Proposed Rule2024-03793
Trade Regulation Rule on Impersonation of Government and Businesses
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
March 1, 2024
Issuing agencies
Federal Trade Commission
Abstract
The Federal Trade Commission (FTC or Commission) requests public comment on its proposal to amend the trade regulation rule entitled Rule on Impersonation of Government and Businesses (Impersonation Rule or Rule) to revise the title of the Rule, add a prohibition on the impersonation of individuals, and extend liability for violations of the Rule to parties who provide goods and services with knowledge or reason to know that those goods or services will be used in impersonations of the kind that are themselves unlawful under the Rule. The Commission believes these changes are necessary and such impersonation is prevalent, based on all comments it received on the Rule and other information discussed in this document. The Commission now solicits written comment, data, and arguments concerning the utility and scope of the proposed revisions to the Impersonation Rule.
Full Text
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[Federal Register Volume 89, Number 42 (Friday, March 1, 2024)]
[Proposed Rules]
[Pages 15072-15083]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-03793]
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FEDERAL TRADE COMMISSION
16 CFR Part 461
RIN 3084-AB71
Trade Regulation Rule on Impersonation of Government and
Businesses
AGENCY: Federal Trade Commission.
ACTION: Supplemental notice of proposed rulemaking; request for public
comment.
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SUMMARY: The Federal Trade Commission (FTC or Commission) requests
public comment on its proposal to amend the trade regulation rule
entitled Rule on Impersonation of Government and Businesses
(Impersonation Rule or Rule) to revise the title of the Rule, add a
prohibition on the impersonation of individuals, and extend liability
for violations of the Rule to parties who provide goods and services
with knowledge or reason to know that those goods or services will be
used in impersonations of the kind that are themselves unlawful under
the Rule. The Commission believes these changes are necessary and such
impersonation is prevalent, based on all comments it received on the
Rule and other information discussed in this document. The Commission
now solicits written comment, data, and arguments concerning the
utility and scope of the proposed revisions to the Impersonation Rule.
DATES: Comments must be received on or before April 30, 2024.
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 SNPRM,
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, Mail Stop H-144 (Annex
I), Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT: Claire Wack, <a href="/cdn-cgi/l/email-protection#5a392d3b39311a3c2e39743d352c"><span class="__cf_email__" data-cfemail="f39084929098b3958790dd949c85">[email protected]</span></a>, (202-326-
2836).
SUPPLEMENTARY INFORMATION: The Commission invites interested parties to
submit data, views, and arguments on the proposed amendments to the
Impersonation Rule and, specifically, on the questions set forth in
Section VIII of this supplementary notice of proposed rulemaking
(``SNPRM''). The comment period will remain open until April 30, 2024.
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). Any
request for an informal hearing must be submitted as a written comment
within the comment period and must include: (1) a request to make an
oral submission, if desired; (2) a statement identifying the person's
interests in the proceeding; and (3) any proposals to add disputed
issues of material fact that need to be resolved during the hearing.
See 16 CFR 1.11(e). Any comment requesting an informal hearing should
also include a statement explaining why an informal hearing is
warranted and a summary of any anticipated oral or documentary
testimony. If the comment identifies disputed issues of material fact,
the comment should include evidence supporting such assertions. If the
Commission schedules an informal hearing, either on its own initiative
or in response to request by an interested party, the FTC will publish
a separate document notifying the public pursuant to 16 CFR 1.12(a)
(``initial notice of informal hearing'').
I. Background
A. Trade Regulation Rule on Impersonation of Government and Business
Published elsewhere in this issue of the Federal Register is the
Commission's final Trade Regulation Rule entitled ``Rule on
Impersonation of Government and Business,'' promulgated 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 the Administrative Procedure Act (``Impersonation
Rule'' or ``Rule''). 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
[[Page 15073]]
commerce within the meaning of section 5(a)(1) of the FTC Act, 15
U.S.C. 45(a)(1).
Promulgation of this Rule followed publication of an Advance Notice
of Proposed Rulemaking (ANPR) on December 23, 2021,\1\ and a Notice of
Proposed Rulemaking on October 17, 2022 (NPRM).\2\ On March 30, 2023,
the Commission published an Initial Notice of Informal Hearing,\3\ and
on May 4, 2023, Chief Administrative Law Judge D. Michael Chappell
presided over the informal hearing,\4\ which was viewable live from the
Commission's website, <a href="https://www.ftc.gov">https://www.ftc.gov</a>. Because there were no
disputed issues of material fact to resolve, the informal hearing
included no cross examination or rebuttal submissions, and the
presiding officer made no recommended decision.
B. Need for a Supplemental Notice of Proposed Rulemaking as to
Impersonation of Individuals and Liability for Provision of Goods and
Services Used in Impersonation Scams
Based on the comments in response to the ANPR, NPRM, Notice of
Informal Hearing, and Informal Hearing, as well as the Commission's
history of enforcement and reports to the Commission from consumers and
other sources, as discussed in Section V below, the Commission has
reason to believe the deceptive or unfair impersonation of individuals
and other parties not currently addressed by the Impersonation Rule is
prevalent and taking comments on additional proposed provisions is in
the public interest.
Additionally, as stated in the Statement of Basis and Purpose for
the Rule, Question 6 of the NPRM asked for comments on whether the
final rule should contain a prohibition against providing the means and
instrumentalities for violations against government or business
impersonation.\5\ As summarized in this document, the Commission
received more than 20 comments that expressly addressed this question,
and many of the sentiments reflected in these comments were also echoed
by several commenters that presented oral statements at the Informal
Hearing.\6\ Based upon the comments received in connection with the
proposed provision regarding means and instrumentalities, the
Commission decided that the specific provision warranted further
analysis and consideration, and the Commission declined to adopt what
was then proposed 16 CFR 461.4. Instead, the Commission stated it would
continue to consider the issue, including soliciting additional
comment. This SNPRM discusses the comments the Commission received on
this proposed section. It also discusses how the comments submitted in
response to the Commission's earlier requests for comment informed the
Commission's current proposals to (1) rename the Impersonation Rule the
``Rule on Impersonation of Government, Businesses, and Individuals;''
(2) include a definition of ``individual'' in the Rule; (3) amend the
Rule to include a prohibition of impersonation of individuals; and (4)
extend liability to parties who provide goods and services with
knowledge or reason to know that those goods or services will be used
in impersonations of the kind that are themselves unlawful under the
Rule, as amended. The Commission also poses specific questions for
comment. Finally, the SNPRM provides the proposed amended text of the
Rule.
II. Summary of Comments to ANPR
The Commission published the ANPR on December 23, 2021, and took
comments for 60 days. The Commission invited the public to comment on
any issues or concerns the public believes are relevant or appropriate
to the Commission's consideration of the proposed rule and also posed
13 specific questions for the public.\7\ Relevant to this SNPRM, the
Commission solicited public comment on the prevalence and methods of
impersonation of individuals or entities other than governments and
businesses in interstate commerce and whether and how individuals and
entities provide the means and instrumentalities used in the
impersonation of government, businesses, and individuals.\8\
The Commission received 164 timely and 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>.\9\ No
commenter expressed the view that the Commission should not commence
this rulemaking. Most comments--140--came from individual consumers.
Ten comments were submitted by businesses,\10\ 11 by trade
associations,\11\ and three by government agencies.\12\
A. Comments About the Impersonation of Individuals
Seven commenters discussed the significant impact of impersonation
of individuals or parties other than government or businesses. NAAG
stated that State consumer protection agencies receive thousands of
complaints annually regarding imposter scams that do not fit into
government or business impersonation, for example grandparent or
romance scams, and that ``data from state consumer protection agencies
suggests that these scams are only becoming more common.'' \13\ WMC
Global, a cybersecurity company, listed executive impersonation, public
figure impersonation, and political impersonation as categories of
individual impersonation of which it is aware.\14\ It identified Short
Message Services (``SMS''), email, social media, and voice calls as
primary methods used by impersonators in contacting consumers.\15\
In addition to those categories of impersonation of individuals,
multiple individual commenters recounted their personal experience with
impersonation of real or fictitious individuals. One individual
commenter reported receiving a call from an individual falsely posing
as her grandson and requesting bail money and stated, ``it is very easy
to give them a lot of money because they [ ] sound so true and reliable
and all that and they are just taking money from elderly people hand
over fist.'' \16\ Another consumer, identified as a victim to a romance
scam, stated ``I feel like nothing can be trusted anymore on the
internet and victims are left picking up their pieces of their life and
there is zero accountability in catching these crooks.'' \17\
B. Comments About the Means and Instrumentalities of Impersonation
Six commenters addressed the Commission's questions regarding
individuals or entities that provide the means and instrumentalities
for impersonators to conduct such practices, and the goods and services
those individuals or entities provide.
