Trade Regulation Rule on Impersonation of Government and Businesses, 62741-62751 [2022-21289]
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Federal Register / Vol. 87, No. 199 / Monday, October 17, 2022 / Proposed Rules
Issued in Kansas City, Missouri, on
October 11, 2022.
Patrick R. Mullen,
Manager, Technical Innovation Policy
Branch, Policy and Innovation Division,
Aircraft Certification Service.
[FR Doc. 2022–22494 Filed 10–14–22; 8:45 am]
BILLING CODE 4910–13–P
FEDERAL TRADE COMMISSION
16 CFR Part 461
Trade Regulation Rule on
Impersonation of Government and
Businesses
Federal Trade Commission.
Notice of proposed rulemaking;
request for public comment.
AGENCY:
ACTION:
The Federal Trade
Commission (‘‘FTC or ‘‘Commission’’)
commences a rulemaking to promulgate
a trade regulation rule entitled ‘‘Rule on
Impersonation of Government and
Businesses,’’ which would prohibit the
impersonation of government,
businesses, or their officials. The
Commission finds such impersonation
to be prevalent based on the comments
it received in response to an advance
notice of proposed rulemaking and
other information discussed in this
document. The Commission now
solicits written comment, data, and
arguments concerning the utility and
scope of the proposed trade regulation
rule to prohibit the impersonation of
government, businesses, or their
officials.
SUMMARY:
Comments must be received on
or before December 16, 2022.
ADDRESSES: Interested parties may file a
comment online or on paper by
following the instructions in the
Comment Submissions part of the
SUPPLEMENTARY INFORMATION section
below. Write ‘‘Impersonation NPRM,
R207000’’ 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, 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.
FOR FURTHER INFORMATION CONTACT:
Christopher E. Brown, Attorney,
Marketing Practices Division, phone:
202–326–2825, cbrown3@ftc.gov.
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DATES:
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The
Commission invites interested parties to
submit data, views, and arguments on
the proposed Rule on Impersonation of
Government and Businesses and,
specifically, on the questions set forth in
Item IV of this notice of proposed
rulemaking (‘‘NPRM’’). The comment
period will remain open until December
16, 2022.1 To the extent practicable, all
comments will be available on the
public record and posted at the docket
for this rulemaking on https://
www.regulations.gov. If interested
parties request to present their position
orally, the Commission will hold an
informal hearing, as specified in Section
18(c) of the FTC Act, 15 U.S.C. 57a(c).
Persons interested in making a
presentation at an informal hearing
must file a comment in response to this
document containing a statement
explaining why they believe an informal
hearing is warranted, how they would
participate in an informal hearing, their
interests in the proceeding, whether
there are any disputed issues of material
fact necessary to be resolved during an
informal hearing, and a summary of
their anticipated testimony. If an
informal hearing is held, a separate
document will issue under 16 CFR
1.12(a) (‘‘initial notice of informal
hearing’’).
SUPPLEMENTARY INFORMATION:
I. Background
On December 23, 2021, the
Commission published an advance
notice of proposed rulemaking
(‘‘ANPR’’) under the authority of
Section 18 of the FTC Act, 15 U.S.C.
57a(b)(2); the provisions of part 1,
subpart B, of the Commission’s Rules of
Practice, 16 CFR 1.7–1.20; and 5 U.S.C.
553.2 This authority permits the
Commission to promulgate, modify, or
repeal trade regulation rules that define
with specificity acts or practices that are
unfair or deceptive in or affecting
commerce within the meaning of
Section 5(a)(1) of the FTC Act, 15 U.S.C.
45(a)(1). The ANPR described the
Commission’s history of taking law
enforcement action against and
educating consumers about the
impersonation of government and
businesses,3 and it asked questions
about the prevalence of impersonation
1 The Commission elects not to provide a
separate, second comment period for rebuttal
comments. See 16 CFR 1.11(e) (‘‘The Commission
may in its discretion provide for a separate rebuttal
period following the comment period.’’).
2 Fed. Trade Comm’n, ANPR: Trade Regulation
Rule on Impersonation of Gov’t and Businesses, 86
FR 72901 (Dec. 23, 2021), https://
www.federalregister.gov/documents/2021/12/23/
2021-27731/trade-regulation-rule-onimpersonation-of-government-and-businesses.
3 See id., 86 FR 72901–04.
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62741
fraud and whether and how to proceed
with an NPRM.4 The Commission took
comment for 60 days, and it received
164 unique comments, which it has
thoroughly considered.
Based on the substance of these
comments, as well as the Commission’s
history of enforcement and other
information discussed below, the
Commission has reason to believe that
the impersonation, including affiliation
or endorsement claims, of government,
businesses, and their officials or agents
is prevalent 5 and that proceeding with
this rulemaking is in the public interest.
This document discusses the comments
and explains its considerations in
developing the proposed rule. The
Commission also poses specific
questions for comment. Finally, the
NPRM provides the text of its proposed
rule.
II. Summary of Comments to ANPR
The Commission received 164 unique
comments in response to the ANPR,
which are publicly available on this
rulemaking’s docket at https://
www.regulations.gov/docket/FTC-20210077/comments.6 Of the total comments
received, 113 expressly support the
Commission’s proceeding with the
rulemaking. Another 35 comments did
not express a clear view on the merits
of proceeding, and another 16
comments did not address the question.
No commenter expressed the view that
the Commission should not commence
this rulemaking. Most comments came
from individual consumers, with 140
total comments. Ten comments were
submitted by businesses,7 eleven by
4 See
id. at 72904.
15 U.S.C. 57a(b)(3) (‘‘The Commission shall
issue a notice of proposed rulemaking pursuant to
paragraph (1)(A) only where it has reason to believe
that the unfair or deceptive acts or practices which
are the subject of the proposed rulemaking are
prevalent.’’).
6 The docket lists 168 comments, but four of these
were submitted by AVIXA, Inc. (‘‘Audio Visual and
Integrated Experience Association’’) and two by the
National Association of Attorneys General
(‘‘NAAG’’), accounting for four total duplicates. See
AVIXA Cmts., https://www.regulations.gov/
comment/FTC-2021-0077-0089, https://
www.regulations.gov/comment/FTC-2021-00770085, https://www.regulations.gov/comment/FTC2021-0077-0126, https://www.regulations.gov/
comment/FTC-2021-0077-0128; NAAG Cmts.,
https://www.regulations.gov/comment/FTC-20210077-0152, https://www.regulations.gov/comment/
FTC-2021-0077-0164.
7 See Pub’rs Clearing House, Cmt. on ANPR (Feb.
8, 2022), https://www.regulations.gov/comment/
FTC-2021-0077-0008 (‘‘PCH Cmt.’’); YouMail Inc.,
Cmt. on ANPR (Feb. 22, 2022), https://
www.regulations.gov/comment/FTC-2021-00770148 (‘‘YouMail Cmt.’’); WMC Global, Cmt. on
ANPR (Feb. 22, 2022), https://www.regulations.gov/
comment/FTC-2021-0077-0154 (‘‘WMC Cmt.’’);
DIRECTV, LLC, Cmt. on ANPR (Feb. 23, 2022),
https://www.regulations.gov/comment/FTC-20215 See
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trade associations,8 and three by
government or law-enforcement
organizations.9
The 140 individual consumers who
commented expressed deep concern
about the harmful effects of both
government and business
impersonation. One representative
consumer comment declared: ‘‘Citizens
of the USA should be able to answer the
phone and not have to worry about what
type of spam, coercion, or trickery is
about to assault them.’’ 10 Many
consumers expressed concern that
impersonation scams target specific
populations, such as older consumers.
0077-0167 (‘‘DIRECTV Cmt.’’); Somos, Inc., Cmt. on
ANPR (Feb. 23, 2022), https://www.regulations.gov/
comment/FTC-2021-0077-0162 (‘‘Somos Cmt.’’);
Microsoft Corp., Cmt. on ANPR (Feb. 22, 2022),
https://www.regulations.gov/comment/FTC-20210077-0135 (‘‘Microsoft Cmt.’’); Apple, Inc., Cmt. on
ANPR (Feb. 23, 2022), https://www.regulations.gov/
comment/FTC-2021-0077-0159 (‘‘Apple Cmt.’’);
Cotney Attorneys & Consultants, Cmt. on ANPR
(Feb. 22, 2022), https://www.regulations.gov/
comment/FTC-2021-0077-0140 (‘‘Cotney Cmt.’’);
Erik M. Pelton & Associations, Consultants, Cmt. on
ANPR (Feb. 22, 2022), https://www.regulations.gov/
comment/FTC-2021-0077-0156 (‘‘Pelton Cmt.’’);
Informa PLC, Cmt. on ANPR (Feb. 22, 2022),
https://www.regulations.gov/comment/FTC-20210077-0166 (‘‘Informa Cmt.’’).
8 See Exhibitions & Conferences Alliances, Cmt.
on ANPR (Feb. 15, 2022), https://
www.regulations.gov/comment/FTC-2021-00770009 (‘‘ECA Cmt.’’); AVIXA, Inc., Cmt. on ANPR
(Feb. 17, 2022), https://www.regulations.gov/
comment/FTC-2021-0077-0085 (‘‘AVIXA Cmt.’’);
Experiential Designers & Producers Association,
Cmt. on ANPR (Feb. 16, 2022), https://
www.regulations.gov/comment/FTC-2021-00770073 (‘‘EDPA Cmt.’’); Association of Equipment
Manufacturers, Cmt. on ANPR (Feb. 23, 2022),
https://www.regulations.gov/comment/FTC-20210077-0168 (‘‘AEM Cmt.’’); The American Apparel &
Footwear Association, Cmt. on ANPR (Feb. 22,
2022), https://www.regulations.gov/comment/FTC2021-0077-0141 (‘‘AAFA Cmt.’’); NCTA—The
internet & Television Association, Cmt. on ANPR
(Feb. 23, 2022), https://www.regulations.gov/
comment/FTC-2021-0077-0169 (‘‘NCTA Cmt.’’);
USTelecom, Cmt. on ANPR (Feb. 23, 2022), https://
www.regulations.gov/comment/FTC-2021-00770160 (‘‘USTelecom Cmt.’’); International
Housewares Association, Cmt. on ANPR (Feb. 22,
2022), https://www.regulations.gov/comment/FTC2021-0077-0144 (‘‘IHA Cmt.’’); National Association
of Broadcasters, Cmt. on ANPR (Feb. 22, 2022),
https://www.regulations.gov/comment/FTC-20210077-0146 (‘‘NAB Cmt.’’); CTIA, Cmt. on ANPR
(Feb. 23, 2022), https://www.regulations.gov/
comment/FTC-2021-0077-0161 (‘‘CTIA Cmt.’’);
Consumer Tech. Ass’n, Cmt. on ANPR (Feb. 17,
2022), https://www.regulations.gov/comment/FTC2021-0077-0091 (‘‘CTA Cmt.’’).
9 See Broward Cnty., Fla., Cmt. on ANPR (Feb. 16,
2022), https://www.regulations.gov/comment/FTC2021-0077-0075 (‘‘Broward Cmt.’’); NAAG, Cmt. on
ANPR (Feb. 23, 2022), https://www.regulations.gov/
comment/FTC-2021-0077-0164 (‘‘NAAG Cmt.’’);
Nat’l Ass’n of State Charity Officials (‘‘NASCO’’),
Cmt. on ANPR, at 1 (Feb. 22, 2022), https://
www.regulations.gov/comment/FTC-2021-00770165 (‘‘NASCO Cmt.’’).
10 Coni Limpert, Cmt. on Trade Regulation Rule
on Impersonation of Government and Businesses
(‘‘Cmt. on ANPR’’) (Feb. 22, 2022), https://
www.regulations.gov/comment/FTC-2021-00770121 (‘‘Limpert Cmt.’’).
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Another consumer, who fell victim to an
impersonator of a contractor company,
described lasting and serious harm: ‘‘We
are lost and devastated. I live in fear
daily because someone has sensitive
information about my home, its
location, and the people I love who
reside in it.’’ 11
A. Comments About the Impersonation
of Government
In its ANPR, the Commission cited
public data from the Consumer Sentinel
Network database and its enforcement
record to conclude that ‘‘government
impersonation scams are highly
prevalent and increasingly harmful.’’ 12
The comments received about the
impersonation of government bolster
this conclusion.
Six commenters explicitly addressed
the widespread nature of the
impersonation of government entities,
citing common scams perpetrated by
fraudsters pretending to be Federal,
State, and local governments.13 For
example, USTelecom, a trade
association of telephone and broadband
industry companies, and YouMail, Inc.
(‘‘YouMail’’), a communications and
cybersecurity company, cite their own
data regarding the prevalence of Social
Security Administration impersonation
scams,14 which echo the Commission’s
findings that these schemes are among
the most common government
impersonation complaints. Broward
County, Florida, and NAAG note the
incidence of government impersonation
at the local level, giving particular
emphasis to scams offering consumers
official-looking government documents
at a significantly marked-up price.15
Commenters also cite evidence of other
common government impersonation
frauds, such as schemes impersonating
the Internal Revenue Service 16 and
Department of Homeland Security 17 or
targeting public-sector employees
entitled to benefits 18 and businesses
seeking to comply with regulatory
reporting requirements.19
11 Yroctonya Williams, Cmt. on ANPR (Jan. 6,
2022), https://www.regulations.gov/comment/FTC2021-0077-0004 (‘‘Williams Cmt.’’).
12 ANPR, 86 FR 72901; see also Fed. Trade
Comm’n, Explore Government Imposter Scams,
TABLEAU PUBLIC, https://public.tableau.com/
app/profile/federal.trade.commission/viz/
GovernmentImposter/Infographic (last visited Mar.
17, 2022).
13 See USTelecom, Cmt. at 2; Broward Cmt. at 1;
NAAG Cmt. at 3; YouMail Cmt. at 3WMC Cmt. at
2; Somos Cmt.
14 See USTelecom Cmt. at 1; YouMail Cmt. at. 3.
15 See Broward Cmt. at 1; NAAG Cmt. at 4.
16 See Broward Cmt. at 1.
17 See USTelecom Cmt. at 1.
18 See NAAG Cmt. at 5–6.
19 See id. at 5; see also Fed. Trade Comm’n,
NPRM: Telemarketing Sales Rule, 87 FR 33677,
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The Commission also takes notice of
additional indications of the prevalence
of government impersonation scams,
which came after the ANPR’s
publication: The Federal Bureau of
Investigation issued a Public Service
Announcement on March 7, 2022,
‘‘warning the public of ongoing
widespread fraud schemes in which
scammers impersonate law enforcement
or government officials in attempts to
extort money or steal personally
identifiable information.’’ 20 Similarly,
the Social Security Administration’s
Office of the Inspector General
spearheaded a scam alert issued by
multiple Federal law enforcement
agencies on May 20, 2022, warning the
public of government impersonation
scams involving the reproduction of
Federal law enforcement credentials
and badges.21 Additionally, the
Commission recently noted that, in
some impersonation scams, fraudsters
have instructed consumers to convert
cash into cryptocurrency under false
threats of government investigations or
fraud.22
Several commenters discussed how a
rule addressing impersonation should
be drafted. For example, Broward
County offered specific
recommendations, including but not
limited to prohibiting advertising that
creates the impression of government
affiliation or endorsement without
express consent and requiring
advertisers to prominently disclaim
government affiliation or endorsement
where it could be reasonably construed
from silence.23 YouMail suggested that
33683 n.77 (June 3, 2022), https://
www.federalregister.gov/documents/2022/06/03/
2022-09914/telemarketing-sales-rule (collecting
cases of business-to-business fraud that
impersonated the government and violated the
Telemarketing Sales Rule).
20 Public Service Announcement, Fed. Bureau of
Investigation, Alert No. I–030722–PSA, FBI Warns
of the Impersonation of Law Enforcement and
Government Officials (Mar. 7, 2022), https://
www.ic3.gov/Media/Y2022/PSA220307.
21 Scam Alert, Soc. Sec. Admin. Off. of Inspector
Gen., Federal Law Enforcement Agencies Warn of
Impersonation Scam Involving Credentials and
Badges (May 20, 2022), https://oig.ssa.gov/assets/
uploads/scam-alert-law-enforcementcredentials.pdf.
22 See Press Release, Fed. Trade Comm’n, New
Analysis Finds Consumers Reported Losing More
than $1 Billion in Cryptocurrency to Scams since
2021 (June 3, 2022), https://www.ftc.gov/newsevents/news/press-releases/2022/06/new-analysisfinds-consumers-reported-losing-more-1-billioncryptocurrency-scams-2021 (‘‘After cryptocurrency
investment schemes, the next largest losses reported
by consumers were on . . . Business and
Government Impersonation Scams[.] Reports show
these scammers often target consumers by claiming
their money is at risk because of fraud or a
government investigation and the only way to
protect their cash is by converting it to
cryptocurrency.’’).
23 See Broward Cmt. at 2.
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the proposed rule ‘‘not be so
prescriptive as to put a damper on
private cybersecurity businesses’ ability
to develop and refine new, market-based
tools to prevent electronic
communications fraud, including
impersonation fraud.’’ 24
Two commenters, NAAG and
USTelecom, explicitly addressed the
Commission’s questions regarding
individuals or entities that provide the
means and instrumentalities for
impersonators to conduct such
practices. NAAG asserted that
impersonators ‘‘often use other
companies’ products and services to
execute their scams,’’ such as
‘‘marketing companies, call centers,
attorneys, third-party mailing services,
payment processors, lead list providers,
remote offices . . . [d]ating websites,
and social media . . . .’’ 25 It also
addressed the Commission’s question
regarding the circumstances under
which the provision of means and
instrumentalities should be considered
deceptive or unfair, remarking that
‘‘when an entity provides substantial
assistance or support to impersonators
and knows or should have known that
their products [or] services are being
used in a fraudulent impersonation
scheme, that company could also be
held liable under the proposed
impersonation rule.’’ 26 Similarly,
USTelecom also recommended liability
for ‘‘individuals or entities that provide
the means and instrumentalities for
impersonators . . . such as how the FTC
has used the [Telemarketing Sales Rule]
against robocall enablers,’’ but noted
that the proposed rule ‘‘should make
clear that liability . . . requires proof of
knowledge of such fraud or conscious
avoidance of it, consistent with FTC
precedent and [Telemarketing Sales
Rule] and Section 5 jurisprudence.’’ 27
Somos, Inc., which manages registry
databases for the telecommunications
industry, similarly encourages the
‘‘[p]rosecution of . . . those knowingly
aiding and abetting’’ impersonated tollfree numbers.28
Several commenters recommended
additional action to a proposed
rulemaking, including the development
of educational workshops and
materials,29 and increased collaboration
between the Commission and other
24 YouMail
Cmt. at 11.
