Jan. 31, 2022);
Google's storage rate for Archive Storage in parts of North America
is $0.0012 per GB per month. Available at <a href="https://cloud.google.com/storage/pricing">https://cloud.google.com/storage/pricing</a> (last visited Jan. 31, 2022).
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The Commission invites comments on: (1) Whether the proposed
collection of information is necessary for the proper performance of
the functions of the agency, including whether the information will
have practical utility; (2) the accuracy of the FTC's burden estimates,
including whether the methodology and assumptions used are valid; (3)
ways to enhance the quality, utility, and clarity of the information to
be collected; and (4) ways to minimize the burden of collecting
information. An agency may not conduct or sponsor, and a person is not
required to respond to, a collection of information unless it displays
a currently valid OMB control number.
Written comments and recommendations for the proposed information
collection should be sent within 30 days of publication of this
document to <a href="http://www.reginfo.gov/public/do/PRAMain">www.reginfo.gov/public/do/PRAMain</a>. Find this particular
information collection by selecting ``Currently under Review--Open for
Public Comments'' or by using the search function. The <a href="http://reginfo.gov">reginfo.gov</a> web
link is a United States Government website produced by OMB and the
General Services Administration (GSA). Under PRA requirements, OMB's
Office of Information and Regulatory Affairs (OIRA) reviews Federal
information collections.
VI. Regulatory Flexibility Act
The Regulatory Flexibility Act (``RFA''), as amended by the Small
Business Regulatory Enforcement Fairness Act of 1996, requires that the
Commission conduct an analysis of the anticipated economic impact of
the proposed amendments on small entities.\114\ The RFA requires the
Commission provide an Initial Regulatory Flexibility Analysis
(``IRFA'') with a proposed rule unless the Commission certifies the
rule will not have a significant economic impact on a substantial
number of small entities.\115\
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\114\ 5 U.S.C. 601-612.
\115\ 5 U.S.C. 605.
---------------------------------------------------------------------------
The Commission believes that the proposed amendment would not have
a significant economic impact upon small entities, although it may
affect a substantial number of small businesses. In the Commission's
view, the proposed amendment should not significantly increase the
costs of small entities that are sellers or telemarketers because the
proposed amendments primarily require these entities to retain records
they are already generating and preserving in the ordinary course of
business. The Commission does not believe the proposed amendments
requiring small entities that are sellers or telemarketers to comply
with the TSR's prohibitions on misrepresentations should impose any
additional costs on small entities. Therefore, based on available
information, the Commission certifies that amending the Rules as
proposed will not have a significant economic impact on a substantial
number of small entities, and hereby provides notice of that
certification to the Small Business Administration (``SBA'').
Nonetheless, the Commission has determined it is appropriate to publish
an IRFA in order to inquire into the impact of the proposed amendments
on small entities. The Commission invites comment on the burden on any
small entities that would be covered and has prepared the following
analysis.
A. Description of the Reasons the Agency Is Taking Action
The Commission proposes amending the TSR to require telemarketers
and sellers to maintain additional records regarding their
telemarketing transactions. As described in Section II, the proposed
amendments are intended to update the TSR's existing recordkeeping
requirements so the requirements comport with the substantial
amendments to the TSR since the recordkeeping requirements were first
made. The requirements are
[[Page 33692]]
also necessary in light of the technological advancements that have
made it easier and cheaper for unscrupulous telemarketers to engage in
illegal telemarketing. The proposed amendments would also require B2B
telemarketers to comply with the TSR's prohibition on
misrepresentations. These amendments are necessary to help protect
businesses from deceptive telemarketing practices. The proposed
amendments would also amend the definition of ``previous donor'' to
clarify that a seller or telemarketer may not use prerecorded messages
to solicit charitable donations on behalf of a charitable organization
unless the recipient of the call previously donated to that charitable
organization within the last two years.
B. Statement of Objectives of, and Legal Basis for, the Proposed
Amendments
The objective of the proposed amendments is to update the TSR's
recordkeeping requirements in order to assist the Commission's
enforcement of the TSR, and to prohibit misrepresentations in B2B
telemarketing. The legal basis for the proposed amendments is the
Telemarketing Act, which authorizes the Commission to issue rules to
prohibit deceptive or abusive telemarketing practices.
