[Federal Register Volume 87, Number 107 (Friday, June 3, 2022)]
[Proposed Rules]
[Pages 33662-33677]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-10922]


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FEDERAL TRADE COMMISSION

16 CFR Part 310

RIN 3084-AB19


Telemarketing Sales Rule

AGENCY: Federal Trade Commission.

ACTION: Advance notice of proposed rulemaking.

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SUMMARY: As part of the Federal Trade Commission's (``FTC'' or 
``Commission'') regulatory review of the Telemarketing Sales Rule 
(``TSR'' or ``Rule''), the Commission issues this advance notice of 
proposed rulemaking (``ANPR'') to seek public comment on whether the 
Rule should continue to exempt telemarketing calls to businesses, 
whether the Rule should require a notice and cancelation mechanism with 
negative option sales, and whether to extend the Rule to apply to 
telemarketing calls that consumers initiate to a telemarketer (i.e., 
``inbound telemarketing calls'') regarding computer technical support 
services.

DATES: Comments must be received on or before August 2, 2022.

ADDRESSES: Interested parties may file a comment online or on paper by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Write ``Telemarketing Sales 
Rule ANPR, R411001'' on your comment, and file your comment through 
https://www.regulations.gov. If you prefer to file your comment on 
paper, mail your comment to the following address: Federal Trade 
Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, Suite 
CC-5610 (Annex B), Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: Benjamin R. Davidson, (202) 326-3055, 
[email protected], or Patricia Hsue, (202) 326-3132, [email protected], 
Division of Marketing Practices, Bureau of Consumer Protection, Federal 
Trade Commission, 600 Pennsylvania Avenue NW, Mail Stop CC-8528, 
Washington, DC 20580.

SUPPLEMENTARY INFORMATION:

I. Introduction

    The Commission reviews its rules and guides periodically to seek 
information about their costs and benefits and their regulatory and 
economic impact. The information obtained assists the Commission in 
identifying rules and guides it should modify or rescind. Where 
appropriate, the Commission combines such periodic general reviews with 
reviews seeking information on specific questions about an industry.
    On August 11, 2014, the Commission initiated a regulatory review by 
publishing a notice in the Federal Register requesting public comment 
on the TSR (``Regulatory Review'').\1\ It sought comment on questions 
including whether the Rule continues to be necessary and serve a useful 
purpose, whether and how the Rule's compliance burdens and costs can be 
decreased and its benefits increased, and the impact of changes in the 
marketplace and new technologies on the Rule. It also requested comment 
on three specific issues; namely, whether the Rule should: (1) Prohibit 
the sharing of preacquired account information for any purpose; (2) 
enhance protections for negative option and free offers, and apply them 
to inbound calls induced by general media advertising; and (3) require 
sellers and telemarketers to maintain records of the numbers they dial 
in their telemarketing campaigns.
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    \1\ 79 FR 46732.
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    Having reviewed the record, the Commission is issuing a Notice of 
Proposed Rulemaking (``NPRM'') seeking comments on the Commission's 
proposal to amend the TSR's recordkeeping provisions and to prohibit 
deception in business-to-business telemarketing calls.\2\ The 
Commission is also issuing this ANPR seeking comment on whether to 
repeal all exemptions regarding telemarketing calls to businesses and 
inbound telemarketing of computer technical support services, and 
whether the TSR should provide consumers additional protections for 
negative option products or services.
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    \2\ The Commission addresses the comments on recordkeeping 
submitted in response to the Regulatory Review in its proposed NPRM 
being published in conjunction with this ANPR.
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II. Background

A. Statutory Basis for the TSR

    Enacted in 1994, the Telemarketing and Consumer Fraud and Abuse 
Prevention Act (``Telemarketing Act'' or ``Act'') targeted deceptive 
and abusive practices in telemarketing. It directed the Commission to 
adopt a rule with anti-fraud and privacy protections for consumers 
receiving telephone solicitations to purchase goods or services, and 
authorized the Commission and state attorneys general or other 
appropriate state officials, as well as private persons who meet 
certain jurisdictional requirements, to bring civil actions against 
violators in Federal district court.\3\
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    \3\ 15 U.S.C. 6101-6108. Subsequently, the USA PATRIOT Act, 
Public Law 107-56, 115 Stat. 272 (Oct. 26, 2001), expanded the 
Telemarketing Act's definition of ``telemarketing'' to encompass 
calls soliciting charitable contributions, donations, or gifts of 
money or any other things of value.
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    In determining whether certain practices that do not fall 
distinctly within the parameters of the Telemarketing Act's emphasis on 
protecting consumer privacy are ``abusive,'' the Commission has applied 
the unfairness analysis set forth in Section 5(n) of the FTC Act.\4\ An 
act or practice is unfair under Section 5 of the Federal Trade 
Commission Act (``FTC Act'') if it causes or is likely to cause 
substantial injury to consumers, if any countervailing benefits to 
consumers or competition do not outweigh the consumer harm, and if that 
harm is not reasonably avoidable by consumers.\5\
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    \4\ Statement of Basis and Purpose and Final Rule Amendments 
(``2010 TSR Amendments''), 75 FR 48458, 48469 (Aug. 10, 2010) 
(discussing the Commission's use of the unfairness standard in 
determining whether a practice is ``abusive''); see also 15 U.S.C. 
45(n) (codifying the Commission's unfairness analysis, set forth in 
a letter from the FTC to Hon. Wendell Ford and Hon. John Danforth, 
Committee on Commerce, Science and Transportation, United States 
Senate, Commission Statement of Policy on the Scope of Consumer 
Unfairness Jurisdiction, reprinted in In re Int'l Harvester Co., 104 
F.T.C. 949, *95-101 (1984)) (``Unfairness Policy Statement'').
    \5\ 15 U.S.C. 45(n).
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B. TSR History and Key Provisions

    Pursuant to the Telemarketing Act's directive, the FTC promulgated 
the TSR on August 23, 1995.\6\ The Commission subsequently amended the 
Rule on four occasions: (1) In 2003 to add the National Do-Not Call 
Registry and other requirements; \7\ (2) in 2008 to prohibit

[[Page 33663]]

unwanted sales robocalls; \8\ (3) in 2010 to ban the telemarketing of 
debt relief services requiring an advance fee; \9\ and (4) in 2015 to 
ban the use in telemarketing of certain payment mechanisms widely used 
in fraudulent transactions.\10\
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    \6\ Statement of Basis and Purpose and Final Rule (``Original 
TSR''), 60 FR 43842 (Aug. 23, 1995). The effective date of the 
original Rule was December 31, 1995.
    \7\ See Statement of Basis and Purpose and Final Amended Rule 
(``2003 TSR Amendments''), 68 FR 4580 (Jan. 29, 2003) (adding Do Not 
Call Registry and other provisions).
    \8\ See Statement of Basis and Purpose and Final Rule Amendments 
(``2008 TSR Amendments''), 73 FR 51164 (Aug. 29, 2008) (addressing 
the use of robocalls).
    \9\ See 2010 TSR Amendments (adding debt relief provisions). The 
Commission subsequently published correcting amendments to the text 
of section 310.4 the TSR. Telemarketing Sales Rule; Correcting 
Amendments, 76 FR 58716 (Sept. 22, 2011).
    \10\ See Statement of Basis and Purpose and Final Rule 
Amendments (``2015 TSR Amendments''), 80 FR 77520 (Dec. 14, 2015) 
(prohibiting the use of remotely created checks and payment orders, 
cash-to-cash money transfers, and cash reload mechanisms).
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    The TSR applies to virtually all ``telemarketing,'' defined in 
accordance with the Telemarketing Act to mean ``a plan, program, or 
campaign which is conducted to induce the purchase of goods or services 
or a charitable contribution, by use of one or more telephones and 
which involves more than one interstate telephone call.'' \11\
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    \11\ 16 CFR 310.2(gg) (using the same definition as the 
Telemarketing Act, 15 U.S.C. 6106(4)). The TSR, like the 
Telemarketing Act, also excludes catalog sales solicitations. Id. 
The Act also explicitly states that the jurisdiction of the 
Commission in enforcing the Rule is coextensive with its 
jurisdiction under Section 5 of the FTC Act. 15 U.S.C. 6105(b).
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    The Rule wholly or partially exempts several types of calls from 
its coverage. For example, it generally exempts telemarketing calls to 
businesses.\12\ It also generally exempts inbound calls placed by 
consumers in response to direct mail or general media advertising.\13\ 
However, there are certain ``carve-outs'' from some of the TSR's 
exemptions that bring certain conduct back within the ambit of the 
rule, such as the carve-out for calls initiated by a consumer in 
response to a general media advertisement relating to investment 
opportunities.\14\
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    \12\ 16 CFR 310.6(b)(7); See also 2015 TSR Amendments, 80 FR at 
77555 (clarifying that the ``business-to-business'' exemption under 
310.6(b)(7) applies only to telemarketing calls that are 
``soliciting the purchase of goods or services or a charitable 
contribution [from a] business itself, rather than personal 
purchases or contributions by employees of the business'').
    \13\ 16 CFR 310.6(b)(5)-(6). Moreover, the Rule exempts from the 
National Do Not Call Registry provisions calls placed by for-profit 
telemarketers to solicit charitable contributions; such calls are 
not exempt, however, from the ``entity-specific'' do not call 
provisions or the TSR's other requirements. 16 CFR 310.6(a).
    \14\ See, e.g., 16 CFR 310.6(b)(5)-(6) (provisions related to 
general advertisements and direct mail solicitations); 16 CFR 
310.2(s) (definition of ``investment opportunity''). The TSR's 
definition of ``investment opportunity'' includes anything sold in 
part based on a representation of future income. In addition to 
traditional passive investments, the definition can also encompass 
work-from-home opportunities, real estate seminars, multi-level-
marketing programs, and programs that purport to educate consumers 
about the stock market.
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    The TSR is designed to protect consumers in a number of different 
ways. First, the TSR includes provisions governing communications 
between telemarketers and consumers, requiring certain disclosures and 
prohibiting material misrepresentations.\15\ Second, the TSR requires 
telemarketers to obtain consumers' ``express informed consent'' to be 
charged on a particular account before billing or collecting payment 
and, through a specified process, to obtain consumers' ``express 
verifiable authorization'' to be billed through any payment system 
other than a credit or debit card.\16\ Third, the TSR prohibits as an 
abusive practice requesting or receiving any fee or consideration in 
advance of obtaining any credit repair services; \17\ recovery 
services; \18\ offers of a loan or other extension of credit, the 
granting of which is represented as ``guaranteed'' or having a high 
likelihood of success; \19\ and debt relief services.\20\ Fourth, the 
TSR prohibits credit card laundering \21\ and assisting and 
facilitating sellers or telemarketers engaged in violations of the 
TSR.\22\ Fifth, the TSR, with narrow exceptions, prohibits 
telemarketers from calling consumers whose numbers are on the National 
Do Not Call Registry or who have specifically requested not to receive 
calls from a particular entity.\23\ Finally, the TSR requires that 
telemarketers transmit to consumers' telephones accurate Caller ID 
information \24\ and places restrictions on calls made by predictive 
dialers \25\ and those delivering prerecorded messages.\26\
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    \15\ The TSR requires that telemarketers soliciting sales of 
goods or services promptly disclose several key pieces of 
information in an outbound telephone call or an internal or external 
upsell: (1) The identity of the seller; (2) the fact that the 
purpose of the call is to sell goods or services; (3) the nature of 
the goods or services being offered; and (4) in the case of prize 
promotions, that no purchase or payment is necessary to win. 16 CFR 
310.4(d); see also 16 CFR 310.2(ee) (defining ``upselling''). 
Telemarketers also must disclose in any telephone sales call the 
cost of the goods or services and certain other material 
information. 16 CFR 310.3(a)(1). In addition, the TSR prohibits 
misrepresentations about, among other things, the cost and quantity 
of the offered goods or services. 16 CFR 310.3(a)(2). It also 
prohibits making false or misleading statements to induce any person 
to pay for goods or services or to induce charitable contributions. 
16 CFR 310.3(a)(4).
    \16\ 16 CFR 310.4(a)(7); 16 CFR 310.3(a)(3).
    \17\ 16 CFR 310.4(a)(2).
    \18\ 16 CFR 310.4(a)(3). As the Commission has previously 
explained, ``[in] recovery room scams . . . a deceptive telemarketer 
calls a consumer who has lost money, or who has failed to win a 
promised prize, in a previous fraud. The recovery room telemarketer 
falsely promises to recover the lost money, or obtain the promised 
prize, in exchange for a fee paid in advance. After the fee is paid, 
the promised services are never provided. In fact, the consumer may 
never hear from the telemarketer again.'' Original TSR, 60 FR at 
43854.
    \19\ 16 CFR 310.4(a)(4); see 2003 TSR Amendments, 68 FR at 4614 
(finding that these three services were ``fundamentally bogus'').
    \20\ 16 CFR 310.4(a)(5).
    \21\ 16 CFR 310.3(c).
    \22\ 16 CFR 310.3(b).
    \23\ 16 CFR 310.4(b)(1)(iii).
    \24\ 16 CFR 310.4(a)(8).
    \25\ 16 CFR 310.4(b)(1)(iv); 16 CFR 310.4(b)(4) (call 
abandonment safe harbor).
    \26\ 16 CFR 310.4(b)(1)(v).
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C. Legal Standard for Retaining, Amending, or Repealing the TSR

    There is a presumption that an existing rule should be 
retained.\27\ A decision to retain any portion of a current rule may be 
based upon evidence gathered during the original rulemaking and the 
Commission's subsequent enforcement experience, as well as evidence 
adduced during a new rulemaking.\28\ Moreover, the Telemarketing Act's 
rulemaking authorization applies not only to an initial rulemaking, but 
also to the amendment or repeal of a telemarketing rule.\29\
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    \27\ See Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. 
Co., 463 U.S. 29, 41-42 (1983).
    \28\ Amended Funeral Rule Statement of Basis and Purpose, 59 FR 
1592, 1596 (Jan. 11, 1994).
    \29\ Federal Trade Commission Organization, Procedures and Rules 
of Practice, 16 CFR 1.25. See 15 U.S.C. 553(e); see also 2003 TSR 
Amendments, 68 FR at 4583.
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    Because of the ``potentially pervasive and deep effect'' of FTC 
rules,\30\ the Commission carefully scrutinizes the regulatory review 
record to determine whether the record is reliable and provides 
sufficient support for undertaking an industry-wide rulemaking or 
amendment proceeding. In particular, the Commission routinely evaluates 
a number of factors, including the relative costs and benefits of the 
Rule, industry compliance, the effect on competition and consumer 
choice, its enforcement experience, and the adequacy of case-by-case 
law enforcement under the FTC Act to address existing problems that 
fall outside the Rule's scope.\31\ In addition, as a responsible 
steward of the public funds allocated to it by Congress, the Commission 
considers whether a rulemaking or amendment proceeding would serve the 
public interest, recognizing the rulemaking process requires a 
substantial, long-term investment of the Commission's finite resources 
that could otherwise be

