Proposed Rule2022-21289
Trade Regulation Rule on Impersonation of Government and Businesses
Primary source
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Published
October 17, 2022
Issuing agencies
Federal Trade Commission
Abstract
The Federal Trade Commission ("FTC or "Commission") commences a rulemaking to promulgate a trade regulation rule entitled "Rule on Impersonation of Government and Businesses," which would prohibit the impersonation of government, businesses, or their officials. The Commission finds such impersonation to be prevalent based on the comments it received in response to an advance notice of proposed rulemaking and other information discussed in this document. The Commission now solicits written comment, data, and arguments concerning the utility and scope of the proposed trade regulation rule to prohibit the impersonation of government, businesses, or their officials.
Full Text
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<title>Federal Register, Volume 87 Issue 199 (Monday, October 17, 2022)</title>
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[Federal Register Volume 87, Number 199 (Monday, October 17, 2022)]
[Proposed Rules]
[Pages 62741-62751]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-21289]
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FEDERAL TRADE COMMISSION
16 CFR Part 461
Trade Regulation Rule on Impersonation of Government and
Businesses
AGENCY: Federal Trade Commission.
ACTION: Notice of proposed rulemaking; request for public comment.
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SUMMARY: The Federal Trade Commission (``FTC or ``Commission'')
commences a rulemaking to promulgate a trade regulation rule entitled
``Rule on Impersonation of Government and Businesses,'' which would
prohibit the impersonation of government, businesses, or their
officials. The Commission finds such impersonation to be prevalent
based on the comments it received in response to an advance notice of
proposed rulemaking and other information discussed in this document.
The Commission now solicits written comment, data, and arguments
concerning the utility and scope of the proposed trade regulation rule
to prohibit the impersonation of government, businesses, or their
officials.
DATES: Comments must be received on or before December 16, 2022.
ADDRESSES: Interested parties may file a comment online or on paper by
following the instructions in the Comment Submissions part of the
SUPPLEMENTARY INFORMATION section below. Write ``Impersonation NPRM,
R207000'' on your comment and file your comment online at <a href="https://www.regulations.gov">https://www.regulations.gov</a>. If you prefer to file your comment on paper, 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.
FOR FURTHER INFORMATION CONTACT: Christopher E. Brown, Attorney,
Marketing Practices Division, phone: 202-326-2825, <a href="/cdn-cgi/l/email-protection#95f6f7e7fae2fba6d5f3e1f6bbf2fae3"><span class="__cf_email__" data-cfemail="2d4e4f5f425a431e6d4b594e034a425b">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION: The Commission invites interested parties to
submit data, views, and arguments on the proposed Rule on Impersonation
of Government and Businesses and, specifically, on the questions set
forth in Item IV of this notice of proposed rulemaking (``NPRM''). The
comment period will remain open until December 16, 2022.\1\ To the
extent practicable, all comments will be available on the public record
and posted at the docket for this rulemaking on <a href="https://www.regulations.gov">https://www.regulations.gov</a>. If interested parties request to present their
position orally, the Commission will hold an informal hearing, as
specified in Section 18(c) of the FTC Act, 15 U.S.C. 57a(c). Persons
interested in making a presentation at an informal hearing must file a
comment in response to this document containing a statement explaining
why they believe an informal hearing is warranted, how they would
participate in an informal hearing, their interests in the proceeding,
whether there are any disputed issues of material fact necessary to be
resolved during an informal hearing, and a summary of their anticipated
testimony. If an informal hearing is held, a separate document will
issue under 16 CFR 1.12(a) (``initial notice of informal hearing'').
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\1\ The Commission elects not to provide a separate, second
comment period for rebuttal comments. See 16 CFR 1.11(e) (``The
Commission may in its discretion provide for a separate rebuttal
period following the comment period.'').
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I. Background
On December 23, 2021, the Commission published an advance notice of
proposed rulemaking (``ANPR'') under the authority of Section 18 of the
FTC Act, 15 U.S.C. 57a(b)(2); the provisions of part 1, subpart B, of
the Commission's Rules of Practice, 16 CFR 1.7-1.20; and 5 U.S.C.
553.\2\ This authority permits the Commission to promulgate, modify, or
repeal trade regulation rules that define with specificity acts or
practices that are unfair or deceptive in or affecting commerce within
the meaning of Section 5(a)(1) of the FTC Act, 15 U.S.C. 45(a)(1). The
ANPR described the Commission's history of taking law enforcement
action against and educating consumers about the impersonation of
government and businesses,\3\ and it asked questions about the
prevalence of impersonation fraud and whether and how to proceed with
an NPRM.\4\ The Commission took comment for 60 days, and it received
164 unique comments, which it has thoroughly considered.
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\2\ Fed. Trade Comm'n, ANPR: Trade Regulation Rule on
Impersonation of Gov't and Businesses, 86 FR 72901 (Dec. 23, 2021),
<a href="https://www.federalregister.gov/documents/2021/12/23/2021-27731/trade-regulation-rule-on-impersonation-of-government-and-businesses">https://www.federalregister.gov/documents/2021/12/23/2021-27731/trade-regulation-rule-on-impersonation-of-government-and-businesses</a>.
\3\ See id., 86 FR 72901-04.
\4\ See id. at 72904.
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Based on the substance of these comments, as well as the
Commission's history of enforcement and other information discussed
below, the Commission has reason to believe that the impersonation,
including affiliation or endorsement claims, of government, businesses,
and their officials or agents is prevalent \5\ and that proceeding with
this rulemaking is in the public interest. This document discusses the
comments and explains its considerations in developing the proposed
rule. The Commission also poses specific questions for comment.
Finally, the NPRM provides the text of its proposed rule.
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\5\ See 15 U.S.C. 57a(b)(3) (``The Commission shall issue a
notice of proposed rulemaking pursuant to paragraph (1)(A) only
where it has reason to believe that the unfair or deceptive acts or
practices which are the subject of the proposed rulemaking are
prevalent.'').
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II. Summary of Comments to ANPR
The Commission received 164 unique comments in response to the
ANPR, which are publicly available on this rulemaking's docket at
<a href="https://www.regulations.gov/docket/FTC-2021-0077/comments">https://www.regulations.gov/docket/FTC-2021-0077/comments</a>.\6\ Of the
total comments received, 113 expressly support the Commission's
proceeding with the rulemaking. Another 35 comments did not express a
clear view on the merits of proceeding, and another 16 comments did not
address the question. No commenter expressed the view that the
Commission should not commence this rulemaking. Most comments came from
individual consumers, with 140 total comments. Ten comments were
submitted by businesses,\7\ eleven by
[[Page 62742]]
trade associations,\8\ and three by government or law-enforcement
organizations.\9\
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\6\ The docket lists 168 comments, but four of these were
submitted by AVIXA, Inc. (``Audio Visual and Integrated Experience
Association'') and two by the National Association of Attorneys
General (``NAAG''), accounting for four total duplicates. See AVIXA
Cmts., <a href="https://www.regulations.gov/comment/FTC-2021-0077-0089">https://www.regulations.gov/comment/FTC-2021-0077-0089</a>,
<a href="https://www.regulations.gov/comment/FTC-2021-0077-0085">https://www.regulations.gov/comment/FTC-2021-0077-0085</a>, <a href="https://www.regulations.gov/comment/FTC-2021-0077-0126">https://www.regulations.gov/comment/FTC-2021-0077-0126</a>, <a href="https://www.regulations.gov/comment/FTC-2021-0077-0128">https://www.regulations.gov/comment/FTC-2021-0077-0128</a>; NAAG Cmts., <a href="https://www.regulations.gov/comment/FTC-2021-0077-0152">https://www.regulations.gov/comment/FTC-2021-0077-0152</a>, <a href="https://www.regulations.gov/comment/FTC-2021-0077-0164">https://www.regulations.gov/comment/FTC-2021-0077-0164</a>.
\7\ See Pub'rs Clearing House, Cmt. on ANPR (Feb. 8, 2022),
<a href="https://www.regulations.gov/comment/FTC-2021-0077-0008">https://www.regulations.gov/comment/FTC-2021-0077-0008</a> (``PCH
Cmt.''); YouMail Inc., Cmt. on ANPR (Feb. 22, 2022), <a href="https://www.regulations.gov/comment/FTC-2021-0077-0148">https://www.regulations.gov/comment/FTC-2021-0077-0148</a> (``YouMail Cmt.'');
WMC Global, Cmt. on ANPR (Feb. 22, 2022), <a href="https://www.regulations.gov/comment/FTC-2021-0077-0154">https://www.regulations.gov/comment/FTC-2021-0077-0154</a> (``WMC Cmt.'');
DIRECTV, LLC, Cmt. on ANPR (Feb. 23, 2022), <a href="https://www.regulations.gov/comment/FTC-2021-0077-0167">https://www.regulations.gov/comment/FTC-2021-0077-0167</a> (``DIRECTV Cmt.'');
Somos, Inc., Cmt. on ANPR (Feb. 23, 2022), <a href="https://www.regulations.gov/comment/FTC-2021-0077-0162">https://www.regulations.gov/comment/FTC-2021-0077-0162</a> (``Somos Cmt.'');
Microsoft Corp., Cmt. on ANPR (Feb. 22, 2022), <a href="https://www.regulations.gov/comment/FTC-2021-0077-0135">https://www.regulations.gov/comment/FTC-2021-0077-0135</a> (``Microsoft Cmt.'');
Apple, Inc., Cmt. on ANPR (Feb. 23, 2022), <a href="https://www.regulations.gov/comment/FTC-2021-0077-0159">https://www.regulations.gov/comment/FTC-2021-0077-0159</a> (``Apple Cmt.'');
Cotney Attorneys & Consultants, Cmt. on ANPR (Feb. 22, 2022),
<a href="https://www.regulations.gov/comment/FTC-2021-0077-0140">https://www.regulations.gov/comment/FTC-2021-0077-0140</a> (``Cotney
Cmt.''); Erik M. Pelton & Associations, Consultants, Cmt. on ANPR
(Feb. 22, 2022), <a href="https://www.regulations.gov/comment/FTC-2021-0077-0156">https://www.regulations.gov/comment/FTC-2021-0077-0156</a> (``Pelton Cmt.''); Informa PLC, Cmt. on ANPR (Feb. 22, 2022),
<a href="https://www.regulations.gov/comment/FTC-2021-0077-0166">https://www.regulations.gov/comment/FTC-2021-0077-0166</a> (``Informa
Cmt.'').
