[Federal Register Volume 89, Number 74 (Tuesday, April 16, 2024)]
[Proposed Rules]
[Pages 26798-26807]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-07182]


=======================================================================
-----------------------------------------------------------------------

FEDERAL TRADE COMMISSION

16 CFR Part 310

RIN 3084-AB19


Telemarketing Sales Rule

AGENCY: Federal Trade Commission.

ACTION: Notice of proposed rulemaking.

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

SUMMARY: The Federal Trade Commission (``FTC'' or ``Commission'') 
proposes to amend the Telemarketing Sales Rule (``Rule'') to extend its 
coverage to inbound telemarketing calls by consumers to technical 
support services--i.e., calls that consumers make in response to an 
advertisement through any medium or to a direct mail solicitation. The 
proposed amendment is necessary in light of the widespread deception 
and consumer injury caused by tech support scams. The amendment would 
provide the Commission with the ability to obtain stronger relief in 
cases involving tech support scams, including civil penalties and 
consumer redress.

DATES: Comments must be received by June 17, 2024.

ADDRESSES: Interested parties may file a comment online or on paper by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Write ``Telemarketing Sales 
Rule (16 CFR part 310--NPRM) (Project No. R411001)'' on your comment, 
and file your comment online at https://www.regulations.gov. If you 
prefer to file your comment on paper, mail your comment to the 
following address: Federal Trade Commission, Office of the Secretary, 
600 Pennsylvania Avenue NW, Mail Stop H-144 (Annex T), Washington, DC 
20580.

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

SUPPLEMENTARY INFORMATION:

I. Introduction

    The Federal Trade Commission issues this notice of proposed 
rulemaking (``NPRM'') to invite public comment on a proposed amendment 
to the TSR that would require inbound technical support (``tech 
support'') calls to comply with the Rule.\1\ The Rule is currently 
framed to exempt from its requirements: (1) calls initiated by a 
customer in response to an advertisement through any medium, and (2) 
calls initiated by a customer in response to a direct mail 
solicitation.\2\ The proposal would specifically exclude tech support 
calls from these inbound call exemptions. The NPRM also explains the 
Commission's decision to refrain from proposing changes to the TSR that 
would: (1) require a notice and cancellation mechanism with negative 
option sales or (2) further address business to business (``B2B'') 
calls.\3\
---------------------------------------------------------------------------

    \1\ See 16 CFR part 310. References to the TSR will cite the 
section number (e.g., Sec.  310.6(b)(5)).
    \2\ See Sec.  310.6(b)(5) and (b)(6). The exemptions currently 
exclude certain categories of calls that are likely to be deceptive, 
such as calls relating to investment opportunities and debt relief 
services.
    \3\ The Commission is concurrently issuing a Final Rule that 
would require B2B calls to comply with the TSR's prohibitions on 
deception.
---------------------------------------------------------------------------

    This NPRM invites written comments on all issues raised by the 
proposed amendment, including answers to the specific questions set 
forth in Section IV of this Notice. The Commission has issued a final 
rule--published elsewhere in this same issue of the Federal Register--
that, among other things, will require telemarketers and sellers to 
maintain additional records of their telemarketing transactions and 
prohibit material misrepresentations and false or misleading statements 
in B2B telemarketing calls.

II. Overview of the Telemarketing Sales Rule

    Congress enacted the Telemarketing and Consumer Fraud and Abuse 
Prevention Act (``Telemarketing Act'' or ``Act'') in 1994 to curb 
deceptive and abusive telemarketing practices and provide anti-fraud 
and privacy protections for consumers receiving

[[Page 26799]]

telephone solicitations to purchase goods or services.\4\ The 
Telemarketing Act directed the Commission to adopt a rule prohibiting 
deceptive or abusive telemarketing practices, including prohibiting 
telemarketers from undertaking a pattern of unsolicited calls that 
reasonable consumers would consider coercive or abusive of their 
privacy, restricting the time of day telemarketers may make unsolicited 
calls to consumers, and requiring telemarketers to promptly and clearly 
disclose that the purpose of the call is to sell goods or services.\5\ 
The Act also directed the Commission to address in its rule other acts 
or practices that it found to be deceptive or abusive, including acts 
or practices of entities or individuals that assist and facilitate 
deceptive telemarketing, and to consider including recordkeeping 
requirements.\6\ Finally, the Act authorized State Attorneys General, 
or other appropriate State officials, and private litigants to bring 
civil actions in federal district court to enforce compliance with the 
FTC's rule.\7\
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 6101-6108.
    \5\ 15 U.S.C. 6102(a)(3). The Telemarketing Act was subsequently 
amended in 2001 to add 15 U.S.C. 6102(a)(3)(D), which requires a 
telemarketer to promptly and clearly disclose the purpose calls made 
to solicit charitable contributions. See Uniting and Strengthening 
America by Providing Appropriate Tools Required to Intercept and 
Obstruct Terrorism Act (``USA PATRIOT Act''), Pub. L. 107-56, 115 
Stat. 272 (Oct. 26, 2001).
    \6\ 15 U.S.C. 6101(a); see also 2002 Notice of Proposed 
Rulemaking, 67 FR 4492, 4510 (Jan. 30, 2002).
    \7\ 15 U.S.C. 6103, 6104.
---------------------------------------------------------------------------

    Pursuant to the Act's directive, the FTC promulgated the TSR on 
August 23, 1995.\8\ Since then, the Commission has amended the Rule's 
substantive provisions on four occasions: (1) in 2003 to, among other 
things, create the National Do Not Call Registry and extend the Rule to 
telemarketing calls soliciting charitable contributions; \9\ (2) in 
2008 to prohibit calls playing a recorded message (``robocalls'') 
selling a good or service or soliciting charitable contributions; \10\ 
(3) in 2010 to ban the telemarketing of debt relief services requiring 
an advance fee; \11\ and (4) in 2015 to bar the use in telemarketing of 
certain novel payment mechanisms widely used in fraudulent 
transactions.\12\
---------------------------------------------------------------------------

    \8\ See Statement of Basis and Purpose and Final Rule 
(``Original TSR''), 60 FR 43842 (Aug. 23, 1995).
    \9\ See Statement of Basis and Purpose and Final Amended Rule 
(``2003 TSR Amendments''), 68 FR 4580 (Jan. 29, 2003) (adding Do Not 
Call Registry, charitable solicitations, and other provisions).
    \10\ See Statement of Basis and Purpose and Final Rule 
Amendments (``2008 TSR Amendments''), 73 FR 51164 (Aug. 29, 2008) 
(addressing the use of robocalls).
    \11\ See Statement of Basis and Purpose and Final Rule 
Amendments (``2010 TSR Amendments''), 75 FR 48458 (Aug. 10, 2010) 
(adding debt relief provisions). The prohibition on misrepresenting 
material aspects of debt relief services in Sec.  310.3(a)(2)(x) was 
added in 2010 along with other debt relief provisions. See 2010 TSR 
Amendments, 75 FR at 48498. The Commission subsequently published 
correcting amendments to the text of Sec.  310.4 of the TSR. 
Telemarketing Sales Rule; Correcting Amendments, 76 FR 58716 (Sept. 
22, 2011).
    \12\ See Statement of Basis and Purpose and Final Rule 
Amendments (``2015 TSR Amendments''), 80 FR 77520 (Dec. 14, 2015) 
(prohibiting the use of remotely created checks and payment orders, 
cash-to-cash money transfers, and cash reload mechanisms).
---------------------------------------------------------------------------

