The FTC held its most recent open meeting on Thursday, and two major topics were front and center: potential changes to the Telemarketing Sales Rule (TSR) and a congressional fix to Section 13(b) after the one-year anniversary of AMG Capital Management LLC v. FTC.
In its first order of business, the Commission unanimously voted to publish a Notice of Proposed Rulemaking (NPR) and an Advance Notice of Proposed Rulemaking (ANPR), which address several proposed updates to the TSR. The NPR is further along in the rulemaking process, where it seeks comment on the published proposed rule.
The FTC proposes two separate changes in the NPR. The first would be to enhance the recordkeeping requirements for telemarketers. Among a handful of proposed changes, the most impactful appear to be changing the time for keeping records from two years to five years. The proposed rule would also require telemarketers to retain a copy of each unique prerecorded message used, records of the established business relationship with each customer, and records of the Do-Not-Call registry used for each campaign to ensure compliance.
The second proposed change in the NPR would be to narrow the business-to-business exemption to the TSR. The proposed rule change would allow the TSR to cover misrepresentations and false or misleading statements in business-to-business calls. The commission believes that this change would help protect small businesses that it believes continue to be harmed by deceptive telemarketing.
The ANPR that the Commission approved on Thursday seeks comment from stakeholders as the Commission examines changes to three separate areas of the TSR: tech-support scams, negative options requirements, and more broadly rescinding the business-to-business exemption.
With respect to tech-support scams, the Commission seeks comment on whether telemarketers that induce customers to make inbound phone calls should not be exempt from the TSR. The Commission also seeks to explore whether the TSR should require telemarketers to provide clearer subscription disclosers and cancellation options, such as click-to-cancel for negative option offers.
Finally, the ANPR considers eliminating entirely the business-to-business exemption, treating such calls in the same manner as calls made to consumers for purposes of the TSR.
All four commissioners voted in favor of moving forward with these two rulemaking proceedings, with Commissioner Wilson noting that, despite her frequent warning against abusing the rulemaking process, these proceedings are precisely the calculated changes she expects to see. The comment period for both the NPR and the ANPR expires 60 days after publication of both in the Federal Register, which should happen in the coming days.
Finally, to commemorate the one-year anniversary of the Supreme Court’s decision in AMG Capital Management, the Commission, yet again, publicly pleaded for a congressional fix to Section 13(b). A presentation from Commission staff, and a concurrence from Commissioners Khan and Slaughter, highlighted the billions of dollars the Commission believes it is not able to return to consumers because of the AMG decision.
Commissioners Philips and Wilson also echoed the calls for a legislative fix to Section 13(b), and the latter of the two separately noted that a congressional fix should be a calculated one. Commissioner Wilson pointed out that any 13(b) replacement should include safeguards, such as a statute of limitations or considerations for instances where consumers receive a benefit from products, even though they were sold with misrepresentations.
However, she noted that given the Commission’s currently expansive view of its authority, she urged the Commission to act prudently to instill Congress with confidence in the management of the Commission, so that Congress restores this authority.
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