\8\ See Exhibitions & Conferences Alliances, Cmt. on ANPR (Feb.
15, 2022), <a href="https://www.regulations.gov/comment/FTC-2021-0077-0009">https://www.regulations.gov/comment/FTC-2021-0077-0009</a>
(``ECA Cmt.''); AVIXA, Inc., Cmt. on ANPR (Feb. 17, 2022), <a href="https://www.regulations.gov/comment/FTC-2021-0077-0085">https://www.regulations.gov/comment/FTC-2021-0077-0085</a> (``AVIXA Cmt.'');
Experiential Designers & Producers Association, Cmt. on ANPR (Feb.
16, 2022), <a href="https://www.regulations.gov/comment/FTC-2021-0077-0073">https://www.regulations.gov/comment/FTC-2021-0077-0073</a>
(``EDPA Cmt.''); Association of Equipment Manufacturers, Cmt. on
ANPR (Feb. 23, 2022), <a href="https://www.regulations.gov/comment/FTC-2021-0077-0168">https://www.regulations.gov/comment/FTC-2021-0077-0168</a> (``AEM Cmt.''); The American Apparel & Footwear
Association, Cmt. on ANPR (Feb. 22, 2022), <a href="https://www.regulations.gov/comment/FTC-2021-0077-0141">https://www.regulations.gov/comment/FTC-2021-0077-0141</a> (``AAFA Cmt.'');
NCTA--The internet & Television Association, Cmt. on ANPR (Feb. 23,
2022), <a href="https://www.regulations.gov/comment/FTC-2021-0077-0169">https://www.regulations.gov/comment/FTC-2021-0077-0169</a>
(``NCTA Cmt.''); USTelecom, Cmt. on ANPR (Feb. 23, 2022), <a href="https://www.regulations.gov/comment/FTC-2021-0077-0160">https://www.regulations.gov/comment/FTC-2021-0077-0160</a> (``USTelecom Cmt.'');
International Housewares Association, Cmt. on ANPR (Feb. 22, 2022),
<a href="https://www.regulations.gov/comment/FTC-2021-0077-0144">https://www.regulations.gov/comment/FTC-2021-0077-0144</a> (``IHA
Cmt.''); National Association of Broadcasters, Cmt. on ANPR (Feb.
22, 2022), <a href="https://www.regulations.gov/comment/FTC-2021-0077-0146">https://www.regulations.gov/comment/FTC-2021-0077-0146</a>
(``NAB Cmt.''); CTIA, Cmt. on ANPR (Feb. 23, 2022), <a href="https://www.regulations.gov/comment/FTC-2021-0077-0161">https://www.regulations.gov/comment/FTC-2021-0077-0161</a> (``CTIA Cmt.'');
Consumer Tech. Ass'n, Cmt. on ANPR (Feb. 17, 2022), <a href="https://www.regulations.gov/comment/FTC-2021-0077-0091">https://www.regulations.gov/comment/FTC-2021-0077-0091</a> (``CTA Cmt.'').
\9\ See Broward Cnty., Fla., Cmt. on ANPR (Feb. 16, 2022),
<a href="https://www.regulations.gov/comment/FTC-2021-0077-0075">https://www.regulations.gov/comment/FTC-2021-0077-0075</a> (``Broward
Cmt.''); NAAG, Cmt. on ANPR (Feb. 23, 2022), <a href="https://www.regulations.gov/comment/FTC-2021-0077-0164">https://www.regulations.gov/comment/FTC-2021-0077-0164</a> (``NAAG Cmt.'');
Nat'l Ass'n of State Charity Officials (``NASCO''), Cmt. on ANPR, at
1 (Feb. 22, 2022), <a href="https://www.regulations.gov/comment/FTC-2021-0077-0165">https://www.regulations.gov/comment/FTC-2021-0077-0165</a> (``NASCO Cmt.'').
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The 140 individual consumers who commented expressed deep concern
about the harmful effects of both government and business
impersonation. One representative consumer comment declared: ``Citizens
of the USA should be able to answer the phone and not have to worry
about what type of spam, coercion, or trickery is about to assault
them.'' \10\ Many consumers expressed concern that impersonation scams
target specific populations, such as older consumers. Another consumer,
who fell victim to an impersonator of a contractor company, described
lasting and serious harm: ``We are lost and devastated. I live in fear
daily because someone has sensitive information about my home, its
location, and the people I love who reside in it.'' \11\
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\10\ Coni Limpert, Cmt. on Trade Regulation Rule on
Impersonation of Government and Businesses (``Cmt. on ANPR'') (Feb.
22, 2022), <a href="https://www.regulations.gov/comment/FTC-2021-0077-0121">https://www.regulations.gov/comment/FTC-2021-0077-0121</a>
(``Limpert Cmt.'').
\11\ Yroctonya Williams, Cmt. on ANPR (Jan. 6, 2022), <a href="https://www.regulations.gov/comment/FTC-2021-0077-0004">https://www.regulations.gov/comment/FTC-2021-0077-0004</a> (``Williams Cmt.'').
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A. Comments About the Impersonation of Government
In its ANPR, the Commission cited public data from the Consumer
Sentinel Network database and its enforcement record to conclude that
``government impersonation scams are highly prevalent and increasingly
harmful.'' \12\ The comments received about the impersonation of
government bolster this conclusion.
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\12\ ANPR, 86 FR 72901; see also Fed. Trade Comm'n, Explore
Government Imposter Scams, TABLEAU PUBLIC, <a href="https://public.tableau.com/app/profile/federal.trade.commission/viz/GovernmentImposter/Infographic">https://public.tableau.com/app/profile/federal.trade.commission/viz/GovernmentImposter/Infographic</a> (last visited Mar. 17, 2022).
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Six commenters explicitly addressed the widespread nature of the
impersonation of government entities, citing common scams perpetrated
by fraudsters pretending to be Federal, State, and local
governments.\13\ For example, USTelecom, a trade association of
telephone and broadband industry companies, and YouMail, Inc.
(``YouMail''), a communications and cybersecurity company, cite their
own data regarding the prevalence of Social Security Administration
impersonation scams,\14\ which echo the Commission's findings that
these schemes are among the most common government impersonation
complaints. Broward County, Florida, and NAAG note the incidence of
government impersonation at the local level, giving particular emphasis
to scams offering consumers official-looking government documents at a
significantly marked-up price.\15\ Commenters also cite evidence of
other common government impersonation frauds, such as schemes
impersonating the Internal Revenue Service \16\ and Department of
Homeland Security \17\ or targeting public-sector employees entitled to
benefits \18\ and businesses seeking to comply with regulatory
reporting requirements.\19\
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\13\ See USTelecom, Cmt. at 2; Broward Cmt. at 1; NAAG Cmt. at
3; YouMail Cmt. at 3WMC Cmt. at 2; Somos Cmt.
\14\ See USTelecom Cmt. at 1; YouMail Cmt. at. 3.
\15\ See Broward Cmt. at 1; NAAG Cmt. at 4.
\16\ See Broward Cmt. at 1.
\17\ See USTelecom Cmt. at 1.
\18\ See NAAG Cmt. at 5-6.
\19\ See id. at 5; see also Fed. Trade Comm'n, NPRM:
Telemarketing Sales Rule, 87 FR 33677, 33683 n.77 (June 3, 2022),
<a href="https://www.federalregister.gov/documents/2022/06/03/2022-09914/telemarketing-sales-rule">https://www.federalregister.gov/documents/2022/06/03/2022-09914/telemarketing-sales-rule</a> (collecting cases of business-to-business
fraud that impersonated the government and violated the
Telemarketing Sales Rule).
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The Commission also takes notice of additional indications of the
prevalence of government impersonation scams, which came after the
ANPR's publication: The Federal Bureau of Investigation issued a Public
Service Announcement on March 7, 2022, ``warning the public of ongoing
widespread fraud schemes in which scammers impersonate law enforcement
or government officials in attempts to extort money or steal personally
identifiable information.'' \20\ Similarly, the Social Security
Administration's Office of the Inspector General spearheaded a scam
alert issued by multiple Federal law enforcement agencies on May 20,
2022, warning the public of government impersonation scams involving
the reproduction of Federal law enforcement credentials and badges.\21\
Additionally, the Commission recently noted that, in some impersonation
scams, fraudsters have instructed consumers to convert cash into
cryptocurrency under false threats of government investigations or
fraud.\22\
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\20\ Public Service Announcement, Fed. Bureau of Investigation,
Alert No. I-030722-PSA, FBI Warns of the Impersonation of Law
Enforcement and Government Officials (Mar. 7, 2022), <a href="https://www.ic3.gov/Media/Y2022/PSA220307">https://www.ic3.gov/Media/Y2022/PSA220307</a>.
\21\ Scam Alert, Soc. Sec. Admin. Off. of Inspector Gen.,
Federal Law Enforcement Agencies Warn of Impersonation Scam
Involving Credentials and Badges (May 20, 2022), <a href="https://oig.ssa.gov/assets/uploads/scam-alert-law-enforcement-credentials.pdf">https://oig.ssa.gov/assets/uploads/scam-alert-law-enforcement-credentials.pdf</a>.
