Trade Regulation Rule on Impersonation of Government and Businesses, 15017-15031 [2024-04335]
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Federal Register / Vol. 89, No. 42 / Friday, March 1, 2024 / Rules and Regulations
procedure under 5 U.S.C. 553(b) are
unnecessary.
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Regulatory Notices and Analyses
The FAA has determined that this
regulation only involves an established
body of technical regulations for which
frequent and routine amendments are
necessary to keep them operationally
current. It, therefore: (1) is not a
‘‘significant regulatory action’’ under
Executive Order 12866; (2) is not a
‘‘significant rule’’ under Department of
Transportation (DOT) Regulatory
Policies and Procedures (44 FR 11034;
February 26, 1979); and (3) does not
warrant preparation of a regulatory
evaluation as the anticipated impact is
so minimal. Since this is a routine
matter that only affects air traffic
procedures and air navigation, it is
certified that this rule, when
promulgated, does not have a significant
economic impact on a substantial
number of small entities under the
criteria of the Regulatory Flexibility Act.
Environmental Review
The FAA has determined that this
action of amending the using agency
information for restricted areas R–
2510A and R–2510B, qualifies for
categorical exclusion under the National
Environmental Policy Act (42 U.S.C.
4321 et seq.) and its implementing
regulations at 40 CFR part 1500, and in
accordance with FAA Order 1050.1F
‘‘Environmental Impacts: Policies and
Procedures,’’ paragraph 5–6.5a, which
categorically excludes from further
environmental impact review
rulemaking actions that designate or
modify classes of airspace areas,
airways, routes, and reporting points
(see 14 CFR part 71, Designation of
Class A, B, C, D, and E Airspace Areas;
Air Traffic Service Routes; and
Reporting Points), and paragraph 5–
6.5d, which categorically excludes from
further environmental impact review
the modification of the technical
description of special use airspace
(SUA) that does not alter the
dimensions, altitudes, or times of
designation of the airspace (such as
changes in designation of the
controlling or using agency, or
correction of typographical errors). This
airspace action is an administrative
change to the description of restricted
areas R–2510A and R–2510B to update
the using agency name. It does not alter
the restricted area dimensions,
designated altitudes, times of
designation, or use of the airspace.
Therefore, this airspace action is not
expected to result in any significant
environmental impacts. In accordance
with FAA Order 1050.1F, paragraph 5–
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2 regarding Extraordinary
Circumstances, this action has been
reviewed for factors and circumstances
in which a normally categorically
excluded action may have a significant
environmental impact requiring further
analysis. Accordingly, the FAA has
determined that no extraordinary
circumstances exist that warrant
preparation of an environmental
assessment or environmental impact
study.
Lists of Subjects in 14 CFR Part 73
Airspace, Prohibited areas, Restricted
areas.
The Amendment
In consideration of the foregoing, the
Federal Aviation Administration
amends 14 CFR part 73 as follows:
PART 73—SPECIAL USE AIRSPACE
1. The authority citation for 14 CFR
part 73 continues to read as follows:
■
Authority: 49 U.S.C. 106(f), 106(g), 40103,
40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR,
1959–1963 Comp., p. 389.
§ 73.25
[Amended]
2. Section 73.25 is amended as
follows:
*
*
*
*
*
■
R–2510A El Centro, CA [Amended]
By removing the existing using agency and
substituting the following:
Using agency. U.S. Marine Corps,
Commanding Officer, Marine Corps Air
Station Yuma, Yuma, AZ.
R–2510B El Centro, CA [Amended]
By removing the current using agency and
adding the following in its place:
Using agency. U.S. Marine Corps,
Commanding Officer, Marine Corps Air
Station Yuma, Yuma, AZ.
*
*
*
*
*
Issued in Washington, DC, on February 26,
2024.
Frank Lias,
Manager, Rules and Regulations Group.
[FR Doc. 2024–04361 Filed 2–29–24; 8:45 am]
BILLING CODE 4910–13–P
FEDERAL TRADE COMMISSION
16 CFR Part 461
RIN 3084–AB71
Trade Regulation Rule on
Impersonation of Government and
Businesses
Federal Trade Commission.
Final rule.
AGENCY:
ACTION:
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15017
This final rule prohibits the
impersonation of government,
businesses, and their officials or agents
in interstate commerce. This document
contains the text of the final rule and
the rule’s Statement of Basis and
Purpose (‘‘SBP’’), including a Regulatory
Analysis.
DATES: This rule is effective April 1,
2024.
FOR FURTHER INFORMATION CONTACT:
Christopher E. Brown (202–326–2825),
Attorney, Division of Marketing
Practices, Bureau of Consumer
Protection, Federal Trade Commission,
600 Pennsylvania Avenue NW,
Washington, DC 20580.
SUPPLEMENTARY INFORMATION:
SUMMARY:
I. Background
A. Advance Notice of Proposed
Rulemaking
On December 23, 2021, the Federal
Trade Commission (‘‘Commission’’ or
‘‘FTC’’) published an advance notice of
proposed rulemaking (‘‘ANPR’’) to
address certain deceptive or unfair acts
or practices of impersonation.1 As part
of the ANPR, the Commission requested
comment on any issues or concerns
relevant or appropriate to this
rulemaking to combat impersonation of
governments, businesses, or their
agents, and whether and how to proceed
with a notice of proposed rulemaking
(‘‘NPRM’’).2 The Commission took
comments for 60 days, and received 164
comments from representatives from a
broad spectrum of businesses, trade
associations, government or lawenforcement organizations, and
individual consumers, which are
publicly available on this rulemaking’s
docket at https://www.regulations.gov/
docket/FTC-2021-0077/comments.
Commenters generally expressed
support for the Commission’s
proceeding with the rulemaking. They
also voiced deep concerns about the
prevalence and harmfulness of both
government and business
impersonation. No commenter
expressed the view that the Commission
should not commence the rulemaking.
Commenters also offered suggestions for
the Commission’s consideration in
drafting the proposed rule and other
recommendations in furtherance of the
proposed rulemaking.
B. Notice of Proposed Rulemaking
Based on an extensive review of the
comments received in response to the
ANPR, the Commission’s own history of
enforcement, and other considerations
that occurred after the ANPR’s
publication,3 the Commission published
the NPRM on October 17, 2022.4 In the
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NPRM, the Commission stated it has
reason to believe impersonation of
government, businesses, and their
officials or agents is prevalent.5 The
Commission identified no disputed
issues of material fact based on the
comment record; explained its
considerations in developing the
proposed rule; solicited additional
public comment thereon, including
posing specific questions designed to
assist the public in submitting
comment; and provided interested
parties the opportunity to request to
present their position orally at an
informal hearing.6 Finally, the NPRM
set out the Commission’s proposed rule.
In response to the NPRM, the
Commission received 78 comments
from entities and individuals interested
in the proposed rule, discussed in
Section III.7 Although some raised
concerns and recommended specific
modifications or additions to the
Commission’s proposal, the majority
generally supported the rule proposed
in the NPRM. Two commenters timely
submitted requests for interested parties
to make an oral statement at an informal
hearing.8
C. Notice of Informal Public Hearing
On March 30, 2023, the Commission
published an Initial Notice of Informal
Hearing (‘‘Notice of Hearing’’).9 The
Notice designated the Commission’s
Chief Administrative Law Judge, D.
Michael Chappell, to serve as the
presiding officer of the informal hearing
and stated that any member of the
public wishing to speak at the informal
hearing or make a documentary
submission to be placed on the public
rulemaking record (or both) should
submit a comment on or before April 14,
2023.10
On May 4, 2023, Chief Judge Chappell
presided over the informal hearing
using video conferencing, which
enabled the public to watch live from
the Commission’s website, https://
www.ftc.gov. Because there were no
disputed issues of material fact to
resolve, the informal hearing included
no cross examination or rebuttal
submissions, and the presiding officer
made no recommended decision. The
informal hearing included oral
statements from 14 interested parties.11
The majority of commenters who
presented oral statements at the
informal hearing or filed documentary
submissions generally expressed strong
support for the Commission’s proposed
rule.12 Several commenters, however,
also expressed concern that the
proposed rule language does not explain
the circumstances under which the
Commission would apply proposed
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§ 461.4, which would prohibit providing
the means and instrumentalities to
commit violations of government and
business impersonation. Some
suggested alternative language imposing
a scienter requirement to narrow the
scope of this provision, discussed in
Section III.D.
In crafting the final rule, the
Commission has carefully considered
the comments received in response to
the NPRM and on the rulemaking
record, which includes the oral
statements and documentary
submissions in response to the Notice of
Hearing. The final rule contains some
changes from the proposed rule. These
modifications, discussed in detail in
Section III, are based upon input from
commenters and careful consideration
of relevant law. Section III also
discusses commenters’
recommendations that the Commission
declined to adopt, along with the
Commission’s reasons for rejecting
them. Accordingly, the Commission
adopts the proposed rule with limited
modifications as discussed below. The
rule will take effect April 1, 2024.
II. The Legal Standard for Promulgating
the Rule
The Commission is promulgating 16
CFR part 461 pursuant to section 18 of
the FTC Act, 15 U.S.C. 57a, the
Administrative Procedure Act (‘‘APA’’),
and Part 1, subpart B of the
Commission’s Rules of Practice.13 This
authority permits the Commission to
promulgate, modify, and 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 Commission’s Rules of Practice
further provide that if the Commission
determines to promulgate a rule, it will
adopt a SBP, which must address three
factors: (1) The prevalence of the acts or
practices addressed by the rule; (2) the
manner and context in which the acts or
practices are unfair or deceptive; and (3)
the economic effect of the rule, taking
into account the effect on small
businesses and consumers.14 In this
section of the preamble, the
Commission summarizes its findings
regarding each of these factors.
A. Prevalence of Acts or Practices
Addressed by the Rule
In its ANPR, the Commission cited
public data from the Consumer Sentinel
Network database and described its
enforcement record, demonstrating
government and business impersonation
scams are not only highly prevalent but
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increasingly harmful.15 In the NPRM,
the Commission also took notice of
additional indications of prevalence that
came after the ANPR’s publication.16
Specifically, the NPRM cited data from
a broad spectrum of commenters
(businesses, trade associations, and
government or law-enforcement
organizations) regarding the prevalence
of government and business
impersonation scams, which echoed the
Commission’s findings that these
schemes are among the most common
deceptive or unfair practices affecting
U.S. consumers and businesses and
continue to be a significant source of
consumer injury.17
B. Manner and Context in Which the
Acts or Practices Are Deceptive or
Unfair
A representation, omission, or
practice is deceptive if it is material and
likely to mislead a consumer acting
reasonably under the circumstances.18
The most frequent allegations in the
Commission’s enforcement actions
involving government and business
impersonation pertain to defendants
tricking consumers to pay money or
disclose personal information by
making, expressly or by implication,
statements that misrepresent the
defendants’ identity.19 Nearly as
frequent are allegations of
misrepresentations concerning
defendants’ affiliation with,
endorsement or approval by, or other
association with a government or
business. The Commission has further
found false threats of severe
consequences and promises of benefits
are additional deceptive tactics
deployed by government and business
impersonators. In the Commission’s
experience, such claims regarding
identity, affiliation, or endorsement are
material to consumers making their
decision to trust impersonators. The
numerous government and business
impersonation complaints consumers
submit to the Commission each year, as
well as comments submitted in
connection with this rulemaking
proceeding, consistently reference these
same concerns. Accordingly, the
specific practices described in the
preamble to the proposed rule reflect
the type of conduct most commonly
associated with deceptive and unfair
practices pertaining to government and
business impersonation.20
C. The Economic Effect of the Rule
As part of the rulemaking proceeding,
the Commission solicited comment and
data (both qualitative and quantitative)
on the economic impact of the proposed
rule and its costs and benefits.21 In
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issuing the final rule, the Commission
has carefully considered the comments
received and the costs and benefits of
each provision, as discussed in more
detail below in Section VI. The record
demonstrates the most significant
anticipated benefit of the final rule is
the Commission’s ability to obtain
monetary relief. This is particularly
critical because that ability was
curtailed by the U.S. Supreme Court’s
decision in AMG Cap. Mgmt., LLC v.
FTC, which holds that equitable
monetary relief, including consumer
redress, is not available under section
13(b) of the FTC Act.22 Further,
obtaining monetary relief based on
violations of the final rule under section
19(b) of the FTC Act will be
significantly faster than obtaining such
relief under section 19(a)(2) without a
rule violation.23 By enabling the
Commission to obtain monetary relief
more efficiently, the final rule would
also reduce the expenditure of
Commission resources.24 As an
additional benefit, the rule enables the
Commission to obtain civil penalties
against violators.25 The final rule also
provides a benefit to businesses through
increased deterrence of business
impersonators, which reduces
businesses’ expenditure of resources
associated with monitoring for and
addressing impersonation.26 Moreover,
as the record and the Commission’s law
enforcement experience demonstrate,
the final rule is unlikely to impose costs
on any honest business, and may
increase deterrence of impersonation
scams, which would benefit consumers
through a reduction in their total
financial losses from these schemes.27
III. Response to Comments
The Commission received 78
comments in response to the NPRM
from a diverse group of individuals,
industry groups and trade associations,
consumer organizations, and
government agencies.28 The
Commission received 28 comments in
response to the Notice of Hearing,
including oral presentations from 14
commenters.29 Commenters generally
supported the proposed rule,
recognizing the Commission’s authority
to protect consumers from the
increasing number of government and
business impersonation frauds targeting
consumers.
In the NPRM, the Commission invited
comment on any issues or concerns the
public believes are relevant or
appropriate to the Commission’s
consideration of the proposed rule.30
The NPRM also posed eight specific
questions for the public.31 Some of these
questions relate to the Paperwork
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Reduction Act (‘‘PRA’’) and Regulatory
Flexibility Act (‘‘RFA’’), and are
addressed in Sections V and VI,
respectively.32 The other questions,
along with common issues or concerns
relevant to the Commission’s
consideration of the proposed rule
outside of the specific questions, are
addressed in this section of the
preamble.
A. Finalizing the Proposed Rule as a
Final Rule
In Question 1 of the NPRM, the
Commission asked whether it should
finalize the proposed rule as a final rule,
and how, if at all, it should change the
proposed rule in promulgating the final
rule.33 The majority of commenters did
not express a clear view regarding
whether the Commission should adopt
the proposed rule as final. Many of
these commenters, however, did share
their experience regarding the
prevalence and harmfulness of various
kinds of government and business
impersonation frauds.34 Some of these
commenters complained more generally
about various non-impersonation
scams.35 The majority of commenters
that addressed Question 1 of the NPRM
were substantially supportive of the
proposed rule, but stopped short of
urging the Commission to finalize the
text of the proposed rule without
modification. These commenters
typically recommended either
broadening or narrowing the scope or
text of the rule in response to other
specific questions asked in the NPRM or
relevant to the Commission’s
consideration of the proposed rule.36
Six commenters explicitly addressed
the Commission’s question regarding
finalizing the proposed rule as a final
rule, and without recommending
additional modifications to the text of
the proposed rule, urged the
Commission to do so.37 Some of these
commenters stated the proposed rule is
in the public interest because it would
allow for civil penalties against
government and business
impersonators, provide redress for
victims of impersonation scams, and
deter future bad acts.38
Several government agencies and
trade associations explained how the
proposed rule would benefit them, their
members, or the people they serve. The
United States Patent and Trademark
Office (‘‘USPTO’’) described its
experience of agency impersonation,
and stated that reliance on the FTC’s
enforcement capabilities through such a
rule would allow the USPTO to
conserve and allocate its resources to
different enforcement efforts that impact
the USPTO and its stakeholders.39
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Similarly, the Marine Retailers
Association of the Americas (‘‘MRAA’’),
a trade association representing marine
retailers, argued the benefits associated
with finalizing the proposed rule would
reduce the financial burden on
businesses and improve trust among
consumers.40 The United States
Copyright Office (‘‘USCO’’) expressed
support for finalizing the proposed rule,
arguing that doing so would allow the
Commission to move more quickly to
put a stop to impersonation scams.41
The USPTO and the USCO explained
they do not have law enforcement
authority to remedy the harms resulting
from bad actors impersonating the
agencies, and USCO argued the
proposed rule would foster public trust
in the copyright system.42 The Cellular
Telecommunications and internet
Association (‘‘CTIA’’), a trade
association for wireless service
providers, argued in favor of finalizing
the proposed rule because its scope is
‘‘targeted and judicious,’’ and
appropriately focused on the bad actors
that harm consumers.43
Somos, Inc., which manages registry
databases for the telecommunications
industry, stated it ‘‘strongly supports the
Commission’s proposed rules,’’ but
suggested the Commission explicitly
clarify that spoofing a telephone number
of a business or government entity to aid
in that impersonation violates the rule.44
The Commission is not persuaded that
explicitly stating telephone spoofing, or
any specific type of government or
business impersonation, constitutes a
violation of the rule is necessary.45
Moreover, the Telemarketing Sales Rule
(‘‘TSR’’) already bars telemarketers from
‘‘failing to transmit. . .the telephone
number and. . .the name of the
telemarketer to any caller identification
service in use by a recipient of a
telemarketing call.’’ 46 By definition, a
spoofed telephone number is not the
number of the telemarketer, and the
Commission can rely on this prohibition
to bring an enforcement action for
violation of the TSR against a
telemarketer that uses a spoofed
number.
The Commission also received several
comments that identified the lack of
access to accurate information
concerning domain name registrants
(commonly known as ‘‘WHOIS’’ data) as
a significant impediment to combatting
the use of domain names to impersonate
government and businesses.47 These
commenters expressed support for
expanding the text or scope of the final
rule to address this issue.48 In
particular, a few commenters urged the
Commission to issue a final rule that
requires domain name registrars to
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collect, verify, maintain, and disclose
accurate WHOIS data to the FTC and
third-party victims on request for such
information based on credible evidence
of impersonation fraud.49 The Coalition
for Online Accountability (‘‘COA’’), a
group advocating for online
transparency and accountability, argued
‘‘[t]here is no justification for the
redaction of data of legal person
registrants or the overwhelming denial
of reasonable access to personal WHOIS
data for legitimate third-party
interests. . ..’’ 50 Both the Messaging
Malware Mobile Anti-Abuse Working
Group (‘‘M3AAWG’’) and the AntiPhishing Working Group (‘‘APWG’’)
also suggested the Commission
encourage Domain Name System
(‘‘DNS’’) registries and registrars to
engage in DNS mitigation and
frequently impersonated entities to
participate as ‘‘trusted notifiers’’ to
address fraudulently registered domain
names.51
The Commission declines to adopt
commenters’ suggestion that the final
rule expressly reference in
accompanying examples the use of
domain names in impersonation
schemes. Rather, the Commission here
repeats what it previously stated in the
NPRM and earlier in this SBP, that the
following list of examples of conduct
covered by the prohibition on the
impersonation of government and
businesses was intended to be
illustrative, not exhaustive: (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
‘‘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; (6) using a
government seal on a building,
letterhead, website, email, vehicle, or
other physical or digital place; (7)
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
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member services’’ or ‘‘the car
dealership’’; (8) sending physical mail
through any carrier using addresses,
seals, logos, or other identifying insignia
of a business or officer thereof; (9)
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’’; (10)
creating or spoofing an email address
that impersonates a business; (11)
placing advertisements that pose as a
business or officer thereof against search
queries for business services; and (12)
using, without authorization, a
business’s mark on a building,
letterhead, website, email, vehicle, or
other physical or digital place.52
Accordingly, the Commission finds the
final rule is drafted with sufficient
clarity and flexibility to address the
unauthorized use of internet identifiers,
including but not limited to domain
names.
Only one commenter suggested in
response to Question 1 of the NPRM
that the proposed rule should not be
finalized.53 The Americans for
Prosperity Foundation (‘‘AFPF’’), a
501(c)(3) nonpartisan education
organization, argued the Commission
should ‘‘abandon its Section 18
rulemaking ambitions, instead
refocusing its efforts on case-by-case
enforcement actions in federal court in
cases involving concrete harm to
consumers.’’ 54
The Commission disagrees with the
AFPF’s suggestion that the section 18
rulemaking process is too difficult or
unwieldy to address many of the unfair
or deceptive acts or practices prevalent
in commerce. In 1975, Congress passed
the Magnuson-Moss Warranty—Federal
Trade Commission Improvement Act
laying out specific procedures for the
promulgation of ‘‘Trade Regulation
Rules’’ to protect consumers in a
dynamic and changing economic
landscape.55 The Commission’s
regulations at 16 CFR part 1, subpart B,
respect the underlying statutory
requirements of section 18, which
provide ample transparency and
opportunity for public participation in
the promulgation of Trade Regulation
Rules. The Commission intends
therefore to fulfill its mission to protect
against unfair or deceptive acts or
practices in or affecting commerce and
to provide consumers and businesses
with due process, clarity, and
transparency while crafting the rules to
do so. Accordingly, the Commission
rightfully responds to Congress’s grant
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of authority by initiating this
rulemaking.
The AFPF also expressed various
criticisms specific to the language of the
proposed rule and recommended
several suggested revisions discussed in
greater detail in Sections III.C and III.D
below.
Following review of all comments and
careful consideration of the relevant
law, the final rule issued by the
Commission contains some minor
changes from the proposed rule, as
discussed in Section III.
B. Relevant Evidence Regarding
Provisions of the Proposed Rule,
Prevalence, Impact and Alternative
Proposals
In the ANPR, the Commission asked
specific questions about the prevalence
of impersonation fraud, and requested
the data source commenters relied upon
for formulating their answer(s).56 The
ANPR also asked specific questions
regarding how to craft a proposed rule
to maximize the benefits to consumers
and minimize the costs to businesses,
and what alternatives to regulations the
Commission should consider in
addressing impersonation frauds.57 In
Question 2 of the NPRM, the
Commission posed these same or nearly
identical specific questions regarding
each different provision of the proposed
rule.58 Six commenters specifically
addressed these questions.59 Each of
these commenters described various
types of government and business
impersonation scams common to their
own experience or industry in support
of their view that such frauds are highly
prevalent.60 For example, the Toy
Association noted various business
impersonation scams experienced by its
members, including counterfeit or noncompliant toys, falsified documents
regarding endorsement and affiliation
related to counterfeit toys, false
solicitation and phishing schemes
collecting customer information, and
domain impersonation.61 Similarly, the
USPTO and USCO described several
examples of government impersonation
scams involving the trademark and
copyright registration processes,
respectively, and included illustrative
examples as attachments with their
public comment.62
Other commenters particularly
concerned with online business
impersonation cited data from studies or
reports regarding trends in these kinds
of impersonation frauds, and recent
examples of phishing attacks against
consumers through the impersonation of
recognized online companies in support
of their arguments regarding
prevalence.63 A small number of
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commenters addressed the impact
(including any benefits and costs) on
consumers, governments, and
businesses, discussed in more detail in
Section VI.
Only one commenter suggested an
alternative proposal for the
Commission’s consideration.64
Specifically, the M3AAWG
recommended as an alternative to the
means and instrumentalities provision
in proposed § 461.4 that the
Commission ‘‘identify best practices or
safe harbors to incentivize prompt
mitigation efforts and sound verification
techniques’’ to address the use of
domain names in business
impersonation schemes.65 M3AAWG
argued this alternative to regulation
would avoid the risk of inadvertently
imposing ‘‘secondary or intermediary
liability against legitimate businesses,
technologies or services’’ exploited by
impersonators.66
Upon review of the comments
received in response to Question 2 of
the NPRM, the Commission concludes
such comments support its own
findings that government and business
impersonation schemes are both
prevalent and harmful. The Commission
declines at this time to adopt
M3AAWG’s alternative proposal for
§ 461.4. As discussed in Section III.D,
the Commission is continuing to review
comments and records relevant to the
means and instrumentalities provision
in proposed § 461.4 to determine
whether additional action or protections
are warranted and is requesting
additional public comment through a
SNPRM, published elsewhere in this
issue of the Federal Register.