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devoted to enforcement actions against rule violators.
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    \30\ American Optometric Ass'n v. FTC, 626 F.2d 896, 905 (D.C. 
Cir. 1980).
    \31\ See, e.g., 2003 TSR Amendments and 2008 TSR Amendments.
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D. Summary of the Regulatory Review Record

    The regulatory review record contains 114 unique responsive 
comments.\32\ They include: two comments from other law enforcement 
agencies; \33\ one comment from a telemarketer; \34\ one from an 
industry services provider; \35\ one from a credit card association; 
\36\ and ten comments from industry trade associations representing 
companies that provide telemarketing services, employ telemarketers, or 
make their own telemarketing calls to consumers.\37\ There are three 
comments on behalf of 13 consumer advocacy groups,\38\ one from an 
academic,\39\ two submissions attaching essentially identical comments 
from 2,064 Illinois residents,\40\ and 92 unique comments from 
individual consumers.\41\
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    \32\ We cite public comments here by the name of the commenting 
organization or individual and the comment number. Although the 
comment record lists 118 submissions, one is a duplicate, American 
Resort Development Association, Nos. 00100, 00101; one is listed 
twice, Abrams, No. 00038; one contains a final attachment to a prior 
submission, Citizens Utility Board, No. 00037 (supplementing No. 
00036); and one is simply a comment period extension request, PACE, 
No. 00039, that was granted by the Commission. 79 FR 61267 (Oct. 10, 
2014).
    \33\ National Assn. of Attorneys General (``NAAG''), No. 00117 
(on behalf of the attorneys general from 37 states and one 
territory); U.S. Department of Justice (``DOJ''), No. 00111.
    \34\ InfoCision Management Corp., No. 00108.
    \35\ NobelBiz, Inc., No. 00104.
    \36\ Visa, Inc., No. 00109.
    \37\ American Bankers Insurance Association (``ABIA''), No. 
00106; American Resort Development Association (``ARDA''), No. 
00100; Brand Activation Association (``BAA''), No. 00115; Consumer 
Credit Industry Association (``CCIA''), No 00098; Direct Marketing 
Association (``DMA''), No. 00103; Electronic Retailing Association 
(``ERA''), No. 00095; MPA-The Association of Magazine Media 
(``MPA''), No. 00116; National Automobile Dealers Association 
(``NADA''), No. 00112; Newspaper Association of America (``NAA''), 
No. 00099; and the Professional Association for Customer Engagement 
(``PACE''), No. 00107.
    \38\ AARP, No. 00097; Center for Responsible Lending (``CRL''), 
No. 00093; and National Consumer Law Center on behalf of itself and 
the Consumer Federation of America, Americans for Financial Reform, 
Consumers Union, Consumer Action, Consumer Federation of California, 
The Maryland Consumer Rights Coalition, National Association of 
Consumer Advocates, U.S. PIRG, Virginia Citizens Consumer Council, 
and Consumer Assistance Council, Inc. of Cape Cod and the Islands 
(collectively, ``NCLC''), No. 00110.
    \39\ The Pennsylvania State University, No. 00114.
    \40\ Citizens Utility Board, Nos. 000356 and 00037.
    \41\ Aside from the Citizens Utility Board comments, the record 
contains 93 consumer comments, but there are duplicate entries for 
Abrams, No. 00038. Several consumer comments sought relief from 
collection agency calls that the TSR does not cover. See, e.g., 
Gray, No. 00007; Castallo, No. 00128; Wysong, No.00015; Branner, No. 
00121; Lehman, No. 00120; and Valdes, No.00014. Several advocate 
extending the TSR's do-not-call provisions to cover political, 
charity, or survey calls. See, e.g., Wright, No. 00002; Anonymous, 
No. 00089; Rosenow, No. 00067; Goodman, No. 00032; and Lehnen, No. 
00030.
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III. Regulatory Review: Continuing Need for the TSR

    All commenters generally agree on the continuing need for the TSR 
but differ in their opinions as to whether amendments are necessary. 
Consumers and their advocates largely argue for amendments they believe 
will enhance consumer protection including by closing ``loopholes'' in 
the TSR, and for more enforcement. Industry representatives, on the 
other hand, largely advocate against any amendments, arguing the 
current regulatory requirements, coupled with the existence of self-
policing industry organizations, provide consumers sufficient 
protections.

A. Consumer Perspective

    Consumers and their advocates all support the continuing need for 
the TSR. The 2,064 largely identical comments from Illinois consumers 
ask the Commission to ``keep and strengthen'' the TSR's consumer 
protections that have ``battled telemarketing fraud and deception for 
nearly two decades,'' \42\ and four other individual consumers 
expressly agree the TSR is still needed and should be retained.\43\ 
AARP asserts it ``strongly agrees that there is a continuing need for 
the [TSR],\44\ and the National Consumer Law Center (``NCLC'') and 
other consumer groups state the TSR ``provides important protections 
for consumers and clear rules of the road for the telemarketing 
industry.'' \45\
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    \42\ Citizens Utility Board, Nos. 00036 and 00037; see Rusch, 
00046.
    \43\ Ashley L., No. 00052 (TSR is ``still greatly needed, in its 
entirety''); Leef, No. 00085 (``Please improve--or at least maintain 
the status quo''); Wright, No. 00002 (``The Do Not Call registry is 
a valuable resource for consumers and should be continued''); West 
Italian, No. 00113 at 1 (``We need the TSR, and its enforcement, 
more than ever'').
    \44\ AARP, No. 00097, at 2.
    \45\ NCLC, No. 00110, at 1.
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    Comments from two other consumer advocates,\46\ an academic engaged 
in relevant behavioral research,\47\ and two state and Federal law 
enforcement agencies \48\ state while the TSR is still needed, it is 
also in need of improvements. In particular, consumers and their 
advocates argue for additional protections. These include heightened 
restrictions on the ``data pass'' of preacquired account information 
from an initial seller to a third party seller \49\ comparable to those 
of the Restore Online Shoppers' Confidence Act (``ROSCA'') for online 
transactions,\50\ extending the TSR's requirements to inbound 
calls,\51\ and requiring sellers and telemarketers to create and 
maintain their own records of the numbers dialed in telemarketing 
campaigns to facilitate enforcement by Federal and state agencies and 
private lawsuits by injured consumers.\52\
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    \46\ CRL, No. 00093, at 1; American Association for Justice, No. 
00102, at 1.
    \47\ Grossklags, No. 00114.
    \48\ NAAG, No. 00117, at 1-2; DOJ, No. 00111, at 1.
    \49\ Citizens Utility Board, Nos. 00036 and 00037.
    \50\ 15 U.S.C. 8401. ROSCA requires a third-party merchant that 
offers add-on products or services after a sale by the initial 
seller to obtain billing information directly from the consumer, 
rather than from the initial seller, so the purchaser will 
understand that there is or will be a charge for any add-on 
purchase. See also AARP, No. 00097, at 3.
    \51\ Citizens Utility Board, Nos. 00036 and 00037.
    \52\ West Italian, No. 00113 at 1; AARP, No. 00097, at 5.
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    More than half of the unique individual consumer comments make a 
case that more enforcement is needed. They include requests for 
enforcement against particular violators,\53\ reports about specific 
violations of the TSR,\54\ complaints about continuing unwanted 
calls,\55\ demands for more general enforcement of the TSR's Do Not 
Call provisions,\56\ appeals for more severe penalties to deter 
violations or a ban on all telemarketing,\57\ and concern that 
violators are calling with impunity due to inadequate enforcement.\58\ 
The 2,064 Illinois consumer comments request amendments that: (1) 
Require telemarketers to provide recordings of their calls, (2) ban 
third-party use of pre-acquired account information, and (3) request 
stronger consumer protection against inbound telemarketing calls placed 
in response to advertisements.\59\ AARP also notes the number of 
telemarketing complaints filed with the FTC and Federal Communications 
Commission (``FCC'') has risen

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significantly, and ``a rise in complaints means more need for 
enforcement.'' \60\
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    \53\ Moody, No. 00094; Smith, No. 00091; Austin, No. 00050; 
Pecoraro, No. 00126; Hall, No. 00012; Peterson, No. 00004; Macias, 
No. 00123; and Ramseur, No. 00118.
    \54\ Buchko, No. 00122; Harr, No. 00020; Branner, No. 00121; 
Alabi, No. 00006; Mercurio, No. 00127; Texas Child, No. 00018; 
Hines, 00124; Greenwood, No. 00125 Taylor, No. 00022; and Hays, No. 
00049.
    \55\ Swirsky, No. 00025; Duffield, No. 00021; and Harr, No. 
00020.
    \56\ Johannsen, No. 00078; Hardy, No. 00071; Boles, No. 00056; 
Olson, No. 00027; Taylor, No. 00022; Burton, No. 00005; Kavanaugh, 
No. 00041; Love, No. 00068; Bradshaw, No. 00065; Gallagher, No. 
00051; Waterbury, No. 00044; Dougherty, No. 00043; Schugardt, No. 
00031; McGlinchey, No. 00042; Lennon, No. 00028; Cockerill, No. 
00082; West Italian, No. 00113 at 2; Rynearson-Moody, 00029; and 
Whi, No. 00017.
    \57\ Thompson, No. 00010; Abrams, No. 00038; and Bethea, No. 
00016; and Keung, No. 00023.
    \58\ Miller, No. 00057; Marcus, No. 00026; Rothenbach, No. 
00024; Gindin, No. 00009; Luttrell, 00077; and Karsbaek, No. 00074.
    \59\ Citizens Utility Board, Nos. 00036 and 00037.
    \60\ AARP, No. 00097, at 5. See also NCLC at 11-12 (applauding 
FTC enforcement action targeting robocall facilitators).
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B. Industry Perspective

    Industry comments support the continuing need for the TSR and 
generally oppose any amendments. As one trade organization observes, 
``the FTC's enforcement actions under the Rule have provided industry 
with adequate and predictable notice as to what practices the agency 
views as acceptable and unacceptable.'' \61\ Another notes ``[i]n its 
current form, the TSR has functioned well and continues to serve its 
purpose of protecting the customers we serve as well as the operations 
of legitimate businesses.'' \62\ The Professional Association for 
Customer Engagement (``PACE'') states ``[t]he Rule has had an overall 
positive impact on consumers . . . and there is a continuing need for 
the majority of its protections.'' \63\
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    \61\ BAA, No. 00115, at 2.
    \62\ MPA, No. 00116, at 1.
    \63\ PACE, No. 00107, at 2; see also CASRO, No. 00105 
(``strongly believes there is a continuing need'' for the TSR and 
lauding it for preventing harm to consumers and the legitimate 
research industry).
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    PACE, however, also asserts that while it ``supports strong 
enforcement against companies that intentionally violate the Rule's DNC 
provisions,'' ``no additional substantive changes are necessary at this 
time.'' \64\ The Electronic Retailing Association (``ERA'') agrees ``no 
revisions to the TSR are warranted.'' \65\
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    \64\ PACE, No. 00107, at 2.
    \65\ ERA, 00095, at 2 (the TSR provides ``the FTC with the tools 
it needs to prosecute offensive telemarketing behavior''). See also 
BAA, 00115, at 2 (the TSR provides a ``robust and effective 
regulatory tool with which to investigate and prosecute offensive 
telemarketing activities'').
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    Most of the industry comments maintain ``the current framework of 
laws, regulations, and industry self-regulation adequately covers 
telemarketing.'' \66\ The Direct Marketing Association (``DMA'') 
stresses ``[a]ny changes to the Rule would have adverse impacts on the 
industry and consumers alike,'' \67\ and the Consumer Credit Industry 
Association (``CCIA'') states ``[d]ue to the multiple layers of 
[Federal and state] regulation and legislation, the industry is in a 
precarious position in attempting to comply.'' \68\ PACE similarly asks 
that the Commission ``consider the impact other laws and regulations 
have had on businesses before adopting any additional regulations of 
its own or expanding the reach of current regulations.'' \69\
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    \66\ DMA, No. 00103, at 2; see also, e.g, BAA, No. 00115, at 2; 
PACE, No. 00107, at 2; ERA, No. 00095, at 2 (likewise supporting the 
TSR but opposing any changes).
    \67\ DMA, No 00103 at 2.
    \68\ CCIA, No. 00098, at 4.
    \69\ PACE, No. 00107, at 2.
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    Several industry trade associations emphasize the voluntary 
compliance steps they have taken by establishing Self-Regulatory 
Organizations (``SROs'') to enhance consumer protection. DMA's 
Guidelines for Ethical Business Practice (``DMA Guidelines'') \70\ and 
the PACE SRO \71\ were created to ensure compliance not only with the 
TSR, but also all state telemarketing laws and regulations. DMA asserts 
its Guidelines include a ``robust accountability program'' that is 
``enforced by DMA's Ethics Committee that ``processes tens of thousands 
of complaints annually, and takes action against members and non-
members alike,'' including disclosure of ``cases where companies failed 
to conform their practices to industry requirements.'' \72\ The PACE-
SRO accredits contact centers that ``undergo an initial and recurring 
onside compliance assessment, and are subject to quarterly data audits 
of their outbound calling records, and those that do not comply fail to 
obtain accreditation or have their accreditation revoked.'' \73\
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    \70\ DMA, No. 00103, at 3-4.
    \71\ PACE, No. 00107, at 3-4 (discussing PACE-SRO, available at 
http://www.pacesroconnect.org) (last visited Jan. 31, 2022).
    \72\ DMA No. 00103, at 3-4; cf. ERA, No. 00095, at 6.
    \73\ PACE, No. 00107, at 3-4.
---------------------------------------------------------------------------

    Both DMA and PACE emphasize that their SRO programs require 
compliance not only with telemarketing regulations, but also with 
industry ``best practices,'' and that they can amend SRO requirements 
to address new technology and other issues more quickly than government 
can amend regulations.\74\ The associations ask the FTC to encourage 
and support their SRO efforts as a ``strong tool that can assist in 
preventing the need for increased regulations.'' \75\
---------------------------------------------------------------------------

    \74\ DMA, No. 00103, at 3; cf. PACE, No. 00107, at 3 (SROs 
``provide greater flexibility for constantly changing business 
environments and technologies'').
    \75\ ERA, No. 00095, at 7; cf. PACE, No. 00107, at 3 (arguing 
``effective SROs are a strong tool that can assist in preventing the 
need for increased regulations''); DMA, No. 00103, at 3 (``Self-
Regulation is the Appropriate Approach'').
---------------------------------------------------------------------------

    The public comments on the record from industry and consumer 
stakeholders, as well as the Commission's own law enforcement 
experience, persuade the Commission that the TSR continues to serve an 
important and useful public purpose. The Commission invites comment on 
the specific issues discussed below.

