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

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

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

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

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.

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.

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.

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.

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

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

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

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.

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.

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

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

Although the Commission did not receive many comments on this 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

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.

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

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.

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

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 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

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.

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.

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 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?

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

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

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

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 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.

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 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.

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.

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.

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.

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.

Pursuant to the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (“USA PATRIOT Act”), 17 the Commission amended the TSR in 2003 to extend its coverage to telemarketing calls soliciting charitable contributions. 18 As part of that amendment, the Commission defined “donor” as “any person solicited to make a charitable contribution.”  19 The Commission declined to limit the definition of donor to those who have “an established business relationship with the non-profit charitable organization.”  20 The Commission stated its intent was for the term “donor. . .[to] encompass not only those who have agreed to make a charitable contribution but also any person who is solicited to do so, to be consistent with [the Rule's] use of the term `customer.' ”  21

In 2008, the Commission amended the TSR to prohibit robocalls soliciting charitable donations unless the robocall was delivered to a “member of, or previous donor to, a non-profit charitable organization on whose behalf the call is made” and the seller or telemarketer otherwise complied with the provisions of § 310.4(b)(1)(v)(B). 22 In allowing robocalls to previous donors, the Commission stated it was recognizing the strong interests of non-profit charitable organizations in reaching those with “whom the charity has an existing relationship— i.e., members of, or previous donors to[,] the non-profit organization on whose behalf the calls are made . . . .”  23 The Commission concluded that allowing “telefunders to make impersonal prerecorded cold calls on behalf of charities that have no prior relationship with the call recipients . . . would defeat the amendment's purpose of protecting consumers' privacy.”  24 Although the Commission's Statement of Basis and Purpose for the 2008 Amendment makes clear the Commission intended previous donor to mean a donor who has previously provided a charitable contribution to the particular non-profit charitable organization, the Commission did not include a definition of the term “previous donor” to explicitly effect that intention.

Because the TSR's definition of donor is “any person solicited to make a charitable contribution,” the Commission's 2008 Amendment could be misinterpreted as allowing a telemarketer to send robocalls to any consumer it had previously solicited for a donation on behalf of a non-profit charitable organization, regardless of whether the consumer actually agreed to donate to that charitable organization. Thus, the Commission proposes to add a new definition of “previous donor” to clarify the exemption, explicitly referencing consumers from whom the non-profit charitable organization has received a donation in the last two years. 25

Since the Commission promulgated the TSR in 1995, it has not made substantial changes to its recordkeeping requirements under § 310.5. The TSR generally requires telemarketers and sellers to keep for a 24-month period records of: (1) Any substantially different advertisement, including telemarketing scripts; (2) lists of prize recipients, customers, and telemarketing employees directly involved in sales or solicitations; and (3) all verifiable authorizations or records of express informed consent or express agreement. 26 They may keep the records in any form and in the same manner and format as they would keep such records in the ordinary course of business, and they may allocate responsibilities of complying with the Rule's recordkeeping requirements between the seller and telemarketer. 27

During its 2003 and 2010 rulemaking processes, the Commission considered whether it should modify the recordkeeping provisions in tandem with the substantive amendments under consideration. 28 In each instance, however, the Commission declined to make substantial modifications to that provision, deeming such changes unnecessary to enact the substantive amendments it was promulgating. 29 In its 2003 Amendment adding the DNC provisions and extending the TSR to charitable solicitations, the Commission inserted a reference to “solicitations” in § 310.5(a)(4) to require telemarketers and sellers to keep records of employees involved in charitable solicitations. 30 It also inserted the phrase “express informed consent or express agreement” in § 310.5(a)(5) to require sellers and telemarketers to keep records of those agreements, in addition to verifiable authorizations, since those agreements were newly added terms in the 2003 amendments. 31 For its 2010 Amendment, the Commission noted the existing recordkeeping requirements would extend to new providers of debt relief services as a result of the Amendment. 32

In 2015, the Commission amended the TSR to expressly state a seller or telemarketer bears the burden of demonstrating that a seller has an existing business relationship (“EBR”) with a consumer whose number is on the Commission's Do Not Call (“DNC”) Registry, or has obtained express written agreement (“EWA”) from such a consumer, as required by § 310.4(b)(1)(iii)(B)(1)-(2). 33 The Commission stated that these two amendments reflected existing law, but the Commission adopted the amendments to make clear the burden of proof was on sellers and telemarketers to assert these affirmative defenses. 34 The Commission also reiterated this carve out from the DNC prohibitions applies only to sellers “that obtained the EWA directly from, or has an EBR directly with, the person called.”  35 The Commission, however, did not amend the recordkeeping requirements to clarify what records a seller or telemarketer must keep to assert these affirmative defenses, believing that telemarketers and sellers would naturally maintain such records in the ordinary course of business without affirmatively being required to do so.

The telemarketing landscape has changed drastically since the Commission promulgated the Rule's original recordkeeping provisions. Technological advancements have made it easier and cheaper for unscrupulous telemarketers to engage in illegal telemarketing, resulting in a greater proliferation of unwanted calls. 36 Technological advancements have also reduced the burden and costs of recordkeeping. 37 While the Commission has made substantial amendments to the TSR over the last 25 years to address the rise in unwanted calls—including by identifying new abusive and deceptive telemarketing practices such as prohibiting robocalls and calls to consumers on the DNC Registry  38 —the TSR's recordkeeping provisions have remained largely static. As such, they no longer adequately meet the needs of the Commission's law enforcement mission to protect consumers.

To date, the Commission has brought more than 150 enforcement actions against companies and telemarketers under the TSR for DNC, robocall, spoofed caller identification (“caller ID”), and assisting and facilitating violations. 39 In bringing those cases, the Commission has identified several challenges in obtaining the necessary records to determine whether a particular telemarketing campaign is covered by and compliant with the TSR, which entities are involved in the telemarketing campaign, and which consumers have been harmed by violations of the TSR.

The primary hurdles are in: (1) Identifying the telemarketer and seller responsible for the telemarketing campaign; (2) obtaining records of the telemarketing calls reflecting the date, time, duration, and disposition of each call, as well as the phone number(s) that placed and received each call ( i.e. “call detail records”); and (3) linking the content of the telemarketing calls with the call detail records to determine which TSR provisions might apply to the telemarketing activity.

The TSR currently requires telemarketers and sellers to retain records of “all substantially different advertising, brochures, telemarketing scripts and promotional materials” used in their telemarketing activities. 40 It does not require sellers or telemarketers to keep other records of their telemarketing activities including call detail records or records of the nature of their telemarketing campaigns, such as whether the campaign used prerecorded messages, placed calls to consumers (“outbound telemarketing”) or induced calls from consumers through advertising (“inbound telemarketing”), or solicited from consumers or businesses. Nor does it require telemarketers or sellers to keep records that link a particular telemarketing campaign to a set of call detail records. The Commission's law enforcement experience has shown, absent a recordkeeping requirement, it is increasingly difficult to obtain these critical records and associate the records with the nature, purpose, or content of a particular telemarketing campaign, frustrating the Commission's law enforcement efforts. As discussed below, the Commission proposes recordkeeping requirements that ensure it is able to adequately assess whether a telemarketing campaign complies with the TSR and remedy the current gaps impeding effective law enforcement.

When the TSR was promulgated in 1995, the Commission relied on consumer complaints about unwanted calls to evaluate whether a particular telemarketing campaign likely violated the TSR and warranted further investigation. It also relied on consumer complaints to identify the relevant telemarketer responsible for making the calls. Specifically, the Commission could use the calling number included in the consumer's complaint to identify the voice service provider (“voice provider”)  41 responsible for sending the call and send a civil investigative demand (“CID”) to the voice provider in question to identify the responsible telemarketer through the voice provider's billing records. The Commission could also obtain the voice provider's call detail records for that telemarketer and use that data as a proxy for the seller's or telemarketer's telemarketing campaign.