C. Clarity of Prohibitions Against
Impersonation of Government &
Businesses
In Question 5 of the NPRM, the
Commission solicited comment
regarding whether the proposed rule’s
one-sentence prohibitions against
impersonation of government in § 461.2
and against impersonation of businesses
in § 461.3 are clear and unambiguous,
and how, if at all, they should be
improved.67 The Commission received
several comments that addressed this
question directly 68 or indirectly.69 Two
commenters considered the onesentence prohibitions to be clear and
unambiguous and/or deferred to the
Commission’s construction, but
suggested certain additions or
modifications.70 For example, the USCO
suggested the Commission consider
whether the definition of ‘‘officer,’’
which covers representatives of both
governments and businesses, should be
bifurcated into two separate and more
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specific terms to define representatives
of governments and businesses,
respectively.71 No other commenter
suggested a revision to the definitions in
proposed § 461.1. The USPTO suggested
the Commission broaden the exemplary
‘‘list of matter’’ used to impersonate a
government to specifically reference
‘‘logos.’’ 72 In support of this
recommendation, the USPTO noted ‘‘the
use of logos’’ was explicitly identified in
the NPRM’s examples of unlawful
conduct that would be covered by the
prohibition against business
impersonation in proposed § 461.3, but
not in the NPRM’s examples of unlawful
conduct that would be covered by the
prohibition of government
impersonation in proposed § 461.2. The
USPTO further asserted government
agencies also ‘‘use logos in addition to
official seals and insignia,’’ and
provided an illustrative example of
impersonators misusing the USPTO’s
logo.73
Three commenters indicated the
language of proposed §§ 461.2 and 461.3
was vague or provided inadequate
guidance, and warranted modification.74
Some commenters raised constitutional
concerns based on the purported
overbreadth of the one-sentence
prohibitions.75 These commenters’
constitutional arguments addressed two
primary considerations: (1) whether the
proposed rule provides due process
notice; 76 and (2) whether it encroaches
upon free speech protected under the
First Amendment.77 The AFPF stated
the proposed rule is an ‘‘open-ended
regulation,’’ arguing it ‘‘fails to provide
constitutionally adequate notice of
required or prohibited conduct’’ and
otherwise falls short of section 18’s
specificity requirements.78 Other
commenters wary of inadvertent
intrusions on protected speech asserted
any final prohibition should exempt
innocent behavior such as parody 79 and
non-commercial or otherwise legitimate
speech.80
In his documentary submission in
response to the Notice of Informal
Hearing, William MacLeod echoed
concerns he previously expressed in
response to the NPRM that the language
in proposed §§ 461.2 and 461.3
‘‘depart[s] from the standards of
deception that the Commission applies
under Section 5.’’ 81 MacLeod noted
that: ‘‘[i]ts terms do not include
‘deception’ or ‘fraud’ or critical
elements of the FTC’s deception policy
statement.’’ 82 He raised additional
concerns about ‘‘impersonations and
affiliations [that] can be false, but also
unbelievable.’’ 83 MacLeod argued that
the prohibitions, as written, are too
broad and would proscribe non-
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deceptive acts or practices, such as
‘‘fictional depictions’’ in television
advertisements.84
Raising First Amendment concerns,
the AFPF similarly asserted that the
proposed rule’s ‘‘falsely pose as’’
language, ‘‘read literally,’’ would
impose civil penalties on ‘‘utterly
innocuous conduct’’ and ‘‘would appear
to make it unlawful for anyone to dress
up as an FTC Commissioner, politicians,
or . . . a Microsoft executive and attend
a Halloween party.’’ 85 It also expressed
concern that the proposed prohibitions
did not require ‘‘materiality,’’
‘‘consumer harm,’’ or ‘‘connection to
interstate commerce.’’ 86 Several
commenters suggested alternative
language to cure what they perceived to
be the overbreadth of the prohibition
provisions. For example, M3AAWG
recommended that the final rule adopt
a definition of ‘‘impersonation’’ that
mirrors the definition of ‘‘criminal
impersonation’’ in 18 U.S.C. Chapter
43.87 M3AAWG asserted that such a
definition would narrow the scope of
the rule to cover only those bad actors
with ‘‘clear intent and specific
knowledge’’ of prohibited acts.
MacLeod proposed narrowing the
focus of the final rule by adopting
language that specifies particular
prohibited practices or the mens rea of
its intended targets.88 The AFPF agreed
with MacLeod and suggested that the
Commission revise the proposed rule to
‘‘explicitly incorporate Section 5’s
statutory prohibition . . . [and]
requirements set forth in the
Commission’s Deception Statement.’’ 89
After analyzing and considering the
comments, the Commission is
persuaded that the language of the final
rule should adhere more closely to the
language of section 5 of the FTC Act to
avoid any potential confusion about the
scope of the rule. The Commission
believes that these revisions sufficiently
address some commenters’ concerns
that the language of the proposed rule
put it in conflict with Due Process
requirements and the First Amendment.
The Commission emphasizes that it
does not intend for the final rule to
regulate non-commercial speech. To
adhere more closely to the language of
section 5 of the FTC Act and case law,
the Commission has revised the final
regulatory text to incorporate relevant
language from section 5. Specifically,
the Commission has replaced
‘‘unlawful’’ with ‘‘unfair or deceptive
act or practice,’’ and added ‘‘materially’’
and ‘‘in or affecting commerce’’ in
§§ 461.2 and 461.3. These changes make
it abundantly clear that the scope of the
final regulatory text is coterminous with
the scope of the FTC’s authority under
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the FTC Act, and they clearly specify
the misconduct prohibited by the final
rule. Accordingly, false impersonations
or misrepresentations that are not
material to a commercial transaction,
such as impersonation in purely artistic
or recreational costumery or
impersonation in connection with
political or other non-commercial
speech, are not covered by the final rule.
The Commission concludes that it is
unnecessary to divide the definition of
‘‘officer’’ into two separate terms as
suggested by the USCO. Section 461.1
defines ‘‘officer’’ to ‘‘include[ ]
executives, officials, employees, and
agents,’’ which the Commission believes
appropriately describes and covers both
government and business
representatives.
As previously stated, the NPRM’s list
of examples of prohibited conduct
covered by the rule is intended to be
illustrative, not exhaustive, and
therefore, the Commission declines to
adopt the USPTO’s suggestion that it
enlarge that exemplary ‘‘list of matter.’’
Rather, the Commission maintains that
not including specific prohibitions in
the regulatory text provides it with
sufficient flexibility to address the many
types of ‘‘matter’’ (including objects,
items, logos, insignia, etc.) used to
impersonate governments and
businesses alike, which are too
numerous to list.
The Commission declines to adopt a
definition of ‘‘impersonation’’ that
reflects a criminal regulatory scheme as
proposed by M3AAWG. The FTC Act
does not include a mens rea
requirement, and there is no evidence in
the record that the imposition of such a
requirement is warranted. Furthermore,
while intent is not required under the
rule or the FTC Act, in any action
seeking civil penalties for violation of
the rule, the Commission will need to
establish ‘‘actual knowledge or
knowledge fairly implied on the basis of
objective circumstances that such act is
unfair or deceptive and is prohibited by
such rule.’’ 90
The Commission rejects the
recommendation by both MacLeod and
AFPF to incorporate the FTC Deception
Policy Statement into the final rule.
Nevertheless, as discussed earlier in this
Section III.C, informed by MacLeod’s
and AFPF’s comments, the Commission
has revised the regulatory text of
§§ 461.2 and 461.3 to mirror the
language of section 5 of the FTC Act
more closely. In particular, the reference
to ‘‘unfair or deceptive act or practice,’’
and the inclusion of materiality and
interstate commerce requirements
should address commenters’ concerns
that this rule might be read to cover
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impersonation in connection with
artistic costumery, parody, or other noncommercial speech.91 The Commission
further notes that, by the terms of these
sections, a court must find that the
alleged defendant made an express or
implied misrepresentation regarding
material information for §§ 461.2 and
461.3 to be violated. For an express or
implied misrepresentation regarding
material information to be made in
violation of the FTC Act and this rule,
there must be a representation that
misleads consumers acting reasonably
under the circumstances regarding
material information. Thus, while the
Commission rejects the
recommendation by both MacLeod and
AFPF to incorporate the FTC Deception
Policy Statement into the final rule, by
incorporating the changes above, the
Commission has ensured that the final
rule is consistent with the Deception
Policy Statement, is consistent with
other relevant Commission rules, and
provides further specificity regarding
the prohibited acts and practices under
section 5 of the FTC Act.
D. Prohibition Against Providing Means
and Instrumentalities
In Question 6 of the NPRM, the
Commission asked whether the final
rule should contain the prohibition in
proposed § 461.4 against providing the
means and instrumentalities for
violations against government or
business impersonation. The
Commission received more than 20
comments that expressly addressed this
question.92 Many of the sentiments
reflected in these comments were also
echoed by several commenters that
presented oral statements in response to
the Notice of Informal Hearing.93A few
commenters arguing for the importance
of holding intermediaries accountable
for enabling or promoting
impersonation schemes encouraged the
Commission to finalize the text of the
proposed provision without
modification.94 These commenters
specifically argued that finalizing the
proposed § 461.4 could help to combat
impersonation schemes perpetrated by
foreign-based scammers—beyond U.S.
court jurisdiction—that obtain services
from U.S.-based instrumentalities, such
as payment processors and internet
service providers.95
Addressing means and
instrumentality liability, both the AFPF
and MacLeod reiterated their concerns
referenced in Section III.C, regarding
section 18’s specificity requirements,
due process notice, free speech, and
conformity to the FTC’s Deception
Policy Statement.96 Most commenters
who addressed Question 6 expressed
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support for means and instrumentalities
liability, but with some concern or
suggested modifications. Some
supportive commenters cautioned that
the proposed means and
instrumentalities provision could be
read too broadly.97 Others expressed the
concern that without a specific scienter
or knowledge requirement, the proposed
rule provision runs the risk of imposing
strict liability against innocent and
unwitting third-party providers of
services or products.98 Accordingly,
several commenters urged the
Commission to clarify the scope of
means and instrumentalities liability or
explicitly include a specific knowledge
requirement in the final rule
provision.99
For example, the Consumer
Technology Association (‘‘CTA’’), a
trade association representing the U.S.
consumer technology industry, stated
that the Commission’s explanation and
examples of the ‘‘means and
instrumentalities’’ provision in the
NPRM seem to limit its applicability,
but such limitation ‘‘is not squarely
reflected in the text of the proposed
rule.’’ 100 The CTA therefore urged the
FTC to clarify that ‘‘means and
instrumentalities’’ liability applies only
‘‘to entities that have knowledge or
consciously avoid knowing that they are
making representations being used to
commit impersonation fraud.’’
USTelecom, a trade association
representing the broadband technology
industry, argued that a discrepancy
exists between the case law, the NPRM’s
discussion of means and instrumentality
liability, and the proposed rule
provision. It urged the Commission to
‘‘adjust the proposed language in § 461.4
to codify the requirement that the
person has knowledge or reason to
expect it is providing the means and
instrumentalities . . .’’ (emphasis in
original).101 Similarly, the American Bar
Association Section of Intellectual
Property Law suggested that the
Commission ‘‘explicitly include [in
§ 461.4] the language referenced in the
[NPRM] from Shell Oil Co., 128 F.T.C.
749 (1999)—acting with ‘knowledge or
reason to expect that consumers may
possibly be deceived as a result.’ ’’ 102
Other commenters argued that
inclusion of a scienter requirement is a
necessary but not sufficient
modification of the proposed language
to impose means and instrumentalities
liability. For example, the internet &
Television Association (‘‘NCTA’’), a
trade association for the United States
cable television industry, argued that
such ‘‘liability requires both providing
deceptive means and instrumentalities,
e.g., providing false or misleading
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claims or counterfeit items, and actual
knowledge that the deceptive
representations or goods will be used to
commit impersonation violations’’
(emphasis in original).103 Likewise,
M3AAWG advocated that, in addition to
a ‘‘knowledge or reason-to-know test,’’
primary liability under a revised § 461.4
should also require that the provision of
such means and instrumentalities be
done willfully or in bad faith, and with
clear intent and specific knowledge.104
A few commenters urged the
Commission to adopt a final rule that
explicitly recognizes specific or defined
‘‘means and instrumentality’’ violations
perpetrated in connection with
impersonation frauds, such as the use of
legal process documents 105 or
manipulated media technologies (i.e.,
deepfakes) 106 or failure to disclose
WHOIS data.107
Based upon the comments received
on the proposed provision regarding
means and instrumentalities, the
Commission has decided that this
specific provision warrants further
analysis and consideration; thus, the
Commission has decided not to finalize
proposed § 461.4. The Commission is
not aware of any other rule, whether
issued pursuant to section 18 or APA
rulemaking authority, that identifies a
means and instrumentalities violation.
The Commission notes that it has used
means and instrumentalities allegations
as a type of deception to establish
primary liability in the absence of
privity between the defendant and the
deceived persons, albeit rarely, in
connection with matters that involve
impersonation.108 Pending further
analysis and consideration, the
Commission declines to adopt proposed
§ 461.4 at this time. The Commission is
still considering the provision regarding
means and instrumentalities, as well as
issues related to the impersonation of
individuals or entities other than
governments and business in interstate
commerce and is requesting public
comment through a Supplemental
Notice of Proposed Rulemaking
(‘‘SNPRM’’), published elsewhere in this
issue of the Federal Register.
E. Inclusion of Prohibition Against
Impersonating Nonprofits
In response to the ANPR, the
Commission received a number of
comments that urged the Commission to
include ‘‘nonprofit’’ entities in the
proposed rule’s definition of businesses
that can be impersonated.109 The
Commission agreed with these
comments, and consequently, defined a
‘‘business’’ that may be impersonated to
include nonprofits in § 461.1 of the
proposed rule, notwithstanding the fact
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that the Commission is authorized to
sue a corporation only when the
corporation is ‘‘organized to carry on
business for its own profit or that of its
members.’’ 110 As the Commission
explained in the NPRM, the reason for
doing so is because for profit businesses
may impersonate nonprofit business.111
In Question 7 of the NPRM, the
Commission solicited comment
regarding whether any final rule should
keep the prohibition against
impersonating nonprofit
organizations.112 The Commission
received more than a dozen comments
that specifically addressed this
question, and each of them expressed
support for a final rule keeping the
prohibition against impersonating
nonprofits.113 None of the comments
responding to the NPRM or Notice of
Hearing opposed doing so. The vast
majority of commenters who addressed
this question were themselves nonprofit
organizations operating as trade
associations, and referenced their own
experience with impersonation frauds
in support of a final rule keeping the
prohibition against impersonating
nonprofits.114 Several commenters
expressed the view that nonprofits are
often the subject of impersonation
scams in the same way as for profit
businesses and government agencies.115
Other commenters asserted that
impersonation of nonprofits could be
uniquely harmful because bad actors
‘‘prey[ ] on the goodwill of individuals
attempting to make donations, and
misappropriate[ ] those donations to
corrupt private actions.’’ 116 Some
commenters noted that nonprofits are
particularly susceptible to being
impersonated in scams involving
affiliation or endorsement claims
because nonprofits often offer awards or
seals of approval.117
Finally, two commenters cited
trademark law in support of keeping
nonprofits in the definition of business
and a final rule that includes the
prohibition against impersonating
nonprofits. Specifically, both INTA and
the Toy Association stated that
trademark law has ‘‘long recognized that
the misuse of names of non-profit
organizations can lead to harmful
consumer confusion.’’ 118 In INTA’s and
the Toy Association’s view, the same
applies with respect to impersonation
schemes; thus, the final rule should also
make no distinction between for profit
and nonprofit businesses.
Based upon the record, including
public comments in response to
Question 7 of the NPRM, the
Commission has determined that the
final rule will retain the definition of
‘‘business’’ in § 461.1 that includes
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nonprofits and the prohibition against
impersonating nonprofit organizations
in § 461.3.
F. Inclusion of Individuals or Entities
Other Than Government and Business
Impersonators
In the NPRM, the Commission asked
whether the proposed rule should be
expanded to address the impersonation
of individuals or entities other than
governments and business in interstate
commerce.119 The NPRM identified
romance and grandparent
impersonation scams as illustrative, but
non-exhaustive, examples of other types
of impersonation fraud, and solicited
further comment regarding their
prevalence and impact, and alternative
proposals to regulation. Six commenters
specifically addressed these questions,
and each of them stated that the
Commission should expand the reach of
the proposed rule to extend beyond
government and business
impersonators.120 Some commenters
asserted that fraudsters often
impersonate individuals in similar ways
they impersonate government and
businesses.121 In support of expanding
the rule, several commenters argued that
romance and grandparent
impersonation scams were harmful and
prevalent, citing to data from the FTC
and other sources showing a steady
increase in the number of consumer
reports and median individual losses for
such scams.122 A comment submitted by
a group of students at Rutgers Law
School asserted that older consumers
are susceptible to ‘‘interpersonal
confidence fraud and romance scams’’
and provided relevant data
demonstrating that older consumers
may be more likely to fall victim to
these kinds of impersonation than to
government impersonation.123 Several
commenters also stated that while the
number of reports of these two types of
impersonation scams are not as high as
government and business
impersonation, they are likely
underreported, and that median
individual losses are often higher.124
The AARP stated that, ‘‘[o]f all fraud
activity, romance scams and scams
impersonating a family member in
trouble are the most insidious, given the
emotional devastation that combines
with often significant financial
losses.’’ 125 A joint comment submitted
by several consumer and privacy
advocacy organizations argued that such
evidence ‘‘should be sufficient
justification’’ for the Commission to
‘‘add a subsection to proposed Section
461 to cover ‘Impersonation of
Individuals.’ ’’ 126
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A few commenters discussed the
prevalence and harmfulness of other
kinds of impersonation scams as
support for expanding the rule beyond
government and businesses to include
individuals. For example, the NCTA
stated that its member companies had
observed an increase in sophisticated
residential IP address scams that
impersonate online subscribers for
illegal purposes such as piracy and
fraud.127 NCTA encouraged the
Commission to consider a new rule to
prohibit impersonation of individuals
through ‘‘unauthorized use of an
individual’s online credentials,
accounts, IP addresses, and digital
networks.’’ 128 The Recording Industry
Association of America (‘‘RIAA’’)
described impersonation scams
involving offers of NFTs and mobile
apps suggesting affiliation with sound
recording artists and phishing scams
where third parties claimed to be a
music artist’s manager or producer.129
RIAA recommended that the
Commission expand the rule to include
the following: ‘‘[I]t [is] unlawful to
falsely pose as or to misrepresent,
directly or by implication, affiliation
with, including endorsement or
sponsorship by, an individual, for
financial gain.’’ 130
The Rutgers Law Students noted the
prevalence of social media, and profiles
of celebrities and influencers in current
modes of online communication,
arguing that it would be a ‘‘grave
oversight’’ to omit persons with such
notable identities from a rule
prohibiting impersonation.131 The
students also argued that individuals are
more likely than government agencies or
businesses to suffer direct harm to their
identities from impersonation scams
and less likely to be able to repair the
reputational injuries.132 Accordingly,
they proposed that the Commission add
another section to the rule with
language prohibiting the impersonation
of ‘‘any person’’ that parallels the
language in §§ 461.2 and 461.3
prohibiting the impersonation of
government and businesses,
respectively.133 The students further
stated that this additional provision
‘‘closes a loophole’’ that proposed
§§ 461.2 and 461.3 leave open regarding
the impersonation of former government
and business officials.134 Finally, the
students concluded that adding such a
narrowly drafted provision would not
burden honest businesses or
individuals, and would benefit
consumers because the median
individual losses for other kinds of
impersonation frauds are often greater
than for government and business
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impersonation.135 Both the students and
the NCTA agreed that expanding the
proposed rule to prohibit impersonation
of individuals would not impact
recreational or comedic impersonations
of individuals in television or film.136
Upon consideration of the comments
received in response to Question 8 of
the NPRM and all relevant records and
data, the Commission is seeking
additional public comment about
potentially expanding part 461 to cover
impersonation of individuals or entities
other than governments and businesses
in interstate commerce in a SNPRM
published elsewhere in this issue of the
Federal Register.137
G. Requiring Domain Name Registrars
To Collect, Verify, Maintain, and
Disclose Accurate WHOIS Data
The Commission received several
comments that identified the lack of
access to accurate information
concerning domain name registrants
(commonly known as ‘‘WHOIS’’ data) as
a significant impediment to combatting
the use of domain names to impersonate
government and businesses.138 These
commenters expressed support for
expanding the text or scope of the final
rule to protect consumers from this
increasingly prevalent impersonation
scheme.139 In particular, a few
commenters urged the Commission to
issue a final rule that requires domain
name registrars to collect, verify,
maintain, and disclose accurate WHOIS
data to the FTC and third-party victims
on request for such information based
on credible evidence of impersonation
fraud.140 As previously noted, the COA
argued that the redaction or denial of
reasonable access to WHOIS data is
unjustified.141 Both M3AAWG and
APWG also suggested that the
Commission encourage DNS registries
or registrars to engage in DNS mitigation
and frequently impersonated entities to
participate as ‘‘trusted notifiers’’ to
address fraudulently registered domain
names.142
Because the deceptive use of internet
domain names is already covered under
the rule, the Commission declines to
adopt commenters’ suggestion that the
final rule expressly reference in the text
or accompanying examples the use of
domain names in impersonation
schemes. As previously noted in Section
III.A, the NPRM’s preamble contained a
list of examples of conduct covered by
the prohibition on the impersonation of
government and businesses that was
intended to be illustrative, not
exhaustive.143 Such a comprehensive
list would be both impossible and
would not provide the trade regulation
rule with the flexibility to accommodate
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changes in the marketplace and
scammers’ behavior. The Commission
finds therefore that the final rule is
drafted with sufficient clarity and
flexibility to address the unauthorized
use of internet identifiers, including but
not limited to, domain names.
Furthermore, the Commission declines
to issue a final rule that imposes
affirmative requirements upon domain
name registrars which is beyond the
purview of this rulemaking and doing so
arguably would place an impracticable
burden upon consumers to know about
and verify the trustworthiness of such
WHOIS data.
H. Comments Regarding Limitation of
Remedies
A small number of commenters urged
the Commission to clarify that any final
rule regarding impersonation would not
limit any rights and remedies already
available to businesses and consumers
that have been the subject of
impersonation.144 For example,
notwithstanding its support of the
Commission’s rulemaking to address
impersonation, the American Bar
Association Section of Intellectual
Property Law asserted that many
government impersonation scams
should be referred to the Department of
Justice for criminal prosecution, and
therefore, cautioned that any regulatory
approach ‘‘not dilute the impetus for a
criminal law solution.’’ 145 Other
commenters suggested that the
Commission clarify that any final rule is
not intended to limit any existing
private right of action or civil
remedies.146 Specifically, the Toy
Association and INTA both advocated
that any final rule on impersonation not
be interpreted as limiting the rights and
remedies available to trademark owners
under the Lanham Act and the AntiCybersquatting Consumer Protection
Act. INTA further proposed that the
Commission issue a clarification that
any final rule is intended only to
complement—not expand or contract—
the legal protections available to private
parties under the entire body of federal
or state trademark and unfair
competition law.147
By issuing the final rule regarding
government and business
impersonation, the Commission does
not preempt or intend to preempt action
in the same area, which is not
inconsistent with this final rule, by any
federal, state, municipal, or other local
government. This final rule does not
annul or diminish any rights or
remedies provided to consumers or
businesses by any federal, state law,
municipal ordinance, or other local
regulation, insofar as those rights or
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those provided by this final rule.
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IV. Final Rule
For the reasons described above, the
Commission has determined to adopt
the provisions of proposed § 461.1 as
initially proposed, and the provisions of
§§ 461.2 and 461.3 with clarifying
modifications. The Commission
declines to finalize proposed § 461.4 at
this time.
Specifically, the Commission
concludes that the proposed definition
of ‘‘officer’’ is sufficient to cover both
government and business
representatives, and therefore, need not
be divided into two separate terms.
Further, the final rule includes a
definition of ‘‘materially’’—which has
been used in other section 18 rules—to
avoid potential confusion or potential
perceived conflict with non-commercial
speech. For these same reasons, the final
rule replaces ‘‘unlawful’’ with ‘‘unfair or
deceptive act or practice’’ and adds
‘‘materially’’ and ‘‘in or affecting
commerce’’ in §§ 461.2 and 461.3. Such
revised language further clarifies that
the rule conforms to the wellestablished standards for deception and
unfairness under the FTC Act. Finally,
the Commission declines to finalize the
proposed § 461.4 provision regarding
means and instrumentalities at this time
because further analysis and
consideration is warranted based on the
record, including comments. The
Commission is requesting additional
public comment on this provision, and
on issues related to the impersonation of
individuals or entities other than
governments and business in interstate
commerce, through a SNPRM,
published elsewhere in this issue of the
Federal Register.
V. Paperwork Reduction Act
The Paperwork Reduction Act
(‘‘PRA’’), 44 U.S.C. 3501 et seq., requires
federal agencies to seek and obtain
Office of Management and Budget
(‘‘OMB’’) approval before undertaking a
collection of information directed to ten
or more persons. In Question 3 of the
NPRM, the Commission asked
commenters whether the proposed rule
contained a collection of information.148
No comments responding to the NPRM
or Notice of Hearing addressed this
question. While the Commission has
revised the rule based on the comments
it received, it has not added any new
requirements that would collect
information from the public.
Accordingly, the Commission has
determined that there are no new
requirements for information collection
associated with this final rule.