C. Description and Estimated Number of Small Entities To Which the Rule
Will Apply
The proposed amendments to the Rule affect sellers and
telemarketers engaged in ``telemarketing,'' defined by the Rule to mean
``a plan, program, or campaign which is conducted to induce the
purchase of goods or services or a charitable contribution, by use of
one or more telephones and which involves more than one interstate
telephone call.'' \116\ As noted above, staff estimate 4,385
telemarketing entities are currently subject to the TSR, and
approximately 75 new entrants enter the market per year. For
telemarketers, a small business is defined by the SBA as one whose
average annual receipts do not exceed $16.5 million.\117\ Because
virtually any business could be a seller under the TSR, it is not
possible to identify average annual receipts that would make a seller a
small business as defined by the SBA. Commission staff are unable to
determine a precise estimate of how many sellers or telemarketers
constitute small entities as defined by SBA. The Commission invites
comment and information on this issue.
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\116\ 16 CFR 310.2(dd). The Commission notes that, as mandated
by the Telemarketing Act, the interstate telephone call requirement
in the definition excludes small business sellers and the
telemarketers which serve them in their local market area, but may
not exclude some small business sellers and telemarketers in multi-
state metropolitan markets, such as Washington, DC.
\117\ Telemarketers are typically classified as ``Telemarketing
Bureaus and Other contact Centers,'' (NAICS Code 561422). See Table
of Small Business Size Standards Matched to North American Industry
Classification System Codes, available at <a href="https://www.sba.gov/sites/default/files/2019-08/SBA%20Table%20of%20Size%20Standards_Effective%20Aug%2019,%202019.pdf">https://www.sba.gov/sites/default/files/2019-08/SBA%20Table%20of%20Size%20Standards_Effective%20Aug%2019,%202019.pdf</a>
(last visited Jan. 31, 2022).
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D. Projected Reporting, Recordkeeping, and Other Compliance
Requirements, Including Classes of Small Entities and Professional
Skills Needed To Comply
The proposed rule contains new recordkeeping requirements and
modifications to existing recordkeeping requirements. The new
recordkeeping requirements would require sellers or telemarketers to
retain: (1) A copy of each unique prerecorded message; (2) call detail
records of telemarketing campaigns; (3) records sufficient to show a
seller has an established business relationship with a consumer; (4)
records sufficient to show a consumer is a previous donor to a
particular charitable organization; (5) records regarding the service
providers 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. The proposed modifications to
the existing recordkeeping requirements would: (1) Change the time
period for retaining records from two years to five years; (2) clarify
the records necessary for sellers or telemarketers to demonstrate the
person they are calling has consented to receive the call; and (3)
specify the format for records that include phone numbers, time, or
duration. The small entities potentially covered by the proposed
amendment will include all such entities subject to the Rule. The
Commission has described the skills necessary to comply with these
recordkeeping requirements in Section V above.
E. Identification of Duplicative, Overlapping, or Conflicting Federal
Rules
The Telephone Consumer Protection Act of 1991, 47 U.S.C. 227, and
its implementing regulations, 47 CFR 64.1200 (collectively, ``TCPA'')
contain recordkeeping requirements that may overlap with the
recordkeeping requirements proposed by the new rule. For example, the
proposed provision requiring sellers or telemarketers to keep a record
of consumers who state they do not wish to receive any outbound calls
made on behalf of a seller or telemarketer, 16 CFR 310.5(a)(10),
overlaps to some degree with the TCPA's prohibition on a person or
entity initiating a call for telemarketing unless such person or entity
has procedures for maintaining lists of persons who request not to
receive telemarketing calls including a requirement to record the
request.\118\ The Commission's proposed recordkeeping requirements do
not conflict with the TCPA's recordkeeping requirements because sellers
and telemarketers can comply with both sets of requirements
simultaneously. Moreover, in the Commission's experience, the
recordkeeping requirements under the TCPA do not lessen the need for
the more robust recordkeeping requirements the Commission is proposing
to further its law enforcement efforts. The Commission invites comment
and information regarding any potentially duplicative, overlapping, or
conflicting federal statutes, rules, or policies.
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\118\ 47 CFR 65.1200(d)(3).
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F. Significant Alternatives to the Proposed Amendments
The Commission has not proposed any specific small entity exemption
or other significant alternatives to the proposed rule. The Commission
has made every effort to avoid imposing unduly burdensome requirements
on sellers and telemarketers by limiting the recordkeeping requirements
to records both necessary for the Commission's law enforcement and
typically already kept in the ordinary course of business.
VII. Communications by Outside Parties to the Commissioners or Their
Advisors
Written communications and summaries or transcripts of oral
communications respecting the merits of this proceeding, from any
outside party to any Commissioner or Commissioner's advisor, will be
placed on the public record.\119\
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\119\ See 16 CFR 1.26(b)(5).