25 NAAG Cmt. at 8.
26 Id. at 10.
27 USTelecom Cmt. at 3–4.
28 Somos Cmt. at 3, 5.
29 See USTelecom Cmt. at 3; NAAG Cmt. at 13;
YouMail Cmt. 9–10; WMC Cmt. at 5; NCTA Cmt.
at 2; CTIA Cmt.; Pelton Cmt. at 5; ECA Cmt. at 2–
3; AAFA Cmt. at 3; CTA Cmt. at 3–7; YouMail Cmt.
at 10; DIRECTV Cmt. at 2.
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government agencies, businesses, and
trade associations to combat
impersonation fraud.30 For example,
WMC Global, a cybersecurity company,
recommended that government agencies
invest in ‘‘phishing kit intelligence’’—
one of the tools the company states it
uses to identify impersonators
responsible for credential phishing
attacks.31 YouMail encourages the
Commission to work with industry
groups ‘‘that develop methods,
techniques, and standards that advance
the fight against robocalls and related
fraud,’’ which can serve to ‘‘help
educate the public about how those
tools can be used for self-protection
against impersonation.’’ 32 Somos
expressed a willingness to assist law
enforcement’s prosecution of
impersonators that spoof a company’s
Toll-Free Number (TFN) for their
CallerID, but use a different TFN as a
call back number, which leads
consumers to believe they are
communicating with an honest
business.33 Somos states that it can
always provide the identity of the entity
that reserved the TFN, which law
enforcement, using subpoenas, can
traceback to the subscriber or U.S. point
of entry that likely committed the fraud
or knowingly aided and abetted the
activity.34
B. Comments About the Impersonation
of Businesses
The ANPR noted that business
impersonation scams cause an
‘‘enormous amount of financial harm to
the public’’ and are widespread: ‘‘From
January 1, 2017, through September 30,
2021, consumers reported being
defrauded of roughly $852 million in
753,555 business impersonation
incidents.’’ 35 The comments received
about the impersonation of businesses
bolster this conclusion.
The Commission received 15
comments that specifically addressed
the widespread impersonation of
businesses from consumers, trade
associations, and businesses.36
Consumers submitted comments about
various business impersonators they
encountered, including impersonators
30 See YouMail Cmt. at 10; WMC Cmt. at 5; Somos
Cmt. at 6.
31 WMC Cmt. at 1, 5.
32 YouMail Cmt. at 10.
33 See Somos Cmt. at 3, 6.
34 Id.
35 ANPR, 86 FR 72901.
36 See ECA Cmt.; AVIXA Cmt.; EDPA Cmt.; AEM
Cmt; AAFA Cmt.; NCTA Cmt.; US Telecom Cmt.;
NAAG Cmt.; PCH Cmt.; YouMail Cmt; WMC Cmt;
IHA Cmt.; DIRECTV Cmt.; Somos Cmt.; NAB Cmt..
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of Microsoft 37 and Apple.38 Several of
these impersonated companies
submitted their own comments relaying
that impersonation of their businesses
causes severe harm to consumers as
well as to their own business.39
The Commission received several
comments from trade associations that
represent groups engaged in the face-toface business events industry. Five trade
associations representing businesses
partaking in conferences, trade shows,
and other face-to face business events
submitted comments noting that they
are frequently targets of business
impersonation.40 These comments
outlined two prevalent types of business
impersonation fraud: hotel reservation
scams and attendee list-sale scams. A
hotel reservation scam involves
scammers impersonating housing
providers of a particular conference or
event and tricking consumers into
purchasing bogus hotel rooms.41
Perpetrators of attendee list-sale scams
contact face-to-face exhibitors and sell
fake attendee lists.42 They often use the
event organizer’s name and logo to
bolster the illusion that they are, or are
affiliated with or endorsed by, the event
organizer.43
The National Association of
Broadcasters (‘‘NAB’’) also expressed its
support for the initiation of a
rulemaking to address impersonation
because of its experience hosting an
annual convention.44 NAB states that
business impersonation harms
numerous small businesses that often do
not have the resources to properly
protect themselves.45
The American Apparel & Footwear
Association (‘‘AAFA’’) states that the
AAFA and the roughly 1,000 brands it
represents are frequent targets of
37 See, e.g., Betty Hanley, Cmt. on ANPR (Feb. 23,
2022), https://www.regulations.gov/comment/FTC2021-0077-0163 (‘‘Hanley Cmt.’’).
38 See, e.g., Maximo Estebar, Cmt. on ANPR (Feb.
23, 2022), https://www.regulations.gov/comment/
FTC-2021-0077-0157 (‘‘Estebar Cmt.’’); Anonymous,
Cmt. on ANPR (Feb. 16, 2022), https://
www.regulations.gov/comment/FTC-2021-00770044 (‘‘0044 Cmt.’’).
39 See Microsoft Corp., Cmt. on ANPR (Feb. 22,
2022), https://www.regulations.gov/comment/FTC2021-0077-0135 (‘‘Microsoft Cmt.’’); Apple, Inc.,
Cmt. on ANPR (Feb. 23, 2022), https://
www.regulations.gov/comment/FTC-2021-00770159 (‘‘Apple Cmt.’’).
40 See EDPA Cmt.; ECA Cmt.; AEM Cmt.; AVIXA
Cmt.; NAB Cmt.
41 See ECA Cmt. at 2; EDPA Cmt.; AEM Cmt. at
1; AVIXA Cmt.
42 See ECA Cmt. at 2; EDPA Cmt.; AEM Cmt. at
1; AVIXA Cmt.
43 See ECA Cmt. at 2; EDPA Cmt; AEM Cmt. at
1; AVIXA Cmt.
44 See NAB Cmt. at 1–2.
45 See id.
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Federal Register / Vol. 87, No. 199 / Monday, October 17, 2022 / Proposed Rules
business impersonation.46 The
impersonators use company or
organization trademarks and logos in
the signature blocks of fraudulent email
solicitations to help perpetrate these
schemes.47 The AAFA comment notes
that impersonation is a widespread
issue in the non-profit trade association
industry.48 Another trade association,
the International Housewares
Association,49 and a consulting firm for
construction companies, Cotney
Attorneys & Consultants,50 submitted
comments that also expressed concern
about rampant impersonation fraud
surrounding trade shows and
conferences.
Four trade associations that represent
businesses in the telecommunications
and technology industries submitted
comments noting that these industries
are frequently targeted for business
impersonation fraud. The internet &
Television Association (‘‘NCTA’’), a
trade association for the United States
cable television industry, states that its
members provide television service to
almost 80% of the nation’s cable
television customers.51 NCTA does not
explicitly take a position on the
proposed rulemaking, but states that it
stands ‘‘ready to assist the FTC with its
educational efforts.’’ 52 NCTA identified
two common types of business scams, a
payment scam and unauthorized
reselling scam. A payment scam
involves scammers impersonating
employees or vendors and calling
customers or prospective customers in
an effort to gain their personal
information, such as credit card
information, bank account numbers,
Social Security numbers, and
passwords.53 An unauthorized reselling
scam involves scammers fraudulently
using member brands to collect
customer or employee information or
unlawfully reselling access to the
company’s network.54 NCTA states that
it takes considerable action to fight
these scams, including communicating
regularly with customers and providing
educational materials online, engaging
with the communities at town halls, and
directing consumers to FTC resources.55
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46 See
AAFA Cmt. at 1.
47 See id.
48 See id. at 2.
49 See IHA Cmt. at 1.
50 See Cotney Attorneys & Consultants, Cmt. on
ANPR, at 1 (Feb. 22, 2022), https://
www.regulations.gov/comment/FTC-2021-00770140 (‘‘Cotney Cmt.’’).
51 See NCTA Cmt. at 2.
52 Id.
53 See id.
54 See id.
55 See id.
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USTelecom states that it supports the
efforts of Federal agencies, including the
FTC, to hold impersonators accountable
for fraud, including impersonators using
telephone networks to perpetrate their
scams.56 It notes that, every day, these
impersonators spam the U.S. telephone
network with robocalls and voice
phishing calls pretending to be private
companies.57 USTelecom’s Industry
Traceback Group tracks these calls and
identifies the percentage of bank scams,
health insurance scams, and Amazon
impersonators, among others.58
According to USTelecom, most of these
calls originate from outside of the
United States, from countries such as
India, Pakistan, Mexico, the United
Kingdom, and Australia.59
Consumer Technology Association
(‘‘CTA’’) states that it is North America’s
largest technology trade association.60
CTA and its members are frequently
targeted for impersonation fraud.61 CTA
states that it has seen a growing number
of impersonation fraud through email
solicitations, including impersonation
attempts of CTA representatives.62 CTA
also states that business impersonation
victimizes non-profit organizations,
such as the CTA Foundation.63 CTA
supports an FTC rule that would
prohibit deceptive impersonation of forprofit and non-profit businesses alike.64
It recommends that the FTC not focus
rulemaking efforts on communication
channels; instead, it encourages the FTC
to work with the private sector to
improve detection and reporting
mechanisms to prevent impersonation
schemes.65 Finally, CTA suggests that
the FTC consider partnership with other
Federal agencies, the private sector, and
non-profits to gather information and
help prevent impersonation fraud.66
CTIA, a trade association for wirelessservice providers, proposes that the FTC
continue to use its existing tools to
combat impersonation fraud.67 CTIA
suggests that, if the FTC proceeds with
a new rule to address impersonation
fraud, the rule should ‘‘narrowly’’ target
bad actors and continue to coordinate
with government partners and the
56 See
USTelecom Cmt. at 1.
id.
58 See id. at 2.
59 See id.
60 Consumer Tech. Ass’n, Cmt. on ANPR, at 1
(Feb. 17, 2022), https://www.regulations.gov/
comment/FTC-2021-0077-0091 (‘‘CTA Cmt.’’).
61 See id.
62 See id. at 4.
63 See id. at 5–6.
64 See id.
65 Id. at 9.
66 See id.
67 See CTIA, Cmt. on ANPR (Feb. 23, 2022),
https://www.regulations.gov/comment/FTC-20210077-0161 (‘‘CTIA Cmt.’’).
57 See
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private sector.68 CTIA lists various
industry efforts to help prevent
robocalls from reaching consumers and
discusses its implementation of
‘‘Messaging Principles and Best
Practices’’ to help stop bad actors.69
CTIA states that its members have been
assisting Federal and State enforcement
actions against impersonation frauds.70
The Commission received 11
comments from businesses or trade
associations that are frequently
impersonated; six of these comments
were from companies in the
telecommunications and technology
industries.71
For example, DIRECTV submitted a
comment supporting the Commission’s
effort to fight impersonation fraud 72 and
states that many impersonators pose as
representatives of DIRECTV in an effort
to commit prepaid card fraud, which
causes significant harm to both
consumers and businesses.73 According
to DIRECTV, impersonators falsely offer
consumers discounts on its service in
exchange for the consumer’s providing
a prepaid credit card or gift card to a
third-party e-commerce website.74 This
conduct can result in significant
financial loss for consumers.75
DIRECTV cites a YouMail, Inc. estimate
that Americans received millions of
calls over the course of one month in
late 2021 from scammers claiming to be
from companies, such as Amazon,
Apple, PayPal, and Wells Fargo, and
making false claims about the
consumers’ accounts or information
with these companies.76 DIRECTV states
that impersonation fraud harms its
business by forcing it to dedicate
resources to fighting the scams and also
states that the scams hurt its ability to
interest consumers in legitimate
services.77
Apple, Inc., submitted a comment that
urges the Commission to adopt a rule
targeting bad actors (and their
‘‘facilitators’’ that are engaging in
impersonation fraud) without stifling
legitimate business activity.78 Apple
states that it has worked cooperatively
with the FTC and other Federal agencies
to protect consumers from
68 Id.
69 Id.
at 7–10.
id.
71 See YouMail Cmt.; WMC Cmt.; DIRECTV Cmt.;
Microsoft Cmt.; Apple Cmt.; Somos Cmt.; PCH
Cmt.; Informa Cmt.; AAFA Cmt.; NAB Cmt.; CTA
Cmt.
72 See DIRECTV Cmt. at 1.
73 See id. at 2–4.
74 See id. at 4–6.
75 See id. at 2.
76 See id.
77 See id. at 3–4.
78 Apple Cmt.
70 See
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impersonation fraud.79 Apple notes the
prevalence of fraud in which
impersonators steal money from
consumers through gift card scams.80
Apple states that, as a result of
aggressive civil and criminal
enforcement, impersonation fraud levels
have decreased.81 Apple states that
impersonators who have obtained stolen
gift cards use gray markets 82 to sell the
items purchased with those cards,
making it harder for consumers to detect
the fraud.83 Apple maintains that gray
markets are primary ‘‘means and
instrumentalities’’ that impersonators
use to conduct their scams.84 One
consumer submitted a comment
describing how he had had fallen prey
to Apple employee impersonators.85
Another commenter, a former Apple
employee, described the many stories
she had heard of customers falling
victim to Apple employee
impersonators.86
Microsoft Corporation strongly
supports the Commission’s decision to
proceed with rulemaking to combat
government and business impersonation
fraud.87 Microsoft states that it is
frequently impersonated in the form of
technical support scams, in which
individuals impersonate Microsoft
employees to trick consumers into
purchasing technical support services to
fix non-existing software or device
issues.88 Such impersonators often steal
personal information from consumers
and frequently install malware or other
programs to do so.89 Microsoft’s
comment discusses its commitment to
protecting customer privacy through its
Digital Crimes Unit.90 Microsoft states
that it has a database of roughly 600,000
consumer complaints regarding
technical support scams.91 It also states
that it has conducted consumer surveys
regarding the prevalence of technology
scams. In 2021, Microsoft commissioned
79 See
id.
id.
81 See id. Apple notes that complaints about
unauthorized calls by individuals listed on the
FTC’s Do Not Call Registry decreased after the
Commission sued a VoIP provider for originating
illegal robocalls.
82 Gray markets ‘‘allow consumers to sell physical
and digital goods at a discounted price.
Impersonators who have obtained stolen gift card
funds utilize gray markets to sell items purchased
with those funds to other consumers who may be
unaware of the fraudulent source of the items they
are purchasing.’’ Id.
83 See id.
84 Id.
85 See Estebar Cmt.
86 See 0044 Cmt.
87 See Microsoft Cmt. at 1.
88 See id.
89 See id.
90 See id. at 2.
91 See id. at 3.
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80 See
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YouGov to conduct an online survey of
more than 16,000 adult internet users in
16 countries.92 Microsoft maintains that
the survey results demonstrate the
strong need for additional protection of
consumers from technical support
scams.93
According to Microsoft, the YouGov
survey shows that 67% of U.S.
consumers have encountered a technical
support scam in the previous year.94
The study did show that marginally
fewer consumers have been exposed to
technical support scams in recent years
than in 2018.95 The YouGov survey also
showed that consumers have been
targeted with impersonation scams
involving Facebook, Apple, Google, and
Amazon.96
Microsoft states that consumers often
lose hundreds and sometimes thousands
of dollars to technical support
impersonation scams.97 According to
Microsoft, the YouGov survey shows
that the Millennial Generation and
Generation Z have the highest losses
from technical support scams: One in 10
members of these demographics fell
victim to such a scam and lost money.98
The survey data shows that men are
more likely to fall prey to a technical
support scam.99
Microsoft states that there has been a
shift from the traditional ‘‘cold-call’’
model that scammers use, often by using
spoofed numbers and claiming to be a
Microsoft employee, to deployment of
automated pop-ups/malware on
websites to redirect consumers to scam
websites.100 It states that technical
support scams typically make strong
claims via pop-up websites, email and
other online platforms,101 in addition to
telephone calls where callers falsely
represent themselves as Microsoft
employees.102 According to Microsoft,
technical support impersonators often
share resources, which allows them to
copy each other’s business models and
limit risk of enforcement action.103
Addressing means-andinstrumentalities liability, Microsoft
states that scammers typically rely on
payment processors to receive money
from victims of these scams.104 The
scammers also utilize affiliate marketing
92 See
id.
id.
94 See id.
95 See id.
96 See id. at 3–4.
97 See id. at 4.
98 See id.
99 See id.
100 See id. at 5–6.
101 See id. at 6.
102 See id.
103 See id.
104 See id.
93 See
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62745
services to advertise to consumers
through malicious ads and pop-up
windows.105
Microsoft states that a systematic
approach is critical to address these
scams, especially because private actors
are limited in their ability to recover
money for victims.106 Microsoft notes
that the FTC’s new rule would ‘‘clarify
and strengthen the FTC’s authority to
address these scams, building upon the
FTC’s existing authority under the FTC
Act and existing regulation, including
the Telemarketing Sales Rule.’’ 107
Somos, Inc. states in its comment that,
when scammers use Toll-Free Numbers
(TFNs) to execute their scams, it causes
consumers to lose confidence in
TFNs.108 It reports that, since 2017,
Somos and partner organizations have
shut down more than 18,000 TFNs used
by impersonation scammers.109 Somos
discusses anecdotal evidence based on
experience with companies that have
asked Somos to help shut down TFNs
utilized by scammers.110 Somos states
that it works with more than 80
companies whose customers have been
targeted by impersonation scams—65
utility companies, four tech companies,
three retailers, and 10 miscellaneous
entities.111 Somos states that there has
been an increase in the number of TFNs
reported as impersonation scams.112
The Commission received a comment
from Erik M. Pelton & Associates, a
trademark law firm in Virginia,
requesting that it include trademark
scams in its definition of impersonation
scams.113 The comment states that
trademark scams have become
widespread.114 Specifically, the
comment states that a Pakistan-based
company used over 200 fake websites to
impersonate the United States Patent
and Trademark Office (USPTO) and
offer trademark filing services.115 The
law firm urges transparency from the
FTC, USPTO, and United States Postal
Inspection Service about the
pervasiveness of trademark scams and
the measures being taken to address
105 See
id.
id.
107 Id. The Commission also received a comment
from a consumer who fell prey to Microsoft
impersonators. See Hanley Cmt.