    On June 3, 2022, the Commission issued an advance notice of 
proposed rulemaking (``ANPR'') and a separate notice of proposed 
rulemaking (``June NPRM'') \13\ concerning several potential changes to 
the TSR. The June NPRM proposed amending the TSR's recordkeeping 
requirements and requiring B2B calls to comply with the TSR's 
prohibitions on several types of misrepresentations.\14\ The TSR 
currently excludes most B2B calls from the Rule's coverage.\15\ The 
ANPR sought comment on: (1) whether to further modify the TSR's 
treatment of B2B calls including removing the exemption entirely; (2) 
whether the Rule should require sellers of negative option products to 
provide consumers notice before they are billed and a simple mechanism 
to cancel the negative option; and (3) whether to extend the Rule to 
apply to inbound tech support calls.
---------------------------------------------------------------------------

    \13\ 87 FR 3367.
    \14\ Id. at 3367. The June NPRM also proposed adding a new 
definition of ``previous donor.''
    \15\ See Sec.  310.6(b)(7). The exemption for B2B calls excludes 
calls selling nondurable office or cleaning supplies.
---------------------------------------------------------------------------

III. Discussion of Comments

A. Negative Option

    The Commission received seven comments that addressed whether the 
Rule should require a notice and cancellation mechanism with negative 
option sales.\16\ Six of the comments supported creating additional 
protections for negative option sales, and one opposed any changes.
---------------------------------------------------------------------------

    \16\ Many commenters filed one comment either in response to the 
ANPR or June NPRM that addressed issues raised by both documents. We 
address relevant comments that were filed in response to both 
rulemakings. We cite public comments by name of the commenting 
organization or individual, the rulemaking (ANPR comments were 
assigned ``33'' and the NPRM comments were assigned ``34'') and the 
comment number.
---------------------------------------------------------------------------

    The Professional Association for Customer Engagement (``PACE'') 
opposed any changes to the Rule to address negative options. PACE 
claimed many consumers ``embrace negative option offers'' and regularly 
check their bank statements to identify and stop unwanted recurring 
charges.\17\ PACE also argued requiring sellers or telemarketers to 
give notice to consumers before they are billed for recurring payments 
would ``amount to yet another nuisance.'' \18\
---------------------------------------------------------------------------

    \17\ PACE 34-21 at 9.
    \18\ Id.
---------------------------------------------------------------------------

    The other six commenters supported amending the Rule to create 
greater protections for negative option sales. Three of those comments 
expressed general support for the Rule requiring notice and a simple 
cancellation method for negative options sales.\19\ The National 
Association of Attorneys General (``NAAG''), and the Electronic Privacy 
Information Center, along with thirteen other consumer organizations 
(``EPIC''), observed that negative options continue to grow in 
popularity.\20\ NAAG's comment ``echoes sentiments expressed by State 
AGs for more than a decade,'' though those sentiments were directed to 
negative options generally as opposed to the specific benefits or risks 
of negative options sold by telemarketing.\21\ NAAG noted negative 
option plans have become ``increasingly prevalent'' over the past 
decade ``especially as home delivery became more popular during the 
COVID-19 pandemic.'' \22\ EPIC cited a prediction made by UBS that the 
``subscription economy'' will more than double by 2025, and it noted 
the rise of a ``cottage industry'' to help consumers manage and cancel 
their subscriptions.\23\
---------------------------------------------------------------------------

    \19\ Two of those comments were anonymous, 33-10 and 33-11, and 
one was made by Kara V, 33-12.
    \20\ NAAG 33-16; EPIC 33-17. The other individuals and 
organizations participating in the EPIC comment are: National 
Consumer Law Center (on behalf of its low-income clients), Center 
for Digital Democracy, Consumer Action, Consumer Federation of 
America, FoolProof, Mountain State Justice, National Consumers 
League, New Jersey Citizen Action, Patient Privacy Rights, Public 
Good Law Center, Public Justice Center, Public Knowledge, South 
Carolina Appleseed Legal Justice Center, Cathy Lesser Mansfield 
(Senior Instructor in Law, Case Western Reserve University School of 
Law).
    \21\ NAAG 33-16 at 3-4.
    \22\ Id. at 3.
    \23\ EPIC 33-17 at 7.
---------------------------------------------------------------------------

    Commenters also expressed concern for rules that would create 
inconsistent regulation of negative options. The Third Party Payments 
Association (``TPPA'') urged the FTC to use its rule making authority 
to ``promulgate consistent requirements across its various rules, 
regardless of sales channel, means of communication and/or method of 
obtaining payment authorization.'' \24\ EPIC also noted Visa and 
Mastercard require sellers to provide advance notice before the end

[[Page 26800]]

of a trial period, and it cautioned ``leaving these safeguards up to 
individual companies will create a patchwork of different policies.'' 
\25\
---------------------------------------------------------------------------

    \24\ TPPA 34-14 at 2.
    \25\ EPIC 33-17 at 8. EPIC also proposed that the Rule specify 
the timing, manner of delivery, and content of the notice and also 
set standards for cancellation.
---------------------------------------------------------------------------

    At the same time the Commission has been considering amendments to 
the Rule, it has also been considering a broader rule that would 
address negative option sales regardless of the method through which 
the sale is made. On October 2, 2019, the Commission issued an advance 
notice of proposed rulemaking regarding the need for a ``Rule 
Concerning the Use of Prenotification Negative Option Plans,'' \26\ and 
on April 24, 2023, the Commission issued a notice of proposed 
rulemaking (``Negative Option NPRM'').\27\ The Negative Option NPRM 
would apply to sales calls made by telephone. It proposes a rule that 
would, among other things: require a clear and conspicuous disclosure 
of the negative option feature and its conditions; require sellers to 
obtain consumers' express informed consent to the negative option 
transaction; and require sellers to provide a simple mechanism to 
cancel the negative option that is at least as easy as the method used 
to initiate the transactions. Because the proposed Negative Option Rule 
addresses the commenters' suggestions including the preference for a 
rule that would apply to all transactions, instead of potentially 
creating different regulatory regimes depending on the sales channel, 
the Commission will not amend the TSR to address negative option 
transactions at this time.
---------------------------------------------------------------------------

    \26\ See ANPR, 84 FR 52393 (Oct. 2, 2019).
    \27\ 88 FR 24716 (Apr. 24, 2023).
---------------------------------------------------------------------------

B. Business to Business

    The Commission received fifteen comments addressing the ANPR's 
question of whether the Commission should modify the TSR's B2B 
provision beyond the proposal in the June NPRM that would subject B2B 
calls to the TSR's prohibitions on misrepresentations. Ten comments 
supported removing the B2B exemption entirely, and five comments 
opposed making any changes. Eight of the ten comments supporting 
removing the B2B provision were made by consumers.\28\ Two of the 
consumers referred to the B2B exemption as a ``loophole,'' and one 
complained about receiving unwanted B2B telemarketing calls.\29\
---------------------------------------------------------------------------

    \28\ The comments are 34-9, 34-11, 33-5, 33-9, 33-10, 33-11, 33-
12, and 33-13.
    \29\ See 33-5; 33-9.
---------------------------------------------------------------------------

    NAAG and EPIC supported removing the B2B exemption entirely. NAAG 
called the exemption a ``relic of a bygone era.'' \30\ NAAG cited data 
showing that: in 2020 more than 62% of U.S. households did not have a 
landline; in 2020 only 26% of employees have employer-provided mobile 
phones; and in 2018 36% of workers participated in the gig economy in 
some capacity.\31\ EPIC noted the ``operational realities of work have 
changed'' and the TSR should be amended to better reflect those 
realities.\32\
---------------------------------------------------------------------------

    \30\ NAAG 33-16 at 8.
    \31\ Id.
    \32\ EPIC 33-17 at 11-12.
---------------------------------------------------------------------------

