The 1995 Telemarketing Sales Rule (TSR), and particularly its later added Do Not Call provisions, come about as close as one can get to a universally popular government program. So anytime the FTC modifies the TSR, it is big news. Last week, the FTC finalized one set of modifications and announced another set of proposed modifications. (To read the federal register notices, click here and here.) As we have noted before in connection with the Green Guides, the FTC periodically reviews its guides and rules to see if updates are required. That process is currently ongoing with respect to the TSR.
With respect to final amendments, the FTC extended the scope of the TSR’s misrepresentation prohibitions to business calls. The current FTC has been particularly sensitive to the potential of business owners, particularly small business owners, to fall prey to deceptive claims and marketing practices. Consistent with that focus, the FTC has removed the exemption for B2B calls, which until now applied to all calls except those relating to “office and cleaning supplies” (oh, how the times have changed since 1995). There were also some changes with respect to recordkeeping requirements. These are primarily intended to help the Commission more easily identify the actual entity responsible for telemarketing calls, but they also affirm that the prohibitions relating to “robocalls” extend to calls using voice cloning technology, which back in 1995 was mostly limited to Star Wars and those who could tap into the Force.
The proposed amendment relates to inbound calls. For the most part, the TSR currently applies to calls that telemarketers make to consumers, and now those they make to businesses (“outbound” calls). Calls made by consumers in response to advertisements, which the Commission views as “television commercials, infomercials, home shopping programs, magazine and newspaper advertisements, and other forms of mass media advertising solicitation” are currently exempt; this has led to interesting questions such as whether a pop-up ad falls into any of the above categories. The existing rule does not extend the exemption to certain types of outbound calls such as calls relating to debt relief services, investment opportunities and certain business opportunities. The Commission now proposes adding “tech support services” to the list of outbound calls that are not exempt from the TSR. The Commission explains that it is proposing this amendment in response to a surge in “tech support scams.” What about Section 5, you might ask; aren’t such scams still subject to Section 5’s general prohibition on deception? Yes, but like so many things at the Commission these days, it all leads back to the Supreme Court’s AMG decision severely restricting the Commission’s ability to seek consumer redress, and the Commission itself acknowledges this. The NPRM states:
In April 2021, the Supreme Court’s decision in AMG Capital Management, LLC v. FTC overturned forty years of precedent from the U.S. Circuit Courts of Appeal that held the Commission could take action under the FTC Act to return money unlawfully taken from consumers through deceptive practices. As a result, the Commission is now limited in its ability to obtain monetary relief from tech support scams whose business practices, in some cases, arguably place the scams beyond the reach of the Rule.
Does that Supreme Court loss still sting at the Commission? Clearly so. And, assuming Congress does not act to restore the Commission’s redress authority, tech scams may only be the first of many categories of outbound calls excused from the TSR’s exemption.
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