108 See Somos Cmt. at 1.
109 See id. at 2.
110 See id.
111 See id.
112 See id. at 4.
113 See Erik M. Pelton & Associations,
Consultants, Cmt. on ANPR, at 1 (Feb. 22, 2022),
https://www.regulations.gov/comment/FTC-20210077-0156 (‘‘Pelton Cmt.’’).
114 See id. at 3.
115 See id.
106 See
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Federal Register / Vol. 87, No. 199 / Monday, October 17, 2022 / Proposed Rules
these scams.116 The comment also
recommends that the FTC investigate
the means used to collect the money
unlawfully taken from victims.117 The
comment also suggests that the FTC
adopt a more robust impersonation
scam reporting system for consumers
and businesses.118
C. Other Comments
The Commission received a number
of comments that advocated for ‘‘nonprofit’’ entities to be included in the
proposed rule’s definition of businesses
that can be impersonated.119 For
example, The National Association of
State Charity Officials (‘‘NASCO’’), an
association of state charity officials,
state attorneys general, and other state
officials who regulate charities,
submitted a comment urging the
Commission to consider including
impersonation of charitable
organizations in the rule.120 NASCO
states that ‘‘fraudulent practices of
impersonating legitimate charitable
causes and charitable organizations
persist across the country.’’ 121 It urges
the FTC to ensure that the
impersonation rule would cover
individual and professional fundraiser
impersonators.122 NASCO notes that the
FTC worked with 38 state charity
regulators to help shut down a
telemarketing scam that involved over
100 million donations.123
III. Reasons for the Proposed Rule on
Impersonation of Government and
Businesses
The Commission believes that the
proposed rule will substantially
improve its ability to combat the most
prevalent impersonation fraud and may
also strengthen deterrence against this
fraud in the first instance. While
government impersonation and business
impersonation are already unlawful
under Section 5 of the FTC Act, which
prohibits unfair or deceptive acts or
practices, the proposed rule will allow
the Commission to seek civil penalties
against the violators and more readily
obtain monetary redress for their
victims. The rule would not impose new
burdens on honest businesses and
instead provide benefits to businesses
116 See
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117 See
id.
id. at 5.
118 Id.
119 Nat’l Ass’n of State Charity Officials
(‘‘NASCO’’), Cmt. on ANPR, at 1 (Feb. 22, 2022),
https://www.regulations.gov/comment/FTC-20210077-0165 (‘‘NASCO Cmt.’’); ECA Cmt. at 2; Cotney
Cmt. at 2; CTA Cmt. at 3–7.
120 See NASCO Cmt. at 1.
121 Id. at 2.
122 See id. at 3.
123 See id.
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whose brands are harmed by business
impersonators.
A. Need for and Objectives of the
Proposed Rule on Impersonation of
Government and Businesses
The Commission’s objective in
commencing this rulemaking is to
expand the remedies available to it in
combatting common and injurious
forms of fraud. In the ANPR, the
Commission described how a recent
U.S. Supreme Court decision,124 which
overturned 40 years of precedent from
the U.S. Circuit Courts of Appeal
uniformly holding that the Commission
could take action under Section 13(b) of
the FTC Act to return money unlawfully
taken from consumers through unfair or
deceptive acts or practices, has made it
significantly more difficult for the
Commission to return money to injured
consumers.125 Without Section 13(b) as
it had historically been understood, the
only method the Commission has to
return money unlawfully taken from
consumers is Section 19, which
provides two paths for consumer
redress. The longer path requires the
Commission to first win a case in—and
any appeal arising from—its
administrative court. Then, to recover
money for consumers, the Commission
must prove that the violator engaged in
fraudulent or dishonest conduct 126 in a
second action in Federal court. The
shorter path, which allows the
Commission to recover directly through
a Federal court action or obtain civil
penalties directly from a Federal court,
is available only when a rule has been
violated.127
The proposed rule will make available
the shorter path in a broader set of
Commission enforcement actions.
Currently, the Commission can directly
pursue in Federal court Section 19
remedies, including civil penalties and
consumer redress, for impersonation
fraud only if that fraud violates the
Commission’s Telemarketing Sales Rule,
Mortgage Assistance Relief Services
Rule, or R-Value Rule, which expressly
prohibit impersonation fraud but apply
only in specific contexts.128 Outlawing
124 See AMG Cap. Mgmt., LLC v. FTC, 141 S. Ct.
1341, 1352 (2021).
125 See ANPR, 86 FR 72901 & n.24 (discussing
AMG Cap. Mgmt.).
126 See 15 U.S.C. 57b(a)(2) (‘‘If the Commission
satisfies the court that the act or practice to which
the cease and desist order relates is one which a
reasonable man would have known under the
circumstances was dishonest or fraudulent, the
court may grant relief.’’).
127 Compare 15 U.S.C. 57b(a)(1) (rule violations),
with id. 57b(a)(2) (Section 5 violations).
128 See TSR, 16 CFR 310.3(a)(2)(vii) (prohibiting
misrepresentations with respect to a ‘‘seller’s or
telemarketer’s affiliation with, or endorsement or
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Sfmt 4702
impersonation of government and
business by rule no matter what the
context expands the Commission’s
enforcement toolkit and allows it to stop
and deter harmful conduct and make
American consumers whole when they
have been wronged. Because
impersonation fraud is so prevalent and
so harmful, the unlocking of additional
remedies through this rulemaking,
particularly the possibility of seeking
civil penalties against violators as well
as obtaining redress for their victims,
will allow the Commission to more
effectively police impersonation scams
that plague consumers.
B. Overview and Scope of Proposed Rule
on Impersonation of Government and
Businesses
The Commission’s proposed rule is
straightforward. It borrows from existing
rules and statutory definitions by
declaring that impersonation of
government and businesses is
unlawful.129 As noted above, case law
and the Commission’s experience, as
well as the comments and other
evidence cited herein, are replete with
examples of such impersonation.
The prohibition against impersonating
government in proposed § 461.2 would
cover unlawful conduct by persons who
misrepresent that they are or are
affiliated with a government or
government officer by, including but not
limited to: (1) calling, messaging, or
otherwise contacting an individual or
entity while posing as a government or
an officer or agent or affiliate or
endorsee thereof, including by
identifying a government or officer by
name or by implication; (2) sending
physical mail through any carrier using
addresses, government seals or
lookalikes, or other identifying insignia
of a government or officer thereof; (3)
creating a website or other electronic
service impersonating the name,
government seal, or identifying insignia
of a government or officer thereof or
using ‘‘.gov’’ or any lookalike, such as
sponsorship by, any person or government entity’’);
R-Value Rule, 16 CFR 460.21 (‘‘Do not say or imply
that a government agency uses, certifies,
recommends, or otherwise favors your product
unless it is true. Do not say or imply that your
insulation complies with a governmental standard
or specification unless it is true.’’); Regulation O
(Mortgage Assistance Relief Services), 12 CFR
1015.3(b)(3) (prohibiting misrepresentations that ‘‘a
mortgage assistance relief service is affiliated with,
endorsed or approved by, or otherwise associated
with: (i) The United States government, (ii) Any
governmental homeowner assistance plan, (iii) Any
Federal, State, or local government agency, unit, or
department, (iv) Any nonprofit housing counselor
agency or program, (v) The maker, holder, or
servicer of the consumer’s dwelling loan, or (vi)
Any other individual, entity, or program’’).
129 See id.
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‘‘govusa.com’’; (4) creating or spoofing
an email address using ‘‘.gov’’ or any
lookalike; (5) placing advertisements
that pose as a government or officer
thereof against search queries for
government services; and (6) using a
government seal on a building,
letterhead, website, email, vehicle, or
other physical or digital place.
The prohibition against impersonating
businesses in § 461.3 would cover a
variety of similarly unlawful conduct,
including but not limited to: (1) calling,
messaging, or otherwise contacting an
individual or entity while posing as a
business or an officer or agent or
affiliate or endorsee thereof, including
by naming a business by name or by
implication, such as ‘‘card member
services’’ or ‘‘the car dealership’’; (2)
sending physical mail through any
carrier using addresses, seals, logos, or
other identifying insignia of a business
or officer thereof; (3) creating a website
or other electronic service
impersonating the name, logo, insignia,
or mark of a business or a close
facsimile or keystroke error, such as
‘‘ntyimes.com,’’ ‘‘rnicrosoft.com,’’
‘‘microsoft.biz,’’ or
‘‘carnegiehall.tixsales.com’’; (4) creating
or spoofing an email address that
impersonates a business; (5) placing
advertisements that pose as a business
or officer thereof against search queries
for business services; and (6) using,
without authorization, a business’s mark
on a building, letterhead, website,
email, vehicle, or other physical or
digital place.
The rule, in proposed § 461.4, also
makes it unlawful to provide the means
and instrumentalities for violations of
proposed §§ 461.2 and 461.3. Some
commenters suggested that the
Commission impose liability on a
broader set of actors, namely those who
assist and facilitate violations. The
Telemarketing Sales Rule (‘‘TSR’’) does
so, but the Commission cannot do so
here. The TSR provides express
statutory authorization for assisting-andfacilitating liability,130 a form of indirect
liability. Sections 5 and 18 of the FTC
Act contain no such express
authorization. Instead, the case law
describes a form of direct liability for a
party who, despite not having direct
contact with the injured consumers,
‘‘passes on a false or misleading
representation with knowledge or
reason to expect that consumers may
possibly be deceived as a result.’’ 131 In
other words: ‘‘One who places in the
130 See 15 U.S.C. 6102(a)(2) (‘‘acts or practices of
entities or individuals that assist or facilitate
deceptive telemarketing’’).
131 Shell Oil Co., 128 F.T.C. 749 (1999).
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hands of another a means of
consummating a fraud or competing
unfairly in violation of the Federal
Trade Commission Act is himself guilty
of a violation of the Act.’’ 132
Accordingly, the Commission proposes
expressly to impose liability on those
who provide the means and
instrumentalities of violations of the
prohibitions against impersonation of
government and businesses, but it
declines to seek to impose assisting-andfacilitating liability. An example of a
violation of proposed § 461.4’s
prohibition on providing the means and
instrumentalities for impersonation is a
person who fabricates official-looking
Internal Revenue Service (IRS) Special
Agent identification badges for sale. In
this example, the person does not
actually impersonate an IRS Special
Agent, so does not violate proposed
§ 461.2’s prohibition against
impersonating government officers but
does provide the means and
instrumentalities for others to do so,
which violates proposed § 461.4.
Several commenters raised questions
about jurisdiction. The proposed rule is
subject to all existing limitations of the
law: of unfair or deceptive acts or
practices under the FTC Act; of the
FTC’s jurisdiction; and of the U.S.
Constitution—the Commission cannot
bring a complaint to enforce the rule if
the complaint would exceed the
Commission’s jurisdiction or offend the
Constitution. One important
jurisdictional subject for discussion is
not-for-profit entities. The Commission
is authorized to sue a corporation
(including any company, trust, or
association, incorporated or
unincorporated) only when it is
‘‘organized to carry on business for its
own profit or that of its members.’’ 133
Nevertheless, the proposed rule’s
definition of ‘‘business’’ includes
entities that are organized as not-forprofit entities. The reason is that
persons, partnerships, or corporations
that are organized for profit (including
illicit profits) may impersonate a
business that is not. For example, a
scammer might impersonate a charity.
Whether organized as a person,
partnership, or corporation, this
hypothetical scammer is within the
jurisdiction of the FTC, even if the
impersonated charity is not.
Accordingly, the rule, in proposed
§ 461.1, defines a ‘‘business’’ that may
132 C. Howard Hunt Pen Co. v. FTC, 197 F.2d 273,
281 (3d Cir. 1952).
133 15 U.S.C. 44.
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62747
be impersonated to include nonprofits.134
One commenter worried that the rule,
if applied literally in an unanticipated
way, could chill legitimate speech.135
The proposed rule, however, sweeps no
more broadly than the existing
prohibition against unfair and deceptive
practices in Section 5 of the FTC Act.
Because misrepresentations must be
‘‘material’’ and ‘‘in or affecting
commerce,’’ a communication that is
not material to a commercial
transaction, such as impersonation in
artistic or recreational costumery or
impersonation in connection with
political or other non-commercial
speech, is not prohibited by the
proposed rule.
C. The Rulemaking Process
The Commission can decide to
finalize the proposed rule if the
rulemaking record, including the public
comments in response to this NPRM,
supports such a conclusion. The
Commission may, either on its own
initiative or in response to a
commenter’s request, engage in
additional processes, which are
described in 16 CFR 1.12 and 1.13. If the
Commission on its own initiative
decides to conduct an informal hearing,
or if a commenter files an adequate
request for such a hearing, then a
separate notice will issue under 16 CFR
1.12(a). Based on the comment record
and existing prohibitions against
impersonation of government and
businesses under Section 5 of the FTC
Act, the Commission does not here
identify any disputed issues of material
fact necessary to be resolved at an
informal hearing. The Commission may
still do so later, on its own initiative or
in response to a persuasive showing
from a commenter.
IV. Preliminary Regulatory Analysis
Under Section 22 of the FTC Act, the
Commission, when it publishes any
NPRM, must include a ‘‘preliminary
regulatory analysis.’’ 15 U.S.C. 57b–
3(b)(1). The required contents of a
preliminary regulatory analysis are (1)
‘‘a concise statement of the need for,
and the objectives of, the proposed
rule,’’ (2) ‘‘a description of any
reasonable alternatives to the proposed
rule which may accomplish the stated
objective,’’ and (3) ‘‘a preliminary
analysis of the projected benefits and
any adverse economic effects and any
134 State laws likely forbid impersonation by a
bona fide non-profit organization even if would not
be subject to FTC jurisdiction.
135 See Cason Reilly, Cmt. on ANPR, at 1–3 (Feb.
22, 2022), https://www.regulations.gov/comment/
FTC-2021-0077-0136.
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Federal Register / Vol. 87, No. 199 / Monday, October 17, 2022 / Proposed Rules
other effects’’ for the proposed rule and
each alternative, along with an analysis
‘‘of the effectiveness of the proposed
rule and each alternative in meeting the
stated objectives of the proposed rule.’’
15 U.S.C. 57b–3(b)(1)(A)–(C). This
NPRM already provided the concise
statement of the need for, and the
objectives of, the proposed rule in Item
III.A above. It addresses the other
requirements below.
A. Reasonable Alternatives and
Anticipated Costs and Benefits
The Commission believes that the
benefits of proceeding with the
rulemaking will significantly outweigh
the costs, but it welcomes public
comment and data (both qualitative and
quantitative) on any benefits and costs
to inform a final regulatory analysis.
Critical to the Commission’s analysis is
the legal consequence that any eventual
rule would allow not only for monetary
relief to victims of rule violations but
also for the imposition of civil penalties
against violators. Such results are likely
to provide benefits to consumers and
competition, as well as to the agency,
without imposing any significant costs
on consumers or competition. It is
difficult to quantify with precision what
all those benefits may be, but it is
possible to describe them qualitatively.
It is useful to begin with the scope of
the problem the proposed rule would
address. As discussed in the ANPR,
consumers reported 1,362,996 instances
of government impersonation and
associated total losses of $922,739,109
from January 1, 2017 through September
30, 2021.136 Since then, consumers
reported another 46,606 instances of
government impersonation in the fourth
quarter of 2021 and 46,950 in the first
quarter of 2022.137 For business
impersonation, the ANPR noted that,
from January 1, 2017 through September
30, 2021, consumers reported being
defrauded of roughly $852 million in
753,555 incidents.138 Since then,
consumers reported another 96,341
instances of business impersonation in
the fourth quarter of 2021 and 79,057 in
the first quarter of 2022.139 For the time
136 See
ANPR, 86 FR 72901, 72902.
Fed. Trade Comm’n, Fraud Reports:
Subcategories over Time, Tableau Public, https://
public.tableau.com/app/profile/
federal.trade.commission/viz/FraudReports/
SubcategoriesOverTime (last visited June 24, 2022).
See also Fed. Trade Comm’n, Consumer Sentinel
Network Data Book 2020, 4 (2022), https://
www.ftc.gov/system/files/ftc_gov/pdf/
CSN%20Annual%20Data%20
Book%202021%20Final%20PDF.pdf.
138 See ANPR, 86 FR 72901.
139 See Fed. Trade Comm’n, Fraud Reports:
Subcategories over Time, Tableau Public, https://
public.tableau.com/app/profile/
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137 See
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period discussed in the ANPR, average
annual total consumer losses reported
from business impersonation were
roughly $180 million, and average
annual total consumer losses reported
from government impersonation were
roughly $190 million. With all the 2021
data in, total reported consumer losses
last year due to government
impersonation topped $445 million over
396,601 reported incidents.140
Reports of government and business
impersonation remain high. The
consumer losses remain large, with, for
government impersonation scams alone,
a median loss of $1,322 and total losses
of $103 million reported for government
impersonation in the first quarter of
2022.141 If the trends from the first
quarter of 2022 continue, the annual
consumer loss reported just for
government impersonation will again
exceed $400 million. And these figures
cover only those incidents that are
reported to the Commission; plainly, the
prevalence of government and business
impersonation in reality is higher than
what gets reported to the Commission.
It follows that, qualitatively,
government and business impersonation
cases have recently constituted and are
likely to constitute in the future a
meaningful share of Commission
enforcement actions,142 and in many of
those actions a rule against
impersonation may prove to be the only
or the most practicable means for
achieving consumer redress. As such,
the most significant anticipated benefit
of a final rule is the ability to obtain
monetary relief, especially consumer
redress, as well as civil penalties. While
such relief could also be obtained with
an existing rule, such as the TSR, in
many cases, by no means do all
impersonation scams implicate an
existing rule, and there is no reason to
expect them all to do so in the future.143
federal.trade.commission/viz/FraudReports/
SubcategoriesOverTime (last visited June 24, 2022).
140 See Fed. Trade Comm’n, Explore Government
Imposter Scams, Tableau Public, https://
public.tableau.com/app/profile/
federal.trade.commission/viz/GovernmentImposter/
Infographic (last visited June 24, 2022).
141 See id.
142 Impersonation scams overall, including those
that are not covered by the proposed rule’s scope
of government and business impersonation,
constitute 17.16% of all consumer complaints
received in the Consumer Sentinel Network in
2021. See Fed. Trade Comm’n, Consumer Sentinel
Network Data Book 2020, 6 (2022), https://
www.ftc.gov/system/files/ftc_gov/pdf/
CSN%20Annual%20Data%20
Book%202021%20Final%20PDF.pdf.
143 The Commission has brought many
impersonation cases in which no existing rule was
violated or no relief under a rule was sought. See,
e.g., Compl. at 12–13, FTC v. Modern Tech. Inc., No.