    Several commenters who opposed making any changes to the Rule 
argued the Commission lacks the legal authority to remove the B2B 
exemption because the Telemarketing Act is focused on harms to 
consumers.\33\ Three commenters supported keeping the B2B exemption 
without modification. The Chamber of Commerce asserted the B2B 
exemption ``has proven beneficial to the business community.'' \34\ The 
Revenue Based Finance Coalition (``RBFC'') argued additional regulation 
of business activities is unwarranted ``given the sophistication of the 
parties to the transaction'' and regulation could ``increase the cost 
of capital available to small businesses.'' \35\ TPPA also noted its 
members use telemarketing to engage with and acquire potential 
customers.\36\
---------------------------------------------------------------------------

    \33\ National Federation of Independent Business 34-1 at 9-11; 
PACE 33-20 at 7.
    \34\ Chamber of Commerce 34-24 at 2.
    \35\ RBPFC 34-13 at 3-5.
    \36\ TPPA 34-14 at 2.
---------------------------------------------------------------------------

    The Commission is persuaded that it is appropriate to modify the 
B2B exemption to require compliance with the TSR's prohibitions on 
misrepresentation and false or misleading statements but not to require 
compliance with all other TSR requirements. The comments do not provide 
sufficient support to warrant modifying the B2B exemption beyond the 
proposal in the ANPR that would require all B2B calls to comply with 
the TSR's prohibitions on misrepresentations. The ANPR sought 
information about the market for B2B telemarketing generally, including 
whether businesses appreciate B2B telemarketing as a way to sell or buy 
products. The ANPR also sought comment on whether businesses believe 
they are harmed by B2B telemarketing or subject to unwanted B2B calls. 
The Commission noted it is ``particularly interested in seeking comment 
on the number of sellers or telemarketers who engage in telemarketing 
to businesses'' \37\ and it asked about the kinds of goods or services 
that are sold through B2B telemarketing, as well as how often 
businesses receive B2B telemarketing calls.\38\ Only three comments 
addressed these broader questions. TPPA claimed its members rely on 
telemarketing to sell their products, and two anonymous commenters 
claimed they receive an excessive volume of B2B telemarketing 
calls.\39\ As NAAG and EPIC described, the Commission recognizes the 
increasing interchangeability of personal and business phones. But, as 
a whole, these comments do not adequately address the nature or scope 
of relevant problems, and they do not enable the Commission to assess 
related harm flowing from B2B telemarketing in order to craft proposed 
changes that would mitigate or address such harm. The Commission will 
consider further modifications to the B2B exemption at a later date if 
the record demonstrates any modifications may be warranted.
---------------------------------------------------------------------------

    \37\ ANPR, 87 FR at 33674.
    \38\ Id. at 33675.
    \39\ TPPA 34-14 at 2; 33-5; and 33-10.
---------------------------------------------------------------------------

C. Tech Support

    The Commission received ten comments addressing whether the TSR 
should require inbound tech support calls to comply with the TSR. Nine 
comments supported the proposal: six filed anonymously or by consumers 
and three filed by organizations.\40\ NAAG ``wholeheartedly'' agreed 
with the proposal and believed that amending the TSR will have a 
``substantial effect'' on tech support scams.\41\ NAAG stated the scams 
``have become one of the most prevalent scams in the nation over the 
past few years.'' \42\ EPIC also supported the proposal and noted the 
``serious nature of this fraud is comparable to that in the 
transactions already singled out for coverage of inbound calls.'' \43\ 
USTelecom--The Broadband Association (``USTelecom'') also supported the 
proposal, noting tech support scams are a ``significant menace for both 
consumers and businesses.'' \44\
---------------------------------------------------------------------------

    \40\ The comments are Jennifer Pierce 33-04; Kara V. 33-12; 
Anonymous 33-02; Anonymous 33-10; and Anonymous 33-11.
    \41\ NAAG 33-16 at 6.
    \42\ Id. at 7.
    \43\ EPIC 33-17 at 10.
    \44\ UST 33-14 at 7.
---------------------------------------------------------------------------

    TPPA opposed ``prohibiting inbound telemarketing calls.'' \45\ TPPA

[[Page 26801]]

acknowledged these scams disproportionately affect older adults, but it 
contended those problems will ``diminish over time'' as consumers 
become more familiar with technology.\46\ TPPA also cautions that 
``prohibiting'' inbound tech support calls could raise conflicts with 
the FTC's Policy Statement on Repair Restrictions, create confusion for 
consumers and businesses, and ``unduly burden legitimate business 
activity by prohibiting Inbound telemarketing of technical support 
services.'' \47\
---------------------------------------------------------------------------

    \45\ TPPA 34-14 at 2. The ANPR did not propose prohibiting 
inbound tech support calls. It proposed requiring inbound tech 
support calls to comply with the TSR. It is not clear from TPPA's 
comment whether TPPA's concerns are limited to the effects of 
prohibiting tech support calls as opposed to merely requiring the 
calls to comply with the TSR.
    \46\ Id.
    \47\ Id.
---------------------------------------------------------------------------

    As explained below, the scope and severity of injury from tech 
support scams, including their impact on older adults, warrants 
amending the TSR.\48\ The Commission is mindful of concerns the 
proposed amendment may unduly burden businesses, and the Commission 
seeks comment on whether the proposed Rule will burden businesses and 
how any undue burdens can be ameliorated.
---------------------------------------------------------------------------

    \48\ See FTC Report to Congress, Protecting Older Consumers, 
2021-2022 (``2022 Protecting Older Consumers Report'') at 31 (Oct. 
18, 2022), available at https://www.ftc.gov/reports/protecting-older-consumers-2021-2022-report-federal-trade-commission (last 
visited Apr. 24, 2023).
---------------------------------------------------------------------------

IV. Proposed Rule

A. Overview of Tech Support Scams

    Tech support scams can begin in a variety of ways. Sometimes the 
scammer places outbound calls to consumers warning them their computers 
have been infected.\49\ Other scammers use deceptive computer pop-up 
messages that claim the consumer's computer has a problem and direct 
the consumer to call a phone number to fix the errors.\50\ Still other 
scammers place advertisements with search engines that appear when 
consumers search for their computer company's tech support telephone 
number.\51\ And sometimes, scammers pay computer security software 
companies so that when consumers call to activate their service, they 
reach the scammer and are pitched additional and unnecessary products 
and services.\52\ Once consumers connect with the scammer, whether 
through outbound telemarketing or inbound telemarketing, the scammers 
deceive consumers about a variety of problems with their computers and 
dupe consumers into purchasing subscription tech support services or 
software they do not need.\53\
---------------------------------------------------------------------------

    \49\ See, e.g., Prepared Statement of the Federal Trade 
Commission Before the United States Senate Special Committee on 
Aging on Combatting Technical Support Scams (``Tech Support 
Testimony''), at 3-5 (Oct. 21, 2015), available at https://www.ftc.gov/system/files/documents/public_statements/826561/151021techsupporttestimony.pdf (last visited Jan. 31, 2022).
    \50\ Id.
    \51\ Id; see also FTC v. Click4Support, LLC, No. 15-cv-05777-SD, 
at 9-10 (E.D. Pa. Oct. 26, 2015), available at https://www.ftc.gov/system/files/documents/cases/151113click4supportcmpt.pdf (last 
visited Jan. 31, 2022).
    \52\ See FTC v. Inbound Call Experts, No. 9:14-cv-81935 (S.D. 
Fla. Nov. 19, 2014), available at https://www.ftc.gov/system/files/documents/cases/141119icecmpt.pdf (last visited June 23, 2023).
    \53\ Tech Support Testimony at 3.
---------------------------------------------------------------------------