IV. Regulatory Review: Comments on Specific Issues

    Commenters also provided responses to the specific issues 
identified in the Regulatory Review. The majority of the comments 
focused on whether the Rule should: (1) Prohibit or regulate the use or 
retention of preacquired account information; (2) enhance protections 
for negative option and free offers, and apply them to inbound calls 
induced by general media advertising; and (3) require sellers and 
telemarketers to maintain records of the numbers they dial in their 
telemarketing campaigns.

A. Should the TSR Ban the Data Pass of Preacquired Account Information?

    The TSR prohibits the disclosure or receipt, for consideration, of 
unencrypted consumer account numbers for use in telemarketing, except 
to process a payment.\76\ It also prohibits telemarketers and sellers 
from causing a consumer to be charged, directly or indirectly, without 
the consumer's express informed consent (i.e. ``unauthorized billing'') 
for all transactions, including those using preacquired account 
information.\77\ It does not, however, generally bar the transfer or 
``data pass'' of preacquired consumer account information from one 
seller or telemarketer to a third party seller or telemarketer, unless 
doing so results in unauthorized billing.\78\ In 2010, Congress enacted 
ROSCA,\79\ requiring a post-transaction third-party seller to obtain a 
consumer's ``express informed consent'' to be charged,\80\ and 
prohibiting an ``initial merchant'' from disclosing the billing 
information of a consumer for use in an internet sale.\81\
---------------------------------------------------------------------------

    \76\ 16 CFR 310.4(a)(6).
    \77\ 16 CFR 310.4(a)(7). The Commission reiterates that Section 
310.4(a)(7) is not limited to transactions involving preacquired 
account information, but applies to all transactions. See 2003 TSR 
Amendments, 68 FR at 4620 (stating the unauthorized billing 
provision applies to all transactions and not just transactions 
involving preacquired account information).
    \78\ 16 CFR 310.4(a)(7); see also 2003 TSR Amendments, 68 FR at 
4620 (The Commission considered a general data pass ban on the use 
of preacquired account information but instead focused on the harm 
resulting from the use of preacquired account information and 
included a broader prohibition generally banning unauthorized 
billing under Part 310.4(a)(7).).
    \79\ 15 U.S.C. 8401.
    \80\ 15 U.S.C. 8402(a)(2).
    \81\ 15 U.S.C. 8402(b).
---------------------------------------------------------------------------

    The operating rules of three of the major credit card associations 
are consistent with ROSCA in prohibiting any ``disclosure, exchange, or 
use'' by and among their merchants of

[[Page 33666]]

preacquired account information for their branded credit, debit and 
prepaid cards, except to process payments.\82\ Thus, the card 
association rules now require each merchant to obtain a consumer's full 
account number directly from the consumer at the time of her first 
purchase from the merchant. In light of ROSCA's passage and the 
subsequent operating rule changes of the credit card industry, the 
Regulatory Review sought comment on whether the TSR should be amended 
to generally ban the data pass of preacquired account information.
---------------------------------------------------------------------------

    \82\ 79 FR at 46734-35 & n. 34; VISA, No. 00109, at 2.
---------------------------------------------------------------------------

    AARP's comment expresses the view ``allowing telemarketers to share 
information with third parties without consent creates a large loophole 
that will allow data collectors and lead generators to . . . harm 
consumers by signing them up for products and services they never 
intended to purchase or hassling them with unwanted telephone calls.'' 
\83\ The National Association of Attorneys General (``NAAG'') concurs, 
arguing the ``very nature of telemarketing makes the use of preacquired 
account information difficult to identify'' and consumers should have 
the same protection against unauthorized charges arising from the 
exchange of preacquired account information in telemarketing sales as 
ROSCA provides in internet sales, because the same consumer confusion 
that spurred ROSCA's passage exists in the telemarketing context.\84\ 
NCLC also supports a ban, and asserts data pass is not necessary to 
conduct legitimate business, arguing that such transfers meet the 
unfairness test the Commission employs to ban abusive telemarketing 
practices.\85\ VISA likewise urges the Commission to consider 
``[h]armonizing the TSR with ROSCA'' to ensure data pass in 
telemarketing is not just prevented by the credit card associations and 
cannot ``migrate to other forms of payment to the detriment of 
consumers.'' \86\
---------------------------------------------------------------------------

    \83\ AARP, No. 00097, at 3; see also Rusch, No. 00046; Beverly 
Anne, No. 00066; Tripp, No. 00063; and West Italian, No. 00113, at 
2.
    \84\ NAAG, No. 00117, at 4; AARP, No. 00097, at 3, 5.
    \85\ NCLC, No. 00110, at 4-5 (citing the harm from data pass 
that consumers cannot avoid and the lack of benefits to consumers or 
competition).
    \86\ VISA, No. 00109, at 4.
---------------------------------------------------------------------------

    Industry advocates do not recommend adding a data pass ban to the 
TSR. The Association of Magazine Media (``MPA'') asserts that in the 
wake of ROSCA and the credit card rules, ``usage of the data pass 
process has declined steadily,'' and suggests that ``concerns regarding 
deceptive or unfair transfers of preacquired account information are no 
longer necessary.'' \87\ DMA notes its Guidelines ``instruct DMA 
members not to transfer or exchange credit card numbers when a consumer 
has a reasonable expectation that the information will be kept 
confidential.'' \88\ Another possible explanation is that Federal laws 
bar financial institutions from disclosing account numbers to non-
affiliates for marketing purposes, including telemarketing.\89\
---------------------------------------------------------------------------

    \87\ MPA, No. 00116, at 2.
    \88\ DMA, No. 00103, at 6.
    \89\ ABIA, No. 00106, at 2; see also 15 U.S.C. 6802(d); 12 CFR 
1016; 15 CFR 313.12.
---------------------------------------------------------------------------

    DMA and PACE argue against the need for a data pass prohibition for 
a different reason; namely, the TSR already requires a business to 
obtain a consumer's ``express informed consent'' before it can charge 
her account for a purchase, even if it already has her billing 
information.\90\ Moreover, for payments not made by a debit or credit 
card, the TSR requires ``express verifiable authorization'' of the 
charge by a written authorization signed by the consumer, an audio 
recording of an oral authorization, or written confirmation of the 
transaction by mail.\91\ DMA and MPA also assert the evidence 
underpinning enactment of ROSCA cannot support a TSR data pass ban, 
because online sales are fundamentally different from telemarketing 
sales.\92\
---------------------------------------------------------------------------

    \90\ DMA, No. 00103, at 6; PACE, No. 00107, at 4; see 16 CFR 
310.4(a)(7). PACE also expresses concern that a data pass ban would 
prevent sellers from using third-party telemarketers, who must be 
able to transmit billing information back to the seller.
    \91\ 16 CFR 310.3(a)(3).
    \92\ DMA, No. 00103, at 5; MPA, No. 00116, at 2; but see NAAG 
No. 00117, at 5 (``the same consumer confusion which spurred ROSCA's 
passage also exists in the telemarketing arena'').
---------------------------------------------------------------------------

    At this time, it is unclear a TSR amendment restricting the data 
pass of preacquired account information is necessary to prevent 
unauthorized billing. The TSR currently prohibits data pass that causes 
unauthorized billing.\93\ It also requires sellers and telemarketers to 
obtain a consumer's ``express informed consent'' to be charged for a 
good, service, or charitable contribution for any form of payment \94\ 
and ``express verifiable authorization'' for payments other than credit 
or debit cards.\95\ Further, card association rules and other Federal 
laws, including the 2015 TSR payment method prohibitions,\96\ provide 
additional protections against unauthorized billing.
---------------------------------------------------------------------------

    \93\ 16 CFR 310.4(a)(7).
    \94\ Id.
    \95\ 16 CFR 310.3(a)(3).
    \96\ On December 14, 2015, one year after the regulatory review 
comment period closed, the Commission issued antifraud amendments to 
the TSR. 2015 TSR Amendments, 80 FR at 77520. The amendments 
prohibited the use of remotely created checks, remotely created 
payment orders, cash-to-cash money transfers and cash reload 
mechanisms in telemarketing. 16 CFR 310.4(a)(9) & (10). Each of the 
prohibited payment mechanisms had been widely used by fraudulent 
sellers and telemarketers and three commenters urged the Commission 
to adopt these amendments during the regulatory review comment 
period. AARP, No. 00097, at 3; NCLC, No. 00110, at 15; NAAG, No. 
00117, at 12-13. During its rulemaking, the Commission concluded 
that the TSR's ``express verifiable authorization'' requirement for 
payments other than credit or debit cards was not sufficient to 
prevent consumer harm because unscrupulous telemarketers that use 
these payment methods typically ignore the TSR's restrictions. 2015 
TSR Amendments, 80 FR at 77543. Given the pervasiveness of fraud 
resulting from these payment mechanisms and the minimal legitimate 
uses for them, the Commission decided to ban these payment 
mechanisms as a bright line rule that benefits competition and 
consumers. Id. at 77537.
---------------------------------------------------------------------------

    The Commission, however, does recognize it may be difficult to 
identify when preacquired account information has resulted in 
unauthorized billing in the context of telemarketing, in part because 
it is not always clear whether consumers have provided ``express 
informed consent'' or ``express verifiable authorization'' 
(collectively, ``consent'') for a particular transaction.\97\ To 
address this challenge, among others, the Commission is issuing an NPRM 
that would require telemarketers and sellers to retain complete records 
of consumer consent, including documentation on the purpose for which 
consent is sought, in the same manner and format that the request for 
consent is presented to consumers.\98\ The Commission believes the 
proposed recordkeeping requirements will help clarify the extent to 
which the use of preacquired account information may result in 
unauthorized billing, and whether additional protections against the 
data pass of preacquired account information are necessary. Thus, the 
Commission is seeking comment on these issues in the NPRM.
---------------------------------------------------------------------------

    \97\ See, e.g., NAAG, No. 00117, at 4-5. See also FTC v. 
Vacation Property Services, No. 8:110cv099585, 2012 WL 1854231, at 
*3 (M.D. Fla. May 21, 2012) (rejecting defendant's arguments that it 
had obtained consumers' express consent through a separate 
verification call); FTC v. Publishers Business Services, Inc., 821 
F. Supp. 2d 1205, 1224 (D. Nev. 2010) (same).
    \98\ See NPRM Section III.B.4.
---------------------------------------------------------------------------

B. Should the TSR Require Consumer Consent for the Retention of Account 
Information?

    When a consumer gives a seller or telemarketer her account 
information to pay for a purchase, that information will be covered by 
the TSR's definition of

[[Page 33667]]

``preacquired account information'' if the seller retains and uses the 
information for subsequent purchases in the same or a subsequent 
telemarketing call.\99\ The Regulatory Review asked whether sellers and 
telemarketers should be required to obtain consumer consent to retain 
preacquired account information to prevent unauthorized billing.
---------------------------------------------------------------------------

    \99\ 16 CFR 310.2(z).
---------------------------------------------------------------------------

    Consumer advocates acknowledge consumers would not be surprised 
that a seller to whom they have given their account information has 
retained it, since sellers may need it for purposes such as canceling 
the transaction and crediting the consumer's account.\100\ PACE and DMA 
also argue that from an industry perspective, sellers need to keep 
account information obtained directly from a consumer not only for 
cancellation purposes, but also to facilitate and expedite returns, 
exchanges, refunds, and order modifications.\101\
---------------------------------------------------------------------------

    \100\ NCLC, No. 00110, at 6.
    \101\ PACE, No. 00107, at 4; DMA, No. 00103, at 7. MPA notes 
that its members generally do not retain account information except 
in the case of automatic renewal transactions in which case the 
information is retained as ``a service of convenience.'' No. 00116 
at 2.
---------------------------------------------------------------------------

    NCLC urges the Commission to amend the TSR to add four safeguards 
to protect consumers if sellers retain their billing information.\102\ 
Specifically, NCLC requests the following protections in transactions 
involving preacquired account information: (1) Sellers should obtain a 
consumers' ``express verifiable consent'' to retain their billing 
information; (2) sellers should confirm the last four digits of the 
consumers' account number, and if the account has an expiration date, 
to confirm the expiration date; (3) sellers should allow consumers the 
right to revoke their consent to retain their account information at 
any time; and (4) sellers should allow consumers to use a different 
account than the one previously provided to complete a transaction.
---------------------------------------------------------------------------

    \102\ NCLC, No. 00110, at 7.
---------------------------------------------------------------------------

    Industry advocates argue against amending the TSR to add safeguards 
for transactions involving preacquired account information. They point 
out that the ``retention [of preacquired account information] is 
different from charging a consumer's account,'' \103\ and consumers 
have sufficient protection because the TSR already requires sellers to 
obtain a consumer's authorization to charge her account even if they 
have the information on file.\104\ DMA also emphasizes that sellers and 
telemarketers must obtain a consumer's ``express informed consent'' 
before charging an account, and must ``identify the account to be 
charged with `sufficient specificity for the customer or donor to 
understand what account will be charged.' '' \105\
---------------------------------------------------------------------------

    \103\ DMA, No. 00103, at 6.
    \104\ PACE, No. 00107, at 4.
    \105\ DMA, No. 00103, at 3 (quoting 16 CFR 310.4(a)(7)(ii)(A) 
(requiring, in any transaction involving preacquired account 
information, that sellers and telemarketers obtain a consumer's 
``express agreement'' to be charged using an account identified with 
sufficient specificity for the consumer to understand what account 
will be charged as evidence of her ``express informed consent'')).
---------------------------------------------------------------------------

    While NCLC's proposals may have merit, neither the Commission's law 
enforcement experience nor the regulatory review provide sufficient 
evidence to warrant further Commission action at this time.

C. Should the TSR provide additional protections for negative option 
offers, including Free-to-Pay Conversion transactions?

