Commission Seeks Comment on Registry and Other Proposed Changes
to the Telemarketing Sales Rule
January 22, 2002
The Federal Trade Commission today announced a proposal to create
a centralized national "Do Not Call" registry. The registry
would enable consumers to eliminate most telemarketing calls simply
by making one call to the FTC. The proposal is a key component of
the privacy initiative that FTC Chairman Timothy J. Muris announced
in early October. The proposed national "Do Not Call"
registry is one element of the Commission's proposal to modify the
Telemarketing Sales Rule (TSR), which protects consumers from unwanted
and late-night telemarketing calls and prohibits deceptive sales
calls. The proposed amendments to the TSR are designed to enhance
the Rule's ability to prevent deceptive telemarketing practices
and to enable consumers to exert greater control over when and whether
to receive telemarketing calls in their homes.
"Under the FTC's proposal, it would be illegal for telemarketers
to call consumers who place their phone number on the national registry,"
said Howard Beales, Director of the FTC's Bureau of Consumer Protection.
"Today's action is the first step. But, consumers need to understand
that this is a proposal. If adopted, it will be a while before the
national 'Do Not Call' registry can become a reality." A notice
of proposed rulemaking to be published shortly in the Federal Register
will seek public comment on this change and a range of other proposed
amendments to the TSR.
The Commission is also proposing changes to the TSR mandated by
the recently enacted USA PATRIOT Act. Prompted by the events of
September 11, this legislation, among other things, directs the
Commission to expand the TSR to cover calls made to solicit charitable
contributions. (Currently the TSR covers only calls made to sell
goods and services.) By law, non-profit charitable organizations
are exempt from the FTC's jurisdiction, and the USA
PATRIOT Act does not change that. However, the USA PATRIOT Act
does enable the FTC to act against for-profit companies that engage
in fraudulent, deceptive, or abusive practices when they solicit
charitable contributions on behalf of charities or purported charities.
The TSR (16 CFR Part 310) prohibits specific deceptive and abusive
telemarketing acts or practices; requires telemarketers to make
specific disclosures of material information; prohibits misrepresentations;
limits the hours that telemarketers may call consumers; prohibits
calls to a consumer who has asked not to be called again; and sets
payment restrictions for the sale of certain goods and services.
The Act that authorizes the FTC Rule also authorizes both the FTC
and state attorneys general to enforce the TSR in federal court.
The Rule, which marked its fifth anniversary this past March, has
resulted in judgments amounting to more than $152 million in consumer
redress and $500,000 in civil penalties.
The Commission also announced it will hold a public forum on June
5-7, 2002 to allow FTC staff and interested parties to explore and
discuss issues raised during the comment period for the amended
The highlights of the FTC's proposed amendments are provided below.
A detailed summary of these proposals can be found in the notice
of proposed rulemaking, which will be published in the Federal Register
and is available at www.ftc.gov.
Through the proposed rulemaking, the Commission is seeking to:
- Supplement the current company-specific "Do Not Call"
provision with an additional provision that will enable a consumer
to stop calls from all companies within the FTC's jurisdiction
by registering with a central "do-not-call" list maintained
by the FTC;
- Permit a consumer who registers with the central "Do Not
Call" list to receive telemarketing sales calls from an individual
company or charitable organization to which the consumer has provided
his or her express verifiable authorization to make telemarketing
calls to the consumer;
- Modify § 310.3(a)(3) to require express verifiable authorization
for all transactions in which the payment method lacks dispute
resolution protection or protection against unauthorized charges
similar or comparable to those available under the Fair Credit
Billing Act and the Truth in Lending Act;
- Delete § 310.3(a)(3)(iii), the provision allowing a telemarketer
to obtain express verifiable authorization by confirming the transaction
in writing prior to submitting the customer's billing information
Require, in the sale of credit card protection, the disclosure
of the legal limits on a cardholder's liability for unauthorized
- Prohibit misrepresenting that a consumer needs offered goods
or services in order to receive protections he or she already
has under 15 U.S.C. § 1643 (limiting a cardholder's liability
for unauthorized charges on a credit card account);
- Mandate, explicitly, that all required disclosures in §
310.3(a)(1) and § 310.4(d) be made truthfully;
- Expand upon the current prize promotion disclosures to include
a statement that any purchase or payment will not increase a consumer's
chances of winning;
- Prohibit the practices of receiving any consumer's billing information
from any third party for use in telemarketing, or disclosing any
consumer's billing information to any third party for use in telemarketing;
- Prohibit additional practices: blocking or otherwise subverting
the transmission of the name and/or telephone number of the calling
party for caller identification service purposes; and denying
or interfering in any way with a consumer's right to be placed
on a "Do Not Call" list;
Clarify that the use of predictive dialers resulting in "dead
air" violates the Rule;
- Narrow certain of the Rule's exemptions;
- Clarify that facsimile transmissions, electronic mail, and other
similar methods of delivery are direct mail for purposes of the
direct mail exemption; and
- Make all changes necessary to implement the USA PATRIOT Act
amendments to the Telemarketing Act, specifically, expanding the
TSR to cover the solicitation of charitable contributions by for-profit
Opportunity for Public Comment
Six paper copies of each written comment regarding the proposed
amendments should be sent by March 29, 2002 to: FTC, Office of the
Secretary, Room 159, 600 Pennsylvania Ave., N.W., Washington, D.C.