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VIII. Incorporation by Reference
Consistent with 5 U.S.C. 552(a) and 1 CFR part 51, the Commission
proposes to incorporate the specifications of the following standard
issued by the International Telecommunications Union: ITU-T E.164:
Series E: Overall Network Operation, Telephone Service,
[[Page 33693]]
Service Operation and Human Factors (published 11/2010). The E.164
standard establishes a common framework for how international telephone
numbers should be arranged so calls can be routed across telephone
networks. Countries use this standard to establish their own
international telephone number formats and ensure those numbers have
the information necessary to route telephone calls successfully between
countries.
This ITU standard is reasonably available to interested parties.
The ITU provides free online public access to view read-only copies of
the standard. The ITU website address for access to the standard is:
<a href="https://www.itu.int/en/pages/default.aspx">https://www.itu.int/en/pages/default.aspx</a>.
List of Subjects in 16 CFR Part 310
Incorporation by reference, Telemarketing, Trade practices.
For the reasons stated above, the Federal Trade Commission proposes
to amend part 310 of title 16 of the Code of Federal Regulations as
follows:
PART 310--TELEMARKETING SALES RULE
0
1. The authority for part 310 continues to read as follows:
Authority: 15 U.S.C. 6101-6108.
PART 310--[AMENDED]
0
2. In Sec. 310.2,
0
a. Revise paragraph (q)
0
b. Redesignate paragraphs (aa) through (hh) as follows:
------------------------------------------------------------------------
Old section New section
------------------------------------------------------------------------
(aa) (bb)
(bb) (cc)
(cc) (dd)
(dd) (ee)
(ee) (ff)
(ff) (gg)
(gg) (hh)
(hh) (ii)
------------------------------------------------------------------------
0
c. Add new paragraph (aa).
The revision and addition read as follows:
Sec. 310.2 Definitions.
* * * * *
(q) Established business relationship means a relationship between
a seller and a consumer based on:
(1) The consumer's purchase, rental, or lease of the seller's goods
or services or a financial transaction between the consumer and seller,
within the 540 days immediately preceding the date of a telemarketing
call; or
(2) the consumer's inquiry or application regarding a good or
service offered by the seller, within the 90 days immediately preceding
the date of a telemarketing call.
* * * * *
(aa) Previous donor means any person who has made a charitable
contribution to a particular charitable organization within the two-
year period immediately preceding the date of the telemarketing call
soliciting on behalf of that charitable organization.
* * * * *
0
3. Revise Sec. 310.5 to read as follows:
Sec. 310.5 Recordkeeping.
(a) Any seller or telemarketer must keep, for a period of 5 years
from the date the record is produced unless specified otherwise, the
following records relating to its telemarketing activities:
(1) A copy of each substantially different advertising, brochure,
telemarketing script, and promotional material, and a copy of each
unique prerecorded message. Such records must be kept for a period of 5
years from the date that they are no longer used in telemarketing;
(2) A record of each telemarketing call, which must include:
(i) The telemarketer that placed or received the call;
(ii) the seller or person for which the telemarketing call is
placed or received;
(iii) the good, service, or charitable purpose that is the subject
of the telemarketing call;
(iv) whether the telemarketing call is to a consumer or a business;
(v) whether the telemarketing call is an outbound telephone call;
(vi) whether the telemarketing call utilizes a prerecorded message;
(vii) the calling number, called number, date, time, and duration
of the telemarketing call;
(viii) the telemarketing script(s) and prerecorded message, if any,
used during the call;
(ix) the caller identification telephone number, and if it is
transmitted, the caller identification name that is transmitted in an
outbound telephone call to the recipient of the call, and any contracts
or other proof of authorization for the telemarketer to use that
telephone number and name, and the time period for which such
authorization or contract applies; and
(x) the disposition of the call, including but not limited to,
whether the call was answered, connected, dropped, or transferred. If
the call was transferred, the record must also include the telephone
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;
(3) For each prize recipient, a record of the name, last known
telephone number, and last known physical or email address of that
prize recipient, and the prize awarded for prizes that are represented,
directly or by implication, to have a value of $25.00 or more;
(4) For each customer, a record of the name, last known telephone
number, and last known physical or email address of that customer, the
goods or services purchased, the date such goods or services were
purchased, the date such goods or services were shipped or provided,
and the amount paid by the customer for the goods or services; \1\
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\1\ For offers of consumer credit products subject to the Truth
in Lending Act, 15 U.S.C. 1601 et seq., and Regulation Z, 12 CFR
part 226, compliance with the recordkeeping requirements under the
Truth in Lending Act, and Regulation Z, will constitute compliance
with paragraph (a)(4) of this section.