The proliferation of new technologies over the years has enabled bad actors to “spoof” or fake a calling number and send calls cheaply from within the United States and abroad. 42 As a result, bad actors have sent increasingly large numbers of unlawful spoofed calls, making it more difficult for law enforcement to identify the telemarketer and seller responsible for a particular telemarketing campaign and obtain the applicable call detail records. 43 For example, to identify a suspect telemarketer using “spoofed” calls, the Commission needs to issue CIDs to multiple voice providers in order to trace the call from the consumer to the telemarketer's voice provider. In some instances, by the time the Commission has identified the relevant voice provider, the voice provider may not have retained the records. 44 As such, the call detail records either no longer exist or are not available for law enforcement purposes, and the Commission cannot identify the bad actor responsible for the spoofed calls. While the Commission has employed other tools to successfully identify and take action against telemarketers violating the law, the absence of call detail records can present challenges, particularly in demonstrating violations of the TSR's do-not-call provisions. 45

Even when the Commission is successful in obtaining the call detail records from the voice provider and identifying the seller or telemarketer responsible for the telemarketing campaign, that information is limited. As noted above, call detail records typically include only: (1) The phone number that placed the call (“calling number”); (2) the phone number that received the call (“called number”); (3) the date, time, and duration of the call; and (4) the disposition of the call ( i.e., was the call answered or connected, transferred to another phone number, disconnected or dropped). The records do not contain other important information, including the purpose of the call, the identity of the seller or charitable organization, or the nature of the call, such as whether the telemarketer used prerecorded messages. Although sellers and telemarketers are required to keep records of their advertisements, such as telemarketing scripts, which may include information on the purpose of the call or the identity of the seller, they are not currently required to maintain records that identify the specific telemarketing campaign in which they used each advertisement or the associated call detail records. 46

The lack of records linking the call detail records to the nature, purpose, and content of the telemarketing campaign presents challenges to law enforcement. Without this link, it is difficult for the Commission to ascertain, among other issues: (1) The seller or charitable organization for which the telemarketer is placing calls; (2) the good or service the telemarketer is offering for sale or the charitable purpose for which the telemarketer is soliciting contributions; (3) whether the telemarketer used robocalls, was telemarketing to consumers or businesses, or the caller ID, 47 if any, they transmitted in outbound telephone calls; and (4) the representations made during the call. Moreover, without information linking the call detail records to a particular telemarketing campaign, the Commission cannot tell when the telemarketing campaigns began and ended or how many calls the telemarketer made in a particular telemarketing campaign.

In the FTC's law enforcement experience, sellers and telemarketers often claim they cannot provide this information because they do not keep call detail records or records associating a telemarketing campaign with the voice provider's call detail records. For example, telemarketers typically assert the voice provider's call detail records include both their telemarketing and non-telemarketing calls ( i.e., non-sales calls) but they cannot identify those that are telemarketing calls because they do not keep such records. In other instances, telemarketers who run telemarketing campaigns on behalf of numerous sellers or non-profit charitable organizations assert they cannot identify the telemarketing calls they made on behalf of a particular client. Without such information, the Commission cannot readily determine whether all the calls pertain to a particular telemarketing campaign the Commission is seeking information about or if the calls are for an unrelated seller and telemarketing campaign.

The ability to associate relevant call detail records with information on the nature and content of the call is also critical for inbound telemarketing campaigns. Although many such calls are exempt from the TSR under § 310.6(b)(4) through (b)(6), the exemptions do not apply to all inbound telemarketing calls and many such calls must still comply with the TSR. 48 Telemarketers frequently claim the voice provider's records of their inbound calls (when they exist) do not uniformly reflect calls that would be subject to the TSR. For example, they claim the voice providers' records of inbound calls include customer service calls that would be exempt from the TSR.

Sellers or telemarketers are in the best position to have information about their telemarketing calls. Thus, the Commission proposes new recordkeeping requirements that require sellers and telemarketers to retain records of this information. Such records are important in enabling the Commission to ascertain what sections of the TSR apply to their telemarketing campaigns and whether the telemarketing campaigns are compliant with the TSR.

The Commission also proposes to clarify existing recordkeeping requirements to address telemarketers' and sellers' frequent assertion that the TSR does not apply to their telemarketing campaigns because one of the TSR exemptions applies. Commonly asserted defenses to the FTC's law enforcement actions include that the calls were sales calls to business entities and not consumers, the seller or telemarketer has an EBR or EWA to make calls to consumers registered on the DNC Registry, or the seller has an express agreement, in writing, authorizing that particular seller to place robocalls to a consumer. Another frequently asserted defense is the consumer never requested to be placed on the entity-specific do-not-call list, made the request only after the telemarketing call had been made, or the consumer had asked to be placed on the entity-specific do-not-call list for one seller but the telemarketer had made subsequent calls on behalf of a different seller.

While the Commission has amended the TSR to address some of these defenses, making clear the seller or telemarketer bears the burden of proof, 49 some sellers and telemarketers still assert the defense in response to law enforcement inquiries even if their records are incomplete. For example, in some instances, the telemarketer's purported proof of a consumer's express written agreement is simply a list of the consumers' IP addresses and timestamps of the purported agreement. The Commission does not believe that information is sufficient proof to demonstrate a consumer has provided express written agreement to receive robocalls or to receive outbound telemarketing calls when a consumer has placed her phone number on the FTC's DNC Registry. Thus, in addition to proposing new recordkeeping requirements, the Commission also proposes amending existing recordkeeping provisions to provide further guidance and clarification on the type of information necessary to assert an applicable affirmative defense.

In 2014, the Commission embarked on a regulatory review of the TSR, in which it sought feedback on a number of issues including the existing recordkeeping requirements. 50 It raised some of the challenges the Commission has faced in bringing enforcement actions under the TSR, including the difficulty in obtaining call detail records, and sought feedback on whether the current recordkeeping requirements are sufficient for law enforcement agencies to enforce the Rule's DNC provisions. 51 Specifically, the Commission raised the possibility of requiring sellers and telemarketers to “retain records of the telemarketing calls they have placed” to address the Commission's ongoing law enforcement challenges. It asked for public comments on: (1) The cost and burden that the lack of such a requirement imposed on law enforcement and consumers, (2) the cost and burden such a provision would impose, particularly for small businesses, and (3) whether there is an alternative solution that would reduce the law enforcement challenges and minimize the burden on industry. 52

The Commission received comments from other state and federal law enforcement agencies confirming the problems the Commission has experienced in enforcing the TSR are not unique to the agency. 53 The Department of Justice (“DOJ”) cited “extreme difficulties” in obtaining call records from voice providers that provide usable information because they “may contain, among other things, non-telemarketing calls” or calls by telemarketers for other clients not targeted in the investigation. 54 DOJ also argued the burden of keeping call detail records would be “slight” since “computer data storage prices are no longer an obstacle to maintaining records,” and stated it is “confident that most, if not all, reputable sellers and telemarketers currently maintain accurate records of their outbound calls.”  55

The National Association of Attorneys General (“NAAG”) stated in its experience subpoenas to voice providers are “time-consuming and frequently fruitless,” with those served on offshore voice providers going unanswered and U.S. voice providers either refusing to provide the records or requesting an “exorbitant fee for doing so.”  56 NAAG also argued “savings realized by telemarketers” from modern dialing technologies “should not be realized at the expense of law enforcement's resources and consumer protection.”  57

Consumer advocacy groups concurred that requiring the retention of outbound call detail records would benefit consumers. The National Consumer Law Center, 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, et al.”) submitted a joint comment supporting a recordkeeping requirement for all outbound telemarketing calls, and further advocating sellers and telemarketers should also be required to record the entirety of all completed calls so it is possible to examine the “overall net impression” of the representations made to determine if they are unfair or deceptive. 58 AARP argued that in addition to call detail records, sellers and telemarketers should also maintain complete recordings of calls to “ease the burden on federal and state enforcers as well as make it easier for citizens to bring private cases.”  59 Another commenter also noted “TCPA plaintiffs would benefit from companies keeping internal records.”  60

Industry comments generally opposed any mandatory requirement to maintain call detail records, arguing that imposing such a requirement would be overly burdensome, particularly for small businesses. 61 None of the industry comments, however, provided concrete information or data on the costs associated with requiring telemarketers to maintain call detail records, nor did they suggest any alternative solutions that address the Commission's law enforcement challenges while minimizing the burden on industry.