13–cv–8257 (N.D. Ill. filed Nov. 18, 2013) (only
counts under Section 5); Compl. at 9–10, FTC v.
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To succeed at obtaining consumer
redress without a rule violation, the
Commission must first file a complaint
alleging that the impersonator violated
Section 5 and prevail in securing a
cease-and-desist order. Then, to secure
consumer redress for victims of the
impersonator, the Commission must file
follow-on litigation under Section 19,
and without a rule this second litigation
requires the Commission to allege and
persuade a court in each case that the
conduct at issue is ‘‘one which a
reasonable man would have known
under the circumstances was dishonest
or fraudulent.’’ 144 Although this
standard is likely to be met in
impersonation cases, having to do so in
each case requires a greater expenditure
of Commission resources than in cases
with a rule violation, which do not
require a second litigation or separate
proof of knowledge that the conduct
was dishonest or fraudulent.
Accordingly, without a rule, the
Section 19 path often requires consumer
victims to wait many years before the
Commission can deliver redress to
them, even six years or more.145
Although the Commission does not have
extensive experience pursuing Section
19 cases without a rule violation, its
limited experience supports a
reasonable estimate that such litigation
can take at least twice as long as
litigation with a rule violation. Because
of the prevalence of impersonation
scams, the Commission will not have a
shortage of bad actors to investigate, and
it could invest the savings of
enforcement resources from having a
Gerber Prods. Co., No. 2:14–cv–06771–SRC–CLW
(D.N.J. filed Oct. 30, 2014) (only counts under
Sections 5 and 12(a)); Compl. at 17–19, 22, FTC v.
DOTAuthority.com, Inc., No. 16–cv–62186 (S.D.
Fla. filed Sept. 13, 2016) (seeking relief only for
counts under Section 5); Compl. at 8–9, FTC v.
Moore, No. 5:18–cv–01960 (C.D. Cal. filed Sept. 13,
2018) (only counts under Section 5); Compl. at 21–
22, FTC v. Forms Direct, Inc. (Am. Immigr. Ctr.), No.
3:18–cv–06294 (N.D. Cal. filed Oct. 16, 2018) (only
counts under Section 5); Am. Compl. at 8–9, FTC
v. Starwood Consulting, LLC, No. 4:18–cv–02368
(S.D. Tex. filed Mar. 27, 2019) (only counts under
Section 5 from FTC); Compl. at 8–9, FTC v. Ponte
Invs., LLC, No. 1:20–cv–00177–JJM–PAS (D.R.I.
filed Apr. 17, 2020) (only counts under Section 5).
144 15 U.S.C. 57b(a)(2). Depending on the
egregiousness of the misconduct and the harm it is
causing, the Commission also may seek preliminary
injunctive relief in federal court. 15 U.S.C. 53(b).
145 See, e.g., Press Release, Fed. Trade Comm’n,
Marketers of Ab Force Weight Loss Device Agree to
Pay $7 Million for Consumer Redress (Jan. 14,
2009), https://www.ftc.gov/news-events/news/pressreleases/2009/01/marketers-ab-force-weight-lossdevice-agree-pay-7-million-consumer-redress
(describing a 2009 settlement of a follow-on Section
19 action against Telebrands Corp. that was brought
after litigation finally concluded of a 2003
administrative complaint alleging violations of
Section 5—in this case, the Section 19 action settled
instead of being litigated to judgment, which would
have taken more time).
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lotter on DSK11XQN23PROD with PROPOSALS1
rule into investigating and, where the
facts warrant, bringing enforcement
actions in additional impersonation
matters. In sum, the significant potential
consumer-redress benefits of a rule are
that the Commission could put a stop to
more impersonation scams, return
money to more victims, and win that
redress more quickly.
A secondary potential benefit is
deterrence of impersonation scams. The
potential deterrence from a rule should
not be overstated; because
impersonation scams are already clearly
unlawful, deterrence would affect only
bad actors who are comfortable breaking
the law under the existing set of
consequences but would opt not to
break the law if potentially subject to
civil penalties and swifter redress.
Scholarship on deterrence suggests that
the potential severity of consequences,
such as high civil penalties, is less
likely to influence behavior than the
perceived likelihood of detection and
punishment.146 Still, an eventual rule
that makes it less likely that
impersonators get to keep their ill-gotten
gains and more likely that they have to
pay civil penalties can have only
helpful deterrence effects, whatever
their magnitude. And the publicity
around this rulemaking process and any
eventual rule could have the salutary
effect of complementing the
Commission’s consumer education work
by elevating public awareness of these
prevalent forms of fraud, which could
increase how often they are detected
and reported.
If a final rule succeeds in deterring
unlawful behavior, another potential
benefit is that businesses that are
frequently impersonated may have to
spend less money to monitor the market
for impersonators of their brand. Several
businesses filed comments indicating
that monitoring for impersonation
required significant expenditures of
funds and personnel.147 Quantifying the
savings those companies might achieve
from deterrence of impersonation
activity, however, would require
substantial speculation. At the same
time, the proposed rule is unlikely to
impose costs on honest businesses, and
no commenter suggested it would. Thus,
even a marginal increase in deterrence
146 See,
e.g., Aaron Chalfin & Justin McCrary,
Criminal Deterrence: A Review of the Literature, 55
J. Econ. Lit. 5 (2017), https://doi.org/10.1257/
jel.20141147 (reviewing twenty years of studies,
albeit in criminal rather than civil context, and
finding stronger evidence for deterrent effect of
perceived risk of detection than for severity of
punishment).
147 See Microsoft Cmt.; Apple Cmt.
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is a likely benefit of the rule, although
not its primary benefit.
Some rough math may help illustrate
these qualitatively described benefits:
Between January 1, 2018, and June 30,
2022, Consumer Sentinel received
338,393 complaints regarding business
or government impersonation scams
that expressly reported the initial
contact method used by the
impersonator as being email, social
media, online or pop-up advertisement,
website, or mobile application.148 These
complaints referenced aggregate
consumer losses of $599,270,000.
Because these initial contact methods
typically are unlikely to be covered by
the TSR or other rules, the Commission
currently cannot redress such fraud
other than by using its Section 19
authority. The Commission cannot
predict the volume of future government
and business impersonation scam
complaints, their contact methods, or
the losses those complaints will report,
but if even a small percentage of similar
complaints the Commission receives in
the future are redressed or deterred by
the proposed rule, the marginal effect
from rule implementation (relative to
not implementing the rule) would have
had economically significant
consequences. For example, assume that
the annualized rate of consumer injury
from government and business
impersonation scams initiated through
email, social media, online or pop-up
advertisements, websites, or mobile
applications over the past 4.5 years is
$133,171,000 (or $599,270,000 divided
by 4.5 years). If that annualized rate
continues over the next 10 years,
consumer losses over that period would
be $1,331,710,000. Even a five per cent
reduction in such losses through redress
or deterrence would result in a benefit
to consumers of over $66.5 million
(without adjusting for inflation or
discounting any of these figures).
One potentially reasonable alternative
to the proposed rule is to terminate the
rulemaking and rely instead on the
existing tools that the Commission
currently possesses to combat
government and business impersonation
fraud, such as consumer education and
enforcement actions brought under
Sections 5 and 19 of the FTC Act.
Termination of the rulemaking would
offer the benefit of preserving some
148 This is a conservative estimate of the number
of Consumer Sentinel complaints received over this
period that reference such initial contact methods.
Complaints referencing a sub-category of business
complaints, related to ‘‘technical support’’ scams,
are excluded because such complaints may also be
reported under business impersonations and
because many were submitted to Consumer
Sentinel from the impersonated business with the
initial contact method information omitted.
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Commission resources that would be
required to continue the rulemaking in
the short term, but it would come at a
significant cost. The cost that is most
significant is the failure to strengthen
the set of tools available in support of
the Commission’s enforcement program
against impersonation fraud, depriving
it of the benefits outlined above. The
alternative of terminating the
rulemaking would not sufficiently
accomplish the Commission’s
objectives. The Commission seeks
comment on this and other potentially
reasonable alternatives.
B. Paperwork Reduction Act
In addition to the requirements of
Section 22, the Commission must
provide in any NPRM the ‘‘information
required by the Regulatory Flexibility
Act, 5 U.S.C. 601–612, and the
Paperwork Reduction Act, 44 U.S.C.
3501–3520, if applicable.’’ 16 CFR
1.11(c)(4).
The Paperwork Reduction Act
requires the Commission to engage in
additional processes and analysis if it
proposes to engage in a ‘‘collection of
information’’ as part of the proposed
rule. 44 U.S.C. 3506. The Commission
states that the proposed rule contains no
collection of information.
C. Regulatory Flexibility Act—Initial
Regulatory Flexibility Analysis
The Regulatory Flexibility Act
requires the Commission to prepare and
make available for public comment an
‘‘initial regulatory flexibility analysis’’
(‘‘IRFA’’) in connection with any NPRM.
5 U.S.C. 603. An IRFA requires many of
the same components as Section 22 of
the FTC Act and the Paperwork
Reduction Act, which the Commission
incorporates into its IRFA. The IRFA
must furthermore contain, among other
things, ‘‘a description of and, where
feasible, an estimate of the number of
small entities to which the proposed
rule will apply.’’ 5 U.S.C. 603(b)(3). This
and other requirements do not apply,
however, whenever ‘‘the agency certifies
that the rule will not, if promulgated,
have a significant economic impact on
a substantial number of small entities.’’
5 U.S.C. 605(b).
The Commission certifies that the
proposed rule will not have a significant
economic impact on a substantial
number of honest, small entities, and
this document serves as notice to the
Small Business Administration of the
Commission’s certification. Because the
impersonation of government and
businesses is already prohibited by
Section 5 of the FTC Act, the rule does
not change the state of the law in terms
of what is legal and what is illegal.
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Furthermore, the proposed rule would
impose no recordkeeping requirement.
The main changes arise for entities that
are currently violating Section 5 but
would, after its finalization, also be
violating the rule: instead of being
immune from civil penalties (at least for
first offenses) and more capable of
evading consumer redress, the violators
could be ordered by a court to pay
significant civil penalties and to provide
full redress to their victims. This change
could constitute a significant economic
impact for law violators, but it will not
affect a substantial number of small
entities. The Commission believes that
the vast majority of small entities do not
impersonate government or other
businesses. Furthermore, the
Commission does not consider those
small entities that are violating existing
law to be among those Congress
protected in enacting the additional
procedural protections for small entities
when agencies consider rulemaking.
V. Request for Comments
Members of the public are invited to
comment on any issues or concerns they
believe are relevant or appropriate to the
Commission’s consideration of the
proposed rule. The Commission
requests that factual data on which the
comments are based be submitted with
the comments. In addition to the issues
raised above, the Commission solicits
public comment on the specific
questions identified below. These
questions are designed to assist the
public and should not be construed as
a limitation on the issues on which
public comment may be submitted.
lotter on DSK11XQN23PROD with PROPOSALS1
Questions
(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) Please provide comment,
including relevant data, statistics,
consumer complaint information, or any
other evidence, on each different
provision of the proposed rule.
Regarding each provision, please
include answers to the following
questions:
(a) How prevalent is the act or
practice the provision seeks to address?
(b) What is the provision’s impact
(including any benefits and costs), if
any, on consumers, governments, and
businesses, both those existing and
those yet to be started?
(c) What alternative proposals should
the Commission consider?
(3) Does the proposed rule contain a
collection of information?
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(4) Would the proposed rule, if
promulgated, have a significant
economic impact on a substantial
number of small entities? If so, how
could it be modified to avoid a
significant economic impact on a
substantial number of small entities?
(5) The proposed rule contains a onesentence prohibition against
impersonation of government in § 461.2
and another against impersonation of
businesses in § 461.3. Are these
prohibitions clear and understandable?
Are they ambiguous in any way? How
if at all should they be improved?
(6) The proposed rule, in § 461.4,
prohibits providing the means and
instrumentalities to commit violations
of § 461.2 or § 461.3. Should any final
rule contain this prohibition against
providing the means and
instrumentalities for violations of the
prohibitions against government or
business impersonation? Why or why
not?
(7) The proposed rule, in § 461.1,
defines ‘‘business’’ to include non-profit
organizations. Should any final rule
keep the prohibition against
impersonating non-profit organizations?
Why or why not?
(8) Should the proposed rule be
expanded to address the impersonation
of individuals or entities other than
governments and businesses in
interstate commerce? 149 For example,
should the proposed rule be expanded
to prohibit impersonation of individuals
for the purpose of seeking monetary
payment or contribution, such as in
romance or grandparent impersonation
scams? In your answer to this question,
please provide the following
information:
(a) How prevalent is the act or
practice?
(b) What would be the impact,
including benefits and costs, of
including individual impersonation in
the proposed rule on consumers,
governments, and businesses?
(c) What alternative proposals should
the Commission consider?
VI. Comment Submissions
You can file a comment online or on
paper. For the Commission to consider
your comment, we must receive it on or
before December 16, 2022. Write
‘‘Impersonation NPRM, R207000’’ on
your comment. Your comment—
including your name and your state—
will be placed on the public record of
149 Cf. ANPR, 86 FR 72901; see also, Emma
Fletcher, Reports of romance scams hit record highs
in 2021, FTC Data Spotlight (Feb. 10, 2022), https://
www.ftc.gov/news-events/data-visualizations/dataspotlight/2022/02/reports-romance-scams-hitrecord-highs-2021.
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this proceeding, including, to the extent
practicable, on the website https://
www.regulations.gov.
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 comments online
through the https://www.regulations.gov
website. To ensure that the Commission
considers your online comment, please
follow the instructions on the webbased form.
If you file your comment on paper,
write ‘‘Impersonation NPRM, R207000’’
on your comment and on the envelope,
and mail your comment to the following
address: Federal Trade Commission,
Office of the Secretary, 600
Pennsylvania Avenue NW, Suite CC–
5610 (Annex B), Washington, DC 20580.
Because your comment will be placed
on the public record, you are solely
responsible for making sure that your
comment does not include any sensitive
or confidential information. In
particular, your comment should not
contain 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 ‘‘[t]rade secret or
any commercial or financial information
which . . . is privileged or
confidential’’—as provided in 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),
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). Your comment will be kept
confidential only if the General Counsel
grants your request in accordance with
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Federal Register / Vol. 87, No. 199 / Monday, October 17, 2022 / Proposed Rules
the law and the public interest. Once
your comment has been posted publicly
at https://www.regulations.gov—as
legally required by FTC Rule 4.9(b), 16
CFR 4.9(b)—we cannot redact or remove
your comment, 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 that 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 December 16,
2022. For information on the
Commission’s privacy policy, including
routine uses permitted by the Privacy
Act, see https://www.ftc.gov/
siteinformation/privacypolicy.
VII. Communications by Outside
Parties to the Commissioners or Their
Advisors
Under Commission Rule 1.18(c)(1), 16
CFR 1.18(c)(1), the Commission has
determined that communications with
respect to the merits of this proceeding
from any outside party to any
Commissioner or Commissioner advisor
will be subject to the following
treatment: written communications and
summaries or transcripts of all oral
communications must be placed on the
rulemaking record. Unless the outside
party making an oral communication is
a member of Congress, communications
received after the close of the publiccomment period are permitted only if
advance notice is published in the
Weekly Calendar and Notice of
‘‘Sunshine’’ Meetings.
List of Subjects in 16 CFR Part 461
Consumer protection, Impersonation,
Trade Practices.
lotter on DSK11XQN23PROD with PROPOSALS1
For the reasons stated above, the
Federal Trade Commission proposes to
amend 16 CFR chapter I by adding part
461 to read as follows:
§ 461.1
Definitions.
§ 461.2 Impersonation of government
prohibited.
It is unlawful to falsely pose as or to
misrepresent, directly or by implication,
affiliation with, including endorsement
or sponsorship by, a government entity
or officer thereof.
§ 461.3 Impersonation of businesses
prohibited.
It is unlawful to falsely pose as or to
misrepresent, directly or by implication,
affiliation with, including endorsement
or sponsorship by, a business or officer
thereof.
§ 461.4 Means and instrumentalities
prohibited.
It is unlawful to provide the means
and instrumentalities for a violation of
§ 461.2 or § 461.3.
By direction of the Commission.
April J. Tabor,
Secretary.
[FR Doc. 2022–21289 Filed 10–14–22; 8:45 am]
BILLING CODE 6750–01–P
DEPARTMENT OF LABOR
Employee Benefits Security
Administration
29 CFR Part 2570
RIN 1210–AC05
Posting of Hearing Transcript
Regarding Proposed Amendment to
Exemption Procedures Regulation and
Closing of Reopened Comment Period
AGENCY:
PART 461—RULE ON
IMPERSONATION OF GOVERNMENT
AND BUSINESSES
SUMMARY:
Sec.
461.1 Definitions.
461.2 Impersonation of government
prohibited.
461.3 Impersonation of businesses
prohibited.
461.4 Means and instrumentalities
prohibited.
Authority: 15 U.S.C. 41–58.
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17:04 Oct 14, 2022
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Employee Benefits Security
Administration, Department of Labor.
ACTION: Announcement of hearing
transcript posting and closing of the
reopened comment period.
As discussed in the DATES
section below, the Department of
Labor’s Employee Benefits Security
Administration (EBSA) is announcing
that it has posted the transcript of the
virtual public hearing regarding the
proposed amendment to its exemption
procedure regulation online and
determined the closing date for the
proposed amendment’s reopened
comment.
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The public hearing transcript
was posted to EBSA’s website on
October 6, 2022, and the reopened
comment period for the proposed
amendment will close on October 28,
2022.
FOR FURTHER INFORMATION CONTACT:
Contact Brian Shiker, Office of
Exemption Determinations, EBSA, by
phone at (202) 693–8552 (not a toll-free
number) or email shiker.brian@dol.gov.
SUPPLEMENTARY INFORMATION: On March
15, 2022, the Department published in
the Federal Register a proposed
amendment 1 (the Rule) that would
update its existing procedures governing
the filing and processing of applications
for administrative exemptions from the
prohibited transaction provisions of the
Employee Retirement Income Security
Act, the Internal Revenue Code, and the
Federal Employees’ Retirement System
Act. The Department received 29
comment letters on the Rule before the
public comment period ended on May
29, 2022.