\22\ See Press Release, Fed. Trade Comm'n, New Analysis Finds
Consumers Reported Losing More than $1 Billion in Cryptocurrency to
Scams since 2021 (June 3, 2022), <a href="https://www.ftc.gov/news-events/news/press-releases/2022/06/new-analysis-finds-consumers-reported-losing-more-1-billion-cryptocurrency-scams-2021">https://www.ftc.gov/news-events/news/press-releases/2022/06/new-analysis-finds-consumers-reported-losing-more-1-billion-cryptocurrency-scams-2021</a> (``After
cryptocurrency investment schemes, the next largest losses reported
by consumers were on . . . Business and Government Impersonation
Scams[.] Reports show these scammers often target consumers by
claiming their money is at risk because of fraud or a government
investigation and the only way to protect their cash is by
converting it to cryptocurrency.'').
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Several commenters discussed how a rule addressing impersonation
should be drafted. For example, Broward County offered specific
recommendations, including but not limited to prohibiting advertising
that creates the impression of government affiliation or endorsement
without express consent and requiring advertisers to prominently
disclaim government affiliation or endorsement where it could be
reasonably construed from silence.\23\ YouMail suggested that
[[Page 62743]]
the proposed rule ``not be so prescriptive as to put a damper on
private cybersecurity businesses' ability to develop and refine new,
market-based tools to prevent electronic communications fraud,
including impersonation fraud.'' \24\
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\23\ See Broward Cmt. at 2.
\24\ YouMail Cmt. at 11.
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Two commenters, NAAG and USTelecom, explicitly addressed the
Commission's questions regarding individuals or entities that provide
the means and instrumentalities for impersonators to conduct such
practices. NAAG asserted that impersonators ``often use other
companies' products and services to execute their scams,'' such as
``marketing companies, call centers, attorneys, third-party mailing
services, payment processors, lead list providers, remote offices . . .
[d]ating websites, and social media . . . .'' \25\ It also addressed
the Commission's question regarding the circumstances under which the
provision of means and instrumentalities should be considered deceptive
or unfair, remarking that ``when an entity provides substantial
assistance or support to impersonators and knows or should have known
that their products [or] services are being used in a fraudulent
impersonation scheme, that company could also be held liable under the
proposed impersonation rule.'' \26\ Similarly, USTelecom also
recommended liability for ``individuals or entities that provide the
means and instrumentalities for impersonators . . . such as how the FTC
has used the [Telemarketing Sales Rule] against robocall enablers,''
but noted that the proposed rule ``should make clear that liability . .
. requires proof of knowledge of such fraud or conscious avoidance of
it, consistent with FTC precedent and [Telemarketing Sales Rule] and
Section 5 jurisprudence.'' \27\ Somos, Inc., which manages registry
databases for the telecommunications industry, similarly encourages the
``[p]rosecution of . . . those knowingly aiding and abetting''
impersonated toll-free numbers.\28\
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\25\ NAAG Cmt. at 8.
\26\ Id. at 10.
\27\ USTelecom Cmt. at 3-4.
\28\ Somos Cmt. at 3, 5.
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Several commenters recommended additional action to a proposed
rulemaking, including the development of educational workshops and
materials,\29\ and increased collaboration between the Commission and
other government agencies, businesses, and trade associations to combat
impersonation fraud.\30\ For example, WMC Global, a cybersecurity
company, recommended that government agencies invest in ``phishing kit
intelligence''--one of the tools the company states it uses to identify
impersonators responsible for credential phishing attacks.\31\ YouMail
encourages the Commission to work with industry groups ``that develop
methods, techniques, and standards that advance the fight against
robocalls and related fraud,'' which can serve to ``help educate the
public about how those tools can be used for self-protection against
impersonation.'' \32\ Somos expressed a willingness to assist law
enforcement's prosecution of impersonators that spoof a company's Toll-
Free Number (TFN) for their CallerID, but use a different TFN as a call
back number, which leads consumers to believe they are communicating
with an honest business.\33\ Somos states that it can always provide
the identity of the entity that reserved the TFN, which law
enforcement, using subpoenas, can traceback to the subscriber or U.S.
point of entry that likely committed the fraud or knowingly aided and
abetted the activity.\34\
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\29\ See USTelecom Cmt. at 3; NAAG Cmt. at 13; YouMail Cmt. 9-
10; WMC Cmt. at 5; NCTA Cmt. at 2; CTIA Cmt.; Pelton Cmt. at 5; ECA
Cmt. at 2-3; AAFA Cmt. at 3; CTA Cmt. at 3-7; YouMail Cmt. at 10;
DIRECTV Cmt. at 2.
\30\ See YouMail Cmt. at 10; WMC Cmt. at 5; Somos Cmt. at 6.
\31\ WMC Cmt. at 1, 5.
\32\ YouMail Cmt. at 10.
\33\ See Somos Cmt. at 3, 6.
\34\ Id.
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B. Comments About the Impersonation of Businesses
The ANPR noted that business impersonation scams cause an
``enormous amount of financial harm to the public'' and are widespread:
``From January 1, 2017, through September 30, 2021, consumers reported
being defrauded of roughly $852 million in 753,555 business
impersonation incidents.'' \35\ The comments received about the
impersonation of businesses bolster this conclusion.
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\35\ ANPR, 86 FR 72901.
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The Commission received 15 comments that specifically addressed the
widespread impersonation of businesses from consumers, trade
associations, and businesses.\36\ Consumers submitted comments about
various business impersonators they encountered, including
impersonators of Microsoft \37\ and Apple.\38\ Several of these
impersonated companies submitted their own comments relaying that
impersonation of their businesses causes severe harm to consumers as
well as to their own business.\39\
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\36\ See ECA Cmt.; AVIXA Cmt.; EDPA Cmt.; AEM Cmt; AAFA Cmt.;
NCTA Cmt.; US Telecom Cmt.; NAAG Cmt.; PCH Cmt.; YouMail Cmt; WMC
Cmt; IHA Cmt.; DIRECTV Cmt.; Somos Cmt.; NAB Cmt..
\37\ See, e.g., Betty Hanley, Cmt. on ANPR (Feb. 23, 2022),
<a href="https://www.regulations.gov/comment/FTC-2021-0077-0163">https://www.regulations.gov/comment/FTC-2021-0077-0163</a> (``Hanley
Cmt.'').
\38\ See, e.g., Maximo Estebar, Cmt. on ANPR (Feb. 23, 2022),
<a href="https://www.regulations.gov/comment/FTC-2021-0077-0157">https://www.regulations.gov/comment/FTC-2021-0077-0157</a> (``Estebar
Cmt.''); Anonymous, Cmt. on ANPR (Feb. 16, 2022), <a href="https://www.regulations.gov/comment/FTC-2021-0077-0044">https://www.regulations.gov/comment/FTC-2021-0077-0044</a> (``0044 Cmt.'').
\39\ See Microsoft Corp., Cmt. on ANPR (Feb. 22, 2022), <a href="https://www.regulations.gov/comment/FTC-2021-0077-0135">https://www.regulations.gov/comment/FTC-2021-0077-0135</a> (``Microsoft Cmt.'');
Apple, Inc., Cmt. on ANPR (Feb. 23, 2022), <a href="https://www.regulations.gov/comment/FTC-2021-0077-0159">https://www.regulations.gov/comment/FTC-2021-0077-0159</a> (``Apple Cmt.'').
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The Commission received several comments from trade associations
that represent groups engaged in the face-to-face business events
industry. Five trade associations representing businesses partaking in
conferences, trade shows, and other face-to face business events
submitted comments noting that they are frequently targets of business
impersonation.\40\ These comments outlined two prevalent types of
business impersonation fraud: hotel reservation scams and attendee
list-sale scams. A hotel reservation scam involves scammers
impersonating housing providers of a particular conference or event and
tricking consumers into purchasing bogus hotel rooms.\41\ Perpetrators
of attendee list-sale scams contact face-to-face exhibitors and sell
fake attendee lists.\42\ They often use the event organizer's name and
logo to bolster the illusion that they are, or are affiliated with or
endorsed by, the event organizer.\43\
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\40\ See EDPA Cmt.; ECA Cmt.; AEM Cmt.; AVIXA Cmt.; NAB Cmt.
\41\ See ECA Cmt. at 2; EDPA Cmt.; AEM Cmt. at 1; AVIXA Cmt.
\42\ See ECA Cmt. at 2; EDPA Cmt.; AEM Cmt. at 1; AVIXA Cmt.
\43\ See ECA Cmt. at 2; EDPA Cmt; AEM Cmt. at 1; AVIXA Cmt.
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The National Association of Broadcasters (``NAB'') also expressed
its support for the initiation of a rulemaking to address impersonation
because of its experience hosting an annual convention.\44\ NAB states
that business impersonation harms numerous small businesses that often
do not have the resources to properly protect themselves.\45\
---------------------------------------------------------------------------
\44\ See NAB Cmt. at 1-2.
\45\ See id.
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The American Apparel & Footwear Association (``AAFA'') states that
the AAFA and the roughly 1,000 brands it represents are frequent
targets of
[[Page 62744]]
business impersonation.\46\ The impersonators use company or
organization trademarks and logos in the signature blocks of fraudulent
email solicitations to help perpetrate these schemes.\47\ The AAFA
comment notes that impersonation is a widespread issue in the non-
profit trade association industry.\48\ Another trade association, the
International Housewares Association,\49\ and a consulting firm for
construction companies, Cotney Attorneys & Consultants,\50\ submitted
comments that also expressed concern about rampant impersonation fraud
surrounding trade shows and conferences.
---------------------------------------------------------------------------
\46\ See AAFA Cmt. at 1.
\47\ See id.
\48\ See id. at 2.
\49\ See IHA Cmt. at 1.
\50\ See Cotney Attorneys & Consultants, Cmt. on ANPR, at 1
(Feb. 22, 2022), <a href="https://www.regulations.gov/comment/FTC-2021-0077-0140">https://www.regulations.gov/comment/FTC-2021-0077-0140</a> (``Cotney Cmt.'').