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(5) For each consumer with whom a seller asserts it has an
established business relationship under Sec. 310.2(q)(2), a record of
the name and last known telephone number of that consumer, the date
that consumer submitted an inquiry or application regarding the
seller's goods or services, and the goods or services inquired about;
(6) For each consumer that a telemarketer intends to assert is a
previous donor to a particular charitable organization under Sec.
310.2(aa), a record of the name and last known telephone number of that
consumer, and the last date that consumer donated to that particular
charitable organization;
(7) For each current or former employee directly involved in
telephone sales or solicitations, a record of the name, any fictitious
name used, the last known home address and telephone number, and the
job title(s) of that employee; provided, however, that if the seller or
telemarketer permits fictitious names to be used by employees, each
fictitious name must be traceable to only one specific employee;
(8) All verifiable authorizations or records of express informed
consent or express agreement (collectively, ``Consent'') required to be
provided or received under this Rule. A complete record of Consent
includes the following:
(i) The name and telephone number of the person providing Consent;
(ii) a copy of the request for Consent in the same manner and
format in which it was presented to the person providing Consent;
(iii) the purpose for which Consent is requested and given;
[[Page 33694]]
(iv) a copy of the Consent provided;
(v) the date Consent was given; and
(vi) for the copy of Consent provided under Sec. 310.3(a)(3) or
310.4(a)(7), (b)(1)(iii)(B)(1), or (b)(1)(v)(A), a complete record must
also include all information specified in those respective sections of
this Rule;
(9) A record of each service provider a telemarketer used to
deliver an outbound telephone call to a consumer on behalf of a seller
for each good or service the seller offers for sale through
telemarketing. For each such service provider, a complete record
includes the contract for the service provided, the date the contract
was signed, and the time period the contract is in effect. Such
contracts must be kept for 5 years from the date the contract expires,
or 5 years from the date the telemarketing activity that the contract
applies to ceased, whichever period of time is shorter;
(10) A record of each consumer who has stated she does not wish to
receive any outbound telephone calls made on behalf of a seller or
charitable organization pursuant to Sec. 310.4(b)(1)(iii)(A)
including: The name of the consumer, the telephone number(s) associated
with the request, the seller or charitable organization from which the
consumer does not wish to receive calls, the telemarketer that called
the consumer, the date the consumer requested that she cease receiving
such calls, and the goods or services the seller was offering for sale
or the charitable purpose for which a charitable contribution was being
solicited; and
(11) A record of each version of the Commission's ``do-not-call''
registry that was used to ensure compliance with Sec.
310.4(b)(1)(iii)(B). Such record must include the date the version was
obtained, and the seller or telemarketer who obtained that version.
(b) A seller or telemarketer may keep the records required by
paragraph (a) of this section in the same manner, format, or place as
they keep such records in the ordinary course of business. The format
for records required by paragraph (a)(2)(vii) of this section, and any
other records that include a time or telephone number, must also comply
with the following:
(1) The format for domestic telephone numbers must comport with the
North American Numbering plan;
(2) The format for international telephone numbers must comport
with the standard established in the ITU-T E.164;
(3) The time and duration of a call must be kept to the closest
second; and
(4) Time must be recorded in Coordinated Universal Time (UTC).
(c) Failure to keep each record required by paragraph (a) of this
section in a complete and accurate manner, and in compliance with
paragraph (b) of this section, as applicable, is a violation of this
Rule.
(d) For records kept pursuant to paragraph (a)(2) of this section,
the seller or telemarketer will not be liable for failure to keep
complete and accurate records pursuant to this section if it can
demonstrate, with documentation, that as part of its routine business
practice:
(1) It has established and implemented procedures to ensure
completeness and accuracy of its records;
(2) It has trained its personnel, and any entity assisting it in
its compliance, in such procedures;
(3) It monitors compliance with and enforces such procedures, and
maintains records documenting such monitoring and enforcement; and
(4) Any failure to keep complete and accurate records was temporary
and due to inadvertent error.