    For telemarketing transactions involving preacquired account 
information, such as negative option offers, the TSR requires sellers 
and telemarketers to: (1) Identify the account to be charged with 
sufficient specificity so that a consumer understands what account will 
be charged; and (2) confirm the consumer's ``express agreement'' to 
charge that account to complete the transaction. \106\ For transactions 
involving both preacquired account information and a ``free-to-pay 
conversion \107\ feature, such as free-trial offers, the TSR provides 
additional protections by requiring sellers and telemarketers to record 
the entire telemarketing call, obtain the last four digits of the 
account number to be used, and confirm the consumer's ``express 
agreement'' to charge that account to complete the transaction.\108\ 
For payment mechanisms other than credit or debit cards, the 
telemarketer or seller must also obtain ``express verifiable 
authorization,'' which for oral authorizations includes the number of 
times a consumer will be charged and the dates of those charges.\109\ 
The Regulatory Review sought comment on whether changes in the 
marketplace require additional protections for negative option offers, 
including ``free-to-pay conversion'' transactions.\110\
---------------------------------------------------------------------------

    \106\ 16 CFR 310.4(a)(7)(ii).
    \107\ 16 CFR 310.2(r) (defining ``free-to-pay conversion'' as an 
offer in which the consumer will receive a product or service for 
free for an initial period and will incur an obligation to pay for 
it if she does not take affirmative action to cancel before the end 
of that trial period).
    \108\ 16 CFR 310.4(a)(7)(i).
    \109\ 16 CFR 310.3(a)(3)(ii); see also 2015 TSR Amendments.
    \110\ 79 FR at 46735.
---------------------------------------------------------------------------

    Consumer advocates argue the existing protections are inadequate 
and offer a myriad of recommendations for enhanced protections. NAAG 
argues additional protections are necessary because all negative option 
offers generate ``confusion, misunderstanding, and outright deception'' 
because some consumers do not understand that sellers will interpret 
their silence and inaction as authorization to charge recurring 
payments.\111\ NAAG suggests an amendment to the TSR requiring a 
statement of the negative option terms in the initial telemarketing 
transaction that is separate from the other terms of the offer, and a 
separate audible acceptance of the negative option terms.\112\ NAAG 
also suggests the TSR should require telemarketers to send a 
``confirmation to the consumer, whether by mail or otherwise'' whenever 
a consumer is enrolled in a negative option feature.\113\ NCLC suggests 
that for all negative option offers using preacquired account 
information, the TSR should require sellers and telemarketers to obtain 
full account numbers directly from the consumer every time they charge 
the consumer so consumers will understand their account will be 
charged.\114\
---------------------------------------------------------------------------

    \111\ NAAG, No. 00117, at 3, 6.
    \112\ Id.
    \113\ Id.
    \114\ NCLC, No. 00110, at 7.
---------------------------------------------------------------------------

    For ``free-to-pay conversion'' offers in particular, NCLC urges the 
Commission to adopt an amendment barring sellers from obtaining account 
information until the end of the trial period, or at least an amendment 
requiring sellers to give consumers timely phone or email reminders 
about how to avoid a charge a few days before they will charge the 
consumer's account.\115\ AARP's comment concurs and proposes requiring 
sellers to send a reminder notice and obtain confirmation of a 
consumer's continued desire to complete the purchase not only for 
``free-to-pay conversion'' offers, but for all negative option 
offers.\116\
---------------------------------------------------------------------------

    \115\ Id. at 9-10. NCLC also advocates requiring that an 
automated toll-free telephone number be made available to accept 
cancellations without speaking to a representative 24 hours a day, 
and forbidding requirements for a written notice of cancellation, 
along with other conditions that make it unduly burdensome to 
cancel.
    \116\ AARP, No. 00097, at 4; cf. NAAG, No. 00117, at 11 (urging 
that the TSR require a telemarketer to send a confirmation to the 
consumer at the time of enrollment in a negative option that clearly 
and conspicuously sets forth the terms of the negative option plan).

---------------------------------------------------------------------------

[[Page 33668]]

    NAAG also advocates for stronger protections in the context of 
free-to-pay conversion offers. Specifically, NAAG suggests that the 
Commission extend Section 310.4(a)(7) to all such offers, even if no 
preacquired account information is used, to ensure telemarketers obtain 
a consumer's express informed consent before telemarketers are able to 
bill or send invoices to consumers after the ``free trial'' is 
over.\117\
---------------------------------------------------------------------------

    \117\ NAAG, No. 00117, at 11.
---------------------------------------------------------------------------

    Industry advocates object to all of these proposed changes. DMA 
emphasizes both card association rules and SRO Guidelines require a 
third-party seller with preacquired account information to obtain the 
full account number directly from the consumer for ``free-to-pay 
conversion'' offers.\118\
---------------------------------------------------------------------------

    \118\ DMA, No. 00103, at 4, 6.
---------------------------------------------------------------------------

    Industry also contends the TSR's current requirements appropriately 
balance consumer convenience and protection. For example, MPA argues 
free trials and automatic renewals benefit consumers, particularly in 
situations where consumers are repeat customers and already have an 
established business relationship with the seller. MPA and other 
industry representatives state that requiring consumers to repeat their 
full 16-digit card number for each additional negative option offer, 
such as an automatic magazine subscription renewal, would frustrate 
consumers and would negatively impact legitimate business.\119\
---------------------------------------------------------------------------

    \119\ MPA, No. 00116, at 3; see also DMA, No. 00103 at 6-7; 
ARDA, No. 00100, at 7. PACE, No. 00107, at 4.
---------------------------------------------------------------------------

    DMA concurs, emphasizing the TSR and its SRO Guidelines require 
sellers to disclose all material terms of the offer, ``identify the 
account [to be charged] with specificity,'' and ``obtain affirmative 
consent from the consumer to charge that account.'' \120\ DMA further 
argues requiring sellers to obtain full account information from 
existing customers simply increases the cost and time involved in the 
transaction, thus frustrating consumers without providing any 
additional protections.\121\ PACE adds the TSR's requirement that 
sellers and telemarketers obtain a consumer's authorization to charge 
her account gives the FTC ``ample authority to pursue entities charging 
accounts without proper authorization.\122\
---------------------------------------------------------------------------

    \120\ DMA, No. 00103, at 6-7.
    \121\ Id. at 3.
    \122\ PACE, No. 00107, at 4.
---------------------------------------------------------------------------

    As discussed above, the Commission is proposing to amend the TSR's 
recordkeeping provisions to explicitly require telemarketers and 
sellers to retain complete and accurate records of consumers' ``express 
informed consent'' to be charged for a particular transaction.\123\ In 
the event a transaction includes a negative option, including ``free-
to-pay'' or ``fee-to-pay'' conversion offers, a complete record of 
``express informed consent'' must include the purpose for which consent 
is requested, the account that will be charged, the date a consumer 
provided consent, and the consumer's consent to be charged using the 
identified account for the relevant good or service. The proposed 
recordkeeping requirements also require sellers and telemarketers to 
retain records that demonstrate they have comported with Section 
310.4(a)(7)'s requirements regarding the use of preacquired account 
information. The Commission believes the new recordkeeping requirements 
will provide additional protections to consumers by ensuring sellers 
and telemarketers obtain actual ``express informed consent'' from 
consumers to be charged for a transaction with a negative option 
feature.\124\ The Commission also believes these requirements will be 
more effective than requiring third-party telemarketers to obtain the 
full account information from consumers as an indication of consent 
because consumers providing full account information may not understand 
that they are being sold a transaction with a negative option feature.
---------------------------------------------------------------------------

    \123\ See supra VI.A.
    \124\ See NPRM Section III.B.4. NAAG also reports that 
telemarketers are circumventing the heightened ``express informed 
consent'' requirements for ``free-to-pay'' conversion offers by 
charging a ``nominal upfront fee.'' No. 00117, at 5. (``By offering 
their products and services for an initial term at a nominal upfront 
price . . . telemarketers relying on preacquired account information 
circumvent the TSR's requirement of obtaining the last four (4) 
digits of the consumer's account number and the equally important 
requirement of maintaining an audio recording of the entire 
transaction.''). The proposed recordkeeping requirements that 
clarify the records necessary to prove that a consumer has consented 
to a transaction should eliminate any incentive to circumvent the 
express informed consent requirement.
---------------------------------------------------------------------------

    The Commission is also interested in exploring the commenters' 
suggestions that sellers or telemarketers provide consumers notice and 
the opportunity to cancel negative option transactions whenever they 
are billed.\125\ Requiring sellers or telemarketers to provide 
consumers with reminders of negative option programs and simple 
cancelation mechanisms may be an effective way of reducing consumer 
harm without overburdening industry. However, the Commission is aware 
of potential logistical hurdles to providing notification and 
cancelation with telemarketing transactions. For example, do 
telemarketers typically obtain consumers' email addresses, and if so, 
would email be an effective method to send a notification? Should 
telemarketers provide cancelation mechanisms by phone or would online 
mechanisms be more convenient for consumers? As outlined below in 
Section V, the Commission is seeking comment on whether the TSR should 
require negative-option sellers to provide simple notice and 
cancelation mechanisms, and how these mechanisms should be provided.
---------------------------------------------------------------------------

    \125\ AARP suggests that companies ``send a reminder to the 
consumer and receive confirmation the consumer still wants to 
purchase the service or product.'' AARP, No. 00097, at 4. cf. NAAG, 
No. 00117, at 11 (urging that the TSR require a telemarketer to send 
a confirmation to the consumer at the time of enrollment in a 
negative option that clearly and conspicuously sets forth the terms 
of the negative option plan).
---------------------------------------------------------------------------

    Beyond the changes the Commission is proposing to the recordkeeping 
provisions, and the Commission's request for information about notice 
and cancelation mechanisms, the Commission does not agree with the 
additional rule proposals made by commenters. Commenters proposed the 
rule: (1) Require sellers and telemarketers to obtain a full account 
number from consumers every time they are charged; or (2) defer payment 
authorization until the end of the trial period. The Commission does 
not believe these proposals would provide protections against deceptive 
negative option offers that outweigh the likely increased consumer 
frustration due to longer, complicated transactions and additional 
burdens on industry. And with respect to NAAG's suggestion that Section 
310.4(a)(7) should be extended to all free-to-pay conversion 
transactions regardless of whether preacquired account information is 
involved, the Commission does not believe such an amendment is 
necessary. Section 310.4(a)(7) already requires telemarketers or 
sellers to obtain a consumer's express informed consent to be charged 
for the good, service, or charitable contribution in all telemarketing 
transactions, including those that do not involve the use of 
preacquired account information. The Commission nonetheless reiterates 
that Section 310.4(a)(7)'s requirement of obtaining a consumer's 
express informed consent before billing a consumer applies to all 
telemarketing transactions, including those in which the consumer is 
billed for a good or service at a later date after the ``free trial'' 
is over.

[[Page 33669]]

D. Is there a need to apply outbound call protections to inbound calls?

    The TSR generally exempts inbound calls responding to media 
advertising, with some specific exceptions.\126\ The Regulatory Review 
asked if there is a need to amend the exemption in view of the 
proliferation of infomercials in the marketplace, including for 
negative option offers.
---------------------------------------------------------------------------

    \126\ 16 CFR 310.6(b)(5).
---------------------------------------------------------------------------

    Consumers and their advocates regard the general media exemption as 
a ``loophole'' in the TSR, advocating that the TSR should apply to all 
telemarketing calls regardless of which party initiated the call.\127\ 
NAAG cites the Commission's 2013 Consumer Fraud Survey as support 
because it reports that more than half of frauds are marketed through 
means other than telemarketing.\128\ Consumer advocates specifically 
suggest the TSR should apply equally to inbound and outbound 
telemarketing for negative option offers. NCLC asserts the TSR 
requirements for the use of preacquired account information in negative 
option offers should apply to all inbound calls responding to general 
media and direct mail ads because ``the potential risks are the same'' 
as offers in outbound telemarketing.\129\ NAAG agrees, and advocates an 
amendment to extend the TSR's outbound call material terms disclosure 
requirements for negative option offers, as well as the ban on 
misrepresenting any aspect of such offers, to all inbound calls induced 
by direct mail or general media ads.\130\
---------------------------------------------------------------------------

    \127\ Kapecki, No. 00084; Rosenow, No. 00067; Beverly Anne, No. 
00066; Tripp, No. 00063; and Steel, No. 00070.
    \128\ NAAG, No. 00117, at 8 (stating that the 2013 survey 
reported 59.3% of fraud incidents were the result of fraudulent 
offers through general media advertising).
    \129\ NCLC, No. 00110, at 7.
    \130\ NAAG, No. 00117, at 10.
---------------------------------------------------------------------------

    Industry advocates uniformly oppose adding any limitations to 
either the general media or direct mail exemptions. PACE and ERA agree 
all material terms and conditions of negative option offers should be 
disclosed prior to any sale, but argue against amending the TSR to 
require the disclosures be made during an inbound call.\131\ DMA 
explains that required oral disclosures during inbound calls would be 
duplicative in many cases of disclosures in the marketing materials 
that induced the call.\132\ BAA adds that unlike answering outbound 
telemarketing calls, consumers placing inbound calls have the ``luxury, 
time and discretion to decide whether to respond'' to general media or 
direct mail ads, and can obtain ``the information they need to make an 
informed purchasing decision'' in advance of or during the call.\133\
---------------------------------------------------------------------------

    \131\ PACE, No. 00107, at 6; ERA, No. 00095, at 3.
    \132\ DMA, No. 00103, at 7.
    \133\ BAA, No. 00115, at 3.
---------------------------------------------------------------------------

    MPA argues applying the TSR's disclosure requirements to inbound 
telemarketing for newspaper subscriptions, particularly for existing 
customers, would add time and expense for industry to comply without 
providing additional consumer protections when the general media 
advertisement includes all material terms of the offer.\134\ ERA 
similarly argues against a disclosure requirement without evidence of 
widespread abuse.\135\ ERA joins PACE in contending the Commission can 
always rely on its authority under Section 5 of the FTC Act to bring 
cases against sellers that fail to disclose material terms in their 
advertising or during an inbound call.\136\
---------------------------------------------------------------------------

    \134\ MPA, No. 00116, at 4.
    \135\ ERA, No. 00095, at 3. ERA disputes NAAG's contention that 
the FTC's Third Consumer Fraud Survey provides evidence of pervasive 
fraud in general media advertising. Compare ERA, No. 00095, at 5 
with NAAG, No. 00117, at 8.
    \136\ ERA, No. 00095, at 5. ERA and PACE made these comments 
before the Supreme Court held that Section 13(b) of the FTC Act does 
not authorize courts to award equitable monetary relief. See AMG 
Capital Management, LLC v. FTC, 141 S.Ct. 1341 (2021).
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    The general media and direct mail exemptions for inbound calls 
contain additional limitations that narrow the scope of the exemptions. 
For example, negative option sales in inbound telemarketing that are 
upsells after an initial purchase are expressly excluded from both the 
general media and direct mail exemptions.\137\ The TSR's outbound call 
provisions therefore are equally applicable to inbound call upsells.
---------------------------------------------------------------------------

    \137\ 16 CFR 310.6(b)(5)(iii) and (b)(6)(iii).
---------------------------------------------------------------------------

    Whether and to what extent there may be a problem with inbound 
telemarketing calls offering a negative option is unclear from the 
regulatory review record. It therefore is difficult to determine at 
this time whether there is a need for an amendment that would apply the 
negative option disclosure requirements and prohibitions or other 
protections to such calls. The Commission is mindful, however, of the 
rising trend of certain types of goods or services that are marketed 
through general media or direct mail and induce inbound telemarketing 
sales that often include a negative option feature. In particular, the 
Commission's law enforcement experience indicates that scams offering 
computer technical support services (or ``tech support'') have been a 
rising trend that particularly impacts older adults and are marketed 
through inbound telemarketing.\138\ Many of these tech support services 
also include negative options. As a result, as outlined below in 
Section V, the Commission is seeking comment on whether the TSR should 
apply to inbound telemarketing of tech support services.\139\ The 
Commission also seeks comment in Section V.E on the number of sellers 
or telemarketers who deceptively sell products or services with 
negative options, other than tech support services, solely through 
inbound telemarketing.
---------------------------------------------------------------------------

    \138\ See FTC Data Spotlight, Older Adults Hardest Hit by Tech 
Support Scams (``FTC Data Spotlight'') (Mar. 7, 2019) (tech support 
scams particularly impact older adults), available at https://www.ftc.gov/news-events/blogs/data-spotlight/2019/03/older-adults-hardest-hit-tech-support-scams (last visited Jan. 31, 2022); FTC 
Report to Congress, Protecting Older Consumers, 2019-2020 (``2020 
Protecting Older Consumers Report'') at 6 (Oct. 18, 2020), available 
at https://www.ftc.gov/system/files/documents/reports/protecting-older-consumers-2019-2020-report-federal-trade-commission/p144400_protecting_older_adults_report_2020.pdf (last visited Jan. 
31, 2022).
    \139\ See infra Section V.A.
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E. Should the rule continue to exempt business-to-business 
telemarketing?

