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On March 7, the FTC announced it had finalized substantial revisions to the Telemarketing Sales Rule (the proposed rule was discussed here). Since promulgated in 1995, the TSR has been amended four times, most recently in 2015. This latest revision to the TSR significantly expands its reach by bringing business to business (B2B) telemarketing calls within its scope. Moreover, the revisions substantially enhanced the TSR's recordkeeping requirements which will likely have a major impact on telemarketers' compliance efforts. Key revisions to the TSR include:
- Application to B2B Telemarketing. The TSR has traditionally exempted B2B calls, except those concerning the sale of nondurable office and cleaning supplies. The final rule now covers these calls and prohibits deceptive or abusive telemarketing practices, including the making of material misrepresentations or misleading statements to induce a person to pay for goods or services. Notably, the rule change does not extend the TSR's recordkeeping, Do Not Call registry, or Do Not Call fee access requirements for B2B telemarketing.
- Enhanced Recordkeeping Requirements. The rule implements enhanced record-keeping practices, requiring telemarketers to keep more extensive and accurate records of their activities. Telemarketers must now keep call detail records of each telemarketing campaign, a copy of each prerecorded message, records concerning the seller's business or charitable relationship with the consumer (if any), records regarding any service provider that a telemarketer uses, any opt-out or consent information, and records of which version of the Do Not Call Registry were used to ensure compliance with this rule. In addition, the final rule requires companies to retain these records for five years, as opposed to the current requirement of two years.
- 30 Day Safe Harbor. Companies that fail to maintain records in a complete and accurate manner are subject to civil penalties under the TSR. Fortunately, the new rule has a safe harbor that gives companies the opportunity to cure any deficiencies 30 days from the date of discovery.
The changes to the TSR will become effective 30 days after the date of publication in the federal register, and compliance will be required 180 days after publication in the federal register.
In addition to the final rule, the FTC announced a proposed supplemental rule to the TSR intended to increase consumer protections from telemarketing scams offering phony technical support services. A surge in tech support scams, including those where consumers call supposed tech support in response to advertising, have prompted the proposed expansion.
Putting It Into Practice: Violations of the TSR can carry hefty penalties. Companies found in violation of the TSR can be fined over $50,000 per call. Accordingly, companies engaged in telemarketing should be particularly aware of these changes and update their existing TSR compliance protocols immediately, especially those involving recordkeeping and vendor oversight.
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