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VI. Regulatory Analysis and Regulatory
Flexibility Act Requirements
Under section 22 of the FTC Act, the
Commission, when it promulgates a
final rule, must issue a ‘‘final regulatory
analysis.’’ 149 The required contents of
this final regulatory analysis are: (1) ‘‘a
concise statement of the need for, and
the objectives of, the final rule’’; (2) ‘‘a
description of any alternatives to the
final rule which were considered by the
Commission’’; (3) ‘‘an analysis of the
projected benefits and any adverse
economic effects and any other effects of
the final rule’’; (4) ‘‘an explanation of
the reasons for the determination of the
Commission that the final rule will
attain its objectives in a manner
consistent with applicable law and the
reasons the particular alternative was
chosen’’; and (5) ‘‘a summary of any
significant issues raised by the
comments submitted during the public
comment period in response to the
preliminary regulatory analysis, and a
summary of the assessment by the
Commission of such issues.’’ 150
Additionally, the Regulatory Flexibility
Act (‘‘RFA’’), 5 U.S.C. 601–612, requires
an agency to provide a Final Regulatory
Flexibility Analysis (‘‘FRFA’’) with the
final rule, if any, unless the agency
certifies that the rule will not have a
significant economic impact on a
substantial number of small entities.151
The NPRM included an Initial
Regulatory Flexibility Analysis
(‘‘IRFA’’) even though the Commission
did not expect that the proposed rule
would have a significant economic
impact on a substantial number of small
entities.152 The Commission invited
public comment on the proposed rule’s
effect on small entities to ensure that no
significant impact would be
overlooked.153
The FTC does not expect that the final
rule will have a significant economic
impact on a substantial number of small
entities, and this SBP serves as notice to
the Small Business Administration of
the agency’s certification of no
significant impact. The final rule
imposes no disclosure or recordkeeping
requirements. As such, both the burdens
imposed on small entities and the
economic impact of the final rule are
likely to be minimal, if any.
Furthermore, as noted in the IRFA, the
rule does not change the law regarding
the legality of government and business
impersonation, which are already
prohibited by section 5 of the FTC
Act.154 Although the Commission
certifies the final rule would not, if
promulgated, have a significant impact
on a substantial number of small
entities, the Commission has
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determined, nonetheless, it is
appropriate to conduct the following
FRFA,155 which incorporates the
Commission’s initial findings, as set
forth in the NPRM,156 addresses the
required contents of the final regulatory
analysis, and describes the steps the
Commission has taken in the final rule
to minimize its impact on small entities.
A. Concise Statement of the Need for,
and Objectives of, the Final Rule
Based upon the record, including
public comments, the Commission is
implementing the rule to expand the
remedies available to it to combat
government and business impersonation
deception. Throughout this rulemaking
proceeding, the Commission has
described how the U.S. Supreme Court
decision in AMG Cap. Mgmt., LLC v.
FTC, 141 S. Ct. 1341, 1352 (2021)
overturned how section 13(b) of the FTC
Act had historically been understood for
40 years to provide equitable monetary
relief, and made it significantly more
difficult for the Commission to obtain
money for injured consumers.157 The
objective of this final rule is to make
available a shorter, faster and more
efficient path for recovery of money for
injured consumers directly through
federal court action in Commission
enforcement actions involving
impersonation of government or
business.158 Further, the rule would
deter illegal impersonation and allow
for the imposition of civil penalties,
where appropriate.159
B. Discussion of Significant Alternatives
the Commission Considered That Would
Accomplish the Stated Objectives of the
Final Rule and That Would Minimize
Any Significant Economic Impact of the
Final Rule on Small Entities
Through the NPRM, the Commission
requested public comment on what
impact (including costs) will be
incurred by existing and future
businesses to comply with the proposed
rule, and whether the Commission
should consider alternative proposals to
the proposed rule.160 This information
was requested by the Commission to
minimize the final rule’s burden on all
businesses, including small entities. As
explained throughout this SBP, the
Commission has considered the
comments and alternatives proposed by
commenters and finds the final rule will
not create a significant economic impact
on small entities.161 Indeed, the type of
deception that will be unlawful under
the final rule is already unlawful under
the FTC Act, but the final rule would
allow the Commission to obtain
monetary relief more efficiently than it
could solely under section 19(a)(2) of
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the FTC Act (i.e., without a rule
violation). Accordingly, the Commission
does not propose any specific small
entity exemption or other significant
alternatives.
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C. Summary of Significant Issues Raised
by the Public Comments in Response to
the Preliminary Regulatory Analysis and
IRFA
None of the comments received
during the public comment period
raised any significant issues in response
to the preliminary regulatory analysis
required pursuant to section 22 of the
FTC Act.162 In the IRFA, however, the
Commission sought comment regarding
the impact of the proposed rule and any
alternatives the Commission should
consider, with a specific focus on the
effect of the rule on small entities. In the
NPRM, the Commission reiterated this
request for comment in Question 4,
asking whether the proposed rule, if
promulgated, would have a significant
impact on a substantial number of small
entities. Two commenters that
specifically addressed the impact of the
proposed rule on small entities stated it
would have a beneficial economic
impact by reducing the time and
financial burden small entities expend
on fighting impersonation frauds.163
One commenter urged the Commission
not to implement a final rule that would
require third-party providers of
government filing services to include
extensive disclosures in their marketing
materials, arguing such disclosure
requirements could lead to small
businesses declining the offered services
and falling out of compliance with
government filing obligations.164 This
commenter, however, did not identify
any proposed disclosure requirements
that were the subject of his concern, nor
does the Commission impose any such
disclosure requirements in connection
with the final rule. None of the
comments responding to the NPRM or
Notice of Hearing disputed the analysis
in the IRFA. Finally, the Small Business
Administration did not submit
comments.
After reviewing the public comments
on the proposed rule, as discussed
throughout this SBP, the Commission
concludes the final rule will not unduly
burden small entities. The
Commission’s explanation in the IRFA
regarding the proposed rule is true of
the final rule—it only constitutes a
significant economic impact for small
entities violating existing law, which are
not entitled to procedural protections
when agencies consider rulemaking.165
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D. Analysis of Projected Benefits and
Adverse Effects of the Final Rule
In the NPRM, the Commission invited
public comment and data on any
benefits and costs of proceeding with
the rulemaking to inform a final
regulatory analysis.166 In issuing the
final rule, the Commission has carefully
considered the comments received and
the costs and benefits of each provision.
As discussed throughout this SBP, the
Commission believes, and the record
demonstrates, the final rule would
provide several benefits to consumers,
businesses, and competition, and help
preserve agency resources, without
imposing any significant adverse effects.
The Commission’s explanation in the
IRFA regarding the proposed rule is true
of the final rule—it is difficult to
quantify with precision what all its
benefits may be, but it is helpful to
begin with the scope of the problem the
final rule would address, and then
describe the benefits qualitatively. As
discussed in the NPRM, reported
consumer losses due to government
impersonation topped $445 million in
2021; 167 and as anticipated, remained
large, and even increased substantially,
with total consumer losses of $513
million reported in 2022 and more than
$483 million for the first ten months of
2023.168 Similarly, the annual consumer
loss reported due to business
impersonation has increased from $453
million in 2021 to $670 million in
2022.169 Accordingly, the most
significant anticipated benefit of the
final rule is that it will allow the
Commission to provide monetary relief
to victims of rule violations and seek
civil penalties against violators.170
Furthermore, the final rule should
reduce economic harm resulting from
impersonation because its potential
deterrent effects make it less likely
impersonators get to keep their ill-gotten
gains and more likely they must pay
civil penalties.
The final rule also would provide the
benefit of a shorter path to obtaining
consumer redress because the
Commission could directly pursue in
federal court section 19 remedies in
government and business impersonation
enforcement actions that do not
implicate an existing rule. The
availability of more immediate
consumer redress in federal court under
section 19 would allow the Commission
to reduce the expense of litigating and
minimize the litigation fora and scope.
The Commission could then apply the
savings of these enforcement resources
to investigating and, where the facts
warrant, bringing enforcement actions
in additional impersonation matters.
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The final rule also would benefit
businesses whose brands are harmed by
impersonators.171 As several
commenters have mentioned, a final
rule that would allow the Commission
to bring enforcement actions more
efficiently against impersonators would
save businesses the time and other
resources dedicated to monitoring and
combatting these kinds of deception.
The record is devoid of any evidence
suggesting the final rule would cause
harm or adversely impact economic
conditions.
E. Description and an Estimate of the
Number of Small Entities to Which the
Final Rule Will Apply, or Explanation
Why No Estimate Is Available
Small entities engaging in the
impersonation of government and
business potentially may be found
across a variety of industries and
economic sectors, but industry and
sector data do not identify entities by
such conduct. Accordingly, it is not
possible to estimate the number of small
entities to which the final rule will
apply. However, because the
Commission finds the final rule will not
impose any recordkeeping or other
compliance costs on covered entities,
the Commission concludes the final rule
will not have a significant impact on a
substantial number of small entities,
notwithstanding the lack of data on how
many small entities will be covered by
the final rule.
F. Description of the Projected
Reporting, Recordkeeping, and Other
Compliance Requirements of the Final
Rule, Including an Estimate of the
Classes of Small Entities That Will Be
Subject to the Requirements of the Final
Rule and the Type of Professional Skills
That Will Be Necessary To Implement
the Final Rule
The final rule does not have any
reporting or recordkeeping
requirements.172 As explained
previously, the final rule would apply to
no small entities other than small
entities violating existing law, and
therefore, no classes of small entities
will be subject to the requirements of
the final rule. Finally, no professional
skills are necessary for compliance with
the final rule other than honesty and
integrity.
G. An Explanation of the Reasons for
the Determination of the Commission
That the Final Rule Will Attain Its
Objectives in a Manner Consistent With
Applicable Law and the Reasons the
Particular Alternative Was Chosen
The Commission’s primary objective
in commencing this rulemaking was to
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expand the remedies available to it in
combatting two prevalent categories of
impersonation scams most frequently
reported by consumers—government
impersonators and business
impersonators. As explained throughout
this SBP, based upon the record,
including public comments, the
Commission finds the final rule will
attain this objective in a manner
consistent with applicable law.
The final rule is straightforward and
defines 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). It also avoids novelty by
borrowing from existing rules and
statutory definitions.173 At the same
time, the final rule is drafted with
sufficient flexibility to address the
various types of conduct covered by the
prohibition on the impersonation of
government and businesses.
Furthermore, this rulemaking has
provided ample transparency and
opportunity for public participation in
accordance with the underlying
statutory requirements of section 18 of
the FTC Act, 15 U.S.C. 57a, the
Administrative Procedure Act, and Part
1, subpart B of the Commission’s Rules
of Practice.174
VII. Congressional Review Act
Pursuant to the Congressional Review
Act (5 U.S.C. 801 et seq.), the Office of
Information and Regulatory Affairs has
designated this rule as not a ‘‘major
rule,’’ as defined by 5 U.S.C. 804(2).
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Endnotes
1 Fed. Trade Comm’n, Advance Notice of
Proposed Rulemaking: Trade Regulation Rule
on Impersonation of Government and
Businesses, 86 FR 72901 (Dec. 23, 2021),
https://www.federalregister.gov/documents/
2021/12/23/2021-27731/trade-regulationrule-on-impersonation-of-government-andbusinesses.
2 See id. at 72904.
3 Those included, among others, numerous
reports of government impersonation scams
reported to federal agencies as reflected in
the following public announcements. On
March 7, 2022, the Federal Bureau of
Investigation issued a Public Service
Announcement ‘‘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.’’ Similarly, on May 20, 2022,
multiple federal law enforcement agencies
issued a scam alert spearheaded by the Social
Security Administration’s Office of the
Inspector General warning the public of
government impersonation scams involving
the reproduction of federal law enforcement
credentials and badges. On June 3, 2022, the
Commission issued a press release noting
that in some impersonation scams, fraudsters
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have instructed consumers to convert cash
into cryptocurrency under false threats of
government investigations or fraud. See Fed.
Trade Comm’n, Notice of Proposed
Rulemaking: Trade Regulation Rule on
Impersonation of Government and
Businesses, 87 FR 62741, 62742 (Oct. 17,
2022), https://www.federalregister.gov/
documents/2022/10/17/2022-21289/traderegulation-rule-onimpersonation-ofgovernment-and-businesses.
4 See id. at 62741–51.
5 See id. at 62741–42.
6 Id. at 62750.
7 See Fed. Trade Comm’n, Trade
Regulation Rule on Impersonation of
Government and Businesses, https://
www.regulations.gov/docket/FTC-2022-0064/
comments.
8 Cindy L. Brown and Raye Mitchell, Cmt.
on NPRM at 9 (Dec. 19, 2022), https://
www.regulations.gov/comment/FTC-20220064-0077 (‘‘Brown Cmt.’’); William
MacLeod, Cmt. on NPRM at 2 (Dec. 16, 2022),
https://www.regulations.gov/comment/FTC2022-0064-0078 (‘‘MacLeod Cmt.’’).
9 Fed. Trade Comm’n, Initial Notice of
Informal Hearing: Trade Regulation Rule on
Impersonation of Government and
Businesses, 88 FR 19024 (Mar. 30, 2023),
https://www.federalregister.gov/documents/
2023/03/30/2023-06537/trade-regulationrule-on-impersonation-of-government-andbusinesses. This Initial Notice of Informal
Hearing also served as the Final Notice of
Informal Hearing. The Commission
determined William MacLeod’s comment in
response to the NPRM represented an
‘‘adequate request’’ for such an informal
hearing. The comment from Cindy Brown
explicitly requesting to make a presentation
at an informal hearing also represented an
‘‘adequate request’’ triggering the
Commission’s obligation to hold an informal
hearing but was inadvertently omitted from
inclusion in the Initial Notice of Informal
Hearing.
10 Because this informal hearing was the
first held in several decades, the Commission
allowed interested parties to request the
opportunity to make an oral comment in
response to the Notice of Informal Hearing as
well as the NPRM. However, the Commission
noted that in the future it may limit oral
statements to those who requested to make
an oral statement in response to the NPRM,
as provided for in the Rules of Practice. Id.
at 19025 n.24.
11 Although Cindy Brown did not submit a
request to make an oral statement in response
to the Notice of Hearing, she was permitted
to make an oral statement at the hearing
based upon her prior comment in response
to the NPRM in which she explicitly stated
her interest ‘‘in making a presentation at an
informal hearing.’’
12 The Notice of Informal Public Hearing
comments addressing specific provisions of
the rule or questions in the NPRM soliciting
public comment are discussed in Section III
within the substantive discussions on the
relevant provisions.
13 5 U.S.C. 551 et seq.; 16 CFR 1.7–1.20.
14 Rules of Practice, 16 CFR 1.14(a)(1)(i)–
(iii). In addition, in accordance with 16 CFR
1.14(a)(2), the regulatory analysis is provided
in Section VI of this SBP.
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15 ANPR, 86 FR at 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.
16 NPRM, 87 FR at 62742.
17 Id. at 62742–46.
18 In re Cliffdale Assocs., Inc., 103 F.T.C.
110, 174 (1984); see also In re POM
Wonderful LLC, No. 9344, 2013 WL 268926,
at *18 (Jan. 16, 2013).
19 ANPR, 86 FR at 72901.
20 NPRM, 87 FR at 62746–47.
21 ANPR, 86 FR at 72903–04; see also
NPRM, 87 FR at 62748–49.
22 See AMG Cap. Mgmt., LLC v. FTC, 141
S. Ct. 1341, 1352 (2021).
23 See 15 U.S.C. 57b(a) and (b); see also
NPRM, 87 FR at 62746 (discussing AMG Cap.
Mgmt.).
24 The Commission can recover money for
consumers directly through a federal court
action or obtain civil penalties directly from
a federal court when the Rule has been
violated. Without the Rule, the path to
monetary relief is longer, and requires the
Commission to first issue a final cease-anddesist order—which might not become final
until after the resolution of any resulting
appeal. Then, to recover money for
consumers, the Commission must prove that
the violator engaged in fraudulent or
dishonest conduct in a second action in
federal court. See 15 U.S.C. 57b(a) and (b).
25 See section 5(m)(1)(A) of the FTC Act, 15
U.S.C. 45(m)(1)(A) (providing that violators
of a trade regulation rule ‘‘with actual
knowledge or knowledge fairly implied on
the basis of objective circumstances that such
act is unfair or deceptive and is prohibited
by such rule’’ are liable for civil penalties for
each violation). In addition, any entity or
person who violates such a rule (irrespective
of the state of knowledge) is liable for injury
caused to consumers by the rule violation.
The Commission may pursue such recovery
in a suit for consumer redress under section
19 of the FTC Act, 15 U.S.C. 57b.
26 NPRM, 87 FR at 62749.
27 Id.
28 https://www.regulations.gov/document/
FTC-2021-0077-0001/comment.
29 https://www.regulations.gov/docket/
FTC-2023-0030/comments.
30 NPRM, 87 FR at 62750.
31 Id.
32 Id., Question 3 (Does the proposed rule
contain a collection of information?) and
Question 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?)
33 NPRM, 87 FR at 62750.
34 See, e.g., Anonymous, Cmt. on NPRM
(Nov. 3, 2022), https://www.regulations.gov/
comment/FTC-2022-0064-0011 (describing
impersonation of accounts payable in
medical device industry); Bernadette Padilla,
Cmt. on NPRM (Nov. 8, 2022), https://
www.regulations.gov/comment/FTC-20220064-0014 (describing police impersonation
scam involving stolen PII); Anonymous
Meeting Planner, Cmt. on NPRM (Dec. 6,
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2022), https://www.regulations.gov/
comment/FTC-2022-0064-0030 (describing
attendee list and hotel reservation
impersonation scams); California IT in
Education, Cmt. on NPRM (Nov. 9, 2022),
https://www.regulations.gov/comment/FTC2022-0064-0034 (describing attendee list
impersonation scam); Illinois Landscape
Contractors Association, Cmt. on NPRM (Dec.
12, 2022), https://www.regulations.gov/
comment/FTC-2022-0064-0038 (describing
attendee list and hotel reservation
impersonation scams).
35 See e.g., Salina Maddox, Cmt. on NPRM
(Oct. 22, 2022), https://www.regulations.gov/
comment/FTC-2022-0064-0003 (spam calls);
Tatiana Alvarez, Cmt. on NPRM (Nov. 22,
2022), https://www.regulations.gov/
comment/FTC-2022-0064-0008 (Romanian
mob scam); Tinee Carraker, Cmt. on NPRM
(Nov. 4, 2022), https://www.regulations.gov/
comment/FTC-2022-0064-0012 (foreclosure
scam); Susan Rounsley, Cmt. on NPRM (Nov.
6, 2022), https://www.regulations.gov/
comment/FTC-2022-0064-0013 (violations of
Do Not Call requirements).
36 See, e.g., Suhkvir Singh/Rutgers Law
School Students, Cmt. on NPRM (Nov. 22,
2022), https://www.regulations.gov/
comment/FTC-2022-0064-0019 (‘‘Rutgers
Law Students/Singh Cmt.’’); AIM, the
European Brands Association, Cmt. on NPRM
(Dec. 13, 2022), https://www.regulations.gov/
comment/FTC-2022-0064-0041 (‘‘AIM
Cmt.’’); The Messaging Malware Mobile AntiAbuse Working Group, Cmt. on NPRM (Dec.
15, 2022), https://www.regulations.gov/
comment/FTC-2022-0064-0051 (‘‘M3AAWG
Cmt.’’); The International Trademark
Association, Cmt. on NPRM (Dec. 16, 2022),
https://www.regulations.gov/comment/FTC2022-0064-0054 (‘‘INTA Cmt.’’); Electronic
Privacy Information Center, National
Consumer Law Center, National Consumers
League, Consumer Action, Consumer
Federation of America, National Association
of Consumer Advocates, and U.S. PIRG, Cmt.
on NPRM (Dec. 16, 2022), https://
www.regulations.gov/comment/FTC-20220064-0070 (‘‘EPIC Cmt.’’); Recording Industry
Association of America, Cmt. on NPRM (Dec.
16, 2022), https://www.regulations.gov/
comment/FTC-2022-0064-0064 (‘‘RIAA
Cmt.’’).
37 United States Patent and Trademark
Office, Cmt. on NPRM at 2–3 (Dec. 2, 2022),
https://www.regulations.gov/comment/FTC2022-0064-0026 (‘‘USPTO Cmt.’’); INTA Cmt.
on NPRM; United States Copyright Office,
Cmt. on NPRM (Dec. 16, 2022), https://
www.regulations.gov/comment/FTC-20220064-0067 (‘‘USCO Cmt.’’); The Toy
Association, Inc., Cmt. on NPRM at 2 (Dec.
16, 2022), https://www.regulations.gov/
comment/FTC-2022-0064-0069 (‘‘Toy Cmt.’’);
Cellular Telecommunications and Internet
Association, Cmt. on NPRM (Dec. 16, 2022),
https://www.regulations.gov/comment/FTC2022-0064-0066 (‘‘CTIA Cmt.’’); Marine
Retailers Association of the Americas,
National Marine Manufacturers Association,
National RV Dealers Association, Cmt. on
NPRM (Dec. 19, 2022), https://
www.regulations.gov/comment/FTC-20220064-0076 (‘‘MRAA Cmt.’’).
38 See, e.g., USPTO Cmt. on NPRM at 2–3;
USCO Cmt. on NPRM at 2; Toy Cmt. on
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NPRM at 2; CTIA Cmt. on NPRM at 3; MRAA
Cmt. on NPRM at 4. See also supra, note 25.
39 USPTO Cmt. on NPRM at 2–3.
40 MRAA Cmt. on NPRM at 4.
41 USCO Cmt. on NPRM at 2–3.
42 Id.; USPTO Cmt. on NPRM at 2.
43 CTIA Cmt. on NPRM at 5, 7.
44 Somos, Inc., Cmt. on NPRM at 2–3 (Dec.
16, 2022), https://www.regulations.gov/
comment/FTC-2022-0064-0068 (‘‘Somos
Cmt.’’).
45 In explaining the scope of the proposed
rule, the NPRM provided an illustrative, but
non-exhaustive, list of unlawful conduct that
would be covered by the prohibitions against
impersonating government and businesses.
NPRM, 87 FR at 62746–47. That list merely
provides examples as it would be
impracticable to list all possible violative
conduct.
46 16 CFR 310.4(a)(8).
47 USTelecom Cmt. on NPRM at 2;
M3AAWG Cmt. on NPRM at 3–4; RIAA Cmt.
on NPRM at 3; Anti-Phishing Working
Group, Cmt. on NPRM at 1–2 (Dec. 16, 2022),
https://www.regulations.gov/comment/FTC2022-0064-0073 (‘‘APWG Cmt.’’), https://
www.regulations.gov/comment/FTC-20220064-0073 (‘‘APWG Cmt.’’); Coalition for
Online Accountability, Cmt. on NPRM at 1–
3 (Dec. 16, 2022), https://
www.regulations.gov/comment/FTC-20220064-0074 (‘‘COA Cmt.’’); INTA Cmt. on
NPRM at 8–10; Coalition for a Secure &
Transparent Internet, Cmt. on NPRM at 1
(Dec. 16, 2022), https://www.regulations.gov/
comment/FTC-2022-0064-0065 (‘‘CSTI
Cmt.’’).
48 Id.
49 M3AAWG Cmt. on NPRM at 3–4; RIAA
Cmt. on NPRM at 3–4; AIM Cmt. on NPRM
at 1; COA Cmt. on NPRM at 1–3; INTA Cmt.
on NPRM at 8–10.
50 COA Cmt. on NPRM at 2.
51 M3AAWG Cmt. on NPRM at 3–4; APWG
Cmt. on NPRM at 1–2; see also APWG, Cmt.
on Informal Hearing at 1–2 (Apr. 14, 2023),
https://www.regulations.gov/comment/FTC2023-0030-0027 (‘‘APWG IH Cmt.’’).
52 See NPRM, 87 FR at 62746–47. The
example of voice cloning—a relatively new
technology—emphasizes the need for an
illustrative, but non-exhaustive, list of
unlawful conduct. Audio deepfakes,
including voice cloning, are generated,
edited, or synthesized by artificial
intelligence, or ‘‘AI,’’ to create fake audio that
seems real. See Khanjani, et. al., How Deep
are the Fakes? Focusing on Audio Deepfake:
A Survey, available at https://arxiv.org/ftp/
arxiv/papers/2111/2111.14203.pdf.
53 Americans for Prosperity Foundation,
Cmt. on NPRM at 1–2 (Dec. 16, 2022), https://
www.regulations.gov/comment/FTC-20220064-0062 (‘‘AFPF Cmt.’’).
54 Id. at 1.
55 Public Law 93–637, 88 Stat. 2183 (1975).
56 ANPR, 86 FR at 72904.
57 Id.
58 NPRM, 87 FR at 62750, Question 2.
59 USPTO Cmt. on NPRM at 3–9;
M3AAWG Cmt. on NPRM at 6–9; INTA Cmt.
on NPRM at 3–5; Toy Cmt. on NPRM at 3–
5; USCO Cmt. on NPRM at 3–7; MRAA Cmt.
on NPRM at 2–4.
