The Federal Trade Commission (FTC) is seeking comment on the disclosure, recordkeeping, and reporting requirements of its Telemarketing Sales Rule (TSR). The deadline for public comment is June 13, 2016.
The FTC’s recent notice invites public comments on four issues:
- Whether the TSR’s disclosure, recordkeeping, and reporting requirements are necessary, and whether the resulting information is useful;
- The accuracy of the FTC’s estimates regarding the burden that such information collection requirements impose on covered entities;
- How the FTC can improve the quality, utility, and clarity of the disclosure requirements; and
- How to minimize the burden of providing the required information to consumers.
The FTC estimates that the annual burden for complying with these requirements is 1,238,670 hours. This number reflects the cumulative burden on all entities covered by the TSR and its obligations.
|TSR Requirement||Cumulative Annual Burden||Per-Party Annual Burden|
|Recordkeeping||14,541 hours||1 hour|
|Disclosures||1,223,777 hours||~174 hours|
|Reporting||352 hours||2 minutes|
The TSR identifies specific disclosures for telesales calls and directs telemarketers to retain records regarding advertising, sales, and employees. The records must be made available for the FTC’s review if requested. According to the FTC’s notice, these disclosure requirements give consumers “information necessary to make informed purchasing decisions,” and the recordkeeping requirements may “yield information helpful to measuring and redressing consumer injury stemming from Rule violations.”
This request for comments is triggered by a separate law, the Paperwork Reduction Act, which requires federal agencies to obtain approval from the Office Management and Budget (OMB) to require members of the public, such as telemarketers, to keep records or submit reports. The FTC is seeking a three-year extension of its current approval from the OMB.
As we have blogged about in the past, the TSR is one of a limited number of ways the FTC can adopt rules prohibiting deceptive or abusive practices. The TSR applies to sellers, telemarketers, and those that provide “substantial assistance” to the seller or telemarketer when that person knows or consciously avoids knowing that the seller or telemarketer is engaged in any act or practice that violates the TSR. As you might expect, liability for “substantial assistance” significantly expands the realm of those parties subject to the TSR’s requirements. Moreover, the TSR’s requirements also can be enforced by the Consumer Financial Protection Bureau (CFPB), state attorneys general, and, in limited circumstances, individual consumers.
The TSR’s recordkeeping requirements are an important tool for the agencies that enforce the TSR. However, as the FTC’s own burden estimates prove, they also are costly and resource intensive for companies to implement. The FTC now must make its case for why those burdens are reasonable and justified. While we expect the OMB to grant the extension, companies affected by the burden have the opportunity to weigh in and potentially shape the exact scope and nature of these burdensome obligations.