NAAG asserted 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 . . . .'' \18\ It also addressed the
Commission's question regarding the circumstances under which the
provision of means and instrumentalities should be considered deceptive
or unfair, opining 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.'' \19\
Apple, Inc., submitted a comment urging the Commission to adopt a
rule targeting bad actors and their
[[Page 15074]]
``facilitators'' that are engaging in impersonation fraud without
stifling legitimate business activity.\20\ Apple stated that
impersonators who have obtained stolen gift cards use gray markets \21\
to sell the items purchased with those cards, making it harder for
consumers to detect the fraud.\22\ Apple stated that gray markets are
primary ``means and instrumentalities'' that impersonators use to
conduct their scams.\23\
Microsoft stated that scammers typically rely on payment processors
to receive money from victims of impersonation scams.\24\ They also
utilize affiliate marketing services to advertise to consumers through
malicious ads and pop-up windows.\25\
Erik M. Pelton & Associates (``EMP&A''), a trademark law firm in
Virginia, identified several types of entities that may provide the
means and instrumentalities for trademark scammers, including landlords
providing office space, mail services, the U.S. Postal Service,
``various banks and payment processing services,'' and domain
registrars and website hosting services that host bad actors'
websites.\26\ EMP&A also stated that provision of these goods and
services ``should be considered deceptive or unfair following a
procedure for putting service providers on notice of the fact that they
are unwittingly enabling scammers . . . If scammers are denied these
means and instrumentalities, it will become difficult for the scams to
be profitable and hopefully they will cease operation.'' \27\
USTelecom, a trade association representing the broadband
technology industry, 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.'' \28\
Somos, Inc., which manages registry databases for the
telecommunications industry, similarly encouraged the ``[p]rosecution
of . . . those knowingly aiding and abetting'' impersonated toll-free
numbers.'' \29\
III. Summary of Comments to NPRM
The Commission published the NPRM on October 17, 2022.\30\ In the
NPRM, the Commission concluded that there is reason to believe that
impersonation of government, businesses, and their officials or agents
is prevalent.\31\ The Commission identified no disputed issues of
material fact based on the comment record; explained its considerations
in developing the proposed rule; solicited additional public comment
thereon, including posing specific questions designed to assist the
public in submitting comment; and provided interested parties the
opportunity to request to present their positions orally at an informal
hearing.\32\ Finally, the NPRM set out the Commission's proposed
regulatory text.
The Commission received 78 comments in response to the NPRM from a
diverse group of individuals, industry groups and trade associations,
consumer organizations, and government agencies.\33\ The majority of
comments generally supported the rule as proposed in the NPRM, but some
comments raised concerns and recommended specific modifications or
additions to the proposed rule.
A. Comments About Individual Impersonations
The Commission received six comments in response to the NPRM that
specifically addressed the impersonation of individuals or entities
other than government and businesses. A group of Rutgers Law School
students urged inclusion of a prohibition on impersonation of
individuals and cited an Elder Fraud Report issued by the Federal
Bureau of Investigation, stating that ``victims over 60 of confidence
fraud and romance scams have steadily increased by approximately 30%
since 2019.'' \34\ AIM, the European Brands Association, and the
Recording Industry Association of America (``RIAA''), also provided
comment in support of inclusion of a prohibition on impersonating
individuals.\35\ The American Association of Retired Persons (``AARP'')
strongly urged the inclusion of a prohibition on impersonation of
individuals or entities other than governments and businesses, noting
that romance scams, which ``rely on the criminal making the target
believe they are in a trusted love relationship to steal from them,''
resulted in losses reported to AARP of over $500 million in 2021 (which
the AARP believed to be ``a vast undercount'' of harm).\36\ AARP
additionally stated that its Fraud Watch Helpline received more than
100,000 calls ``ranging from targets who report scams they avoided,
consumers trying to determine if something is legitimate, and from
victims and their family members.'' \37\
The Electronic Privacy Information Center and other consumer and
privacy advocacy organizations strongly urged the Commission to include
impersonations of individuals in the rule.\38\ The Electronic Privacy
Information Center noted that ``the actual number of reported losses
from romance and other familial scams are not as high as those reported
to be caused by the government and business imposters,'' but because of
the ``personal nature'' of individual impersonation scams, ``it is
highly likely that many fewer victims of these scams actually make
reports to government and other agencies about the devastating losses
they have suffered.'' \39\ Finally, NCTA--The internet and Television
Association (``NCTA'') noted that its member companies ``have seen an
increase in sophisticated `RES IP' scams to impersonate customers
online and route traffic through their home networks and residential IP
addresses.'' \40\
B. Comments About the Means and Instrumentalities of Impersonation
Twenty-two comments expressly addressed Question 6 of the NPRM,
which asked whether the final rule should contain a prohibition against
providing the means and instrumentalities for violations against
government or business impersonation.\41\ Most of the commenters
expressed support for the inclusion of a means and instrumentalities
provision, some with modification, while two expressed concerns with
the inclusion of such a prohibition.
Of the commenters supporting inclusion of a means and
instrumentalities prohibition, three of the commenters encouraged the
Commission to finalize the text of the proposed rule without
modification.\42\ These comments argued that inclusion of means and
instrumentalities liability would help combat impersonation schemes
perpetrated by foreign-based scammers that are outside of U.S. court
jurisdiction but obtain services from U.S.-based entities such as
payment processors and internet service providers.\43\
Most commenters who addressed Question 6 of the NPRM expressed
their support for means and instrumentalities liability but recommended
certain modifications. Some expressed concerns that the proposed
language could be read too broadly.\44\ Others expressed concern that
without a specific scienter or knowledge requirement, the proposed
provision runs the risk of imposing strict liability against third
parties who supply goods or services with no knowledge that those goods
or services would be used in the commission of
[[Page 15075]]
unlawful impersonations.\45\ Accordingly, several commenters urged the
Commission to clarify the scope of means and instrumentalities
liability or explicitly include a knowledge requirement in the final
rule provision.\46\
For example, the Consumer Technology Association (``CTA''), a trade
association representing the U.S. consumer technology industry, stated
that the Commission's explanation and examples of the ``means and
instrumentalities'' provision in the NPRM, which seem to limit its
applicability, are ``not squarely reflected in the text of the proposed
rule.'' \47\ CTA urged the FTC to limit the bounds of ``means and
instrumentalities'' in the text of the rule ``to entities that have
knowledge or consciously avoid knowing that they are making
representations being used to commit impersonation fraud.'' \48\ Somos,
in its comment, supported the inclusion of a means and
instrumentalities provision, but added that ``those involved must
knowingly be aiding and abetting the impersonation fraud.'' \49\
USTelecom urged the Commission to ``adjust the proposed language in
Sec. 461.4 to codify the requirement that the person has knowledge or
reason to expect it is providing the means and instrumentalities''
(emphasis in original).\50\ USTelecom argued that such modification
would ``help to avoid confusion about the new rule's scope and
application with regards to intermediaries that, by no fault of their
own and by nature of the services they offer, were unintentional
conduits for impersonation fraud.'' \51\ EMP&A similarly stated that it
supported adding ``that the party must have known or should have known
that it was providing a means or instrumentality to facilitate a scam''
because without such modification ``parties could be held liable even
if they had no intention to facilitate the scam.'' \52\
The American Bar Association Section of Intellectual Property Law
argued that ``there should be an explicit requirement that parties at
least knew or should have known that they were providing the means or
instrumentalities'' for unlawful impersonation, and suggested that the
Commission could ``explicitly include the language referenced in the
[NPRM] from Shell Oil Co., 128 F.T.C. 749 (1999)--acting with
`knowledge or reason to expect that consumers may possibly be deceived
as a result.' '' \53\ CTIA, an industry group that represents the U.S.