Additionally, a few industry comments confirmed some businesses are already requiring telemarketers to retain call detail records in the regular course of business. 62 Notably, the Association of Magazine Media (“MPA”) supported requiring “telemarketers to retain their own call records” as a “reasonable and workable approach.”  63 MPA also stated “[s]ome magazine publishers are currently requiring third party telemarketing providers to maintain outbound call records for three years,” and argued recordkeeping requirements would provide “an added layer of transparency that further blocks opportunities for fraudulent behavior.”  64

The Original TSR included an exemption for B2B calls other than B2B calls that sold office and cleaning supplies. 65 The Commission decided not to exempt from the TSR B2B calls that sold office and cleaning supplies because, in the Commission's experience, those calls were “by far the most significant business-to-business problem” at the time. 66 The Commission also commented it would “reconsider that position if additional business-to-business telemarketing activities become problems after the Final Rule has been in effect.”  67

In 2003, the Commission reconsidered the scope of the B2B exemption and issued a Notice of Proposed Rulemaking that would require B2B sales of internet or web services to also comply with the TSR. 68 The Commission explained the sale of these services had “increased dramatically” and these product areas “ha[d] emerged as one of the leading sources of complaints.”  69 The Commission ultimately decided not to modify the B2B exemption because the Commission wanted 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.”  70 The Commission again noted it would “continue to monitor closely” the B2B telemarketing practices in this area and “may revisit the issue in subsequent Rule Reviews should circumstances warrant.”  71

Since 2003, the Commission has continued to see businesses harmed by deceptive B2B telemarketing. Deceptive B2B telemarketing comes in many forms, 72 including schemes that sell business directory listings, 73 web hosting or design services, 74 search engine optimization services, 75 and market-specific advertising opportunities, 76 as well as schemes that impersonate the government. 77 For example, some of these schemes were the subject of a coordinated FTC-led crackdown on scams targeting small businesses, called “Operation Main Street,” announced in June of 2018. 78 The Commission believes it is now time to reassess the B2B exemption and address problems associated with B2B telemarketing.

The Commission is issuing an ANPR that seeks comments on the B2B exemption generally, including comments addressing whether the Commission should remove the exemption entirely. 79 The Commission recognizes requiring all B2B calls to comply with all TSR requirements would be a significant change that will require careful consideration. 80 While that process is underway, the Commission proposes in this NPRM to require all B2B telemarketing calls to comply with the TSR's existing prohibitions on misrepresentations articulated in § 310.3(a)(2) and (4).

When the Commission issues a rule prohibiting deceptive practices pursuant to the Telemarketing Act, the Commission assesses whether the rule prohibits conduct that involves a material representation likely to mislead consumers acting reasonably under the circumstances. 81 When the Commission included the prohibition on specific material misrepresentations  82 in § 310.3(a)(2) of the original TSR, the Commission identified these particular misrepresentations “based on established case law and the Commission's policy statement on deception.”  83 The prohibition in § 310.3(a)(4) on making false or misleading statements to induce any person to pay for goods or services or induce a charitable contribution was included to prohibit sellers “from gaining access to consumers' money through false and misleading statements.”  84 The prohibitions in § 310.3(a)(2) and (4) have been critical tools in the Commission's efforts to combat deceptive telemarketing.

The Commission is of the view that requiring B2B calls to comply with these provisions should not impose any burden on the telemarketing industry because Section 5 of the FTC Act generally prohibits telemarketers from making misrepresentations when they sell products or solicit charitable contributions. 85 As noted above, the Commission is not, at this time, proposing B2B sellers and telemarketers comply with other provisions of the TSR, such as the TSR's recordkeeping requirements, or the requirements that sellers and telemarketers access the Do Not Call Registry and pay fees. 86

The Commission proposes amending the § 310.5 recordkeeping provisions to require sellers and telemarketers to maintain additional records of their telemarketing activities. The proposed amendments identify specific records that, in the Commission's law enforcement experience, are difficult for the Commission to obtain if the telemarketer or seller does not maintain these records, but are necessary for the Commission to ensure compliance with the TSR.

The proposed amendments also clarify certain of the existing recordkeeping requirements by providing additional guidance to sellers and telemarketers regarding what the Commission considers a complete record and the penalties for failing to keep such records. In developing the proposed amendments, the Commission carefully considered the types of records sellers and telemarketers likely keep in the ordinary course of business, any additional burden the proposed amendments would impose, and the types of records the Commission considers necessary to enforce the TSR.

The Commission also proposes amending the exemption for B2B telemarketing calls in § 310.6(b)(7) to require all such calls to comply with § 310.3(a)(2) and (4). The proposed amendments would provide businesses the same protections the TSR provides consumers against misrepresentations. Finally, the Commission proposes adding a definition of “previous donor” to effectuate its original intent in the 2008 TSR Amendments.

The Commission invites written comments on the proposed amendments, and in particular, seeks answers to the questions set forth in Section IV below. The written comments will assist the Commission in determining whether to implement the proposed amendments and whether the amendments as proposed strike an appropriate balance between the goal of protecting consumers from deceptive and abusive telemarketing and harm from imposing compliance burdens.

The proposed amendments require sellers and telemarketers to retain new categories of information the Commission considers necessary for it to pursue law enforcement actions against those who have violated the TSR. Specifically, the proposed amendments require the retention of the following new categories: (1) A copy of each unique prerecorded message; (2) call detail records of telemarketing campaigns; (3) records sufficient to show a seller has an established business relationship with a consumer; (4) records sufficient to show a consumer is a previous donor to a particular charitable organization; (5) records of the service providers a telemarketer uses to deliver outbound calls; (6) records of a seller or charitable organization's entity-specific do-not-call registries; and (7) records of the Commission's DNC Registry that were used to ensure compliance with this Rule. 87

Section 310.5(a)(1) currently requires sellers and telemarketers to keep records of “all substantially different advertising, brochures, telemarketing scripts, and promotional materials.” The proposed amendments to § 310.5(a)(1) would require telemarketers and sellers to also keep a copy of each unique prerecorded message they use in telemarketing, including each call a telemarketer makes using soundboard technology. 88 In the FTC's law enforcement experience, records of each unique prerecorded message are necessary for the Commission to ensure compliance with the TSR. The Commission does not believe keeping copies of each unique robocall will be unduly burdensome because the recordings are typically of short duration. For calls utilizing soundboard technology, the Commission is mindful such calls may be of longer duration than a typical robocall. As such, the Commission seeks comment on the burden that may be imposed by requiring sellers or telemarketers to keep each unique prerecorded message involving the use of soundboard technology, including how many telemarketers employ soundboard technology in telemarketing, how many calls they make using soundboard technology, the average duration of each call, and whether the telemarketer typically keeps recordings of such calls in the ordinary course of business. 89

The proposed amendments also clarify a copy of each substantially different advertising, brochure, telemarketing script, promotional material, and each unique robocall constitutes one record, and failure to keep one substantially different version of such records is one violation of the TSR. 90 This provision applies to each telemarketing script, including robocall and upsell scripts. Telemarketers or sellers would be required to keep such records for 5 years from the date the record is no longer used in telemarketing. The Commission is proposing to modify this time period so it dates from the time the record is no longer in use to account for the possibility the advertisement may be in use for more than 5 years, which would exceed the proposed recordkeeping time period.

As discussed above, the Commission frequently has difficulty obtaining the call detail and other records of a seller or telemarketer's telemarketing activities. 91 Ensuring the availability of such records is necessary to enable the Commission to adequately determine whether the telemarketer or seller is complying with the TSR. 92

To address these problems, the Commission proposes to amend the TSR to add § 310.5(a)(2), which would require the retention of call detail records. Such call detail records include, for each call a telemarketer places or receives, the calling number; called number; time, date, and duration of the call; and the disposition of the call, such as whether the call was answered, dropped, transferred, or connected. If the call was transferred, the record should also include the phone number or IP address the call was transferred to as well as the company name, if the call was transferred to a company different from the seller or telemarketer that placed the call.

The proposed addition of § 310.5(a)(2) would require the retention of other records that help identify the nature and purpose of each call including: (1) The identity of the telemarketer who placed or received each call; (2) the seller or charitable organization for which the telemarketing call is placed or received; (3) the good, service, or charitable purpose that is the subject of the call; (4) whether the call is to a consumer or business, utilizes robocalls, or is an outbound call; and (5) the telemarketing script(s) and robocall (if applicable) that was used in the call. Finally, proposed § 310.5(a)(2) would require the retention of records regarding the caller ID transmitted if the call was an outbound call, including the name and phone number that was transmitted, and records of the telemarketer's authorization to use the phone number and name that was transmitted.