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Four trade associations that represent businesses in the
telecommunications and technology industries submitted comments noting
that these industries are frequently targeted for business
impersonation fraud. The internet & Television Association (``NCTA''),
a trade association for the United States cable television industry,
states that its members provide television service to almost 80% of the
nation's cable television customers.\51\ NCTA does not explicitly take
a position on the proposed rulemaking, but states that it stands
``ready to assist the FTC with its educational efforts.'' \52\ NCTA
identified two common types of business scams, a payment scam and
unauthorized reselling scam. A payment scam involves scammers
impersonating employees or vendors and calling customers or prospective
customers in an effort to gain their personal information, such as
credit card information, bank account numbers, Social Security numbers,
and passwords.\53\ An unauthorized reselling scam involves scammers
fraudulently using member brands to collect customer or employee
information or unlawfully reselling access to the company's
network.\54\ NCTA states that it takes considerable action to fight
these scams, including communicating regularly with customers and
providing educational materials online, engaging with the communities
at town halls, and directing consumers to FTC resources.\55\
---------------------------------------------------------------------------
\51\ See NCTA Cmt. at 2.
\52\ Id.
\53\ See id.
\54\ See id.
\55\ See id.
---------------------------------------------------------------------------
USTelecom states that it supports the efforts of Federal agencies,
including the FTC, to hold impersonators accountable for fraud,
including impersonators using telephone networks to perpetrate their
scams.\56\ It notes that, every day, these impersonators spam the U.S.
telephone network with robocalls and voice phishing calls pretending to
be private companies.\57\ USTelecom's Industry Traceback Group tracks
these calls and identifies the percentage of bank scams, health
insurance scams, and Amazon impersonators, among others.\58\ According
to USTelecom, most of these calls originate from outside of the United
States, from countries such as India, Pakistan, Mexico, the United
Kingdom, and Australia.\59\
---------------------------------------------------------------------------
\56\ See USTelecom Cmt. at 1.
\57\ See id.
\58\ See id. at 2.
\59\ See id.
---------------------------------------------------------------------------
Consumer Technology Association (``CTA'') states that it is North
America's largest technology trade association.\60\ CTA and its members
are frequently targeted for impersonation fraud.\61\ CTA states that it
has seen a growing number of impersonation fraud through email
solicitations, including impersonation attempts of CTA
representatives.\62\ CTA also states that business impersonation
victimizes non-profit organizations, such as the CTA Foundation.\63\
CTA supports an FTC rule that would prohibit deceptive impersonation of
for-profit and non-profit businesses alike.\64\ It recommends that the
FTC not focus rulemaking efforts on communication channels; instead, it
encourages the FTC to work with the private sector to improve detection
and reporting mechanisms to prevent impersonation schemes.\65\ Finally,
CTA suggests that the FTC consider partnership with other Federal
agencies, the private sector, and non-profits to gather information and
help prevent impersonation fraud.\66\
---------------------------------------------------------------------------
\60\ Consumer Tech. Ass'n, Cmt. on ANPR, at 1 (Feb. 17, 2022),
<a href="https://www.regulations.gov/comment/FTC-2021-0077-0091">https://www.regulations.gov/comment/FTC-2021-0077-0091</a> (``CTA
Cmt.'').
\61\ See id.
\62\ See id. at 4.
\63\ See id. at 5-6.
\64\ See id.
\65\ Id. at 9.
\66\ See id.
---------------------------------------------------------------------------
CTIA, a trade association for wireless-service providers, proposes
that the FTC continue to use its existing tools to combat impersonation
fraud.\67\ CTIA suggests that, if the FTC proceeds with a new rule to
address impersonation fraud, the rule should ``narrowly'' target bad
actors and continue to coordinate with government partners and the
private sector.\68\ CTIA lists various industry efforts to help prevent
robocalls from reaching consumers and discusses its implementation of
``Messaging Principles and Best Practices'' to help stop bad
actors.\69\ CTIA states that its members have been assisting Federal
and State enforcement actions against impersonation frauds.\70\
---------------------------------------------------------------------------
\67\ See CTIA, Cmt. on ANPR (Feb. 23, 2022), <a href="https://www.regulations.gov/comment/FTC-2021-0077-0161">https://www.regulations.gov/comment/FTC-2021-0077-0161</a> (``CTIA Cmt.'').
\68\ Id.
\69\ Id. at 7-10.
\70\ See id.
---------------------------------------------------------------------------
The Commission received 11 comments from businesses or trade
associations that are frequently impersonated; six of these comments
were from companies in the telecommunications and technology
industries.\71\
---------------------------------------------------------------------------
\71\ See YouMail Cmt.; WMC Cmt.; DIRECTV Cmt.; Microsoft Cmt.;
Apple Cmt.; Somos Cmt.; PCH Cmt.; Informa Cmt.; AAFA Cmt.; NAB Cmt.;
CTA Cmt.
---------------------------------------------------------------------------
For example, DIRECTV submitted a comment supporting the
Commission's effort to fight impersonation fraud \72\ and states that
many impersonators pose as representatives of DIRECTV in an effort to
commit prepaid card fraud, which causes significant harm to both
consumers and businesses.\73\ According to DIRECTV, impersonators
falsely offer consumers discounts on its service in exchange for the
consumer's providing a prepaid credit card or gift card to a third-
party e-commerce website.\74\ This conduct can result in significant
financial loss for consumers.\75\ DIRECTV cites a YouMail, Inc.
estimate that Americans received millions of calls over the course of
one month in late 2021 from scammers claiming to be from companies,
such as Amazon, Apple, PayPal, and Wells Fargo, and making false claims
about the consumers' accounts or information with these companies.\76\
DIRECTV states that impersonation fraud harms its business by forcing
it to dedicate resources to fighting the scams and also states that the
scams hurt its ability to interest consumers in legitimate
services.\77\
---------------------------------------------------------------------------
\72\ See DIRECTV Cmt. at 1.
\73\ See id. at 2-4.
\74\ See id. at 4-6.
\75\ See id. at 2.
\76\ See id.
\77\ See id. at 3-4.
---------------------------------------------------------------------------
Apple, Inc., submitted a comment that urges the Commission to adopt
a rule targeting bad actors (and their ``facilitators'' that are
engaging in impersonation fraud) without stifling legitimate business
activity.\78\ Apple states that it has worked cooperatively with the
FTC and other Federal agencies to protect consumers from
[[Page 62745]]
impersonation fraud.\79\ Apple notes the prevalence of fraud in which
impersonators steal money from consumers through gift card scams.\80\
Apple states that, as a result of aggressive civil and criminal
enforcement, impersonation fraud levels have decreased.\81\ Apple
states that impersonators who have obtained stolen gift cards use gray
markets \82\ to sell the items purchased with those cards, making it
harder for consumers to detect the fraud.\83\ Apple maintains that gray
markets are primary ``means and instrumentalities'' that impersonators
use to conduct their scams.\84\ One consumer submitted a comment
describing how he had had fallen prey to Apple employee
impersonators.\85\ Another commenter, a former Apple employee,
described the many stories she had heard of customers falling victim to
Apple employee impersonators.\86\
---------------------------------------------------------------------------
\78\ Apple Cmt.
\79\ See id.
\80\ See id.
\81\ See id. Apple notes that complaints about unauthorized
calls by individuals listed on the FTC's Do Not Call Registry
decreased after the Commission sued a VoIP provider for originating
illegal robocalls.
\82\ Gray markets ``allow consumers to sell physical and digital
goods at a discounted price. Impersonators who have obtained stolen
gift card funds utilize gray markets to sell items purchased with
those funds to other consumers who may be unaware of the fraudulent
source of the items they are purchasing.'' Id.
\83\ See id.
\84\ Id.
\85\ See Estebar Cmt.
\86\ See 0044 Cmt.
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Microsoft Corporation strongly supports the Commission's decision
to proceed with rulemaking to combat government and business
impersonation fraud.\87\ Microsoft states that it is frequently
impersonated in the form of technical support scams, in which
individuals impersonate Microsoft employees to trick consumers into
purchasing technical support services to fix non-existing software or
device issues.\88\ Such impersonators often steal personal information
from consumers and frequently install malware or other programs to do
so.\89\ Microsoft's comment discusses its commitment to protecting
customer privacy through its Digital Crimes Unit.\90\ Microsoft states
that it has a database of roughly 600,000 consumer complaints regarding
technical support scams.\91\ It also states that it has conducted
consumer surveys regarding the prevalence of technology scams. In 2021,
Microsoft commissioned YouGov to conduct an online survey of more than
16,000 adult internet users in 16 countries.\92\ Microsoft maintains
that the survey results demonstrate the strong need for additional
protection of consumers from technical support scams.\93\
---------------------------------------------------------------------------
\87\ See Microsoft Cmt. at 1.
\88\ See id.
\89\ See id.
\90\ See id. at 2.
\91\ See id. at 3.
\92\ See id.
\93\ See id.
---------------------------------------------------------------------------
According to Microsoft, the YouGov survey shows that 67% of U.S.
consumers have encountered a technical support scam in the previous
year.\94\ The study did show that marginally fewer consumers have been
exposed to technical support scams in recent years than in 2018.\95\
The YouGov survey also showed that consumers have been targeted with
impersonation scams involving Facebook, Apple, Google, and Amazon.\96\
---------------------------------------------------------------------------
\94\ See id.
\95\ See id.
\96\ See id. at 3-4.
---------------------------------------------------------------------------
Microsoft states that consumers often lose hundreds and sometimes
thousands of dollars to technical support impersonation scams.\97\
According to Microsoft, the YouGov survey shows that the Millennial
Generation and Generation Z have the highest losses from technical
support scams: One in 10 members of these demographics fell victim to
such a scam and lost money.\98\ The survey data shows that men are more
likely to fall prey to a technical support scam.\99\
---------------------------------------------------------------------------
\97\ See id. at 4.
\98\ See id.
\99\ See id.