wireless communications industry, argued that the NPRM would make
liable parties ``providing means and instrumentalities to another
entity only where the resulting fraud is a predictable consequence of
those actions'' and that ``the proposed rule will appropriately target
those actors with malicious intent, while avoiding `unduly burdening or
stifling legitimate business activities,' or punishing `an innocent
entity whose ordinary course of work brought it--unknowingly--into
contact with a bad actor.' '' \54\
Other commenters argued that inclusion of a scienter requirement is
a necessary but insufficient modification of the proposed language to
impose means and instrumentalities liability. For example, NCTA argued
that ``liability requires both providing deceptive means and
instrumentalities, e.g., providing false or misleading claims or
counterfeit items, and actual knowledge that the deceptive
representations or goods will be used to commit impersonation
violations.'' \55\ Likewise, the Messaging, Malware and Mobile Anti-
Abuse Working Group (``M3AAWG'') advocated that, in addition to a
``knowledge or reason-to-know test,'' primary liability under the
NPRM's proposed Sec. 461.4 should also require that the provision of
such means and instrumentalities be done willfully or in bad faith, and
with clear intent and specific knowledge.\56\
A few commenters urged the Commission to adopt a final rule that
explicitly recognizes specific or defined ``means and instrumentality''
violations perpetrated in connection with impersonation frauds, such as
the use of legal process documents,\57\ manipulated media technologies
(i.e., deepfakes),\58\ or failure to disclose WHOIS data.\59\
Two commenters expressed broad concerns with the proposed language
of the means and instrumentalities prohibition in the NPRM. First, the
Americans for Prosperity Foundation (``AFPF'') stated that the proposed
rule, as drafted, ``fails to provide regulated parties with
constitutionally adequate notice of required or prohibited conduct,
particularly with respect to the proposed `means and instrumentalities'
prohibition.'' \60\ AFPF argued that the proposed provision as proposed
is untethered to the Commission's authority under section 5 as, in
AFPF's view, it neither required the Commission to prove any of the
elements of deception nor contained a scienter requirement.\61\ AFPF
suggested that the Commission ``not only tether violations to Section
5's text . . . , but also define with specificity the universe of
prohibited conduct . . . [and] also revise the proposed rule to make
clear that only conduct that a reasonable person would know is
fraudulent or dishonest may be subject to civil penalties.'' AFPF
requested a supplemental NPRM or an additional 30 days of comment and
additionally requested the Commission hold an informal public hearing
to receive additional public input.\62\ Second, William MacLeod cited
concerns that the proposed rule left ``unresolved questions of how the
Commission would apply'' the proposed means and instrumentalities
provision.\63\ Mr. MacLeod stated his belief that the rulemaking
process would benefit from ``an opportunity for interested parties to
exchange ideas'' and accordingly requested a hearing.\64\
IV. Summary of Comments in Response to Notice of Hearing and Statements
at Hearing
On March 30, 2023, the Commission published an Initial Notice of
Informal Hearing.\65\ In response to the Notice of Informal Hearing,
the Commission received 28 comments, which are publicly available on
this rulemaking's docket at <a href="https://www.regulations.gov/docket/FTC-2023-0030/comments">https://www.regulations.gov/docket/FTC-2023-0030/comments</a>, including 13 requests to make oral statements.\66\
One comment in response to the Notice of Informal Hearing was relevant
to this SNPRM, and eight commenters at the informal hearing provided
testimony relevant to this SNPRM.
The American Bankers Association urged adoption of the means and
instrumentalities provision without requesting any modifications.\67\
However, the other commenters who addressed the means and
instrumentalities provision expressed concern that the proposed
language in the NPRM did not explain the circumstances under which the
Commission would apply that prohibition. Some suggested alternative
language imposing a scienter requirement to narrow the scope of this
provision.\68\
[[Page 15076]]
In addition to his request to make an oral statement at the
hearing, William MacLeod expressed in his comment to the Notice of
Informal Hearing his concern that the proposed means and
instrumentalities prohibition in the NPRM did not include any knowledge
standard and requested that the final rule ``explain the definitions
and limitations of [means and instrumentalities] as the Commission
intends to apply it.'' \69\ In his oral testimony at the informal
hearing, Mr. MacLeod reiterated his request for further clarification
that ``providing the means and instrumentalities doesn't . . .
automatically expose everyone involved, from the actors to the ISPs to
civil penalties. People unaware of a fraud should not face massive
liability for it.'' \70\
The CTA expressed strong support for the NPRM but also concern that
the prohibition on providing means and instrumentalities did not
``include a knowledge requirement and could be misinterpreted to impose
strict liability'' on unwitting third parties.\71\ USTelecom requested
that the Commission clarify ``that liability for providing the means
and instrumentalities of the illegal impersonation only attaches when a
person has knowledge or reason to expect it is providing such a means
and instrumentalities,'' so there is no confusion regarding the
liability of ``unknowingly unintentional conduits for impersonation
fraud.'' \72\ Neil Chilson, a senior research fellow at the Center for
Growth and Opportunity at Utah State University, also requested that
the prohibition against providing means and instrumentalities include a
knowledge requirement for liability.\73\ The Voice on the Net Coalition
(``VON''), an internet communication trade association, urged that the
means and instrumentalities provision be modified to require knowledge
before liability is imposed.\74\ VON further asserted that the
``liability standard should be based on knowledge and the lack of
action to prevent fraudulent activity by upstream providers or
customers.'' \75\ INCOMPAS, which represents communications and
technology companies offering broadband video and data offerings, also
urged a liability standard ``based on knowledge and the lack of action
to prevent fraudulent activity by upstream providers for customers.''
\76\ NCTA urged the Commission to ``explicitly incorporate the
fundamental elements of both actual knowledge and deception'' into any
final rule imposing means and instrumentalities liability.\77\ NCTA
also urged that the final rule's application of means and
instrumentalities liability only apply where ``inherently deceptive
means and instrumentalities'' are provided.\78\
V. Reasons for the Proposed Amendments to the Impersonation Rule
The Commission believes the proposed amendments set out in this
SNPRM will improve its ability to combat impersonation fraud and could
provide significant benefits to those harmed by impersonators, while
strengthening deterrence against such fraud in the first instance.
Further, the Rule as amended would not impose new burdens on honest
individuals or businesses.
A. Need for and Objectives of the Proposed Amendments to the
Impersonation Rule
The Commission's objective for proposing these amendments to the
Rule is to more effectively and efficiently redress consumers harmed by
impersonation schemes and to more effectively address the types of
unlawful impersonation affecting consumers.
1. Accessing Monetary Relief
The Commission described in the ANPR and summarized in the NPRM how
the 2021 U.S. Supreme Court decision in AMG \79\ changed the legal
landscape and made it significantly more difficult for the Commission
to obtain monetary relief, including consumer redress.\80\ Post-AMG,
the Commission must rely in large part on section 19 of the FTC Act,
which provides two paths for consumer redress. On the first path,
following issuance of a complaint by the Commission, agency staff must
litigate the case before an Administrative Law Judge through the
agency's administrative process, leading to the Commission's issuance
of a Final Decision.\81\ Following any reconsideration of the
Commission's final decision and any subsequent appeal to a federal
Court of Appeals, the Commission must then file a new case in federal
district court and establish that the defendant engaged in fraudulent
or dishonest conduct.\82\ With a rule in effect, the Commission may
avail itself of the second, shorter, path and directly seek consumer
redress through a federal court action.\83\ Thus, this SNPRM's proposed
amendments covering impersonation of individuals \84\ and those who
with knowledge provide the means and instrumentalities to others to
engage in impersonation of business, government, or individuals would
allow the Commission to proceed more efficiently and effectively to
protect consumers and obtain monetary relief. Because the Commission
can seek civil penalties for rule violations, the proposed rule also
should achieve better deterrence against bad actors.\85\
2. Impersonation of Individuals and Other Entities Not Covered by
Government and Businesses Impersonation Rule
This SNPRM proposes to prohibit the deceptive impersonation of
individuals and would address conduct that is prevalent and
harmful.\86\ Extending the Rule to cover impersonation of individuals,
real or fictitious, will allow the Commission to more effectively
remedy harm caused to consumers by romance scams, e.g., scammers posing
as individuals interested in a romantic relationship to extract money
or sensitive information from consumers.\87\ The SNPRM also would
provide a way to remedy other relationship-based scams, such as
grandparent scams where scammers pose as a grandchild in need of
immediate financial assistance in an attempt to extract money from the
consumers.\88\
Since issuance of the ANPR in December 2021, the FTC has received
thousands to tens of thousands of complaints each quarter from
consumers concerning romance scams or family and friend
impersonations.\89\ According to data from complaints submitted to the
Commission, the median dollar loss of consumers targeted by romance or
family and friend impersonation ranged from $1,850 to $2,400 and $614
to $800, respectively, in the quarters since publication of the
ANPR.\90\ These types of impersonation scams have a significant impact
on older consumers as well. As noted in the Commission's 2021-2022
``Protecting Older Consumers'' report, in 2021, the highest aggregate
dollar losses reported by older adults were in the romance scam
category, with a total reported loss of $213 million.\91\ Further, the
individual losses caused by romance scams are outsized compared to
other types of scams reported by older consumers, including other
impersonation scams: the reported individual dollar loss by adults age
60 and over for romance scams was $5,100, compared to $658 for all
fraud reports by consumers in that age group.\92\ In the Commission's
2022-2023 ``Protecting Older Consumers'' report, the Commission found
that ``[r]eported losses to romance scams by older adults increased
13%, topping the record levels seen in 2021.'' \93\
The revisions regarding impersonation of individuals proposed in
this SNPRM will allow the
[[Page 15077]]
Commission to more effectively redress and protect consumers targeted
by impersonation scams. Further, the SNPRM is designed to deter the
perpetrators of such scams by exposing them to greater and more
immediate monetary liability, including civil penalties.
