Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: FTC reviews Telemarketing Sales Rule, seeks public comments, (Aug 1, 2014)
By Greg Hammond, J.D.
As part of the FTC’s periodic review of its rules and guides, the agency has issued a notice of rule review and request for public comments on its Telemarketing Sales Rule (TSR). The TSR was established in 1995, and was amended three times to add—in part—provisions creating the National Do Not Call Registry, as well as provisions that address debt relief offers and prerecorded messages.
Telemarketing Sales Rule. The TSR was formed under the Telemarketing and Consumer Fraud and Abuse Prevention Act, which targets deceptive and abusive telemarketing practices. It protects consumers in many ways, including: (1) requiring telemarketers to make certain disclosures and prohibiting material misrepresentations to consumers; (2) establishing mechanisms that protect consumers from unauthorized charges or debits, such as requiring telemarketers to obtain “express informed consent” from consumers, prior to billing a particular account; (3) prohibiting telemarketers from charging advance fees for credit repair services, recovery services, loans, or debt relief services; (4) barring credit card laundering; (5) precluding telemarketers from contacting consumers on the National Do Not Call Registry, or who have requested not to receive calls from a specific entity; and (6) requiring telemarketers to transmit consumers’ telephones accurate Caller ID information and placing restrictions on calls made with predictive dialers or with prerecorded messages.
Areas of interest. According to the notice, the Commission is interested in receiving comments on a number of general and specific issues, including the continuing need for the TSR and its economic impact; the rule’s effect on deceptive telemarketing; how the rule interacts with other regulations; preacquired account information; negative option marketing; and recordkeeping requirements. “The Commission believes that this review is important to determine whether the TSR continues to serve a useful purpose, and if so, how it could or should be improved,” the notice stated.
Some specific questions the FTC is seeking response to include:
Is there a continuing need for all parts of the Rule? Why or why not? What impact, if any, has the Rule had on consumers; entities that must comply with it; and sellers or telemarketers that are small businesses with respect to costs, profitability, and competitiveness?
Has the Rule provision—prohibiting telemarketers from submitting billing information for payment in any transaction without first obtaining the express informed consent of the customer—been effective in preventing the use of preacquired account information for unauthorized billing of consumers’ accounts? What changes, if any, should be made to this section? Should this section be made more consistent with the credit card associations’ rules prohibiting the exchange, transfer, or sale of cardholder account numbers? Should this section be made more consistent with section 3(a)(2) of the Restore Online Shoppers’ Confidence Act? Have the provisions of this section significantly increased the cost of doing business?
Should the recordkeeping provisions be expanded to include a requirement that sellers and/or telemarketers retain records of the telemarketing calls they have placed? What specific costs and burdens would such a requirement impose on businesses, including small businesses? What costs and burdens does the lack of such a requirement impose on law enforcement and on consumers? Are there alternatives to such a requirement that would reduce law enforcement costs and burdens while minimizing the costs and burdens on businesses?
Comments may be submitted on paper, or online, and must be received by October 14, 2014. Written comments must be labeled “Telemarketing Sales Rule Regulatory Review, 16 CFR Part 310, Project No. R411001” on the comment and envelope, and should be addressed to: Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue, NW, Suite CC-5610 (Annex B), Washington, DC 20580. Comments may be submitted electronically here.
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