(e) The seller and the telemarketer calling on behalf of the seller
may, by written agreement, allocate responsibility between themselves
for the recordkeeping required by this section. When a seller and
telemarketer have entered into such an agreement, the terms of that
agreement will govern, and the seller or telemarketer, as the case may
be, need not keep records that duplicate those of the other. If by
written agreement the telemarketer bears the responsibility for the
recordkeeping requirements of this section, the seller must establish
and implement practices and procedure to ensure the telemarketer is
complying with the requirements of this section. If the agreement is
unclear as to who must maintain any required record(s), or if no such
agreement exists, both the telemarketer and the seller are responsible
for complying with this section.
(f) In the event of any dissolution or termination of the seller's
or telemarketer's business, the principal of that seller or
telemarketer must maintain all records required under this section. In
the event of any sale, assignment, or other change in ownership of the
seller's or telemarketer's business, the successor business must
maintain all records required under this section.
(g) The material required in this section is incorporated by
reference into this section with the approval of the Director of the
Federal Register under 5 U.S.C. 552(a) and 1 CFR part 51. All approved
material is available for inspection at the Federal Trade Commission
(FTC) and at the National Archives and Records Administration (NARA).
Contact FTC at: FTC Library, (202) 326-2395, Federal Trade Commission,
Room H-630, 600 Pennsylvania Avenue NW, Washington, DC 20580; or by
email at <a href="/cdn-cgi/l/email-protection#713d181303100308311705125f161e07"><span class="__cf_email__" data-cfemail="87cbeee5f5e6f5fec7e1f3e4a9e0e8f1">[email protected]</span></a>. For information on the availability of this
material at NARA, email: <a href="/cdn-cgi/l/email-protection#096f7b2760677a796c6a7d6066674967687b68276e667f"><span class="__cf_email__" data-cfemail="7d1b0f5314130e0d181e091412133d131c0f1c531a120b">[email protected]</span></a> or go to
<a href="http://www.archives.gov/federal-register/cfr/ibr-locations.html">www.archives.gov/federal-register/cfr/ibr-locations.html</a>. It is
available from: The International Telecommunications Union,
Telecommunications Standardization Bureau, Place des Nations, CH-1211
Geneva 20; (+41 22 730 5852); <a href="https://www.itu.int/en/pages/default.aspx">https://www.itu.int/en/pages/default.aspx</a>.
(1) Recommendation ITU-T E.164: Series E: Overall Network
Operation, Telephone Service, Service Operation and Human Factors,
2010.
(2) [Reserved.]
0
4. Amend Sec. 310.6 as follows:
0
a. In paragraphs (b)(1) through (3), remove the text ``Sec. Sec.
310.4(a)(1), (a)(7), (b), and (c)'' and add, in its place, the text
``Sec. Sec. 310.4(a)(1), (a)(8), (b), and (c)''; and
0
b. Revise paragraph (b)(7) to read as follows:
Sec. 310.6 Exemptions.
* * * * *
(b) * * *
(7) Telephone calls between a telemarketer and any business to
induce the purchase of goods or services or a charitable contribution
by the business, provided, however that this exemption does not apply
to:
(i) The requirements of Sec. 310.3(a)(2) and (4); or
(ii) Calls to induce the retail sale of nondurable office or
cleaning supplies; provided, however, that Sec. Sec.
310.4(b)(1)(iii)(B) and 310.5 shall not apply to sellers or
telemarketers of nondurable office or cleaning supplies.
0
5. Amend Sec. 310.7 by revising paragraph (a) to read as follows:
Sec. 310.7 Actions by states and private persons.
(a) Any attorney general or other officer of a state authorized by
the state to bring an action under the Telemarketing and Consumer Fraud
and Abuse Prevention Act, and any private person who brings an action
under that Act, must serve written notice of its action on the
Commission, if feasible, prior to its initiating an action under this
part. The notice must be sent to the Office of the Director, Bureau of
Consumer Protection, Federal Trade
[[Page 33695]]
Commission, Washington, DC 20580, at <a href="/cdn-cgi/l/email-protection#f18582839f9e85989294b1978592df969e87"><span class="__cf_email__" data-cfemail="88fcfbfae6e7fce1ebedc8eefceba6efe7fe">[email protected]</span></a> and must include
a copy of the state's or private person's complaint and any other
pleadings to be filed with the court. If prior notice is not feasible,
the state or private person must serve the Commission with the required
notice immediately upon instituting its action.
* * * * *
By direction of the Commission.
April J. Tabor,
Secretary.
[FR Doc. 2022-09914 Filed 6-2-22; 8:45 am]
BILLING CODE 6750-01-P
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</html>Indexed from Federal Register on June 3, 2022.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.