60 USPTO Cmt. on NPRM at 3–9;
M3AAWG Cmt. on NPRM at 6–9; INTA Cmt.
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on NPRM at 3–5; Toy Cmt. on NPRM at 3–
5; USCO Cmt. on NPRM at 3–7; MRAA Cmt.
on NPRM at 2–4.
61 Toy Cmt. on NPRM at 3–5.
62 USPTO Cmt. on NPRM at 3–9; USCO
Cmt. on NPRM at 3–4;
63 INTA Cmt. on NPRM at 3; M3AAWG
Cmt. on NPRM at 7.
64 M3AAWG Cmt. on NPRM at 9.
65 Id.
66 Id.
67 NPRM, 87 FR at 62750, Question 5.
68 USCO Cmt. on NPRM at 8; USPTO Cmt.
on NPRM at 10; INTA Cmt. on NPRM at 6–
7; M3AAWG Cmt. on NPRM at 9; MacLeod
Cmt. on NPRM at 1–2; AFPF Cmt. on NPRM
at 3–6.
69 NetChoice Cmt. on NPRM at 2; Toy Cmt.
on NPRM at 2; ZoomInfo Technologies LLC,
Cmt. on NPRM at 1–2 (Dec. 16, 2022), https://
www.regulations.gov/comment/FTC-20220064-0079 (‘‘Zoom NPRM Cmt.’’).
70 USCO Cmt. on NPRM at 8; USPTO Cmt.
on NPRM at 10.
71 USCO Cmt. on NPRM at 8.
72 USPTO Cmt. on NPRM at 10.
73 Id. at 9–10.
74 MacLeod Cmt. on NPRM at 2; AFPF Cmt.
on NPRM at 3; M3AAWG Cmt. on NPRM at
9.
75 M3AAWG Cmt. on NPRM at 2;
NetChoice Cmt. on NPRM at 2; Toy Cmt. on
NPRM at 2; AFPF Cmt. on NPRM at 2, 4;
Zoom Cmt. on NPRM at 1; INTA Cmt. on
NPRM at 5–6; William MacLeod, Cmt. on
Informal Hearing at 5–7 (Apr. 14, 2023),
https://www.regulations.gov/comment/FTC2023-0030-0019 (‘‘MacLeod IH Cmt.’’).
76 AFPF Cmt. on NPRM at 2, 4; see also
MacLeod IH Cmt. at 2.
77 AFPF Cmt. on NPRM at 3, 4. M3AAWG
Cmt. on NPRM at 2; NetChoice Cmt. on
NPRM at 2; INTA Cmt. on NPRM at 5–6; Toy
Cmt. on NPRM at 2; Zoom Cmt. on NPRM at
1; MacLeod IH Cmt. at 5–7.
78 AFPF Cmt. on NPRM at 2, 6.
79 NetChoice Cmt. on NPRM at 2;
M3AAWG Cmt. on NPRM at 3.
80 AFPF Cmt. on NPRM at 4; INTA Cmt. on
NPRM at 5–6; Toy Cmt. on NPRM at 2; Zoom
Cmt. on NPRM at 1; MacLeod IH Cmt. at 5.
81 MacLeod IH Cmt. at 1; see also MacLeod
Cmt. on NPRM at 1.
82 MacLeod IH Cmt. at 2.
83 Id. at 3.
84 Id. at 3.
85 AFPF Cmt. on NPRM at 3–4.
86 Id. at 3, 5–6.
87 M3AAWG Cmt. on NPRM at 9.
88 Id. at 1, 5.
89 AFPF Cmt. on NPRM at 5.
90 See 15 U.S.C. 45(m)(1)(A).
91 See Cent. Hudson Gas & Elec. Corp. v.
Pub. Serv. Comm’n of N.Y., 447 U.S. 557,
563–64 (1980) (‘‘[T]here can be no
constitutional objection to the suppression of
commercial messages that do not accurately
inform the public about lawful activity. The
government may ban forms of
communication more likely to deceive the
public than to inform it, or commercial
speech related to illegal activity.’’) (citations
omitted); see also Zauderer v. Office of
Disciplinary Counsel, 471 U.S. 626, 638
(1985) (holding it is ‘‘well settled’’ that ‘‘[t]he
States and the Federal Government are free
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to prevent the dissemination of commercial
speech that is false, deceptive, or
misleading’’).
92 USPTO Cmt. on NPRM; Anonymous,
Cmt. on NPRM (Dec. 9, 2022), https://
www.regulations.gov/comment/FTC-20220064-0033 (‘‘0033 Cmt.’’); AIM Cmt. on
NPRM; Erik M. Pelton & Associates, PLLC,
Cmt. on NPRM (Dec. 14, 2022), https://
www.regulations.gov/comment/FTC-20220064-0045; NetChoice Cmt. on NPRM;
M3AAWG Cmt. on NPRM; Consumer
Technology Association, Cmt. on NPRM
(Dec. 16, 2022), https://www.regulations.gov/
comment/FTC-2022-0064-0073 (‘‘CTA
Cmt.’’); NCTA—The internet and Television
Association, Cmt. on NPRM (Dec. 16, 2022),
https://www.regulations.gov/comment/FTC2022-0064-0071 (‘‘NCTA Cmt.’’); ASAE Cmt.
on NPRM; INTA Cmt. on NPRM; Somos Cmt.
on NPRM; CTIA Cmt. on NPRM; USCO Cmt.
on NPRM; USTelecom Cmt. on NPRM;
American Society of Association Executives,
Center for Exhibition Industry Research
Destinations International, Exhibition
Services & Contractors Association,
Exhibitions & Conferences Alliance,
Experiential Designers + Producers
Association, International Association of
Exhibitions & Events, International
Association of Venue Managers, PCMA,
Society of Independent Show Organizers,
UFI, Cmt. on NPRM (Dec 16, 2022), https://
www.regulations.gov/comment/FTC-20220064-0060 (‘‘ECA Cmt.’’); RIAA Cmt. on
NPRM; American Bar Association Section of
Intellectual Property Law, Cmt. on NPRM at
3 (Dec. 16, 2022), https://
www.regulations.gov/comment/FTC-20220064-0061 (‘‘ABA–IPL Cmt.’’); AFPF Cmt. on
NPRM; Zoom Cmt. on NPRM; American
Bankers Association, ACA International,
American Association of Healthcare
Administrative Management, Credit Union
National Association, Mortgage Bankers
Association National Association of
Federally-Insured Credit Unions (the
Associations), Cmt. on NPRM (Dec. 16, 2022),
https://www.regulations.gov/comment/FTC2022-0064-0080 (‘‘Assocns. Cmt.’’); COA
Cmt. on NPRM; MacLeod Cmt. on NPRM;
Brown Cmt. on NPRM.
93 A copy of the transcript of the May 4,
2023 Informal Hearing is available at https://
www.ftc.gov/system/files/ftc_gov/pdf/
impersonationruleinformalhearing
transcript.pdf. References to the transcript
from the May 4, 2023 Informal Hearing are
cited herein as: Name of commenter, May
2023 Tr at page no. (e.g., Doe, May 2023 Tr
at #); see CTA, May 2023 Tr at 16; MacLeod,
May 2023 Tr at 27; USTelecom, May 2023 Tr
at 30; Chilson, May 2023 Tr at 34; VON, May
2023 Tr at 36; American Bankers Association
(ABA), May 2023 Tr at 39–40; INCOMPAS,
May 2023 Tr at 42, 44; NCTA, May 2023 Tr
at 51–52.
94 USPTO Cmt. on NPRM at 10; USCO Cmt.
on NPRM at 8; RIAA Cmt. on NPRM at 3;
ABA, May 2023 Tr at 39–40.
95 USPTO Cmt. on NPRM at 10; USCO Cmt.
on NPRM at 8; RIAA Cmt. on NPRM at 3;
ABA, May 2023 Tr at 39–40.
96 AFPF Cmt. on NPRM at 3–5; MacLeod
IH Cmt. at 6–7; McLeod, May 2023 Tr at 27.
97 0033 Cmt. on NPRM; ABA–IPL Cmt. on
NPRM at 2; Zoom Cmt. on NPRM at 1.
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98 ABA–IPL Cmt. on NPRM at 1–2;
NetChoice Cmt. on NPRM at 2; USTelecom
Cmt. on NPRM at 2; see also CTA, May 2023
Tr at 16; VON, May 2023 Tr at 36; ABA, May
2023 Tr at 39–40; INCOMPAS, May 2023 Tr
at 42.
99 NetChoice Cmt. on NPRM at 2; CTA
Cmt. on NPRM; American Society of
Association Executives, Cmt. on NPRM at 1
(Dec. 16, 2022), https://www.regulations.gov/
comment/FTC-2022-0064-0057 (‘‘ASAE
Cmt.’’); INTA Cmt. on NPRM; Somos Cmt. on
NPRM; CTIA Cmt. on NPRM at 7; USTelecom
Cmt. on NPRM at 2; ECA Cmt. on NPRM at
3; ABA–IPL Cmt. on NPRM at 3; Zoom Cmt.
on NPRM at 2; Cmt. on NPRM at 3; see also
CTA, May 2023 Tr at 16; MacLeod, May 2023
Tr at 27; USTelecom, May 2023 Tr at 30;
Chilson, May 2023 Tr at 34; VON, May 2023
Tr at 36; INCOMPAS, May 2023 Tr at 42, 44;
NCTA, May 2023 Tr at 51–52.
100 CTA Cmt. on NPRM at 7.
101 USTelecom Cmt. on NPRM at 2.
102 ABA–IPL Cmt. on NPRM at 3.
103 NCTA Cmt. on NPRM at 2.
104 M3AAWG Cmt. on NPRM at 10.
105 Brown Cmt. on NPRM at 8.
106 M3AAWG Cmt. on NPRM at 3.
107 COA Cmt. on NPRM at 3; M3AAWG
Cmt. on NPRM at 4–5. ‘‘WHOIS data’’ is a
commonly used internet record listing that
identifies who owns a domain and how to get
in contact with them.
108 See, e.g., Compl. at 3–5 & Ex. H, FTC
v. Moore, No. 5:18–cv–01960 (C.D. Cal. filed
Sept. 13, 2018) (alleging that a seller of
variety of fake but genuine-looking financial
documents provided to others the means and
instrumentalities with which to make
misrepresentations regarding a person’s
identity).
109 NPRM, 87 FR at 62746.
110 Id. at 62751; see also 15 U.S.C. 44.
111 NPRM, 87 FR at 62747.
112 Id. at 62750.
113 Minnesota Nursery & Landscape
Association, Cmt. on NPRM at 2 (Dec. 2,
2022), https://www.regulations.gov/
comment/FTC-2022-0064-0027; Louise
Nemmers, Cmt. on NPRM (Dec. 5, 2022),
https://www.regulations.gov/comment/FTC2022-0064-0028; California Landscape
Contractors Association, Cmt. on NPRM (Dec.
6, 2022), https://www.regulations.gov/
comment/FTC-2022-0064-0029; Outdoor
Power Equipment Institute, Cmt. on NPRM at
2 (Dec. 7, 2022), https://www.regulations.gov/
comment/FTC-2022-0064-0032; AIM Cmt. on
NPRM at 2; AARP, Cmt. on NPRM (Dec. 14,
2022), https://www.regulations.gov/
comment/FTC-2022-0064-0043 (‘‘AARP
Cmt.’’); Minnesota Municipal Utilities
Association, Cmt. on NPRM (Dec. 14, 2022),
https://www.regulations.gov/comment/FTC2022-0064-0048; M3AAWG Cmt. on NPRM at
10; CTA Cmt. on NPRM; ASAE Cmt. on
NPRM; INTA Cmt. on NPRM; Toy Cmt. on
NPRM at 6; RIAA Cmt. on NPRM at 2;
National Association of Broadcasters, Cmt.
on NPRM (Dec. 19, 2022), https://
www.regulations.gov/comment/FTC-20220064-0075; MRAA Cmt. on NPRM at 4.
114 See, e.g., Toy Cmt. on NPRM at 6;
MRAA Cmt. on NPRM at 4; AARP Cmt. at 2;
CTA Cmt. on NPRM at 1; ASAE Cmt. on
NPRM; RIAA Cmt. on NPRM at 1; INTA Cmt.
on NPRM at 2.
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115 AIM Cmt. on NPRM at 2; M3AAWG
Cmt. on NPRM at 10; CTA Cmt. on NPRM at
1.
116 Toy Cmt. on NPRM at 6; INTA Cmt. on
NPRM at 6.
117 Toy Cmt. on NPRM at 6; RIAA Cmt. on
NPRM at 3.
118 INTA Cmt. on NPRM at 6; Toy Cmt. on
NPRM at 6.
119 NPRM, 87 FR at 62750.
120 Rutgers Law Students/Singh Cmt. on
NPRM; AIM Cmt. on NPRM; AARP Cmt. on
NPRM; NCTA Cmt. on NPRM; EPIC Cmt. on
NPRM; RIAA Cmt. on NPRM.
121 AIM Cmt. on NPRM at 2; Rutgers Law
Students/Singh Cmt. on NPRM at 1.
122 Rutgers Law Students/Singh Cmt. on
NPRM at 1–2; AARP Cmt. on NPRM at 2;
EPIC Cmt. on NPRM at 5.
123 Rutgers Law Students/Singh Cmt. on
NPRM at 1–2.
124 Rutgers Law Students/Singh Cmt. on
NPRM at 2–4; AARP Cmt. on NPRM at 1–2;
EPIC Cmt. on NPRM at 4–5.
125 AARP Cmt. on NPRM at 2.
126 EPIC Cmt. on NPRM at 5.
127 NCTA Cmt. on NPRM at 3, 8.
128 Id.
129 RIAA Cmt. on NPRM at 3.
130 Id. at 2.
131 Rutgers Law Students/Singh Cmt. on
NPRM at 2.
132 Id.
133 Id. at 3.
134 Id.
135 Id. at 3–4.
136 Id.; NCTA Cmt. on NPRM at 8, n. 16.
137 The Commission also is exploring other
tools to address the fake endorsement
concerns raised by the RIAA and Rutgers
Law School Students. Specifically, in the
Commission’s proposed Rule on the Use of
Consumer Reviews and Testimonials, § 465.2
would prohibit businesses from purchasing a
consumer review, or from disseminating or
causing the dissemination of a consumer
testimonial or celebrity testimonial when the
business knew or should have known it was
false or fake. See Fed. Trade Comm’n, Notice
of Proposed Rulemaking: Trade Regulation
Rule on the Use of Consumer Reviews and
Testimonials, 88 FR 49364, 49391 (Jul. 31,
2023), https://www.federalregister.gov/
documents/2023/07/31/2023-15581/traderegulation-rule-on-the-use-of-consumerreviews-and-testimonials#sectno-reference465.2.
138 USTelecom Cmt. on NPRM at 2;
M3AAWG Cmt. on NPRM at 3–4; RIAA Cmt.
on NPRM at 3; APWG Cmt. on NPRM; COA
Cmt. on NPRM at 1–3; INTA Cmt. on NPRM
at 8–10; CSTI Cmt. on NPRM at 1.
139 Id.
140 M3AAWG Cmt. on NPRM at 3–4; RIAA
Cmt. on NPRM at 3–4; AIM Cmt. on NPRM
at 1; COA Cmt. on NPRM at 1–3; INTA Cmt.
on NPRM at 8–10.
141 COA Cmt. on NPRM at 2.
142 M3AAWG Cmt. on NPRM at 3–4;
APWG Cmt. on NPRM at 1–2; see also
APWG, Cmt. on Informal Hearing at 1–2
(Apr. 14, 2023), https://www.regulations.gov/
comment/FTC-2023-0030-0027 (‘‘APWG IH
Cmt.’’).
143 See also supra, note 52.
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144 Toy Cmt. on NPRM at 2; M3AAWG
Cmt. on NPRM at 2; ABA–IPL Cmt. on NPRM
at 3; INTA Cmt. on NPRM at 2.
145 ABA–IPL Cmt. on NPRM at 3.
146 Toy Cmt. on NPRM at 2; M3AAWG
Cmt. on NPRM at 2; INTA Cmt. on NPRM at
2.
147 INTA Cmt. on NPRM at 6–7.
148 NPRM, 87 FR at 62750.
149 See 15 U.S.C. 57b–3(b)(2).
150 15 U.S.C. 57b–3(b)(2)(A).
151 See 5 U.S.C. 603–605; see also section
22(b) of the FTC Act, 15 U.S.C. 57b–3(b).
152 NPRM, 87 FR at 62749–50; see also 5
U.S.C. 603.
153 NPRM, 87 FR at 62750.
154 NPRM, 87 FR at 62749.
155 See 15 U.S.C. 57b–3(b)(3)(A)(ii) (‘‘In
order to avoid duplication or waste, the
Commission is authorized to . . . whenever
appropriate, incorporate any data or analysis
contained in a regulatory analysis issued
under this subsection in the statement of
basis and purpose.’’).
156 NPRM, 87 FR at 62749–50.
157 See ANPR, 86 FR at 72901 & n.24
(discussing AMG Cap. Mgmt.); NPRM, 87 FR
at 62746 (same).
158 See ANPR, 86 FR at 72901 & n.24;
NPRM, 87 FR at 62746; see also 15 U.S.C.
57b(a) and (b).
159 See 15 U.S.C. 45(m)(1)(A).
160 NPRM, 87 FR at 62750.
161 Only one commenter suggested an
alternative to regulation, which the
Commission declines to adopt for the reasons
previously stated in Section III.B.
162 See supra note 161.
163 Toy Cmt. on NPRM at 5–6; MRAA Cmt.
on NPRM at 4.
164 Robert Kamerschen, Cmt. on NPRM at
2 (Nov. 30, 2022), https://
www.regulations.gov/comment/FTC-20220064-0023.
165 See NPRM, 87 FR at 62750.
166 NPRM, 87 FR at 62748.
167 Id.
168 See Fed. Trade Comm’n, Explore
Government Imposter Scams, TABLEAU
PUBLIC, https://public.tableau.com/app/
profile/federal.trade.commission/viz/
FraudReports/SubcategoriesOverTime (last
visited December 21, 2023).
169 Id.
170 See 15 U.S.C. Secs. 45(m)(1)(A) and
57b.
171 See Toy Cmt. on NPRM at 5–6; MRAA
Cmt. on NPRM at 4; see also NPRM, 87 FR
at 62749.
172 NPRM, 87 FR at 62750.
173 See, e.g., TSR, 16 CFR 310.3(a)(2)(vii);
R-Value Rule, 16 CFR 460.21; Regulation O
(Mortgage Assistance Relief Services), 12 CFR
1015.3(b)(3).
174 5 U.S.C. 551 et seq.; 16 CFR 1.7 through
1.20.
List of Subjects in 16 CFR Part 461
Consumer protection, Impersonation,
Trade Practices.
For the reasons set forth above, the
Federal Trade Commission amends 16
CFR Chapter I by adding part 461 to
read as follows:
■
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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.
Authority: 15 U.S.C. 41 through 58.
§ 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.
Materially means likely to affect a
person’s choice of, or conduct regarding,
goods or services.
Officer includes executives, officials,
employees, and agents.
§ 461.2 Impersonation of Government
Prohibited.
It is a violation of this part, and an
unfair or deceptive act or practice to:
(a) materially and falsely pose as,
directly or by implication, a government
entity or officer thereof, in or affecting
commerce as commerce is defined in
the Federal Trade Commission Act (15
U.S.C. 44); or
(b) materially misrepresent, directly
or by implication, affiliation with,
including endorsement or sponsorship
by, a government entity or officer
thereof, in or affecting commerce as
commerce is defined in the Federal
Trade Commission Act (15 U.S.C. 44).
§ 461.3 Impersonation of Businesses
Prohibited.
It is a violation of this part, and an
unfair or deceptive act or practice to:
(a) materially and falsely pose as,
directly or by implication, a business or
officer thereof, in or affecting commerce
as commerce is defined in the Federal
Trade Commission Act (15 U.S.C. 44); or
(b) materially misrepresent, directly
or by implication, affiliation with,
including endorsement or sponsorship
by, a business or officer thereof, in or
affecting commerce as commerce is
defined in the Federal Trade
Commission Act (15 U.S.C. 44).
By direction of the Commission.
April J. Tabor,
Secretary.
Note: The following statement will not
appear in the Code of Federal Regulations.
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Statement of Chair Lina M. Khan Joined
by Commissioner Rebecca Kelly
Slaughter and Commissioner Alvaro M.
Bedoya
Today the Federal Trade Commission
finalizes its rule prohibiting government
and business impersonation schemes
and issues a supplemental notice of
proposed rulemaking to extend this
prohibition to impersonation of
individuals. This final rule marks the
first time since 1980 that the
Commission has finalized a brand-new
trade regulation rule prohibiting an
unfair or deceptive practice.
Impersonation schemes cheat
Americans out of billions of dollars
every year. Fraudsters pretending to
represent government agencies—like the
Social Security Administration or the
IRS—tell targets that if they do not hand
over money or their sensitive personal
information, then they could lose a
government benefit, face a tax liability,
or even be arrested. Scammers also
commonly claim false affiliations with
household brand names to bilk
consumers for bogus services. This
category of fraud skyrocketed during the
coronavirus pandemic—with imposters
scamming Americans out of reported $2
billion between October 2020 and
September 2021, an 85 percent increase
year-over-year.1 Losses remain high:
FTC data show that in 2023 consumers
reported losing $2.7 billion to reported
imposter scams.2 Impersonation fraud
has remained one of the largest sources
of total reported consumer financial
losses for several years.3
Public comments submitted to the
Commission provide a snapshot of how
impersonation frauds can devastate:
• One commenter reported on how a
friend was scammed by someone
claiming that they were with Publisher’s
Clearing House and that she had won a
sweepstakes. Her friend was scammed
out of a total of $367,000: ‘‘She used all
of her savings . . . to help her
grandchildren go to college and wiped
out her IRA and now is left to pay the
1 Fed. Trade Comm’n, Fraud Reports: Trends
Over Time (2021), https://public.tableau.com/app/
profile/federal.trade.commission/viz/FraudReports/
FraudFacts.
2 Fed. Trade Comm’n, Consumer Sentinel
Network Data Book 2023 (2024), https://
www.ftc.gov/reports/consumer-sentinel-networkdata-book-2023.
3 Fed. Trade Comm’n, Fraud Reports: Top
Reports, Tableau Public (last accessed Feb. 8, 2024),
https://public.tableau.com/app/profile/
federal.trade.commission/viz/FraudReports/
TopReports; see also Fed. Trade Comm’n,
Consumer Sentinel Network Data Book 2020 (2021)
at 4–8, https://www.ftc.gov/system/files/documents/
reports/consumer-sentinel-network-databook-2020/
csn_annual_data_book_2020.pdf; see also,
Consumer Sentinel Network Data Book 2023, supra
note 2.
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penalties for depleting it. This woman is
now, at age 70, in a position of living
only on her social security and has to
try to find work. . . .’’ 4
• Another commenter received a call
from someone claiming to be with the
U.S. Treasury Department, who asserted
that her social security number had
been compromised. This person lost all
her money: ‘‘That money is from my
mother’s life insurance policy who
passed in 2019. My father needs that
money to survive. I am devastated.’’ 5
• A third commenter spoke of her
mother being scammed by someone
pretending to be with a government
agency: ‘‘Before we, her family, realized
the extent to which the imposters
preyed upon her, she had divulged
identity and banking information.’’ 6
The rise of generative AI technologies
risks making these problems worse by
turbocharging scammers’ ability to
defraud the public in new, more
personalized ways. For example, the
proliferation of AI chatbots gives
scammers the ability to generate spearphishing emails using individuals’
social media posts and to instruct bots
to use words and phrases targeted at
specific groups and communities.7 AIenabled voice cloning fraud is also on
the rise, where scammers use voicecloning tools to impersonate the voice of
a loved one seeking money in distress
or a celebrity peddling fake goods.8
Scammers can use these technologies to
disseminate fraud more cheaply, more
precisely, and on a much wider scale
than ever before.
In its supplemental NPRM, the
Commission proposes to expand the
rule’s prohibitions to also cover
impersonation of individuals. If
adopted, this additional protection will
equip enforcers to seek civil penalties
and redress when fraudsters
4 Comment Submitted by Anonymous, FTC Seek
Comments on Advanced Notice of Proposed Rule;
Impersonation ANPR, Regulations.gov (Feb. 22,
2022), https://www.regulations.gov/comment/FTC2021-0077-0131.
5 Comment Submitted by Jamila Sherman, FTC
Seek Comments on Advanced Notice of Proposed
Rule; Impersonation ANPR, Regulations.gov (Feb.