    Although tech support scams have typically targeted consumers 
looking for help with computers, tech support scams also target 
consumers looking for help with other electronic devices, such as 
cellular phones and smart home devices. News stories report on 
consumers encountering tech support scams when they search for help 
with their iPhones \54\ or look for support for their Kindle 
tablets.\55\ In August 2022, Amazon filed a lawsuit alleging a tech 
support operation targeted consumers who were seeking help with their 
smart home doorbells and streaming video services.\56\
---------------------------------------------------------------------------

    \54\ ``Woman loses $1,500 to fake Apple Customer Service Scam,'' 
WCPO ABC 9, Cincinnati, (May 20, 2022), available at https://www.wcpo.com/money/consumer/dont-waste-your-money/woman-loses-1-500-to-fake-apple-customer-service-scam (last visited June 23, 2023).
    \55\ ``Don't get Scammed by Fake Amazon Kindle and Fire Tablet 
Support Sites'' (Feb. 22, 2016), available at https://blog.the-ebook-reader.com/2016/02/22/dont-get-scammed-by-fake-amazon-kindle-and-fire-tablet-support-sites/ (last visited June 23, 2023).
    \56\ Amazon.com, Inc. v. Pionera, Inc., 2:22-cv-1491 (E.D. Cal. 
Aug. 23, 2022).
---------------------------------------------------------------------------

    Consumer complaints about tech support scams have increased 
dramatically over the last few years, ranging from approximately 40,000 
complaints in 2017 to nearly 115,000 complaints in 2021.\57\ 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 of approximately $500 for consumers over the age of 
60.\58\
---------------------------------------------------------------------------

    \57\ See FTC Consumer Sentinel Network Databook 2022 at 86, 
available at https://www.ftc.gov/reports/consumer-sentinel-network-data-book-2021 (last visited June 23, 2023).
    \58\ See, FTC Data Spotlight (``Tech Support Spotlight''), 
available at https://www.ftc.gov/news-events/blogs/data-spotlight/2019/03/older-adults-hardest-hit-tech-sugpport-scams (last visited 
Jan. 31, 2022).
---------------------------------------------------------------------------

    Moreover, tech support scams disproportionately harm older 
consumers, with consumers 60 years of age and older being five times 
more likely to report a financial loss to tech support scams compared 
to younger consumers.\59\ Data shows tech support scams have 
consistently caused such disproportionate harm to older consumers. From 
2015 to 2018, older consumers filed more reports on tech support scams 
than on any other fraud category.\60\
---------------------------------------------------------------------------

    \59\ See 2022 Protecting Oder Consumers Report at 31, available 
at https://www.ftc.gov/reports/protecting-older-consumers-2021-2022-report-federal-trade-commission (last visited June 23, 2023). In 
2020, older consumers were six times as likely to report a financial 
loss to tech support scams as compared to younger consumers. See FTC 
Report to Congress, Protecting Older Consumers, 2019-2020 (``2020 
Protecting Older Consumers Report'') at 6 (Oct. 18, 2020) available 
at https://www.ftc.gov/system/files/documents/reports/protecting-older-consumers-2019-2020-report-federal-trade-commission/p144400_protecting_older_adults_report_2020.pdf (last visited April. 
24, 2023).
    \60\ Tech Support Spotlight; see also FTC Report to Congress, 
Protecting Older Consumers, 2018-2019 (``2019 Protecting Older 
Consumers Report'') at 5 (Oct. 18, 2019), available at https://www.ftc.gov/reports/protecting-older-consumers-2018-2019-report-federal-trade-commission (last visited Jan. 31, 2022). In 2021, 
reports of online shopping frauds and business imposter frauds were 
the top fraud complaint for older consumers, with tech support scams 
dropping to third. 2022 Protecting Older Consumers Report, at 31. 
Older consumers, however, are disproportionately more likely to lose 
money to tech support scams. Id.
---------------------------------------------------------------------------

B. Law Enforcement and Other Responses

    The Commission has responded to tech support scams through consumer 
education and law enforcement actions. For consumer education, the 
Commission has issued guidance to consumers including ``How to Spot, 
Avoid, and Report Tech Support Scams,'' \61\ and ``Keep tech support 
strangers out of your computer.'' \62\ The Commission has also 
responded to particular tech support campaigns with consumer education 
such as ``Fake Calls from Apple and Amazon Support: What you need to 
know,'' \63\ ``No gift cards for tech support scammers,'' \64\ and 
``FTC asking for access to your computer? It's a scam.'' \65\ Other 
government agencies and consumer organizations have also

[[Page 26802]]

issued guidance on tech support scams.\66\
---------------------------------------------------------------------------

    \61\ ``How to Spot, Avoid, and Report Tech Support Scams'' 
(Sept. 6, 2022), available at https://consumer.ftc.gov/articles/how-spot-avoid-and-report-tech-support-scams (last visited June 23, 
2023).
    \62\ ``Keep tech support strangers out of your computer'' (Mar. 
7, 2019), available at https://consumer.ftc.gov/consumer-alerts/2019/03/keep-tech-support-strangers-out-your-computer (last visited 
June 23, 2023).
    \63\ ``Fake Calls from Apple and Amazon Support: What you need 
to know'' (Dec. 3, 2020), available at https://consumer.ftc.gov/consumer-alerts/2020/12/fake-calls-apple-and-amazon-support-what-you-need-know (last visited June 23, 2023).
    \64\ ``No gift cards for tech support scammers'' (June 6, 2018), 
available at https://consumer.ftc.gov/consumer-alerts/2018/06/no-gift-cards-tech-support-scammers (last visited June 23, 2023).
    \65\ ``FTC asking for access to your computer? It's a scam'' 
(Apr. 6, 2018), available at https://consumer.ftc.gov/consumer-alerts/2018/04/ftc-asking-access-your-computer-its-scam (last 
visited June 23, 2023).
    \66\ See, e.g., AARP, ``How to Get Good Tech Support'' (Jan. 3, 
2022), available at https://www.aarp.org/home-family/personal-technology/info-2021/tips-for-getting-tech-support.html (last 
visited June 23, 2023); CFPB, ``What you should do about tech 
support scams'' (Jan. 21, 2021), available at https://www.consumerfinance.gov/about-us/blog/what-you-should-know-about-tech-support-scams/ (last visited June 23, 2023).
---------------------------------------------------------------------------

    In addition to consumer education, the Commission and other State 
and Federal law enforcement partners have brought a multitude of 
actions against tech support scams. For example, on May 12, 2017, the 
Commission announced ``Operation Tech Trap'' which consisted of 29 law 
enforcement actions brought by the Commission and other law enforcement 
agencies against tech support schemes.\67\ On March 7, 2019, the 
Department of Justice announced the largest-ever elder fraud sweep, 
which focused on tech-support scams and involved actions against ``more 
than 260 defendants from around the globe who victimized more than two 
million Americans.'' \68\ The Commission has filed numerous tech 
support cases outside the scope of the sweeps.\69\
---------------------------------------------------------------------------