As stated above, the proposed addition of § 310.5(a)(2) is necessary for the Commission to determine whether the TSR applies to the calls in the telemarketing campaign and which particular sections of the TSR the seller and telemarketer must comply with for that particular telemarketing campaign. 93

Although some consumer advocates recommended telemarketers and sellers should also be required to retain recordings of all their telemarketing calls, 94 the Commission believes at this time, it would be overly burdensome to require retention of call recordings of each telemarketing call, particularly for small businesses. Requiring telemarketers and sellers to retain records of the substantially different telemarketing script(s) and unique robocall used in each call should provide the Commission with sufficient information regarding the content of the call, thus striking an appropriate balance between the Commission's interest in ensuring compliance with the TSR and avoiding the imposition of unnecessary burdens on businesses.

The Commission also believes implementing this new provision should not be overly burdensome for telemarketers or sellers since the cost of electronic storage is decreasing over time. 95 Additionally, given the prevalent use of technology such as autodialers in telemarketing campaigns, the Commission believes telemarketers likely already prepare similar call detail records in the regular course of business and can do so in an automated fashion. For the categories of information that may not be generated in an automated fashion, such as records of which script was used in the telemarketing calls, the seller's identity, or other information regarding the content of the call, the Commission believes telemarketers should be able to create a record of this information without much difficulty. For example, if the script contains information about the identity of the seller and the product or service being sold or the charitable purpose for which contributions are being solicited, the telemarketer or seller need only keep records of which telemarketing script is used for a particular telemarketing campaign.

As discussed above, the Commission proposes adding § 310.5(a)(5) to further clarify what records a seller must keep in order to “demonstrate that the seller has an established business relationship” with a consumer. Specifically, for each consumer with whom a seller asserts it has an established business relationship, the seller must keep a record of the name and last known phone number of that consumer, the date the consumer submitted an inquiry or application regarding that seller's goods or services, and the goods or services inquired about. 96 The Commission does not believe adding this provision to the recordkeeping requirements will impose any significant burdens on sellers or telemarketers because sellers or telemarketers must already collect and use this information to ensure they are complying with the requirements of this affirmative defense. They are only being asked to retain the records demonstrating their compliance.

Similar to the EBR requirements described above, the Commission also proposes adding § 310.5(a)(6) to clarify that if a telemarketer intends to assert a consumer is a previous donor to a particular non-profit charitable organization, 97 the telemarketer must keep a record, for each such consumer, of the name and last known phone number of that consumer, and the last date the consumer donated to the particular non-profit charitable organization. The Commission does not believe this provision will impose any new burdens on telemarketers since this is information a non-profit charitable organization already keeps and telemarketers that comply with the TSR will likely seek this information in the ordinary course of business.

The Commission proposes including a new record keeping requirement in § 310.5(a)(9) requiring sellers and telemarketers to keep records of all service providers the telemarketer uses to deliver outbound calls in each telemarketing campaign. Such service providers include, but are not limited to, voice providers, autodialers, sub-contracting telemarketers, or soundboard technology platforms. The Commission does not intend for this provision to include every voice provider involved in delivering the outbound call, but limits this provision to the service providers with which the seller or telemarketer has a business relationship. For each such entity, the seller or telemarketer must keep records of any applicable contracts, the date the contract was signed, and the time period the contract is in effect.

The Commission also proposes that the seller or telemarketer maintain such records for five years from the date the contract expires or five years from the date the telemarketing activity covered by the contract ceases, whichever is shorter. The Commission proposes that the telemarketer or seller maintain such records for that specified time period to provide the Commission and other law enforcement agencies sufficient time to complete any investigation of noncompliance. Such information is necessary for the Commission to determine whether any other entities assisted and facilitated in violating the TSR. The Commission calculates the five-year period from the date the contract expires or the date the telemarketing activity ceases rather than the date the contract was signed to account for the possibility the contract could be of long-standing duration. The Commission does not believe this requirement is overly burdensome because telemarketers and sellers likely keep such records in the ordinary course of business.

The NPRM also includes two new provisions requiring telemarketers and sellers to maintain for five years records related to the entity-specific do-not-call registry and the FTC's DNC Registry. For the entity-specific do-not-call registry, the Commission proposes requiring telemarketers and sellers to retain records of: (1) The consumer's name, (2) the phone number(s) associated with the DNC request, (3) the seller or charitable organization from which the consumer does not wish to receive calls, (4) the telemarketer that made the call; (5) the date the DNC request was made; and (6) the good or service being offered for sale or the charitable purpose for which contributions are being solicited.

For the FTC's DNC Registry, the Commission proposes requiring telemarketers or sellers to keep records of every version of the FTC's DNC Registry the telemarketer or seller downloaded to ensure compliance with the TSR. The Commission does not believe these two proposed recordkeeping requirements impose a substantial burden on the telemarketer or seller since telemarketers complying with the TSR already keep such records in the ordinary course of business to avail themselves of the TSR's safe harbor provisions. 98

The Commission, however, invites public comment on whether and for how long telemarketers and sellers maintain records in the ordinary course of business of every version of the FTC's DNC Registry they access to comply with the TSR's safe harbor rules, and if not, whether requiring them to do so would be overly burdensome. The Commission also invites comment from other law enforcement agencies and any other interested parties regarding whether a record of the name of the telemarketer or seller who accessed the registry, the subscription account number used to access the registry, the telemarketing campaign for which it was accessed, and the date of access would suffice to ensure telemarketers and sellers are complying with the TSR. 99

In this NPRM, the Commission proposes changing the time period telemarketers and sellers must keep records from two years to five years from the date the record is made, except for § 310.5(a)(1) and (9), which require retention of records for five years from the date such records are no longer in use. 100 The Commission is proposing to change the time period from two years to five years because the Commission needs adequate time to complete its investigations of non-compliance with the TSR. Given the additional complexities of identifying the telemarketer and seller responsible for particular telemarketing campaigns and gathering the necessary evidence, two years is no longer a sufficient amount of time for the Commission to fully complete its investigations of noncompliance. Given the decreasing cost of data storage, the Commission does not believe changing the length of time sellers and telemarketers are required to keep records will be unduly burdensome.

The TSR currently requires telemarketers and sellers to retain the “name and last known address” of each prize recipient. 101 The Commission is proposing to modify this provision also to require sellers and telemarketers to retain the last known telephone number and the last known physical or email address for each prize recipient. 102 The Commission is proposing this change to reflect current business practices in communicating with customers. The Commission does not believe retention of such records is unduly burdensome since telemarketers and sellers likely keep such information in the regular course of business.

The TSR currently requires sellers or telemarketers to retain the “name and last known address of each customer, the goods or services purchased, the date such goods or services were shipped or provided, and the amount paid by the customer for the goods or services.”  103 To account for the new requirement telemarketers and sellers keep records of each consumer with whom a seller intends to assert it has an EBR, the Commission proposes modifying § 310.5(a)(4) to require the seller or telemarketer to keep records of the date the customer purchased the good or service. 104 The Commission also proposes modifying § 310.5(a)(4) to require the retention of the customer's last known telephone number and the customer's last known physical address or email address to account for current business practices in communicating with existing customers. Because the Commission believes sellers likely already keep records of this information in the ordinary course of business, the Commission does not believe these modifications will cause significant additional burden.

The Commission recognizes requiring telemarketers and sellers to retain information regarding consumers' names, phone numbers, and either their email or physical addresses, in combination with the goods or services they have purchased, raises privacy concerns. The Commission emphasizes telemarketers and sellers have an obligation under Section 5 of the FTC Act to adhere to commitments they make about their information practices, and take reasonable measures to secure consumers' data. 105

Section 310.5(a)(5) of the TSR currently requires sellers or telemarketers to keep records of “[a]ll verifiable authorizations or records of express informed consent or express agreement required to be provided or received under [the TSR] .” The Commission proposes modifying this requirement to keep records of verifiable authorizations, express informed consent or express agreement (collectively, “consent”) to clarify what information the Commission believes is a complete record sufficient for a telemarketer or seller to assert such an affirmative defense. 106 Specifically, for each consumer from whom a seller or telemarketer states it has obtained consent, the Commission proposes requiring sellers or telemarketers to maintain records of that consumer's name and phone number, a copy of the consent requested in the same manner and format it was presented to that consumer, a copy of the consent provided, the date the consumer provided consent, and the purpose for which consent was given and received.