3. Means and Instrumentalities
The SNPRM's proposed means and instrumentalities provision \94\
would allow the Commission to more fully provide redress for those
consumers who have been targeted by any impersonation scam where a
party knew or had reason to know that the goods and services they
provided will be used for the purpose of impersonations in violation of
the Rule. The Commission took into consideration those comments in
response to the NPRM that urged the proposed means and
instrumentalities provision be revised to include a knowledge component
and clarify the scope of the provision. Accordingly, this SNPRM
proposes Sec. 461.5, ``Provision of Goods or Services for Unlawful
Impersonation Prohibited,'' to clarify that ``means and
instrumentalities'' liability attaches where a party provides goods and
services used in impersonation in violation of the Impersonation Rule,
and where that party has knowledge or reason to know that the goods or
services the party provides will be used in impersonations of the kind
that are themselves unlawful under the Rule.\95\ As with other Rule
provisions this SNPRM's proposed Sec. 461.5 is designed to deter the
perpetrators of such scams by exposing them to greater and more
immediate monetary liability, including civil penalties.\96\
B. Overview and Scope of Proposed Amendments to the Impersonation Rule
The Commission proposes four revisions to the Impersonation Rule in
this SNPRM. Each proposed revision will be discussed in order. First,
because amendment of the Rule as proposed by the SNPRM would prohibit
impersonation of individuals as well as businesses and government, the
SNPRM proposes to change the title of the Rule to read ``Rule on
Impersonation of Government, Businesses, and Individuals.'' Second,
this SNPRM proposes to add a definition of ``Individual'' in Sec.
461.1 to mean ``a person, entity, or party, whether real or fictitious,
other than those that constitute a business or government under this
Part.'' The Commission proposes this definition of ``individual'' to
make clear the type of impersonation that is prohibited by Sec. 461.4.
Third, proposed Sec. 461.4, ``Impersonation of Individuals
Prohibited,'' prohibits the impersonation of individuals in connection
with commerce, as commerce is defined in the Federal Trade Commission
Act (15 U.S.C. 44). This provision mirrors the existing prohibitions in
Sec. Sec. 461.2 and 461.3, prohibiting impersonation of government and
businesses, respectively. Those provisions themselves borrowed from
existing rules and statutory definitions.\97\ As detailed in Section
V.A.2. of this document, consumer complaints and the Commission's
experience, as well as the comments and other evidence cited herein,
are replete with examples of impersonation of individuals. The proposed
prohibition in Sec. 461.4 would cover unlawful conduct by persons who
misrepresent that they are or are affiliated with an individual, as
defined in Sec. 461.1, including but not limited to: (1) calling,
messaging, or otherwise contacting a person or entity while posing as
an individual or affiliate thereof, including by identifying an
individual by name or by implication; (2) sending physical mail through
any carrier using addresses, identifying information, or insignia or
likeness of an individual; (3) creating a website or other electronic
service or social media account impersonating the name, identifying
information, or insignia or likeness of an individual; (4) creating or
spoofing an email address using the name of an individual; (5) placing
advertisements, including dating profiles or personal advertisements,
that pose as an individual or affiliate of an individual; and (6) using
an individual's identifying information, including likeness or
insignia, on a letterhead, website, email, or other physical or digital
place.\98\
Fourth, proposed Sec. 461.5, ``Provision of Goods or Services for
Unlawful Impersonation Prohibited,'' makes it unlawful to provide goods
or services with knowledge or reason to know that those goods or
services will be used in impersonations of the kind that are themselves
unlawful under the Rule. The NPRM proposed a similar provision, which
referred to ``means and instrumentalities,'' but lacked a requirement
to prove ``knowledge or reason to know.'' This SNPRM proposes modified
language based on comments to the ANPR, NPRM, the informal hearing and
the Commission's experience, which support the addition of the above-
mentioned knowledge requirement.
As described in Section III.B., above, many commenters expressed
concern or requested modification of the means and instrumentalities
provision proposed in the NPRM. Some supportive commenters stated that
the provision could be read too broadly.\99\ Other commenters argued
that without a scienter or knowledge requirement, the proposed rule
provision runs the risk of imposing strict liability against innocent
and unwitting third-party providers.\100\ Accordingly, several
commenters urged the Commission to clarify the scope of means and
instrumentalities liability or explicitly include a knowledge
requirement in the final rule provision.\101\
The Commission has carefully considered the comments and all
concerns and proposals expressed in them. As noted in the NPRM, some
commenters suggested that the Commission impose liability on a broader
set of actors, namely those who assist and facilitate violations.\102\
The Telemarketing Sales Rule (``TSR'') imposed assisting-and-
facilitating liability, a form of indirect liability authorized by the
TSR's authorizing statue.\103\ Sections 5 and 18 of the FTC Act, which
authorize this Rule, contain no such authorizing language. However, a
long line of 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.''
\104\ 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.'' \105\ Accordingly, the Commission proposes, in Sec. 461.5,
expressly to impose liability on those who provide goods or services
with knowledge or reason to know that those goods or services will be
used in impersonations of the kind that are themselves unlawful under
the Rule.
C. The Rulemaking Process
The Commission can decide to finalize this supplemental proposed
rule if the rulemaking record, including the public comments in
response to this SNPRM, 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
[[Page 15078]]
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,
i.e., in response to data or other evidence demonstrating that there is
a genuine, bona fide dispute over material facts that will affect the
outcome of the proceeding.\106\
VI. 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 this SNPRM contains no collection of
information.
VII. 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 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 SNPRM already
provided the concise statement of the need for, and the objectives of,
this proposal in Item V.A above. It addresses the other requirements
below.
A. Reasonable Alternatives and Anticipated Costs
The Commission believes that the benefits of proceeding with these
proposals 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 that these proposed amendments to the Rule
would allow for monetary relief to victims of impersonations of
individuals and also for the imposition of civil penalties against
violators. Such results will provide benefits to consumers, as well as
to the agency and its mission, without imposing any costs on consumers.
It is difficult to quantify with precision all the benefits that would
arise from amending the Impersonation Rule to include a prohibition on
impersonation of individuals, but they can be described qualitatively.
Consumers have reported 152,696 instances of family and friend
impersonation and associated total losses of approximately $339 million
from 2019 through 2023.\107\ For romance scams, from 2019 through 2023,
consumers reported being defrauded of roughly $4.978 billion in 307,370
incidents.\108\ In 2022, older adults reported a 13% increase in losses
to romance scammers, surpassing the record losses reported in
2021.\109\ Adopting the proposed amendments may make some of the losses
experienced by future victims recoverable through consumer redress and
also allow for the imposition of civil penalties.\110\
While providing the means and instrumentalities for such scams is
already illegal under section 5, civil penalties cannot be imposed
without the proposed amendments. Adopting the proposed amendments may
also have a deterrence effect on impersonation scams and those
providing the means and instrumentalities for such scams. Deterring
plainly illegal conduct is challenging. Scholarship on deterrence
suggests that the potential severity of consequences, such as civil
penalties, is less likely to influence behavior than the perceived
likelihood of detection and punishment.\111\ Still, a rule that makes
it less likely that impersonators and those providing the means and
instrumentalities for such scams get to keep their ill-gotten gains and
more likely that they have to pay civil penalties can have deterrence
effects, whatever their magnitude. And the publicity around any
eventual amendments to the 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.