22, 2022), https://www.regulations.gov/comment/
FTC-2021-0077-0127.
6 Comment Submitted by Susan Frost, FTC Seek
Comments on Advanced Notice of Proposed Rule;
Impersonation ANPR, Regulations.gov (Feb. 16,
2022), https://www.regulations.gov/comment/FTC2021-0077-0031.
7 Bob Violino, AI Tools Such As ChatGPT Are
Generating A Mammoth Increase In Malicious
Phishing Emails, CNBC (Nov. 28, 2023), https://
www.cnbc.com/2023/11/28/ai-like-chatgpt-iscreating-huge-increase-in-malicious-phishingemail.html.
8 Eric Revell, AI Voice Cloning Scams On The
Rise, Expert Warns, Fox Business (Sept. 23, 2023),
https://www.foxbusiness.com/technology/ai-voicecloning-scams-on-rise-expert-warns.
VerDate Sep<11>2014
16:31 Feb 29, 2024
Jkt 262001
impersonate individual people, not just
government or business entities. Given
the proliferation of AI-enabled fraud,
this additional protection seems
especially critical. Notably, the
supplemental proposal also
recommends extending liability to any
actor that provides the ‘‘means and
instrumentalities’’ to commit an
impersonation scam. Under this
approach, liability would apply, for
example, to a developer who knew or
should have known that their AI
software tool designed to generate
deepfakes of IRS officials would be used
by scammers to deceive people about
whether they paid their taxes. Ensuring
that the upstream actors best positioned
to halt unlawful use of their tools are
not shielded from liability will help
align responsibility with capability and
control.
By unlocking civil penalties and
redress, the final rule, along with the
proposed supplemental provisions, will
promote both more efficient
enforcement and greater deterrence. In
2020, the Supreme Court held that the
Commission cannot rely on Section
13(b) of the FTC Act to get money back
to defrauded consumers,9 so
rulemakings—while not a substitute for
a legislative fix—can help ensure that
lawbreakers do not profit from their
lawbreaking and that wronged
consumers can be made whole.
This rule marks the agency’s first
brand-new Section 18 rulemaking since
1980. Although the authority to issue
rules is clearly laid out in the FTC Act,
bureaucratic red tape presented an
obstacle to the agency’s exercise of this
important statutory authority. Thanks to
efforts initiated under Commissioner
Slaughter’s leadership to align the
procedural requirements for Section 18
rulemaking with the FTC Act’s statutory
text, Section 18 rulemakings can now
proceed more efficiently.10 This effort
took two years from proposal to final
rule, finally putting lie to the old idea
that this must be an impossibly long
process.
Many thanks to the FTC team for their
swift work and dedication. This rule
banning government and business
impersonation will allow us to more
vigorously and effectively protect
Americans from fraudsters. And we are
eager for public input on the
supplemental NPRM that would extend
9 AMG
Cap. Mgmt., LLC v. FTC, 593 U.S. (2021).
Release, Fed. Trade Comm’n, FTC Votes
to Update Rulemaking Procedures, Sets Stage for
Stronger Deterrence of Corporate Misconduct (July
1, 2021), https://www.ftc.gov/news-events/news/
press-releases/2021/07/ftc-votes-updaterulemaking-procedures-sets-stage-strongerdeterrence-corporate-misconduct.
10 Press
PO 00000
Frm 00021
Fmt 4700
Sfmt 4700
15031
this rule to cover impersonation of
individuals. With the rapid rise of voice
cloning fraud and other AI-based scams,
additional protection for consumers
seems especially critical. As these
technologies enable more sophisticated
and innovative forms of fraud, we will
continue to ensure the Commission is
activating all the tools Congress has
given us and faithfully executing on our
statutory mandate.
[FR Doc. 2024–04335 Filed 2–29–24; 8:45 am]
BILLING CODE 6750–01–P
ENVIRONMENTAL PROTECTION
AGENCY
40 CFR Part 52
[EPA–R06–OAR–2022–0279; FRL–10675–
02–R6]
Air Plan Approval; Oklahoma; Updates
to the State Implementation Plan
Incorporation by Reference Provisions
Environmental Protection
Agency (EPA).
ACTION: Final rule.
AGENCY:
Pursuant to the Federal Clean
Air Act (CAA or the Act), the
Environmental Protection Agency (EPA)
is approving revisions to the Oklahoma
State Implementation Plan (SIP)
submitted by the State of Oklahoma
designee on December 17, 2021, and
January 20, 2023. This action addresses
the submittal of revisions to the
Oklahoma SIP to update the
incorporation by reference provision of
Federal requirements under Oklahoma
Administrative Code (OAC).
DATES: This rule is effective April 1,
2024.
SUMMARY:
The EPA has established a
docket for this action under Docket ID
No. EPA–R06–OAR–2022–0279. All
documents in the docket are listed on
the https://www.regulations.gov
website. Although listed in the index,
some information is not publicly
available, e.g., Confidential Business
Information or other information whose
disclosure is restricted by statute.
Certain other material, such as
copyrighted material, is not placed on
the internet. Publicly available docket
materials are available electronically
through https://www.regulations.gov.
FOR FURTHER INFORMATION CONTACT:
Adina Wiley, EPA Region 6 Office, Air
Permits Section, 214–665–2115,
wiley.adina@epa.gov. Please call or
email the contact listed above if you
need alternative access to material
indexed but not provided in the docket.
ADDRESSES:
E:\FR\FM\01MRR1.SGM
01MRR1
Agencies
[Federal Register Volume 89, Number 42 (Friday, March 1, 2024)]
[Rules and Regulations]
[Pages 15017-15031]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-04335]
=======================================================================
-----------------------------------------------------------------------
FEDERAL TRADE COMMISSION
16 CFR Part 461
RIN 3084-AB71
Trade Regulation Rule on Impersonation of Government and
Businesses
AGENCY: Federal Trade Commission.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule prohibits the impersonation of government,
businesses, and their officials or agents in interstate commerce. This
document contains the text of the final rule and the rule's Statement
of Basis and Purpose (``SBP''), including a Regulatory Analysis.
DATES: This rule is effective April 1, 2024.
FOR FURTHER INFORMATION CONTACT: Christopher E. Brown (202-326-2825),
Attorney, Division of Marketing Practices, Bureau of Consumer
Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW,
Washington, DC 20580.
SUPPLEMENTARY INFORMATION:
I. Background
A. Advance Notice of Proposed Rulemaking
On December 23, 2021, the Federal Trade Commission (``Commission''
or ``FTC'') published an advance notice of proposed rulemaking
(``ANPR'') to address certain deceptive or unfair acts or practices of
impersonation.\1\ As part of the ANPR, the Commission requested comment
on any issues or concerns relevant or appropriate to this rulemaking to
combat impersonation of governments, businesses, or their agents, and
whether and how to proceed with a notice of proposed rulemaking
(``NPRM'').\2\ The Commission took comments for 60 days, and received
164 comments from representatives from a broad spectrum of businesses,
trade associations, government or law-enforcement organizations, and
individual consumers, which are publicly available on this rulemaking's
docket at https://www.regulations.gov/docket/FTC-2021-0077/comments.
Commenters generally expressed support for the Commission's proceeding
with the rulemaking. They also voiced deep concerns about the
prevalence and harmfulness of both government and business
impersonation. No commenter expressed the view that the Commission
should not commence the rulemaking. Commenters also offered suggestions
for the Commission's consideration in drafting the proposed rule and
other recommendations in furtherance of the proposed rulemaking.
B. Notice of Proposed Rulemaking
Based on an extensive review of the comments received in response
to the ANPR, the Commission's own history of enforcement, and other
considerations that occurred after the ANPR's publication,\3\ the
Commission published the NPRM on October 17, 2022.\4\ In the
[[Page 15018]]
NPRM, the Commission stated it has reason to believe impersonation of
government, businesses, and their officials or agents is prevalent.\5\
The Commission identified no disputed issues of material fact based on
the comment record; explained its considerations in developing the
proposed rule; solicited additional public comment thereon, including
posing specific questions designed to assist the public in submitting
comment; and provided interested parties the opportunity to request to
present their position orally at an informal hearing.\6\ Finally, the
NPRM set out the Commission's proposed rule.
In response to the NPRM, the Commission received 78 comments from
entities and individuals interested in the proposed rule, discussed in
Section III.\7\ Although some raised concerns and recommended specific
modifications or additions to the Commission's proposal, the majority
generally supported the rule proposed in the NPRM. Two commenters
timely submitted requests for interested parties to make an oral
statement at an informal hearing.\8\
C. Notice of Informal Public Hearing
On March 30, 2023, the Commission published an Initial Notice of
Informal Hearing (``Notice of Hearing'').\9\ The Notice designated the
Commission's Chief Administrative Law Judge, D. Michael Chappell, to
serve as the presiding officer of the informal hearing and stated that
any member of the public wishing to speak at the informal hearing or
make a documentary submission to be placed on the public rulemaking
record (or both) should submit a comment on or before April 14,
2023.\10\
On May 4, 2023, Chief Judge Chappell presided over the informal
hearing using video conferencing, which enabled the public to watch
live from the Commission's website, https://www.ftc.gov. Because there
were no disputed issues of material fact to resolve, the informal
hearing included no cross examination or rebuttal submissions, and the
presiding officer made no recommended decision. The informal hearing
included oral statements from 14 interested parties.\11\ The majority
of commenters who presented oral statements at the informal hearing or
filed documentary submissions generally expressed strong support for
the Commission's proposed rule.\12\ Several commenters, however, also
expressed concern that the proposed rule language does not explain the
circumstances under which the Commission would apply proposed Sec.
461.4, which would prohibit providing the means and instrumentalities
to commit violations of government and business impersonation. Some
suggested alternative language imposing a scienter requirement to
narrow the scope of this provision, discussed in Section III.D.
In crafting the final rule, the Commission has carefully considered
the comments received in response to the NPRM and on the rulemaking
record, which includes the oral statements and documentary submissions
in response to the Notice of Hearing. The final rule contains some
changes from the proposed rule. These modifications, discussed in
detail in Section III, are based upon input from commenters and careful
consideration of relevant law. Section III also discusses commenters'
recommendations that the Commission declined to adopt, along with the
Commission's reasons for rejecting them. Accordingly, the Commission
adopts the proposed rule with limited modifications as discussed below.
The rule will take effect April 1, 2024.
II. The Legal Standard for Promulgating the Rule
The Commission is promulgating 16 CFR part 461 pursuant to section
18 of the FTC Act, 15 U.S.C. 57a, the Administrative Procedure Act
(``APA''), and Part 1, subpart B of the Commission's Rules of
Practice.\13\ This authority permits the Commission to promulgate,
modify, and 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 Commission's Rules of Practice further provide that if the
Commission determines to promulgate a rule, it will adopt a SBP, which
must address three factors: (1) The prevalence of the acts or practices
addressed by the rule; (2) the manner and context in which the acts or
practices are unfair or deceptive; and (3) the economic effect of the
rule, taking into account the effect on small businesses and
consumers.\14\ In this section of the preamble, the Commission
summarizes its findings regarding each of these factors.
A. Prevalence of Acts or Practices Addressed by the Rule
In its ANPR, the Commission cited public data from the Consumer
Sentinel Network database and described its enforcement record,
demonstrating government and business impersonation scams are not only
highly prevalent but increasingly harmful.\15\ In the NPRM, the
Commission also took notice of additional indications of prevalence
that came after the ANPR's publication.\16\ Specifically, the NPRM
cited data from a broad spectrum of commenters (businesses, trade
associations, and government or law-enforcement organizations)
regarding the prevalence of government and business impersonation
scams, which echoed the Commission's findings that these schemes are
among the most common deceptive or unfair practices affecting U.S.
consumers and businesses and continue to be a significant source of
consumer injury.\17\
B. Manner and Context in Which the Acts or Practices Are Deceptive or
Unfair
A representation, omission, or practice is deceptive if it is
material and likely to mislead a consumer acting reasonably under the
circumstances.\18\ The most frequent allegations in the Commission's
enforcement actions involving government and business impersonation
pertain to defendants tricking consumers to pay money or disclose
personal information by making, expressly or by implication, statements
that misrepresent the defendants' identity.\19\ Nearly as frequent are
allegations of misrepresentations concerning defendants' affiliation
with, endorsement or approval by, or other association with a
government or business. The Commission has further found false threats
of severe consequences and promises of benefits are additional
deceptive tactics deployed by government and business impersonators. In
the Commission's experience, such claims regarding identity,
affiliation, or endorsement are material to consumers making their
decision to trust impersonators. The numerous government and business
impersonation complaints consumers submit to the Commission each year,
as well as comments submitted in connection with this rulemaking
proceeding, consistently reference these same concerns. Accordingly,
the specific practices described in the preamble to the proposed rule
reflect the type of conduct most commonly associated with deceptive and
unfair practices pertaining to government and business
impersonation.\20\
C. The Economic Effect of the Rule
As part of the rulemaking proceeding, the Commission solicited
comment and data (both qualitative and quantitative) on the economic
impact of the proposed rule and its costs and benefits.21 In
[[Page 15019]]
issuing the final rule, the Commission has carefully considered the
comments received and the costs and benefits of each provision, as
discussed in more detail below in Section VI. The record demonstrates
the most significant anticipated benefit of the final rule is the
Commission's ability to obtain monetary relief. This is particularly
critical because that ability was curtailed by the U.S. Supreme Court's
decision in AMG Cap. Mgmt., LLC v. FTC, which holds that equitable
monetary relief, including consumer redress, is not available under
section 13(b) of the FTC Act.22 Further, obtaining monetary
relief based on violations of the final rule under section 19(b) of the
FTC Act will be significantly faster than obtaining such relief under
section 19(a)(2) without a rule violation.23 By enabling the
Commission to obtain monetary relief more efficiently, the final rule
would also reduce the expenditure of Commission resources.24
As an additional benefit, the rule enables the Commission to obtain
civil penalties against violators.25 The final rule also
provides a benefit to businesses through increased deterrence of
business impersonators, which reduces businesses' expenditure of
resources associated with monitoring for and addressing
impersonation.26 Moreover, as the record and the
Commission's law enforcement experience demonstrate, the final rule is
unlikely to impose costs on any honest business, and may increase
deterrence of impersonation scams, which would benefit consumers
through a reduction in their total financial losses from these
schemes.27
III. Response to Comments
The Commission received 78 comments in response to the NPRM from a
diverse group of individuals, industry groups and trade associations,
consumer organizations, and government agencies.28 The
Commission received 28 comments in response to the Notice of Hearing,
including oral presentations from 14 commenters.29
Commenters generally supported the proposed rule, recognizing the
Commission's authority to protect consumers from the increasing number
of government and business impersonation frauds targeting consumers.
In the NPRM, the Commission invited comment on any issues or
concerns the public believes are relevant or appropriate to the
Commission's consideration of the proposed rule.30 The NPRM
also posed eight specific questions for the public.31 Some
of these questions relate to the Paperwork Reduction Act (``PRA'') and
Regulatory Flexibility Act (``RFA''), and are addressed in Sections V
and VI, respectively.32 The other questions, along with
common issues or concerns relevant to the Commission's consideration of
the proposed rule outside of the specific questions, are addressed in
this section of the preamble.
A. Finalizing the Proposed Rule as a Final Rule
In Question 1 of the NPRM, the Commission asked whether it should
finalize the proposed rule as a final rule, and how, if at all, it
should change the proposed rule in promulgating the final
rule.33 The majority of commenters did not express a clear
view regarding whether the Commission should adopt the proposed rule as
final. Many of these commenters, however, did share their experience
regarding the prevalence and harmfulness of various kinds of government
and business impersonation frauds.34 Some of these
commenters complained more generally about various non-impersonation
scams.35 The majority of commenters that addressed Question
1 of the NPRM were substantially supportive of the proposed rule, but
stopped short of urging the Commission to finalize the text of the
proposed rule without modification. These commenters typically
recommended either broadening or narrowing the scope or text of the
rule in response to other specific questions asked in the NPRM or
relevant to the Commission's consideration of the proposed
rule.36
Six commenters explicitly addressed the Commission's question
regarding finalizing the proposed rule as a final rule, and without
recommending additional modifications to the text of the proposed rule,
urged the Commission to do so.37 Some of these commenters
stated the proposed rule is in the public interest because it would
allow for civil penalties against government and business
impersonators, provide redress for victims of impersonation scams, and
deter future bad acts.38
Several government agencies and trade associations explained how
the proposed rule would benefit them, their members, or the people they
serve. The United States Patent and Trademark Office (``USPTO'')
described its experience of agency impersonation, and stated that
reliance on the FTC's enforcement capabilities through such a rule
would allow the USPTO to conserve and allocate its resources to
different enforcement efforts that impact the USPTO and its
stakeholders.39 Similarly, the Marine Retailers Association
of the Americas (``MRAA''), a trade association representing marine
retailers, argued the benefits associated with finalizing the proposed
rule would reduce the financial burden on businesses and improve trust
among consumers.40 The United States Copyright Office
(``USCO'') expressed support for finalizing the proposed rule, arguing
that doing so would allow the Commission to move more quickly to put a
stop to impersonation scams.41 The USPTO and the USCO
explained they do not have law enforcement authority to remedy the
harms resulting from bad actors impersonating the agencies, and USCO
argued the proposed rule would foster public trust in the copyright
system.42 The Cellular Telecommunications and internet
Association (``CTIA''), a trade association for wireless service
providers, argued in favor of finalizing the proposed rule because its
scope is ``targeted and judicious,'' and appropriately focused on the
bad actors that harm consumers.43
Somos, Inc., which manages registry databases for the
telecommunications industry, stated it ``strongly supports the
Commission's proposed rules,'' but suggested the Commission explicitly
clarify that spoofing a telephone number of a business or government
entity to aid in that impersonation violates the rule.44 The
Commission is not persuaded that explicitly stating telephone spoofing,
or any specific type of government or business impersonation,
constitutes a violation of the rule is necessary.45
Moreover, the Telemarketing Sales Rule (``TSR'') already bars
telemarketers from ``failing to transmit. . .the telephone number and.
. .the name of the telemarketer to any caller identification service in
use by a recipient of a telemarketing call.'' 46 By
definition, a spoofed telephone number is not the number of the
telemarketer, and the Commission can rely on this prohibition to bring
an enforcement action for violation of the TSR against a telemarketer
that uses a spoofed number.
The Commission also received several comments that identified the
lack of access to accurate information concerning domain name
registrants (commonly known as ``WHOIS'' data) as a significant
impediment to combatting the use of domain names to impersonate
government and businesses.47 These commenters expressed
support for expanding the text or scope of the final rule to address
this issue.48 In particular, a few commenters urged the
Commission to issue a final rule that requires domain name registrars
to
[[Page 15020]]
collect, verify, maintain, and disclose accurate WHOIS data to the FTC
and third-party victims on request for such information based on
credible evidence of impersonation fraud.49 The Coalition
for Online Accountability (``COA''), a group advocating for online
transparency and accountability, argued ``[t]here is no justification
for the redaction of data of legal person registrants or the
overwhelming denial of reasonable access to personal WHOIS data for
legitimate third-party interests. . ..'' 50 Both the
Messaging Malware Mobile Anti-Abuse Working Group (``M3AAWG'') and the
Anti-Phishing Working Group (``APWG'') also suggested the Commission
encourage Domain Name System (``DNS'') registries and registrars to
engage in DNS mitigation and frequently impersonated entities to
participate as ``trusted notifiers'' to address fraudulently registered
domain names.51
The Commission declines to adopt commenters' suggestion that the
final rule expressly reference in accompanying examples the use of
domain names in impersonation schemes. Rather, the Commission here
repeats what it previously stated in the NPRM and earlier in this SBP,
that the following list of examples of conduct covered by the
prohibition on the impersonation of government and businesses was
intended to be illustrative, not exhaustive: (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 ``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; (6) using a government seal on
a building, letterhead, website, email, vehicle, or other physical or
digital place; (7) 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''; (8) sending physical mail through any carrier using
addresses, seals, logos, or other identifying insignia of a business or
officer thereof; (9) 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''; (10) creating or spoofing an email
address that impersonates a business; (11) placing advertisements that
pose as a business or officer thereof against search queries for
business services; and (12) using, without authorization, a business's
mark on a building, letterhead, website, email, vehicle, or other
physical or digital place.52 Accordingly, the Commission
finds the final rule is drafted with sufficient clarity and flexibility
to address the unauthorized use of internet identifiers, including but
not limited to domain names.
Only one commenter suggested in response to Question 1 of the NPRM
that the proposed rule should not be finalized.53 The
Americans for Prosperity Foundation (``AFPF''), a 501(c)(3) nonpartisan
education organization, argued the Commission should ``abandon its
Section 18 rulemaking ambitions, instead refocusing its efforts on
case-by-case enforcement actions in federal court in cases involving
concrete harm to consumers.'' 54
The Commission disagrees with the AFPF's suggestion that the
section 18 rulemaking process is too difficult or unwieldy to address
many of the unfair or deceptive acts or practices prevalent in
commerce. In 1975, Congress passed the Magnuson-Moss Warranty--Federal
Trade Commission Improvement Act laying out specific procedures for the
promulgation of ``Trade Regulation Rules'' to protect consumers in a
dynamic and changing economic landscape.55 The Commission's
regulations at 16 CFR part 1, subpart B, respect the underlying
statutory requirements of section 18, which provide ample transparency
and opportunity for public participation in the promulgation of Trade
Regulation Rules. The Commission intends therefore to fulfill its
mission to protect against unfair or deceptive acts or practices in or
affecting commerce and to provide consumers and businesses with due
process, clarity, and transparency while crafting the rules to do so.
Accordingly, the Commission rightfully responds to Congress's grant of
authority by initiating this rulemaking.
The AFPF also expressed various criticisms specific to the language
of the proposed rule and recommended several suggested revisions
discussed in greater detail in Sections III.C and III.D below.
Following review of all comments and careful consideration of the
relevant law, the final rule issued by the Commission contains some
minor changes from the proposed rule, as discussed in Section III.
B. Relevant Evidence Regarding Provisions of the Proposed Rule,
Prevalence, Impact and Alternative Proposals
In the ANPR, the Commission asked specific questions about the
prevalence of impersonation fraud, and requested the data source
commenters relied upon for formulating their answer(s).56
The ANPR also asked specific questions regarding how to craft a
proposed rule to maximize the benefits to consumers and minimize the
costs to businesses, and what alternatives to regulations the
Commission should consider in addressing impersonation
frauds.57 In Question 2 of the NPRM, the Commission posed
these same or nearly identical specific questions regarding each
different provision of the proposed rule.58 Six commenters
specifically addressed these questions.59 Each of these
commenters described various types of government and business
impersonation scams common to their own experience or industry in
support of their view that such frauds are highly
prevalent.60 For example, the Toy Association noted various
business impersonation scams experienced by its members, including
counterfeit or non-compliant toys, falsified documents regarding
endorsement and affiliation related to counterfeit toys, false
solicitation and phishing schemes collecting customer information, and
domain impersonation.61 Similarly, the USPTO and USCO
described several examples of government impersonation scams involving
the trademark and copyright registration processes, respectively, and
included illustrative examples as attachments with their public
comment.62
Other commenters particularly concerned with online business
impersonation cited data from studies or reports regarding trends in
these kinds of impersonation frauds, and recent examples of phishing
attacks against consumers through the impersonation of recognized
online companies in support of their arguments regarding
prevalence.63 A small number of
[[Page 15021]]
commenters addressed the impact (including any benefits and costs) on
consumers, governments, and businesses, discussed in more detail in
Section VI.
Only one commenter suggested an alternative proposal for the
Commission's consideration.64 Specifically, the M3AAWG
recommended as an alternative to the means and instrumentalities
provision in proposed Sec. 461.4 that the Commission ``identify best
practices or safe harbors to incentivize prompt mitigation efforts and
sound verification techniques'' to address the use of domain names in
business impersonation schemes.65 M3AAWG argued this
alternative to regulation would avoid the risk of inadvertently
imposing ``secondary or intermediary liability against legitimate
businesses, technologies or services'' exploited by
impersonators.66
Upon review of the comments received in response to Question 2 of
the NPRM, the Commission concludes such comments support its own
findings that government and business impersonation schemes are both
prevalent and harmful. The Commission declines at this time to adopt
M3AAWG's alternative proposal for Sec. 461.4. As discussed in Section
III.D, the Commission is continuing to review comments and records
relevant to the means and instrumentalities provision in proposed Sec.
461.4 to determine whether additional action or protections are
warranted and is requesting additional public comment through a SNPRM,
published elsewhere in this issue of the Federal Register.