For a copy of the consent provided under § 310.3(a)(3), 310.4(a)(7), (b)(1)(iii)(B)(1), or (b)(1)(v)(A), a complete record must include all of the requirements outlined in those respective sections. For example, a copy of the consent provided to receive prerecorded sales messages under § 310.4(b)(1)(v)(A) must evidence, in writing: (1) The consumer's name, telephone number, and signature; (2) the consumer states she is willing to receive prerecorded messages from or on behalf of a specific seller; (3) the seller obtained consent only after clearly and conspicuously disclosing that the purpose of the written agreement is to authorize that seller to place prerecorded messages to that consumer; and (4) the seller did not condition the sale of the relevant good or service on the consumer providing consent to receive prerecorded messages.

If the telemarketer or seller requested consent verbally, the copy of consent requested need not be a recording of the conversation unless such a recording is required by another provision of the TSR. For such consent requests, unless such a recording is required by another provision of the TSR, a copy of the telemarketing script of the request for consent will suffice as a complete record. The Commission does not believe requiring the telemarketer or seller to keep records of consent imposes significant additional burden since it is likely telemarketers and sellers who comply with the TSR already keep such records in the ordinary course of business.

The NPRM includes a modification to the formatting requirements for records that include phone numbers, time, or duration. For such records, the Commission proposes to require that international phone numbers must comport with the International Telecommunications Union's Recommendation E.164 format and domestic numbers must comport with the North American Numbering plan. For time and duration, the Commission proposes such records be kept to the closest whole second, and time must be recorded in Coordinated Universal Time (UTC). The Commission does not believe specifying these format requirements will cause any undue burden since the numbering formats are standard practice across the telecommunications industry, and the proposed time and duration formats are widely used, so sellers and telemarketers can easily select them when they set up an automated method of maintaining call detail records.

The Commission proposes clarifying that the failure to keep each record required by § 310.5 in a complete and accurate manner constitutes a violation of this Rule. The Commission wants to state clearly that a violation does not mean a failure to keep all records, but instead that failure to keep each required record constitutes a separate violation. To do otherwise would create a perverse incentive for deceptive telemarketers to choose not to comply with the recordkeeping provisions when the only consequence would be liability for a single violation of the TSR. Such an outcome would negate the entire purpose of implementing recordkeeping requirements.

The Commission proposes including a safe harbor provision for temporary and inadvertent errors in keeping call detail records pursuant to § 310.5(a)(2). Specifically, a seller or telemarketer would not be liable for failing to keep records under § 310.5(a)(2) if it can demonstrate: (1) It has established and implemented procedures to ensure completeness and accuracy of its records under § 310.5(a)(2); (2) it trained its personnel in the procedures; (3) it monitors compliance and enforces the procedures, and documents its monitoring and enforcement activities; and (4) any failure to keep accurate or complete records under § 310.5(a)(2) was temporary and inadvertent.

The Commission believes providing a safe harbor for the recordkeeping requirements under § 310.5(a)(2) is appropriate since the process of maintaining such records will likely be automated by technology, and telemarketers and sellers should not be held liable under this section of the TSR for brief and inadvertent technological errors so long as they make good faith efforts to comply.

The Commission also proposes modifying the compliance obligations in § 310.5(e). In the event the seller and telemarketer fail to allocate responsibility for maintaining the required records, the TSR currently designates which recordkeeping obligations fall on the telemarketer and which fall on the seller. The Commission is proposing to modify the TSR so that if the seller and telemarketer fail to allocate recordkeeping obligations between themselves, the responsibility for complying with this Section will fall on both parties. This would avoid disputes between sellers and telemarketers over which party is responsible for recordkeeping. Also, because the parties may still allocate the recordkeeping obligations, the Commission does not believe modifying this provision would alter the overall burden of complying with the TSR; rather, it should incentivize the parties to delineate clearly their respective responsibilities.

The Commission proposes narrowing the B2B exemption to require B2B telemarketing calls to comply with § 310.3(a)(2)'s prohibition on misrepresentations and § 310.3(a)(4)'s prohibition on false or misleading statements. The Commission believes a prohibition on such deceptive conduct will protect businesses from illegal telemarketing without burdening industry since the FTC Act already prohibits businesses from making misrepresentations and false or misleading statements.

The Commission proposes adding a new definition for the term “previous donor” to implement the Commission's original intent to allow robocalls soliciting charitable donations on behalf of a particular non-profit charitable organization only to consumers who have an established relationship with that organization. The proposed definition also specifies the consumer must have made a donation to the non-profit charitable organization within the two-year period immediately preceding the date of the robocall. The Commission proposes implementing a time limit for the existence of an established relationship and chose two years to account for the possibility that consumers who donate annually may not necessarily donate exactly one year apart ( i.e., one year the consumer might donate in January and the following year the consumer might not donate until December). The Commission, however, seeks public comment on whether two years is an appropriate time period to use in determining whether the consumer has an established relationship with a particular organization.

The Commission also proposes five corrections to the Rule. The first is a clerical correction to the cross-reference citations in § 310.6(b)(1), (2), and (3) changing the cross-references from § 310.4(a)(1) and (7), (b), and (c) to § 310.4(a)(1) and (8), (b), and (c).

The second is modifying the time requirements in the definition of EBR to change it from months to days. For § 310.2(q)(1), the time requirement to qualify for EBR will be modified from 18 months between the date of the telephone call and financial transaction to 540 days. For § 310.2(q)(2), the time requirement to qualify for EBR will be modified from three months between the date of the telephone call and the date of the consumer's inquiry or application to 90 days. The Commission is proposing these modifications to make the technical calculations of whether a consumer has an EBR with a particular seller easier to determine since the number of days to qualify would be fixed instead of fluctuating depending on which months were applicable.

The third correction is to add an email address to § 310.7 so state officials or private litigants can more easily provide notice to the Commission that the state official or private litigant intends to bring an action under the Telemarketing Act.

The fourth correction is amending § 310.5(a)(7) so it is consistent in form with the new proposed additions to § 310.5(a). The substantive requirements of this section will remain the same.

The fifth correction is amending § 310.5(f) to remove an extraneous word. The substantive requirements of this section will remain the same.

The Commission seeks comments on all aspects of the proposed requirements, including the likely effectiveness of the proposed requirements to combat violations of the TSR and any alternatives to the proposed requirements. The Commission also seeks comments on the estimated burden compliance with the proposed regulations will 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 costs of complying with the proposed amendments.

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 (16 CFR part 310—NPRM) (Project No. 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 (16 CFR part 310—NPRM) (Project No. 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, or deliver your comment to the following address: Federal Trade Commission, Office of the Secretary, Constitution Center, 400 7th Street SW, 5th Floor, Suite 5610 (Annex B), Washington, DC 20024. If possible, please submit your paper comment to the Commission by courier or overnight service.

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 .

In addition to the issues raised above, the Commission solicits public comment on the list of questions below regarding the costs and benefits of the proposed amendments. The Commission requests that comments provide the factual data upon which they are based. These questions are designed to assist the public and should not be construed as a limitation on the issues on which a public comment may be submitted.

1. What would be the impact (including any benefits and costs), if any, of the proposed amendments on consumers?

2. What would be the impact (including any benefits and costs), if any, of the proposed amendments on individual firms (including small businesses) that must comply with them?

3. What would be the impact (including any benefits and costs), if any, on industry, including those who may be affected by the proposed amendments but not obligated to comply with the Rule?

4. What changes, if any, should be made to the proposed amendments to minimize any costs to consumers or to industry and individual firms (including small businesses) that must comply with the Rule?

5. How would each change suggested in response to Question 4 affect the benefits that might be provided by the proposed amendment to consumers or to industry and individual firms (including small businesses) that must comply with the Rule?

6. How would the proposed amendments impact small businesses with respect to costs, profitability, competitiveness, and employment? What other burdens, if any, would the proposed amendments impose on small businesses, and in what ways could the proposed amendments be modified to reduce any such costs or burdens?

7. How many small businesses would be affected by each of the proposed amendments?

8. With respect to each of the proposed amendments, are there any potentially duplicative, overlapping, or conflicting federal statutes, rules, or policies currently in effect?

1. Is 5 years an appropriate time period to require telemarketers and sellers to maintain records? If not, what is an appropriate time period and why?