B. 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. 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 SNPRM 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 deceptive impersonation of
individuals is already prohibited by section 5 of the FTC Act, and
section 5 similarly makes unlawful providing the means and
instrumentalities for a violation of section 5 of the Act, the SNPRM
would not change the state of the law in terms of what is legal and
what is illegal. Furthermore, the proposed amendments to the Rule would
impose no recordkeeping requirement and would not create or impose any
compliance costs. The main changes arise for entities violating section
5 through the impersonation of individuals and by providing the means
and instrumentalities for impersonations that would be unlawful under
the Rule if this SNPRM is finalized as drafted. Adoption of the
proposed amendments to the Rule would make such conduct a Rule
violation in addition to being a section 5 violation. Such violators
would no longer be immune from civil penalties for a first offence and
could be ordered by a federal court to pay significant civil penalties
and to provide redress to their victims. Adoption of the proposed
amendments could, therefore, constitute a significant economic impact
for law violators, but it is unlikely to affect a substantial number of
small entities or individuals otherwise not engaging in conduct
prohibited by section 5 or the SNPRM. The Commission believes that the
vast majority of small entities and individuals do not deceptively
impersonate individuals or knowingly
[[Page 15079]]
provide goods and services used in impersonating government,
businesses, or individuals in a manner that would be unlawful under the
provisions set out in this SNPRM. 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.
VIII. 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 SNPRM. The Commission requests that factual data
or other evidence on which the comments are based be submitted with the
comments, particularly if a commenter intends to dispute an issue of
fact material to this rulemaking.\112\ 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 amend the Impersonation Rule to include a
prohibition of impersonation of individuals? Why or why not?
(2) Please provide comment, including relevant data, statistics,
consumer complaint information, or any other evidence, on proposed
Sec. Sec. 461.4 and 461.5. 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 Rule, if amended as proposed by the SNPRM, contain a
collection of information?
(4) Would the Rule, if amended as proposed by the SNPRM, 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 SNPRM proposes including in the amended Impersonation Rule
a two-part prohibition against impersonation of individuals in Sec.
461.4. Is this prohibition clear and understandable? Is it ambiguous in
any way? How if at all should it be improved?
(6) For purposes of prohibiting impersonation of individuals,
should the Commission define ``individual'' to mean ``a person, entity,
or party, whether real or fictitious, other than those that constitute
a business or government under this part''? Is this definition clear
and understandable? Is it ambiguous in any way? How if at all should it
be improved?
(7) The SNPRM proposes including in the amended Impersonation Rule
a two-part prohibition in Sec. 461.5 against providing goods or
services with knowledge or reason to know that those goods or services
will be used to (a) materially and falsely pose as, directly or by
implication, a government entity or officer thereof, a business or
officer thereof, or an individual, in or affecting commerce as commerce
is defined in the Federal Trade Commission Act (15 U.S.C. 44); or (b)
materially misrepresent, directly or by implication, affiliation with,
including endorsement or sponsorship by, a government entity or officer
thereof, a business or officer thereof, or an individual, in or
affecting commerce as commerce is defined in the Federal Trade
Commission Act (15 U.S.C. 44). Should the Rule be revised to contain
this prohibition against providing goods or services with knowledge or
reason to know that those goods or services will be used to unlawfully
impersonate a government, business, or individual? Why or why not? Is
the standard ``know or have reason to know,'' which reflects current
law, sufficiently clear and understandable? Is it ambiguous in any way?
How, if at all, should it be improved?
IX. 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 April 30, 2024.
Write ``Impersonation SNPRM, 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 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 SNPRM,
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, Mail Stop H-144 (Annex I),
Washington, DC 20580. If possible, please submit your paper comment to
the Commission by overnight service.
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 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 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 and visit <a href="https://www.regulations.gov/docket/FTC-2024-0019">https://www.regulations.gov/docket/FTC-2024-0019</a> to read a plain-language summary of the proposed rule. The FTC Act
and
[[Page 15080]]
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 April 30, 2024. 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>.
X. 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.
Endnotes
\1\ Fed. Trade Comm'n, ANPR: Trade Regulation Rule on
Impersonation of Gov't and Businesses, 86 FR 72901 (Dec. 23, 2021)
(``ANPR''), <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>.
\2\ Fed. Trade Comm'n, Notice of Proposed Rulemaking: Trade
Regulation Rule on Impersonation of Government and Businesses, 87 FR
62741 (Oct. 17, 2022) (``NPRM''), <a href="https://www.federalregister.gov/documents/2022/10/17/2022-21289/trade-regulation-rule-onimpersonation-of-government-and-businesses">https://www.federalregister.gov/documents/2022/10/17/2022-21289/trade-regulation-rule-onimpersonation-of-government-and-businesses</a>.
\3\ Fed. Trade Comm'n, Initial notice of informal hearing; final
notice of informal hearing; request for public comment and speakers,
88 FR 19024 (Mar. 30, 2023), <a href="https://www.federalregister.gov/documents/2023/03/30/2023-06537/trade-regulation-rule-on-impersonation-of-government-and-businesses">https://www.federalregister.gov/documents/2023/03/30/2023-06537/trade-regulation-rule-on-impersonation-of-government-and-businesses</a> (``Informal Hearing
Notice'').
\4\ A copy of the transcript of the May 4, 2023, Informal
Hearing is available at <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/impersonationruleinformalhearingtranscript.pdf">https://www.ftc.gov/system/files/ftc_gov/pdf/impersonationruleinformalhearingtranscript.pdf</a>. References to
the transcript from the May 4, 2023, Informal Hearing are cited
herein as: Name of commenter, May 2023 Tr at page no. (e.g., Doe,
May 2023 Tr at #). A copy of the transcript of the Informal Hearing
and the comments submitted in response to this hearing can be found
at: <a href="https://www.regulations.gov/docket/FTC-2023-0030/document">https://www.regulations.gov/docket/FTC-2023-0030/document</a>.
\5\ See Section III.D. of the SBP of the Impersonation Rule
published elsewhere in this edition of the Federal Register; NPRM,
87 FR at 62750.
\6\ See <a href="https://www.regulations.gov/docket/FTC-2023-0030/comments">https://www.regulations.gov/docket/FTC-2023-0030/comments</a>.
\7\ ANPR, 86 FR 72901.
\8\ Id. at 72904.
\9\ While the docket lists 169 comments, four of these were
submitted by AVIXA, Inc. (``Audio Visual and Integrated Experience
Association,'' collectively ``AVIXA ANPR Cmts.'') and two by the
National Association of Attorneys General (``NAAG,'' collectively
``NAAG ANPR Cmts.''), accounting for four total duplicates, while
one comment was untimely filed eight months after the close of
comments and only said ``no.'' See AVIXA ANPR 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 ANPR 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>; Lucy Chen, Cmt. on
ANPR (Oct. 21, 2022), <a href="https://www.regulations.gov/comment/FTC-2021-0077-0171">https://www.regulations.gov/comment/FTC-2021-0077-0171</a>.
\10\ 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>; 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>; 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
ANPR 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>; 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 ANPR 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 ANPR 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 ANPR 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>; 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 ANPR 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>.
\11\ 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>;
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 ANPR
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>; 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>); 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>; 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>; 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 ANPR
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>;
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>; 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>; 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>.
\12\ 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>; 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 ANPR 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>.
\13\ NAAG ANPR Cmt. at 8.
\14\ WMC ANPR Cmt. at 4.
\15\ WMC ANPR Cmt. at 4.
\16\ See Barbara Lay Cmt. on ANPR (Feb. 18, 2022), <a href="https://www.regulations.gov/comment/FTC-2021-0077-0109">https://www.regulations.gov/comment/FTC-2021-0077-0109</a>.
\17\ See Mai Huynh Cmt. on ANPR (Feb. 22, 2022), <a href="https://www.regulations.gov/comment/FTC-2021-0077-0155">https://www.regulations.gov/comment/FTC-2021-0077-0155</a>.
\18\ NAAG ANPR Cmt. at 8.
\19\ Id. at 10.
\20\ Apple ANPR Cmt.
\21\ 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.
\22\ See id.
\23\ Id.
\24\ Microsoft ANPR Cmt. at 6.
\25\ See id.
\26\ See Pelton ANPR Cmt. at 6-7.
\27\ Id. at 6-7.
\28\ USTelecom ANPR Cmt. at 3-4.
\29\ Somos ANPR Cmt. at 3, 5.
\30\ NPRM, 87 FR 62741.
\31\ See id. at 62741-42.
\32\ Id. at 62750.
\33\ Fed. Trade Comm'n, Trade Regulation Rule on Impersonation
of Government and Businesses, <a href="https://www.regulations.gov/docket/FTC-2022-0064/comments">https://www.regulations.gov/docket/FTC-2022-0064/comments</a>.
\34\ Suhkvir Singh/Rutgers Law School Students, Cmt. on NPRM at
1 (Nov. 22, 2022), <a href="https://www.regulations.gov/comment/FTC-2022-0064-0019">https://www.regulations.gov/comment/FTC-2022-0064-0019</a> (internal citation omitted).
\35\ AIM, the European Brands Association, Cmt. on NPRM (Dec.