C. Clarity of Prohibitions Against Impersonation of Government &
Businesses
In Question 5 of the NPRM, the Commission solicited comment
regarding whether the proposed rule's one-sentence prohibitions against
impersonation of government in Sec. 461.2 and against impersonation of
businesses in Sec. 461.3 are clear and unambiguous, and how, if at
all, they should be improved.67 The Commission received
several comments that addressed this question directly 68 or
indirectly.69 Two commenters considered the one-sentence
prohibitions to be clear and unambiguous and/or deferred to the
Commission's construction, but suggested certain additions or
modifications.70 For example, the USCO suggested the
Commission consider whether the definition of ``officer,'' which covers
representatives of both governments and businesses, should be
bifurcated into two separate and more specific terms to define
representatives of governments and businesses,
respectively.71 No other commenter suggested a revision to
the definitions in proposed Sec. 461.1. The USPTO suggested the
Commission broaden the exemplary ``list of matter'' used to impersonate
a government to specifically reference ``logos.'' 72 In
support of this recommendation, the USPTO noted ``the use of logos''
was explicitly identified in the NPRM's examples of unlawful conduct
that would be covered by the prohibition against business impersonation
in proposed Sec. 461.3, but not in the NPRM's examples of unlawful
conduct that would be covered by the prohibition of government
impersonation in proposed Sec. 461.2. The USPTO further asserted
government agencies also ``use logos in addition to official seals and
insignia,'' and provided an illustrative example of impersonators
misusing the USPTO's logo.73
Three commenters indicated the language of proposed Sec. Sec.
461.2 and 461.3 was vague or provided inadequate guidance, and
warranted modification.74 Some commenters raised
constitutional concerns based on the purported overbreadth of the one-
sentence prohibitions.75 These commenters' constitutional
arguments addressed two primary considerations: (1) whether the
proposed rule provides due process notice; 76 and (2)
whether it encroaches upon free speech protected under the First
Amendment.77 The AFPF stated the proposed rule is an ``open-
ended regulation,'' arguing it ``fails to provide constitutionally
adequate notice of required or prohibited conduct'' and otherwise falls
short of section 18's specificity requirements.78 Other
commenters wary of inadvertent intrusions on protected speech asserted
any final prohibition should exempt innocent behavior such as parody
79 and non-commercial or otherwise legitimate
speech.80
In his documentary submission in response to the Notice of Informal
Hearing, William MacLeod echoed concerns he previously expressed in
response to the NPRM that the language in proposed Sec. Sec. 461.2 and
461.3 ``depart[s] from the standards of deception that the Commission
applies under Section 5.'' 81 MacLeod noted that: ``[i]ts
terms do not include `deception' or `fraud' or critical elements of the
FTC's deception policy statement.'' 82 He raised additional
concerns about ``impersonations and affiliations [that] can be false,
but also unbelievable.'' 83 MacLeod argued that the
prohibitions, as written, are too broad and would proscribe non-
deceptive acts or practices, such as ``fictional depictions'' in
television advertisements.84
Raising First Amendment concerns, the AFPF similarly asserted that
the proposed rule's ``falsely pose as'' language, ``read literally,''
would impose civil penalties on ``utterly innocuous conduct'' and
``would appear to make it unlawful for anyone to dress up as an FTC
Commissioner, politicians, or . . . a Microsoft executive and attend a
Halloween party.'' 85 It also expressed concern that the
proposed prohibitions did not require ``materiality,'' ``consumer
harm,'' or ``connection to interstate commerce.'' 86 Several
commenters suggested alternative language to cure what they perceived
to be the overbreadth of the prohibition provisions. For example,
M3AAWG recommended that the final rule adopt a definition of
``impersonation'' that mirrors the definition of ``criminal
impersonation'' in 18 U.S.C. Chapter 43.87 M3AAWG asserted
that such a definition would narrow the scope of the rule to cover only
those bad actors with ``clear intent and specific knowledge'' of
prohibited acts.
MacLeod proposed narrowing the focus of the final rule by adopting
language that specifies particular prohibited practices or the mens rea
of its intended targets.88 The AFPF agreed with MacLeod and
suggested that the Commission revise the proposed rule to ``explicitly
incorporate Section 5's statutory prohibition . . . [and] requirements
set forth in the Commission's Deception Statement.'' 89
After analyzing and considering the comments, the Commission is
persuaded that the language of the final rule should adhere more
closely to the language of section 5 of the FTC Act to avoid any
potential confusion about the scope of the rule. The Commission
believes that these revisions sufficiently address some commenters'
concerns that the language of the proposed rule put it in conflict with
Due Process requirements and the First Amendment.
The Commission emphasizes that it does not intend for the final
rule to regulate non-commercial speech. To adhere more closely to the
language of section 5 of the FTC Act and case law, the Commission has
revised the final regulatory text to incorporate relevant language from
section 5. Specifically, the Commission has replaced ``unlawful'' with
``unfair or deceptive act or practice,'' and added ``materially'' and
``in or affecting commerce'' in Sec. Sec. 461.2 and 461.3. These
changes make it abundantly clear that the scope of the final regulatory
text is coterminous with the scope of the FTC's authority under
[[Page 15022]]
the FTC Act, and they clearly specify the misconduct prohibited by the
final rule. Accordingly, false impersonations or misrepresentations
that are not material to a commercial transaction, such as
impersonation in purely artistic or recreational costumery or
impersonation in connection with political or other non-commercial
speech, are not covered by the final rule.
The Commission concludes that it is unnecessary to divide the
definition of ``officer'' into two separate terms as suggested by the
USCO. Section 461.1 defines ``officer'' to ``include[ ] executives,
officials, employees, and agents,'' which the Commission believes
appropriately describes and covers both government and business
representatives.
As previously stated, the NPRM's list of examples of prohibited
conduct covered by the rule is intended to be illustrative, not
exhaustive, and therefore, the Commission declines to adopt the USPTO's
suggestion that it enlarge that exemplary ``list of matter.'' Rather,
the Commission maintains that not including specific prohibitions in
the regulatory text provides it with sufficient flexibility to address
the many types of ``matter'' (including objects, items, logos,
insignia, etc.) used to impersonate governments and businesses alike,
which are too numerous to list.
The Commission declines to adopt a definition of ``impersonation''
that reflects a criminal regulatory scheme as proposed by M3AAWG. The
FTC Act does not include a mens rea requirement, and there is no
evidence in the record that the imposition of such a requirement is
warranted. Furthermore, while intent is not required under the rule or
the FTC Act, in any action seeking civil penalties for violation of the
rule, the Commission will need to establish ``actual knowledge or
knowledge fairly implied on the basis of objective circumstances that
such act is unfair or deceptive and is prohibited by such rule.''
90
The Commission rejects the recommendation by both MacLeod and AFPF
to incorporate the FTC Deception Policy Statement into the final rule.
Nevertheless, as discussed earlier in this Section III.C, informed by
MacLeod's and AFPF's comments, the Commission has revised the
regulatory text of Sec. Sec. 461.2 and 461.3 to mirror the language of
section 5 of the FTC Act more closely. In particular, the reference to
``unfair or deceptive act or practice,'' and the inclusion of
materiality and interstate commerce requirements should address
commenters' concerns that this rule might be read to cover
impersonation in connection with artistic costumery, parody, or other
non-commercial speech.91 The Commission further notes that,
by the terms of these sections, a court must find that the alleged
defendant made an express or implied misrepresentation regarding
material information for Sec. Sec. 461.2 and 461.3 to be violated. For
an express or implied misrepresentation regarding material information
to be made in violation of the FTC Act and this rule, there must be a
representation that misleads consumers acting reasonably under the
circumstances regarding material information. Thus, while the
Commission rejects the recommendation by both MacLeod and AFPF to
incorporate the FTC Deception Policy Statement into the final rule, by
incorporating the changes above, the Commission has ensured that the
final rule is consistent with the Deception Policy Statement, is
consistent with other relevant Commission rules, and provides further
specificity regarding the prohibited acts and practices under section 5
of the FTC Act.
D. Prohibition Against Providing Means and Instrumentalities
In Question 6 of the NPRM, the Commission asked whether the final
rule should contain the prohibition in proposed Sec. 461.4 against
providing the means and instrumentalities for violations against
government or business impersonation. The Commission received more than
20 comments that expressly addressed this question.92 Many
of the sentiments reflected in these comments were also echoed by
several commenters that presented oral statements in response to the
Notice of Informal Hearing.93A few commenters arguing for
the importance of holding intermediaries accountable for enabling or
promoting impersonation schemes encouraged the Commission to finalize
the text of the proposed provision without modification.94
These commenters specifically argued that finalizing the proposed Sec.
461.4 could help to combat impersonation schemes perpetrated by
foreign-based scammers--beyond U.S. court jurisdiction--that obtain
services from U.S.-based instrumentalities, such as payment processors
and internet service providers.95
Addressing means and instrumentality liability, both the AFPF and
MacLeod reiterated their concerns referenced in Section III.C,
regarding section 18's specificity requirements, due process notice,
free speech, and conformity to the FTC's Deception Policy
Statement.96 Most commenters who addressed Question 6
expressed support for means and instrumentalities liability, but with
some concern or suggested modifications. Some supportive commenters
cautioned that the proposed means and instrumentalities provision could
be read too broadly.97 Others expressed the concern that
without a specific scienter or knowledge requirement, the proposed rule
provision runs the risk of imposing strict liability against innocent
and unwitting third-party providers of services or
products.98 Accordingly, several commenters urged the
Commission to clarify the scope of means and instrumentalities
liability or explicitly include a specific knowledge requirement in the
final rule provision.99
For example, the Consumer Technology Association (``CTA''), a trade
association representing the U.S. consumer technology industry, stated
that the Commission's explanation and examples of the ``means and
instrumentalities'' provision in the NPRM seem to limit its
applicability, but such limitation ``is not squarely reflected in the
text of the proposed rule.'' 100 The CTA therefore urged the
FTC to clarify that ``means and instrumentalities'' liability applies
only ``to entities that have knowledge or consciously avoid knowing
that they are making representations being used to commit impersonation
fraud.'' USTelecom, a trade association representing the broadband
technology industry, argued that a discrepancy exists between the case
law, the NPRM's discussion of means and instrumentality liability, and
the proposed rule provision. It urged the Commission to ``adjust the
proposed language in Sec. 461.4 to codify the requirement that the
person has knowledge or reason to expect it is providing the means and
instrumentalities . . .'' (emphasis in original).101
Similarly, the American Bar Association Section of Intellectual
Property Law suggested that the Commission ``explicitly include [in
Sec. 461.4] the language referenced in the [NPRM] from Shell Oil Co.,
128 F.T.C. 749 (1999)--acting with `knowledge or reason to expect that
consumers may possibly be deceived as a result.' '' 102
Other commenters argued that inclusion of a scienter requirement is
a necessary but not sufficient modification of the proposed language to
impose means and instrumentalities liability. For example, the internet
& Television Association (``NCTA''), a trade association for the United
States cable television industry, argued that such ``liability requires
both providing deceptive means and instrumentalities, e.g., providing
false or misleading
[[Page 15023]]
claims or counterfeit items, and actual knowledge that the deceptive
representations or goods will be used to commit impersonation
violations'' (emphasis in original).103 Likewise, M3AAWG
advocated that, in addition to a ``knowledge or reason-to-know test,''
primary liability under a revised Sec. 461.4 should also require that
the provision of such means and instrumentalities be done willfully or
in bad faith, and with clear intent and specific
knowledge.104
A few commenters urged the Commission to adopt a final rule that
explicitly recognizes specific or defined ``means and instrumentality''
violations perpetrated in connection with impersonation frauds, such as
the use of legal process documents 105 or manipulated media
technologies (i.e., deepfakes) 106 or failure to disclose
WHOIS data.107
Based upon the comments received on the proposed provision
regarding means and instrumentalities, the Commission has decided that
this specific provision warrants further analysis and consideration;
thus, the Commission has decided not to finalize proposed Sec. 461.4.
The Commission is not aware of any other rule, whether issued pursuant
to section 18 or APA rulemaking authority, that identifies a means and
instrumentalities violation. The Commission notes that it has used
means and instrumentalities allegations as a type of deception to
establish primary liability in the absence of privity between the
defendant and the deceived persons, albeit rarely, in connection with
matters that involve impersonation.108 Pending further
analysis and consideration, the Commission declines to adopt proposed
Sec. 461.4 at this time. The Commission is still considering the
provision regarding means and instrumentalities, as well as issues
related to the impersonation of individuals or entities other than
governments and business in interstate commerce and is requesting
public comment through a Supplemental Notice of Proposed Rulemaking
(``SNPRM''), published elsewhere in this issue of the Federal Register.
E. Inclusion of Prohibition Against Impersonating Nonprofits
In response to the ANPR, the Commission received a number of
comments that urged the Commission to include ``nonprofit'' entities in
the proposed rule's definition of businesses that can be
impersonated.109 The Commission agreed with these comments,
and consequently, defined a ``business'' that may be impersonated to
include nonprofits in Sec. 461.1 of the proposed rule, notwithstanding
the fact that the Commission is authorized to sue a corporation only
when the corporation is ``organized to carry on business for its own
profit or that of its members.'' 110 As the Commission
explained in the NPRM, the reason for doing so is because for profit
businesses may impersonate nonprofit business.111 In
Question 7 of the NPRM, the Commission solicited comment regarding
whether any final rule should keep the prohibition against
impersonating nonprofit organizations.112 The Commission
received more than a dozen comments that specifically addressed this
question, and each of them expressed support for a final rule keeping
the prohibition against impersonating nonprofits.113 None of
the comments responding to the NPRM or Notice of Hearing opposed doing
so. The vast majority of commenters who addressed this question were
themselves nonprofit organizations operating as trade associations, and
referenced their own experience with impersonation frauds in support of
a final rule keeping the prohibition against impersonating
nonprofits.114 Several commenters expressed the view that
nonprofits are often the subject of impersonation scams in the same way
as for profit businesses and government agencies.115 Other
commenters asserted that impersonation of nonprofits could be uniquely
harmful because bad actors ``prey[ ] on the goodwill of individuals
attempting to make donations, and misappropriate[ ] those donations to
corrupt private actions.'' 116 Some commenters noted that
nonprofits are particularly susceptible to being impersonated in scams
involving affiliation or endorsement claims because nonprofits often
offer awards or seals of approval.117
Finally, two commenters cited trademark law in support of keeping
nonprofits in the definition of business and a final rule that includes
the prohibition against impersonating nonprofits. Specifically, both
INTA and the Toy Association stated that trademark law has ``long
recognized that the misuse of names of non-profit organizations can
lead to harmful consumer confusion.'' 118 In INTA's and the
Toy Association's view, the same applies with respect to impersonation
schemes; thus, the final rule should also make no distinction between
for profit and nonprofit businesses.
Based upon the record, including public comments in response to
Question 7 of the NPRM, the Commission has determined that the final
rule will retain the definition of ``business'' in Sec. 461.1 that
includes nonprofits and the prohibition against impersonating nonprofit
organizations in Sec. 461.3.
F. Inclusion of Individuals or Entities Other Than Government and
Business Impersonators
In the NPRM, the Commission asked whether the proposed rule should
be expanded to address the impersonation of individuals or entities
other than governments and business in interstate
commerce.119 The NPRM identified romance and grandparent
impersonation scams as illustrative, but non-exhaustive, examples of
other types of impersonation fraud, and solicited further comment
regarding their prevalence and impact, and alternative proposals to
regulation. Six commenters specifically addressed these questions, and
each of them stated that the Commission should expand the reach of the
proposed rule to extend beyond government and business
impersonators.120 Some commenters asserted that fraudsters
often impersonate individuals in similar ways they impersonate
government and businesses.121 In support of expanding the
rule, several commenters argued that romance and grandparent
impersonation scams were harmful and prevalent, citing to data from the
FTC and other sources showing a steady increase in the number of
consumer reports and median individual losses for such
scams.122 A comment submitted by a group of students at
Rutgers Law School asserted that older consumers are susceptible to
``interpersonal confidence fraud and romance scams'' and provided
relevant data demonstrating that older consumers may be more likely to
fall victim to these kinds of impersonation than to government
impersonation.123 Several commenters also stated that while
the number of reports of these two types of impersonation scams are not
as high as government and business impersonation, they are likely
underreported, and that median individual losses are often
higher.124 The AARP stated that, ``[o]f all fraud activity,
romance scams and scams impersonating a family member in trouble are
the most insidious, given the emotional devastation that combines with
often significant financial losses.'' 125 A joint comment
submitted by several consumer and privacy advocacy organizations argued
that such evidence ``should be sufficient justification'' for the
Commission to ``add a subsection to proposed Section 461 to cover
`Impersonation of Individuals.' '' 126
[[Page 15024]]
A few commenters discussed the prevalence and harmfulness of other
kinds of impersonation scams as support for expanding the rule beyond
government and businesses to include individuals. For example, the NCTA
stated that its member companies had observed an increase in
sophisticated residential IP address scams that impersonate online
subscribers for illegal purposes such as piracy and
fraud.127 NCTA encouraged the Commission to consider a new
rule to prohibit impersonation of individuals through ``unauthorized
use of an individual's online credentials, accounts, IP addresses, and
digital networks.'' 128 The Recording Industry Association
of America (``RIAA'') described impersonation scams involving offers of
NFTs and mobile apps suggesting affiliation with sound recording
artists and phishing scams where third parties claimed to be a music
artist's manager or producer.129 RIAA recommended that the
Commission expand the rule to include the following: ``[I]t [is]
unlawful to falsely pose as or to misrepresent, directly or by
implication, affiliation with, including endorsement or sponsorship by,
an individual, for financial gain.'' 130
The Rutgers Law Students noted the prevalence of social media, and
profiles of celebrities and influencers in current modes of online
communication, arguing that it would be a ``grave oversight'' to omit
persons with such notable identities from a rule prohibiting
impersonation.131 The students also argued that individuals
are more likely than government agencies or businesses to suffer direct
harm to their identities from impersonation scams and less likely to be
able to repair the reputational injuries.132 Accordingly,
they proposed that the Commission add another section to the rule with
language prohibiting the impersonation of ``any person'' that parallels
the language in Sec. Sec. 461.2 and 461.3 prohibiting the
impersonation of government and businesses, respectively.133
The students further stated that this additional provision ``closes a
loophole'' that proposed Sec. Sec. 461.2 and 461.3 leave open
regarding the impersonation of former government and business
officials.134 Finally, the students concluded that adding
such a narrowly drafted provision would not burden honest businesses or
individuals, and would benefit consumers because the median individual
losses for other kinds of impersonation frauds are often greater than
for government and business impersonation.135 Both the
students and the NCTA agreed that expanding the proposed rule to
prohibit impersonation of individuals would not impact recreational or
comedic impersonations of individuals in television or
film.136
Upon consideration of the comments received in response to Question
8 of the NPRM and all relevant records and data, the Commission is
seeking additional public comment about potentially expanding part 461
to cover impersonation of individuals or entities other than
governments and businesses in interstate commerce in a SNPRM published
elsewhere in this issue of the Federal Register.137
G. Requiring Domain Name Registrars To Collect, Verify, Maintain, and
Disclose Accurate WHOIS Data
The Commission received several comments that identified the lack
of access to accurate information concerning domain name registrants
(commonly known as ``WHOIS'' data) as a significant impediment to
combatting the use of domain names to impersonate government and
businesses.138 These commenters expressed support for
expanding the text or scope of the final rule to protect consumers from
this increasingly prevalent impersonation scheme.139 In
particular, a few commenters urged the Commission to issue a final rule
that requires domain name registrars to collect, verify, maintain, and
disclose accurate WHOIS data to the FTC and third-party victims on
request for such information based on credible evidence of
impersonation fraud.140 As previously noted, the COA argued
that the redaction or denial of reasonable access to WHOIS data is
unjustified.141 Both M3AAWG and APWG also suggested that the
Commission encourage DNS registries or registrars to engage in DNS
mitigation and frequently impersonated entities to participate as
``trusted notifiers'' to address fraudulently registered domain
names.142
Because the deceptive use of internet domain names is already
covered under the rule, the Commission declines to adopt commenters'
suggestion that the final rule expressly reference in the text or
accompanying examples the use of domain names in impersonation schemes.
As previously noted in Section III.A, the NPRM's preamble contained a
list of examples of conduct covered by the prohibition on the
impersonation of government and businesses that was intended to be
illustrative, not exhaustive.143 Such a comprehensive list
would be both impossible and would not provide the trade regulation
rule with the flexibility to accommodate changes in the marketplace and
scammers' behavior. The Commission finds therefore that the final rule
is drafted with sufficient clarity and flexibility to address the
unauthorized use of internet identifiers, including but not limited to,
domain names. Furthermore, the Commission declines to issue a final
rule that imposes affirmative requirements upon domain name registrars
which is beyond the purview of this rulemaking and doing so arguably
would place an impracticable burden upon consumers to know about and
verify the trustworthiness of such WHOIS data.
H. Comments Regarding Limitation of Remedies
A small number of commenters urged the Commission to clarify that
any final rule regarding impersonation would not limit any rights and
remedies already available to businesses and consumers that have been
the subject of impersonation.144 For example,
notwithstanding its support of the Commission's rulemaking to address
impersonation, the American Bar Association Section of Intellectual
Property Law asserted that many government impersonation scams should
be referred to the Department of Justice for criminal prosecution, and
therefore, cautioned that any regulatory approach ``not dilute the
impetus for a criminal law solution.'' 145 Other commenters
suggested that the Commission clarify that any final rule is not
intended to limit any existing private right of action or civil
remedies.146 Specifically, the Toy Association and INTA both
advocated that any final rule on impersonation not be interpreted as
limiting the rights and remedies available to trademark owners under
the Lanham Act and the Anti-Cybersquatting Consumer Protection Act.
INTA further proposed that the Commission issue a clarification that
any final rule is intended only to complement--not expand or contract--
the legal protections available to private parties under the entire
body of federal or state trademark and unfair competition
law.147
By issuing the final rule regarding government and business
impersonation, the Commission does not preempt or intend to preempt
action in the same area, which is not inconsistent with this final
rule, by any federal, state, municipal, or other local government. This
final rule does not annul or diminish any rights or remedies provided
to consumers or businesses by any federal, state law, municipal
ordinance, or other local regulation, insofar as those rights or
[[Page 15025]]
remedies are equal to or greater than those provided by this final
rule.
IV. Final Rule
For the reasons described above, the Commission has determined to
adopt the provisions of proposed Sec. 461.1 as initially proposed, and
the provisions of Sec. Sec. 461.2 and 461.3 with clarifying
modifications. The Commission declines to finalize proposed Sec. 461.4
at this time.
Specifically, the Commission concludes that the proposed definition
of ``officer'' is sufficient to cover both government and business
representatives, and therefore, need not be divided into two separate
terms. Further, the final rule includes a definition of
``materially''--which has been used in other section 18 rules--to avoid
potential confusion or potential perceived conflict with non-commercial
speech. For these same reasons, the final rule replaces ``unlawful''
with ``unfair or deceptive act or practice'' and adds ``materially''
and ``in or affecting commerce'' in Sec. Sec. 461.2 and 461.3. Such
revised language further clarifies that the rule conforms to the well-
established standards for deception and unfairness under the FTC Act.
Finally, the Commission declines to finalize the proposed Sec. 461.4
provision regarding means and instrumentalities at this time because
further analysis and consideration is warranted based on the record,
including comments. The Commission is requesting additional public
comment on this provision, and on issues related to the impersonation
of individuals or entities other than governments and business in
interstate commerce, through a SNPRM, published elsewhere in this issue
of the Federal Register.
V. Paperwork Reduction Act
The Paperwork Reduction Act (``PRA''), 44 U.S.C. 3501 et seq.,
requires federal agencies to seek and obtain Office of Management and
Budget (``OMB'') approval before undertaking a collection of
information directed to ten or more persons. In Question 3 of the NPRM,
the Commission asked commenters whether the proposed rule contained a
collection of information.148 No comments responding to the
NPRM or Notice of Hearing addressed this question. While the Commission
has revised the rule based on the comments it received, it has not
added any new requirements that would collect information from the
public. Accordingly, the Commission has determined that there are no
new requirements for information collection associated with this final
rule.
VI. Regulatory Analysis and Regulatory Flexibility Act Requirements
Under section 22 of the FTC Act, the Commission, when it
promulgates a final rule, must issue a ``final regulatory analysis.''
149 The required contents of this final regulatory analysis
are: (1) ``a concise statement of the need for, and the objectives of,
the final rule''; (2) ``a description of any alternatives to the final
rule which were considered by the Commission''; (3) ``an analysis of
the projected benefits and any adverse economic effects and any other
effects of the final rule''; (4) ``an explanation of the reasons for
the determination of the Commission that the final rule will attain its
objectives in a manner consistent with applicable law and the reasons
the particular alternative was chosen''; and (5) ``a summary of any
significant issues raised by the comments submitted during the public
comment period in response to the preliminary regulatory analysis, and
a summary of the assessment by the Commission of such issues.''