2. What are the current practices of sellers and telemarketers in keeping records of their telemarketing activities? How will the proposed amendments alter the current practices?

3. Is the proposed requirement to retain a record of each unique robocall recording used in telemarketing, under § 310.5(a)(1), overly burdensome? If so, what are the costs or burdens associated with keeping a record of each unique robocall recording?

4. What are the costs or burdens associated with keeping a record of each call in which soundboard technology is used? How many telemarketers employ soundboard technology in telemarketing? How many calls do telemarketers make on average in one year using soundboard technology? What is the average duration of each call using soundboard technology? Do telemarketers typically keep recordings of such calls in the ordinary course of business? If so, how long do telemarketers typically keep such recordings in the ordinary course of business?

5. Do the proposed recordkeeping requirements of 310.5(a)(2) adequately identify all data categories a telemarketer or seller should retain from the call detail records of their telemarketing activities? If not, what data categories are missing? Alternatively, are there data categories that are overly burdensome or unnecessary to ensure the telemarketer and seller are complying with the TSR? If the data categories are overly burdensome, is there an alternative proposal on how a telemarketer or seller can retain the information from that data category in a less burdensome manner?

6. Is the proposed requirement to identify the robocall recording used in each call, under § 310.5(a)(2), overly burdensome? If so, what are the costs or burdens associated with this requirement? Is there an alternative proposal that would still give the Commission information on what robocall was used in the call but is less burdensome for the seller or telemarketer?

7. Does the proposed amendment to § 310.5(a)(8) adequately describe the information the telemarketer or seller needs to retain to provide proof of verifiable authorizations, express informed consent, or express agreement? If not, what other information should the telemarketer or seller be required to retain to show proof of verifiable authorizations, express informed consent, or express agreement?

8. Does the proposed amendment to § 310.5(a)(8) require sufficient records to demonstrate whether telemarketers or sellers who obtain preacquired account information through data pass are authorized to bill consumers? If not, what other information should the telemarketer or seller be required to retain?

9. Does the proposed amendment to § 310.5(a)(8) sufficiently address any potential harms caused by telemarketers or sellers using preacquired account information through data pass? Does it also sufficiently address any new harms that have emerged since 2014 caused by telemarketers or sellers using preacquired account information through data pass? If not, what harms have emerged since 2014? What other changes should be made to the TSR to address harms caused by data pass of preacquired account information?

10. Does the proposed amendment in § 310.5(a)(9) requiring the telemarketer or seller to retain records of all service providers a telemarketer uses to deliver an outbound call provide adequate guidance on which service providers are referenced in this provision? If not, is there an alternative description that would more accurately provide guidance on what service providers a telemarketer or seller would need to retain records of as required by this provision? Would such a description be flexible enough to account for changes in the telecommunications industry, including technological developments?

11. Should the Commission require the telemarketer or seller to retain records of every version of the Commission's DNC Registry that it downloaded to ensure compliance with the TSR or would requiring a record of each instance the telemarketer or seller accessed the registry, including the date of access, the subscription account number used to access, the telemarketing campaign for which it was accessed, and the entity that accessed the registry, be sufficient to ensure compliance with the TSR?

12. Should the Commission include the safe harbor provision in § 310.5(d) for the retention of records identified in § 310.5(a)(2)? Is such a safe harbor necessary? Alternatively, does the proposed safe harbor provide adequate protection to the seller or telemarketer against mistakes that cannot readily be prevented? Should the safe harbor provision apply only to records identified in § 310.5(a)(2) or should it also apply to other records required by § 310.5?

13. Should sellers and telemarketers be allowed to decide by contract which entity is responsible for retaining records under this Rule? If not, should both sellers and telemarketers be required to retain records under this Rule? Alternatively, should the Commission specify which entity should be required to retain specific categories of records?

14. Should the definition of previous donor include a two-year time limit after which a consumer is no longer considered a previous donor to a particular charitable organization? If not, what is the appropriate amount of time that can lapse before a consumer should no longer be considered a previous donor to a particular charitable organization?

15. How many calls on average do sellers and telemarketers make per year?

16. What call detail records do sellers and telemarketers currently keep?

17. How much do sellers and telemarketers pay to retain call detail records on a monthly basis?

18. Are there other costs associated with creating and preserving call detail records?

19. How many different prerecorded messages do sellers and telemarketers use with their campaigns and what is the file size of the messages?

20. To what extent do existing recordkeeping requirements, such as those found under the Telephone Consumer Protection Act, overlap with the proposed rule's recordkeeping requirements?

21. Are businesses harmed by deception in B2B telemarketing? Would requiring B2B telemarketing to comply with the TSR's prohibitions on misrepresentations and making false or misleading statements help businesses?

22. Are businesses harmed by B2B telemarketing in ways not addressed by the FTC's past law enforcement work?

23. Would the proposed amendment to the B2B exemption burden sellers or telemarketers? If so, in what way, and what is the burden?

The current Rule contains various provisions that constitute information collection requirements as defined by 5 CFR 1320.3(c), the definitional provision within the Office of Management and Budget (“OMB”) regulations implementing the Paperwork Reduction Act (PRA). 44 U.S.C. chapter 35. OMB has approved the Rule's existing information collection requirements through September 30, 2022 (OMB Control No. 3084-0097). The proposed amendments will make changes in the Rule's recordkeeping requirements that will increase the PRA burden as detailed below. Accordingly, FTC staff will submit this notice of proposed rulemaking and the associated Supporting Statement to OMB for review under the PRA. 107

The proposed rule contains new recordkeeping requirements and modifications to existing recordkeeping requirements. The new recordkeeping provisions would require sellers or telemarketers to retain: (1) A copy of each unique prerecorded message; (2) call detail records of telemarketing campaigns; (3) records sufficient to show a seller has an established business relationship with a consumer; (4) records sufficient to show a consumer is a previous donor to a particular charitable organization; (5) records regarding the service providers a telemarketer uses to deliver outbound calls; (6) records of a seller or charitable organization's entity-specific do-not-call registries; and (7) records of the Commission's DNC Registry that were used to ensure compliance with this Rule. The proposed modifications to the existing recordkeeping requirements would: (1) Change the time period for retaining records from two years to five years;  108 (2) clarify the records necessary for sellers or telemarketers to demonstrate the person it is calling has consented to receive the call; and (3) specify the format for records that include phone numbers, time, or duration.

As explained above, the Commission believes for the most part, sellers and telemarketers already generate and retain these records in the ordinary course of business. For example, to comply with the TSR, sellers and telemarketers must already have a reliable method to identify whether they have a previous business relationship with a customer or whether the customer is a prior donor. They must also access the DNC Registry and maintain an entity-specific DNC registry. Moreover, sellers and telemarketers are also likely to keep records about their existing customers or donors and service providers in the ordinary course of business. The proposed rule would also require telemarketers and sellers to keep call detail records of their telemarketing campaigns, but in the Commission's experience the technological methods sellers and telemarketers use to implement their campaigns can also reliably generate the records of those campaigns that would be required under the proposed rule.

The Commission estimates the PRA burden of the proposed amendments based on its knowledge of the telemarketing industry and data compiled from the Do Not Call Registry. In calendar year 2021, 11,756 telemarketing entities accessed the Do Not Call Registry; however, 536 were exempt entities obtaining access to data. 109 Of the non-exempt entities, 6,835 obtained data for a single state. Staff assumes these 6,835 entities are operating solely intrastate, and thus would not be subject to the TSR. Therefore, Staff estimates approximately 4,385 telemarketing entities (11,756—536 exempt—6,835 intrastate) are currently subject to the TSR. The Commission also estimates there will be 75 new entrants to the industry per year.

The Commission has previously estimated that complying with the TSR's current recordkeeping requirements requires 100 hours for new entrants to develop recordkeeping systems that comply with the TSR and 1 hour per year for established entities to file and store records after their systems are created, for a total annual recordkeeping burden of 4,385 hours for established entities and 7,500 hours for new entrants who must develop required record systems. 110

Because the proposed rule contains new recordkeeping requirements, the Commission anticipates in the first year after the proposed amendments take effect, every entity subject to the TSR would need to ensure their recordkeeping systems meet the new requirements. The Commission estimates this undertaking will take 50 hours. This includes 10 hours to verify the entities are maintaining the required records, and 40 hours to create and retain call detail records. This yields an additional burden of 219,250 hours for established entities (50 hours × 4,385 covered entities).