13, 2022), <a href="https://www.regulations.gov/comment/FTC-2022-0064-0041">https://www.regulations.gov/comment/FTC-2022-0064-0041</a>
(``AIM NPRM Cmt.''); Recording Industry Association of America, Cmt.
on NPRM (Dec. 16, 2022), <a href="https://www.regulations.gov/comment/FTC-2022-0064-0064">https://www.regulations.gov/comment/FTC-2022-0064-0064</a> (``RIAA NPRM Cmt.'').
[[Page 15081]]
\36\ AARP, Cmt. on NPRM at 2 (Dec. 14, 2022), <a href="https://www.regulations.gov/comment/FTC-2022-0064-0043">https://www.regulations.gov/comment/FTC-2022-0064-0043</a>.
\37\ Id. at 2.
\38\ Electronic Privacy Information Center, National Consumer
Law Center, National Consumers League, Consumer Action, Consumer
Federation of America, National Association of Consumer Advocates,
and U.S. PIRG, Cmt. on NPRM at 5 (Dec. 16, 2022), <a href="https://www.regulations.gov/comment/FTC-2022-0064-0070">https://www.regulations.gov/comment/FTC-2022-0064-0070</a> (``EPIC NPRM Cmt.'').
\39\ Id. at iv-v.
\40\ NCTA--The internet and Television Association, Cmt. on NPRM
at 8 (Dec. 16, 2022), <a href="https://www.regulations.gov/comment/FTC-2022-0064-0071">https://www.regulations.gov/comment/FTC-2022-0064-0071</a> (``NCTA NPRM Cmt.'').
\41\ See 87 FR 62750; see also United States Patent and
Trademark Office, Cmt. on NPRM (Dec. 2, 2022), <a href="https://www.regulations.gov/comment/FTC-2022-0064-0026">https://www.regulations.gov/comment/FTC-2022-0064-0026</a> (``USPTO NPRM
Cmt.''); Anonymous, Cmt. on NPRM (Dec. 9, 2022), <a href="https://www.regulations.gov/comment/FTC-2022-0064-0033">https://www.regulations.gov/comment/FTC-2022-0064-0033</a> (``0033 NPRM Cmt.'');
AIM NPRM Cmt.; Erik M. Pelton & Associates, PLLC, Cmt. on NPRM (Dec.
14, 2022), <a href="https://www.regulations.gov/comment/FTC-2022-0064-0045">https://www.regulations.gov/comment/FTC-2022-0064-0045</a>
(``Pelton NPRM Cmt.''); NetChoice, Cmt. on NPRM (Dec. 15, 2022),
<a href="https://www.regulations.gov/comment/FTC-2022-0064-0053">https://www.regulations.gov/comment/FTC-2022-0064-0053</a> (``NetChoice
NPRM Cmt.''); Messaging, Malware and Mobile Anti-Abuse Working
Group, Cmt. on NPRM (Dec. 15, 2022) <a href="https://www.regulations.gov/comment/FTC-2022-0064-0051">https://www.regulations.gov/comment/FTC-2022-0064-0051</a> (``M3AAWG NPRM Cmt.''); Consumer
Technology Association, Cmt. on NPRM (Dec. 16, 2022) <a href="https://www.regulations.gov/comment/FTC-2022-0064-0063">https://www.regulations.gov/comment/FTC-2022-0064-0063</a> (``CTA NPRM Cmt.'');
NCTA NPRM Cmt.; American Society of Association Executives, Cmt on
NPRM (Dec. 16, 2022), <a href="https://www.regulations.gov/comment/FTC-2022-0064-0057">https://www.regulations.gov/comment/FTC-2022-0064-0057</a> (``ASAE NPRM Cmt.''); International Trademark Association,
Cmt. on NPRM (Dec. 15, 2022) <a href="https://www.regulations.gov/comment/FTC-2022-0064-0054">https://www.regulations.gov/comment/FTC-2022-0064-0054</a> (``INTA NPRM Cmt.''); Somos NPRM Cmt.; CTIA, Cmt.
on NPRM (Dec. 16, 2022) <a href="https://www.regulations.gov/comment/FTC-2022-0064-0066">https://www.regulations.gov/comment/FTC-2022-0064-0066</a> (``CTIA NPRM Cmt.''); U.S. Copyright Office, Cmt. on
NPRM (Dec. 16, 2022) <a href="https://www.regulations.gov/comment/FTC-2022-0064-0067">https://www.regulations.gov/comment/FTC-2022-0064-0067</a> (``USCO NPRM Cmt.''); USTelecom--The Broadband
Association, Cmt. on NPRM (Dec. 16, 2022) <a href="https://www.regulations.gov/comment/FTC-2022-0064-0067">https://www.regulations.gov/comment/FTC-2022-0064-0067</a> (``USTelecom NPRM
Cmt.''); Exhibitions & Conference Alliance, Cmt. on NPRM (Dec. 16,
2022) <a href="https://www.regulations.gov/comment/FTC-2022-0064-0060">https://www.regulations.gov/comment/FTC-2022-0064-0060</a> (``ECA
NPRM Cmt.''); RIAA NPRM Cmt.; American Bar Association Intellectual
Property Law Section, Cmt. on NPRM (Dec. 16, 2022) <a href="https://www.regulations.gov/comment/FTC-2022-0064-0061">https://www.regulations.gov/comment/FTC-2022-0064-0061</a> (``ABA-IPL NPRM
Cmt.''); Americans for Prosperity Foundation, Cmt. on NPRM (Dec. 16,
2022) <a href="https://www.regulations.gov/comment/FTC-2022-0064-0062">https://www.regulations.gov/comment/FTC-2022-0064-0062</a> (``AFPF
NPRM Cmt.''); ZoomInfo Technologies LLC, Cmt. on NPRM (Dec. 16,
2022) <a href="https://www.regulations.gov/comment/FTC-2022-0064-0079">https://www.regulations.gov/comment/FTC-2022-0064-0079</a> (``Zoom
NPRM Cmt.''); American Bankers Association, Cmt. on NPRM (Dec. 16,
2022) <a href="https://www.regulations.gov/comment/FTC-2022-0064-0080">https://www.regulations.gov/comment/FTC-2022-0064-0080</a>;
Coalition for Online Accountability, Cmt. on NPRM (Dec. 16, 2022)
<a href="https://www.regulations.gov/comment/FTC-2022-0064-0074">https://www.regulations.gov/comment/FTC-2022-0064-0074</a> (``COA NPRM
Cmt.''); William MacLeod, Cmt. on NPRM (Dec. 16, 2022) <a href="https://www.regulations.gov/comment/FTC-2022-0064-0078">https://www.regulations.gov/comment/FTC-2022-0064-0078</a> (``MacLeod NPRM
Cmt.''); Cindy Brown et. al, Cmt. on NPRM (Dec. 16, 2022) <a href="https://www.regulations.gov/comment/FTC-2022-0064-0077">https://www.regulations.gov/comment/FTC-2022-0064-0077</a> (``Brown NPRM
Cmt.'').
\42\ USPTO NPRM Cmt. at 10; USCO NPRM Cmt. at 8; RIAA NPRM Cmt.
at 3.
\43\ USPTO NPRM Cmt. at 10; USCO NPRM Cmt. at 8; RIAA NPRM Cmt.
at 3.
\44\ 0033 NPRM Cmt.; ABA-IPL NPRM Cmt. at 2; Zoom NPRM Cmt. at
1.
\45\ ABA-IPL NPRM Cmt. at 1-2; NetChoice NPRM Cmt. at 2;
USTelecom NPRM Cmt. at 2.
\46\ NetChoice NPRM Cmt. at 2; CTA NPRM Cmt.; ASAE NPRM Cmt. at
1; INTA NPRM Cmt.; Somos NPRM Cmt.; CTIA NPRM Cmt. at 7; USTelecom
NPRM Cmt. at 2; ECA NPRM Cmt. at 3; ABA-IPL NPRM Cmt. at 3; Zoom
NPRM Cmt. at 2; ABA NPRM Cmt. at 3.
\47\ CTA NPRM Cmt. at 7.
\48\ Id.; see also ASAE NPRM Cmt.
\49\ Somos NPRM Cmt. at 2.
\50\ USTelecom NPRM Cmt. at 2.
\51\ USTelecom NPRM Cmt. at 2.
\52\ Pelton NPRM Cmt. at 3 (emphasis in original).
\53\ ABA-IPL NPRM Cmt. at 3.
\54\ CTIA NPRM Cmt at 7.
\55\ NCTA NPRM Cmt. at 2.
\56\ M3AAWG NPRM Cmt. at 10.