On August 22, 2022, the Department
announced in a Federal Register
notice 2 that it would hold a virtual
public hearing regarding the Rule on
September 15, 2022 and then reopen the
Rule’s public comment period from the
hearing date until approximately 14
days after the Department published the
hearing transcript on EBSA’s website.
The notice also stated that the
Department will publish a Federal
Register notice that announces it has
posted the hearing transcript to EBSA’s
website and when the reopened
comment period closes.
The Department held the virtual
public hearing on September 15, 2022,
and eight organizations were
represented at the hearing. The
Department reopened the Rule’s
comment period on the hearing date.
In accordance with the August 22,
2022 Federal Register notice, the
Department is hereby providing notice
that it posted the hearing transcript to
EBSA’s website on October 6, 2022, and
the Rule’s reopened comment period
that began on September 22, 2022 will
close on October 28, 2022.3
The Department encourages all
interested parties to submit comments
on the Rule before the reopened
comment period closes. All written
comments should be identified by RIN
1210–ACO5 and sent to the Office of
Exemption Determinations through the
Federal eRulemaking Portal. Federal
eRulemaking Portal: https://
DATES:
As used in this part:
Business means a corporation,
partnership, association, or any other
entity that provides goods or services,
including not-for-profit entities.
Government includes Federal, State,
local, and tribal governments as well as
agencies and departments thereof.
Officer includes executives, officials,
employees, and agents.
■
62751
Sfmt 4702
1 87
FR 14722.
FR 51299.
3 The hearing transcript may be accessed at:
https://www.dol.gov/agencies/ebsa.
2 87
E:\FR\FM\17OCP1.SGM
17OCP1
]]>Agencies
[Federal Register Volume 87, Number 199 (Monday, October 17, 2022)]
[Proposed Rules]
[Pages 62741-62751]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-21289]
=======================================================================
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FEDERAL TRADE COMMISSION
16 CFR Part 461
Trade Regulation Rule on Impersonation of Government and
Businesses
AGENCY: Federal Trade Commission.
ACTION: Notice of proposed rulemaking; request for public comment.
-----------------------------------------------------------------------
SUMMARY: The Federal Trade Commission (``FTC or ``Commission'')
commences a rulemaking to promulgate a trade regulation rule entitled
``Rule on Impersonation of Government and Businesses,'' which would
prohibit the impersonation of government, businesses, or their
officials. The Commission finds such impersonation to be prevalent
based on the comments it received in response to an advance notice of
proposed rulemaking and other information discussed in this document.
The Commission now solicits written comment, data, and arguments
concerning the utility and scope of the proposed trade regulation rule
to prohibit the impersonation of government, businesses, or their
officials.
DATES: Comments must be received on or before December 16, 2022.
ADDRESSES: Interested parties may file a comment online or on paper by
following the instructions in the Comment Submissions part of the
SUPPLEMENTARY INFORMATION section below. Write ``Impersonation NPRM,
R207000'' 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, 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.
FOR FURTHER INFORMATION CONTACT: Christopher E. Brown, Attorney,
Marketing Practices Division, phone: 202-326-2825, [email protected].
SUPPLEMENTARY INFORMATION: The Commission invites interested parties to
submit data, views, and arguments on the proposed Rule on Impersonation
of Government and Businesses and, specifically, on the questions set
forth in Item IV of this notice of proposed rulemaking (``NPRM''). The
comment period will remain open until December 16, 2022.\1\ To the
extent practicable, all comments will be available on the public record
and posted at the docket for this rulemaking on https://www.regulations.gov. If interested parties request to present their
position orally, the Commission will hold an informal hearing, as
specified in Section 18(c) of the FTC Act, 15 U.S.C. 57a(c). Persons
interested in making a presentation at an informal hearing must file a
comment in response to this document containing a statement explaining
why they believe an informal hearing is warranted, how they would
participate in an informal hearing, their interests in the proceeding,
whether there are any disputed issues of material fact necessary to be
resolved during an informal hearing, and a summary of their anticipated
testimony. If an informal hearing is held, a separate document will
issue under 16 CFR 1.12(a) (``initial notice of informal hearing'').
---------------------------------------------------------------------------
\1\ The Commission elects not to provide a separate, second
comment period for rebuttal comments. See 16 CFR 1.11(e) (``The
Commission may in its discretion provide for a separate rebuttal
period following the comment period.'').
---------------------------------------------------------------------------
I. Background
On December 23, 2021, the Commission published an advance notice of
proposed rulemaking (``ANPR'') under the authority of Section 18 of the
FTC Act, 15 U.S.C. 57a(b)(2); the provisions of part 1, subpart B, of
the Commission's Rules of Practice, 16 CFR 1.7-1.20; and 5 U.S.C.
553.\2\ This authority permits the Commission to promulgate, modify, or
repeal trade regulation rules that define with specificity acts or
practices that are unfair or deceptive in or affecting commerce within
the meaning of Section 5(a)(1) of the FTC Act, 15 U.S.C. 45(a)(1). The
ANPR described the Commission's history of taking law enforcement
action against and educating consumers about the impersonation of
government and businesses,\3\ and it asked questions about the
prevalence of impersonation fraud and whether and how to proceed with
an NPRM.\4\ The Commission took comment for 60 days, and it received
164 unique comments, which it has thoroughly considered.
---------------------------------------------------------------------------
\2\ Fed. Trade Comm'n, ANPR: Trade Regulation Rule on
Impersonation of Gov't and Businesses, 86 FR 72901 (Dec. 23, 2021),
https://www.federalregister.gov/documents/2021/12/23/2021-27731/trade-regulation-rule-on-impersonation-of-government-and-businesses.
\3\ See id., 86 FR 72901-04.
\4\ See id. at 72904.
---------------------------------------------------------------------------
Based on the substance of these comments, as well as the
Commission's history of enforcement and other information discussed
below, the Commission has reason to believe that the impersonation,
including affiliation or endorsement claims, of government, businesses,
and their officials or agents is prevalent \5\ and that proceeding with
this rulemaking is in the public interest. This document discusses the
comments and explains its considerations in developing the proposed
rule. The Commission also poses specific questions for comment.
Finally, the NPRM provides the text of its proposed rule.
---------------------------------------------------------------------------
\5\ See 15 U.S.C. 57a(b)(3) (``The Commission shall issue a
notice of proposed rulemaking pursuant to paragraph (1)(A) only
where it has reason to believe that the unfair or deceptive acts or
practices which are the subject of the proposed rulemaking are
prevalent.'').
---------------------------------------------------------------------------
II. Summary of Comments to ANPR
The Commission received 164 unique comments in response to the
ANPR, which are publicly available on this rulemaking's docket at
https://www.regulations.gov/docket/FTC-2021-0077/comments.\6\ Of the
total comments received, 113 expressly support the Commission's
proceeding with the rulemaking. Another 35 comments did not express a
clear view on the merits of proceeding, and another 16 comments did not
address the question. No commenter expressed the view that the
Commission should not commence this rulemaking. Most comments came from
individual consumers, with 140 total comments. Ten comments were
submitted by businesses,\7\ eleven by
[[Page 62742]]
trade associations,\8\ and three by government or law-enforcement
organizations.\9\
---------------------------------------------------------------------------
\6\ The docket lists 168 comments, but four of these were
submitted by AVIXA, Inc. (``Audio Visual and Integrated Experience
Association'') and two by the National Association of Attorneys
General (``NAAG''), accounting for four total duplicates. See AVIXA
Cmts., https://www.regulations.gov/comment/FTC-2021-0077-0089,
https://www.regulations.gov/comment/FTC-2021-0077-0085, https://www.regulations.gov/comment/FTC-2021-0077-0126, https://www.regulations.gov/comment/FTC-2021-0077-0128; NAAG Cmts., https://www.regulations.gov/comment/FTC-2021-0077-0152, https://www.regulations.gov/comment/FTC-2021-0077-0164.
\7\ See Pub'rs Clearing House, Cmt. on ANPR (Feb. 8, 2022),
https://www.regulations.gov/comment/FTC-2021-0077-0008 (``PCH
Cmt.''); YouMail Inc., Cmt. on ANPR (Feb. 22, 2022), https://www.regulations.gov/comment/FTC-2021-0077-0148 (``YouMail Cmt.'');
WMC Global, Cmt. on ANPR (Feb. 22, 2022), https://www.regulations.gov/comment/FTC-2021-0077-0154 (``WMC Cmt.'');
DIRECTV, LLC, Cmt. on ANPR (Feb. 23, 2022), https://www.regulations.gov/comment/FTC-2021-0077-0167 (``DIRECTV Cmt.'');
Somos, Inc., Cmt. on ANPR (Feb. 23, 2022), https://www.regulations.gov/comment/FTC-2021-0077-0162 (``Somos Cmt.'');
Microsoft Corp., Cmt. on ANPR (Feb. 22, 2022), https://www.regulations.gov/comment/FTC-2021-0077-0135 (``Microsoft Cmt.'');
Apple, Inc., Cmt. on ANPR (Feb. 23, 2022), https://www.regulations.gov/comment/FTC-2021-0077-0159 (``Apple Cmt.'');
Cotney Attorneys & Consultants, Cmt. on ANPR (Feb. 22, 2022),
https://www.regulations.gov/comment/FTC-2021-0077-0140 (``Cotney
Cmt.''); Erik M. Pelton & Associations, Consultants, Cmt. on ANPR
(Feb. 22, 2022), https://www.regulations.gov/comment/FTC-2021-0077-0156 (``Pelton Cmt.''); Informa PLC, Cmt. on ANPR (Feb. 22, 2022),
https://www.regulations.gov/comment/FTC-2021-0077-0166 (``Informa
Cmt.'').
\8\ See Exhibitions & Conferences Alliances, Cmt. on ANPR (Feb.
15, 2022), https://www.regulations.gov/comment/FTC-2021-0077-0009
(``ECA Cmt.''); AVIXA, Inc., Cmt. on ANPR (Feb. 17, 2022), https://www.regulations.gov/comment/FTC-2021-0077-0085 (``AVIXA Cmt.'');
Experiential Designers & Producers Association, Cmt. on ANPR (Feb.
16, 2022), https://www.regulations.gov/comment/FTC-2021-0077-0073
(``EDPA Cmt.''); Association of Equipment Manufacturers, Cmt. on
ANPR (Feb. 23, 2022), https://www.regulations.gov/comment/FTC-2021-0077-0168 (``AEM Cmt.''); The American Apparel & Footwear
Association, Cmt. on ANPR (Feb. 22, 2022), https://www.regulations.gov/comment/FTC-2021-0077-0141 (``AAFA Cmt.'');
NCTA--The internet & Television Association, Cmt. on ANPR (Feb. 23,
2022), https://www.regulations.gov/comment/FTC-2021-0077-0169
(``NCTA Cmt.''); USTelecom, Cmt. on ANPR (Feb. 23, 2022), https://www.regulations.gov/comment/FTC-2021-0077-0160 (``USTelecom Cmt.'');
International Housewares Association, Cmt. on ANPR (Feb. 22, 2022),
https://www.regulations.gov/comment/FTC-2021-0077-0144 (``IHA
Cmt.''); National Association of Broadcasters, Cmt. on ANPR (Feb.
22, 2022), https://www.regulations.gov/comment/FTC-2021-0077-0146
(``NAB Cmt.''); CTIA, Cmt. on ANPR (Feb. 23, 2022), https://www.regulations.gov/comment/FTC-2021-0077-0161 (``CTIA Cmt.'');
Consumer Tech. Ass'n, Cmt. on ANPR (Feb. 17, 2022), https://www.regulations.gov/comment/FTC-2021-0077-0091 (``CTA Cmt.'').
\9\ See Broward Cnty., Fla., Cmt. on ANPR (Feb. 16, 2022),
https://www.regulations.gov/comment/FTC-2021-0077-0075 (``Broward
Cmt.''); NAAG, Cmt. on ANPR (Feb. 23, 2022), https://www.regulations.gov/comment/FTC-2021-0077-0164 (``NAAG Cmt.'');
Nat'l Ass'n of State Charity Officials (``NASCO''), Cmt. on ANPR, at
1 (Feb. 22, 2022), https://www.regulations.gov/comment/FTC-2021-0077-0165 (``NASCO Cmt.'').
---------------------------------------------------------------------------
The 140 individual consumers who commented expressed deep concern
about the harmful effects of both government and business
impersonation. One representative consumer comment declared: ``Citizens
of the USA should be able to answer the phone and not have to worry
about what type of spam, coercion, or trickery is about to assault
them.'' \10\ Many consumers expressed concern that impersonation scams
target specific populations, such as older consumers. Another consumer,
who fell victim to an impersonator of a contractor company, described
lasting and serious harm: ``We are lost and devastated. I live in fear
daily because someone has sensitive information about my home, its
location, and the people I love who reside in it.'' \11\
---------------------------------------------------------------------------
\10\ Coni Limpert, Cmt. on Trade Regulation Rule on
Impersonation of Government and Businesses (``Cmt. on ANPR'') (Feb.
22, 2022), https://www.regulations.gov/comment/FTC-2021-0077-0121
(``Limpert Cmt.'').
\11\ Yroctonya Williams, Cmt. on ANPR (Jan. 6, 2022), https://www.regulations.gov/comment/FTC-2021-0077-0004 (``Williams Cmt.'').
---------------------------------------------------------------------------
A. Comments About the Impersonation of Government
In its ANPR, the Commission cited public data from the Consumer
Sentinel Network database and its enforcement record to conclude that
``government impersonation scams are highly prevalent and increasingly
harmful.'' \12\ The comments received about the impersonation of
government bolster this conclusion.
---------------------------------------------------------------------------
\12\ ANPR, 86 FR 72901; see also Fed. Trade Comm'n, Explore
Government Imposter Scams, TABLEAU PUBLIC, https://public.tableau.com/app/profile/federal.trade.commission/viz/GovernmentImposter/Infographic (last visited Mar. 17, 2022).
---------------------------------------------------------------------------
Six commenters explicitly addressed the widespread nature of the
impersonation of government entities, citing common scams perpetrated
by fraudsters pretending to be Federal, State, and local
governments.\13\ For example, USTelecom, a trade association of
telephone and broadband industry companies, and YouMail, Inc.
(``YouMail''), a communications and cybersecurity company, cite their
own data regarding the prevalence of Social Security Administration
impersonation scams,\14\ which echo the Commission's findings that
these schemes are among the most common government impersonation
complaints. Broward County, Florida, and NAAG note the incidence of
government impersonation at the local level, giving particular emphasis
to scams offering consumers official-looking government documents at a
significantly marked-up price.\15\ Commenters also cite evidence of
other common government impersonation frauds, such as schemes
impersonating the Internal Revenue Service \16\ and Department of
Homeland Security \17\ or targeting public-sector employees entitled to
benefits \18\ and businesses seeking to comply with regulatory
reporting requirements.\19\
---------------------------------------------------------------------------
\13\ See USTelecom, Cmt. at 2; Broward Cmt. at 1; NAAG Cmt. at
3; YouMail Cmt. at 3WMC Cmt. at 2; Somos Cmt.
\14\ See USTelecom Cmt. at 1; YouMail Cmt. at. 3.
\15\ See Broward Cmt. at 1; NAAG Cmt. at 4.
\16\ See Broward Cmt. at 1.
\17\ See USTelecom Cmt. at 1.
\18\ See NAAG Cmt. at 5-6.
\19\ See id. at 5; see also Fed. Trade Comm'n, NPRM:
Telemarketing Sales Rule, 87 FR 33677, 33683 n.77 (June 3, 2022),
https://www.federalregister.gov/documents/2022/06/03/2022-09914/telemarketing-sales-rule (collecting cases of business-to-business
fraud that impersonated the government and violated the
Telemarketing Sales Rule).
---------------------------------------------------------------------------
The Commission also takes notice of additional indications of the
prevalence of government impersonation scams, which came after the
ANPR's publication: The Federal Bureau of Investigation issued a Public
Service Announcement on March 7, 2022, ``warning the public of ongoing
widespread fraud schemes in which scammers impersonate law enforcement
or government officials in attempts to extort money or steal personally
identifiable information.'' \20\ Similarly, the Social Security
Administration's Office of the Inspector General spearheaded a scam
alert issued by multiple Federal law enforcement agencies on May 20,
2022, warning the public of government impersonation scams involving
the reproduction of Federal law enforcement credentials and badges.\21\
Additionally, the Commission recently noted that, in some impersonation
scams, fraudsters have instructed consumers to convert cash into
cryptocurrency under false threats of government investigations or
fraud.\22\
---------------------------------------------------------------------------
\20\ Public Service Announcement, Fed. Bureau of Investigation,
Alert No. I-030722-PSA, FBI Warns of the Impersonation of Law
Enforcement and Government Officials (Mar. 7, 2022), https://www.ic3.gov/Media/Y2022/PSA220307.
\21\ Scam Alert, Soc. Sec. Admin. Off. of Inspector Gen.,
Federal Law Enforcement Agencies Warn of Impersonation Scam
Involving Credentials and Badges (May 20, 2022), https://oig.ssa.gov/assets/uploads/scam-alert-law-enforcement-credentials.pdf.
\22\ See Press Release, Fed. Trade Comm'n, New Analysis Finds
Consumers Reported Losing More than $1 Billion in Cryptocurrency to
Scams since 2021 (June 3, 2022), https://www.ftc.gov/news-events/news/press-releases/2022/06/new-analysis-finds-consumers-reported-losing-more-1-billion-cryptocurrency-scams-2021 (``After
cryptocurrency investment schemes, the next largest losses reported
by consumers were on . . . Business and Government Impersonation
Scams[.] Reports show these scammers often target consumers by
claiming their money is at risk because of fraud or a government
investigation and the only way to protect their cash is by
converting it to cryptocurrency.'').
---------------------------------------------------------------------------
Several commenters discussed how a rule addressing impersonation
should be drafted. For example, Broward County offered specific
recommendations, including but not limited to prohibiting advertising
that creates the impression of government affiliation or endorsement
without express consent and requiring advertisers to prominently
disclaim government affiliation or endorsement where it could be
reasonably construed from silence.\23\ YouMail suggested that
[[Page 62743]]
the proposed rule ``not be so prescriptive as to put a damper on
private cybersecurity businesses' ability to develop and refine new,
market-based tools to prevent electronic communications fraud,
including impersonation fraud.'' \24\
---------------------------------------------------------------------------
\23\ See Broward Cmt. at 2.
\24\ YouMail Cmt. at 11.