---------------------------------------------------------------------------
Microsoft states that there has been a shift from the traditional
``cold-call'' model that scammers use, often by using spoofed numbers
and claiming to be a Microsoft employee, to deployment of automated
pop-ups/malware on websites to redirect consumers to scam
websites.\100\ It states that technical support scams typically make
strong claims via pop-up websites, email and other online
platforms,\101\ in addition to telephone calls where callers falsely
represent themselves as Microsoft employees.\102\ According to
Microsoft, technical support impersonators often share resources, which
allows them to copy each other's business models and limit risk of
enforcement action.\103\
---------------------------------------------------------------------------
\100\ See id. at 5-6.
\101\ See id. at 6.
\102\ See id.
\103\ See id.
---------------------------------------------------------------------------
Addressing means-and-instrumentalities liability, Microsoft states
that scammers typically rely on payment processors to receive money
from victims of these scams.\104\ The scammers also utilize affiliate
marketing services to advertise to consumers through malicious ads and
pop-up windows.\105\
---------------------------------------------------------------------------
\104\ See id.
\105\ See id.
---------------------------------------------------------------------------
Microsoft states that a systematic approach is critical to address
these scams, especially because private actors are limited in their
ability to recover money for victims.\106\ Microsoft notes that the
FTC's new rule would ``clarify and strengthen the FTC's authority to
address these scams, building upon the FTC's existing authority under
the FTC Act and existing regulation, including the Telemarketing Sales
Rule.'' \107\
---------------------------------------------------------------------------
\106\ See id.
\107\ Id. The Commission also received a comment from a consumer
who fell prey to Microsoft impersonators. See Hanley Cmt.
---------------------------------------------------------------------------
Somos, Inc. states in its comment that, when scammers use Toll-Free
Numbers (TFNs) to execute their scams, it causes consumers to lose
confidence in TFNs.\108\ It reports that, since 2017, Somos and partner
organizations have shut down more than 18,000 TFNs used by
impersonation scammers.\109\ Somos discusses anecdotal evidence based
on experience with companies that have asked Somos to help shut down
TFNs utilized by scammers.\110\ Somos states that it works with more
than 80 companies whose customers have been targeted by impersonation
scams--65 utility companies, four tech companies, three retailers, and
10 miscellaneous entities.\111\ Somos states that there has been an
increase in the number of TFNs reported as impersonation scams.\112\
---------------------------------------------------------------------------
\108\ See Somos Cmt. at 1.
\109\ See id. at 2.
\110\ See id.
\111\ See id.
\112\ See id. at 4.
---------------------------------------------------------------------------
The Commission received a comment from Erik M. Pelton & Associates,
a trademark law firm in Virginia, requesting that it include trademark
scams in its definition of impersonation scams.\113\ The comment states
that trademark scams have become widespread.\114\ Specifically, the
comment states that a Pakistan-based company used over 200 fake
websites to impersonate the United States Patent and Trademark Office
(USPTO) and offer trademark filing services.\115\ The law firm urges
transparency from the FTC, USPTO, and United States Postal Inspection
Service about the pervasiveness of trademark scams and the measures
being taken to address
[[Page 62746]]
these scams.\116\ The comment also recommends that the FTC investigate
the means used to collect the money unlawfully taken from victims.\117\
The comment also suggests that the FTC adopt a more robust
impersonation scam reporting system for consumers and businesses.\118\
---------------------------------------------------------------------------
\113\ See Erik M. Pelton & Associations, Consultants, Cmt. on
ANPR, at 1 (Feb. 22, 2022), <a href="https://www.regulations.gov/comment/FTC-2021-0077-0156">https://www.regulations.gov/comment/FTC-2021-0077-0156</a> (``Pelton Cmt.'').
\114\ See id. at 3.
\115\ See id.
\116\ See id.
\117\ See id. at 5.
\118\ Id.
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C. Other Comments
The Commission received a number of comments that advocated for
``non-profit'' entities to be included in the proposed rule's
definition of businesses that can be impersonated.\119\ For example,
The National Association of State Charity Officials (``NASCO''), an
association of state charity officials, state attorneys general, and
other state officials who regulate charities, submitted a comment
urging the Commission to consider including impersonation of charitable
organizations in the rule.\120\ NASCO states that ``fraudulent
practices of impersonating legitimate charitable causes and charitable
organizations persist across the country.'' \121\ It urges the FTC to
ensure that the impersonation rule would cover individual and
professional fundraiser impersonators.\122\ NASCO notes that the FTC
worked with 38 state charity regulators to help shut down a
telemarketing scam that involved over 100 million donations.\123\
---------------------------------------------------------------------------
\119\ Nat'l Ass'n of State Charity Officials (``NASCO''), Cmt.
on ANPR, at 1 (Feb. 22, 2022), <a href="https://www.regulations.gov/comment/FTC-2021-0077-0165">https://www.regulations.gov/comment/FTC-2021-0077-0165</a> (``NASCO Cmt.''); ECA Cmt. at 2; Cotney Cmt. at
2; CTA Cmt. at 3-7.
\120\ See NASCO Cmt. at 1.
\121\ Id. at 2.
\122\ See id. at 3.
\123\ See id.
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III. Reasons for the Proposed Rule on Impersonation of Government and
Businesses
The Commission believes that the proposed rule will substantially
improve its ability to combat the most prevalent impersonation fraud
and may also strengthen deterrence against this fraud in the first
instance. While government impersonation and business impersonation are
already unlawful under Section 5 of the FTC Act, which prohibits unfair
or deceptive acts or practices, the proposed rule will allow the
Commission to seek civil penalties against the violators and more
readily obtain monetary redress for their victims. The rule would not
impose new burdens on honest businesses and instead provide benefits to
businesses whose brands are harmed by business impersonators.
A. Need for and Objectives of the Proposed Rule on Impersonation of
Government and Businesses
The Commission's objective in commencing this rulemaking is to
expand the remedies available to it in combatting common and injurious
forms of fraud. In the ANPR, the Commission described how a recent U.S.
Supreme Court decision,\124\ which overturned 40 years of precedent
from the U.S. Circuit Courts of Appeal uniformly holding that the
Commission could take action under Section 13(b) of the FTC Act to
return money unlawfully taken from consumers through unfair or
deceptive acts or practices, has made it significantly more difficult
for the Commission to return money to injured consumers.\125\ Without
Section 13(b) as it had historically been understood, the only method
the Commission has to return money unlawfully taken from consumers is
Section 19, which provides two paths for consumer redress. The longer
path requires the Commission to first win a case in--and any appeal
arising from--its administrative court. Then, to recover money for
consumers, the Commission must prove that the violator engaged in
fraudulent or dishonest conduct \126\ in a second action in Federal
court. The shorter path, which allows the Commission to recover
directly through a Federal court action or obtain civil penalties
directly from a Federal court, is available only when a rule has been
violated.\127\
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\124\ See AMG Cap. Mgmt., LLC v. FTC, 141 S. Ct. 1341, 1352
(2021).
\125\ See ANPR, 86 FR 72901 & n.24 (discussing AMG Cap. Mgmt.).
\126\ See 15 U.S.C. 57b(a)(2) (``If the Commission satisfies the
court that the act or practice to which the cease and desist order
relates is one which a reasonable man would have known under the
circumstances was dishonest or fraudulent, the court may grant
relief.'').
\127\ Compare 15 U.S.C. 57b(a)(1) (rule violations), with id.
57b(a)(2) (Section 5 violations).
---------------------------------------------------------------------------
The proposed rule will make available the shorter path in a broader
set of Commission enforcement actions. Currently, the Commission can
directly pursue in Federal court Section 19 remedies, including civil
penalties and consumer redress, for impersonation fraud only if that
fraud violates the Commission's Telemarketing Sales Rule, Mortgage
Assistance Relief Services Rule, or R-Value Rule, which expressly
prohibit impersonation fraud but apply only in specific contexts.\128\
Outlawing impersonation of government and business by rule no matter
what the context expands the Commission's enforcement toolkit and
allows it to stop and deter harmful conduct and make American consumers
whole when they have been wronged. Because impersonation fraud is so
prevalent and so harmful, the unlocking of additional remedies through
this rulemaking, particularly the possibility of seeking civil
penalties against violators as well as obtaining redress for their
victims, will allow the Commission to more effectively police
impersonation scams that plague consumers.
---------------------------------------------------------------------------
\128\ See TSR, 16 CFR 310.3(a)(2)(vii) (prohibiting
misrepresentations with respect to a ``seller's or telemarketer's
affiliation with, or endorsement or sponsorship by, any person or
government entity''); R-Value Rule, 16 CFR 460.21 (``Do not say or
imply that a government agency uses, certifies, recommends, or
otherwise favors your product unless it is true. Do not say or imply
that your insulation complies with a governmental standard or
specification unless it is true.''); Regulation O (Mortgage
Assistance Relief Services), 12 CFR 1015.3(b)(3) (prohibiting
misrepresentations that ``a mortgage assistance relief service is
affiliated with, endorsed or approved by, or otherwise associated
with: (i) The United States government, (ii) Any governmental
homeowner assistance plan, (iii) Any Federal, State, or local
government agency, unit, or department, (iv) Any nonprofit housing
counselor agency or program, (v) The maker, holder, or servicer of
the consumer's dwelling loan, or (vi) Any other individual, entity,
or program'').
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B. Overview and Scope of Proposed Rule on Impersonation of Government
and Businesses
The Commission's proposed rule is straightforward. It borrows from
existing rules and statutory definitions by declaring that
impersonation of government and businesses is unlawful.\129\ As noted
above, case law and the Commission's experience, as well as the
comments and other evidence cited herein, are replete with examples of
such impersonation.
---------------------------------------------------------------------------
\129\ See id.
---------------------------------------------------------------------------
The prohibition against impersonating government in proposed Sec.
