FTC Reviewing Telemarketing Sales Rule

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As part of a systematic review of its regulations, the Federal Trade Commission (FTC) is seeking comment on a variety of issues relating to its Telemarketing Sales Rule (TSR). The FTC is conducting the review “to determine whether the TSR continues to serve a useful purpose, and, if so, how it could or should be improved.” Comments must be received on or before October 14, 2014.

The request for comments highlights three “specific areas of interest” for the FTC review:

  • Preacquired account information. The FTC observes that the legal landscape has changed significantly since the TSR was amended in 2003 to address the use of preacquired account information in telemarketing. (Preacquired account information is described in the notice as “any information that enables a seller or telemarketer to cause a charge to be placed against a consumer’s account without obtaining the account number directly from the consumer.”) The FTC discusses the prohibition on the disclosure of pre-acquired account information by and among merchants in the 2010 Restore Online Shoppers Confidence Act (ROSCA) and the current operating rules of the three major credit card associations. Observing that, in contrast, the existing TSR generally permits the use of preacquired account information by and among third parties, the FTC invites comment on what effect the post-2003 legal and industry changes should have on the TSR.
     
  • Negative option marketing. The FTC discusses the increased use of general media by marketers to solicit inbound calls from consumers in response to “do not call” rules, including for purchases involving negative option offers, since the TSR was amended in 2003 to address negative options. Noting that ROSCA also includes provisions dealing with negative options, the FTC invites comment on what impact such post-2003 legal and marketplace changes should have on the TSR.
     
  • Recordkeeping. The FTC notes that the TSR does not require sellers and telemarketers to retain a record of the telemarketing calls they place. It states that the absence of such a requirement was based on an incorrect assumption that such records would be readily available from telephone carriers. Recognizing that compliance costs and burdens would likely be created by requiring sellers and telemarketers to retain their own records, the FTC seeks comments detailing such costs and burdens and offering suggestions for feasible alternatives.

The notice also includes 38 specific questions (with many containing multiple subquestions), dealing with:

  • The continuing need for the TSR, the TSR’s impact on consumers, entities that must comply, small business sellers and telemarketers, and the TSR’s relationship to other federal, state, or local laws or regulations
  • Various existing TSR prohibitions and requirements
  • Existing TSR exemptions
  • The telemarketing industry generally, such as sales volume, technology innovations, self-regulatory efforts, government regulation, and consumer issues

In the notice, the FTC references the TSR changes it proposed last year that would prohibit sellers and telemarketers from accepting or requesting remotely created checks or payment orders, cash-to-cash money transfers, and cash reload mechanisms as payment in inbound and outbound telemarketing transactions. The FTC notes that it has not yet completed the rulemaking process or issued any further notice regarding the proposal since it was published in the Federal Register in July 2013.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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