---------------------------------------------------------------------------
Two commenters, NAAG and USTelecom, explicitly addressed the
Commission's questions regarding individuals or entities that provide
the means and instrumentalities for impersonators to conduct such
practices. NAAG asserted that impersonators ``often use other
companies' products and services to execute their scams,'' such as
``marketing companies, call centers, attorneys, third-party mailing
services, payment processors, lead list providers, remote offices . . .
[d]ating websites, and social media . . . .'' \25\ It also addressed
the Commission's question regarding the circumstances under which the
provision of means and instrumentalities should be considered deceptive
or unfair, remarking that ``when an entity provides substantial
assistance or support to impersonators and knows or should have known
that their products [or] services are being used in a fraudulent
impersonation scheme, that company could also be held liable under the
proposed impersonation rule.'' \26\ Similarly, USTelecom also
recommended liability for ``individuals or entities that provide the
means and instrumentalities for impersonators . . . such as how the FTC
has used the [Telemarketing Sales Rule] against robocall enablers,''
but noted that the proposed rule ``should make clear that liability . .
. requires proof of knowledge of such fraud or conscious avoidance of
it, consistent with FTC precedent and [Telemarketing Sales Rule] and
Section 5 jurisprudence.'' \27\ Somos, Inc., which manages registry
databases for the telecommunications industry, similarly encourages the
``[p]rosecution of . . . those knowingly aiding and abetting''
impersonated toll-free numbers.\28\
---------------------------------------------------------------------------
\25\ NAAG Cmt. at 8.
\26\ Id. at 10.
\27\ USTelecom Cmt. at 3-4.
\28\ Somos Cmt. at 3, 5.
---------------------------------------------------------------------------
Several commenters recommended additional action to a proposed
rulemaking, including the development of educational workshops and
materials,\29\ and increased collaboration between the Commission and
other government agencies, businesses, and trade associations to combat
impersonation fraud.\30\ For example, WMC Global, a cybersecurity
company, recommended that government agencies invest in ``phishing kit
intelligence''--one of the tools the company states it uses to identify
impersonators responsible for credential phishing attacks.\31\ YouMail
encourages the Commission to work with industry groups ``that develop
methods, techniques, and standards that advance the fight against
robocalls and related fraud,'' which can serve to ``help educate the
public about how those tools can be used for self-protection against
impersonation.'' \32\ Somos expressed a willingness to assist law
enforcement's prosecution of impersonators that spoof a company's Toll-
Free Number (TFN) for their CallerID, but use a different TFN as a call
back number, which leads consumers to believe they are communicating
with an honest business.\33\ Somos states that it can always provide
the identity of the entity that reserved the TFN, which law
enforcement, using subpoenas, can traceback to the subscriber or U.S.
point of entry that likely committed the fraud or knowingly aided and
abetted the activity.\34\
---------------------------------------------------------------------------
\29\ See USTelecom Cmt. at 3; NAAG Cmt. at 13; YouMail Cmt. 9-
10; WMC Cmt. at 5; NCTA Cmt. at 2; CTIA Cmt.; Pelton Cmt. at 5; ECA
Cmt. at 2-3; AAFA Cmt. at 3; CTA Cmt. at 3-7; YouMail Cmt. at 10;
DIRECTV Cmt. at 2.
\30\ See YouMail Cmt. at 10; WMC Cmt. at 5; Somos Cmt. at 6.
\31\ WMC Cmt. at 1, 5.
\32\ YouMail Cmt. at 10.
\33\ See Somos Cmt. at 3, 6.
\34\ Id.
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B. Comments About the Impersonation of Businesses
The ANPR noted that business impersonation scams cause an
``enormous amount of financial harm to the public'' and are widespread:
``From January 1, 2017, through September 30, 2021, consumers reported
being defrauded of roughly $852 million in 753,555 business
impersonation incidents.'' \35\ The comments received about the
impersonation of businesses bolster this conclusion.
---------------------------------------------------------------------------
\35\ ANPR, 86 FR 72901.
---------------------------------------------------------------------------
The Commission received 15 comments that specifically addressed the
widespread impersonation of businesses from consumers, trade
associations, and businesses.\36\ Consumers submitted comments about
various business impersonators they encountered, including
impersonators of Microsoft \37\ and Apple.\38\ Several of these
impersonated companies submitted their own comments relaying that
impersonation of their businesses causes severe harm to consumers as
well as to their own business.\39\
---------------------------------------------------------------------------
\36\ See ECA Cmt.; AVIXA Cmt.; EDPA Cmt.; AEM Cmt; AAFA Cmt.;
NCTA Cmt.; US Telecom Cmt.; NAAG Cmt.; PCH Cmt.; YouMail Cmt; WMC
Cmt; IHA Cmt.; DIRECTV Cmt.; Somos Cmt.; NAB Cmt..
\37\ See, e.g., Betty Hanley, Cmt. on ANPR (Feb. 23, 2022),
https://www.regulations.gov/comment/FTC-2021-0077-0163 (``Hanley
Cmt.'').
\38\ See, e.g., Maximo Estebar, Cmt. on ANPR (Feb. 23, 2022),
https://www.regulations.gov/comment/FTC-2021-0077-0157 (``Estebar
Cmt.''); Anonymous, Cmt. on ANPR (Feb. 16, 2022), https://www.regulations.gov/comment/FTC-2021-0077-0044 (``0044 Cmt.'').
\39\ See Microsoft Corp., Cmt. on ANPR (Feb. 22, 2022), https://www.regulations.gov/comment/FTC-2021-0077-0135 (``Microsoft Cmt.'');
Apple, Inc., Cmt. on ANPR (Feb. 23, 2022), https://www.regulations.gov/comment/FTC-2021-0077-0159 (``Apple Cmt.'').
---------------------------------------------------------------------------
The Commission received several comments from trade associations
that represent groups engaged in the face-to-face business events
industry. Five trade associations representing businesses partaking in
conferences, trade shows, and other face-to face business events
submitted comments noting that they are frequently targets of business
impersonation.\40\ These comments outlined two prevalent types of
business impersonation fraud: hotel reservation scams and attendee
list-sale scams. A hotel reservation scam involves scammers
impersonating housing providers of a particular conference or event and
tricking consumers into purchasing bogus hotel rooms.\41\ Perpetrators
of attendee list-sale scams contact face-to-face exhibitors and sell
fake attendee lists.\42\ They often use the event organizer's name and
logo to bolster the illusion that they are, or are affiliated with or
endorsed by, the event organizer.\43\
---------------------------------------------------------------------------
\40\ See EDPA Cmt.; ECA Cmt.; AEM Cmt.; AVIXA Cmt.; NAB Cmt.
\41\ See ECA Cmt. at 2; EDPA Cmt.; AEM Cmt. at 1; AVIXA Cmt.
\42\ See ECA Cmt. at 2; EDPA Cmt.; AEM Cmt. at 1; AVIXA Cmt.
\43\ See ECA Cmt. at 2; EDPA Cmt; AEM Cmt. at 1; AVIXA Cmt.
---------------------------------------------------------------------------
The National Association of Broadcasters (``NAB'') also expressed
its support for the initiation of a rulemaking to address impersonation
because of its experience hosting an annual convention.\44\ NAB states
that business impersonation harms numerous small businesses that often
do not have the resources to properly protect themselves.\45\
---------------------------------------------------------------------------
\44\ See NAB Cmt. at 1-2.
\45\ See id.
---------------------------------------------------------------------------
The American Apparel & Footwear Association (``AAFA'') states that
the AAFA and the roughly 1,000 brands it represents are frequent
targets of
[[Page 62744]]
business impersonation.\46\ The impersonators use company or
organization trademarks and logos in the signature blocks of fraudulent
email solicitations to help perpetrate these schemes.\47\ The AAFA
comment notes that impersonation is a widespread issue in the non-
profit trade association industry.\48\ Another trade association, the
International Housewares Association,\49\ and a consulting firm for
construction companies, Cotney Attorneys & Consultants,\50\ submitted
comments that also expressed concern about rampant impersonation fraud
surrounding trade shows and conferences.
---------------------------------------------------------------------------
\46\ See AAFA Cmt. at 1.
\47\ See id.
\48\ See id. at 2.
\49\ See IHA Cmt. at 1.
\50\ See Cotney Attorneys & Consultants, Cmt. on ANPR, at 1
(Feb. 22, 2022), https://www.regulations.gov/comment/FTC-2021-0077-0140 (``Cotney Cmt.'').
---------------------------------------------------------------------------
Four trade associations that represent businesses in the
telecommunications and technology industries submitted comments noting
that these industries are frequently targeted for business
impersonation fraud. The internet & Television Association (``NCTA''),
a trade association for the United States cable television industry,
states that its members provide television service to almost 80% of the
nation's cable television customers.\51\ NCTA does not explicitly take
a position on the proposed rulemaking, but states that it stands
``ready to assist the FTC with its educational efforts.'' \52\ NCTA
identified two common types of business scams, a payment scam and
unauthorized reselling scam. A payment scam involves scammers
impersonating employees or vendors and calling customers or prospective
customers in an effort to gain their personal information, such as
credit card information, bank account numbers, Social Security numbers,
and passwords.\53\ An unauthorized reselling scam involves scammers
fraudulently using member brands to collect customer or employee
information or unlawfully reselling access to the company's
network.\54\ NCTA states that it takes considerable action to fight
these scams, including communicating regularly with customers and
providing educational materials online, engaging with the communities
at town halls, and directing consumers to FTC resources.\55\
---------------------------------------------------------------------------
\51\ See NCTA Cmt. at 2.
\52\ Id.
\53\ See id.
\54\ See id.
\55\ See id.
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USTelecom states that it supports the efforts of Federal agencies,
including the FTC, to hold impersonators accountable for fraud,
including impersonators using telephone networks to perpetrate their
scams.\56\ It notes that, every day, these impersonators spam the U.S.
telephone network with robocalls and voice phishing calls pretending to
be private companies.\57\ USTelecom's Industry Traceback Group tracks
these calls and identifies the percentage of bank scams, health
insurance scams, and Amazon impersonators, among others.\58\ According
to USTelecom, most of these calls originate from outside of the United
States, from countries such as India, Pakistan, Mexico, the United
Kingdom, and Australia.\59\
---------------------------------------------------------------------------
\56\ See USTelecom Cmt. at 1.
\57\ See id.
\58\ See id. at 2.
\59\ See id.
---------------------------------------------------------------------------
Consumer Technology Association (``CTA'') states that it is North
America's largest technology trade association.\60\ CTA and its members
are frequently targeted for impersonation fraud.\61\ CTA states that it
has seen a growing number of impersonation fraud through email
solicitations, including impersonation attempts of CTA
representatives.\62\ CTA also states that business impersonation
victimizes non-profit organizations, such as the CTA Foundation.\63\
CTA supports an FTC rule that would prohibit deceptive impersonation of
for-profit and non-profit businesses alike.\64\ It recommends that the
FTC not focus rulemaking efforts on communication channels; instead, it
encourages the FTC to work with the private sector to improve detection
and reporting mechanisms to prevent impersonation schemes.\65\ Finally,
CTA suggests that the FTC consider partnership with other Federal
agencies, the private sector, and non-profits to gather information and
help prevent impersonation fraud.\66\
---------------------------------------------------------------------------
\60\ Consumer Tech. Ass'n, Cmt. on ANPR, at 1 (Feb. 17, 2022),
https://www.regulations.gov/comment/FTC-2021-0077-0091 (``CTA
Cmt.'').
\61\ See id.
\62\ See id. at 4.
\63\ See id. at 5-6.
\64\ See id.
\65\ Id. at 9.
\66\ See id.
---------------------------------------------------------------------------
CTIA, a trade association for wireless-service providers, proposes
that the FTC continue to use its existing tools to combat impersonation
fraud.\67\ CTIA suggests that, if the FTC proceeds with a new rule to
address impersonation fraud, the rule should ``narrowly'' target bad
actors and continue to coordinate with government partners and the
private sector.\68\ CTIA lists various industry efforts to help prevent
robocalls from reaching consumers and discusses its implementation of
``Messaging Principles and Best Practices'' to help stop bad
actors.\69\ CTIA states that its members have been assisting Federal
and State enforcement actions against impersonation frauds.\70\
---------------------------------------------------------------------------
\67\ See CTIA, Cmt. on ANPR (Feb. 23, 2022), https://www.regulations.gov/comment/FTC-2021-0077-0161 (``CTIA Cmt.'').
\68\ Id.
\69\ Id. at 7-10.
\70\ See id.
---------------------------------------------------------------------------
The Commission received 11 comments from businesses or trade
associations that are frequently impersonated; six of these comments
were from companies in the telecommunications and technology
industries.\71\
---------------------------------------------------------------------------
\71\ See YouMail Cmt.; WMC Cmt.; DIRECTV Cmt.; Microsoft Cmt.;
Apple Cmt.; Somos Cmt.; PCH Cmt.; Informa Cmt.; AAFA Cmt.; NAB Cmt.;
CTA Cmt.
---------------------------------------------------------------------------
For example, DIRECTV submitted a comment supporting the
Commission's effort to fight impersonation fraud \72\ and states that
many impersonators pose as representatives of DIRECTV in an effort to
commit prepaid card fraud, which causes significant harm to both
consumers and businesses.\73\ According to DIRECTV, impersonators
falsely offer consumers discounts on its service in exchange for the
consumer's providing a prepaid credit card or gift card to a third-
party e-commerce website.\74\ This conduct can result in significant
financial loss for consumers.\75\ DIRECTV cites a YouMail, Inc.
estimate that Americans received millions of calls over the course of
one month in late 2021 from scammers claiming to be from companies,
such as Amazon, Apple, PayPal, and Wells Fargo, and making false claims
about the consumers' accounts or information with these companies.\76\
DIRECTV states that impersonation fraud harms its business by forcing
it to dedicate resources to fighting the scams and also states that the
scams hurt its ability to interest consumers in legitimate
services.\77\
---------------------------------------------------------------------------
\72\ See DIRECTV Cmt. at 1.
\73\ See id. at 2-4.
\74\ See id. at 4-6.
\75\ See id. at 2.
\76\ See id.
\77\ See id. at 3-4.
---------------------------------------------------------------------------
Apple, Inc., submitted a comment that urges the Commission to adopt
a rule targeting bad actors (and their ``facilitators'' that are
engaging in impersonation fraud) without stifling legitimate business
activity.\78\ Apple states that it has worked cooperatively with the
FTC and other Federal agencies to protect consumers from
[[Page 62745]]
impersonation fraud.\79\ Apple notes the prevalence of fraud in which
impersonators steal money from consumers through gift card scams.\80\
Apple states that, as a result of aggressive civil and criminal
enforcement, impersonation fraud levels have decreased.\81\ Apple
states that impersonators who have obtained stolen gift cards use gray
markets \82\ to sell the items purchased with those cards, making it
harder for consumers to detect the fraud.\83\ Apple maintains that gray
markets are primary ``means and instrumentalities'' that impersonators
use to conduct their scams.\84\ One consumer submitted a comment
describing how he had had fallen prey to Apple employee
impersonators.\85\ Another commenter, a former Apple employee,
described the many stories she had heard of customers falling victim to
Apple employee impersonators.\86\
---------------------------------------------------------------------------
\78\ Apple Cmt.
\79\ See id.
\80\ See id.
\81\ See id. Apple notes that complaints about unauthorized
calls by individuals listed on the FTC's Do Not Call Registry
decreased after the Commission sued a VoIP provider for originating
illegal robocalls.
\82\ Gray markets ``allow consumers to sell physical and digital
goods at a discounted price. Impersonators who have obtained stolen
gift card funds utilize gray markets to sell items purchased with
those funds to other consumers who may be unaware of the fraudulent
source of the items they are purchasing.'' Id.
\83\ See id.
\84\ Id.
\85\ See Estebar Cmt.
\86\ See 0044 Cmt.
---------------------------------------------------------------------------
Microsoft Corporation strongly supports the Commission's decision
to proceed with rulemaking to combat government and business
impersonation fraud.\87\ Microsoft states that it is frequently
impersonated in the form of technical support scams, in which
individuals impersonate Microsoft employees to trick consumers into
purchasing technical support services to fix non-existing software or
device issues.\88\ Such impersonators often steal personal information
from consumers and frequently install malware or other programs to do
so.\89\ Microsoft's comment discusses its commitment to protecting
customer privacy through its Digital Crimes Unit.\90\ Microsoft states
that it has a database of roughly 600,000 consumer complaints regarding
technical support scams.\91\ It also states that it has conducted
consumer surveys regarding the prevalence of technology scams. In 2021,
Microsoft commissioned YouGov to conduct an online survey of more than
16,000 adult internet users in 16 countries.\92\ Microsoft maintains
that the survey results demonstrate the strong need for additional
protection of consumers from technical support scams.\93\
---------------------------------------------------------------------------
\87\ See Microsoft Cmt. at 1.
\88\ See id.
\89\ See id.
\90\ See id. at 2.
\91\ See id. at 3.
\92\ See id.
\93\ See id.
---------------------------------------------------------------------------
According to Microsoft, the YouGov survey shows that 67% of U.S.
consumers have encountered a technical support scam in the previous
year.\94\ The study did show that marginally fewer consumers have been
exposed to technical support scams in recent years than in 2018.\95\
The YouGov survey also showed that consumers have been targeted with
impersonation scams involving Facebook, Apple, Google, and Amazon.\96\
---------------------------------------------------------------------------
\94\ See id.
\95\ See id.
\96\ See id. at 3-4.
---------------------------------------------------------------------------
Microsoft states that consumers often lose hundreds and sometimes
thousands of dollars to technical support impersonation scams.\97\
According to Microsoft, the YouGov survey shows that the Millennial
Generation and Generation Z have the highest losses from technical
support scams: One in 10 members of these demographics fell victim to
such a scam and lost money.\98\ The survey data shows that men are more
likely to fall prey to a technical support scam.\99\
---------------------------------------------------------------------------
\97\ See id. at 4.
\98\ See id.
\99\ See id.
---------------------------------------------------------------------------
Microsoft states that there has been a shift from the traditional
``cold-call'' model that scammers use, often by using spoofed numbers
and claiming to be a Microsoft employee, to deployment of automated
pop-ups/malware on websites to redirect consumers to scam
websites.\100\ It states that technical support scams typically make
strong claims via pop-up websites, email and other online
platforms,\101\ in addition to telephone calls where callers falsely
represent themselves as Microsoft employees.\102\ According to
Microsoft, technical support impersonators often share resources, which
allows them to copy each other's business models and limit risk of
enforcement action.\103\
---------------------------------------------------------------------------
\100\ See id. at 5-6.