    Currently the TSR exempts telemarketing calls to ``any business to 
induce the purchase of goods or services or a charitable contribution 
by the business,'' (i.e., ``business-to-business exemption'' or ``B2B 
exemption'').\140\ The Commission sought comment on how sales to a 
``home-based business should be treated'' under the Rule.\141\ One 
comment suggests ``home business[es] should be treated more like [ ] 
consumer[s] . . . out of deference to the overall home environment. . . 
. The same phone often handles both personal and business calls in a 
home business or in a home occupied by an independent consultant or 
freelancer.'' \142\
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    \140\ 16 CFR 310.6(b)(7). This exemption, however, does not 
apply to the telemarketing of nondurable office or cleaning 
supplies. Id.
    \141\ 79 FR at 46738.
    \142\ West Italian, No. 00113, at 3.
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    PACE, however, argues the current exemption ``properly strikes a 
balance between consumer protection and overregulation and should be 
left intact.'' \143\ PACE also asserts allowing the exemption to 
continue ``represents sound public policy and equitableness because it 
is impossible for callers to know whether the phone provider classifies 
the number as a residential or business number.'' \144\
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    \143\ PACE, No. 00107, at 6.
    \144\ Id.
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    Although the Commission did not receive many comments on this

[[Page 33670]]

question, the Commission's law enforcement experience with deceptive 
business-to-business telemarketing along with changing market forces 
influencing where consumers perform their jobs and the nature of those 
jobs raise the question whether the TSR should continue to exempt such 
calls. Thus, for the reasons outlined below in Section V, the 
Commission is seeking additional comment on whether the TSR should 
continue to exempt business-to-business telemarketing.\145\
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    \145\ See infra Section V.B.
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F. Other Commenter Proposals

    A number of comments have recommended a variety of other amendments 
to the TSR. These comments fall into the following categories: (1) 
Revision of prior determinations or interpretations the Commission is 
not inclined to reconsider; \146\ (2) amendments the Commission does 
not believe are necessary; \147\ (3) amendments outside of the agency's 
jurisdiction; \148\ and (4) amendments that lack data to support the 
suggested change.\149\ As such, the Commission is not inclined to 
further consider or implement these requested amendments.
---------------------------------------------------------------------------

    \146\ Infocision, No. 00108, at 2 (amendment to exempt for-
profit telemarketers who offer goods or services on behalf of non-
profits (i.e., ticket sales on behalf of a ballet company)); NAA, 
No. 00099, at 1-6 (amendment of the ``established business 
relationship'' exception to allow live calls to introduce digital 
offerings to former newspaper subscribers with numbers on the Do Not 
Call Registry); ARDA, No. 00100, at 2-4 (e.g., amendments to the 
prohibition to send robocalls and relaxing the restrictions on 
abandoned calls to existing customers); NCLC, No. 00110, at 14 
(amendment to change the assisting and facilitating knowledge 
standard from ``knows or consciously avoids knowing'' to ``knows or 
has reason to know''); NobelBiz, No. 00104, at 5 (amendment stating 
that the transmission of an erroneous name or failure to transmit a 
name pursuant to the TSR's caller ID provision is not a violation 
unless there was intent to deceive the call recipient).
    \147\ NAA, No. 00099, at 7-8 (amendment to require monthly 
purging of disconnected and reassigned numbers on the Registry which 
is unnecessary since the agency already performs such purging--see 
FTC, Do-Not-Call Improvement Act of 2007, Report To Congress: 
Regarding the Accuracy of the Do Not Call Registry (Oct. 2008), 
available at https://www.ftc.gov/sites/default/files/documents/reports/do-not-call-improvement-act-2007-report-congress-regarding-accuracy-do-not-call-registry/p034305dncreport.pdf); Air Rehab. 
Corp., No. 00047 (amendment to exempt calls to arrange face-to-face 
sales meetings which are already exempt under Section 310.6(b)(3)); 
Whi, No. 00017 (amendment to permit private lawsuits, which are 
already permitted under the Telemarketing Act, 15 U.S.C. 6104, and 
the Telephone Consumer Protection Act, 47 U.S.C. 227(b)(3)).
    \148\ See, e.g., ARDA, No. 00100, at 2, 4-6 (amendments relating 
to issues under the FCC's jurisdiction, including autodialers, cell 
phones, and SMS texts).
    \149\ See, e.g., CRL, No. 00093 at 4, 10 (acknowledging lack of 
data); NCLC, No. 001100, at 18-19.
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V. Request for Comments

    In determining the advisability of exempting certain calls from 
complying with the TSR the Commission considers the following factors: 
(1) Did Congress intend the TSR to cover such calls; (2) is the conduct 
or business in question regulated extensively by Federal or state law; 
(3) in the Commission's law enforcement experience, does the conduct or 
business lend itself to the type of deceptive acts and practices that 
the TSR is intended to address; and (4) would it be unduly burdensome 
to require businesses to comply with the TSR compared to the likelihood 
that sellers or telemarketers engaged in fraud will use the existing 
exemption to circumvent the TSR's coverage.\150\
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    \150\ Original TSR, 60 FR at 43859.
---------------------------------------------------------------------------

    To assist the Commission in evaluating these factors, the 
Commission seeks comments on whether the TSR should: (1) Apply to 
inbound telemarketing of tech support services; (2) apply to 
telemarketing to businesses; and (3) require telemarketers to provide 
consumers with notice that they are about to be billed for a negative 
option product or service and provide consumers with a simple 
cancellation mechanism. The Commission also seeks comments on the 
benefits and estimated burdens these potential rule changes would 
impose on sellers and telemarketers. In their replies, commenters 
should provide any available evidence and data that supports their 
position, such as empirical data on the harm to consumers caused by 
deceptive inbound telemarketing of tech support services, deceptive 
telemarketing to businesses, or the failure to provide consumers with 
notice and simple cancellation mechanism in negative option 
telemarketing. Commenters should also provide any empirical data on the 
costs to sellers or telemarketers that would be caused by applying the 
TSR's requirements on inbound telemarketing of tech support services, 
telemarketing to businesses, or requiring notification and a simple 
cancellation mechanism for negative option products or services. The 
questions are designed to assist the public and should not be construed 
as a limitation on the issues about which a public comment may be 
submitted.

A. Inbound Telemarketing of Computer Technology Support Services

    Consumer complaints about tech support scams have increased 
dramatically over the last few years, ranging from approximately 40,000 
complaints in 2017 to approximately 100,000 complaints in 2020.\151\ In 
2018, consumers reported losing more than $55 million to these scams, 
with an average individual loss of approximately $400, and an average 
individual loss for consumers over the age of 60 of approximately 
$500.\152\ Indeed, tech support scams disproportionately harm older 
consumers, with consumers age 60 and over being six times more likely 
to report a financial loss to tech support scams compared to younger 
consumers.\153\ From 2015 to 2018, older adults filed more reports on 
tech support scams than on any other fraud category.\154\
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    \151\ See FTC Consumer Sentinel Network Databook 2020, at 86, 
(Feb. 2021), available at https://www.ftc.gov/system/files/documents/reports/consumer-sentinel-network-data-book-2020/csn_annual_data_book_2020.pdf (last visited Jan. 31, 2022); FTC 
Consumer Sentinel Network Databook 2017, at 93, (list visited Jan. 
31, 2022), available at https://www.ftc.gov/system/files/documents/reports/consumer-sentinel-network-data-book-2017/consumer_sentinel_data_book_2017.pdf (last visited Jan. 31, 2022).
    \152\ See, FTC Data Spotlight, available at https://www.ftc.gov/news-events/blogs/data-spotlight/2019/03/older-adults-hardest-hit-tech-support-scams (last visited Jan. 31, 2022).
    \153\ See 2020 Protecting Older Consumers Report, at 6, 
available at https://www.ftc.gov/system/files/documents/reports/protecting-older-consumers-2019-2020-report-federal-trade-commission/p144400_protecting_older_adults_report_2020.pdf (last 
visited Jan. 31, 2022).
    \154\ FTC Data Spotlight, available at https://www.ftc.gov/news-events/blogs/data-spotlight/2019/03/older-adults-hardest-hit-tech-support-scams (last visited Jan. 31, 2022); see also FTC Report to 
Congress, Protecting Older Consumers, 2018-2019, at 5 (Oct. 18, 
2019), available at https://www.ftc.gov/reports/protecting-older-consumers-2018-2019-report-federal-trade-commission (last visited 
Jan. 31, 2022). In 2019, reports of online shopping frauds became 
the top fraud complaint for older consumers, with tech support scams 
dropping to second place. 2020 Protecting Older Consumers Report, at 
7, available at https://www.ftc.gov/system/files/documents/reports/protecting-older-consumers-2019-2020-report-federal-trade-commission/p144400_protecting_older_adults_report_2020.pdf (last 
visited Jan. 31, 2022). Older consumers, however, are less likely to 
report losing money to online shopping frauds, compared to younger 
consumers. Id.
---------------------------------------------------------------------------

    The scam typically begins with an outbound telemarketing call, a 
pop-up message on a consumer's computer, or an advertisement that 
induces inbound telemarketing calls.\155\ The scammers typically 
pretend to represent well-known companies such as Microsoft, McAfee, or 
Symantec, and in their outbound calls, they inform consumers

[[Page 33671]]

that they have detected an issue on their computers.\156\ 
Alternatively, scammers use deceptive computer pop-up messages that 
tell consumers to run a scan resulting in numerous ``error'' 
messages.\157\ Or, they place search engine advertisements displayed 
when a consumer searches online for either the phone number of her 
computer company or for information about an issue she is having with 
her computer.\158\ The pop-up messages and search engine advertisements 
typically direct consumers to call a phone number to fix the purported 
problems. Once consumers connect with telemarketers, whether through 
outbound telemarketing or inbound, the telemarketers convince consumers 
there are a variety of problems with their computers and persuade 
consumers to purchase subscription tech support services \159\ or 
software they do not need.\160\
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    \155\ See, e.g., Prepared Statement of the Federal Trade 
Commission Before the United States Senate Special Committee on 
Aging on Combatting Technical Support Scams (``Tech Support 
Testimony''), at 3-5 (Oct. 21, 2015), available at https://www.ftc.gov/system/files/documents/public_statements/826561/151021techsupporttestimony.pdf (last visited Jan. 31, 2022).
    \156\ Id.
    \157\ See, e.g., Tech Support Testimony, at 3-5, available at 
https://www.ftc.gov/system/files/documents/public_statements/826561/151021techsupport03JNtestimony.pdf (last visited Jan. 31, 2022).
    \158\ See, e.g., FTC v. Click4Support, LLC, et. al., No. 15-cv-
05777-SD, at 9-10 (E.D. Pa. Oct. 26, 2015), available at https://www.ftc.gov/system/files/documents/cases/151113click4supportcmpt.pdf 
(last visited Jan. 31, 2022).
    \159\ See, e.g., FTC v. Vylah Tec LLC, et. al., No. 17-cv-228-
FtM-99MRM (M.D. Fa. May 17, 2017), available at https://www.ftc.gov/system/files/documents/cases/162_3253_vylah_tec_llc_complant.pdf 
(last visited Jan. 31, 2022).
    \160\ Id.
---------------------------------------------------------------------------

    The Commission has brought a multitude of cases against sellers and 
telemarketers perpetrating tech support frauds on consumers.\161\ In 
many of those cases, telemarketers have induced inbound telemarketing 
by placing advertisements via search engine ads, thus falling outside 
of the TSR's purview unless the telemarketer also upsells the consumer 
on a good or service.\162\ Given this rising threat and the harm it 
causes to consumers, particularly those aged 60 and older, the 
Commission believes the time is ripe to consider repealing the TSR 
exemption for inbound telemarketing of tech support services.
---------------------------------------------------------------------------

    \161\ See, e.g., FTC v. RevenueWire, Inc., No. 1:20-cv-1032 
(D.D.C. April 21, 2020) (the companies to which RevenueWire provided 
payment processing services used pop-up dialog boxes that claimed to 
have detected computer infections and directed consumers to call a 
1-800 number) available at https://www.ftc.gov/system/files/documents/cases/revcomp3.pdf (last visited Jan. 31, 2022); FTC v. 
Boost Software, Inc., No. 14-cv-81397 (S.D. Fla. Nov. 10, 2014) 
(same as RevenueWire) available at https://www.ftc.gov/system/files/documents/cases/141119vastboostcmpt.pdf (last visited Jan. 31, 
2022); FTC v. PCCare247, Inc., 12-cv-7189 (S.D.N.Y. Oct. 3, 2012) 
(PCCare used paid advertisements that made it appear PCCare was 
affiliated with established computer companies in order to trick 
consumers to call PCCare's telemarketers) available at https://www.ftc.gov/sites/default/files/documents/cases/2012/10/121003pccarecmpt.pdf (last visited Jan. 31, 2022). See also, Press 
Release, FTC and Federal, State and International Partners Announce 
Major Crackdown on Tech Support Scams (May 12, 2017) (announcing 16 
new cases as part of tech support sweep) available at https://www.ftc.gov/news-events/press-releases/2017/05/ftc-federal-state-international-partners-announce-major-crackdown (last visited Jan. 
31, 2022) and ``Operation Tech Trap Law Enforcement Actions'' (May 
2017) (listing cases brought as part of tech support sweep) 
available at https://www.ftc.gov/system/files/attachments/press-releases/ftc-federal-state-international-partners-announce-major-crackdown-tech-support-scams/operation_tech_trap_chart_of_actions.pdf (last visited Jan. 31, 
2022).
    \162\ The TSR generally exempts inbound telemarketing calls 
induced by general media advertisements. 16 CFR 310.6(b)(5) and (6). 
As noted in Section IV.D, supra, the TSR's coverage extends to all 
upsells, including those in inbound telemarketing. 16 CFR 
310.6(b)(5)(iii) & (b)(6)(iii).
---------------------------------------------------------------------------

