New FTC Telemarketing Sales Rule Amendments

The Federal Trade Commission (“FTC”)  recently announced that it approved final amendments to its Telemarketing Sales Rule (“TSR”), broadening the rule’s coverage to inbound calls for technical support (“Tech Support”) services. For example, if a Tech Support company presents a pop-up alert (such as one that claims consumers’ computers or other devices are infected with malware or other problems) or uses a direct mail solicitation to induce consumers to call about Tech Support services, that conduct would violate the amended TSR. 

The FTC proposed these amendments because “older consumers continue to report tech support scams as a leading driver of fraud losses,” according to Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. In 2023, older consumers reported more than $175 million in losses to Tech Support scams.

Congress enacted the Telemarketing and Consumer Fraud and Abuse Prevention Act (“Telemarketing Act”) in 1994 to curb abusive telemarketing practices and provide key anti-fraud and privacy protections to consumers (15 U.S.C. §§ 6101 – 6108). The Telemarketing Act directed the FTC to adopt a rule prohibiting deceptive or abusive telemarketing practices and include disclosure requirements (15 U.S.C. § 6102(a)(1)). Pursuant to the Telemarketing Act, the FTC promulgated the TSR in 1995 (16 C.F.R. 310). The TSR prohibits deceptive or abusive telemarketing practices, such as misrepresenting several categories of material information or making false or misleading statements to induce a person to pay for a good or service. The TSR also requires sellers and telemarketers to make specific disclosures and keep certain records. The TSR has since been updated several times, including amendments in 2003 creating the national Do Not Call Registry for telemarketers, as well as in 2008 and 2010, when the rule was amended to specifically address pre-recorded telemarketing calls (“robocalls”) and debt collection services, respectively. In March 2024, the Commission amended the rule to prohibit deception in calls between businesses.

In April 2024, the FTC announced that it was seeking public comment on the TSR regarding a proposal to extend the rule’s coverage to inbound telemarketing calls to Tech Support services, and in November 2024, the FTC voted to approve publication of the notice in the Federal Register.

Prior to its amendment, the TSR exempted calls that consumers make to telemarketers (“inbound calls”) that are: 1) not the result of any solicitation, 2) in response to certain advertisements, and 3) in response to a direct mail solicitation that contains certain information (16 C.F.R. 310.6(b)). However, there were exclusions from those exemptions (i.e., conduct that was not exempt and therefore covered). The newly approved amendments add inbound telemarketing calls regarding Tech Support services to the exemption exclusions list.

The final rule defines Tech Support services as “any plan, program, software, or service that is marketed to repair, maintain, or improve the performance or security of any device on which code can be downloaded, installed, run, or otherwise used, such as a computer, smartphone, tablet, or smart home product, including any software or application run on such a device.”

The FTC Commissioners voted 4-1 to approve publication of the notice. Commissioner Andrew Ferguson voted no and issued a dissenting statement, explaining that he voted no “not because it is bad policy, but because the time for rulemaking by the Biden-Harris FTC is over,” further stating that he “will vote against all new rules not required by statute, and any enforcement action that advances an unprecedented theory of liability until [the presidential] transition is complete.” Commissioner Melissa Holyoak voted yes but issued a separate concurring statement expressing her belief that “the Commission should redirect its efforts and resources toward enforcement against fraud and, only where appropriate, rulemakings that ensure the Commission can robustly prosecute fraud and provide consumers redress.”

The amendments are effective 30 days after publication in the Federal Register.

Why this matters:

• The bipartisan vote (with the only no vote based on voting against all new rules by the lame-duck FTC) indicates that telemarketing and fraud will remain a focus of FTC enforcement under the new administration.
• Violators of the TSR may be subject to civil penalties of up to $51,744 for each violation, nationwide injunctions that prohibit certain conduct, and may be required to pay redress to injured consumers.