\101\ See id. at 6.
\102\ See id.
\103\ See id.
---------------------------------------------------------------------------
Addressing means-and-instrumentalities liability, Microsoft states
that scammers typically rely on payment processors to receive money
from victims of these scams.\104\ The scammers also utilize affiliate
marketing services to advertise to consumers through malicious ads and
pop-up windows.\105\
---------------------------------------------------------------------------
\104\ See id.
\105\ See id.
---------------------------------------------------------------------------
Microsoft states that a systematic approach is critical to address
these scams, especially because private actors are limited in their
ability to recover money for victims.\106\ Microsoft notes that the
FTC's new rule would ``clarify and strengthen the FTC's authority to
address these scams, building upon the FTC's existing authority under
the FTC Act and existing regulation, including the Telemarketing Sales
Rule.'' \107\
---------------------------------------------------------------------------
\106\ See id.
\107\ Id. The Commission also received a comment from a consumer
who fell prey to Microsoft impersonators. See Hanley Cmt.
---------------------------------------------------------------------------
Somos, Inc. states in its comment that, when scammers use Toll-Free
Numbers (TFNs) to execute their scams, it causes consumers to lose
confidence in TFNs.\108\ It reports that, since 2017, Somos and partner
organizations have shut down more than 18,000 TFNs used by
impersonation scammers.\109\ Somos discusses anecdotal evidence based
on experience with companies that have asked Somos to help shut down
TFNs utilized by scammers.\110\ Somos states that it works with more
than 80 companies whose customers have been targeted by impersonation
scams--65 utility companies, four tech companies, three retailers, and
10 miscellaneous entities.\111\ Somos states that there has been an
increase in the number of TFNs reported as impersonation scams.\112\
---------------------------------------------------------------------------
\108\ See Somos Cmt. at 1.
\109\ See id. at 2.
\110\ See id.
\111\ See id.
\112\ See id. at 4.
---------------------------------------------------------------------------
The Commission received a comment from Erik M. Pelton & Associates,
a trademark law firm in Virginia, requesting that it include trademark
scams in its definition of impersonation scams.\113\ The comment states
that trademark scams have become widespread.\114\ Specifically, the
comment states that a Pakistan-based company used over 200 fake
websites to impersonate the United States Patent and Trademark Office
(USPTO) and offer trademark filing services.\115\ The law firm urges
transparency from the FTC, USPTO, and United States Postal Inspection
Service about the pervasiveness of trademark scams and the measures
being taken to address
[[Page 62746]]
these scams.\116\ The comment also recommends that the FTC investigate
the means used to collect the money unlawfully taken from victims.\117\
The comment also suggests that the FTC adopt a more robust
impersonation scam reporting system for consumers and businesses.\118\
---------------------------------------------------------------------------
\113\ See Erik M. Pelton & Associations, Consultants, Cmt. on
ANPR, at 1 (Feb. 22, 2022), https://www.regulations.gov/comment/FTC-2021-0077-0156 (``Pelton Cmt.'').
\114\ See id. at 3.
\115\ See id.
\116\ See id.
\117\ See id. at 5.
\118\ Id.
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C. Other Comments
The Commission received a number of comments that advocated for
``non-profit'' entities to be included in the proposed rule's
definition of businesses that can be impersonated.\119\ For example,
The National Association of State Charity Officials (``NASCO''), an
association of state charity officials, state attorneys general, and
other state officials who regulate charities, submitted a comment
urging the Commission to consider including impersonation of charitable
organizations in the rule.\120\ NASCO states that ``fraudulent
practices of impersonating legitimate charitable causes and charitable
organizations persist across the country.'' \121\ It urges the FTC to
ensure that the impersonation rule would cover individual and
professional fundraiser impersonators.\122\ NASCO notes that the FTC
worked with 38 state charity regulators to help shut down a
telemarketing scam that involved over 100 million donations.\123\
---------------------------------------------------------------------------
\119\ Nat'l Ass'n of State Charity Officials (``NASCO''), Cmt.
on ANPR, at 1 (Feb. 22, 2022), https://www.regulations.gov/comment/FTC-2021-0077-0165 (``NASCO Cmt.''); ECA Cmt. at 2; Cotney Cmt. at
2; CTA Cmt. at 3-7.
\120\ See NASCO Cmt. at 1.
\121\ Id. at 2.
\122\ See id. at 3.
\123\ See id.
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III. Reasons for the Proposed Rule on Impersonation of Government and
Businesses
The Commission believes that the proposed rule will substantially
improve its ability to combat the most prevalent impersonation fraud
and may also strengthen deterrence against this fraud in the first
instance. While government impersonation and business impersonation are
already unlawful under Section 5 of the FTC Act, which prohibits unfair
or deceptive acts or practices, the proposed rule will allow the
Commission to seek civil penalties against the violators and more
readily obtain monetary redress for their victims. The rule would not
impose new burdens on honest businesses and instead provide benefits to
businesses whose brands are harmed by business impersonators.
A. Need for and Objectives of the Proposed Rule on Impersonation of
Government and Businesses
The Commission's objective in commencing this rulemaking is to
expand the remedies available to it in combatting common and injurious
forms of fraud. In the ANPR, the Commission described how a recent U.S.
Supreme Court decision,\124\ which overturned 40 years of precedent
from the U.S. Circuit Courts of Appeal uniformly holding that the
Commission could take action under Section 13(b) of the FTC Act to
return money unlawfully taken from consumers through unfair or
deceptive acts or practices, has made it significantly more difficult
for the Commission to return money to injured consumers.\125\ Without
Section 13(b) as it had historically been understood, the only method
the Commission has to return money unlawfully taken from consumers is
Section 19, which provides two paths for consumer redress. The longer
path requires the Commission to first win a case in--and any appeal
arising from--its administrative court. Then, to recover money for
consumers, the Commission must prove that the violator engaged in
fraudulent or dishonest conduct \126\ in a second action in Federal
court. The shorter path, which allows the Commission to recover
directly through a Federal court action or obtain civil penalties
directly from a Federal court, is available only when a rule has been
violated.\127\
---------------------------------------------------------------------------
\124\ See AMG Cap. Mgmt., LLC v. FTC, 141 S. Ct. 1341, 1352
(2021).
\125\ See ANPR, 86 FR 72901 & n.24 (discussing AMG Cap. Mgmt.).
\126\ See 15 U.S.C. 57b(a)(2) (``If the Commission satisfies the
court that the act or practice to which the cease and desist order
relates is one which a reasonable man would have known under the
circumstances was dishonest or fraudulent, the court may grant
relief.'').
\127\ Compare 15 U.S.C. 57b(a)(1) (rule violations), with id.
57b(a)(2) (Section 5 violations).
---------------------------------------------------------------------------
The proposed rule will make available the shorter path in a broader
set of Commission enforcement actions. Currently, the Commission can
directly pursue in Federal court Section 19 remedies, including civil
penalties and consumer redress, for impersonation fraud only if that
fraud violates the Commission's Telemarketing Sales Rule, Mortgage
Assistance Relief Services Rule, or R-Value Rule, which expressly
prohibit impersonation fraud but apply only in specific contexts.\128\
Outlawing impersonation of government and business by rule no matter
what the context expands the Commission's enforcement toolkit and
allows it to stop and deter harmful conduct and make American consumers
whole when they have been wronged. Because impersonation fraud is so
prevalent and so harmful, the unlocking of additional remedies through
this rulemaking, particularly the possibility of seeking civil
penalties against violators as well as obtaining redress for their
victims, will allow the Commission to more effectively police
impersonation scams that plague consumers.
---------------------------------------------------------------------------
\128\ See TSR, 16 CFR 310.3(a)(2)(vii) (prohibiting
misrepresentations with respect to a ``seller's or telemarketer's
affiliation with, or endorsement or sponsorship by, any person or
government entity''); R-Value Rule, 16 CFR 460.21 (``Do not say or
imply that a government agency uses, certifies, recommends, or
otherwise favors your product unless it is true. Do not say or imply
that your insulation complies with a governmental standard or
specification unless it is true.''); Regulation O (Mortgage
Assistance Relief Services), 12 CFR 1015.3(b)(3) (prohibiting
misrepresentations that ``a mortgage assistance relief service is
affiliated with, endorsed or approved by, or otherwise associated
with: (i) The United States government, (ii) Any governmental
homeowner assistance plan, (iii) Any Federal, State, or local
government agency, unit, or department, (iv) Any nonprofit housing
counselor agency or program, (v) The maker, holder, or servicer of
the consumer's dwelling loan, or (vi) Any other individual, entity,
or program'').
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B. Overview and Scope of Proposed Rule on Impersonation of Government
and Businesses
The Commission's proposed rule is straightforward. It borrows from
existing rules and statutory definitions by declaring that
impersonation of government and businesses is unlawful.\129\ As noted
above, case law and the Commission's experience, as well as the
comments and other evidence cited herein, are replete with examples of
such impersonation.
---------------------------------------------------------------------------
\129\ See id.
---------------------------------------------------------------------------
The prohibition against impersonating government in proposed Sec.
461.2 would cover unlawful conduct by persons who misrepresent that
they are or are affiliated with a government or government officer by,
including but not limited to: (1) calling, messaging, or otherwise
contacting an individual or entity while posing as a government or an
officer or agent or affiliate or endorsee thereof, including by
identifying a government or officer by name or by implication; (2)
sending physical mail through any carrier using addresses, government
seals or lookalikes, or other identifying insignia of a government or
officer thereof; (3) creating a website or other electronic service
impersonating the name, government seal, or identifying insignia of a
government or officer thereof or using ``.gov'' or any lookalike, such
as
[[Page 62747]]
``govusa.com''; (4) creating or spoofing an email address using
``.gov'' or any lookalike; (5) placing advertisements that pose as a
government or officer thereof against search queries for government
services; and (6) using a government seal on a building, letterhead,
website, email, vehicle, or other physical or digital place.
The prohibition against impersonating businesses in Sec. 461.3
would cover a variety of similarly unlawful conduct, including but not
limited to: (1) calling, messaging, or otherwise contacting an
individual or entity while posing as a business or an officer or agent
or affiliate or endorsee thereof, including by naming a business by
name or by implication, such as ``card member services'' or ``the car
dealership''; (2) sending physical mail through any carrier using
addresses, seals, logos, or other identifying insignia of a business or
officer thereof; (3) creating a website or other electronic service
impersonating the name, logo, insignia, or mark of a business or a
close facsimile or keystroke error, such as ``ntyimes.com,''
``rnicrosoft.com,'' ``microsoft.biz,'' or
``carnegiehall.tixsales.com''; (4) creating or spoofing an email
address that impersonates a business; (5) placing advertisements that
pose as a business or officer thereof against search queries for
business services; and (6) using, without authorization, a business's
mark on a building, letterhead, website, email, vehicle, or other
physical or digital place.
The rule, in proposed Sec. 461.4, also makes it unlawful to
provide the means and instrumentalities for violations of proposed
Sec. Sec. 461.2 and 461.3. Some commenters suggested that the
Commission impose liability on a broader set of actors, namely those
who assist and facilitate violations. The Telemarketing Sales Rule
(``TSR'') does so, but the Commission cannot do so here. The TSR
provides express statutory authorization for assisting-and-facilitating
liability,\130\ a form of indirect liability. Sections 5 and 18 of the
FTC Act contain no such express authorization. Instead, the case law
describes a form of direct liability for a party who, despite not
having direct contact with the injured consumers, ``passes on a false
or misleading representation with knowledge or reason to expect that
consumers may possibly be deceived as a result.'' \131\ In other words:
``One who places in the hands of another a means of consummating a
fraud or competing unfairly in violation of the Federal Trade
Commission Act is himself guilty of a violation of the Act.'' \132\
Accordingly, the Commission proposes expressly to impose liability on
those who provide the means and instrumentalities of violations of the
prohibitions against impersonation of government and businesses, but it
declines to seek to impose assisting-and-facilitating liability. An
example of a violation of proposed Sec. 461.4's prohibition on
providing the means and instrumentalities for impersonation is a person
who fabricates official-looking Internal Revenue Service (IRS) Special
Agent identification badges for sale. In this example, the person does
not actually impersonate an IRS Special Agent, so does not violate
proposed Sec. 461.2's prohibition against impersonating government
officers but does provide the means and instrumentalities for others to
do so, which violates proposed Sec. 461.4.
---------------------------------------------------------------------------
\130\ See 15 U.S.C. 6102(a)(2) (``acts or practices of entities
or individuals that assist or facilitate deceptive telemarketing'').
\131\ Shell Oil Co., 128 F.T.C. 749 (1999).
\132\ C. Howard Hunt Pen Co. v. FTC, 197 F.2d 273, 281 (3d Cir.
1952).
---------------------------------------------------------------------------
Several commenters raised questions about jurisdiction. The
proposed rule is subject to all existing limitations of the law: of
unfair or deceptive acts or practices under the FTC Act; of the FTC's
jurisdiction; and of the U.S. Constitution--the Commission cannot bring
a complaint to enforce the rule if the complaint would exceed the
Commission's jurisdiction or offend the Constitution. One important
jurisdictional subject for discussion is not-for-profit entities. The
Commission is authorized to sue a corporation (including any company,
trust, or association, incorporated or unincorporated) only when it is
``organized to carry on business for its own profit or that of its
members.'' \133\ Nevertheless, the proposed rule's definition of
``business'' includes entities that are organized as not-for-profit
entities. The reason is that persons, partnerships, or corporations
that are organized for profit (including illicit profits) may
impersonate a business that is not. For example, a scammer might
impersonate a charity. Whether organized as a person, partnership, or
corporation, this hypothetical scammer is within the jurisdiction of
the FTC, even if the impersonated charity is not. Accordingly, the
rule, in proposed Sec. 461.1, defines a ``business'' that may be
impersonated to include non-profits.\134\
---------------------------------------------------------------------------
\133\ 15 U.S.C. 44.
\134\ State laws likely forbid impersonation by a bona fide non-
profit organization even if would not be subject to FTC
jurisdiction.
---------------------------------------------------------------------------
One commenter worried that the rule, if applied literally in an
unanticipated way, could chill legitimate speech.\135\ The proposed
rule, however, sweeps no more broadly than the existing prohibition
against unfair and deceptive practices in Section 5 of the FTC Act.
Because misrepresentations must be ``material'' and ``in or affecting
commerce,'' a communication that is not material to a commercial
transaction, such as impersonation in artistic or recreational
costumery or impersonation in connection with political or other non-
commercial speech, is not prohibited by the proposed rule.
---------------------------------------------------------------------------
\135\ See Cason Reilly, Cmt. on ANPR, at 1-3 (Feb. 22, 2022),
https://www.regulations.gov/comment/FTC-2021-0077-0136.
---------------------------------------------------------------------------
C. The Rulemaking Process
The Commission can decide to finalize the proposed rule if the
rulemaking record, including the public comments in response to this
NPRM, supports such a conclusion. The Commission may, either on its own
initiative or in response to a commenter's request, engage in
additional processes, which are described in 16 CFR 1.12 and 1.13. If
the Commission on its own initiative decides to conduct an informal
hearing, or if a commenter files an adequate request for such a
hearing, then a separate notice will issue under 16 CFR 1.12(a). Based
on the comment record and existing prohibitions against impersonation
of government and businesses under Section 5 of the FTC Act, the
Commission does not here identify any disputed issues of material fact
necessary to be resolved at an informal hearing. The Commission may
still do so later, on its own initiative or in response to a persuasive
showing from a commenter.
IV. Preliminary Regulatory Analysis
Under Section 22 of the FTC Act, the Commission, when it publishes
any NPRM, must include a ``preliminary regulatory analysis.'' 15 U.S.C.
57b-3(b)(1). The required contents of a preliminary regulatory analysis
are (1) ``a concise statement of the need for, and the objectives of,
the proposed rule,'' (2) ``a description of any reasonable alternatives
to the proposed rule which may accomplish the stated objective,'' and
(3) ``a preliminary analysis of the projected benefits and any adverse
economic effects and any
[[Page 62748]]
other effects'' for the proposed rule and each alternative, along with
an analysis ``of the effectiveness of the proposed rule and each
alternative in meeting the stated objectives of the proposed rule.'' 15
U.S.C. 57b-3(b)(1)(A)-(C). This NPRM already provided the concise
statement of the need for, and the objectives of, the proposed rule in
Item III.A above. It addresses the other requirements below.
A. Reasonable Alternatives and Anticipated Costs and Benefits
The Commission believes that the benefits of proceeding with the
rulemaking will significantly outweigh the costs, but it welcomes
public comment and data (both qualitative and quantitative) on any
benefits and costs to inform a final regulatory analysis. Critical to
the Commission's analysis is the legal consequence that any eventual
rule would allow not only for monetary relief to victims of rule
violations but also for the imposition of civil penalties against
violators. Such results are likely to provide benefits to consumers and
competition, as well as to the agency, without imposing any significant
costs on consumers or competition. It is difficult to quantify with
precision what all those benefits may be, but it is possible to
describe them qualitatively.
It is useful to begin with the scope of the problem the proposed
rule would address. As discussed in the ANPR, consumers reported
1,362,996 instances of government impersonation and associated total
losses of $922,739,109 from January 1, 2017 through September 30,
2021.\136\ Since then, consumers reported another 46,606 instances of
government impersonation in the fourth quarter of 2021 and 46,950 in
the first quarter of 2022.\137\ For business impersonation, the ANPR
noted that, from January 1, 2017 through September 30, 2021, consumers
reported being defrauded of roughly $852 million in 753,555
incidents.\138\ Since then, consumers reported another 96,341 instances
of business impersonation in the fourth quarter of 2021 and 79,057 in
the first quarter of 2022.\139\ For the time period discussed in the
ANPR, average annual total consumer losses reported from business
impersonation were roughly $180 million, and average annual total
consumer losses reported from government impersonation were roughly
$190 million. With all the 2021 data in, total reported consumer losses
last year due to government impersonation topped $445 million over
396,601 reported incidents.\140\
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\136\ See ANPR, 86 FR 72901, 72902.
\137\ See Fed. Trade Comm'n, Fraud Reports: Subcategories over
Time, Tableau Public, https://public.tableau.com/app/profile/federal.trade.commission/viz/FraudReports/SubcategoriesOverTime
(last visited June 24, 2022). See also Fed. Trade Comm'n, Consumer
Sentinel Network Data Book 2020, 4 (2022), https://www.ftc.gov/system/files/ftc_gov/pdf/CSN%20Annual%20Data%20Book%202021%20Final%20PDF.pdf.