461.2 would cover unlawful conduct by persons who misrepresent that
they are or are affiliated with a government or government officer by,
including but not limited to: (1) calling, messaging, or otherwise
contacting an individual or entity while posing as a government or an
officer or agent or affiliate or endorsee thereof, including by
identifying a government or officer by name or by implication; (2)
sending physical mail through any carrier using addresses, government
seals or lookalikes, or other identifying insignia of a government or
officer thereof; (3) creating a website or other electronic service
impersonating the name, government seal, or identifying insignia of a
government or officer thereof or using ``.gov'' or any lookalike, such
as
[[Page 62747]]
``<a href="http://govusa.com">govusa.com</a>''; (4) creating or spoofing an email address using
``.gov'' or any lookalike; (5) placing advertisements that pose as a
government or officer thereof against search queries for government
services; and (6) using a government seal on a building, letterhead,
website, email, vehicle, or other physical or digital place.
The prohibition against impersonating businesses in Sec. 461.3
would cover a variety of similarly unlawful conduct, including but not
limited to: (1) calling, messaging, or otherwise contacting an
individual or entity while posing as a business or an officer or agent
or affiliate or endorsee thereof, including by naming a business by
name or by implication, such as ``card member services'' or ``the car
dealership''; (2) sending physical mail through any carrier using
addresses, seals, logos, or other identifying insignia of a business or
officer thereof; (3) creating a website or other electronic service
impersonating the name, logo, insignia, or mark of a business or a
close facsimile or keystroke error, such as ``<a href="http://ntyimes.com">ntyimes.com</a>,''
``<a href="http://rnicrosoft.com">rnicrosoft.com</a>,'' ``<a href="http://microsoft.biz">microsoft.biz</a>,'' or
``<a href="http://carnegiehall.tixsales.com">carnegiehall.tixsales.com</a>''; (4) creating or spoofing an email
address that impersonates a business; (5) placing advertisements that
pose as a business or officer thereof against search queries for
business services; and (6) using, without authorization, a business's
mark on a building, letterhead, website, email, vehicle, or other
physical or digital place.
The rule, in proposed Sec. 461.4, also makes it unlawful to
provide the means and instrumentalities for violations of proposed
Sec. Sec. 461.2 and 461.3. Some commenters suggested that the
Commission impose liability on a broader set of actors, namely those
who assist and facilitate violations. The Telemarketing Sales Rule
(``TSR'') does so, but the Commission cannot do so here. The TSR
provides express statutory authorization for assisting-and-facilitating
liability,\130\ a form of indirect liability. Sections 5 and 18 of the
FTC Act contain no such express authorization. Instead, the case law
describes a form of direct liability for a party who, despite not
having direct contact with the injured consumers, ``passes on a false
or misleading representation with knowledge or reason to expect that
consumers may possibly be deceived as a result.'' \131\ In other words:
``One who places in the hands of another a means of consummating a
fraud or competing unfairly in violation of the Federal Trade
Commission Act is himself guilty of a violation of the Act.'' \132\
Accordingly, the Commission proposes expressly to impose liability on
those who provide the means and instrumentalities of violations of the
prohibitions against impersonation of government and businesses, but it
declines to seek to impose assisting-and-facilitating liability. An
example of a violation of proposed Sec. 461.4's prohibition on
providing the means and instrumentalities for impersonation is a person
who fabricates official-looking Internal Revenue Service (IRS) Special
Agent identification badges for sale. In this example, the person does
not actually impersonate an IRS Special Agent, so does not violate
proposed Sec. 461.2's prohibition against impersonating government
officers but does provide the means and instrumentalities for others to
do so, which violates proposed Sec. 461.4.
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\130\ See 15 U.S.C. 6102(a)(2) (``acts or practices of entities
or individuals that assist or facilitate deceptive telemarketing'').
\131\ Shell Oil Co., 128 F.T.C. 749 (1999).
\132\ C. Howard Hunt Pen Co. v. FTC, 197 F.2d 273, 281 (3d Cir.
1952).
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Several commenters raised questions about jurisdiction. The
proposed rule is subject to all existing limitations of the law: of
unfair or deceptive acts or practices under the FTC Act; of the FTC's
jurisdiction; and of the U.S. Constitution--the Commission cannot bring
a complaint to enforce the rule if the complaint would exceed the
Commission's jurisdiction or offend the Constitution. One important
jurisdictional subject for discussion is not-for-profit entities. The
Commission is authorized to sue a corporation (including any company,
trust, or association, incorporated or unincorporated) only when it is
``organized to carry on business for its own profit or that of its
members.'' \133\ Nevertheless, the proposed rule's definition of
``business'' includes entities that are organized as not-for-profit
entities. The reason is that persons, partnerships, or corporations
that are organized for profit (including illicit profits) may
impersonate a business that is not. For example, a scammer might
impersonate a charity. Whether organized as a person, partnership, or
corporation, this hypothetical scammer is within the jurisdiction of
the FTC, even if the impersonated charity is not. Accordingly, the
rule, in proposed Sec. 461.1, defines a ``business'' that may be
impersonated to include non-profits.\134\
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\133\ 15 U.S.C. 44.
\134\ State laws likely forbid impersonation by a bona fide non-
profit organization even if would not be subject to FTC
jurisdiction.
---------------------------------------------------------------------------
One commenter worried that the rule, if applied literally in an
unanticipated way, could chill legitimate speech.\135\ The proposed
rule, however, sweeps no more broadly than the existing prohibition
against unfair and deceptive practices in Section 5 of the FTC Act.
Because misrepresentations must be ``material'' and ``in or affecting
commerce,'' a communication that is not material to a commercial
transaction, such as impersonation in artistic or recreational
costumery or impersonation in connection with political or other non-
commercial speech, is not prohibited by the proposed rule.
---------------------------------------------------------------------------
\135\ See Cason Reilly, Cmt. on ANPR, at 1-3 (Feb. 22, 2022),
<a href="https://www.regulations.gov/comment/FTC-2021-0077-0136">https://www.regulations.gov/comment/FTC-2021-0077-0136</a>.
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C. The Rulemaking Process
The Commission can decide to finalize the proposed rule if the
rulemaking record, including the public comments in response to this
NPRM, supports such a conclusion. The Commission may, either on its own
initiative or in response to a commenter's request, engage in
additional processes, which are described in 16 CFR 1.12 and 1.13. If
the Commission on its own initiative decides to conduct an informal
hearing, or if a commenter files an adequate request for such a
hearing, then a separate notice will issue under 16 CFR 1.12(a). Based
on the comment record and existing prohibitions against impersonation
of government and businesses under Section 5 of the FTC Act, the
Commission does not here identify any disputed issues of material fact
necessary to be resolved at an informal hearing. The Commission may
still do so later, on its own initiative or in response to a persuasive
showing from a commenter.
IV. Preliminary Regulatory Analysis
Under Section 22 of the FTC Act, the Commission, when it publishes
any NPRM, must include a ``preliminary regulatory analysis.'' 15 U.S.C.
57b-3(b)(1). The required contents of a preliminary regulatory analysis
are (1) ``a concise statement of the need for, and the objectives of,
the proposed rule,'' (2) ``a description of any reasonable alternatives
to the proposed rule which may accomplish the stated objective,'' and
(3) ``a preliminary analysis of the projected benefits and any adverse
economic effects and any
[[Page 62748]]
other effects'' for the proposed rule and each alternative, along with
an analysis ``of the effectiveness of the proposed rule and each
alternative in meeting the stated objectives of the proposed rule.'' 15
U.S.C. 57b-3(b)(1)(A)-(C). This NPRM already provided the concise
statement of the need for, and the objectives of, the proposed rule in
Item III.A above. It addresses the other requirements below.
A. Reasonable Alternatives and Anticipated Costs and Benefits
The Commission believes that the benefits of proceeding with the
rulemaking will significantly outweigh the costs, but it welcomes
public comment and data (both qualitative and quantitative) on any
benefits and costs to inform a final regulatory analysis. Critical to
the Commission's analysis is the legal consequence that any eventual
rule would allow not only for monetary relief to victims of rule
violations but also for the imposition of civil penalties against
violators. Such results are likely to provide benefits to consumers and
competition, as well as to the agency, without imposing any significant
costs on consumers or competition. It is difficult to quantify with
precision what all those benefits may be, but it is possible to
describe them qualitatively.
It is useful to begin with the scope of the problem the proposed
rule would address. As discussed in the ANPR, consumers reported
1,362,996 instances of government impersonation and associated total
losses of $922,739,109 from January 1, 2017 through September 30,
2021.\136\ Since then, consumers reported another 46,606 instances of
government impersonation in the fourth quarter of 2021 and 46,950 in
the first quarter of 2022.\137\ For business impersonation, the ANPR
noted that, from January 1, 2017 through September 30, 2021, consumers
reported being defrauded of roughly $852 million in 753,555
incidents.\138\ Since then, consumers reported another 96,341 instances
of business impersonation in the fourth quarter of 2021 and 79,057 in
the first quarter of 2022.\139\ For the time period discussed in the
ANPR, average annual total consumer losses reported from business
impersonation were roughly $180 million, and average annual total
consumer losses reported from government impersonation were roughly
$190 million. With all the 2021 data in, total reported consumer losses
last year due to government impersonation topped $445 million over
396,601 reported incidents.\140\
---------------------------------------------------------------------------
\136\ See ANPR, 86 FR 72901, 72902.
\137\ See Fed. Trade Comm'n, Fraud Reports: Subcategories over
Time, Tableau Public, <a href="https://public.tableau.com/app/profile/federal.trade.commission/viz/FraudReports/SubcategoriesOverTime">https://public.tableau.com/app/profile/federal.trade.commission/viz/FraudReports/SubcategoriesOverTime</a>
(last visited June 24, 2022). See also Fed. Trade Comm'n, Consumer
Sentinel Network Data Book 2020, 4 (2022), <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/CSN%20Annual%20Data%20Book%202021%20Final%20PDF.pdf">https://www.ftc.gov/system/files/ftc_gov/pdf/CSN%20Annual%20Data%20Book%202021%20Final%20PDF.pdf</a>.