    \67\ Press Release, FTC and Federal, State and International 
Partners Announce Major Crackdown on Tech Support Scams (May 12, 
2017), available at https://www.ftc.gov/news-events/press-releases/2017/05/ftc-federal-state-international-partners-announce-major-crackdown (last visited June 23, 2023).
    \68\ Press Release, Justice Department Coordinates Largest-Ever 
Nationwide Elder Fraud Sweep (Mar. 7, 2019), available at https://www.justice.gov/opa/pr/justice-department-coordinates-largest-ever-nationwide-elder-fraud-sweep-0 (last visited June 23, 2023).
    \69\ See, e.g., United States v. Nexway SASU, No. 1:23-cv-900 
(D.D.C. Apr. 3, 2023) (complaint alleging that Nexway provided 
payment processing services for several deceptive tech support 
operations), available at https://www.ftc.gov/system/files/ftc_gov/pdf/nexway-complaint.pdf (last visited Apr. 19, 2023); FTC v. 
RevenueWire, Inc., No. 1:20-cv-1032 (D.D.C. April 21, 2020) 
(complaint alleging that companies to which RevenueWire provided 
payment processing services used pop-up dialog boxes that claimed to 
have detected computer infections and directed consumers to call a 
1-800 number), available at https://www.ftc.gov/system/files/documents/cases/revcomp3.pdf (last visited Jan. 31, 2022); FTC v. 
Boost Software, Inc., No. 14-cv-81397 (S.D. Fla. Nov. 10, 2014), 
available at https://www.ftc.gov/system/files/documents/cases/141119vastboostcmpt.pdf (last visited Jan. 31, 2022); FTC v. 
Click4Support, LLC, No. 15-cv-05777-SD, at 9-10 (E.D. Pa. Oct. 26, 
2015), available at https://www.ftc.gov/system/files/documents/cases/151113click4supportcmpt.pdf (last visited Jan. 31, 2022) 
(``Click4Support''); FTC v. Inbound Call Experts, LLC, 9:14-cv-81395 
(S.D. Fla. Nov. 2014), available at https://www.ftc.gov/system/files/documents/cases/141119icecmpt.pdf (last visited June 23, 2023) 
(``Inbound Call Experts'').
---------------------------------------------------------------------------

    While the Commission has sued tech support scams for engaging in 
deceptive practices under the TSR where applicable, the Commission has 
brought cases under the FTC Act alone if the telemarketer's practices 
could arguably fall within an exception to the TSR. In FTC v. 
PCCare247, for example, the Commission used the FTC Act to seek 
monetary relief from a tech support operation that placed deceptive 
online advertisements to induce consumers to place inbound calls.\70\ 
The calls at issue in PCCare 247 may have fallen outside of the Rule to 
the extent they were telephone calls initiated by a consumer in 
response to an advertisement.\71\ Similarly in FTC v. Vylah Tec LLC, 
the Commission used the FTC Act to seek monetary relief from a tech 
support operation that lured consumers by placing deceptive pop up 
messages warning consumers their computers had been infected with 
viruses.\72\ The calls at issue in Vylah Tec may have fallen outside 
the Rule if a court were to determine that pop-up messages are a form 
of advertisement or a direct mail solicitation under the Rule.\73\
---------------------------------------------------------------------------

    \70\ FTC v. PCCare247, Inc., 12-cv-7189 (S.D.N.Y. Oct. 3, 2012) 
(``PCCare247''), available at https://www.ftc.gov/sites/default/files/documents/cases/2012/10/121003pccarecmpt.pdf (last visited 
Jan. 31, 2022) (``PCCare247'').
    \71\ See Sec.  310.6(b)(5). Even if the consumer's call was in 
response to an advertisement, the Rule would still apply to 
instances of upselling included in the call. Section 
310.6(b)(5)(iii). If, for example, the consumer initiated a call for 
technical support with their computer and the consumer was pitched 
additional software products or computer services, that transaction 
would likely be an upsell under the Rule.
    \72\ See, e.g., FTC v. Vylah Tec LLC, No. 17-cv-228-FtM-99MRM 
(M.D. Fla. May 17, 2017) (``Vylah Tec''), available at https://www.ftc.gov/system/files/documents/cases/162_3253_vylah_tec_llc_complant.pdf (last visited Jan. 31, 2022).
    \73\ In an abundance of caution, the Commission pursued its 
claim regarding the pop-ups under section 5. The Commission, 
however, does not believe such pop-up messages are exempt under the 
Rule. The exemption in Sec.  310.6(b)(5) ``applies to calls in 
response to television commercials, infomercials, home shopping 
programs, magazine and newspaper advertisements, and other forms of 
mass media advertising solicitation. . . . In the Commission's 
experience, calls responding to general media advertising do not 
typically involve the forms of deception and abuse the Act seeks to 
stem.'' 60 FR at 43860. The Commission also generally has not 
observed pop-up messages that contained the disclosures necessary to 
fall within the exemption for direct mail solicitations.
---------------------------------------------------------------------------

    In April 2021, the Supreme Court's decision in AMG Capital 
Management, LLC v. FTC overturned forty years of precedent from the 
U.S. Circuit Courts of Appeal that held the Commission could take 
action under the FTC Act to return money unlawfully taken from 
consumers through deceptive practices.\74\ As a result, the Commission 
is now limited in its ability to obtain monetary relief from tech 
support scams whose business practices, in some cases, arguably place 
the scams beyond the reach of the Rule. Amending the Rule will clarify 
all tech support scams are potentially subject to the Rule.
---------------------------------------------------------------------------

    \74\ See AMG Cap. Mgmt., LLC v. FTC, 141 S. Ct. 1341, 1352 
(2021).
---------------------------------------------------------------------------

C. Discussion of the Proposed Rule

    The proposed rule would define ``technical support service'' and 
amend the exemptions for calls in response to advertisements and calls 
in response to direct mail solicitations, to add technical support 
services to the categories of calls excluded from the exemptions.
1. Definition of Technical Support Service.
    The proposed rule defines technical support services as ``any plan, 
program, software or service that is marketed to repair, maintain, or 
improve the performance or security of any device on which code can be 
downloaded, installed, run, or otherwise used, such as a computer, 
smartphone, tablet, or smart home product.'' This definition is broad 
enough to encompass a wide range of electronic devices.
    A broad definition is necessary because, in the Commission's 
experience, tech support scams have shown an ability to evolve with 
changes in consumer behavior and technology. The Commission's first 
actions against tech support scams involved telemarketers making 
outbound calls to consumers in which the telemarketer claimed to be a 
Microsoft technician who had identified a virus on the consumer's 
computer.\75\ As consumers learned that Microsoft does not call 
consumers to warn them about viruses on their computers, tech support 
scams began relying on intrusive popup messages that claimed the 
computers had been infected with viruses.\76\ As web browsers began 
blocking popup messages, tech support scammers have taken other means 
to reach consumers, including placing advertisements that solicit 
inbound calls from consumers looking for tech support.\77\ The 
techniques scammers use to alarm consumers have also evolved. Early 
tech support scams relied on ``red x's'' in a computer's event viewer 
while later scams have instructed consumers to download software 
programs that run

[[Page 26803]]

diagnostics of computers and exaggerated the risks the diagnostics 
reveal.\78\ Scammers have also evolved from targeting computers to also 
targeting a variety of electronic devices.\79\
---------------------------------------------------------------------------

    \75\ Press Release, ``FTC Halts Massive Tech Support 
Scams''(Oct. 3, 2012), available at https://www.ftc.gov/news-events/news/press-releases/2012/10/ftc-halts-massive-tech-support-scams 
(last visited June 23, 2023).
    \76\ See Vylah Tec. Microsoft has also advised consumers to keep 
in mind that Microsoft does not make unsolicited phone calls ``to 
request personal or financial information, or to fix your 
computer.'' ``Tech Support scams.'' available at https://learn.microsoft.com/en-us/microsoft-365/security/intelligence/support-scams?view=o365-worldwide (last visited Apr. 19, 2023).
    \77\ See Click4Support; Inbound Call Experts.
    \78\ See PCCare247; Elite IT.
    \79\ Supra notes 54-56.
---------------------------------------------------------------------------