\57\ Brown NPRM Cmt. at 8.
\58\ M3AAWG NPRM Cmt. at 3.
\59\ COA NPRM Cmt. at 3; M3AAWG NPRM Cmt. at 4-5. ``WHOIS data''
is a commonly used internet record listing that identifies who owns
a domain and how to contact them.
\60\ AFPF NPRM Cmt. at 2.
\61\ AFPF NPRM Cmt. at 5-6.
\62\ Id. at 8.
\63\ MacLeod NPRM Cmt. at 2.
\64\ Id.
\65\ Informal Hearing Notice, 88 FR 19024.
\66\ Because this informal hearing was the first held in several
decades, the Commission allowed interested parties to request the
opportunity to make an oral comment in response to the Notice of
Informal Hearing as well as the NPRM. However, the Commission noted
that in the future it may limit oral statements to those who
requested to make an oral statement in response to the NPRM, as
provided for in the Rules of Practice. Id. at 19025 n.24.
\67\ American Bankers Association, May 2023 Tr at 39-40.
\68\ See CTA, May 2023 Tr at 16; MacLeod, May 2023 Tr at 27;
USTelecom, May 2023 Tr at 30; Chilson, May 2023 Tr at 34; VON, May
2023 Tr at 36; INCOMPAS, May 2023 Tr at 42, 44; NCTA, May 2023 Tr at
51-52.
\69\ William MacLeod, Cmt. on Informal Hearing Notice at 7 (Apr.
14, 2023) <a href="https://www.regulations.gov/comment/FTC-2023-0030-0019">https://www.regulations.gov/comment/FTC-2023-0030-0019</a>.
\70\ MacLeod, May 2023 Tr at 27.
\71\ CTA, May 2023 Tr at 16.
\72\ USTelecom, May 2023 Tr at 30.
\73\ Chilson, May 2023 Tr at 34.
\74\ Voice on the Net Coalition, May 2023 Tr at 36.
\75\ Id. at 36.
\76\ INCOMPAS, May 2023 Tr at 42, 44.
\77\ NCTA, The internet & Television Assoc., May 2023 Tr at 51.
\78\ Id. at 51-52.
\79\ See AMG Cap. Mgmt., LLC v. FTC, 141 S. Ct. 1341, 1352
(2021).
\80\ See ANPR, 78 FR at 72902 & n.24 (discussing AMG Cap.
Mgmt.); NPRM, 87 FR at 62746.
\81\ In July 2023, the Commission amended its rules of practice
for adjudicative proceedings. See 88 FR 42872 (July 5, 2023).
Following those amendments, administrative law judges presiding over
an administrative hearing issue a recommended decision, rather than
an initial decision as previously issued. Id. at 42873. The
Commission then automatically reviews the decision and either
affirms in full or rejects, in whole or in part, and issues its own
decision, which is final. Id. These rules changes do not impact the
requirements under section 19.
\82\ 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.'').
\83\ Compare 15 U.S.C. 57b(a)(1) (rule violations), with id.
57b(a)(2) (section 5 violations).
\84\ As noted in the NPRM, the Commission's Telemarketing Sales
Rule, Mortgage Assistance Relief Services Rule, and R-Value Rule
expressly prohibit deception by way of impersonation and allow for
direct pursuit of section 19 remedies in federal court, including
civil penalties and consumer redress, in specific contexts. However,
the Impersonation Rule does not reach individuals.
\85\ NPRM, 87 FR at 62749.
\86\ See, e.g., Protecting Older Consumers 2021-2022, Federal
Trade Commission at 32 (Oct. 18, 2022), available at <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/P144400OlderConsumersReportFY22.pdf">https://www.ftc.gov/system/files/ftc_gov/pdf/P144400OlderConsumersReportFY22.pdf</a>.
\87\ See, e.g., Protecting Older Consumers 2022-2023, Federal
Trade Commission (Oct. 18, 2023) at 30-31, available at <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/p144400olderadultsreportoct2023.pdf">https://www.ftc.gov/system/files/ftc_gov/pdf/p144400olderadultsreportoct2023.pdf</a>.; Federal Trade Commission, What
to Know About Romance Scams (Aug. 2022), available at <a href="https://consumer.ftc.gov/articles/what-know-about-romance-scams">https://consumer.ftc.gov/articles/what-know-about-romance-scams</a>; Federal
Bureau of Investigation, Scammers Defraud Victims of Millions of
Dollars in New Trend in Romance Scams, Alert No. I-091621-PSA (Sept.
16, 2021), available at <a href="https://www.ic3.gov/Media/Y2021/PSA210916">https://www.ic3.gov/Media/Y2021/PSA210916</a>.
\88\ See, e.g., AARP, Grandparent Scams (updated Sept. 30,
2022), available at <a href="https://www.aarp.org/money/scams-fraud/info-2019/grandparent.html">https://www.aarp.org/money/scams-fraud/info-2019/grandparent.html</a>; Federal Trade Commission, Don't Open Your
Door To Grandparent Scams, Consumer Alert (Apr. 13, 2021), available
at <a href="https://consumer.ftc.gov/consumer-alerts/2021/04/dont-open-your-door-grandparent-scams">https://consumer.ftc.gov/consumer-alerts/2021/04/dont-open-your-door-grandparent-scams</a>.
[[Page 15082]]
\89\ Federal Trade Commission, Fraud Reports, Tableau Public,
available at <a href="https://public.tableau.com/app/profile/federal.trade.commission/viz/FraudReports/Subcategories">https://public.tableau.com/app/profile/federal.trade.commission/viz/FraudReports/Subcategories</a> Over Time
(filtered to display: Complaint Source--All; Timeframe--Quarters;
Category--Imposter Scams; View--Table; Year-Quarter--2022, Q1
through 2023, Q4 selected; Subcategory--(All)) (last visited
February 2024).
\90\ Federal Trade Commission, Fraud Reports, Tableau Public,
available at <a href="https://public.tableau.com/app/profile/federal.trade.commission/viz/FraudReports/Subcategories">https://public.tableau.com/app/profile/federal.trade.commission/viz/FraudReports/Subcategories</a> Over Time
(filtered to display: Complaint Source--All; Timeframe--Quarters;
Category--Imposter Scams; View--Table; Year-Quarter--2022, Q1
through 2023, Q4 selected; Subcategory--(All)) (last visited
February 2024).
\91\ Protecting Older Consumers 2021-2022, Federal Trade
Commission (Oct. 18, 2022) at 32, available at <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/P144400OlderConsumersReportFY22.pdf">https://www.ftc.gov/system/files/ftc_gov/pdf/P144400OlderConsumersReportFY22.pdf</a>.
\92\ Id. at 29 n.104.
\93\ Protecting Older Consumers 2022-2023, Federal Trade
Commission (Oct. 18, 2023) at 31, available at <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/p144400olderadultsreportoct2023.pdf">https://www.ftc.gov/system/files/ftc_gov/pdf/p144400olderadultsreportoct2023.pdf</a>. While
the reported harm is significant, the actual amount of harm is
likely significantly higher due to underreporting by consumers. Id.
at 39-40.
\94\ ``Means and instrumentalities'' liability is a form of
direct liability. See, e.g., FTC v. Magui Publishers, Inc., No. Civ.
89-3818RSWL(GX), 1991 WL 90895, at *14 (C.D. Cal. Mar. 28, 1991),
aff'd, 9 F.3d 1551 (9th Cir. 1993) (``One who places in the hands of
another a means or instrumentalities to be used by another to
deceive the public in violation of the FTC Act is directly liable
for violating the Act.''); Regina Corp. v. FTC, 322 F.2d 765, 768
(3rd Cir. 1963). ``Means and instrumentalities'' is distinct from
``aiding and abetting'' liability and ``assisting and facilitating''
liability, both of which are secondary forms of liability and not
available to the Commission in this rulemaking. See Andrew Smith,
Multi-party liability, FTC Business Blog (Jan. 29, 2021), <a href="https://www.ftc.gov/business-guidance/blog/2021/01/multi-party-liability">https://www.ftc.gov/business-guidance/blog/2021/01/multi-party-liability</a>
(noting various legal theories used by the Commission to impose
liability on additional parties where the primary target's
customers, vendors, or business partners were also engaged in
misconduct). The Commission observes that it does not always allege
knowledge in complaints seeking to hold parties liable for providing
the means and instrumentalities used in a section 5 violation. See,
e.g., Amended Complaint for Permanent Injunction and Other Equitable
Relief, FTC v. James D. Noland, Jr., et al., case no. 2:20-cv-00047-
DWL (D. Az. Jan. 17, 2020); Complaint for Permanent Injunction and
Other Equitable Relief, FTC v. Cyberspy Software, LLC, et al., case
no. 6:08-cv-01872-GAP-GJK (M.D. Fl. Nov. 5, 2008); Complaint for
Injunctive and Other Equitable Relief, FTC v. Five Star Auto Club,
Inc., et al., case no. 99-civ-1693 (S.D.N.Y. March 8, 1999).