\138\ See ANPR, 86 FR 72901.
\139\ See Fed. Trade Comm'n, Fraud Reports: Subcategories over
Time, Tableau Public, <a href="https://public.tableau.com/app/profile/federal.trade.commission/viz/FraudReports/SubcategoriesOverTime">https://public.tableau.com/app/profile/federal.trade.commission/viz/FraudReports/SubcategoriesOverTime</a>
(last visited June 24, 2022).
\140\ See Fed. Trade Comm'n, Explore Government Imposter Scams,
Tableau Public, <a href="https://public.tableau.com/app/profile/federal.trade.commission/viz/GovernmentImposter/Infographic">https://public.tableau.com/app/profile/federal.trade.commission/viz/GovernmentImposter/Infographic</a> (last
visited June 24, 2022).
---------------------------------------------------------------------------
Reports of government and business impersonation remain high. The
consumer losses remain large, with, for government impersonation scams
alone, a median loss of $1,322 and total losses of $103 million
reported for government impersonation in the first quarter of
2022.\141\ If the trends from the first quarter of 2022 continue, the
annual consumer loss reported just for government impersonation will
again exceed $400 million. And these figures cover only those incidents
that are reported to the Commission; plainly, the prevalence of
government and business impersonation in reality is higher than what
gets reported to the Commission.
---------------------------------------------------------------------------
\141\ See id.
---------------------------------------------------------------------------
It follows that, qualitatively, government and business
impersonation cases have recently constituted and are likely to
constitute in the future a meaningful share of Commission enforcement
actions,\142\ and in many of those actions a rule against impersonation
may prove to be the only or the most practicable means for achieving
consumer redress. As such, the most significant anticipated benefit of
a final rule is the ability to obtain monetary relief, especially
consumer redress, as well as civil penalties. While such relief could
also be obtained with an existing rule, such as the TSR, in many cases,
by no means do all impersonation scams implicate an existing rule, and
there is no reason to expect them all to do so in the future.\143\
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\142\ Impersonation scams overall, including those that are not
covered by the proposed rule's scope of government and business
impersonation, constitute 17.16% of all consumer complaints received
in the Consumer Sentinel Network in 2021. See Fed. Trade Comm'n,
Consumer Sentinel Network Data Book 2020, 6 (2022), <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/CSN%20Annual%20Data%20Book%202021%20Final%20PDF.pdf">https://www.ftc.gov/system/files/ftc_gov/pdf/CSN%20Annual%20Data%20Book%202021%20Final%20PDF.pdf</a>.
\143\ The Commission has brought many impersonation cases in
which no existing rule was violated or no relief under a rule was
sought. See, e.g., Compl. at 12-13, FTC v. Modern Tech. Inc., No.
13-cv-8257 (N.D. Ill. filed Nov. 18, 2013) (only counts under
Section 5); Compl. at 9-10, FTC v. Gerber Prods. Co., No. 2:14-cv-
06771-SRC-CLW (D.N.J. filed Oct. 30, 2014) (only counts under
Sections 5 and 12(a)); Compl. at 17-19, 22, FTC v. <a href="http://DOTAuthority.com">DOTAuthority.com</a>,
Inc., No. 16-cv-62186 (S.D. Fla. filed Sept. 13, 2016) (seeking
relief only for counts under Section 5); Compl. at 8-9, FTC v.
Moore, No. 5:18-cv-01960 (C.D. Cal. filed Sept. 13, 2018) (only
counts under Section 5); Compl. at 21-22, FTC v. Forms Direct, Inc.
(Am. Immigr. Ctr.), No. 3:18-cv-06294 (N.D. Cal. filed Oct. 16,
2018) (only counts under Section 5); Am. Compl. at 8-9, FTC v.
Starwood Consulting, LLC, No. 4:18-cv-02368 (S.D. Tex. filed Mar.
27, 2019) (only counts under Section 5 from FTC); Compl. at 8-9, FTC
v. Ponte Invs., LLC, No. 1:20-cv-00177-JJM-PAS (D.R.I. filed Apr.
17, 2020) (only counts under Section 5).
---------------------------------------------------------------------------
To succeed at obtaining consumer redress without a rule violation,
the Commission must first file a complaint alleging that the
impersonator violated Section 5 and prevail in securing a cease-and-
desist order. Then, to secure consumer redress for victims of the
impersonator, the Commission must file follow-on litigation under
Section 19, and without a rule this second litigation requires the
Commission to allege and persuade a court in each case that the conduct
at issue is ``one which a reasonable man would have known under the
circumstances was dishonest or fraudulent.'' \144\ Although this
standard is likely to be met in impersonation cases, having to do so in
each case requires a greater expenditure of Commission resources than
in cases with a rule violation, which do not require a second
litigation or separate proof of knowledge that the conduct was
dishonest or fraudulent.
---------------------------------------------------------------------------
\144\ 15 U.S.C. 57b(a)(2). Depending on the egregiousness of the
misconduct and the harm it is causing, the Commission also may seek
preliminary injunctive relief in federal court. 15 U.S.C. 53(b).
---------------------------------------------------------------------------
Accordingly, without a rule, the Section 19 path often requires
consumer victims to wait many years before the Commission can deliver
redress to them, even six years or more.\145\ Although the Commission
does not have extensive experience pursuing Section 19 cases without a
rule violation, its limited experience supports a reasonable estimate
that such litigation can take at least twice as long as litigation with
a rule violation. Because of the prevalence of impersonation scams, the
Commission will not have a shortage of bad actors to investigate, and
it could invest the savings of enforcement resources from having a
[[Page 62749]]
rule into investigating and, where the facts warrant, bringing
enforcement actions in additional impersonation matters. In sum, the
significant potential consumer-redress benefits of a rule are that the
Commission could put a stop to more impersonation scams, return money
to more victims, and win that redress more quickly.
---------------------------------------------------------------------------
\145\ See, e.g., Press Release, Fed. Trade Comm'n, Marketers of
Ab Force Weight Loss Device Agree to Pay $7 Million for Consumer
Redress (Jan. 14, 2009), <a href="https://www.ftc.gov/news-events/news/press-releases/2009/01/marketers-ab-force-weight-loss-device-agree-pay-7-million-consumer-redress">https://www.ftc.gov/news-events/news/press-releases/2009/01/marketers-ab-force-weight-loss-device-agree-pay-7-million-consumer-redress</a> (describing a 2009 settlement of a follow-
on Section 19 action against Telebrands Corp. that was brought after
litigation finally concluded of a 2003 administrative complaint
alleging violations of Section 5--in this case, the Section 19
action settled instead of being litigated to judgment, which would
have taken more time).
---------------------------------------------------------------------------
A secondary potential benefit is deterrence of impersonation scams.
The potential deterrence from a rule should not be overstated; because
impersonation scams are already clearly unlawful, deterrence would
affect only bad actors who are comfortable breaking the law under the
existing set of consequences but would opt not to break the law if
potentially subject to civil penalties and swifter redress. Scholarship
on deterrence suggests that the potential severity of consequences,
such as high civil penalties, is less likely to influence behavior than
the perceived likelihood of detection and punishment.\146\ Still, an
eventual rule that makes it less likely that impersonators get to keep
their ill-gotten gains and more likely that they have to pay civil
penalties can have only helpful deterrence effects, whatever their
magnitude. And the publicity around this rulemaking process and any
eventual rule could have the salutary effect of complementing the
Commission's consumer education work by elevating public awareness of
these prevalent forms of fraud, which could increase how often they are
detected and reported.
---------------------------------------------------------------------------
\146\ See, e.g., Aaron Chalfin & Justin McCrary, Criminal
Deterrence: A Review of the Literature, 55 J. Econ. Lit. 5 (2017),
<a href="https://doi.org/10.1257/jel.20141147">https://doi.org/10.1257/jel.20141147</a> (reviewing twenty years of
studies, albeit in criminal rather than civil context, and finding
stronger evidence for deterrent effect of perceived risk of
detection than for severity of punishment).
---------------------------------------------------------------------------
If a final rule succeeds in deterring unlawful behavior, another
potential benefit is that businesses that are frequently impersonated
may have to spend less money to monitor the market for impersonators of
their brand. Several businesses filed comments indicating that
monitoring for impersonation required significant expenditures of funds
and personnel.\147\ Quantifying the savings those companies might
achieve from deterrence of impersonation activity, however, would
require substantial speculation. At the same time, the proposed rule is
unlikely to impose costs on honest businesses, and no commenter
suggested it would. Thus, even a marginal increase in deterrence is a
likely benefit of the rule, although not its primary benefit.
---------------------------------------------------------------------------
\147\ See Microsoft Cmt.; Apple Cmt.
---------------------------------------------------------------------------
Some rough math may help illustrate these qualitatively described
benefits: Between January 1, 2018, and June 30, 2022, Consumer Sentinel
received 338,393 complaints regarding business or government
impersonation scams that expressly reported the initial contact method
used by the impersonator as being email, social media, online or pop-up
advertisement, website, or mobile application.\148\ These complaints
referenced aggregate consumer losses of $599,270,000. Because these
initial contact methods typically are unlikely to be covered by the TSR
or other rules, the Commission currently cannot redress such fraud
other than by using its Section 19 authority. The Commission cannot
predict the volume of future government and business impersonation scam
complaints, their contact methods, or the losses those complaints will
report, but if even a small percentage of similar complaints the
Commission receives in the future are redressed or deterred by the
proposed rule, the marginal effect from rule implementation (relative
to not implementing the rule) would have had economically significant
consequences. For example, assume that the annualized rate of consumer
injury from government and business impersonation scams initiated
through email, social media, online or pop-up advertisements, websites,
or mobile applications over the past 4.5 years is $133,171,000 (or
$599,270,000 divided by 4.5 years). If that annualized rate continues
over the next 10 years, consumer losses over that period would be
$1,331,710,000. Even a five per cent reduction in such losses through
redress or deterrence would result in a benefit to consumers of over
$66.5 million (without adjusting for inflation or discounting any of
these figures).