    The unifying characteristic of tech support scams is that scammers 
attempt to profit from consumers' problems with technology and 
potential lack of familiarity with complicated electronic devices. As 
technology changes, tech support scams are likely to change as well, 
and the definition of tech support in the proposed rule is intended to 
be broad enough to encompass these changes.
    The definition of tech support also excludes ``any plan, program, 
software, or services in which the person providing the repair obtains 
physical possession of the device being repaired.'' In the Commission's 
experience, tech support scams have not involved situations where the 
repair includes physical interaction with the device, such as replacing 
a computer hard drive or repairing a broken phone screen.\80\ Whether 
this interaction involves face-to-face contact between the consumer and 
the person providing the repair or the consumer shipping the device to 
the repair person and waiting for a return shipment, the Commission 
believes tech support scams rarely involve physical repair of 
electronic devices.\81\ The Rule currently exempts calls in which 
payment is not required until ``after a face-to-face sales or donation 
presentation by the seller.'' \82\ In creating that exemption, the 
Commission explained the ``occurrence of a face-to-face meeting limits 
the incidence of telemarketing deception and abuse'' because the 
``paradigm of telemarking fraud involves an interstate telephone call 
in which the customer has no other direct contact with the caller.'' 
\83\ Here too, the ``paradigm'' of tech support scams are consumers 
speaking with third parties with whom they have limited contact and 
often at a time when they have been misled to believe they have a 
problem with their electronic device. Physical in-person repair does 
not involve the same pressures as remote tech support, and it is less 
conducive to scams. The Commission seeks comment on the proposed 
definition of tech support.
---------------------------------------------------------------------------

    \80\ Tech support scammers sometimes obtain remote access to a 
computer or electronic device to perform diagnosis or service. The 
``physical possession'' is not intended to apply when the tech 
support involves remote access to a device.
    \81\ The Commission's lawsuit against Office Depot is an 
exception to this pattern. See FTC v. Office Depot Inc., 9:19-cv-
80431 (S.D. Fla. Mar. 29, 2019) (alleging that Office Depot and 
Support.com deceived consumers who brought their computers into 
Office Depot stores for support services).
    \82\ Section 310.6(b)(3).
    \83\ Original TSR, 60 FR at 43860.
---------------------------------------------------------------------------

2. Requirements.
    The proposed rule would add ``tech support services'' to the 
categories of calls excluded from the TSR's exemptions for inbound 
calls ``in response to an advertisement through any medium'' and 
inbound calls in response to ``a direct mail solicitation,'' including 
email.\84\ The Commission created these exemptions in the original Rule 
based on its consideration of four factors: whether Congress intended 
certain types of sales activity to be exempt under the Rule; whether 
the conduct or business in question ``already is regulated extensively 
by Federal or State law''; whether the conduct ``lends itself easily to 
the forms of deception or abuse that the Act is intended to address''; 
and whether requiring business to comply the Rule would be ``unduly 
burdensome weighed against the likelihood that sellers or telemarketers 
engaged in fraud would use an exemption to circumvent Rule coverage.'' 
\85\
---------------------------------------------------------------------------

    \84\ Sections 310.6(b)(5) and 310.6(b)(6). For ``direct mail 
solicitations'' to qualify for the exemption, the solicitations must 
``clearly, conspicuously, and truthfully disclose[] all material 
information listed in Sec.  310.3(a)(1)'' and contain ``no material 
misrepresentation regarding any item contained in Sec.  310.3(d).''
    \85\ Original TSR, 60 FR at 43859.
---------------------------------------------------------------------------

    The Commission decided to create exemptions from the rule for calls 
in response to advertisements and direct mail solicitation because, in 
the Commission's experience, calls in response to these solicitations 
``do not typically involve the forms of deception and abuse the Act 
seeks to stem.'' \86\ At the same time, the Commission recognized 
``some deceptive sellers or telemarketers use mass media or general 
advertising to entice their victims to call, particularly in relation 
to the sale of investment opportunities, specific credit-related 
programs'' and other areas.\87\ The Commission decided to exclude 
certain categories of calls from the exemptions given its ``experience 
with the marketing of these deceptive telemarketing schemes.'' \88\ The 
Commission's experience with tech support schemes also supports 
excluding tech support calls from the exemptions for inbound calls in 
response to advertisements and direct mail solicitations.
---------------------------------------------------------------------------

    \86\ Id. at 43860.
    \87\ Id.
    \88\ Id.
---------------------------------------------------------------------------

    The Commission is mindful of the potential burden the proposed 
amendment may have on tech support businesses that do not engage in 
deceptive practices. The proposed amendment has been drafted in an 
attempt to minimize the burden on these businesses, and the Commission 
seeks comment on whether the burden would be undue or can be further 
reduced.
    Two features of the proposed amendment would minimize the burden on 
legitimate tech support businesses. First, tech support calls ``that 
are not the result of any solicitation by a seller, charitable 
organization, or telemarketer'' would still be exempt under Sec.  
310.6(b)(5). As the Commission recognized when it created this 
exemption, these type of calls are not ``part of a telemarketing `plan, 
program, or campaign * * * to induce the purchase of goods or services' 
under the Act.'' \89\ The Commission further explained: ``This 
exemption covers incidental uses of the telephone that are not in 
response to a direction solicitation, e.g., calls from a customer . . . 
to obtain information or customer technical support.'' \90\ Under this 
exemption, as long as the call is not solicited, a consumer calling 
their computer manufacturer for technical support or a home security 
company about a disruption to their service would not be subject to the 
Rule unless, as part of that transaction, the company also engaged in 
an upsell.\91\
---------------------------------------------------------------------------

    \89\ Id.
    \90\ Id.
    \91\ Section 310.6(b)(4).
---------------------------------------------------------------------------

    Second, excluding tech support where the person providing the 
service takes physical possession of the device will also limit the 
breadth of the rule. Consumer calls to a local repair shop or to the 
manufacturer of their device seeking physical repairs will not be 
subject to the Rule. The Commission seeks comment on whether it should 
consider other approaches to reduce any burden imposed by the Rule.

V. Request for Comment

    The Commission seeks comments on all aspects of the proposed 
regulation. The Commission also seeks comments on the estimated burden 
that 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 amendment.

[[Page 26804]]

    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before June 17, 2024. 
Write ``Telemarketing Sales Rule (16 CFR 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 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 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, Mail 
Stop H-144 (Annex T), Washington, DC 20580. If possible, please submit 
your paper comment to the Commission by 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.'' 15 U.S.C. 
46(f); see FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2). In particular, your 
comment should not include 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), 16 CFR 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), 16 CFR 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), 16 CFR 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), 16 CFR 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 June 17, 2024. 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 amendment. 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.

A. Questions for Comments

    1. Should the Commission finalize the proposed rule as a final 
rule? Why or why not? How, if at all, should the Commission change the 
proposed rule in promulgating a final rule?
    2. Is the definition of ``technical support service'' clear and 
understandable? It is ambiguous in any way? How, if at all, should it 
be improved?
    3. Is the definition of ``technical support service'' appropriately 
tailored? Is it overinclusive or underinclusive in any way? How, if at 
all, should it be improved?
    4. Do you support excluding from the definition of technical 
support instances in which the person providing the repair obtains 
physical possession of the device being repaired? Why or why not?
    5. Do you support the proposal to add technical support services to 
the list of calls that do not qualify for the exemptions for calls in 
response to advertisements and direct mail solicitations in Sec.  
310.6(b)(5) and Sec.  310.6(b)(6)? Should the Commission consider other 
modifications to the Rule to address tech support scams?
    6. Would the proposed rule place an undue burden on technical 
support operations that do not engage in deceptive acts or practices? 
If so, what burden would it impose and how can the burden be reduced?
    7. Do you agree with the estimates in the Paperwork Reduction 
Analysis? Why or why not?
    8. How many new calls would be subject to the TSR if the proposed 
rule is adopted?
    9. Would the proposed rule disproportionately benefit or burden 
original equipment manufacturers? If so, how should the proposed rule 
be changed?