    In considering this proposal, in addition to the questions listed 
below, the Commission seeks comment on whether: (1) It should add tech 
support services to the list of goods or services for which the inbound 
telemarketing exemptions do not apply; \163\ (2) it should repeal the 
exemption only for general media advertisements (e.g., search engine 
ads) that induce inbound telemarketing of tech support services but 
retain the exemption for direct mail solicitation under Section 
310.6(b)(6); or (3) it should repeal the exemption in its entirety but 
carve out an exemption for sellers who manufacture the computer at 
issue, and with whom the consumer has an existing business relationship 
(i.e., if a consumer purchased a computer from Microsoft, the TSR would 
not apply to any inbound telemarketing calls induced by or on behalf of 
Microsoft to that consumer). The Commission also seeks comment on 
whether tech support service scams impact other devices such as mobile 
phones or tablets.
---------------------------------------------------------------------------

    \163\ See 16 CFR 310.6(b)(5) and (6).
---------------------------------------------------------------------------

B. Questions for Inbound Telemarketing of Tech Support Services

    1. Should the TSR apply to inbound telemarketing of tech support 
services? If not, why not? If yes, why? What harm is caused by such 
calls? What benefits do such calls confer? What existing Federal or 
state laws apply to such calls, and are the existing laws sufficient or 
insufficient to address the identified harm?
    2. What kind of tech support services do sellers offer to 
consumers? What kinds of products do the tech support services cover? 
What is the nature of the services offered? Do the services require 
consumers to sign up for a subscription plan? How many services require 
a subscription plan?
    3. How many sellers or telemarketers sell tech support services 
through inbound telemarketing without using unfair or deceptive acts or 
practices? How many sellers offer those services only through inbound 
telemarketing and do not employ any outbound telemarketing? How do 
consumers learn about these sellers? Do they advertise through general 
media advertisements or direct mail solicitations? What kind of 
advertisements? How would requiring such sellers to comply with the TSR 
affect their business? How would it affect consumers?
    4. How many inbound telemarketing calls for tech support services 
do sellers or telemarketers receive on average per year, per month, or 
per day? How many of those calls or what percentage of those calls 
result in a sale?
    5. Do sellers or telemarketers that sell tech support services 
through inbound telemarketing sell those services to consumers, 
businesses, or both? If sellers or telemarketers are engaged in inbound 
telemarketing of tech support services to consumers, how many such 
calls do sellers or telemarketers receive on average per year, per 
month, or per day? How many of those calls or what percentage of those 
calls result in a sale? If sellers or telemarketers are engaged in 
inbound telemarketing of tech support services to businesses, how many 
such calls do sellers or telemarketers receive on average per year, per 
month, or per day? How many of those calls or what percentage of those 
calls result in a sale?
    6. How many inbound tech support telemarketing calls were induced 
by general media advertising such as search engine advertisements? How 
many of those calls or what percentage of calls induced by general 
media resulted in a sale?
    7. How many inbound tech support telemarketing calls were induced 
by a direct mail solicitation? How many of those calls or what 
percentage of calls induced by direct mail solicitations resulted in a 
sale?
    8. Do entities that manufacture and sell computers engage in 
inbound telemarketing of tech support services to businesses or 
consumers? If so, do such entities use unfair or deceptive acts or 
practices to sell their tech support services? If such entities engage 
in inbound telemarketing of tech support services to consumers, how 
many calls do such entities receive from consumers on average per year, 
per month, or per day? How many calls result in a sale? If such 
entities engage in inbound telemarketing of tech support services to 
businesses, how many calls do such entities receive from businesses on

[[Page 33672]]

average per year, per month, or per day? How many calls result in a 
sale?
    9. Should the TSR apply to inbound telemarketing of tech support 
services induced by advertisements through any medium? If yes, why, and 
what is the harm caused by such solicitations? If not, why not, and 
should the TSR apply to inbound telemarketing of tech support services 
induced by particular types of advertisements?
    10. Should the TSR apply to inbound telemarketing of tech support 
services induced by direct mail solicitation? If yes, why and what harm 
is caused by such solicitations? If not, why not?
    11. Should the TSR continue to exempt inbound telemarketing of tech 
support services but apply the TSR's provisions regarding the use of 
prerecorded messages, including those that use soundboard technology? 
If yes, why and what is the harm caused by the use of prerecorded 
messages in inbound telemarketing of tech support services? If not, why 
not?
    12. If the Commission repeals the exemptions for inbound 
telemarketing of tech support services, should it create a carve out? 
What kind of carve out and why? Should the Commission carve out an 
exemption for entities who manufacture the computer at issue and have 
an existing business relationship with the consumer? Why or why not?
    13. How should the Commission define ``tech support services''? 
Should the definition apply to any type of technology assistance, 
including for any device (e.g., mobile phones and tablets)? If not, why 
not? If yes, why and what is the harm caused in connection with those 
technology assistance services? Have there been instances of fraud 
occurring in connection with those technology assistance services? How 
pervasive is this type of fraud?
    14. If the Commission considers employing a broad definition of 
tech support so that it either encompasses multiple types of services, 
or any form of technology assistance, should the Commission consider 
carve outs for a particular type of technology assistance? If yes, what 
carve out should the Commission consider and why?
    15. If the Commission repeals the exemptions for inbound 
telemarketing of tech support services, what burden would be imposed on 
industry? How do you quantify that burden? How can the Commission 
repeal the exemption for inbound telemarketing of tech support services 
but lessen that burden on industry?

B. Business-to-Business Telemarketing Calls

1. Regulatory History of Business-to-Business Telemarketing Exemption
    The Commission has considered whether to narrow or clarify the 
business-to-business (``B2B'') exemption on several occasions since its 
promulgation in 1995.\164\ First, in 2003 the Commission considered 
whether to include a carve out from the exemption for the sale of 
internet or web services \165\ to prevent small businesses from being 
defrauded as they navigated the then-new world of internet advertising. 
The Commission defined internet or web services as services that enable 
businesses to access the internet or the world wide web.\166\ The 
Commission noted that reports of frauds from small businesses about 
telemarketers promoting services that could help them increase their 
internet presence had risen dramatically with the rapid adoption of 
internet use from 1997 to 2002.\167\
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    \164\ See Original TSR, 60 FR at 43861.
    \165\ 2003 TSR Amendments, 68 FR at 4662. The Commission also 
considered whether to carve out solicitations for charitable 
contributions from the TSR's B2B exemption. On balance, the 
Commission decided to rely on its Section 5 authority to address 
fraudulent fundraising rather than impose additional regulatory 
burdens on legitimate non-profit organizations that already operate 
on very narrow margins. Id. at 4663.
    \166\ The Commission proposed two definitions in its proposed 
rulemaking--internet Services and Web Services. 2002 Notice of 
Proposed Rulemaking, 67 FR at 4500. Internet Services meant any 
service that allowed a business to access the internet, including 
internet service providers, providers of software and telephone or 
cable connections, as well as services that provide access to email, 
file transfers, websites, and newsgroups. Id. Web services was 
defined as ``designing, building, creating, publishing, maintaining, 
providing, or hosting a website on the internet.'' Id. The 
Commission intended for the term internet services to encompass any 
and all services related to accessing the internet and the term web 
services to encompass any and all services related to the world wide 
web. Id.
    \167\ Id. at 4531; see also Press Release, FTC Cracks Down on 
Small Business Scams (June 17, 1999) (announcing sweep of cases 
against fraudulent telemarketers who scammed small businesses by 
offering a negative option website design and hosting service to 
help small businesses create an internet presence), available at 
https://www.ftc.gov/news-events/press-releases/1999/06/ftc-cracks-down-small-business-scams (last visited Jan. 31, 2022).
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    Consumer advocates and law enforcement agencies argued the TSR 
should not exempt telemarketing of internet or web services to 
businesses based on extensive law enforcement efforts to combat the 
proliferation of fraudulent telemarketing of those services.\168\ 
Industry proponents argued the record did not support applying the TSR 
to those services in such a sweeping fashion and overregulation would 
result in harming small businesses because ``it would increase their 
costs and hamper their use of Web-based advertising such as online 
Yellow Pages.'' \169\ The Commission decided imposing regulations 
without further evidence that its law enforcement tools were 
insufficient might negatively impact small businesses by increasing 
their cost and impeding their use of internet advertising.\170\ The 
Commission stated it needed to ``move cautiously so as not to chill 
innovation in the development of cost-efficient methods for small 
businesses to join in the internet marketing revolution.'' \171\
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    \168\ 2003 TSR Amendments, 68 FR at 4662.
    \169\ Id. at 4663.
    \170\ Id.
    \171\ Id.
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    The Commission revisited the B2B exemption in 2013 when it issued a 
Notice of Proposed Rulemaking (``2013 NPRM'') seeking comment on 
whether to amend the exemption to explicitly limit it to telemarketing 
calls selling a good or service to that business or seeking a 
charitable contribution from that business, rather than personal 
purchases or charitable contributions of employees of the 
business.\172\ The Commission noted in its 2013 NPRM that it had 
allowed business telephone numbers to be listed on the FTC's Do Not 
Call (``DNC'') Registry ``because, among other reasons, telemarketers 
who seek to circumvent the Registry have solicited employees at their 
place of business to buy goods or services such as dietary products, 
auto warranties, and credit assistance.'' \173\ In implementing the 
amendment in 2015, the Commission reiterated the amendment is ``simply 
a clarification of the scope of the existing exemption, not a change in 
its substance'' and the ``clarification should further deter 
telemarketers from attempting to circumvent the Registry.'' \174\
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    \172\ Notice of Proposed Rule Making (``2013 TSR NPRM''), 78 FR 
41200, 41219 (July 9, 2013).
    \173\ Id. at 41219.
    \174\ Id.
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2. Law Enforcement Experience in Deceptive Business-to-Business 
Telemarketing
    Since the Commission last considered, and declined, to 
substantively amend the B2B exemption to exclude services providing 
access to the internet, the marketplace has substantially evolved. The 
digital marketing landscape has become increasingly complex and rife 
with opportunities for sellers or telemarketers to defraud small 
businesses by selling them services to help them advertise their 
businesses online. Indeed, the

[[Page 33673]]

expansion of the different ways to advertise online has been 
accompanied by numerous types of deceptive telemarketing schemes aimed 
at small businesses, including schemes that have purportedly sold 
business directory listing services, the very same services industry 
proponents claimed small businesses would not be able to access if the 
Commission implemented its proposed amendments.\175\ The Commission has 
brought many cases against fraudulent telemarketers selling services 
that purportedly assist small businesses to advertise online, including 
business directory listings,\176\ web hosting or design scams,\177\ and 
search engine optimization (``SEO'') services.\178\ The Commission has 
also seen deceptive telemarketing schemes that target businesses in 
other areas not related to online advertising services.\179\ In fact, 
the Commission has filed cases against other telemarketing frauds 
targeting small businesses such as market-specific advertising 
opportunities \180\ and government imposter scams.\181\ Given the 
Commission's law enforcement experience in this area showing the 
prevalence of fraud in digital marketing services targeting businesses, 
and the maturation of this industry, the Commission believes it is time 
to reconsider whether the TSR should continue to exempt B2B 
telemarketing at all, or at a minimum, B2B telemarketing of digital 
marketing services or imposter scams that harm businesses.\182\ The 
Commission also believes there is sufficient evidence to apply the 
TSR's prohibitions against making material misrepresentations or false 
or misleading statements in B2B telemarketing and seeks comment on this 
proposal in the NPRM.
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    \175\ See supra note 169.
    \176\ See, e.g., FTC v. Your Yellow Book Inc., No. 14-cv-786-D 
(W.D. Ok. July 24, 2014), available at https://www.ftc.gov/system/files/documents/cases/140807youryellowbookcmpt.pdf (last visited 
Jan. 31, 2022); FTC v. OnlineYellowPagesToday.com, Inc., No. 14-cv-
0838 RAJ (W.D. Wa. June 9, 2014), available at https://www.ftc.gov/system/files/documents/cases/140717onlineyellowpagescmpt.pdf (last 
visited Jan. 31, 2022); FTC v. Modern Tech. Inc., et. al., No. 13-
cv-8257 (Nov. 18, 2013) available at https://www.ftc.gov/sites/default/files/documents/cases/131119yellowpagescmpt.pdf (last 
visited Jan. 31, 2022); FTC v. 6555381 Canada Inc. d/b/a Reed 
Publishing, No. 09-cv-3158 (N.D. Ill. May 27, 2009) available at 
https://www.ftc.gov/sites/default/files/documents/cases/2009/06/090602reedcmpt.pdf (last visited Jan. 31, 2022); FTC v. 6654916 
Canada Inc. d/b/a Nat'l. Yellow Pages Online, Inc., No. 09-cv-3159 
(N.D. Ill. May 27, 2009), available at https://www.ftc.gov/sites/default/files/documents/cases/2009/06/090602nypocmpt.pdf (last 
visited Jan. 31, 2022); FTC v. Integration Media, Inc., No. 09-cv-
3160 (N.D. Ill. May 27, 2009), available at https://www.ftc.gov/sites/default/files/documents/cases/2009/06/090602goamcmpt.pdf (last 
visited Jan. 31, 2022); FTC v. Datacom Mktg. Inc., et. al., No. 06-
cv-2574 (N.D. Ill. May 9, 2006), available at https://www.ftc.gov/sites/default/files/documents/cases/2006/05/060509datacomcomplaint.pdf (last visited Jan. 31, 2022); FTC v. 
Datatech Commc'ns, Inc., No. 03-cv-6249 (N.D. Il. Aug. 3, 2005) 
(filing amended complaint), available at https://www.ftc.gov/sites/default/files/documents/cases/2005/08/050825compdatatech.pdf (last 
visited Jan. 31, 2022); FTC v. Ambus Registry, Inc., No. 03-cv-1294 
RBL (W.D. Wa. June 16, 2003), available at https://www.ftc.gov/sites/default/files/documents/cases/2003/07/ambuscomp.pdf (last 
visited Jan. 31, 2022).
    \177\ See FTC v. Epixtar Corp., et. al., No. 03-cv-8511(DAB) 
(S.D.N.Y. Nov. 3, 2003), available at https://www.ftc.gov/sites/default/files/documents/cases/2003/11/031103comp0323124.pdf (last 
visited Jan. 31, 2022); FTC v. Mercury Marketing of Delaware, Inc., 
No. 00-cv-3281 (E.D. Pa. Aug. 12, 2003) (filing for an Order to Show 
Cause Why Defendants Should Not be Held in Contempt), available at 
https://www.ftc.gov/sites/default/files/documents/cases/2003/08/030812contempmercurymarketing.pdf (last visited Jan. 31, 2022).
    \178\ See, e.g., FTC v. Pointbreak Media, LLC, No. 18-cv-61017-
CMA (S.D. Fla. May 7, 2018), available at https://www.ftc.gov/system/files/documents/cases/matter_1723182_pointbreak_complaint.pdf 
(last visited Jan. 31, 2022); FTC v. 7051620 Canada, Inc. No. 14-cv-
22132 (S.D. Fla. June 9, 2014), available at https://www.ftc.gov/system/files/documents/cases/140717nationalbusadcmpt.pdf (last 
visited Jan. 31, 2022).
    \179\ A 2018 survey conducted by the Better Business Bureau 
revealed that the same scams that harm consumers, such as tech 
support scams and imposter scams, also harm small businesses, and 
that 57% of scams that impact small businesses are perpetrated 
through telemarketing. Better Business Bureau, Scams and Your Small 
Business Research Report, at 9-10 (June 2018), available at https://www.bbb.org/globalassets/local-bbbs/council-113/media/small-business-research/bbb_smallbizscamsreport-final-06-18.pdf (last 
visited Jan. 31, 2022).
    \180\ See, e.g., FTC v. Production Media Co., No. 20-cv-00143-BR 
(D. Or. Jan. 23, 2020), available at https://www.ftc.gov/system/files/documents/cases/production_media_complaint.pdf (last visited 
Jan. 31, 2022).
    \181\ See, e.g., FTC v. DOTAuthority.com, No. 16-cv-62186 (S.D. 
Fla. Sept. 13, 2016) available at https://www.ftc.gov/system/files/documents/cases/162017dotauthoriity-cmpt.pdf (last visited Jan. 31, 
2022); FTC v. D & S Mktg. Solutions LLC, No. 16-cv-01435-MSS-AAS 
(M.D. Fla. June 6, 2016), available at https://www.ftc.gov/system/files/documents/cases/160621dsmarketingcmpt.pdf (last visited Jan. 
31, 2022).
    \182\ See supra note 186; see also, FTC Blog, Protecting Small 
Business from Imposters (Jan. 9 2020), available at https://www.consumer.ftc.gov/blog/2020/01/protecting-small-business-imposters (last visited Jan. 31, 2022).
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3. Market Changes in People's Work Experience
    In addition to the Commission's law enforcement experience, the 
Commission also notes that since it last considered making substantive 
changes to the exemption in 2003, technological advancements, along 
with current events, have drastically affected where people typically 
perform their jobs as well as the types of jobs they perform. 
Specifically, technological changes have provided people more workplace 
flexibilities,\183\ resulting in greater numbers of people working from 
home on either a part-time or full-time basis.\184\ But more 
significantly, the COVID-19 pandemic has resulted in an unprecedented 
number of people working from home since March 2020.\185\ Although it 
is difficult to predict whether people will continue to work from home 
in such large numbers in the future, industry analysts currently 
believe businesses will provide greater work flexibilities to their 
employees post-pandemic.\186\ The Commission's

