FTC Seeks Comment on Telemarketing Sales Rule

By Jonathan PompanAugust 1, 2014

The Federal Trade Commission (“FTC”) announced that it is seeking public comment on the Telemarketing Sales Rule (“TSR”).  For lead generators, this review provides an opportunity to weigh-in on a regulation that touches on core aspects of many companies’ business models and a source of significant compliance costs.

Despite its focus on telemarketing practices, the TSR’s breadth and impact goes far beyond merely the telephone and the well-known Do Not Call (“DNC”) Registry.  The TSR is one of the few methods the FTC can efficiently (although sometimes controversially) adopt rules prohibiting deceptive or abusive practices.   And, it’s the TSR’s broad scope of coverage that has made it a popular enforcement vehicle for the FTC, Consumer Financial Protection Bureau (“CFPB”), and state Attorneys General against lead generators.

The TSR has been regularly updated since its inception in 2000, most recently in 2010 to address debt relief services.  Last year, the FTC proposed amendments to the TSR to ban telemarketers from using certain payment methods.  Comments will be accepted until October 14, 2014.  A copy of the Federal Register notice is available here<http://www.ftc.gov/system/files/documents/federal_register_notices/2014/07/140731tsrrulereviewfrn.pdf>.

In the notice, the FTC lists specific changes in the marketplace and legal landscape since the TSR was last amended, focusing on:

1)     the use and sharing of pre-acquired account information in telemarketing, and

2)     issues raised by the use of negative-option and free-trial offers in combination with general media ads designed to generate inbound telemarketing calls from consumers.

The notice also includes a comprehensive list of questions regarding the TSR, posed in soliciting public comment, including on such topics as:  “abusive acts and practices,” industry background, technology, self-regulatory efforts, and government regulation.  Also, the notice seeks suggestions for specific changes to the TSR that will reduce DNC enforcement obstacles encountered when trying to obtain call records from telemarketers.

The TSR gives the FTC, CFPB, and state Attorneys General broad enforcement power over telemarketers and those that provide “substantial assistance” to a seller or telemarketer when that person knows or consciously avoids knowing that the seller or telemarketer is engaged in any act or practice that violates the rule.  As a result, the TSR has become a favored enforcement tool of the FTC against those that allegedly facilitate the conduct of others.

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