VI. Paperwork Reduction Act

    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 October 31, 2025 (OMB Control No. 3084-
0097). The proposed amendment will newly require certain inbound tech 
support calls to comply with the Rule's recordkeeping and disclosure 
requirements. This will increase the PRA burden for sellers or 
telemarketers as detailed below. Accordingly, FTC staff is 
simultaneously submitting this notice of proposed rulemaking and the 
associated Supporting Statement to OMB for review under the PRA.\92\
---------------------------------------------------------------------------

    \92\ This PRA analysis focuses specifically on the information 
collection requirements created by or otherwise affected by the 
proposed amendment.
---------------------------------------------------------------------------

A. Estimated Annual Hours Burden

    The Commission estimates the PRA burden of the proposed amendment 
based on its knowledge of the telemarketing industry and data compiled 
from the Do Not Call Registry. The annual hours of burden for sellers 
or telemarketers will consist of two components: the time required to 
make disclosures and the costs of complying with the Rule's 
recordkeeping requirements.

[[Page 26805]]

    First the Commission estimates that the disclosure burden will take 
19,566 hours. Calculating the disclosure burden requires estimating the 
number of inbound tech support calls that will now be subject to the 
TSR if the proposed amendment goes into effect. The Commission uses the 
same methodology it has used in the past to calculate the disclosure 
burden for categories of calls that are excluded from the TSR's 
exemptions for inbound calls.\93\
---------------------------------------------------------------------------

    \93\ See, e.g., Agency Information Collection Activities; 
Proposed Collection; Comment Request; Extension. 87 FR 23179 (April 
19, 2022).
---------------------------------------------------------------------------

    As it has in the past, the Commission estimates that there are 1.8 
billion inbound telemarketing calls that result in sales, that consumer 
injury from telemarketing fraud is $40 billion a year, and that it 
takes seven seconds to make the disclosures required by the Rule in 
inbound calls.\94\ The Commission estimates the disclosure burden for 
particular categories of calls that are excluded from the TSR's 
exemptions by extrapolating a percentage of those calls based on their 
complaint rates in the FTC's Consumer Sentinel system.\95\ The 
resulting percentage of total fraud complaints must be adjusted to 
reflect the fact that only a relatively small percentage of 
telemarketing calls are fraudulent. To extrapolate the percentage of 
fraudulent telemarketing calls, staff divides a Congressional estimate 
of annual consumer injury from telemarketing fraud ($40 billion) \96\ 
by available data on total consumer and business-to-business 
telemarketing sales ($310.0 billion projected for 2016),\97\ or 13%. 
The two percentages are then multiplied together to determine the 
percentage of the 1.8 billion annual inbound telemarketing calls 
represented by each type of fraud complaint. That number is then 
rounded to the nearest ten. In 2022, there were 2,369,527 fraud 
complaints and 89,158 complaints about tech support.\98\ Thus, the 
general sales disclosure burden is 19,566 hours (1.8 billion inbound 
calls xthe percentage of fraud complaints for tech support (89,158/
2,369,527) xthe percentage of telemarketing calls that are estimated to 
be fraudulent (.13) xthe length of the disclosures (8 seconds per 
disclosure, / 3,600 to convert to hours).
---------------------------------------------------------------------------

    \94\ Id.
    \95\ Id.
    \96\ House Committee on Government Operations, The Scourge of 
Telemarketing Fraud: What Can Be Done Against It, H.R. Rep. 421, 
102nd Cong., 1st Sess. at 7 (Dec. 18, 1991). The FBI believes that 
this estimate overstates telemarketing fraud losses as a result of 
its investigations and closings of once massive telemarketing boiler 
room operations. See FBI, A Byte Out of History: Turning the Tables 
on Telemarketing Fraud (Dec. 8, 2010), available at https://www.fbi.gov/news/stories/2010/december/telemarketing_120810/telemarketing_120810. See also Internet Crime Complaint Center, 2020 
Annual Report on Internet Crime (citing $4.1 billion of losses 
claimed in consumer complaints for 2020), available at https://www.ic3.gov/Media/PDF/AnnualReport/2020_IC3Report.pdf.
    \97\ DMA 2013 Statistical Fact Book (January 2013) projection up 
through 2016, p. 5 (no associated DMA updates made or otherwise 
found thereafter).
    \98\ See FTC, Consumer Sentinel Network Data Book 2022 (February 
2023) (``Sentinel Data'') at 9, 87, available at https://www.ftc.gov/system/files/ftc_gov/pdf/CSN-Data-Book-2022.pdf (last 
visited June 12, 2023).
---------------------------------------------------------------------------

    Second, the estimated recordkeeping burden is 104,250 hours. 
Estimating this burden requires estimating how many new telemarketing 
entities will be subject to the TSR if the proposed amendment goes into 
effect. To create this estimate, staff first estimates the number of 
existing telemarketing entities that engage in tech support sales. In 
calendar year 2022, 10,804 telemarketing entities accessed the Do Not 
Call Registry; however, 549 were ``exempt'' entities obtaining access 
to data.\99\ Of the non-exempt entities, 6,562 obtained data for a 
single State. Staff assumes that these 6,562 entities are operating 
solely intrastate, and thus would not be subject to the TSR. Therefore, 
staff estimates that approximately 3,693 telemarketing entities 
(10,804--549 exempt--6,562 intrastate) are currently subject to the 
TSR. To estimate the percentage of those entities that sell tech 
support products and services, staff again relies on the percentage of 
fraud complaints for tech support out of the total fraud complaints. 
(89,158/2,369,527) which is multiplied by the number of telemarketing 
entities, (3,693) to produce the estimate that 139 telemarketing 
entities receive tech support calls.
---------------------------------------------------------------------------

    \99\ See National Do Not Call Registry Data Book for Fiscal Year 
2022 (``Data Book''), available at https://www.ftc.gov/system/files/ftc_gov/pdf/DNC-Data-Book-2022.pdf (last visited March 21, 2024). An 
exempt entity is one that, although not subject to the TSR, 
voluntarily chooses to scrub its calling lists against the data in 
the Registry.
---------------------------------------------------------------------------

    If the proposed amendment goes into effect, additional businesses 
will likely be covered by the TSR. For example, tech support companies 
that advertise their products through general advertisements and do not 
engage in upselling may be subject to the Rule for the first time.\100\ 
On the other hand, companies that market through a combination of 
advertisements and outbound telemarketing are already subject to the 
Rule. Companies that receive inbound calls from consumers with 
questions about their products who then engage in upsells of technical 
support services are also already subject to the Rule. The Commission 
estimates that the Proposed amendment will increase the number of 
telemarketing entities that receive inbound tech support calls by a 
factor of 5, which would mean that an additional 695 entities will be 
covered by the Rule.
---------------------------------------------------------------------------

    \100\ See Sec.  310.6(b)(5).
---------------------------------------------------------------------------

    The Commission estimates that after implementation of the separate 
Final Rule proceeding which, among other things, requires telemarketers 
and sellers to maintain additional records of their telemarketing 
transactions, complying with the TSR's current recordkeeping 
requirements requires 150 hours for new entrants to develop 
recordkeeping systems that comply with the TSR, for a total annual 
recordkeeping burden of 104,250 hours.\101\
---------------------------------------------------------------------------

    \101\ The Commission is using a Final Rule simultaneously with 
this NPRM.
---------------------------------------------------------------------------

B. Estimated Annual Labor Costs

    The Commission estimates annual labor costs by applying appropriate 
hourly wage rates to the burden hours described above. The Commission 
estimates that the annual labor cost for disclosures will be $315,991. 
This total is the product of applying an assumed hourly wage of $16.15 
for 19,566 hours of disclosures.\102\ The Commission estimates that the 
annual labor cost for recordkeeping will be $3,228,623. This is 
calculated by applying a skilled labor rate of $30.97/hour \103\ to the 
estimated 150 burden hours for the estimated 695 entities that will now 
be covered by the Rule ($30.97 x 150 x 695).
---------------------------------------------------------------------------