150 Additionally, the Regulatory Flexibility Act (``RFA''),
5 U.S.C. 601-612, requires an agency to provide a Final Regulatory
Flexibility Analysis (``FRFA'') with the final rule, if any, unless the
agency certifies that the rule will not have a significant economic
impact on a substantial number of small entities.151
The NPRM included an Initial Regulatory Flexibility Analysis
(``IRFA'') even though the Commission did not expect that the proposed
rule would have a significant economic impact on a substantial number
of small entities.152 The Commission invited public comment
on the proposed rule's effect on small entities to ensure that no
significant impact would be overlooked.153
The FTC does not expect that the final rule will have a significant
economic impact on a substantial number of small entities, and this SBP
serves as notice to the Small Business Administration of the agency's
certification of no significant impact. The final rule imposes no
disclosure or recordkeeping requirements. As such, both the burdens
imposed on small entities and the economic impact of the final rule are
likely to be minimal, if any. Furthermore, as noted in the IRFA, the
rule does not change the law regarding the legality of government and
business impersonation, which are already prohibited by section 5 of
the FTC Act.154 Although the Commission certifies the final
rule would not, if promulgated, have a significant impact on a
substantial number of small entities, the Commission has determined,
nonetheless, it is appropriate to conduct the following
FRFA,155 which incorporates the Commission's initial
findings, as set forth in the NPRM,156 addresses the
required contents of the final regulatory analysis, and describes the
steps the Commission has taken in the final rule to minimize its impact
on small entities.
A. Concise Statement of the Need for, and Objectives of, the Final Rule
Based upon the record, including public comments, the Commission is
implementing the rule to expand the remedies available to it to combat
government and business impersonation deception. Throughout this
rulemaking proceeding, the Commission has described how the U.S.
Supreme Court decision in AMG Cap. Mgmt., LLC v. FTC, 141 S. Ct. 1341,
1352 (2021) overturned how section 13(b) of the FTC Act had
historically been understood for 40 years to provide equitable monetary
relief, and made it significantly more difficult for the Commission to
obtain money for injured consumers.157 The objective of this
final rule is to make available a shorter, faster and more efficient
path for recovery of money for injured consumers directly through
federal court action in Commission enforcement actions involving
impersonation of government or business.158 Further, the
rule would deter illegal impersonation and allow for the imposition of
civil penalties, where appropriate.159
B. Discussion of Significant Alternatives the Commission Considered
That Would Accomplish the Stated Objectives of the Final Rule and That
Would Minimize Any Significant Economic Impact of the Final Rule on
Small Entities
Through the NPRM, the Commission requested public comment on what
impact (including costs) will be incurred by existing and future
businesses to comply with the proposed rule, and whether the Commission
should consider alternative proposals to the proposed
rule.160 This information was requested by the Commission to
minimize the final rule's burden on all businesses, including small
entities. As explained throughout this SBP, the Commission has
considered the comments and alternatives proposed by commenters and
finds the final rule will not create a significant economic impact on
small entities.161 Indeed, the type of deception that will
be unlawful under the final rule is already unlawful under the FTC Act,
but the final rule would allow the Commission to obtain monetary relief
more efficiently than it could solely under section 19(a)(2) of
[[Page 15026]]
the FTC Act (i.e., without a rule violation). Accordingly, the
Commission does not propose any specific small entity exemption or
other significant alternatives.
C. Summary of Significant Issues Raised by the Public Comments in
Response to the Preliminary Regulatory Analysis and IRFA
None of the comments received during the public comment period
raised any significant issues in response to the preliminary regulatory
analysis required pursuant to section 22 of the FTC Act.162
In the IRFA, however, the Commission sought comment regarding the
impact of the proposed rule and any alternatives the Commission should
consider, with a specific focus on the effect of the rule on small
entities. In the NPRM, the Commission reiterated this request for
comment in Question 4, asking whether the proposed rule, if
promulgated, would have a significant impact on a substantial number of
small entities. Two commenters that specifically addressed the impact
of the proposed rule on small entities stated it would have a
beneficial economic impact by reducing the time and financial burden
small entities expend on fighting impersonation frauds.163
One commenter urged the Commission not to implement a final rule that
would require third-party providers of government filing services to
include extensive disclosures in their marketing materials, arguing
such disclosure requirements could lead to small businesses declining
the offered services and falling out of compliance with government
filing obligations.164 This commenter, however, did not
identify any proposed disclosure requirements that were the subject of
his concern, nor does the Commission impose any such disclosure
requirements in connection with the final rule. None of the comments
responding to the NPRM or Notice of Hearing disputed the analysis in
the IRFA. Finally, the Small Business Administration did not submit
comments.
After reviewing the public comments on the proposed rule, as
discussed throughout this SBP, the Commission concludes the final rule
will not unduly burden small entities. The Commission's explanation in
the IRFA regarding the proposed rule is true of the final rule--it only
constitutes a significant economic impact for small entities violating
existing law, which are not entitled to procedural protections when
agencies consider rulemaking.165
D. Analysis of Projected Benefits and Adverse Effects of the Final Rule
In the NPRM, the Commission invited public comment and data on any
benefits and costs of proceeding with the rulemaking to inform a final
regulatory analysis.166 In issuing the final rule, the
Commission has carefully considered the comments received and the costs
and benefits of each provision. As discussed throughout this SBP, the
Commission believes, and the record demonstrates, the final rule would
provide several benefits to consumers, businesses, and competition, and
help preserve agency resources, without imposing any significant
adverse effects.
The Commission's explanation in the IRFA regarding the proposed
rule is true of the final rule--it is difficult to quantify with
precision what all its benefits may be, but it is helpful to begin with
the scope of the problem the final rule would address, and then
describe the benefits qualitatively. As discussed in the NPRM, reported
consumer losses due to government impersonation topped $445 million in
2021; 167 and as anticipated, remained large, and even
increased substantially, with total consumer losses of $513 million
reported in 2022 and more than $483 million for the first ten months of
2023.168 Similarly, the annual consumer loss reported due to
business impersonation has increased from $453 million in 2021 to $670
million in 2022.169 Accordingly, the most significant
anticipated benefit of the final rule is that it will allow the
Commission to provide monetary relief to victims of rule violations and
seek civil penalties against violators.170 Furthermore, the
final rule should reduce economic harm resulting from impersonation
because its potential deterrent effects make it less likely
impersonators get to keep their ill-gotten gains and more likely they
must pay civil penalties.
The final rule also would provide the benefit of a shorter path to
obtaining consumer redress because the Commission could directly pursue
in federal court section 19 remedies in government and business
impersonation enforcement actions that do not implicate an existing
rule. The availability of more immediate consumer redress in federal
court under section 19 would allow the Commission to reduce the expense
of litigating and minimize the litigation fora and scope. The
Commission could then apply the savings of these enforcement resources
to investigating and, where the facts warrant, bringing enforcement
actions in additional impersonation matters.
The final rule also would benefit businesses whose brands are
harmed by impersonators.171 As several commenters have
mentioned, a final rule that would allow the Commission to bring
enforcement actions more efficiently against impersonators would save
businesses the time and other resources dedicated to monitoring and
combatting these kinds of deception.
The record is devoid of any evidence suggesting the final rule
would cause harm or adversely impact economic conditions.
E. Description and an Estimate of the Number of Small Entities to Which
the Final Rule Will Apply, or Explanation Why No Estimate Is Available
Small entities engaging in the impersonation of government and
business potentially may be found across a variety of industries and
economic sectors, but industry and sector data do not identify entities
by such conduct. Accordingly, it is not possible to estimate the number
of small entities to which the final rule will apply. However, because
the Commission finds the final rule will not impose any recordkeeping
or other compliance costs on covered entities, the Commission concludes
the final rule will not have a significant impact on a substantial
number of small entities, notwithstanding the lack of data on how many
small entities will be covered by the final rule.
F. Description of the Projected Reporting, Recordkeeping, and Other
Compliance Requirements of the Final Rule, Including an Estimate of the
Classes of Small Entities That Will Be Subject to the Requirements of
the Final Rule and the Type of Professional Skills That Will Be
Necessary To Implement the Final Rule
The final rule does not have any reporting or recordkeeping
requirements.172 As explained previously, the final rule
would apply to no small entities other than small entities violating
existing law, and therefore, no classes of small entities will be
subject to the requirements of the final rule. Finally, no professional
skills are necessary for compliance with the final rule other than
honesty and integrity.
G. An Explanation of the Reasons for the Determination of the
Commission That the Final Rule Will Attain Its Objectives in a Manner
Consistent With Applicable Law and the Reasons the Particular
Alternative Was Chosen
The Commission's primary objective in commencing this rulemaking
was to
[[Page 15027]]
expand the remedies available to it in combatting two prevalent
categories of impersonation scams most frequently reported by
consumers--government impersonators and business impersonators. As
explained throughout this SBP, based upon the record, including public
comments, the Commission finds the final rule will attain this
objective in a manner consistent with applicable law.
The final rule is straightforward and defines 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). It also avoids novelty by borrowing from existing rules and
statutory definitions.173 At the same time, the final rule
is drafted with sufficient flexibility to address the various types of
conduct covered by the prohibition on the impersonation of government
and businesses. Furthermore, this rulemaking has provided ample
transparency and opportunity for public participation in accordance
with the underlying statutory requirements of section 18 of the FTC
Act, 15 U.S.C. 57a, the Administrative Procedure Act, and Part 1,
subpart B of the Commission's Rules of Practice.174
VII. Congressional Review Act
Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.),
the Office of Information and Regulatory Affairs has designated this
rule as not a ``major rule,'' as defined by 5 U.S.C. 804(2).
Endnotes
\1\ Fed. Trade Comm'n, Advance Notice of Proposed Rulemaking:
Trade Regulation Rule on Impersonation of Government 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.
\2\ See id. at 72904.
\3\ Those included, among others, numerous reports of government
impersonation scams reported to federal agencies as reflected in the
following public announcements. On March 7, 2022, the Federal Bureau
of Investigation issued a Public Service Announcement ``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.''
Similarly, on May 20, 2022, multiple federal law enforcement
agencies issued a scam alert spearheaded by the Social Security
Administration's Office of the Inspector General warning the public
of government impersonation scams involving the reproduction of
federal law enforcement credentials and badges. On June 3, 2022, the
Commission issued a press release noting that in some impersonation
scams, fraudsters have instructed consumers to convert cash into
cryptocurrency under false threats of government investigations or
fraud. See Fed. Trade Comm'n, Notice of Proposed Rulemaking: Trade
Regulation Rule on Impersonation of Government and Businesses, 87 FR
62741, 62742 (Oct. 17, 2022), https://www.federalregister.gov/documents/2022/10/17/2022-21289/trade-regulation-rule-onimpersonation-of-government-and-businesses.
\4\ See id. at 62741-51.
\5\ See id. at 62741-42.
\6\ Id. at 62750.
\7\ See Fed. Trade Comm'n, Trade Regulation Rule on
Impersonation of Government and Businesses, https://www.regulations.gov/docket/FTC-2022-0064/comments.
\8\ Cindy L. Brown and Raye Mitchell, Cmt. on NPRM at 9 (Dec.
19, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0077
(``Brown Cmt.''); William MacLeod, Cmt. on NPRM at 2 (Dec. 16,
2022), https://www.regulations.gov/comment/FTC-2022-0064-0078
(``MacLeod Cmt.'').
\9\ Fed. Trade Comm'n, Initial Notice of Informal Hearing: Trade
Regulation Rule on Impersonation of Government and Businesses, 88 FR
19024 (Mar. 30, 2023), https://www.federalregister.gov/documents/2023/03/30/2023-06537/trade-regulation-rule-on-impersonation-of-government-and-businesses. This Initial Notice of Informal Hearing
also served as the Final Notice of Informal Hearing. The Commission
determined William MacLeod's comment in response to the NPRM
represented an ``adequate request'' for such an informal hearing.
The comment from Cindy Brown explicitly requesting to make a
presentation at an informal hearing also represented an ``adequate
request'' triggering the Commission's obligation to hold an informal
hearing but was inadvertently omitted from inclusion in the Initial
Notice of Informal Hearing.
\10\ Because this informal hearing was the first held in several
decades, the Commission allowed interested parties to request the
opportunity to make an oral comment in response to the Notice of
Informal Hearing as well as the NPRM. However, the Commission noted
that in the future it may limit oral statements to those who
requested to make an oral statement in response to the NPRM, as
provided for in the Rules of Practice. Id. at 19025 n.24.
\11\ Although Cindy Brown did not submit a request to make an
oral statement in response to the Notice of Hearing, she was
permitted to make an oral statement at the hearing based upon her
prior comment in response to the NPRM in which she explicitly stated
her interest ``in making a presentation at an informal hearing.''
\12\ The Notice of Informal Public Hearing comments addressing
specific provisions of the rule or questions in the NPRM soliciting
public comment are discussed in Section III within the substantive
discussions on the relevant provisions.
\13\ 5 U.S.C. 551 et seq.; 16 CFR 1.7-1.20.
\14\ Rules of Practice, 16 CFR 1.14(a)(1)(i)-(iii). In addition,
in accordance with 16 CFR 1.14(a)(2), the regulatory analysis is
provided in Section VI of this SBP.
\15\ ANPR, 86 FR at 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.
\16\ NPRM, 87 FR at 62742.
\17\ Id. at 62742-46.
\18\ In re Cliffdale Assocs., Inc., 103 F.T.C. 110, 174 (1984);
see also In re POM Wonderful LLC, No. 9344, 2013 WL 268926, at *18
(Jan. 16, 2013).
\19\ ANPR, 86 FR at 72901.
\20\ NPRM, 87 FR at 62746-47.
\21\ ANPR, 86 FR at 72903-04; see also NPRM, 87 FR at 62748-49.
\22\ See AMG Cap. Mgmt., LLC v. FTC, 141 S. Ct. 1341, 1352
(2021).
\23\ See 15 U.S.C. 57b(a) and (b); see also NPRM, 87 FR at 62746
(discussing AMG Cap. Mgmt.).
\24\ The Commission can recover money for consumers directly
through a federal court action or obtain civil penalties directly
from a federal court when the Rule has been violated. Without the
Rule, the path to monetary relief is longer, and requires the
Commission to first issue a final cease-and-desist order--which
might not become final until after the resolution of any resulting
appeal. Then, to recover money for consumers, the Commission must
prove that the violator engaged in fraudulent or dishonest conduct
in a second action in federal court. See 15 U.S.C. 57b(a) and (b).
\25\ See section 5(m)(1)(A) of the FTC Act, 15 U.S.C.
45(m)(1)(A) (providing that violators of a trade regulation rule
``with actual knowledge or knowledge fairly implied on the basis of
objective circumstances that such act is unfair or deceptive and is
prohibited by such rule'' are liable for civil penalties for each
violation). In addition, any entity or person who violates such a
rule (irrespective of the state of knowledge) is liable for injury
caused to consumers by the rule violation. The Commission may pursue
such recovery in a suit for consumer redress under section 19 of the
FTC Act, 15 U.S.C. 57b.
\26\ NPRM, 87 FR at 62749.
\27\ Id.
\28\ https://www.regulations.gov/document/FTC-2021-0077-0001/comment.
\29\ https://www.regulations.gov/docket/FTC-2023-0030/comments.
\30\ NPRM, 87 FR at 62750.
\31\ Id.
\32\ Id., Question 3 (Does the proposed rule contain a
collection of information?) and Question 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?)
\33\ NPRM, 87 FR at 62750.
\34\ See, e.g., Anonymous, Cmt. on NPRM (Nov. 3, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0011 (describing
impersonation of accounts payable in medical device industry);
Bernadette Padilla, Cmt. on NPRM (Nov. 8, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0014 (describing police
impersonation scam involving stolen PII); Anonymous Meeting Planner,
Cmt. on NPRM (Dec. 6,
[[Page 15028]]
2022), https://www.regulations.gov/comment/FTC-2022-0064-0030
(describing attendee list and hotel reservation impersonation
scams); California IT in Education, Cmt. on NPRM (Nov. 9, 2022),
https://www.regulations.gov/comment/FTC-2022-0064-0034 (describing
attendee list impersonation scam); Illinois Landscape Contractors
Association, Cmt. on NPRM (Dec. 12, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0038 (describing attendee
list and hotel reservation impersonation scams).
\35\ See e.g., Salina Maddox, Cmt. on NPRM (Oct. 22, 2022),
https://www.regulations.gov/comment/FTC-2022-0064-0003 (spam calls);
Tatiana Alvarez, Cmt. on NPRM (Nov. 22, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0008 (Romanian mob scam);
Tinee Carraker, Cmt. on NPRM (Nov. 4, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0012 (foreclosure scam);
Susan Rounsley, Cmt. on NPRM (Nov. 6, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0013 (violations of Do Not
Call requirements).
\36\ See, e.g., Suhkvir Singh/Rutgers Law School Students, Cmt.
on NPRM (Nov. 22, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0019 (``Rutgers Law Students/Singh Cmt.''); AIM, the
European Brands Association, Cmt. on NPRM (Dec. 13, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0041 (``AIM Cmt.''); The
Messaging Malware Mobile Anti-Abuse Working Group, Cmt. on NPRM
(Dec. 15, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0051 (``M3AAWG Cmt.''); The International Trademark Association,
Cmt. on NPRM (Dec. 16, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0054 (``INTA Cmt.''); Electronic Privacy Information
Center, National Consumer Law Center, National Consumers League,
Consumer Action, Consumer Federation of America, National
Association of Consumer Advocates, and U.S. PIRG, Cmt. on NPRM (Dec.
16, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0070
(``EPIC Cmt.''); Recording Industry Association of America, Cmt. on
NPRM (Dec. 16, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0064 (``RIAA Cmt.'').
\37\ United States Patent and Trademark Office, Cmt. on NPRM at
2-3 (Dec. 2, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0026 (``USPTO Cmt.''); INTA Cmt. on NPRM; United States
Copyright Office, Cmt. on NPRM (Dec. 16, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0067 (``USCO Cmt.''); The
Toy Association, Inc., Cmt. on NPRM at 2 (Dec. 16, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0069 (``Toy Cmt.'');
Cellular Telecommunications and Internet Association, Cmt. on NPRM
(Dec. 16, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0066 (``CTIA Cmt.''); Marine Retailers Association of the Americas,
National Marine Manufacturers Association, National RV Dealers
Association, Cmt. on NPRM (Dec. 19, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0076 (``MRAA Cmt.'').
\38\ See, e.g., USPTO Cmt. on NPRM at 2-3; USCO Cmt. on NPRM at
2; Toy Cmt. on NPRM at 2; CTIA Cmt. on NPRM at 3; MRAA Cmt. on NPRM
at 4. See also supra, note 25.
\39\ USPTO Cmt. on NPRM at 2-3.
\40\ MRAA Cmt. on NPRM at 4.
\41\ USCO Cmt. on NPRM at 2-3.
\42\ Id.; USPTO Cmt. on NPRM at 2.
\43\ CTIA Cmt. on NPRM at 5, 7.
\44\ Somos, Inc., Cmt. on NPRM at 2-3 (Dec. 16, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0068 (``Somos Cmt.'').
\45\ In explaining the scope of the proposed rule, the NPRM
provided an illustrative, but non-exhaustive, list of unlawful
conduct that would be covered by the prohibitions against
impersonating government and businesses. NPRM, 87 FR at 62746-47.
That list merely provides examples as it would be impracticable to
list all possible violative conduct.
\46\ 16 CFR 310.4(a)(8).
\47\ USTelecom Cmt. on NPRM at 2; M3AAWG Cmt. on NPRM at 3-4;
RIAA Cmt. on NPRM at 3; Anti-Phishing Working Group, Cmt. on NPRM at
1-2 (Dec. 16, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0073 (``APWG Cmt.''), https://www.regulations.gov/comment/FTC-2022-0064-0073 (``APWG Cmt.''); Coalition for Online Accountability,
Cmt. on NPRM at 1-3 (Dec. 16, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0074 (``COA Cmt.''); INTA Cmt. on NPRM at 8-
10; Coalition for a Secure & Transparent Internet, Cmt. on NPRM at 1
(Dec. 16, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0065 (``CSTI Cmt.'').
\48\ Id.
\49\ M3AAWG Cmt. on NPRM at 3-4; RIAA Cmt. on NPRM at 3-4; AIM
Cmt. on NPRM at 1; COA Cmt. on NPRM at 1-3; INTA Cmt. on NPRM at 8-
10.
\50\ COA Cmt. on NPRM at 2.
\51\ M3AAWG Cmt. on NPRM at 3-4; APWG Cmt. on NPRM at 1-2; see
also APWG, Cmt. on Informal Hearing at 1-2 (Apr. 14, 2023), https://www.regulations.gov/comment/FTC-2023-0030-0027 (``APWG IH Cmt.'').
\52\ See NPRM, 87 FR at 62746-47. The example of voice cloning--
a relatively new technology--emphasizes the need for an
illustrative, but non-exhaustive, list of unlawful conduct. Audio
deepfakes, including voice cloning, are generated, edited, or
synthesized by artificial intelligence, or ``AI,'' to create fake
audio that seems real. See Khanjani, et. al., How Deep are the
Fakes? Focusing on Audio Deepfake: A Survey, available at https://arxiv.org/ftp/arxiv/papers/2111/2111.14203.pdf.
\53\ Americans for Prosperity Foundation, Cmt. on NPRM at 1-2
(Dec. 16, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0062 (``AFPF Cmt.'').
\54\ Id. at 1.
\55\ Public Law 93-637, 88 Stat. 2183 (1975).
\56\ ANPR, 86 FR at 72904.
\57\ Id.
\58\ NPRM, 87 FR at 62750, Question 2.
\59\ USPTO Cmt. on NPRM at 3-9; M3AAWG Cmt. on NPRM at 6-9; INTA
Cmt. on NPRM at 3-5; Toy Cmt. on NPRM at 3-5; USCO Cmt. on NPRM at
3-7; MRAA Cmt. on NPRM at 2-4.
\60\ USPTO Cmt. on NPRM at 3-9; M3AAWG Cmt. on NPRM at 6-9; INTA
Cmt. on NPRM at 3-5; Toy Cmt. on NPRM at 3-5; USCO Cmt. on NPRM at
3-7; MRAA Cmt. on NPRM at 2-4.
\61\ Toy Cmt. on NPRM at 3-5.
\62\ USPTO Cmt. on NPRM at 3-9; USCO Cmt. on NPRM at 3-4;
\63\ INTA Cmt. on NPRM at 3; M3AAWG Cmt. on NPRM at 7.
\64\ M3AAWG Cmt. on NPRM at 9.
\65\ Id.
\66\ Id.
\67\ NPRM, 87 FR at 62750, Question 5.
\68\ USCO Cmt. on NPRM at 8; USPTO Cmt. on NPRM at 10; INTA Cmt.
on NPRM at 6-7; M3AAWG Cmt. on NPRM at 9; MacLeod Cmt. on NPRM at 1-
2; AFPF Cmt. on NPRM at 3-6.
\69\ NetChoice Cmt. on NPRM at 2; Toy Cmt. on NPRM at 2;
ZoomInfo Technologies LLC, Cmt. on NPRM at 1-2 (Dec. 16, 2022),
https://www.regulations.gov/comment/FTC-2022-0064-0079 (``Zoom NPRM
Cmt.'').
\70\ USCO Cmt. on NPRM at 8; USPTO Cmt. on NPRM at 10.
\71\ USCO Cmt. on NPRM at 8.
\72\ USPTO Cmt. on NPRM at 10.
\73\ Id. at 9-10.
\74\ MacLeod Cmt. on NPRM at 2; AFPF Cmt. on NPRM at 3; M3AAWG
Cmt. on NPRM at 9.
\75\ M3AAWG Cmt. on NPRM at 2; NetChoice Cmt. on NPRM at 2; Toy
Cmt. on NPRM at 2; AFPF Cmt. on NPRM at 2, 4; Zoom Cmt. on NPRM at
1; INTA Cmt. on NPRM at 5-6; William MacLeod, Cmt. on Informal
Hearing at 5-7 (Apr. 14, 2023), https://www.regulations.gov/comment/FTC-2023-0030-0019 (``MacLeod IH Cmt.'').
\76\ AFPF Cmt. on NPRM at 2, 4; see also MacLeod IH Cmt. at 2.
\77\ AFPF Cmt. on NPRM at 3, 4. M3AAWG Cmt. on NPRM at 2;
NetChoice Cmt. on NPRM at 2; INTA Cmt. on NPRM at 5-6; Toy Cmt. on
NPRM at 2; Zoom Cmt. on NPRM at 1; MacLeod IH Cmt. at 5-7.
\78\ AFPF Cmt. on NPRM at 2, 6.
\79\ NetChoice Cmt. on NPRM at 2; M3AAWG Cmt. on NPRM at 3.