\138\ See ANPR, 86 FR 72901.
\139\ See Fed. Trade Comm'n, Fraud Reports: Subcategories over
Time, Tableau Public, https://public.tableau.com/app/profile/federal.trade.commission/viz/FraudReports/SubcategoriesOverTime
(last visited June 24, 2022).
\140\ See Fed. Trade Comm'n, Explore Government Imposter Scams,
Tableau Public, https://public.tableau.com/app/profile/federal.trade.commission/viz/GovernmentImposter/Infographic (last
visited June 24, 2022).
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Reports of government and business impersonation remain high. The
consumer losses remain large, with, for government impersonation scams
alone, a median loss of $1,322 and total losses of $103 million
reported for government impersonation in the first quarter of
2022.\141\ If the trends from the first quarter of 2022 continue, the
annual consumer loss reported just for government impersonation will
again exceed $400 million. And these figures cover only those incidents
that are reported to the Commission; plainly, the prevalence of
government and business impersonation in reality is higher than what
gets reported to the Commission.
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\141\ See id.
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It follows that, qualitatively, government and business
impersonation cases have recently constituted and are likely to
constitute in the future a meaningful share of Commission enforcement
actions,\142\ and in many of those actions a rule against impersonation
may prove to be the only or the most practicable means for achieving
consumer redress. As such, the most significant anticipated benefit of
a final rule is the ability to obtain monetary relief, especially
consumer redress, as well as civil penalties. While such relief could
also be obtained with an existing rule, such as the TSR, in many cases,
by no means do all impersonation scams implicate an existing rule, and
there is no reason to expect them all to do so in the future.\143\
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\142\ Impersonation scams overall, including those that are not
covered by the proposed rule's scope of government and business
impersonation, constitute 17.16% of all consumer complaints received
in the Consumer Sentinel Network in 2021. See Fed. Trade Comm'n,
Consumer Sentinel Network Data Book 2020, 6 (2022), https://www.ftc.gov/system/files/ftc_gov/pdf/CSN%20Annual%20Data%20Book%202021%20Final%20PDF.pdf.
\143\ The Commission has brought many impersonation cases in
which no existing rule was violated or no relief under a rule was
sought. See, e.g., Compl. at 12-13, FTC v. Modern Tech. Inc., No.
13-cv-8257 (N.D. Ill. filed Nov. 18, 2013) (only counts under
Section 5); Compl. at 9-10, FTC v. Gerber Prods. Co., No. 2:14-cv-
06771-SRC-CLW (D.N.J. filed Oct. 30, 2014) (only counts under
Sections 5 and 12(a)); Compl. at 17-19, 22, FTC v. DOTAuthority.com,
Inc., No. 16-cv-62186 (S.D. Fla. filed Sept. 13, 2016) (seeking
relief only for counts under Section 5); Compl. at 8-9, FTC v.
Moore, No. 5:18-cv-01960 (C.D. Cal. filed Sept. 13, 2018) (only
counts under Section 5); Compl. at 21-22, FTC v. Forms Direct, Inc.
(Am. Immigr. Ctr.), No. 3:18-cv-06294 (N.D. Cal. filed Oct. 16,
2018) (only counts under Section 5); Am. Compl. at 8-9, FTC v.
Starwood Consulting, LLC, No. 4:18-cv-02368 (S.D. Tex. filed Mar.
27, 2019) (only counts under Section 5 from FTC); Compl. at 8-9, FTC
v. Ponte Invs., LLC, No. 1:20-cv-00177-JJM-PAS (D.R.I. filed Apr.
17, 2020) (only counts under Section 5).
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To succeed at obtaining consumer redress without a rule violation,
the Commission must first file a complaint alleging that the
impersonator violated Section 5 and prevail in securing a cease-and-
desist order. Then, to secure consumer redress for victims of the
impersonator, the Commission must file follow-on litigation under
Section 19, and without a rule this second litigation requires the
Commission to allege and persuade a court in each case that the conduct
at issue is ``one which a reasonable man would have known under the
circumstances was dishonest or fraudulent.'' \144\ Although this
standard is likely to be met in impersonation cases, having to do so in
each case requires a greater expenditure of Commission resources than
in cases with a rule violation, which do not require a second
litigation or separate proof of knowledge that the conduct was
dishonest or fraudulent.
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\144\ 15 U.S.C. 57b(a)(2). Depending on the egregiousness of the
misconduct and the harm it is causing, the Commission also may seek
preliminary injunctive relief in federal court. 15 U.S.C. 53(b).
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Accordingly, without a rule, the Section 19 path often requires
consumer victims to wait many years before the Commission can deliver
redress to them, even six years or more.\145\ Although the Commission
does not have extensive experience pursuing Section 19 cases without a
rule violation, its limited experience supports a reasonable estimate
that such litigation can take at least twice as long as litigation with
a rule violation. Because of the prevalence of impersonation scams, the
Commission will not have a shortage of bad actors to investigate, and
it could invest the savings of enforcement resources from having a
[[Page 62749]]
rule into investigating and, where the facts warrant, bringing
enforcement actions in additional impersonation matters. In sum, the
significant potential consumer-redress benefits of a rule are that the
Commission could put a stop to more impersonation scams, return money
to more victims, and win that redress more quickly.
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\145\ See, e.g., Press Release, Fed. Trade Comm'n, Marketers of
Ab Force Weight Loss Device Agree to Pay $7 Million for Consumer
Redress (Jan. 14, 2009), https://www.ftc.gov/news-events/news/press-releases/2009/01/marketers-ab-force-weight-loss-device-agree-pay-7-million-consumer-redress (describing a 2009 settlement of a follow-
on Section 19 action against Telebrands Corp. that was brought after
litigation finally concluded of a 2003 administrative complaint
alleging violations of Section 5--in this case, the Section 19
action settled instead of being litigated to judgment, which would
have taken more time).
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A secondary potential benefit is deterrence of impersonation scams.
The potential deterrence from a rule should not be overstated; because
impersonation scams are already clearly unlawful, deterrence would
affect only bad actors who are comfortable breaking the law under the
existing set of consequences but would opt not to break the law if
potentially subject to civil penalties and swifter redress. Scholarship
on deterrence suggests that the potential severity of consequences,
such as high civil penalties, is less likely to influence behavior than
the perceived likelihood of detection and punishment.\146\ Still, an
eventual rule that makes it less likely that impersonators get to keep
their ill-gotten gains and more likely that they have to pay civil
penalties can have only helpful deterrence effects, whatever their
magnitude. And the publicity around this rulemaking process and any
eventual rule could have the salutary effect of complementing the
Commission's consumer education work by elevating public awareness of
these prevalent forms of fraud, which could increase how often they are
detected and reported.
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\146\ See, e.g., Aaron Chalfin & Justin McCrary, Criminal
Deterrence: A Review of the Literature, 55 J. Econ. Lit. 5 (2017),
https://doi.org/10.1257/jel.20141147 (reviewing twenty years of
studies, albeit in criminal rather than civil context, and finding
stronger evidence for deterrent effect of perceived risk of
detection than for severity of punishment).
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If a final rule succeeds in deterring unlawful behavior, another
potential benefit is that businesses that are frequently impersonated
may have to spend less money to monitor the market for impersonators of
their brand. Several businesses filed comments indicating that
monitoring for impersonation required significant expenditures of funds
and personnel.\147\ Quantifying the savings those companies might
achieve from deterrence of impersonation activity, however, would
require substantial speculation. At the same time, the proposed rule is
unlikely to impose costs on honest businesses, and no commenter
suggested it would. Thus, even a marginal increase in deterrence is a
likely benefit of the rule, although not its primary benefit.
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\147\ See Microsoft Cmt.; Apple Cmt.
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Some rough math may help illustrate these qualitatively described
benefits: Between January 1, 2018, and June 30, 2022, Consumer Sentinel
received 338,393 complaints regarding business or government
impersonation scams that expressly reported the initial contact method
used by the impersonator as being email, social media, online or pop-up
advertisement, website, or mobile application.\148\ These complaints
referenced aggregate consumer losses of $599,270,000. Because these
initial contact methods typically are unlikely to be covered by the TSR
or other rules, the Commission currently cannot redress such fraud
other than by using its Section 19 authority. The Commission cannot
predict the volume of future government and business impersonation scam
complaints, their contact methods, or the losses those complaints will
report, but if even a small percentage of similar complaints the
Commission receives in the future are redressed or deterred by the
proposed rule, the marginal effect from rule implementation (relative
to not implementing the rule) would have had economically significant
consequences. For example, assume that the annualized rate of consumer
injury from government and business impersonation scams initiated
through email, social media, online or pop-up advertisements, websites,
or mobile applications over the past 4.5 years is $133,171,000 (or
$599,270,000 divided by 4.5 years). If that annualized rate continues
over the next 10 years, consumer losses over that period would be
$1,331,710,000. Even a five per cent reduction in such losses through
redress or deterrence would result in a benefit to consumers of over
$66.5 million (without adjusting for inflation or discounting any of
these figures).
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\148\ This is a conservative estimate of the number of Consumer
Sentinel complaints received over this period that reference such
initial contact methods. Complaints referencing a sub-category of
business complaints, related to ``technical support'' scams, are
excluded because such complaints may also be reported under business
impersonations and because many were submitted to Consumer Sentinel
from the impersonated business with the initial contact method
information omitted.
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One potentially reasonable alternative to the proposed rule is to
terminate the rulemaking and rely instead on the existing tools that
the Commission currently possesses to combat government and business
impersonation fraud, such as consumer education and enforcement actions
brought under Sections 5 and 19 of the FTC Act. Termination of the
rulemaking would offer the benefit of preserving some Commission
resources that would be required to continue the rulemaking in the
short term, but it would come at a significant cost. The cost that is
most significant is the failure to strengthen the set of tools
available in support of the Commission's enforcement program against
impersonation fraud, depriving it of the benefits outlined above. The
alternative of terminating the rulemaking would not sufficiently
accomplish the Commission's objectives. The Commission seeks comment on
this and other potentially reasonable alternatives.
B. Paperwork Reduction Act
In addition to the requirements of Section 22, the Commission must
provide in any NPRM the ``information required by the Regulatory
Flexibility Act, 5 U.S.C. 601-612, and the Paperwork Reduction Act, 44
U.S.C. 3501-3520, if applicable.'' 16 CFR 1.11(c)(4).
The Paperwork Reduction Act requires the Commission to engage in
additional processes and analysis if it proposes to engage in a
``collection of information'' as part of the proposed rule. 44 U.S.C.
3506. The Commission states that the proposed rule contains no
collection of information.
C. Regulatory Flexibility Act--Initial Regulatory Flexibility Analysis
The Regulatory Flexibility Act requires the Commission to prepare
and make available for public comment an ``initial regulatory
flexibility analysis'' (``IRFA'') in connection with any NPRM. 5 U.S.C.
603. An IRFA requires many of the same components as Section 22 of the
FTC Act and the Paperwork Reduction Act, which the Commission
incorporates into its IRFA. The IRFA must furthermore contain, among
other things, ``a description of and, where feasible, an estimate of
the number of small entities to which the proposed rule will apply.'' 5
U.S.C. 603(b)(3). This and other requirements do not apply, however,
whenever ``the agency certifies that the rule will not, if promulgated,
have a significant economic impact on a substantial number of small
entities.'' 5 U.S.C. 605(b).
The Commission certifies that the proposed rule will not have a
significant economic impact on a substantial number of honest, small
entities, and this document serves as notice to the Small Business
Administration of the Commission's certification. Because the
impersonation of government and businesses is already prohibited by
Section 5 of the FTC Act, the rule does not change the state of the law
in terms of what is legal and what is illegal.
[[Page 62750]]
Furthermore, the proposed rule would impose no recordkeeping
requirement. The main changes arise for entities that are currently
violating Section 5 but would, after its finalization, also be
violating the rule: instead of being immune from civil penalties (at
least for first offenses) and more capable of evading consumer redress,
the violators could be ordered by a court to pay significant civil
penalties and to provide full redress to their victims. This change
could constitute a significant economic impact for law violators, but
it will not affect a substantial number of small entities. The
Commission believes that the vast majority of small entities do not
impersonate government or other businesses. Furthermore, the Commission
does not consider those small entities that are violating existing law
to be among those Congress protected in enacting the additional
procedural protections for small entities when agencies consider
rulemaking.
V. Request for Comments
Members of the public are invited to comment on any issues or
concerns they believe are relevant or appropriate to the Commission's
consideration of the proposed rule. The Commission requests that
factual data on which the comments are based be submitted with the
comments. In addition to the issues raised above, the Commission
solicits public comment on the specific questions identified below.
These questions are designed to assist the public and should not be
construed as a limitation on the issues on which public comment may be
submitted.
Questions
(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) Please provide comment, including relevant data, statistics,
consumer complaint information, or any other evidence, on each
different provision of the proposed rule. Regarding each provision,
please include answers to the following questions:
(a) How prevalent is the act or practice the provision seeks to
address?
(b) What is the provision's impact (including any benefits and
costs), if any, on consumers, governments, and businesses, both those
existing and those yet to be started?
(c) What alternative proposals should the Commission consider?
(3) Does the proposed rule contain a collection of information?
(4) Would the proposed rule, if promulgated, have a significant
economic impact on a substantial number of small entities? If so, how
could it be modified to avoid a significant economic impact on a
substantial number of small entities?
(5) The proposed rule contains a one-sentence prohibition against
impersonation of government in Sec. 461.2 and another against
impersonation of businesses in Sec. 461.3. Are these prohibitions
clear and understandable? Are they ambiguous in any way? How if at all
should they be improved?
(6) The proposed rule, in Sec. 461.4, prohibits providing the
means and instrumentalities to commit violations of Sec. 461.2 or
Sec. 461.3. Should any final rule contain this prohibition against
providing the means and instrumentalities for violations of the
prohibitions against government or business impersonation? Why or why
not?
(7) The proposed rule, in Sec. 461.1, defines ``business'' to
include non-profit organizations. Should any final rule keep the
prohibition against impersonating non-profit organizations? Why or why
not?
(8) Should the proposed rule be expanded to address the
impersonation of individuals or entities other than governments and
businesses in interstate commerce? \149\ For example, should the
proposed rule be expanded to prohibit impersonation of individuals for
the purpose of seeking monetary payment or contribution, such as in
romance or grandparent impersonation scams? In your answer to this
question, please provide the following information:
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\149\ Cf. ANPR, 86 FR 72901; see also, Emma Fletcher, Reports of
romance scams hit record highs in 2021, FTC Data Spotlight (Feb. 10,
2022), https://www.ftc.gov/news-events/data-visualizations/data-spotlight/2022/02/reports-romance-scams-hit-record-highs-2021.
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(a) How prevalent is the act or practice?
(b) What would be the impact, including benefits and costs, of
including individual impersonation in the proposed rule on consumers,
governments, and businesses?
(c) What alternative proposals should the Commission consider?
VI. Comment Submissions
You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before December 16,
2022. Write ``Impersonation NPRM, R207000'' 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 website https://www.regulations.gov.
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 comments online through the https://www.regulations.gov website. To ensure that the Commission considers
your online comment, please follow the instructions on the web-based
form.
If you file your comment on paper, write ``Impersonation NPRM,
R207000'' on your comment and on the envelope, and mail your comment to
the following address: Federal Trade Commission, Office of the
Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 (Annex B),
Washington, DC 20580.
Because your comment will be placed on the public record, you are
solely responsible for making sure that your comment does not include
any sensitive or confidential information. In particular, your comment
should not contain 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 ``[t]rade secret or
any commercial or financial information which . . . is privileged or
confidential''--as provided in Section 6(f) of the FTC Act, 15 U.S.C.
46(f), and FTC Rule Sec. 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), 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). Your comment
will be kept confidential only if the General Counsel grants your
request in accordance with
[[Page 62751]]
the law and the public interest. Once your comment has been posted
publicly at https://www.regulations.gov--as legally required by FTC
Rule 4.9(b), 16 CFR 4.9(b)--we cannot redact or remove your comment,
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 that 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 December
16, 2022. For information on the Commission's privacy policy, including
routine uses permitted by the Privacy Act, see https://www.ftc.gov/siteinformation/privacypolicy.
VII. Communications by Outside Parties to the Commissioners or Their
Advisors
Under Commission Rule 1.18(c)(1), 16 CFR 1.18(c)(1), the Commission
has determined that communications with respect to the merits of this
proceeding from any outside party to any Commissioner or Commissioner
advisor will be subject to the following treatment: written
communications and summaries or transcripts of all oral communications
must be placed on the rulemaking record. Unless the outside party
making an oral communication is a member of Congress, communications
received after the close of the public-comment period are permitted
only if advance notice is published in the Weekly Calendar and Notice
of ``Sunshine'' Meetings.
List of Subjects in 16 CFR Part 461
Consumer protection, Impersonation, Trade Practices.
0
For the reasons stated above, the Federal Trade Commission proposes to
amend 16 CFR chapter I by adding part 461 to read as follows:
PART 461--RULE ON IMPERSONATION OF GOVERNMENT AND BUSINESSES
Sec.
461.1 Definitions.
461.2 Impersonation of government prohibited.
461.3 Impersonation of businesses prohibited.
461.4 Means and instrumentalities prohibited.
Authority: 15 U.S.C. 41-58.
Sec. 461.1 Definitions.
As used in this part:
Business means a corporation, partnership, association, or any
other entity that provides goods or services, including not-for-profit
entities.
Government includes Federal, State, local, and tribal governments
as well as agencies and departments thereof.
Officer includes executives, officials, employees, and agents.
Sec. 461.2 Impersonation of government prohibited.
It is unlawful to falsely pose as or to misrepresent, directly or
by implication, affiliation with, including endorsement or sponsorship
by, a government entity or officer thereof.
Sec. 461.3 Impersonation of businesses prohibited.
It is unlawful to falsely pose as or to misrepresent, directly or
by implication, affiliation with, including endorsement or sponsorship
by, a business or officer thereof.
Sec. 461.4 Means and instrumentalities prohibited.
It is unlawful to provide the means and instrumentalities for a
violation of Sec. 461.2 or Sec. 461.3.
By direction of the Commission.
April J. Tabor,
Secretary.
[FR Doc. 2022-21289 Filed 10-14-22; 8:45 am]
BILLING CODE 6750-01-P