For new entrants, the Commission estimates the new requirements will increase their overall burden for establishing new recordkeeping systems from 100 hours per year to 150 hours per year. This yields a total burden for new entrants of 11,250 hours (150 hours × 75 new entrants per year).

The Commission estimates annual labor costs by applying appropriate hourly wage rates to the burden hours described above. The Commission estimates established entities will employ skilled computer support specialists to modify their recordkeeping systems.

Applying a skilled labor rate of $29.11/hour  111 to the estimated 50 burden hours for established entities yields approximately $6,384,560 in labor costs in the first year after the proposed amendments would take effect (4,385 respondents × $1,456).

As described above, the Commission estimates new entrants will spend approximately 150 hours per year to establish new recordkeeping systems. Applying a skilled labor rate of $29.11/hour to the estimated 150 burden hours for new entrants, the Commission estimates the annual labor costs for new entrants would be approximately $327,525 (75 entrants × $4,367).

Staff previously estimated the non-labor costs to comply with the TSR's recordkeeping requirements were de minimis because most affected entities would maintain the required records in the ordinary course of business. Staff estimated the recordkeeping requirements could require $50 per year in office supplies to comply with the Rule's recordkeeping requirements. Because the proposed recordkeeping requirements require retaining additional records, Staff estimates these requirements will increase to $60 per year in office supplies.

The new recordkeeping requirements also require entities to retain call detail records and audio recordings of prerecorded messages used in calls. Staff estimates the costs associated with preserving these records will also be de minimis. The Commission regularly obtains call detail records from voice providers when investigating potential TSR violations, and these records are kept in databases with small file sizes even when the database contains information about a substantial number of calls. For example, the Commission received a 2.9 gigabyte database that contained information about 56 million calls. The Commission also received a 1.2 gigabyte database that contained information about 5.5 million calls. Similarly, audio files of most prerecorded messages will not be very large because prerecorded messages are typically short in duration. Storing electronic data is very inexpensive. Electronic storage can cost $.74 per gigabyte for onsite storage including hardware, software, and personnel costs. 112 Commercial cloud-based storage options are less expensive and can cost around $.20 per gigabyte per year. 113 The Commission estimates the non-labor costs associated with electronically storing audio files of prerecorded messages and call detail records will cost around $5 a year.

The Commission invites comments on: (1) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) the accuracy of the FTC's burden estimates, including whether the methodology and assumptions used are valid; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of collecting information. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.

Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this document to www.reginfo.gov/public/do/PRAMain. Find this particular information collection by selecting “Currently under Review—Open for Public Comments” or by using the search function. The reginfo.gov web link is a United States Government website produced by OMB and the General Services Administration (GSA). Under PRA requirements, OMB's Office of Information and Regulatory Affairs (OIRA) reviews Federal information collections.

The Regulatory Flexibility Act (“RFA”), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996, requires that the Commission conduct an analysis of the anticipated economic impact of the proposed amendments on small entities. 114 The RFA requires the Commission provide an Initial Regulatory Flexibility Analysis (“IRFA”) with a proposed rule unless the Commission certifies the rule will not have a significant economic impact on a substantial number of small entities. 115

The Commission believes that the proposed amendment would not have a significant economic impact upon small entities, although it may affect a substantial number of small businesses. In the Commission's view, the proposed amendment should not significantly increase the costs of small entities that are sellers or telemarketers because the proposed amendments primarily require these entities to retain records they are already generating and preserving in the ordinary course of business. The Commission does not believe the proposed amendments requiring small entities that are sellers or telemarketers to comply with the TSR's prohibitions on misrepresentations should impose any additional costs on small entities. Therefore, based on available information, the Commission certifies that amending the Rules as proposed will not have a significant economic impact on a substantial number of small entities, and hereby provides notice of that certification to the Small Business Administration (“SBA”). Nonetheless, the Commission has determined it is appropriate to publish an IRFA in order to inquire into the impact of the proposed amendments on small entities. The Commission invites comment on the burden on any small entities that would be covered and has prepared the following analysis.

The Commission proposes amending the TSR to require telemarketers and sellers to maintain additional records regarding their telemarketing transactions. As described in Section II, the proposed amendments are intended to update the TSR's existing recordkeeping requirements so the requirements comport with the substantial amendments to the TSR since the recordkeeping requirements were first made. The requirements are also necessary in light of the technological advancements that have made it easier and cheaper for unscrupulous telemarketers to engage in illegal telemarketing. The proposed amendments would also require B2B telemarketers to comply with the TSR's prohibition on misrepresentations. These amendments are necessary to help protect businesses from deceptive telemarketing practices. The proposed amendments would also amend the definition of “previous donor” to clarify that a seller or telemarketer may not use prerecorded messages to solicit charitable donations on behalf of a charitable organization unless the recipient of the call previously donated to that charitable organization within the last two years.

The objective of the proposed amendments is to update the TSR's recordkeeping requirements in order to assist the Commission's enforcement of the TSR, and to prohibit misrepresentations in B2B telemarketing. The legal basis for the proposed amendments is the Telemarketing Act, which authorizes the Commission to issue rules to prohibit deceptive or abusive telemarketing practices.

The proposed amendments to the Rule affect sellers and telemarketers engaged in “telemarketing,” defined by the Rule 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.”  116 As noted above, staff estimate 4,385 telemarketing entities are currently subject to the TSR, and approximately 75 new entrants enter the market per year. For telemarketers, a small business is defined by the SBA as one whose average annual receipts do not exceed $16.5 million. 117 Because virtually any business could be a seller under the TSR, it is not possible to identify average annual receipts that would make a seller a small business as defined by the SBA. Commission staff are unable to determine a precise estimate of how many sellers or telemarketers constitute small entities as defined by SBA. The Commission invites comment and information on this issue.

The proposed rule contains new recordkeeping requirements and modifications to existing recordkeeping requirements. The new recordkeeping requirements would require sellers or telemarketers to retain: (1) A copy of each unique prerecorded message; (2) call detail records of telemarketing campaigns; (3) records sufficient to show a seller has an established business relationship with a consumer; (4) records sufficient to show a consumer is a previous donor to a particular charitable organization; (5) records regarding the service providers a telemarketer uses to deliver outbound calls; (6) records of a seller or charitable organization's entity-specific do-not-call registries; and (7) records of the Commission's DNC Registry that were used to ensure compliance with this Rule. The proposed modifications to the existing recordkeeping requirements would: (1) Change the time period for retaining records from two years to five years; (2) clarify the records necessary for sellers or telemarketers to demonstrate the person they are calling has consented to receive the call; and (3) specify the format for records that include phone numbers, time, or duration. The small entities potentially covered by the proposed amendment will include all such entities subject to the Rule. The Commission has described the skills necessary to comply with these recordkeeping requirements in Section V above.

The Telephone Consumer Protection Act of 1991, 47 U.S.C. 227, and its implementing regulations, 47 CFR 64.1200 (collectively, “TCPA”) contain recordkeeping requirements that may overlap with the recordkeeping requirements proposed by the new rule. For example, the proposed provision requiring sellers or telemarketers to keep a record of consumers who state they do not wish to receive any outbound calls made on behalf of a seller or telemarketer, 16 CFR 310.5(a)(10), overlaps to some degree with the TCPA's prohibition on a person or entity initiating a call for telemarketing unless such person or entity has procedures for maintaining lists of persons who request not to receive telemarketing calls including a requirement to record the request. 118 The Commission's proposed recordkeeping requirements do not conflict with the TCPA's recordkeeping requirements because sellers and telemarketers can comply with both sets of requirements simultaneously. Moreover, in the Commission's experience, the recordkeeping requirements under the TCPA do not lessen the need for the more robust recordkeeping requirements the Commission is proposing to further its law enforcement efforts. The Commission invites comment and information regarding any potentially duplicative, overlapping, or conflicting federal statutes, rules, or policies.

The Commission has not proposed any specific small entity exemption or other significant alternatives to the proposed rule. The Commission has made every effort to avoid imposing unduly burdensome requirements on sellers and telemarketers by limiting the recordkeeping requirements to records both necessary for the Commission's law enforcement and typically already kept in the ordinary course of business.