\95\ The Commission notes that if adopted as final, the SNPRM's
proposed Sec. 461.5 would not be the first trade regulation rule
promulgated by the Commission that includes a ``knew or had reason
to know'' requirement. For example, Sec. 460.8 of the Labeling and
Advertising of Home Insulation, R-value tolerances, prohibits non-
manufacturers of home insulation to rely on R-value data provided by
the manufacturer they ``know or should know'' is false or not based
on proper tests. 16 CFR 460.8; see also 16 CFR 460.19(e) (non-
manufacturers are liable only if they ``know or should know that the
manufacturer does not have a reasonable basis for the claim''); 16
CFR 436.7(d) (franchise sellers must notify prospective franchisees
of any material changes ``that the seller knows or should have known
occurred'').
\96\ NPRM, 87 FR at 62749.
\97\ See id.
\98\ These examples, which are the same as those articulated in
connection with the prior rules (see Section III of the Statement of
Basis and Purposes published elsewhere in this issue of the Federal
Register), make clear that the use of voice cloning for purposes of
impersonation is covered where its use satisfies the Rule's
prohibitions. Audio deepfakes, including voice cloning, are
generated, edited, or synthesized by artificial intelligence, or
``AI,'' to create fake audio that seems real. See Khanjani, et. al.,
How Deep are the Fakes? Focusing on Audio Deepfake: A Survey,
available at <a href="https://arxiv.org/ftp/arxiv/papers/2111/2111.14203.pdf">https://arxiv.org/ftp/arxiv/papers/2111/2111.14203.pdf</a>.
\99\ 0033 NPRM Cmt.; ABA-IPL NPRM Cmt. at 2; Zoom NPRM Cmt. at
1.
\100\ ABA-IPL NPRM Cmt. at 1-2; NetChoice NPRM Cmt. at 2;
USTelecom NPRM Cmt. at 2; see also CTA, May 2023 Tr at 16; VON, May
2023 Tr at 36; ABA, May 2023 Tr at 39-40; INCOMPAS, May 2023 Tr at
42.
\101\ NetChoice NPRM Cmt. at 2; CTA NPRM Cmt.; ASAE NPRM Cmt. 1;
INTA NPRM Cmt.; Somos NPRM Cmt.; CTIA NPRM Cmt. at 7; USTelecom NPRM
Cmt. at 2; ECA NPRM Cmt. at 3; ABA-IPL NPRM Cmt. at 3; Zoom NPRM
Cmt. at 2; ABA NPRM Cmt. at 3; see also CTA, May 2023 Tr at 16;
MacLeod, May 2023 Tr at 27; USTelecom, May 2023 Tr at 30; Chilson,
May 2023 Tr at 34; VON, May 2023 Tr at 36; INCOMPAS, May 2023 Tr at
42, 44; NCTA, May 2023 Tr at 51-52.
\102\ See supra, n.94, n.95.
\103\ See 15 U.S.C. 6102(a)(2) (``acts or practices of entities
or individuals that assist or facilitate deceptive telemarketing'').
\104\ In re Shell Oil Co., 128 F.T.C. 749, 764 (1999) (statement
of Chairman Pitofsky and Commissioners Anthony and Thompson, citing
Regina Corp. v. FTC, 322 F.2d 765, 768 (3rd Cir. 1963)). See also,
e.g., FTC v. Five-Star Auto Club, 97 F. Supp. 2d 502 (S.D.N.Y.
2000); FTC v. Magui Publishers, Inc., No. Civ. 89-3818RSWL(GX), 1991
WL 90895, at *14 (C.D. Cal. Mar. 28, 1991), aff'd, 9 F.3d 1551 (9th
Cir. 1993); supra n.94.
\105\ C. Howard Hunt Pen Co. v. FTC, 197 F.2d 273, 281 (3d Cir.
1952). See also supra n.94.
\106\ In the context of an informal hearing, ``disputed'' and
``material'' are given the same meaning as in the standard for
summary judgment. See Fed. Trade Comm'n, Initial notice of informal
hearing; final notice of informal hearing; list of Hearing
Participants; requests for submissions from Hearing Participants, 88
FR 85525, 85527 (Dec. 8, 2023), <a href="https://www.federalregister.gov/documents/2023/12/08/2023-26946/negative-option-rule">https://www.federalregister.gov/documents/2023/12/08/2023-26946/negative-option-rule</a> (citing H.R.
REP. No. 93-1107, 93d Cong., 2d Sess., reprinted in [1974] U.S. CODE
CONG. & AD. NEWS 7702, 7728; Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 248 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 586 (1986)).
\107\ Federal Trade Commission, Fraud Reports, Tableau Public,
available at <a href="https://public.tableau.com/app/profile/federal.trade.commission/viz/FraudReports/Subcategories">https://public.tableau.com/app/profile/federal.trade.commission/viz/FraudReports/Subcategories</a> Over Time
(filtered to display: Complaint Source--All; Timeframe--Years;
Category--Imposter Scams; View--Table; Subcategory--(All)) (last
visited February 2024).
\108\ Federal Trade Commission, Fraud Reports, Tableau Public,
available at <a href="https://public.tableau.com/app/profile/federal.trade.commission/viz/FraudReports/Subcategories">https://public.tableau.com/app/profile/federal.trade.commission/viz/FraudReports/Subcategories</a> Over Time
(filtered to display: Complaint Source--All; Timeframe--Years;
Category--Imposter Scams; View--Table; Subcategory--(All)) (last
visited February 2024).
\109\ Protecting Older Consumers 2022-2023, Federal Trade
Commission (Oct. 18, 2023), available at <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/p144400olderadultsreportoct2023.pdf">https://www.ftc.gov/system/files/ftc_gov/pdf/p144400olderadultsreportoct2023.pdf</a>.
\110\ While such relief could also be obtained with an existing
rule, such as the TSR if applicable, 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.
\111\ 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).
\112\ See supra n.106 and accompanying text.
List of Subjects in 16 CFR Part 461
Consumer protection, Impersonation, Trade Practices.
Accordingly, the Federal Trade Commission proposes to amend 16 CFR
part 461 as follows:
PART 461--RULE ON IMPERSONATION OF GOVERNMENT, BUSINESSES, AND
INDIVIDUALS
0
1. The authority citation for part 461 continues to read as follows:
Authority: 15 U.S.C. 41 through 58.
0
2. Revise the heading of part 461 to read as set forth above.
0
3. In Sec. 461.1, add the definition of ``individual'' in alphabetical
order to read as follows:
Sec. 461.1 Definitions.
* * * * *
[[Page 15083]]
Individual means a person, entity, or party, whether real or
fictitious, other than those that constitute a business or government
under this Part.
* * * * *
0
4. Add Sec. 461.4 to read as follows:
Sec. 461.4 Impersonation of Individuals Prohibited.
It is a violation of this part, and an unfair or deceptive act or
practice to:
(a) materially and falsely pose as, directly or by implication, an
individual, in or affecting commerce as commerce is defined in the
Federal Trade Commission Act (15 U.S.C. 44); or
(b) materially misrepresent, directly or by implication,
affiliation with, including endorsement or sponsorship by, an
individual, in or affecting commerce as commerce is defined in the
Federal Trade Commission Act (15 U.S.C. 44).
0
5. Add Sec. 461.5 to read as follows:
Sec. 461.5 Means and Instrumentalities: Provision of Goods or
Services for Unlawful Impersonation Prohibited.
It is a violation of this part, and an unfair or deceptive act or
practice to provide goods or services with knowledge or reason to know
that those goods or services will be used to:
(a) materially and falsely pose as, directly or by implication, a
government entity or officer thereof, a business or officer thereof, or
an individual, in or affecting commerce as commerce is defined in the
Federal Trade Commission Act (15 U.S.C. 44); or
(b) materially misrepresent, directly or by implication,
affiliation with, including endorsement or sponsorship by, a government
entity or officer thereof, a business or officer thereof, or an
individual, in or affecting commerce as commerce is defined in the
Federal Trade Commission Act (15 U.S.C. 44).
By direction of the Commission.
April J. Tabor,
Secretary.
[FR Doc. 2024-03793 Filed 2-29-24; 8:45 am]
BILLING CODE 6750-01-P
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