We made it to the 11th public commission meeting. Now, one person who didn’t make it to the meeting today (or at least did not appear on the main screen) was Alvaro Bedoya. We had heard that his confirmation vote to become the fifth commissioner was going to happen this week, but apparently a few high-profile COVID-19 cases caused a delay in his vote. Because of a partisan divide on his nomination, his vote was likely going to require a tie-breaking vote from Vice President Harris.
The surprise portion of the meeting was brought to you by the Telemarketing Sales Rule (TSR), which is a broad rule that regulates what telemarketers can and cannot do with respect to contacting consumers and also sets payment restrictions for the sale of goods and services made through telemarketing calls. As important background, the TSR generally just addresses calls that companies make to consumers, not business-to-business (B2B) calls (though there are a few substantive areas where B2B calls are also covered). And for those unfamiliar with AMG, it is a Supreme Court decision from April 2021 that dramatically limited the ability of the FTC to get equitable monetary relief in federal court. We have discussed it a lot here, but lately, new FTC leadership hasn’t said all that much about it.
So, for today’s meeting, the first substantive topic was possible amendments to the TSR, and this, oddly enough, brings us back to 2014, which is also the year that Macklemore beat out Kendrick Lamar and Ed Sheeran for Best New Artist at the Grammys. That year, the FTC also initiated a TSR Rulemaking. Eight long years later, and the TSR rulemaking returns. The commission has proposed several substantive changes to the TSR in two separate rulemakings, and an FTC staffer walked us through the potential changes.
First, through a Notice of Proposed Rulemaking (NPRM), the agency is proposing a rule that would apply the TSR to any B2B telemarketing calls that made deceptive claims. This would mean that the FTC could use the TSR to go after companies that made deceptive calls to businesses. The proposed rule would also have additional recordkeeping requirements.
The agency also proposes issuing an Advance Notice of Proposed Rulemaking (ANPRM) that would seek comment and information regarding three different TSR proposals. One proposal would get rid of the B2B exemption entirely. The second would have the TSR cover inbound calls regarding tech support services, a frequent source of fraud. And the third would require telemarketers to give consumers a simple means to cancel when signed up for subscription services that are sold with negative option features. Being able to cancel such subscriptions easily has been a frequent FTC topic of late.
In case you are wondering why there are two separate proposals regarding the same rule, well, we won’t make this overly wonky. The key difference is that for the first issue, the NPRM, the FTC is basically stating that they have enough information to issue an actual proposed rule and the public can now comment about the proposed rule. For the second set of proposals, the ANPRM, the FTC is more generally considering the issue and is soliciting general feedback but has not provided proposed rule language.
Chair Khan expressed her strong support for issuing the ANPRM and the NPRM. Commissioner Phillips indicated that this is how rulemaking should work, with a thorough staff analysis and comments sought from the public to inform decision making. Commissioner Slaughter discussed how effective the TSR has been as a law enforcement tool and noted it has been updated numerous times over the year, as a sly reminder that, from her perspective, rulemaking is good. And finally, Commissioner Wilson added her thanks to staff, emphasizing the tailored proposal, and commended them on their work. She expressed her broad rulemaking concerns but emphasized that the TSR is an important and beneficial rule, and the proposal is appropriately grounded in the experience of FTC “seasoned staff.”
For the second topic, we took a deep dive into 13(b), and an FTC staffer provided an overview of the issue and its impact on FTC law enforcement. The staffer talked about the underlying facts from the AMG case and some of the challenges faced using other tools, such as the amount of time it takes to seek money in administrative litigation.
Chair Khan noted the importance of 13(b) to the mission and expressed her delight that the House had passed a bill on 13(b) reform. Commissioner Phillips emphasized the need for a bipartisan congressional fix for the 13(b) problem. Commissioner Slaughter discussed some of the specific cases where the decision has had an impact on law enforcement, including the impact on competition cases. Commissioner Wilson had a lot more to say. She is on board with using 13(b) in appropriate cases and working with Congress to restore it with appropriate safeguards. She noted that she would support adding a statute of limitations and that Congress should consider other issues that have been raised by stakeholders, such as whether a revised 13(b) should limit recovery by reducing the value of the product that was sold. She also raised her concern about the agency’s using its authority in ways that exceed its statutory authority, and she noted her concerns about the Made in the USA rule as an example where the agency did just that. She also suggested that there have been similar proposals behind the scenes that, fortunately, have not come to pass (note to selves – we are intrigued).
So, on the public participation part of the meeting, we have a cast change and some pretty interesting discussions. The prior head of the FTC’s Public Affairs Office was yet another in a lengthy series of high-profile departures from the agency, and her former deputy admirably took over the emcee role. Today, we heard from a representative for Sen. Cantwell stating that she is working on bipartisan 13(b) reform and also heard about franchise issues, repair issues and imposter fraud. But the highlight for us was the one consumer who discussed concerns about targeted dream incubation, which – if we get this correctly – was companies being able to implant product imagery into brains to stoke purchasing behavior. We haven’t really researched the viability of this as a marketing technique, but we will certainly do so and also advise our dear readers of the legal ramifications. But this could also explain some of the dreams we have been having lately. With that – we are adjourned. And sweet dreams.
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