\80\ AFPF Cmt. on NPRM at 4; INTA Cmt. on NPRM at 5-6; Toy Cmt.
on NPRM at 2; Zoom Cmt. on NPRM at 1; MacLeod IH Cmt. at 5.
\81\ MacLeod IH Cmt. at 1; see also MacLeod Cmt. on NPRM at 1.
\82\ MacLeod IH Cmt. at 2.
\83\ Id. at 3.
\84\ Id. at 3.
\85\ AFPF Cmt. on NPRM at 3-4.
\86\ Id. at 3, 5-6.
\87\ M3AAWG Cmt. on NPRM at 9.
\88\ Id. at 1, 5.
\89\ AFPF Cmt. on NPRM at 5.
\90\ See 15 U.S.C. 45(m)(1)(A).
\91\ See Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm'n of
N.Y., 447 U.S. 557, 563-64 (1980) (``[T]here can be no
constitutional objection to the suppression of commercial messages
that do not accurately inform the public about lawful activity. The
government may ban forms of communication more likely to deceive the
public than to inform it, or commercial speech related to illegal
activity.'') (citations omitted); see also Zauderer v. Office of
Disciplinary Counsel, 471 U.S. 626, 638 (1985) (holding it is ``well
settled'' that ``[t]he States and the Federal Government are free
[[Page 15029]]
to prevent the dissemination of commercial speech that is false,
deceptive, or misleading'').
\92\ USPTO Cmt. on NPRM; Anonymous, Cmt. on NPRM (Dec. 9, 2022),
https://www.regulations.gov/comment/FTC-2022-0064-0033 (``0033
Cmt.''); AIM Cmt. on NPRM; Erik M. Pelton & Associates, PLLC, Cmt.
on NPRM (Dec. 14, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0045; NetChoice Cmt. on NPRM; M3AAWG Cmt. on NPRM;
Consumer Technology Association, Cmt. on NPRM (Dec. 16, 2022),
https://www.regulations.gov/comment/FTC-2022-0064-0073 (``CTA
Cmt.''); NCTA--The internet and Television Association, Cmt. on NPRM
(Dec. 16, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0071 (``NCTA Cmt.''); ASAE Cmt. on NPRM; INTA Cmt. on NPRM; Somos
Cmt. on NPRM; CTIA Cmt. on NPRM; USCO Cmt. on NPRM; USTelecom Cmt.
on NPRM; American Society of Association Executives, Center for
Exhibition Industry Research Destinations International, Exhibition
Services & Contractors Association, Exhibitions & Conferences
Alliance, Experiential Designers + Producers Association,
International Association of Exhibitions & Events, International
Association of Venue Managers, PCMA, Society of Independent Show
Organizers, UFI, Cmt. on NPRM (Dec 16, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0060 (``ECA Cmt.''); RIAA
Cmt. on NPRM; American Bar Association Section of Intellectual
Property Law, Cmt. on NPRM at 3 (Dec. 16, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0061 (``ABA-IPL Cmt.'');
AFPF Cmt. on NPRM; Zoom Cmt. on NPRM; American Bankers Association,
ACA International, American Association of Healthcare Administrative
Management, Credit Union National Association, Mortgage Bankers
Association National Association of Federally-Insured Credit Unions
(the Associations), Cmt. on NPRM (Dec. 16, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0080 (``Assocns. Cmt.'');
COA Cmt. on NPRM; MacLeod Cmt. on NPRM; Brown Cmt. on NPRM.
\93\ A copy of the transcript of the May 4, 2023 Informal
Hearing is available at https://www.ftc.gov/system/files/ftc_gov/pdf/impersonationruleinformalhearingtranscript.pdf. References to
the transcript from the May 4, 2023 Informal Hearing are cited
herein as: Name of commenter, May 2023 Tr at page no. (e.g., Doe,
May 2023 Tr at #); see CTA, May 2023 Tr at 16; MacLeod, May 2023 Tr
at 27; USTelecom, May 2023 Tr at 30; Chilson, May 2023 Tr at 34;
VON, May 2023 Tr at 36; American Bankers Association (ABA), May 2023
Tr at 39-40; INCOMPAS, May 2023 Tr at 42, 44; NCTA, May 2023 Tr at
51-52.
\94\ USPTO Cmt. on NPRM at 10; USCO Cmt. on NPRM at 8; RIAA Cmt.
on NPRM at 3; ABA, May 2023 Tr at 39-40.
\95\ USPTO Cmt. on NPRM at 10; USCO Cmt. on NPRM at 8; RIAA Cmt.
on NPRM at 3; ABA, May 2023 Tr at 39-40.
\96\ AFPF Cmt. on NPRM at 3-5; MacLeod IH Cmt. at 6-7; McLeod,
May 2023 Tr at 27.
\97\ 0033 Cmt. on NPRM; ABA-IPL Cmt. on NPRM at 2; Zoom Cmt. on
NPRM at 1.
\98\ ABA-IPL Cmt. on NPRM at 1-2; NetChoice Cmt. on NPRM at 2;
USTelecom Cmt. on NPRM at 2; see also CTA, May 2023 Tr at 16; VON,
May 2023 Tr at 36; ABA, May 2023 Tr at 39-40; INCOMPAS, May 2023 Tr
at 42.
\99\ NetChoice Cmt. on NPRM at 2; CTA Cmt. on NPRM; American
Society of Association Executives, Cmt. on NPRM at 1 (Dec. 16,
2022), https://www.regulations.gov/comment/FTC-2022-0064-0057
(``ASAE Cmt.''); INTA Cmt. on NPRM; Somos Cmt. on NPRM; CTIA Cmt. on
NPRM at 7; USTelecom Cmt. on NPRM at 2; ECA Cmt. on NPRM at 3; ABA-
IPL Cmt. on NPRM at 3; Zoom Cmt. on NPRM at 2; Cmt. on NPRM at 3;
see also CTA, May 2023 Tr at 16; MacLeod, May 2023 Tr at 27;
USTelecom, May 2023 Tr at 30; Chilson, May 2023 Tr at 34; VON, May
2023 Tr at 36; INCOMPAS, May 2023 Tr at 42, 44; NCTA, May 2023 Tr at
51-52.
\100\ CTA Cmt. on NPRM at 7.
\101\ USTelecom Cmt. on NPRM at 2.
\102\ ABA-IPL Cmt. on NPRM at 3.
\103\ NCTA Cmt. on NPRM at 2.
\104\ M3AAWG Cmt. on NPRM at 10.
\105\ Brown Cmt. on NPRM at 8.
\106\ M3AAWG Cmt. on NPRM at 3.
\107\ COA Cmt. on NPRM at 3; M3AAWG Cmt. on NPRM at 4-5. ``WHOIS
data'' is a commonly used internet record listing that identifies
who owns a domain and how to get in contact with them.
\108\ See, e.g., Compl. at 3-5 & Ex. H, FTC v. Moore, No. 5:18-
cv-01960 (C.D. Cal. filed Sept. 13, 2018) (alleging that a seller of
variety of fake but genuine-looking financial documents provided to
others the means and instrumentalities with which to make
misrepresentations regarding a person's identity).
\109\ NPRM, 87 FR at 62746.
\110\ Id. at 62751; see also 15 U.S.C. 44.
\111\ NPRM, 87 FR at 62747.
\112\ Id. at 62750.
\113\ Minnesota Nursery & Landscape Association, Cmt. on NPRM at
2 (Dec. 2, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0027; Louise Nemmers, Cmt. on NPRM (Dec. 5, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0028; California Landscape
Contractors Association, Cmt. on NPRM (Dec. 6, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0029; Outdoor Power
Equipment Institute, Cmt. on NPRM at 2 (Dec. 7, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0032; AIM Cmt. on NPRM at
2; AARP, Cmt. on NPRM (Dec. 14, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0043 (``AARP Cmt.''); Minnesota Municipal
Utilities Association, Cmt. on NPRM (Dec. 14, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0048; M3AAWG Cmt. on NPRM
at 10; CTA Cmt. on NPRM; ASAE Cmt. on NPRM; INTA Cmt. on NPRM; Toy
Cmt. on NPRM at 6; RIAA Cmt. on NPRM at 2; National Association of
Broadcasters, Cmt. on NPRM (Dec. 19, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0075; MRAA Cmt. on NPRM at
4.
\114\ See, e.g., Toy Cmt. on NPRM at 6; MRAA Cmt. on NPRM at 4;
AARP Cmt. at 2; CTA Cmt. on NPRM at 1; ASAE Cmt. on NPRM; RIAA Cmt.
on NPRM at 1; INTA Cmt. on NPRM at 2.
\115\ AIM Cmt. on NPRM at 2; M3AAWG Cmt. on NPRM at 10; CTA Cmt.
on NPRM at 1.
\116\ Toy Cmt. on NPRM at 6; INTA Cmt. on NPRM at 6.
\117\ Toy Cmt. on NPRM at 6; RIAA Cmt. on NPRM at 3.
\118\ INTA Cmt. on NPRM at 6; Toy Cmt. on NPRM at 6.
\119\ NPRM, 87 FR at 62750.
\120\ Rutgers Law Students/Singh Cmt. on NPRM; AIM Cmt. on NPRM;
AARP Cmt. on NPRM; NCTA Cmt. on NPRM; EPIC Cmt. on NPRM; RIAA Cmt.
on NPRM.
\121\ AIM Cmt. on NPRM at 2; Rutgers Law Students/Singh Cmt. on
NPRM at 1.
\122\ Rutgers Law Students/Singh Cmt. on NPRM at 1-2; AARP Cmt.
on NPRM at 2; EPIC Cmt. on NPRM at 5.
\123\ Rutgers Law Students/Singh Cmt. on NPRM at 1-2.
\124\ Rutgers Law Students/Singh Cmt. on NPRM at 2-4; AARP Cmt.
on NPRM at 1-2; EPIC Cmt. on NPRM at 4-5.
\125\ AARP Cmt. on NPRM at 2.
\126\ EPIC Cmt. on NPRM at 5.
\127\ NCTA Cmt. on NPRM at 3, 8.
\128\ Id.
\129\ RIAA Cmt. on NPRM at 3.
\130\ Id. at 2.
\131\ Rutgers Law Students/Singh Cmt. on NPRM at 2.
\132\ Id.
\133\ Id. at 3.
\134\ Id.
\135\ Id. at 3-4.
\136\ Id.; NCTA Cmt. on NPRM at 8, n. 16.
\137\ The Commission also is exploring other tools to address
the fake endorsement concerns raised by the RIAA and Rutgers Law
School Students. Specifically, in the Commission's proposed Rule on
the Use of Consumer Reviews and Testimonials, Sec. 465.2 would
prohibit businesses from purchasing a consumer review, or from
disseminating or causing the dissemination of a consumer testimonial
or celebrity testimonial when the business knew or should have known
it was false or fake. See Fed. Trade Comm'n, Notice of Proposed
Rulemaking: Trade Regulation Rule on the Use of Consumer Reviews and
Testimonials, 88 FR 49364, 49391 (Jul. 31, 2023), https://www.federalregister.gov/documents/2023/07/31/2023-15581/trade-regulation-rule-on-the-use-of-consumer-reviews-and-testimonials#sectno-reference-465.2.
\138\ USTelecom Cmt. on NPRM at 2; M3AAWG Cmt. on NPRM at 3-4;
RIAA Cmt. on NPRM at 3; APWG Cmt. on NPRM; COA Cmt. on NPRM at 1-3;
INTA Cmt. on NPRM at 8-10; CSTI Cmt. on NPRM at 1.
\139\ Id.
\140\ M3AAWG Cmt. on NPRM at 3-4; RIAA Cmt. on NPRM at 3-4; AIM
Cmt. on NPRM at 1; COA Cmt. on NPRM at 1-3; INTA Cmt. on NPRM at 8-
10.
\141\ COA Cmt. on NPRM at 2.
\142\ M3AAWG Cmt. on NPRM at 3-4; APWG Cmt. on NPRM at 1-2; see
also APWG, Cmt. on Informal Hearing at 1-2 (Apr. 14, 2023), https://www.regulations.gov/comment/FTC-2023-0030-0027 (``APWG IH Cmt.'').
\143\ See also supra, note 52.
[[Page 15030]]
\144\ Toy Cmt. on NPRM at 2; M3AAWG Cmt. on NPRM at 2; ABA-IPL
Cmt. on NPRM at 3; INTA Cmt. on NPRM at 2.
\145\ ABA-IPL Cmt. on NPRM at 3.
\146\ Toy Cmt. on NPRM at 2; M3AAWG Cmt. on NPRM at 2; INTA Cmt.
on NPRM at 2.
\147\ INTA Cmt. on NPRM at 6-7.
\148\ NPRM, 87 FR at 62750.
\149\ See 15 U.S.C. 57b-3(b)(2).
\150\ 15 U.S.C. 57b-3(b)(2)(A).
\151\ See 5 U.S.C. 603-605; see also section 22(b) of the FTC
Act, 15 U.S.C. 57b-3(b).
\152\ NPRM, 87 FR at 62749-50; see also 5 U.S.C. 603.
\153\ NPRM, 87 FR at 62750.
\154\ NPRM, 87 FR at 62749.
\155\ See 15 U.S.C. 57b-3(b)(3)(A)(ii) (``In order to avoid
duplication or waste, the Commission is authorized to . . . whenever
appropriate, incorporate any data or analysis contained in a
regulatory analysis issued under this subsection in the statement of
basis and purpose.'').
\156\ NPRM, 87 FR at 62749-50.
\157\ See ANPR, 86 FR at 72901 & n.24 (discussing AMG Cap.
Mgmt.); NPRM, 87 FR at 62746 (same).
\158\ See ANPR, 86 FR at 72901 & n.24; NPRM, 87 FR at 62746; see
also 15 U.S.C. 57b(a) and (b).
\159\ See 15 U.S.C. 45(m)(1)(A).
\160\ NPRM, 87 FR at 62750.
\161\ Only one commenter suggested an alternative to regulation,
which the Commission declines to adopt for the reasons previously
stated in Section III.B.
\162\ See supra note 161.
\163\ Toy Cmt. on NPRM at 5-6; MRAA Cmt. on NPRM at 4.
\164\ Robert Kamerschen, Cmt. on NPRM at 2 (Nov. 30, 2022),
https://www.regulations.gov/comment/FTC-2022-0064-0023.
\165\ See NPRM, 87 FR at 62750.
\166\ NPRM, 87 FR at 62748.
\167\ Id.
\168\ See Fed. Trade Comm'n, Explore Government Imposter Scams,
TABLEAU PUBLIC, https://public.tableau.com/app/profile/federal.trade.commission/viz/FraudReports/SubcategoriesOverTime
(last visited December 21, 2023).
\169\ Id.
\170\ See 15 U.S.C. Secs. 45(m)(1)(A) and 57b.
\171\ See Toy Cmt. on NPRM at 5-6; MRAA Cmt. on NPRM at 4; see
also NPRM, 87 FR at 62749.
\172\ NPRM, 87 FR at 62750.
\173\ See, e.g., TSR, 16 CFR 310.3(a)(2)(vii); R-Value Rule, 16
CFR 460.21; Regulation O (Mortgage Assistance Relief Services), 12
CFR 1015.3(b)(3).
\174\ 5 U.S.C. 551 et seq.; 16 CFR 1.7 through 1.20.
List of Subjects in 16 CFR Part 461
Consumer protection, Impersonation, Trade Practices.
0
For the reasons set forth above, the Federal Trade Commission amends 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.
Authority: 15 U.S.C. 41 through 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.
Materially means likely to affect a person's choice of, or conduct
regarding, goods or services.
Officer includes executives, officials, employees, and agents.
Sec. 461.2 Impersonation of Government Prohibited.
It is a violation of this part, and an unfair or deceptive act or
practice to:
(a) materially and falsely pose as, directly or by implication, a
government entity or officer thereof, in or affecting commerce as
commerce is defined in the Federal Trade Commission Act (15 U.S.C. 44);
or
(b) materially misrepresent, directly or by implication,
affiliation with, including endorsement or sponsorship by, a government
entity or officer thereof, in or affecting commerce as commerce is
defined in the Federal Trade Commission Act (15 U.S.C. 44).
Sec. 461.3 Impersonation of Businesses Prohibited.
It is a violation of this part, and an unfair or deceptive act or
practice to:
(a) materially and falsely pose as, directly or by implication, a
business or officer thereof, in or affecting commerce as commerce is
defined in the Federal Trade Commission Act (15 U.S.C. 44); or
(b) materially misrepresent, directly or by implication,
affiliation with, including endorsement or sponsorship by, a business
or officer thereof, in or affecting commerce as commerce is defined in
the Federal Trade Commission Act (15 U.S.C. 44).
By direction of the Commission.
April J. Tabor,
Secretary.
Note: The following statement will not appear in the Code of
Federal Regulations.
Statement of Chair Lina M. Khan Joined by Commissioner Rebecca Kelly
Slaughter and Commissioner Alvaro M. Bedoya
Today the Federal Trade Commission finalizes its rule prohibiting
government and business impersonation schemes and issues a supplemental
notice of proposed rulemaking to extend this prohibition to
impersonation of individuals. This final rule marks the first time
since 1980 that the Commission has finalized a brand-new trade
regulation rule prohibiting an unfair or deceptive practice.
Impersonation schemes cheat Americans out of billions of dollars
every year. Fraudsters pretending to represent government agencies--
like the Social Security Administration or the IRS--tell targets that
if they do not hand over money or their sensitive personal information,
then they could lose a government benefit, face a tax liability, or
even be arrested. Scammers also commonly claim false affiliations with
household brand names to bilk consumers for bogus services. This
category of fraud skyrocketed during the coronavirus pandemic--with
imposters scamming Americans out of reported $2 billion between October
2020 and September 2021, an 85 percent increase year-over-year.\1\
Losses remain high: FTC data show that in 2023 consumers reported
losing $2.7 billion to reported imposter scams.\2\ Impersonation fraud
has remained one of the largest sources of total reported consumer
financial losses for several years.\3\
---------------------------------------------------------------------------
\1\ Fed. Trade Comm'n, Fraud Reports: Trends Over Time (2021),
https://public.tableau.com/app/profile/federal.trade.commission/viz/FraudReports/FraudFacts.
\2\ Fed. Trade Comm'n, Consumer Sentinel Network Data Book 2023
(2024), https://www.ftc.gov/reports/consumer-sentinel-network-data-book-2023.
\3\ Fed. Trade Comm'n, Fraud Reports: Top Reports, Tableau
Public (last accessed Feb. 8, 2024), https://public.tableau.com/app/profile/federal.trade.commission/viz/FraudReports/TopReports; see
also Fed. Trade Comm'n, Consumer Sentinel Network Data Book 2020
(2021) at 4-8, https://www.ftc.gov/system/files/documents/reports/consumer-sentinel-network-databook-2020/csn_annual_data_book_2020.pdf; see also, Consumer Sentinel Network
Data Book 2023, supra note 2.
---------------------------------------------------------------------------
Public comments submitted to the Commission provide a snapshot of
how impersonation frauds can devastate:
One commenter reported on how a friend was scammed by
someone claiming that they were with Publisher's Clearing House and
that she had won a sweepstakes. Her friend was scammed out of a total
of $367,000: ``She used all of her savings . . . to help her
grandchildren go to college and wiped out her IRA and now is left to
pay the
[[Page 15031]]
penalties for depleting it. This woman is now, at age 70, in a position
of living only on her social security and has to try to find work. . .
.'' \4\
---------------------------------------------------------------------------
\4\ Comment Submitted by Anonymous, FTC Seek Comments on
Advanced Notice of Proposed Rule; Impersonation ANPR,
Regulations.gov (Feb. 22, 2022), https://www.regulations.gov/comment/FTC-2021-0077-0131.
---------------------------------------------------------------------------
Another commenter received a call from someone claiming to
be with the U.S. Treasury Department, who asserted that her social
security number had been compromised. This person lost all her money:
``That money is from my mother's life insurance policy who passed in
2019. My father needs that money to survive. I am devastated.'' \5\
---------------------------------------------------------------------------
\5\ Comment Submitted by Jamila Sherman, FTC Seek Comments on
Advanced Notice of Proposed Rule; Impersonation ANPR,
Regulations.gov (Feb. 22, 2022), https://www.regulations.gov/comment/FTC-2021-0077-0127.
---------------------------------------------------------------------------
A third commenter spoke of her mother being scammed by
someone pretending to be with a government agency: ``Before we, her
family, realized the extent to which the imposters preyed upon her, she
had divulged identity and banking information.'' \6\
---------------------------------------------------------------------------
\6\ Comment Submitted by Susan Frost, FTC Seek Comments on
Advanced Notice of Proposed Rule; Impersonation ANPR,
Regulations.gov (Feb. 16, 2022), https://www.regulations.gov/comment/FTC-2021-0077-0031.
---------------------------------------------------------------------------
The rise of generative AI technologies risks making these problems
worse by turbocharging scammers' ability to defraud the public in new,
more personalized ways. For example, the proliferation of AI chatbots
gives scammers the ability to generate spear-phishing emails using
individuals' social media posts and to instruct bots to use words and
phrases targeted at specific groups and communities.\7\ AI-enabled
voice cloning fraud is also on the rise, where scammers use voice-
cloning tools to impersonate the voice of a loved one seeking money in
distress or a celebrity peddling fake goods.\8\ Scammers can use these
technologies to disseminate fraud more cheaply, more precisely, and on
a much wider scale than ever before.
---------------------------------------------------------------------------
\7\ Bob Violino, AI Tools Such As ChatGPT Are Generating A
Mammoth Increase In Malicious Phishing Emails, CNBC (Nov. 28, 2023),
https://www.cnbc.com/2023/11/28/ai-like-chatgpt-is-creating-huge-increase-in-malicious-phishing-email.html.
\8\ Eric Revell, AI Voice Cloning Scams On The Rise, Expert
Warns, Fox Business (Sept. 23, 2023), https://www.foxbusiness.com/technology/ai-voice-cloning-scams-on-rise-expert-warns.
---------------------------------------------------------------------------
In its supplemental NPRM, the Commission proposes to expand the
rule's prohibitions to also cover impersonation of individuals. If
adopted, this additional protection will equip enforcers to seek civil
penalties and redress when fraudsters impersonate individual people,
not just government or business entities. Given the proliferation of
AI-enabled fraud, this additional protection seems especially critical.
Notably, the supplemental proposal also recommends extending liability
to any actor that provides the ``means and instrumentalities'' to
commit an impersonation scam. Under this approach, liability would
apply, for example, to a developer who knew or should have known that
their AI software tool designed to generate deepfakes of IRS officials
would be used by scammers to deceive people about whether they paid
their taxes. Ensuring that the upstream actors best positioned to halt
unlawful use of their tools are not shielded from liability will help
align responsibility with capability and control.
By unlocking civil penalties and redress, the final rule, along
with the proposed supplemental provisions, will promote both more
efficient enforcement and greater deterrence. In 2020, the Supreme
Court held that the Commission cannot rely on Section 13(b) of the FTC
Act to get money back to defrauded consumers,\9\ so rulemakings--while
not a substitute for a legislative fix--can help ensure that
lawbreakers do not profit from their lawbreaking and that wronged
consumers can be made whole.
---------------------------------------------------------------------------
\9\ AMG Cap. Mgmt., LLC v. FTC, 593 U.S. (2021).
---------------------------------------------------------------------------
This rule marks the agency's first brand-new Section 18 rulemaking
since 1980. Although the authority to issue rules is clearly laid out
in the FTC Act, bureaucratic red tape presented an obstacle to the
agency's exercise of this important statutory authority. Thanks to
efforts initiated under Commissioner Slaughter's leadership to align
the procedural requirements for Section 18 rulemaking with the FTC
Act's statutory text, Section 18 rulemakings can now proceed more
efficiently.\10\ This effort took two years from proposal to final
rule, finally putting lie to the old idea that this must be an
impossibly long process.
---------------------------------------------------------------------------
\10\ Press Release, Fed. Trade Comm'n, FTC Votes to Update
Rulemaking Procedures, Sets Stage for Stronger Deterrence of
Corporate Misconduct (July 1, 2021), https://www.ftc.gov/news-events/news/press-releases/2021/07/ftc-votes-update-rulemaking-procedures-sets-stage-stronger-deterrence-corporate-misconduct.
---------------------------------------------------------------------------
Many thanks to the FTC team for their swift work and dedication.
This rule banning government and business impersonation will allow us
to more vigorously and effectively protect Americans from fraudsters.
And we are eager for public input on the supplemental NPRM that would
extend this rule to cover impersonation of individuals. With the rapid
rise of voice cloning fraud and other AI-based scams, additional
protection for consumers seems especially critical. As these
technologies enable more sophisticated and innovative forms of fraud,
we will continue to ensure the Commission is activating all the tools
Congress has given us and faithfully executing on our statutory
mandate.
[FR Doc. 2024-04335 Filed 2-29-24; 8:45 am]
BILLING CODE 6750-01-P