20580. All comments should also be submitted, if possible, electronically
on computer disk, with a label stating the name of the commenter
and the name and version of the word processing program used to
create the document. In addition, the Commission will accept comments
that are submitted to the following e-mail address: firstname.lastname@example.org,
if the information is organized in sequentially numbered paragraphs.
All written comments and electronic submissions should be identified
as "Telemarketing Rulemaking - Comment. FTC File No. R411001."
Individual members of the public filing comments need not submit
multiple copies or comments in electronic form.
The Public Forum
The public forum announced in the Federal Register notice will
be held at FTC Headquarters after the close of the public comment
period. Parties interested in attending the forum should submit
their request in writing to: Carole Danielson, FTC Bureau of Consumer
Protection, Division of Marketing Practices, 600 Pennsylvania Ave.,
N.W., Washington, D.C. 20580.
For More Information
For additional information on the TSR, the notice of proposed rulemaking,
or the upcoming public forum, contact: Catherine Harrington-McBride,
202-326-2452 (e-mail: email@example.com); Karen Leonard, 202-326-3597
(e-mail: firstname.lastname@example.org); or Carole Danielson, 202-326-3115 (e-mail:
The Commission vote to approve publication of the Federal Register
notice was 5-0.
Commissioner Orson Swindle issued a concurring statement in which
he stated his wholehearted support for the changes to the TSR, noting
that the new proposals appear to strike a balance between protecting
consumers without unduly restricting legitimate telemarketing practices.
The Commissioner's statement emphasized two points regarding the
Telemarketing Act and the TSR. First, he pointed out that the Commission's
regulatory scheme would be more effective and more equitable if
it covered the "entire spectrum of entities engaged in telemarketing,"
emphasizing that "the Commission lacks jurisdiction, in whole
or in part, over the calls of entities such as banks, telephone
companies, airlines, insurance companies, credit unions, charities,
political campaigns, and political fund raisers."
Second, Commissioner Swindle raised concerns regarding the Commission's
method of determining whether certain practices are "abusive"
under the Telemarketing Act. For some practices, the Commission
proposes to determine that they are abusive for the purposes of
the Telemarketing Act because they are "unfair" for purposes
of Section 5 of the FTC Act. Commissioner Swindle has "reservations
about using unfairness principles under Section 5 to determine what
is abusive under the Telemarketing Act." Commissioner Swindle's
statement requests public comment regarding this issue as well as
comments regarding "whether the transfer of pre-acquired account
information meets the standards for unfairness under Section 5 of
the FTC Act."
Copies of the Federal Register notice mentioned
in this release are available from the FTC's Web site at http://www.ftc.gov
and also from the FTC's Consumer Response Center, Room 130, 600
Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works
for the consumer to prevent fraudulent, deceptive and unfair business
practices in the marketplace and to provide information to help
consumers spot, stop and avoid them. To file a complaint, or to
get free information on any of 150 consumer topics, call toll-free,
1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov.
The FTC enters Internet, telemarketing, identity theft and other
fraud-related complaints into Consumer Sentinel, a secure, online
database available to hundreds of civil and criminal law enforcement
agencies in the U.S. and abroad.
Mitchell J. Katz
Office of Public Affairs
Bureau of Consumer Protection
(FTC File No. R411001)
Proposed National "Do Not Call" Registry Web Site
The FTC's Proposal to Create a National
"Do Not Call" Registry
Q&A: FTC's Proposed Changes
to the Telemarketing Sales Rule
16 C.F.R. Part 310
Telemarketing Sales Rule: Notice of Proposed Rulemaking to Amend
the Rule; Request for Public Comment on the Proposed Changes; and
Invitation to Participate In Public Forum.
Text of Federal Register Notice
Concurring Statement of Commissioner Swindle