[[Page 33674]]

DNC Registry is meant, in part, to protect consumers' privacy from an 
abusive pattern of calls.\187\ With more people working from home, the 
likelihood B2B telemarketing will impinge on the privacy of a 
consumer's home is escalating. This raises the question whether the DNC 
Registry will still be able to effectively protect consumers' privacy 
if the TSR is not extended to cover B2B telemarketing.
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    \183\ See Rachel M. Krantz-Kent, Monthly Labor Review: Where did 
Workers Perform Their Jobs in the Early 21st Century?, U.S. Bureau 
of Labor and Statistics (July 2019), available at https://www.bls.gov/opub/mlr/2019/article/where-did-workers-perform-their-jobs.htm (last visited Jan. 31, 2022) (noting that ``advances in 
information and communication technology allow people to reach their 
colleagues and clients by phone, email, or text from nearly 
anywhere, at all hours of the day'' and that the ``development and 
expansion of secure computer networks, cloud computing, and wireless 
connections provide additional flexibility in where and when work 
can be done'').
    \184\ A 2017 survey estimated that approximately 43% of 
Americans spend some time working from home, with increasing numbers 
working remotely four to five days a week. Niraj Chokshi, Out of the 
Office: More People Are Working Remotely, Survey Finds, N.Y. Times, 
Feb. 15, 2017, available at https://www.nytimes.com/2017/02/15/us/remote-workers-work-from-home.html (last visited Jan. 31, 2022). See 
also U.S. Bureau of Labor Statistics (``BLS''), Ability to Work From 
Home: Evidence From Two Surveys and Implications for the Labor 
Market in the COVID-19 Pandemic, at n.1 (June 2020), available at 
https://www.bls.gov/opub/mlr/2020/article/ability-to-work-from-home.htm#_edn1 (last visited Jan. 31, 2022) (citing to a survey 
conducted by Global Workforce Analytics that reported the number of 
workers who worked at home at least half the time increased by 115% 
from 2005 to 2017); see also BLS, Job Flexibilities and Work 
Schedules--2017-2018: Data from the American Time Use Survey (Sept. 
19, 2019), available at https://www.bls.gov/news.release/flex2.nr0.htm (last visited Jan. 31, 2022) (reporting that 
approximately 25% of wage and salary workers worked at home 
occasionally); BLS, Work at Home Summary in 2004 (Sept. 25, 2005), 
available at https://www.bls.gov/news.release/homey.nr0.htm (last 
visited Jan. 31, 2022) (reporting that approximately 15% of workers 
reported working from home at least once per week).
    \185\ The Federal Reserve, Update on the Economic Well-Being of 
U.S. Households: July 2020 Results, at 4 (Sept. 22, 2020), available 
at https://www.federalreserve.gov/publications/files/2019-report-economic-well-being-us-households-update-202009.pdf (last visited 
Jan. 31, 2022) (reporting that approximately 41% and 31% of workers 
were working from home when the surveys were conducted in April 2020 
and July 2020, respectively.).
    \186\ See Press Release, Gartner, Inc., Gartner HR Survey 
Reveals 41% of Employees Likely to Work Remotely at Least Some of 
the Time Post Coronavirus Pandemic (April 14, 2020), available at 
https://www.gartner.com/en/newsroom/press-releases/2020-04-14-
gartner-hr-survey-reveals-41--of-employees-likely-to- (last visited 
Jan. 31, 2022); See also, McKinsey & Company, The Future of Telework 
after Covid-19 (Feb. 18, 2021), available at https://www.mckinsey.com/featured-insights/future-of-work/the-future-of-work-after-covid-19 (last visited Jan. 31, 2022) (reporting that 
approximately 4-5 times more telework is possible post Covid-19 in 
advanced economies and in jobs in which remote work can be done 
without loss of productivity and that a survey of executives 
revealed they planned to reduce their office footprint by 
approximately 30%); PwC, US Remote Work Survey (Jan. 12, 2021), 
available at https://www.pwc.com/us/en/library/covid-19/us-remote-work-survey.html#content-free-1-24f5 (last visited Jan. 31, 2022) 
(reporting a hybrid workplace where employees rotate in and out of 
the offices configured for shared spaces is a likely outcome post 
Covid-19).
    \187\ 2003 TSR Amendments, 68 FR at 4631.
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    Additionally, the rise of the gig economy and the economic impact 
of the pandemic has resulted in more people utilizing alternative work 
arrangements to supplement their income, or as a means of full-time 
employment.\188\ The gig economy refers to alternative work 
arrangements including independent contractors, online platform 
workers, contract firm work, on-call workers, and temporary 
workers.\189\ Given the nature of gig work, it is likely gig workers 
utilize their personal phones for business purposes rather than relying 
on separate phone lines dedicated for business purposes. Thus, for gig 
workers, allowing B2B telemarketing might subject them to an increasing 
number of unwanted calls they cannot avoid by using call-blocking 
technology \190\ or by placing their numbers on the FTC's DNC 
Registry.\191\ This is not a new dilemma; one commenter to the 
Regulatory Review highlighted it as a challenge for home-based 
businesses several years ago.\192\ But it may be on the rise along with 
the gig economy. This issue likely affects more than just home-based 
businesses and applies to any person who utilizes one phone for both 
personal purposes and business purposes. Despite the Commission's 
amendments in 2015 to make explicit that the B2B telemarketing 
exemption only applies to the sale of goods or services to a business, 
unscrupulous telemarketers could take advantage of this rising trend to 
assert the B2B exemption should apply if a person does have a dual 
purpose phone.
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    \188\ Shane McFeely and Ryan Pendell, The Gig Economy and 
Alternative Work Arrangements, at 6 (Aug. 18, 2018), available at 
https://www.gallup.com/workplace/240929/workplace-leaders-learn-real-gig-economy.aspx (last visited Jan. 31, 2022) (reporting 
approximately 36% of workers are involved in the gig economy); see 
also The Federal Reserve, Report on the Economic Well-Being of U.S. 
Households in 2019, Featuring Supplemental Data from April 2020, at 
18 (May 2020), available at https://www.federalreserve.gov/publications/files/2019-report-economic-well-being-us-households-202005.pdf (last visited Jan. 31, 2022) (reporting approximately one 
in three of all adults engaged in gig work). Another survey 
estimated that approximately 30% of the population freelanced or 
participated in the gig economy in the U.S., and projected that 
approximately 50% of the population will be freelancing in 10 years. 
Elaine Pofeldt, Are We Ready For A Workforce That Is 50% Freelance?, 
Forbes, Oct. 17, 2017, available at https://www.forbes.com/sites/elainepofeldt/2017/10/17/are-we-ready-for-a-workforce-that-is-50-freelance/#6c123af23f82 (last visited Jan. 31, 2022). See also, 
Matthew Lavietes and Michael McCoy, Waiting for Work: Pandemic 
Leaves U.S. Gig Workers Clamoring for Jobs, Reuters, Oct. 19, 2020, 
available at https://www.reuters.com/article/us-biggerpicture-health-coronavirus-gigw/waiting-for-work-pandemic-leaves-u-s-gig-workers-clamoring-for-jobs-idUSKBN2741DM (last visited Jan. 31, 
2022) (reporting that with unemployment soaring, more workers are 
joining the gig economy).
    \189\ See Shane McFeely and Ryan Pendell, The Gig Economy and 
Alternative Work Arrangements, at 6 (Aug. 18, 2018), available at 
https://www.gallup.com/workplace/240929/workplace-leaders-learn-real-gig-economy.aspx (last visited Jan. 31, 2022) (examples of gig 
workers include Uber drivers, Task Rabbit workers, contract nurses, 
and free lancers).
    \190\ While call-blocking technology may be effective for a 
consumer's personal phone, businesses and individuals using their 
personal phones for business purposes may not feel able to employ 
call-blocking technology to the same extent if they anticipate 
receiving calls from prospective customers.
    \191\ Because the TSR exempts B2B telemarketing calls, a seller 
or telemarketer engaged in B2B telemarketing may argue that it is 
not prohibited from calling people on the FTC's Do Not Call registry 
if those people are also using their phone numbers for business 
purposes and the seller or telemarketer is calling to sell a good or 
service to a business.
    \192\ West Italian, No. 00113, at 3.
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    In light of these changes in workforce dynamics, the Commission is 
seeking comment on whether the TSR should continue to exempt B2B 
telemarketing calls. Specifically, the Commission seeks comments on 
whether: (1) The exemption should be repealed in its entirety; \193\ 
(2) the exemption should be partially repealed so that only specific 
provisions of the TSR would apply to B2B telemarketing; or (3) the 
exemption should be partially repealed so that the TSR applies to a 
subset of B2B telemarketing based on, for example, the particular goods 
or services offered for sale.
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    \193\ The Commission is publishing an NPRM in conjunction with 
this ANPR. The NPRM proposes, among other things, prohibiting 
deception in business-to-business telemarketing calls. This ANPR 
seeks additional comment on the B2B exemption including whether it 
should be repealed in its entirety.
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    Because, as PACE has noted, telemarketers cannot easily 
differentiate between residential phone numbers and business phone 
numbers,\194\ the Commission believes it is possible many telemarketers 
who engage in telemarketing to businesses may already ensure that they 
do not make calls to numbers on the FTC's DNC Registry even though they 
are not currently required to comply with the DNC provisions of the 
TSR. As such, the Commission is also particularly interested in seeking 
comment on the number of sellers or telemarketers who engage in 
telemarketing to businesses. The Commission is also interested in 
whether, in the ordinary course of business, such sellers or 
telemarketers make any attempts to determine whether a phone number is 
on the FTC's DNC Registry or to differentiate between phone numbers 
used for personal purposes and those used for business purposes.
---------------------------------------------------------------------------

    \194\ PACE, No. 00107, at 6.
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    From its law enforcement experience and through its policy work in 
connection with the Every Community Initiative, the Commission is 
cognizant that fraud and other consumer and business concerns can have 
disproportionate negative impacts on underserved communities.\195\ 
Thus, the Commission is also interested in understanding whether its 
proposal to apply more completely the TSR to B2B telemarketing will 
impact underserved communities differently. For example, would applying 
the TSR to B2B telemarketing impose greater burdens on minority-owned 
businesses engaged in telemarketing? Would it create barriers to 
entrepreneurship when entrepreneurs from communities of color are 
already underrepresented compared to their share of the 
population?\196\ Or would it provide greater protection to minority-
owned businesses against fraud and disruptive telemarketing? The 
Commission has found very few sources of data on these issues and 
invites comments that can help the Commission understand the full 
impact of its proposal on underserved communities.
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    \195\ See Serving Communities of Color: A Staff Report on the 
Federal Trade Commission's Efforts to Address Fraud and Consumer 
Issues Affecting Communities of Color, available at https://www.ftc.gov/system/files/documents/reports/serving-communities-color-staff-report-federal-trade-commissions-efforts-address-fraud-consumer/ftc-communities-color-report_oct_2021-508-v2.pdf (last 
visited Jan. 31, 2022).
    \196\ See, Michael McManus, Minority Business Ownership: Data 
from the 2012 Survey of Business Owners, Office of Advocacy, U.S. 
Small Business Administration, at 1-2 (Sept. 14, 2016), available at 
https://cdn.advocacy.sba.gov/wp-content/uploads/2016/09/07141514/Minority-Owned-Businesses-in-the-US.pdf (last accessed June 29, 
2021).