    \102\ This figure is derived from the mean hourly wage shown for 
Telemarketers. See ``Occupational Employment and Wages-May 2022,'' 
U.S. Department of Labor, released April 25, 2023 Table 1 
(``National employment and wage data from the Occupational 
Employment Statistics survey by occupation, May 2022''), available 
at https://www.bls.gov/news.release/ocwage.t01.htm (last visited 
July 19, 2023).
    \103\ This figure is derived from the mean hourly wage shown for 
Computer Support Specialists from the U.S. Department of Labor 
source set out in the prior footnote.
---------------------------------------------------------------------------

C. Estimated Annual Non-Labor Costs

    The final rule published in this same issue of the Federal Register 
estimates that the annual non-labor costs are $55 a year, derived from 
$5 for electronically storing audio files, and $50 for storing the 
required records. The Commission thus estimates that the annual non-
labor costs will be $38,255 (695 entries x $55).
    The Commission invites comments on the accuracy of the FTC's burden 
estimates, including whether the methodology and assumptions used are 
valid. Specifically, the Commission invites comments on: (1) whether 
the

[[Page 26806]]

proposed collection of information is necessary for the proper 
performance of the functions of the FTC, including whether the 
information will have practical utility; (2) the accuracy of the FTC's 
estimate of the burden of the proposed collection of information; (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 on those who respond.
    Written comments and recommendations for the proposed information 
collection should be sent within 30 days of publication of this notice 
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.

VII. Regulatory Flexibility Act

    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 amendment on small entities.\104\ The RFA requires that 
the Commission provide an Initial Regulatory Flexibility Analysis 
(``IRFA'') with a proposed rule unless the Commission certifies that 
the rule will not have a significant economic impact on a substantial 
number of small entities.\105\
---------------------------------------------------------------------------

    \104\ 5 U.S.C. 601 through 612.
    \105\ 5 U.S.C. 605.
---------------------------------------------------------------------------

    The Commission believes that the proposed amendment would not have 
a significant economic impact upon small entities, nor will it 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. 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 that it is appropriate to 
publish an IRFA to inquire into the impact of the proposed amendment on 
small entities. The Commission invites comment on the burden on any 
small entities that would be covered and has prepared the following 
analysis.

A. Description of the Reasons the Agency Is Taking Action

    The Commission proposes amending the TSR to explicitly exclude tech 
support calls from the exemptions for inbound calls by consumers in 
response to advertisements and direct mail solicitations from tech 
support services. As described in Section IV, the proposed amendment is 
intended to address the widespread harm caused by deceptive tech 
support services, which disproportionately impact older consumers 
compared to younger ones.

B. Statement of Objectives of, and Legal Basis for, the Proposed 
Amendment

    The objective of the proposed amendment is to lessen the harm 
caused by deceptive tech support scams. The legal basis for the 
proposed amendment is the Telemarketing Act, which authorizes the 
Commission to issue rules to prohibit deceptive or abusive 
telemarketing practices.

C. Description and Estimated Number of Small Entities to Which the Rule 
Will Apply

    The proposed amendment to the Rule affects sellers and 
telemarketers that sell technical support services through inbound 
telemarketing calls that are made in response to advertisements and 
direct mail solicitations. As noted above, staff estimates that there 
are 695 such entities that would be covered by the Rule. For 
telemarketers, a small business is defined by the SBA as one whose 
average annual receipts do not exceed $25.5 million.\106\ It is not 
possible to identify how many of these entities would be 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.
---------------------------------------------------------------------------

    \106\ Telemarketers are typically classified as ``Telemarketing 
Bureaus and Other contact Centers,'' (NAICS Code 561422). See Table 
of Small Business Size Standards Matched to North American Industry 
Classification System Codes, available at https://www.sba.gov/sites/sbagov/files/2023-06/Table%20of%20Size%20Standards_Effective%20March%2017%2C%202023%20%282%29.pdf.
---------------------------------------------------------------------------

D. Projected Reporting, Recordkeeping, and Other Compliance 
Requirements, Including Classes of Small Entities and Professional 
Skills Needed To Comply

    The proposed amendment would require sellers and telemarketers that 
sell technical support services through inbound telemarketing calls 
that are made in response to advertisements and direct mail 
solicitations to comply with the TSR's disclosure and recordkeeping 
requirements. 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 VI above on the Paperwork 
Reduction Act.

E. Identification of Duplicative, Overlapping, or Conflicting Federal 
Rules

    The Commission has not identified any other Federal statutes, 
rules, or policies currently in effect that may duplicate, overlap or 
conflict with the proposed amendment. The Commission invites comment 
and information regarding any potentially duplicative, overlapping, or 
conflicting Federal statutes, rules, or policies.

F. Significant Alternatives to the Proposed Amendment

    The Commission believes that there are no significant alternatives 
to the proposed amendment but is seeking comment on whether the 
proposed rule places an undue burden on technical support operations 
that do not engage in deceptive acts or practices and, if so, how can 
the burden be reduced. The Commission has over many years pursued 
alternatives to the proposed amendment in the form of law enforcement 
and consumer outreach. The continued injury caused by these scams shows 
that the proposed amendment to the Rule is necessary.

VIII. Communications by Outside Parties to the Commissioners or Their 
Advisors

    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.\107\
---------------------------------------------------------------------------

    \107\ See 16 CFR 1.26(b)(5).
---------------------------------------------------------------------------

List of Subjects in 16 CFR Part 310

    Advertising; Consumer protection; Telephone; Trade practices.


[[Page 26807]]


    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:

PART 310--TELEMARKETING SALES RULE

0
1. The authority for part 310 continues to read as follows:

    Authority:  15 U.S.C. 6101-6108.

0
2. Amend Sec.  310.2 by:
0
a. Redesignating paragraphs (ff) through (hh) as paragraphs (gg) 
through (ii); and
0
b. Adding new paragraph (ff).

    The addition reads as follows:


Sec.  310.2  Definitions.

* * * * *
    (ff) Technical Support Service means any plan, program, software, 
or service that is marketed to repair, maintain, or improve the 
performance or security of any device on which code can be downloaded, 
installed, run, or otherwise used, such as a computer, smartphone, 
tablet, or smart home product. Technical support service does not 
include any plan, program, software, or services in which the person 
providing the repair, maintenance, or improvement obtains physical 
possession of the device being repaired.
* * * * *
0
3. Amend Sec.  310.6 by revising paragraphs (b)(5)(i) and (b)(6)(ii) to 
read as follows:


Sec.  310.6   Exemptions.

* * * * *
    (b) * * *
    (5) * * *
    (i) Calls initiated by a customer or donor in response to an 
advertisement relating to investment opportunities, debt relief 
services, technical support services, business opportunities other than 
business arrangements covered by the Franchise Rule or Business 
Opportunity Rule, or advertisements involving offers for goods or 
services described in Sec.  310.3(a)(1)(vi) or Sec.  310.4(a)(2) 
through (4);
* * * * *
    (6) * * *
    (ii) Calls initiated by a customer in response to a direct mail 
solicitation relating to prize promotions, investment opportunities, 
debt relief services, technical support services, business 
opportunities other than business arrangements covered by the Franchise 
Rule or Business Opportunity Rule, or goods or services described in 
Sec.  310.3(a)(1)(vi) or Sec.  310.4(a)(2) through (4);
* * * * *

    By direction of the Commission.
Joel Christie,
Acting Secretary.
[FR Doc. 2024-07182 Filed 4-15-24; 8:45 am]
BILLING CODE 6750-01-P