FTC Cracks Down on Business-to-Business Telemarketing and Seeks Input on Addressing Tech Support Scam Calls

TSR Rule Amendments 

Business-to-Business Telemarketing
As it stands today, the TSR has limited applicability to calls made between businesses. Under the current Rule, B2B calls are generally excluded, except for B2B calls to induce the sale of nondurable office or cleaning supplies. When the TSR was adopted in 1995, these types of calls were deemed to be “by far the most significant business-to-business problem area,” and subsequent amendments did not expand that applicability.

According to the FTC, in the nearly 30 years since the Rule was first adopted, deceptive B2B calls have extended beyond the sale of nondurable office or cleaning supplies. The amended Rule now more broadly prohibits misrepresentation of goods and services during B2B telemarketing calls, including, among other things, misrepresenting the “total costs to purchase, receive, or use, and the quantity of, any goods or services that are the subject of a sales offer”; “[a]ny material aspect of the performance, efficacy, nature, or central characteristics of goods or services that are the subject of a sales offer”; “[a]ny material aspect of a negative option feature including, but not limited to, the fact that the customer’s account will be charged unless the customer takes an affirmative action to avoid the charge(s), the date(s) the charge(s) will be submitted for payment, and the specific steps the customer must take to avoid the charge(s)”; and “[m]aking a false or misleading statement to induce any person to pay for goods or services or to induce a charitable contribution.” These prohibitions have for years applied to similar telemarketing calls made to individual consumers and will now apply to telemarketing calls made to businesses.

New Recordkeeping Requirements
The FTC has also amended the Rule to require enhanced recordkeeping practices for telemarketers and sellers. According to the FTC, the three main hurdles to effective TSR enforcement are “(1) identifying the telemarketer and seller responsible for the telemarketing campaign; (2) obtaining call detail records; and (3) linking the content of the telemarketing calls with the call detail records to determine which TSR provisions might apply to the telemarketing activity.” Until now, certain information was either not required to be retained by voice service providers or by telemarketers, making certain information beyond the reach of law enforcement. In some cases, records are not required to be retained for long enough to effectively aid enforcement actions. According to the FTC, the lack of access to information frustrates its ability to find and prosecute bad actors.

Since the Rule was enacted, telemarketers or sellers have been required to retain for two years records relating to substantially different advertisements, including telemarketing scripts; lists of prize recipients, customers, and telemarketing employees directly involved in sales or solicitations; and verifiable authorizations or records of express informed consent or express agreement from the called party. The telemarketer was permitted to retain the records in the same manner in which it retained its business records. Under the new Rule, telemarketers or sellers are required to collect and retain (for at least five years) more detailed information including:

• A copy of each unique prerecorded (i.e., robocall) message;
• Call detail records of telemarketing campaigns;
• Records sufficient to show a seller has an established business relationship with a consumer;
• Records sufficient to show a consumer is a previous donor to a particular charity;
• Records of the voice service provider that a telemarketer uses to deliver outbound calls;
• Records of a seller or charitable organization’s entity-specific do-not-call (DNC) registries; and
• Records of the FTC’s DNC Registry used to ensure compliance with the TSR.

Notice of Proposed Rulemaking
The NPRM takes aim at a familiar scam: a “tech support” agent tells us that our computer is infected with a virus and that the agent can help if we pay them. The virus warning may be delivered by a popup message on our computer screen, helpfully including a phone number to call for help in resolving the problem. Of course, legitimate tech and computer companies and tech support providers do not make unsolicited personal phone calls to consumers who may have an infected device. According to the NPRM, tech support services scams are particularly effective against older people, who are five times more likely to report falling victim to such scams. Technical support service is defined 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.”

The FTC has sought to tackle tech support scams through a mix of consumer education, specialized guidance, and enforcement actions. The FTC has, at times, used its authority under the FTC Act when it thought a particular scam might fall into a TSR exemption or where a scam’s connection to the TSR might have been too attenuated. The 2021 U.S. Supreme Court case AMG Capital Management, LLC v. FTC further muddled the enforcement landscape by overturning years of precedent that said the FTC could use the FTC Act to return money to consumers who lost it due to deceptive practices. The proposed changes to the TSR seek to ensure the FTC has the authority to act against tech support scammers and protect consumers.

Under the current TSR, inbound calls (calls made by a consumer to a telemarketer) “in response to an advertisement through any medium” and inbound calls in response to “a direct mail solicitation,” including email are outside the reach of the Rule. The proposed amendment would clarify that inbound “tech support services” calls are included in the Rule and would allow the FTC to reach calls initiated by consumers in response to, for example, a computer popup, text message, or internet search. According to the Notice, the FTC has sought to limit the proposed amendment’s impact on legitimate tech support services, and it asks interested parties to share their comments on this and the other questions posed in the NPRM.

To discuss the FTC’s Telemarketing Sales Rule or to participate in the rulemaking, please contact Pillsbury’s Communications practice.