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[[Page 33675]]

C. Questions for Business-to-Business Telemarketing Calls

Questions Regarding Possible Benefits to People and Businesses From 
Repealing the B2B Exemption
    1. How many telemarketing calls do businesses and non-profit 
charitable organizations receive on average per year, per month, or per 
day? What kinds of goods or services are the subject of those B2B 
telemarketing calls? Do businesses and non-profit charitable 
organizations receive B2B telemarketing calls utilizing prerecorded 
messages, including soundboard technology? If yes, how many do 
businesses receive on average per year, per month, or per day? What 
kinds of goods or services are sold to businesses and non-profit 
charitable organizations via prerecorded message? How many of these 
calls involve soundboard technology?
    2. Do businesses and non-profit charitable organizations receive 
telemarketing calls soliciting charitable contributions? If yes, how 
many such calls do businesses receive on average per year, per month, 
or per day? On behalf of what kinds of organizations do telemarketers 
solicit charitable contributions from businesses and non-profit 
charitable organizations? Do businesses and non-profit charitable 
organizations receive B2B telemarketing that use prerecorded messages 
to solicit charitable contributions? How many such calls do businesses 
and non-profit charitable organizations receive on average per year, 
per month, or per day? Do those messages utilize soundboard technology?
    3. Do people or businesses support repealing the business-to-
business exemption from the TSR? If not, why not? If yes, what harm 
does B2B telemarketing cause to people, to small businesses, or to 
businesses of any size? What is an accurate estimate of annual harm 
suffered by businesses as a result of B2B telemarketing?
    4. Do underserved communities support repealing the business-to-
business exemption from the TSR? If not, why not? If yes, what harm 
does B2B telemarketing cause to underserved communities? What is an 
accurate estimate of annual harm suffered by underserved communities as 
a result of B2B telemarketing?
    5. Do B2B telemarketing calls cause harm to non-profit charitable 
organizations? If yes, what harm does B2B telemarketing calls cause? If 
not, why not?
    6. Should the TSR apply to all B2B telemarketing calls? If so, why? 
If not, why not? If not, what types of B2B telemarketing calls should 
the TSR apply to and why? What harm do those B2B telemarketing calls 
cause to people, businesses, or non-profit charitable organizations?
    7. Should the TSR apply only to B2B telemarketing calls offering 
digital marketing goods or services to businesses or non-profit 
charitable organizations and imposter scams? If not, why not? If yes, 
why? How would you define digital marketing goods or services? What 
harm is caused by telemarketing these goods or services to businesses 
or non-profit charitable organizations? If the TSR were applied to B2B 
telemarketing calls of digital marketing goods or services or imposter 
scams harming businesses, should the TSR carve out any exceptions? If 
yes, what exceptions and why?
    8. Should the TSR be limited to B2B telemarketing calls of specific 
goods or services? If yes, what goods or services? What harm is caused 
by telemarketing those goods or services to businesses or non-profit 
charitable organizations? What existing Federal or state laws apply to 
the telemarketing of those goods or services to businesses or non-
profit charitable organizations? Why are the existing laws governing 
the sale of those goods or services to businesses or non-profit 
charitable organizations insufficient to prevent the identified harm? 
Should all provisions of the TSR apply to the telemarketing of those 
goods or services to businesses? If not, why not and what specific TSR 
provisions should apply? Should there be any carve outs from applying 
the TSR or specific provisions of the TSR to the telemarketing of those 
goods or services to businesses or non-profit charitable organizations?
    9. Should the TSR eliminate the exemption for inbound B2B 
telemarketing calls? If not, why not? If so, why? What harm is caused 
by inbound B2B telemarketing?
    10. Should the TSR eliminate the exemption for outbound B2B 
telemarketing calls? If not, why not? If so, why? What harm is caused 
by outbound telemarketing that affects businesses or non-profit 
charitable organizations?
    11. Should all of the provisions of the TSR apply to B2B 
telemarketing calls? If yes, why? If not, which provision(s) of the TSR 
should apply to B2B telemarketing calls? What harm would be prevented 
by applying that provision?
    12. Should the TSR's provisions regarding the use of prerecorded 
messages apply to B2B telemarketing calls? If no, why not? If yes, why? 
What harm is caused by B2B telemarketing calls that utilize prerecorded 
messages?
    13. How many people work from home? How many days per week do 
people work from home? Do people who work from home use a separate 
phone number for business purposes? Do people who work from home use 
their personal mobile or home landline for business purposes? Do people 
who work from home receive B2B telemarketing calls? Do they receive 
those calls on their personal phone numbers or business phone numbers? 
How many B2B telemarketing calls do they receive? Do any of those B2B 
telemarketing calls use prerecorded messages? How many B2B 
telemarketing calls using prerecorded messages do they receive? What 
types of goods or services are offered for sale in B2B telemarketing 
calls that use prerecorded messages?
    14. How many people are employed in the gig economy? How many gig 
workers use a separate business phone number for their gig work? How 
many gig workers use one phone number for personal purposes and another 
for their gig work? Do gig workers receive B2B telemarketing calls? How 
many B2B telemarketing calls do they receive? Do any of those B2B 
telemarketing calls use prerecorded messages? How many B2B 
telemarketing calls that use prerecorded messages do they receive? What 
types of goods or services are offered for sale in the B2B 
telemarketing calls that gig workers receive?
    15. Do businesses or non-profit organizations employ call-blocking 
technologies? If yes, do they successfully reduce the number of 
unwanted B2B telemarketing calls? If they don't use such technologies, 
why not?
    16. Do people who work from home or gig workers use call-blocking 
technologies? If yes, do they use such technologies on their business 
phones or personal phones? Do the call-blocking technologies 
successfully reduce the number of unwanted telemarketing calls, 
including unwanted B2B calls, if any? If they don't use such 
technologies, why not?
    17. How many home-based businesses have a dedicated phone number 
for business purposes? How many B2B telemarketing calls do such 
businesses receive on their business phone numbers on average per year, 
per month, or per day? How many home-based businesses utilize one phone 
number for both personal and business purposes? How many B2B 
telemarketing calls do such businesses receive on their dual purpose 
phone number on average per year, per month, or per day? Do home-based 
businesses use call-blocking technologies? If yes, do such businesses 
use call-blocking

[[Page 33676]]

technologies on their business lines? Do call-blocking technologies 
successfully reduce the number of unwanted telemarketing calls, 
including unwanted B2B calls, if any? If not, why don't home-based 
businesses use call-blocking technologies? What types of goods or 
services are offered for sale in the B2B telemarketing calls that home-
based businesses receive?
    18. How many small businesses have a dedicated phone number for 
business purposes? How many B2B telemarketing calls do such businesses 
receive on their business lines on average per year, per month, or per 
day? How many small businesses have one phone number that they use for 
personal and business purposes? How many B2B telemarketing calls do 
such businesses receive on their dual purpose phone number on average 
per year, per month, or per day? Do small businesses use call-blocking 
technologies? If yes, do small businesses use call-blocking 
technologies on their business lines? Do call-blocking technologies 
successfully reduce the number of telemarketing calls, including 
unwanted B2B calls, if any? If not, why don't small businesses use 
call-blocking technologies? What types of goods or services are offered 
for sale in the B2B telemarketing calls that small businesses receive?
    19. How do sellers or telemarketers determine whether a phone 
number belongs to a person or a business? Has this determination been 
made more difficult by people working from home or participating in the 
gig economy?
Questions Regarding the Potential Burden to Telemarketers and Sellers 
From Repealing the B2B Exemption
    1. How many sellers or telemarketers engage in telemarketing to 
businesses? How much revenue do sellers or telemarketers make in 
telemarketing to businesses and how would removing the exemption for 
B2B sales affect their revenue?
    2. How many sellers or telemarketers engage in telemarketing 
exclusively to businesses and do not engage in telemarketing to people?
    3. How many telemarketers solicit charitable contributions from 
businesses? Do those same telemarketers also solicit charitable 
contributions from people?
    4. What goods or services do sellers offer for sale to businesses 
through telemarketing? Do sellers utilize other means of marketing 
those same goods or services to businesses? Do sellers sell those same 
goods or services to people?
    5. How many outbound B2B telemarketing calls do sellers or 
telemarketers make on average per year, per month, or per day? How many 
of those calls or what percentage of those outbound B2B telemarketing 
calls result in a sale? How many inbound B2B telemarketing calls do 
sellers or telemarketers receive on average per year, per month, or per 
day? How many of those calls or what percentage of those inbound 
telemarketing calls result in a sale? Do sellers or telemarketers keep 
records of the outbound calls or inbound B2B telemarketing calls in the 
ordinary course of business? What type of records do sellers or 
telemarketers keep of those telemarketing calls? How long are they 
kept?
    6. Do sellers or telemarketers offer goods or services to 
businesses by using prerecorded messages, including through soundboard 
technology? If so, how many B2B telemarketing calls do sellers or 
telemarketers make using prerecorded messages on average per year, per 
month, or per day? How many of those calls result in a sale?
    7. Do sellers or telemarketers make B2B telemarketing calls 
involving debt relief services? If so, how many calls involving debt 
relief services do sellers or telemarketers make on average per year, 
per month, or per day? How many of those calls or what percentage of 
those calls result in a sale?
    8. What is the estimated burden of complying with the TSR if the 
B2B exemption is repealed for both outbound and inbound telemarketing? 
What is the basis for the estimated burden?
    9. What is the estimated burden of complying with the TSR if the 
B2B exemption for outbound telemarketing is repealed? What is the basis 
for the estimated burden?
    10. What is the estimated burden to underserved communities of 
complying with the TSR if the B2B exemption is repealed for outbound 
telemarketing? What is the estimated burden to underserved communities 
of complying with the TSR if the B2B exemption is repealed for inbound 
telemarketing? What is the basis for the estimated burden?
    11. What is the estimated burden of complying with the TSR if the 
B2B exemption is repealed for the sale of digital marketing goods or 
services or imposter scams that harm businesses? What is the basis for 
the estimated burden?
    12. What is the estimated burden of complying with the TSR if the 
B2B telemarketing calls are required to comply with the TSR's 
provisions regarding prerecorded messages? What is the basis for the 
estimated burden?
    13. Do sellers or telemarketers who engage in B2B telemarketing 
take any steps to ensure they are not making calls to phone numbers on 
the DNC Registry? If so, what steps do sellers or telemarketers take? 
Do such sellers or telemarketers also engage in telemarketing to 
people? Do sellers or telemarketers who engage in B2B telemarketing 
exclusively take steps to ensure that they are not making calls to 
phone numbers on the FTC's DNC Registry? If so, what steps do such 
sellers or telemarketers take? Do they access the DNC Registry?

D. Questions for Negative Option Notice and Cancelation Mechanisms

    As discussed in Section IV.C, the Commission seeks comment on the 
proposal that negative option sellers and telemarketers provide 
consumers with notice and the opportunity to cancel before they are 
billed for negative option products. The Commission also seeks comment 
on the scope of deceptive or abusive inbound telemarketing with a 
negative option feature.
    1. How many telemarketing calls involve a negative option feature 
on average per year, per month, or per day? How many of those calls or 
what percentage of those calls result in a sale?
    2. Which industries offer negative option goods or services through 
telemarketing and what products do they sell? How many of the goods or 
services sold by these industries are sold through telemarketing that 
includes negative options?
    3. When sellers or telemarketers sell goods, or services with 
negative option features, how often (e.g., weekly, monthly, annually) 
do the sellers bill consumers and businesses?
    4. Do sellers or telemarketers already provide consumers notice 
when consumers and businesses are billed as part of negative option 
programs? How is that notice provided? How often is the notice provided 
before the consumer and business is billed? What is the cost of 
providing this notice?
    5. Do consumers want notification that they are about to be charged 
for a subscription plan? If so, how would they like to be notified? How 
often would they like to be notified? When would they like the 
notification to take place (e.g., one week before being charged)?
    6. What cancelation mechanisms do sellers or telemarketers provide 
for consumers and businesses to cancel their negative option programs? 
What is the cost of these mechanisms? Are some mechanisms easier for 
consumers to use than others? If sellers or telemarketers offer 
multiple cancelation mechanisms, how often do consumers use each 
mechanism?

[[Page 33677]]

    7. Do consumers and businesses who purchase a negative option 
product or service through telemarketing have a preference for how they 
communicate with the seller (e.g., email, phone, online chat, or some 
other method)?
    8. Do consumers and businesses who purchase negative option 
products or services through telemarketing typically have email 
accounts where they can receive notice of negative option programs? Do 
they typically provide email addresses to sellers or telemarketers? Do 
they have a preference for how they cancel the negative option or 
service? If not, what is the best way for those consumers and 
businesses to cancel negative-option programs?
    9. When sellers or telemarketers sell negative option programs to 
consumers and businesses, what personal information do they obtain? How 
often do sellers or telemarketers communicate with consumers by email?
    10. How often do sellers or telemarketers use unfair or deceptive 
acts or practices to sell goods or services with a negative option 
feature solely through inbound telemarketing that are not part of an 
upsell? Are goods or services other than tech support sold in this 
manner? If so, which goods or services and how often are they sold in 
this manner? Should the TSR be further amended to provide consumers 
with additional protections against these deceptive acts or practices? 
How so?

VI. Comment Submissions

    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before August 2, 2022. 
Write ``Telemarketing Sales Rule ANPR, R411001'' on your comment. Your 
comment--including your name and your state--will be placed on the 
public record of this proceeding, including, to the extent practicable, 
on the https://www.regulations.gov website.
    Because of the public health emergency in response to the COVID-19 
outbreak and the agency's heightened security screening, postal mail 
addressed to the Commission will be subject to delay. We strongly 
encourage you to submit your comment online through the https://www.regulations.gov website. To ensure the Commission considers your 
online comment, please follow the instructions on the web-based form.
    If you file your comment on paper, write ``Telemarketing Sales Rule 
ANPR, R411001'' on your comment and on the envelope and mail your 
comment to the following address: Federal Trade Commission, Office of 
the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 (Annex B), 
Washington, DC 20580.
    Because your comment will be placed on the publicly accessible 
website, https://www.regulations.gov, you are solely responsible for 
making sure your comment does not include any sensitive or confidential 
information. In particular, your comment should not include any 
sensitive personal information, such as your or anyone else's Social 
Security number; date of birth; driver's license number or other state 
identification number, or foreign country equivalent; passport number; 
financial account number; or credit or debit card number. You are also 
solely responsible for making sure your comment does not include any 
sensitive health information, such as medical records or other 
individually identifiable health information. In addition, your comment 
should not include any ``trade secret or any commercial or financial 
information which . . . is privileged or confidential''--as provided by 
Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 
16 CFR 4.10(a)(2)--including in particular competitively sensitive 
information such as costs, sales statistics, inventories, formulas, 
patterns, devices, manufacturing processes, or customer names.
    Comments containing material for which confidential treatment is 
requested must be filed in paper form, must be clearly labeled 
``Confidential,'' and must comply with FTC Rule 4.9(c). In particular, 
the written request for confidential treatment that accompanies the 
comment must include the factual and legal basis for the request, and 
must identify the specific portions of the comment to be withheld from 
the public record. See FTC Rule 4.9(c). Your comment will be kept 
confidential only if the General Counsel grants your request in 
accordance with the law and the public interest. Once your comment has 
been posted publicly at www.regulations.gov--as legally required by FTC 
Rule 4.9(b)--we cannot redact or remove your comment from the FTC 
website, unless you submit a confidentiality request that meets the 
requirements for such treatment under FTC Rule 4.9(c), and the General 
Counsel grants that request.
    Visit the FTC website to read this document and the news release 
describing it. The FTC Act and other laws the Commission administers 
permit the collection of public comments to consider and use in this 
proceeding as appropriate. The Commission will consider all timely and 
responsive public comments it receives on or before August 2, 2022. For 
information on the Commission's privacy policy, including routine uses 
permitted by the Privacy Act, see https://www.ftc.gov/site-information/privacy-policy.

    By direction of the Commission.
April J. Tabor,
Secretary.
[FR Doc. 2022-10922 Filed 6-2-22; 8:45 am]
BILLING CODE 6750-01-P