Written communications and summaries or transcripts of oral communications respecting the merits of this proceeding, from any outside party to any Commissioner or Commissioner's advisor, will be placed on the public record. 119

Consistent with 5 U.S.C. 552(a) and 1 CFR part 51, the Commission proposes to incorporate the specifications of the following standard issued by the International Telecommunications Union: ITU-T E.164: Series E: Overall Network Operation, Telephone Service, Service Operation and Human Factors (published 11/2010). The E.164 standard establishes a common framework for how international telephone numbers should be arranged so calls can be routed across telephone networks. Countries use this standard to establish their own international telephone number formats and ensure those numbers have the information necessary to route telephone calls successfully between countries.

This ITU standard is reasonably available to interested parties. The ITU provides free online public access to view read-only copies of the standard. The ITU website address for access to the standard is: https://www.itu.int/en/pages/default.aspx.

For the reasons stated above, the Federal Trade Commission proposes to amend part 310 of title 16 of the Code of Federal Regulations as follows:

The revision and addition read as follows:

Under CAA section 110(k)(1), the EPA must determine whether a SIP submittal meets the minimum completeness criteria established in 40 CFR part 51, appendix V for an official SIP submittal on which the EPA is obligated to take action. If the EPA does not make an affirmative determination of completeness or incompleteness within six months of receipt of a SIP submittal, the submittal is deemed to be complete by operation of law. The submittals listed in Table 1 were deemed complete by operation of law on October 20, 2021 (Rule 61.2) and June 29, 2021 (SDCAPCD's negative declaration).

We approved a previous version of Rule 61.2 (locally amended on July 26, 2000) into the California SIP on August 26, 2003 (68 FR 51186). The SDCAPCD adopted revisions to the SIP-approved version on February 10, 2021, and CARB submitted them to us on April 20, 2021. If we take final action to approve the February 10, 2021 version of Rule 61.2, this version will replace the previously approved version of this rule in the SIP.

We approved portions of the RACT SIP and negative declarations on December 3, 2020 (85 FR 77996), not including the negative declaration for non-CTG major VOC sources because the SDCAPCD had not formally adopted it. The SDCAPCD formally adopted the negative declaration for non-CTG major VOC sources on October 14, 2020, and CARB submitted it to us on December 29, 2020.

Emissions of VOCs contribute to the production of ground-level ozone, smog and particulate matter, which harm human health and the environment. Section 110(a) of the CAA requires states to submit regulations that control VOC emissions. Sections 182(b)(2) and (f) require that SIPs for ozone nonattainment areas classified as Moderate or above implement RACT for any source covered by Control Techniques Guidelines (CTG). The SDCAPCD is subject to this requirement as it regulates an ozone nonattainment area that, at the time it prepared the original submittal for the negative declaration and Rule 61.2, was designated and classified as a Moderate nonattainment area for the 2008 8-hour ozone NAAQS. Therefore, the SDCAPCD must, at a minimum, adopt RACT-level controls for all sources covered by a CTG document and for all major non-CTG sources of VOCs within the ozone nonattainment area that it regulates. Any stationary source that emits or has the potential to emit at least 100 tons per year (tpy) of VOCs or NO X is a major stationary source in a Moderate ozone nonattainment area (CAA section 182(b)(2), (f) and 302(j)).

On December 3, 2020 (85 FR 77996), the EPA partially disapproved the SDCAPCD's 2008 RACT SIP demonstration for the source category covering the CTG for “Control of Hydrocarbon from Tank Truck Gasoline Loading Terminals” (EPA 450/2-77-026) (Tank Truck Gasoline Loading CTG). The EPA's technical support document (TSD) for the proposal (August 10, 2020, 85 FR 48127) states that, “. . . Rule 61.2 sets a limit of 0.29 lb/1,000 gallons for transfers at bulk terminals. We determined that Rule 61.2 did not meet current RACT for tank truck loading at bulk terminals. This limit is higher than the emissions limit in nearly every nonattainment area in California, and in a number of nonattainment areas outside California.” In addition, our partial disapproval of SDCAPCD's 2008 RACT SIP also included a disapproval of the District's RACT demonstration for non-CTG major sources of VOCs. The District had not formally adopted a negative declaration for non-CTG major VOC sources.

On December 29, 2020, CARB submitted to the EPA the SDCAPCD's 2015 RACT SIP, which includes a negative declaration adopted for non-CTG major VOC sources for the 2008 RACT SIP which corrects the deficiency in EPA's 2020 disapproval action for the non-CTG major VOC source category. On April 20, 2021, CARB submitted to the EPA amended Rule 61.2 that included a decrease in emission limit for bulk terminals to 0.08 pound per 1,000 gallons, which corrects the deficiency in EPA's 2020 disapproval action for the Tank Truck Gasoline Loading CTG category. The EPA's TSD has more information.

Rules in the SIP must be enforceable (see CAA section 110(a)(2)), must not interfere with applicable requirements concerning attainment and reasonable further progress or other CAA requirements (see CAA section 110(l)), and must not modify certain SIP control requirements in nonattainment areas without ensuring equivalent or greater emissions reductions (see CAA section 193).

Generally, SIP rules must require reasonably available control technology (RACT) for each category of sources covered by a CTG document as well as each major source of VOCs in ozone nonattainment areas classified as Moderate or above (see CAA section 182(b)(2)). The SDCAPCD regulates an ozone nonattainment area that is currently classified as a “Severe” nonattainment area for the 2008 8-hour ozone National Ambient Air Quality Standard (NAAQS). 1 Therefore, this rule must implement RACT. Our action evaluates whether Rule 61.2 implements RACT for the Tank Truck Gasoline Loading CTG source category.

States must submit for SIP approval negative declarations for those source categories for which they have not adopted CTG-based regulations (because they have no sources above the CTG-recommended applicability threshold) regardless of whether such negative declarations were made for an earlier SIP. 2 The submittal should provide reasonable assurance that no sources subject to the CTG requirements currently exist in the portion of the ozone nonattainment area that is regulated by the SDCAPCD. Our action evaluates the negative declaration for non-CTG major VOC sources.

Guidance and policy documents that we used to evaluate enforceability, revision/relaxation and rule stringency requirements for the applicable criteria pollutants include the following:

This rule and negative declaration are consistent with CAA requirements and relevant guidance regarding enforceability, RACT, and SIP revisions. Specifically, the rule requirements sufficiently ensure that affected sources and regulators can consistently evaluate and determine compliance. Additionally, our analysis finds that Rule 61.2 represents current RACT for the Tank Truck Gasoline Loading CTG because the rule is as stringent as the CTG and is generally consistent with requirements in other air districts for tank truck gasoline loading at bulk terminals. In addition, our analysis of the District's negative declaration determined that there are no non-CTG VOC sources that exceed the 100 tpy VOC threshold for Moderate ozone nonattainment areas. The Technical Support Document (TSD) has more information on our evaluation.

The TSD includes a recommendation for the next time the local agency modifies the Rule 61.2.

As authorized in section 110(k)(3) of the Act, the EPA proposes to fully approve the submitted Rule 61.2 because it fulfills all relevant requirements. In addition, the EPA proposes approval of the submitted negative declaration for non-CTG major VOC sources for 2008 RACT SIP Moderate area requirements. We will accept comments from the public on this proposal until July 5, 2022. If we take final action to approve the submitted rule and negative declaration, our final action will incorporate this rule into the federally enforceable SIP and stop the sanctions and FIP clocks that are associated with our previous disapproval.

In this rule, the EPA is proposing to include in a final EPA rule regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, the EPA is proposing to incorporate by reference SDCAPCD Rule 61.2, “Transfer of Organic Compounds into Mobile Transport Tanks” as amended on February 10, 2021. The EPA has made, and will continue to make, these materials available through https://www.regulations.gov and at the EPA Region IX Office (please contact the person identified in the FOR FURTHER INFORMATION CONTACT section of this preamble for more information).

Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, the EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this proposed action merely proposes to approve state law as meeting federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this proposed action:

• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011);

• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq. );

• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. );

• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);

• Does not have federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);

• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);

• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);

• Is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA; and

• Does not provide the EPA with the discretionary authority to address disproportionate human health or environmental effects with practical, appropriate, and legally permissible methods under Executive Order 12898 (59 FR 7629, February 16, 1994).

In addition, the SIP is not approved to apply on any Indian reservation land or in any other area where the EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the rule does not have tribal implications and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).