---------------------------------------------------------------------------
\148\ This is a conservative estimate of the number of Consumer
Sentinel complaints received over this period that reference such
initial contact methods. Complaints referencing a sub-category of
business complaints, related to ``technical support'' scams, are
excluded because such complaints may also be reported under business
impersonations and because many were submitted to Consumer Sentinel
from the impersonated business with the initial contact method
information omitted.
---------------------------------------------------------------------------
One potentially reasonable alternative to the proposed rule is to
terminate the rulemaking and rely instead on the existing tools that
the Commission currently possesses to combat government and business
impersonation fraud, such as consumer education and enforcement actions
brought under Sections 5 and 19 of the FTC Act. Termination of the
rulemaking would offer the benefit of preserving some Commission
resources that would be required to continue the rulemaking in the
short term, but it would come at a significant cost. The cost that is
most significant is the failure to strengthen the set of tools
available in support of the Commission's enforcement program against
impersonation fraud, depriving it of the benefits outlined above. The
alternative of terminating the rulemaking would not sufficiently
accomplish the Commission's objectives. The Commission seeks comment on
this and other potentially reasonable alternatives.
B. Paperwork Reduction Act
In addition to the requirements of Section 22, the Commission must
provide in any NPRM the ``information required by the Regulatory
Flexibility Act, 5 U.S.C. 601-612, and the Paperwork Reduction Act, 44
U.S.C. 3501-3520, if applicable.'' 16 CFR 1.11(c)(4).
The Paperwork Reduction Act requires the Commission to engage in
additional processes and analysis if it proposes to engage in a
``collection of information'' as part of the proposed rule. 44 U.S.C.
3506. The Commission states that the proposed rule contains no
collection of information.
C. Regulatory Flexibility Act--Initial Regulatory Flexibility Analysis
The Regulatory Flexibility Act requires the Commission to prepare
and make available for public comment an ``initial regulatory
flexibility analysis'' (``IRFA'') in connection with any NPRM. 5 U.S.C.
603. An IRFA requires many of the same components as Section 22 of the
FTC Act and the Paperwork Reduction Act, which the Commission
incorporates into its IRFA. The IRFA must furthermore contain, among
other things, ``a description of and, where feasible, an estimate of
the number of small entities to which the proposed rule will apply.'' 5
U.S.C. 603(b)(3). This and other requirements do not apply, however,
whenever ``the agency certifies that the rule will not, if promulgated,
have a significant economic impact on a substantial number of small
entities.'' 5 U.S.C. 605(b).
The Commission certifies that the proposed rule will not have a
significant economic impact on a substantial number of honest, small
entities, and this document serves as notice to the Small Business
Administration of the Commission's certification. Because the
impersonation of government and businesses is already prohibited by
Section 5 of the FTC Act, the rule does not change the state of the law
in terms of what is legal and what is illegal.
[[Page 62750]]
Furthermore, the proposed rule would impose no recordkeeping
requirement. The main changes arise for entities that are currently
violating Section 5 but would, after its finalization, also be
violating the rule: instead of being immune from civil penalties (at
least for first offenses) and more capable of evading consumer redress,
the violators could be ordered by a court to pay significant civil
penalties and to provide full redress to their victims. This change
could constitute a significant economic impact for law violators, but
it will not affect a substantial number of small entities. The
Commission believes that the vast majority of small entities do not
impersonate government or other businesses. Furthermore, the Commission
does not consider those small entities that are violating existing law
to be among those Congress protected in enacting the additional
procedural protections for small entities when agencies consider
rulemaking.
V. Request for Comments
Members of the public are invited to comment on any issues or
concerns they believe are relevant or appropriate to the Commission's
consideration of the proposed rule. The Commission requests that
factual data on which the comments are based be submitted with the
comments. In addition to the issues raised above, the Commission
solicits public comment on the specific questions identified below.
These questions are designed to assist the public and should not be
construed as a limitation on the issues on which public comment may be
submitted.
Questions
(1) Should the Commission finalize the proposed rule as a final
rule? Why or why not? How, if at all, should the Commission change the
proposed rule in promulgating a final rule?
(2) Please provide comment, including relevant data, statistics,
consumer complaint information, or any other evidence, on each
different provision of the proposed rule. Regarding each provision,
please include answers to the following questions:
(a) How prevalent is the act or practice the provision seeks to
address?
(b) What is the provision's impact (including any benefits and
costs), if any, on consumers, governments, and businesses, both those
existing and those yet to be started?
(c) What alternative proposals should the Commission consider?
(3) Does the proposed rule contain a collection of information?
(4) Would the proposed rule, if promulgated, have a significant
economic impact on a substantial number of small entities? If so, how
could it be modified to avoid a significant economic impact on a
substantial number of small entities?
(5) The proposed rule contains a one-sentence prohibition against
impersonation of government in Sec. 461.2 and another against
impersonation of businesses in Sec. 461.3. Are these prohibitions
clear and understandable? Are they ambiguous in any way? How if at all
should they be improved?
(6) The proposed rule, in Sec. 461.4, prohibits providing the
means and instrumentalities to commit violations of Sec. 461.2 or
Sec. 461.3. Should any final rule contain this prohibition against
providing the means and instrumentalities for violations of the
prohibitions against government or business impersonation? Why or why
not?
(7) The proposed rule, in Sec. 461.1, defines ``business'' to
include non-profit organizations. Should any final rule keep the
prohibition against impersonating non-profit organizations? Why or why
not?
(8) Should the proposed rule be expanded to address the
impersonation of individuals or entities other than governments and
businesses in interstate commerce? \149\ For example, should the
proposed rule be expanded to prohibit impersonation of individuals for
the purpose of seeking monetary payment or contribution, such as in
romance or grandparent impersonation scams? In your answer to this
question, please provide the following information:
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\149\ Cf. ANPR, 86 FR 72901; see also, Emma Fletcher, Reports of
romance scams hit record highs in 2021, FTC Data Spotlight (Feb. 10,
2022), <a href="https://www.ftc.gov/news-events/data-visualizations/data-spotlight/2022/02/reports-romance-scams-hit-record-highs-2021">https://www.ftc.gov/news-events/data-visualizations/data-spotlight/2022/02/reports-romance-scams-hit-record-highs-2021</a>.
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(a) How prevalent is the act or practice?
(b) What would be the impact, including benefits and costs, of
including individual impersonation in the proposed rule on consumers,
governments, and businesses?
(c) What alternative proposals should the Commission consider?
VI. Comment Submissions
You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before December 16,
2022. Write ``Impersonation NPRM, R207000'' 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 website <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
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 comments online through the <a href="https://www.regulations.gov">https://www.regulations.gov</a> website. To ensure that the Commission considers
your online comment, please follow the instructions on the web-based
form.
If you file your comment on paper, write ``Impersonation NPRM,
R207000'' 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.
Because your comment will be placed on the public record, you are
solely responsible for making sure that your comment does not include
any sensitive or confidential information. In particular, your comment
should not contain 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 ``[t]rade secret or
any commercial or financial information which . . . is privileged or
confidential''--as provided in Section 6(f) of the FTC Act, 15 U.S.C.
46(f), and FTC Rule Sec. 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), 16 CFR 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
[[Page 62751]]
the law and the public interest. Once your comment has been posted
publicly at <a href="https://www.regulations.gov">https://www.regulations.gov</a>--as legally required by FTC
Rule 4.9(b), 16 CFR 4.9(b)--we cannot redact or remove your comment,
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 that 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 December
16, 2022. For information on the Commission's privacy policy, including
routine uses permitted by the Privacy Act, see <a href="https://www.ftc.gov/siteinformation/privacypolicy">https://www.ftc.gov/siteinformation/privacypolicy</a>.
VII. Communications by Outside Parties to the Commissioners or Their
Advisors
Under Commission Rule 1.18(c)(1), 16 CFR 1.18(c)(1), the Commission
has determined that communications with respect to the merits of this
proceeding from any outside party to any Commissioner or Commissioner
advisor will be subject to the following treatment: written
communications and summaries or transcripts of all oral communications
must be placed on the rulemaking record. Unless the outside party
making an oral communication is a member of Congress, communications
received after the close of the public-comment period are permitted
only if advance notice is published in the Weekly Calendar and Notice
of ``Sunshine'' Meetings.
List of Subjects in 16 CFR Part 461
Consumer protection, Impersonation, Trade Practices.
0
For the reasons stated above, the Federal Trade Commission proposes to
amend 16 CFR chapter I by adding part 461 to read as follows:
PART 461--RULE ON IMPERSONATION OF GOVERNMENT AND BUSINESSES
Sec.
461.1 Definitions.
461.2 Impersonation of government prohibited.
461.3 Impersonation of businesses prohibited.
461.4 Means and instrumentalities prohibited.
Authority: 15 U.S.C. 41-58.
Sec. 461.1 Definitions.
As used in this part:
Business means a corporation, partnership, association, or any
other entity that provides goods or services, including not-for-profit
entities.
Government includes Federal, State, local, and tribal governments
as well as agencies and departments thereof.
Officer includes executives, officials, employees, and agents.
Sec. 461.2 Impersonation of government prohibited.
It is unlawful to falsely pose as or to misrepresent, directly or
by implication, affiliation with, including endorsement or sponsorship
by, a government entity or officer thereof.
Sec. 461.3 Impersonation of businesses prohibited.
It is unlawful to falsely pose as or to misrepresent, directly or
by implication, affiliation with, including endorsement or sponsorship
by, a business or officer thereof.
Sec. 461.4 Means and instrumentalities prohibited.
It is unlawful to provide the means and instrumentalities for a
violation of Sec. 461.2 or Sec. 461.3.
By direction of the Commission.
April J. Tabor,
Secretary.
[FR Doc. 2022-21289 Filed 10-14-22; 8:45 am]
BILLING CODE 6750-01-P
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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.