The beginning of 2024 has brought with it a decided regulatory focus on telemarketing. In the past couple of months, we’ve written about several important FCC actions related to the Telephone Consumer Protection Act (TCPA), namely the adoption of a one-to-one consent requirement, a ruling that calls to consumers using AI technologies are considered “artificial or prerecorded” messages subject to regulation under the TCPA, and rule changes intended to expand consumers’ ability to revoke consent to receive calls and texts.
Not to be outdone by its sister-agency, this month, the FTC announced two significant revisions to the Telemarketing Sales Rule (TSR) and one proposed expansion that will increase the Rule’s reach and impact.
No Deceptive B2B Telemarketing. The FTC finalized a TSR update that will expand the Rule’s prohibition on misrepresentations and false or misleading statements in business-to-business (B2B) telemarketing calls. The original TSR exempted B2B calls (other than those selling office and cleaning supplies), focusing instead on calls to individual consumers. The FTC claims the expansion is warranted due to the rise in B2B scams, which are often carried out through telemarketing.
DNC Rules Not Extended to B2B. Notably, the rule change does not extend any other provisions of the TSR to B2B calls, such as recordkeeping, DNC Registry, or DNC fee access requirements. (With that said, practitioners should be mindful both that (a) many consumers use their wireless phones for business and personal use, providing ambiguity on when a call is B2B vs. B2C), and (b) there are still TCPA autodialer rules and a number of state telemarketing laws that more broadly regulate B2B telemarketing).
B2C Do Not Call (DNC) Recordkeeping. The FTC announced new affirmative recordkeeping requirements for telemarketers, most of which are necessary to support a DNC safe harbor. These records now must be maintained for 5 rather than 2 years. Given that the civil penalty statute of limitations is 5 years, the timing update may not change many businesses’ current practices. Affirmatively requiring retention of all outbound telemarketing records though may require some companies to closely evaluate sales personnel outbound calling practices, separate from a dialing platform, that also need to be taken into account. Records that telemarketers must maintain include, among others:
- call detail records of telemarketing campaigns, such as calling number, called number, time, date, and duration of the call, disposition of the call, whether the call was to an individual or business consumer, and whether the call utilized a prerecorded message (although the rule provides an exemption for calls made by an individual telemarketer who manually enters a single telephone number to initiate a call; for these, records of the calling number, called number, date, time, duration, and disposition of the telemarketing call are not required) [NOTE: The FTC is not requiring compliance with the call detail records retention requirement until 180 days after publication of the rule in the Federal Register to give affected businesses time implement new systems, software, or procedures necessary to comply];
- customer information, including name, last known telephone number and physical or email address, the goods or services purchased, the date of purchase, and the date the goods or services were shipped or provided, and the amount paid by the customer (the rule acknowledges that for “offers of consumer credit products subject to the Truth in Lending Act,” compliance with the recordkeeping requirements under that statute and corresponding Regulation Z would be sufficient to constitute compliance with this provision of the TSR);
- for calls made based on an established business relationship, records sufficient to show a seller has an established business relationship with a consumer, including the name and last known phone number of the consumer, the date the consumer submitted an inquiry or application, and the goods or services inquired about;
- where consent is relied upon, sellers or telemarketers must maintain records of that consumer’s name and phone number, a copy of the consent requested in the same manner and format that it was presented to that consumer, a copy of the consent provided, the date the consumer provided consent, and the purpose for which consent was requested and given. For consent provided orally, the seller or telemarketer must retain a recording of the consent requested, the consent provided, and the recording must make clear the purpose for which consent was provided;
- records of opt-out requests, including the name of the person, date of the request, telephone number associated with the request, and the seller from which the person does not want to receive calls (as well as the goods or services offered by that seller).
- records of which version of the National Do Not Call Registry a seller or telemarketer used by keeping records of: (1) the name of the entity which accessed the registry; (2) the date the DNC Registry was accessed; (3) the subscription account number that was used to access the registry; and (4) the telemarketing campaign(s) for which it was used;
- records of all service providers that a telemarketer uses to deliver outbound calls, including contracts with them (and, as applicable, requiring telemarketers to enforce the record retention requirements for any of its applicable service providers). The FTC makes clear that “service providers” includes “any entity that provides ‘digital soundboard’ technology,” such as those that “sellers use to mimic or clone the voice of an individual to deliver live and prerecorded outbound telemarketing calls.” Further, where the seller has allocated responsibility of recordkeeping to a telemarketer, the seller will be required to ensure their telemarketers are abiding by the TSR’s recordkeeping provisions and retain access to their telemarketer’s records of telemarketing activities on the seller’s behalf;
- a copy of each unique prerecorded message;
Narrow Safe Harbor. The Rule also clarifies that failure to maintain records in a complete and accurate manner constitutes a violation of the TSR subject to civil penalties, but builds in a safe harbor of 30 days from the date of discovery, allowing companies a short grace period to cure inadvertent errors and deficiencies. Based on past FTC TSR enforcement, however, businesses should prioritize steps to confirm retention practices are in place, rather than rely on the discretion of the agency in its application of the safe harbor.
Timing. The updated Rule will become effective 30 days after publication in the Federal Register, except as noted above for retention of call detail records.
Further Proposed TSR Amendments. The FTC announced a proposal to amend the TSR to cover inbound telemarketing calls involving technical support services, which are broadly 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 proposal would exclude tech support services involving an entity taking physical possession of the device being repaired, and the TSR’s requirements would only be triggered if the company disseminated advertisements that resulted in the inbound customer calls. (Separately, the FTC has taken the position that inbound calls involving upsells are already covered by the TSR’s requirements.)
The proposed tech support services exemption would join several other enumerated business activities of concern to the FTC, including debt relief services, investment opportunities, and business opportunities. Comments on the new proposal will be due 60 days after publication in the Federal Register.
Monetary Exposure. As a reminder, a violation of the TSR can result in civil penalties of up to $51,744 (and the FTC can seek this amount on a per call basis).
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In light of these and other announced telemarketing updates and revisions, companies engaged in activities that may be covered under the revised TSR and TCPA rules should review these new requirements carefully, including through consultation with counsel, and modify internal processes as appropriate to ensure compliance. For example, all TSR-covered entities will need to review and update, as applicable, their recordkeeping processes and training materials to ensure retention of new record categories, and perhaps their contracts and auditing processes with their service providers supporting telemarketing. Similarly, entities engaged in B2B telemarketing will need to develop new processes for ensuring that all messages are truthful and non-misleading.
